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Audit of Cost Increases and Schedule Delays for Military Construction Projects at Joint Region Marianas DODIG-2020-040

Audit

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Publicly Released: December 13, 2019

Objective

The objective of this audit was to determine why select military construction (MILCON) projects at Joint Region Marianas (JRM) were over budget and delayed.

Background

Federal law defines MILCON as construction, development, conversion, or extension of any kind carried out with respect to a military installation, whether to satisfy temporary or permanent requirements, or any acquisition of land or construction of a defense access road.

We reviewed nine MILCON projects that Naval Facilities Engineering Command (NAVFAC) managed at JRM, with a programmed amount of $574 million.

Findings

Deputy Assistant Secretary of Defense for Facilities Management, NAVFAC, Air Force, and Defense Logistics Agency (DLA) officials experienced schedule delays and cost increases for nine MILCON projects valued at $574.4 million at JRM; however, Guam’s unique characteristics and environment present challenges in planning and managing MILCON in the region. Specifically, the DoD has experienced—and continues to experience—schedule delays and cost increases for:

  • 6 of 9 projects because DoD officials did not plan for the technical specifications of Munitions and Explosives of Concern (MEC) clearance requirements as implemented by the MEC Quality Assurance representatives; (MEC are unexploded ordnance, discarded military munitions, and munitions constituents present in high enough concentrations to pose an explosive hazard.)
     
  • 4 of 9 projects because contractors had a shortage of available laborers for MILCON projects when Department of Homeland Security personnel decreased the approval and renewal of H‑2B visas, which allow U.S. employers to bring foreign nationals to the United States, including Guam, to fill temporary nonagricultural positions;
     
  • 4 of 9 projects because NAVFAC Pacific personnel encountered extensive environmental concerns such as U.S. Fish and Wildlife Services listing 23 new species as endangered or threatened requiring the biological opinion to be updated before the contract could be awarded;
     
  • 2 of 9 projects because personnel at the Office of the Assistant Secretary of Defense for Sustainment and Commander, Navy Installations Command used an accelerated programming process and not the normal programming process, which typically is a 3 year process to develop and finalize the DD Form 1391, “FY____ Military Construction Project Data;”
     
  • 1 of 9 projects because NAVFAC Marianas personnel experienced challenges working with the U.S. Army Corps of Engineers and the contractor to obtain a dredging permit that incorporated increased environmental requirements not anticipated at the time of the contract award;
     
  • 1 of 9 projects because contractors identified archaeological items on site once MEC clearance began, which required the contractor to stop work in the area of the discovery and protect the artifact;
     
  • 1 of 9 projects because NAVFAC personnel made post‑award changes to the construction contract when security and aviation requirements changed; and
     
  • 1 of 9 projects because a contractor protested the award of the contract.

Additionally, NAVFAC Marianas personnel stated that schedule delays also occurred, in part, because they are experiencing personnel resourcing shortages. NAVFAC Marianas officials stated that they have ongoing challenges recruiting personnel with experience and the required qualifications for many positions, leaving NAVFAC Marianas personnel shorthanded and limited in the level of support they can provide as construction contract agents.

As a result, the DoD had a total of 13 years and 5 months in schedule delays and $37.5 million in increased costs over the programmed budgets for the nine projects we reviewed. The DoD’s inability to complete MILCON projects at JRM on time and within the programmed budget is indirectly affecting our National Defense Strategy and DoD priorities and resulting in:

  • inability to restore readiness to build a more lethal force,
     
  • negative impacts to our relationship with allies, and
     
  • impediments to facility modernization needed to meet the changing environment.

Delays in MILCON projects, such as the construction of maintenance hangars and upgrading of the fuel pipeline, hinder readiness in the region and DoD officials’ ability to build a more lethal force capable of protecting our assets and meeting the goals of the National Defense Strategy.

Furthermore, NAVFAC Marianas did not always complete Contractor Performance Assessment Reporting System evaluations in a timely manner, as required by the Federal Acquisition Regulation. NAVFAC Marianas personnel stated that this occurred because they have had trouble hiring and retaining staff. Although NAVFAC Marianas officials stated that they have resource shortages, contracting officials are required by the Federal Acquisition Regulation to complete past performance e valuations in a timely manner. Because NAVFAC Marianas officials did not always complete Contractor Performance Assessment Reporting System evaluations in a timely manner, contracting personnel could award additional contracts to poor performing contractors and the DoD or other Federal Agencies may not receive the best value for goods and services.

Recommendations

We recommend that the NAVFAC Commander perform a review to determine resource requirements at NAVFAC Marianas and identify potential solutions to address vacant positions as well as issue a memorandum directing contracting personnel to issue annual past performance evaluations for contractors in the Contractor Performance Assessment Reporting System within 120 days following the end of the period of performance.

We recommend that the NAVFAC Commander, the Pacific Air Forces Commander, and the Defense Logistics Agency Director issue a memorandum emphasizing to personnel the importance of identifying all costs related to MEC clearance when completing the DD Form 1391, “FY____ Military Construction Project Data,” for all future MILCON projects.

We recommend that the NAVFAC Marianas Commander coordinate with U.S. Army Corps of Engineers officials to develop processes and best practices for obtaining permits for underwater construction and coordinate with JRM Environmental and MEC personnel and the Guam Historic Preservation Office to develop processes and best practices for archaeological preservation at MILCON sites when MEC clearance is also required.

We further recommend that the Chief of Naval Operations revise and reissue Office of the Chief of Naval Operations Instruction 11010.20H, “Navy Facilities Projects,” to ensure that all Navy MILCON projects, including housing projects, follow the same planning and programming process.

Management Comments and Our Response

The DLA Chief of Staff, responding for the DLA Director, agreed with the recommendation to issue a memorandum, stating that the DLA Director issued a memorandum to facilities personnel on October 30, 2019, emphasizing the importance of identifying all costs related to MEC clearance when completing the DD Form 1391 “FY____ Military Construction Project Data,” for all future MILCON projects. The Chief of Staff’s comments and associated actions addressed the recommendation and we consider it closed.

The Deputy Commander of the Pacific Air Forces, responding for the Commander, agreed with the recommendation to issue a memorandum, and stated that the Pacific Air Forces will emphasize the importance of identifying all costs related to MEC clearance when completing DD Form 1391 “FY____ Military Construction Project Data,” for all future MILCON projects in a memorandum. The comments from the Deputy Commander addressed the specifics of the recommendation; therefore, the recommendation is resolved but will remain open. We will close the recommendation once we review the memorandum emphasizing the importance of identifying MEC clearance costs.

The Director of the Shore Readiness Division in the Office of the Chief of Naval Operations, responding for the Chief of Naval Operations, partially agreed with the recommendation to revise and reissue Chief of Naval Operations Instruction 11010.20H, “Naval Facilities Projects,” and stated that the Office is revising the Instruction to ensure that all Navy MILCON projects, including family housing projects, follow the same planning and programming process. Comments from the Director addressed the specifics of the recommendation; therefore, the recommendation is resolved but will remain open. We will c lose the recommendation once we review the revised Instruction to ensure it contains language directing all Navy MILCON projects to use the same planning and programming process.

The NAVFAC Commander and the NAVFAC Marianas Commander did not respond to the recommendations in the report. Therefore, the recommendations are unresolved. We request that the NAVFAC Commander and the NAVFAC Marianas Commander provide comments on the final report.

This report is a result of Project No. D2019-D000AV-0048.000.