May 31, 2018 —
This report has been updated to ensure compliance with the U.S. Workforce Rehabilitation Act of 1973, section 508. Formatting revisions may have resulted in minor changes to the appearance of the report; however, no changes were made regarding facts or content.
We performed this audit in response to a FY 2018 National Defense Authorization Act (NDAA) requirement for the DoD Office of Inspector General to provide a report on the schedule delays and cost increases related to the construction of the U.S. Strategic Command (USSTRATCOM) replacement facility at Offutt Air Force Base, Nebraska. We reviewed the requirements development, design-bid-build contract award processes, design suitability, and contractor performance.
To fulfill the NDAA requirement, we report on the following five elements.
First, we examine the specific reasons the DoD has used to explain the 16-month schedule delay and 10-percent cost increase. We determined that U.S. Army Corps of Engineers (USACE) Omaha District personnel experienced multiple delays and cost increases to the USSTRATCOM replacement facility because of the lack of expert involvement in the requirements development, inaccurate cost estimates, design deficiencies, contract modifications, fire, floods, mold, and challenges related to the execution of contract modifications. As of February 2018, project costs have increased 9.4 percent from the programmed amount of $564 million to $617.1 million, and construction completion has been delayed 29 months.
Second, we examine the specific actions taken to prevent further schedule delays and cost increases on this project as well as lessons learned to apply to future projects. We determined that the Office of the Assistant Secretary of Defense for Energy, Installations, and Environment (OASD[EI&E]), the Air Force Civil Engineer Center, USACE Headquarters, and USACE Omaha District have implemented or are implementing several initiatives.
These initiatives include updated guidance on roles, responsibilities, and management controls; additional training programs for cost estimators; and after-action reviews for all building projects.
Third, we identify ongoing or completed proceedings or investigations of parties responsible for the delays or cost increases. According to USACE Omaha District personnel, two separate contract claims are in litigation in the Armed Services Board of Contract Appeals.
Fourth, we describe administrative actions taken as a result of the proceedings or investigations identified in Element 3. As of March 2018, two contract claims are in litigation and have not yet been resolved; therefore, there are no results or associated administrative actions to report at this time.
Fifth, we provide a summary of changes we believe may be required for future military construction projects to prevent the problems we identified in the USSTRATCOM replacement facility project and to apply the lessons learned. We determined that improvements are necessary for future military construction projects. The recommendations below are addressed to key DoD organizations involved in the USSTRATCOM replacement facility project but should be applied as guidelines for all DoD construction projects.
We recommend that the OASD (EI&E):
- develop guidance requiring DoD organizations involved with a military construction project to draft a charter at the beginning of the project life cycle, focusing on communications and accountability in their project management plan; and
- develop guidance establishing metrics that include financial risk management parameters and triggers when higher headquarters engagement is required.
We recommend that the USSTRATCOM and USACE Commanders complete after-action reviews following completion of the construction for the USSTRATCOM replacement facility and implement the lessons learned in any ongoing or new construction projects under their oversight.
In addition, we recommend that the USSTRATCOM Commander review the administrative actions of individuals involved in the cost increases or schedule delays of the USSTRATCOM replacement facility and initiate action as appropriate.
We also recommend that the USACE Commander issue guidance to implement lessons learned from the USSTRATCOM facility construction project in other military construction projects that contain DoD-unique requirements and issue a memorandum instructing contracting personnel involved with the USSTRATCOM facility construction project to issue yearly past performance evaluations as required by the Federal Acquisition Regulation. In addition, we recommend that the USACE Commander review the administrative actions of individuals involved in the cost increases or schedule delays of the USSTRATCOM replacement facility and initiate action as appropriate.
We recommend that the U.S. Air Force Civil Engineer Center Commander conduct program life-cycle evaluations to determine the success of the Cost Estimating Improvement Plan.
Management Comments and Our Response
OASD (EI&E), USSTRATCOM, USACE, and U.S. Air Force agreed with our findings and recommendations.
The USACE Commander also reviewed the actions of the individuals involved in the cost increases or schedule delays of the USSTRATCOM replacement facility and concluded that no individuals should be held directly accountable.
We will close the remaining recommendations upon completion and verification of the proposed corrective actions.
This report is a result of Project No. D2018-D000CG-0077.000.