United States Government Accountability Office

GAO Report to Congressional Requesters

UNITED NATIONS

Renovation Planning 

Follows Industry 

Practices, but 

Procurement and 

Oversight Could 

Present Challenges 

November 2006 

 

GAO-07-31 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

November 2006

UNITED NATIONS

Renovation Planning Follows Industry 

Practices, but Procurement and 

Oversight Could Present Challenges 

Highlights of GAO-07-31, a report to 

congressional requesters 

The United Nations (UN) estimated 

in 2005 that renovating its 

headquarters will cost up to $1.75

billion. As the UN’s host country 

and largest contributor, the United

States has a substantial interest in 

the project’s success. In this

report, we (1) determine whether

the development of the Capital 

Master Plan (CMP) has been 

consistent with leading industry

practices, (2) examine factors that

led to changes in the cost estimate 

and determine whether the 2005

estimate was updated using 

industry practices, (3) review the 

status of financing of the 

renovation, (4) identify decisions 

needed for the renovation to

proceed, and (5) review UN

oversight and State monitoring 

efforts. 

To address these objectives, we

reviewed UN design and planning

documents, including the latest 

cost estimate, to compare them

with industry standards. To assess 

oversight, we reviewed OIOS and 

UN Board of Auditors reports and

met with UN officials. 

What GAO Recommends

GAO recommends that the

Secretary of State and U.S. 

Permanent Representative to the 

UN work with other member states 

to (1) identify a CMP procurement 

strategy to mitigate weaknesses in 

UN procurement processes and (2) 

ensure that OIOS receives

sufficient funding for its oversight 

of the CMP. State and the UN

agreed with our recommendations. 

UN officials continue to use leading industry practices in developing the UN 

headquarters renovation project, but reliance on existing UN procurement 

practices could impact the effective implementation of the renovation in the 

future. Since the CMP office relies on current UN procurement practices, 

implementation of future CMP procurements could become vulnerable to 

numerous UN procurement weaknesses that GAO previously reported in 

April 2006 (GAO-06-577), such as the lack of guidance for construction 

procurement in the procurement manual. 

The estimated total cost of the CMP increased from about $1.19 billion to 

almost $1.75 billion between 2002 and 2005 to reflect inflation arising from a 

later start date, refinements to the design, and a change in the renovation 

approach. The UN continued to follow construction industry practices to 

develop the 2005 cost estimate and has included expected elements. 

However, the cost estimate is still preliminary and will likely change. 

While the UN has passed a resolution expressing a preference for cash 

assessments, it has yet to decide how to finance the remaining renovation 

costs. In June 2006, the General Assembly passed a resolution stating that a

cash payment option would be the simplest and most cost-effective 

approach for funding the CMP. Under this approach, the UN would assess 

member states for the cost of the renovation through single- or multiyear 

payments. The amount the UN assessed member states would be likely 

based on each country’s rate for its annual regular budget contributions. 

The General Assembly plans to revisit the financing issue by the end of 2006. 

Without certain General Assembly decisions by the end of 2006, the 

renovation’s current schedule could be delayed and costs could increase. 

Specifically, a General Assembly decision on a financing arrangement for the 

total CMP budget would be needed to ensure that funds could be available 

by December 2007. Without these decisions, the CMP office cannot finalize 

a start date for the renovation. 

UN oversight entities have continued to oversee the CMP while the 

Department of State has monitored its progress. The Office of Internal 

Oversight Services (OIOS) has conducted audits on CMP procurements and 

has issued several reports of its findings and recommendations. However, 

OIOS relies on funds from the CMP budget and must negotiate for those 

funds with the UN budget office, which may impair its ability to secure 

sufficient funds. The UN Board of Auditors has also conducted oversight of 

the CMP office by reviewing its financial records and internal controls and 

has found no material weaknesses in its review. Similarly, State’s 

monitoring efforts have not identified any significant concerns, according to 

State officials. 

www.gao.gov/cgi-bin/getrpt?GAO-07-31.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Thomas Melito 

at (202) 512-9601 or melitot@gao.gov or

Terrell Dorn at (202) 512-6923. 
Contents 

Letter 1

Results in Brief 3

Background 5

Renovation Process Continues to Follow Leading Industry 

Practices but Faces Challenges Going Forward 10 

Cost Estimate Increased; Industry Practices Followed but Estimate 

Likely to Change 12 

The General Assembly Has Not Decided How to Finance 

Remaining Renovation Project Costs 16 

Decisions Needed by December 2006 to Maintain the Current Start 

Date and Avoid Increased Costs 20 

UN Entities Have Continued Oversight of the CMP and State Has 

Monitored CMP Progress 21 

Conclusion 24

Recommendations 25

Agency Comments 25 

Appendix I Scope and Methodology 27 

Appendix II Comments from the Department of State 29 

Appendix III Comments from the United Nations 32 

Appendix IV Comments from OIOS 34 

Appendix V GAO Contact and Staff Acknowledgments 36 

Tables 

Table 1: Comparison of 2002 and 2005 Estimated Total Project 

Costs by Cost Element 12 

Table 2: UN Appropriations for Headquarters Renovation, 2000-

2006 17 

Page i GAO-07-31 United Nations
Table 3: Approximate Yearly Cost to Member States of Cash 

Assessments 18

Table 4: Approximate Yearly Cost to the United States of Cash 

Assessments 18

Figures 

Figure 1: Site Plan of UN Headquarters 6 

Figure 2: CMP Time-Frame 7 

Figure 3: CMP Progress through the Five-Stage Renovation Project 

Since December 2002 8 

Abbreviations 

CMP Capital Master Plan 

OBO Bureau of Overseas Buildings Operations 

OIOS Office of Internal Oversight Services 

OPPBA UN Office of Program Planning, Budget and Accounts 

UN United Nations 

UNDC United Nations Development Corporation 

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Page ii GAO-07-31 United Nations
United States Government Accountability Office

Washington, DC 20548 

November 16, 2006 

The Honorable Frank R. Wolf 

Chairman 

Subcommittee on Science, the Departments of State, 

 Justice, and Commerce, and Related Agencies 

Committee on Appropriations 

House of Representatives 

The Honorable Richard G. Lugar 

Chairman 

Committee on Foreign Relations 

United States Senate 

The Honorable Cliff Stearns 

House of Representatives 

The United Nations (UN) headquarters complex in New York City neither 

conforms to current safety, fire, and building codes nor meets UN 

technology or security requirements. To address these concerns, the UN 

has developed the Capital Master Plan (CMP)—a comprehensive 

renovation of the entire complex. Since we last reported on the CMP in 

2003, the UN has moved forward with designing the renovation and 

updating the cost estimate. In 2005, the CMP office’s cost estimate for the 

entire project was approximately $1.75 billion. In 2006, the General 

Assembly appropriated an additional $100.5 million to continue design 

work and obtain space to temporarily relocate UN staff and activities 

during the renovation.1

 The CMP office currently plans to begin 

preparations for the renovation in mid-2007 and begin the construction 

work associated with renovating the existing buildings in early 2008. In 

November 2006, the CMP office updated the cost estimate to $1.88 billion.

We have previously reviewed UN efforts to develop the CMP and prepare a

cost estimate. In June 2001 and May 2003, we reported that UN renovation 

planning efforts had been reasonable and conformed to leading industry 

 1

United Nations General Assembly, Resolution Adopted by the General Assembly,

A/RES/60/256 (New York, N.Y.: May 8, 2006), and Resolution Adopted by the General 

Assembly, A/RES/60/282 (New York, N.Y.: Jun. 30, 2006).

Page 1 GAO-07-31 United Nations
practices.2

 We also recommended that the Secretary of State encourage 

the UN to provide its internal and external oversight offices with the 

resources needed to conduct effective oversight. In June 2006, we testified 

that effective implementation of the CMP is vulnerable due to weaknesses 

in existing UN oversight and procurement practices.3

 For example, we 

found that the UN has yet to incorporate guidance for construction 

procurement into its procurement manual. 

As the UN’s host country and largest contributor, the United States 

continues to have a significant interest in the success of the renovation. In

this report, we (1) determine whether the continued development of the 

CMP has been consistent with leading industry practices, (2) examine 

what factors contributed to the changes in the cost estimate from 2002 to 

2005 and determine whether the cost estimate was updated using industry 

practices, (3) review the status of financing of the planned renovation, (4) 

identify decisions needed for the renovation to continue as planned, and 

(5) review the UN’s efforts to oversee and the U.S. Department of State’s 

(State) efforts to monitor the planned renovation. 

To address these objectives, we reviewed pertinent UN design and 

planning documents, including the 2002 and 2005 cost estimates, and 

compared them with industry standards. We also interviewed UN officials 

and the CMP office’s program management consultant. We did not assess 

the cost estimate included in the Secretary-General’s 2006 progress report 

on the CMP.4

 To assess oversight and monitoring activities, we interviewed 

officials from the Office of Internal Oversight Services (OIOS), the UN 

Board of Auditors, and State. We conducted our work at the UN in New 

York City and at State in Washington, D.C., from August 2005 to October 

2006 in accordance with generally accepted government auditing 

standards. Appendix I provides detailed information on our methodology.

 2

GAO, United Nations: Planning for Headquarters Renovation is Reasonable: United

States Needs to Decide Whether to Support Work, GAO-01-788 (Washington, D.C.: Jun. 15,

2001); and GAO, United Nations: Early Renovation Planning Reasonable, but Additional 

Management Controls and Oversight Will Be Needed, GAO-03-566 (Washington, D.C.: May

30, 2003). 

3

GAO, United Nations: Weaknesses in Internal Oversight and Procurement Could Affect 

the Effective Implementation of the Planned Renovation, GAO-06-877T (Washington, D.C.:

Jun. 20, 2006). 

4

As our report was going to press, the UN released the Secretary-General’s Fourth Annual

Progress Report on the Implementation of the Capital Master Plan, A/61/549. 

Page 2 GAO-07-31 United Nations
UN officials continue to follow leading industry practices in the 

development of the UN headquarters renovation project, but the CMP 

office’s reliance on existing UN procurement practices could impact the 

effective implementation of the renovation in the future. We found that UN

officials continued to follow leading construction industry practices such 

as involving stakeholders in the design of the project and having a team 

review the ongoing design work. We also found that since the CMP office 

relies on current UN procurement practices, implementation of future 

CMP procurements could become vulnerable to numerous UN 

procurement weaknesses that we reported on in April 2006.5

 For example, 

the UN has yet to incorporate guidance for construction procurement into 

its procurement manual, and the chairman of the UN procurement 

contract review committee has stated that his committee did not have the

resources to keep up with its expanding workload. In addition, the UN had 

not established an independent process to consider vendor protests that 

could alert senior UN officials of failures by procurement staff to comply 

with stated procedures. 

Results in Brief 

The estimated total cost of the CMP increased from about $1.19 billion to 

almost $1.75 billion—an almost $560 million increase—between 2002 and 

2005 to reflect inflation arising from a later start date, refinements to the 

design, and a change in the renovation approach. The UN changed its 

renovation approach because of difficulties in securing low-cost off-site 

space to temporarily relocate most UN staff and activities. The UN has 

continued to follow construction industry practices to develop and update

the 2005 cost estimate and has included expected elements such as 

construction, management, and contingency costs. However, the cost 

estimate is still preliminary and will likely change to reflect completed 

design work and estimates of future market conditions. 

While the General Assembly has passed a resolution expressing a 

preference for cash assessments, it has yet to decide how to finance the 

remaining renovation costs. In June 2006, the General Assembly passed a

resolution stating that a cash payment option would be the simplest and 

most cost-effective approach for funding the CMP. Under this approach, 

the UN would assess member states for the cost of the renovation through 

single- or multiyear payments. The amount the UN assessed member 

states would be likely based on each country’s rate for its annual regular 

 5

GAO, United Nations: Procurement Internal Controls Are Weak, GAO-06-577 

(Washington, D.C.: Apr. 25, 2006). 

Page 3 GAO-07-31 United Nations
budget contributions. For example, if the General Assembly were to 

decide on multiyear payments, the U.S. would be assessed a total of $302 

million over 5 years, based on the UN’s 2005 cost estimate. Since the UN 

likely will not have all of the funds required for the renovation before 

construction work begins, the UN may secure a commercial letter of credit 

to assure its construction contractors that it can pay them for their work. 

This letter of credit may also act as a source of short-term external 

borrowing in the event of temporary cash shortfalls. If the General 

Assembly decides to finance the renovation using cash assessments, the 

United States could explore the viability of renewing a prior loan offer to 

the UN to act as a line of credit, which could decrease the cost of any 

commercial borrowing. The General Assembly plans to revisit the issue of 

financing the CMP by the end of 2006. 

Without certain General Assembly decisions by the end of 2006, the 

renovation’s current schedule could be delayed and costs could increase. 

Specifically, a General Assembly decision would be needed on a financing 

arrangement and the total CMP budget to ensure that funds could be 

available by December 2007. Without these decisions, the CMP office 

cannot finalize a start date, which may complicate the process of leasing 

off-site space to temporarily relocate some UN staff and activities. In 

addition, the CMP office will be unable to proceed with renovation work 

on the complex. A delay in the beginning of renovation work could result 

in increases to the project’s cost. 

UN oversight entities have continued to oversee the CMP while State has 

monitored CMP progress. The Office of Internal Oversight Services 

(OIOS), an internal UN oversight entity, has conducted audits on CMP 

procurements and has issued several reports of its findings and 

recommendations. OIOS found that the standard procurement documents 

needed to be modified to reflect the project’s complexity and size but that 

the process for procuring consultants for the CMP had been fair. OIOS 

also concluded that the CMP office had generally used its resources in 

accordance with UN financial rules and regulations. However, OIOS relies 

on funds from the CMP budget to conduct effective oversight of the CMP, 

which may impair its ability to secure sufficient funds. In addition, UN 

rules and regulations severely limit OIOS’s ability to reallocate resources 

from different sources and apply them to high-risk areas as they arise. The

UN Board of Auditors, an external oversight entity, has also conducted 

oversight of the CMP office by reviewing its financial records, compliance 

with UN regulations and rules, and internal controls and has found no 

material weaknesses in its review. State has continued to monitor the CMP

by reviewing the UN’s security enhancements and financing arrangements 

Page 4 GAO-07-31 United Nations
and the quality of the renovation planning and cost estimating process. 

State’s monitoring efforts have not identified any significant concerns, 

according to State officials. 

In this report, we make recommendations to the Secretary of State and the 

U.S. Permanent Representative to the United Nations to work with other 

member states to (1) identify a procurement strategy for the CMP to 

mitigate the impact of weaknesses in the UN procurement processes and 

(2) to ensure that OIOS receives sufficient funding for its oversight of the 

CMP. 

The Department of State, the UN, and OIOS provided written comments 

on a draft of this report, which are reproduced in appendixes II through IV. 

They generally concurred with our findings and recommendations. State 

and the UN also provided us with a number of technical suggestions and 

clarifications that we have addressed in this report, as appropriate. 

The original UN headquarters complex in New York City was considered 

among the most modern facilities when construction was completed in 

1952; however, it no longer conforms to current safety, fire, and building 

codes and does not meet UN technology or security requirements. 

Although originally designed to hold 70 member states, the complex 

currently accommodates the needs of 192 member states and 

approximately 4,700 UN staff and also hosts nearly 1 million visitors per 

year from around the world. The United States financed construction of 

the original complex—the General Assembly, Secretariat, and Conference 

Building—by providing the UN with a no-interest loan. The rest of the 

present-day complex—the Dag Hammarskjöld Library, the underground 

North Lawn Extension, South Annex, and Unitar Building—was built 

between 1960 and 1982 and was funded through the UN regular budget or

private donations. 

Background 

History of the UN 

Headquarters Complex 

Page 5 GAO-07-31 United Nations
Figure 1: Site Plan of UN Headquarters 

Sources: GAO and UN.

North Lawn

Extension

Unitar

Building

UN buildings scheduled for renovation

Conference

Building

General

Assembly

Secretariat

First Avenue

FDR Drive

East River

FDR Drive

North

South

AnnexLibrary

42nd Street

48th Street

Under the CMP, the UN intends to renovate the complex to make it 

conform to current safety, fire, and building codes and meet UN 

technology and security requirements (see fig. 1). This process will involve 

upgrading or replacing all major building systems, including electrical, 

plumbing, fire suppression, heating and air conditioning, as well as 

reinforcing structural integrity and removing asbestos from the entire 

complex. As shown in figure 2, the General Assembly first proposed a 

comprehensive renovation in June 2000. Under the current schedule, work 

associated with the renovation will begin in early 2007 with an estimated 

completion date of 2014.

Page 6 GAO-07-31 United Nations
Figure 2: CMP Time-Frame 

Source: GAO based on UN data.

2000 2001 2002 2003 2004 2005 2006 2007 2008 2014

UN proposed 

headquarters

renovation.

General Assembly 

authorized 

conceptual 

designs and cost 

assessment.

NY State legislature failed to 

enact legislation necessary 

for UN Development 

Corporation to construct 

new building.

General Assembly 

endorsed CMP and 

funded continued 

design with singlephased approach, that 

relied on the UN 

Development 

Corporation for 

temporary space.

General Assembly 

reaffirmed CMP, 

endorsed 

multiphased 

approach and 

deferred financing 

decision to end of 

2006.

CMP to select 

construction manager, 

General Assembly to 

decide on financing.

Member states to pay first 

construction assessment.

Staff to move 

to temporary 

space, UN to 

begin 

renovating 

complex.

UN to 

begin 

temporary 

North 

Lawn 

building.

Estimated 

completion date 

for renovation.

Present

Future milestones

The Renovation Process In June 2001 and May 2003, we reported that the UN’s early renovation 

planning was reasonable and consistent with leading industry practices.6

By 2003, the UN had completed the first stage of a five-stage renovation 

process—conceptual planning. In December 2002, the General Assembly 

authorized the Secretary-General to proceed with the second stage, design. 

According to CMP officials, as of July 2006, the project was about 60 

percent through this stage (see fig. 3).

 6

GAO-01-788 and GAO-03-566. 

Page 7 GAO-07-31 United Nations
Figure 3: CMP Progress through the Five-Stage Renovation Project Since 

December 2002

Stage 2

Design

Stage 3

Procurement

Stage 4

Construction

Stage 5

Start-up

Stage 1

Conceptual

planning

Sources: Federal Facilities Council Technical Report #139, GAO, Art Explosion and Corel (clip art).

CMP as of

Dec. 2002

CMP as of

July 2006

The five stages of a renovation project are summarized as follows: 

Stage 1: Conceptual Planning—Feasibility studies are conducted to 

determine scope of work and alternative design solutions incorporating 

requirements for performance, quality, cost, and schedule. Several 

alternative design solutions are identified, and one approach is generally 

selected. 

Stage 2: Design—The preferred design solution is further developed, 

culminating in the development of final construction documents from 

which construction services can be solicited. 

Stage 3: Procurement—Owner procures construction services and long 

lead-time equipment, such as unique or large electrical or mechanical 

equipment. 

Stage 4: Construction—Contractors and consultants are employed to 

execute the renovation based on the construction documents. 

Page 8 GAO-07-31 United Nations
Stage 5: Start-up—Building is occupied and tests are conducted on 

individual and systems components to ensure that they are operating 

correctly. 

In its December 2002 authorization, the General Assembly decided to 

implement the CMP and execute the design phase. In developing design 

documents for the renovation, the General Assembly instructed the CMP 

office to include options that the General Assembly has not yet decided

whether to include in the renovation. The options were divided into three 

categories: security, system redundancies, and sustainability and include 

additional blast protection, backup equipment for building 

communications systems, increased coverage and reliability for 

emergency power, higher efficiency equipment, and on-site alternative 

energy sources. These options could enhance operational and working 

conditions but were not considered integral to the project at the time. 

Because of difficulties in securing off-site space to temporarily relocate 

UN staff and activities, the UN has changed its renovation approach. In 

May 2003, we reported that the UN had decided on a single-phased 

approach to the renovation, in which most UN staff and activities would 

be temporarily relocated so that the buildings could be renovated 

concurrently.

7

 The U.N. Development Corporation8 would have built a new 

building, referred to as UNDC-5, adjacent to the UN headquarters where 

UN activities could continue during the renovation. However, the UN 

determined that this option was no longer viable when the corporation 

could not secure approval for the new building from the New York State 

legislature in time for the beginning of construction. In June 2006, the 

General Assembly approved proceeding with the renovation project using 

a multiphased approach. This approach consists of renovating the 

Secretariat building, 10 floors at a time, and moving UN staff and functions 

displaced by the renovation to rented commercial office space and a 

temporary building to be constructed on the North Lawn above the 

existing North Lawn extension. The CMP office has modified its design 

documents to reflect this multiphased renovation approach and moved 

forward with completing the required design details. This information will 

be used in the procurement process to solicit construction services. 

 7

GAO-03-566. 

8

The U.N. Development Corporation is a New York State nonprofit public benefit 

corporation tasked with constructing and leasing office space to the UN. 

Page 9 GAO-07-31 United Nations
Consistent with our 2001 and 2003 reviews of the early planning for the 

renovations, we found that UN officials continue to follow leading industry 

practices in the development of the UN headquarters renovation project.

These include involving those impacted by the project, using a competitive 

procurement process, and using a team to review the design. However, 

reliance on existing procurement processes and the vacancy of the 

leadership post could create challenges as the project proceeds. 

The CMP office has continued to consult with UN managers and other 

affected entities, such as the city of New York, in the various aspects of 

planning and designing the renovation to help ensure that the project 

meets their needs. The CMP office has solicited input from officials in 

various UN departments during the design review process. In addition, 

while not required, it is UN policy to follow city and state codes. To 

facilitate the implementation of the project, the CMP office continues to 

coordinate and meet with the city and state of New York to discuss the 

UN’s renovation plans. The CMP office has also taken steps to ensure that

information about the renovation is readily available to stakeholders and 

the public. It has established a Web site, www.un.org/cmp, which explains 

the renovation project and provides related UN documents and 

opportunities to direct comments to the CMP office. 

The CMP office has continued to use a competitive process to procure 

program management, planning, and design services for the renovation 

project. Competition among multiple firms is important for obtaining a 

quality product at a reasonable price. As part of the competitive process, 

the CMP office and UN officials issued requests for proposals, obtained 

proposals from multiple firms, evaluated the proposals based on 

established criteria, and selected firms to perform the work. OIOS 

reviewed the CMP procurements and reported that the process was fair 

and transparent. To increase visibility of the procurements related to the 

CMP, the procurement division has created a page on its Web site, 

www.un.org/depts/ptd/, for CMP awards that lists information such as the 

contractor, subject of the contract, and award amount. The CMP office is 

also exploring the possibility of posting copies of the awarded contracts 

on this Web site. 

Renovation Process 

Continues to Follow 

Leading Industry 

Practices but Faces 

Challenges Going 

Forward 

Those Affected by the 

Project Involved in its 

Development 

Competitive Procurement 

Used but UN Procurement 

Process Has Weaknesses 

Page 10 GAO-07-31 United Nations
Although the CMP office has used a competitive process to date, we 

reported in April 2006 that the UN’s procurement process has numerous 

weaknesses.9

 For example, the UN has yet to incorporate guidance for 

construction procurement into its procurement manual, and the chairman

of the UN procurement contract review committee has stated that his 

committee did not have the resources to keep up with its expanding 

workload. In addition, the UN had not established an independent process 

to consider vendor protests that could alert senior UN officials of 

procurement staff’s failures to comply with stated procedures. The UN is 

currently in the process of hiring a construction manager to oversee the 

day-to-day project activities and the subcontractors performing the 

construction work. CMP officials stated that as the project progresses, the 

CMP office will continue to be responsible for the daily oversight and 

administration of the CMP contracts. In addition, according to a UN 

procurement official the UN procurement division will be involved in 

processing contract amendments and ensuring compliance with UN 

procurement rules and procedures. According to CMP officials, to address 

resource shortfalls in the UN procurement division, funding has been 

made available from the CMP budget to hire three new staff with 

construction-related experience. 

Experienced Team in Place 

to Review Renovation 

Design, but Vacancy in 

Leadership Post Exists 

Within the UN, the CMP office manages the development and execution of

the renovation project, including the review of the ongoing renovation 

design. The CMP office has supplemented its in-house staff with a 

consultant to assist with design review and cost estimate development. 

While the UN was considering different renovation approaches, the CMP 

office instructed its contractors to incorporate flexibility in the design so it 

could be tailored to work with any of the approaches being considered. 

This ensured that when the UN selected a multiphased approach in August 

2006, there was little need for redesign. 

Although the CMP office has continued moving the renovation project 

forward, it has often lacked an executive director. The executive director 

provides leadership, support, and direction to the project, and acts as the 

primary representative of the CMP to the General Assembly and UN 

stakeholders. In February 2003, the Secretary-General appointed the first 

executive director for the CMP, but he left after about a year. The position 

remained vacant until September 2005 when the UN hired a CMP 

 9

GAO-06-577. 

Page 11 GAO-07-31 United Nations
executive director with experience working on large construction and 

renovation projects in New York City. However, he left in June 2006 and 

the position is currently vacant. The current staff are now performing the 

executive director’s duties as well as their own. UN officials have stated

that they recognize the importance of having a CMP executive director and 

are working to fill the position. 

The estimated total cost of the CMP increased from about $1.19 billion to 

almost $1.75 billion—an almost $560 million increase—between 2002 and 

2005 to reflect inflation arising from a later start date, refinements to the 

design, and a multiphased renovation approach. In developing the 2005

estimate, the CMP office followed industry practices such as defining the 

work required and reviewing the estimate. In November 2006, the 

Secretary-General released a progress report on the CMP that included an

updated cost estimate of $1.88 billion. This estimate was developed before 

the design phase was completed; therefore, it is still preliminary and likely 

to change. 

As shown in table 1, the estimated total cost of the CMP including the 

scope options increased from about $1.19 billion to about $1.75 billion 

between 2002 and 2005. 

Table 1: Comparison of 2002 and 2005 Estimated Total Project Costs by Cost 

Element 

Cost Estimate 

Increased; Industry 

Practices Followed 

but Estimate Likely to 

Change 

Cost Estimate Increased 

Due to Changes in 

Schedule, Refinements to 

the Design Project, and 

Approach 

Dollars in millions 

Increase in estimate 

Cost element

2002 

estimate

2005 

estimatea

Inflation 

2002-2004 

Design

refinement

Project 

phasing 

Constructionb$537.4 $734.6 $59.1 $55.8 $82.6

Professional fees and 

management

c

97.6 144.3 10.8 9.5 26.0

Contingencyd143.0 184.4 15.7 14.8 10.9

Swing spacee96.0 164.3 N/A N/A 68.3

Scope optionsf144.0 161.0 17.0 N/A N/A

Subtotal $1,018.0 $1,388.6 $102.6 $80.1 $187.8

Escalationg 175.0 360.0

Total $1,193.0 $1,748.6h

Source: UN CMP Office. 

Note: N/A = not applicable. 

Page 12 GAO-07-31 United Nations
a

Estimate is current as of early 2005 and thus does not include 2005 inflation. 

b

Construction—cost of the labor and materials for the specific renovation work. 

c

Professional fees and management—costs for CMP office staff and overhead, including leasing of 

office space; all UN staff support including procurement and legal services; project management 

consultant services that enhance the CMP office’s capabilities; planning and design services; and 

project management fees. 

d

Contingency—cost to account for unforeseen conditions and other changes that might arise during 

the renovation project. 

e

Swing space—cost of relocating staff and operational functions displaced by the renovation into 

temporary space. The swing space approach varied significantly from 2002 to 2005.

f

Scope options—cost of optional work being considered by the UN for inclusion in the renovation. 

g

Escalation—cost to account for the effect of inflation over the life of the project, on the price of

materials and labor. Escalation in the 2005 estimate covers the period 2005 to 2014. 

h

In the third annual progress report on the CMP, A/60/550, the Secretary-General reports the revised 

project cost estimate to be $1,587.8 million. However, this estimate does not include the scope 

options. 

The change in the scheduled start date and project duration increased 

estimated costs due to inflation. In August 2002, the CMP office projected

that the renovation project would begin in 2005 and be completed in less 

than 5 years. By December 2005, the CMP office had adjusted the schedule 

to a 7-year multiphased approach. The CMP office’s cost estimator 

determined that the New York City construction industry for projects 

similar to the UN renovation experienced about 11 percent inflation 

between 2002 and 2004, which accounts for almost $103 million of the 

estimated cost increase. In addition, the escalation costs in the estimate 

increased by $185 million to account for the expected inflation over the 

duration of the project, including the additional 2 years that were added to

the project schedule for the multiphased approach. Any future changes 

that extend the start date or duration of the renovation would be expected 

to further increase the cost of the project. 

We have previously reported that changes in the cost estimate should be 

expected as the design progresses and more project details become 

known.10 The 2002 estimate is based on a broad conceptual design, 

whereas the 2005 estimate was based on a more detailed project design. 

For example, the 2005 estimate was based on the actual number and size 

of the systems needed, rather than an overall cost estimate for the heating 

and air conditioning systems, as in the 2002 estimate. These types of 

design refinements increased the cost estimate by about $80 million. The 

 10GAO-01-788 and GAO-03-566. 

Page 13 GAO-07-31 United Nations
Secretary-General’s third annual progress report on the CMP noted that 

the process of controlling the scope and cost of the CMP would continue 

to be part of the project management process during design development 

and contract document preparation. According to CMP officials, efforts 

are under way to reduce the construction cost through value engineering 

and detailed scope review.11

The change to using a multiphased renovation approach, in which parts of 

the buildings will be renovated while other parts remain in operation, 

increased the project’s complexity and required the CMP office to make 

numerous adjustments to the estimate. For example, 20 percent was added 

to the expected cost of replacing the window structure on the outside of 

the Secretariat building because it will have to be done in more than one 

stage and additional waterproofing will be required. There was also a cost

associated with isolating those floors being renovated from those that will 

be occupied by UN staff during the renovation. In addition, the source of

temporary space needed for UN complex occupants during the renovation

changed after the 2002 estimate was completed. In the 2002 estimate, the 

UN had expected to lease about 800,000 square feet of office and 

conference space in the new UNDC-5 building at below market rates. 

Since the proposed UNDC-5 building will not be built and the rental rates 

in New York City have increased considerably, the 2005 estimate reflects 

the UN’s revised plan to (1) lease about 228,000 square feet of office space 

and 80,000 square feet of library space at market rates for displaced staff 

and functions and (2) construct a 100,000 square foot temporary building 

on the UN complex to meet the conference needs of the UN during the 

renovation.12 While the projected amount of necessary office space has 

decreased since the last estimate, it will be needed for a longer period of 

time, and the projected rental rates have increased substantially. The CMP 

office estimated that the change to a multiphased renovation approach 

added about $188 million to the 2005 estimated CMP cost. 

In November 2006, the Secretary-General’s fourth annual progress report 

on the CMP updated the total project cost estimate from about $1.75 

 11Value engineering is the process of identifying opportunities to remove unnecessary costs

while assuring the quality, reliability, and performance of the project. 

12At the completion of the renovation, this temporary building is expected to be removed. 

Page 14 GAO-07-31 United Nations
billion to about $1.88 billion, an increase of approximately $128 million.13

According to the report, this increase is due primarily to increases in the 

cost of swing space ($50 million) and further development of the scope 

options ($69 million). The report also identifies some areas where the 

project cost is at risk of increasing further. For example, the UN would 

need to add a visitor screening area to the renovation project, if the 

proposed visitors’ center, which includes a visitor screening area, is not 

constructed.14

The CMP office continues to follow leading industry practices in updating 

the project cost estimate. In 2003, we reported that the UN had defined the 

work to be done, developed a standardized format for the cost estimate, 

had the estimate reviewed, and reported the estimate including its range of 

accuracy. Using the same leading industry practices, the CMP office 

updated the previous cost estimate to reflect the multiphased approach. 

The 2005 cost estimate includes relevant cost elements such as design, 

construction, overhead, management, contingency and escalation. 

Although the cost of new furniture and equipment is not included in the 

cost estimate for the CMP, the UN plans to purchase them for the 

renovated space through its regular budget. The CMP office is working 

with the various UN departments to estimate these costs for inclusion in 

the departments’ future budget submittals. 

Following leading industry practices, the CMP office is continuing to 

update the total project cost estimate at major milestones in the project. 

According to the Construction Industry Institute, the final cost of any 

project at this stage of design may vary from plus or minus 20 to 30

percent of the estimate. The CMP office recently updated the project cost 

estimate on the basis of the ongoing design work. In accordance with 

industry practice, the CMP office will again update the cost estimate after 

the completion of the construction documents. This estimate will be based 

on actual quantities of materials that have been identified and the range of 

Cost Estimate Updated 

Following Industry 

Practices

Cost Estimate Still 

Preliminary and Likely to 

Change 

 13The UN provided us with a copy of this detailed report as our report was going to press;

therefore, we did not have sufficient time to analyze the new information. See UN Doc.

A/61/549. 

14The proposed new visitors’ center was offered as a donation to the UN and is separate 

from the proposed renovation. 

Page 15 GAO-07-31 United Nations
accuracy of this estimate is expected to increase to plus or minus 15 to 20

percent. In addition, CMP officials stated that they are planning to have 

this estimate independently reviewed. 

Several uncertainties outside the UN or CMP office’s control could also 

have a significant impact on the final cost of the project. The decreased 

availability of office space in mid-town Manhattan has driven up rental 

rates, which could make it difficult to procure the space necessary to 

relocate staff during the renovation at the 2005 estimated cost. In addition,

construction costs could increase if the impending redevelopment of the 

World Trade Center site limits construction resources. 

While the General Assembly has passed a resolution expressing a 

preference for cash assessments, it has yet to decide how to finance the 

bulk of the renovation. Under the cash assessment approach, each 

member state would likely be assessed the cost of the renovation based on 

the rate of its annual regular budget contributions to the UN. In addition, 

to assure the UN’s contractors that it can pay them for their work, the UN 

may obtain a commercial letter of credit. If the General Assembly decides 

to finance the renovation using direct assessments, the United States 

could explore the viability of renewing a prior loan offer to the UN to act 

as a line of credit, which could decrease the cost of any commercial 

borrowing. The General Assembly plans to revisit the issue of financing 

the CMP by the end of 2006. 

While the General Assembly has passed a resolution stating that cash 

assessments would be the simplest and most cost-effective approach for 

funding the CMP, it has yet to decide how to finance the remaining $1.43 

billion, which excludes scope options. The UN has already assessed 

member states for $152 million of the estimated renovation cost and 

obtained $8 million from the UN regular budget. In June 2006, the General

Assembly decided to defer the issue of funding the CMP to the 61st General 

Assembly session, which began in September 2006. 

The General 

Assembly Has Not 

Decided How to 

Finance Remaining 

Renovation Project 

Costs 

The General Assembly Has 

Not Decided on a 

Financing Arrangement for 

Its Remaining Renovation 

Project Costs 

Page 16 GAO-07-31 United Nations
The UN appropriated a total of $160 million between 2000 and 2006 for 

various prerenovation activities (see table 2).15

Table 2: UN Appropriations for Headquarters Renovation, 2000-2006 

Dollars in millions 

Year Purpose

Appropriation

amount

2000 Design concepts and cost analysis $8a

2003 Continued design, project management and 

preconstruction services 

25.5b

2005 Continued design, project management and 

preconstruction services 

17.8b

2005 Continued design, project management and 

preconstruction services 

8.2b

2006 Design, preconstruction and swing space 23.5b

2006 Construction and fit-out of North Lawn building; lease, 

design and fit-out of off-site library and office space 

77b

Total $160

Source: UN.

a

Funded through an allotment from the regular UN budget. 

b

Funded through cash assessments on member states specifically for the CMP. 

Member States 

Considering Cash 

Assessments to Finance 

Renovation 

In June 2006, the General Assembly passed a resolution stating that a cash

payment option, based on single- or multiyear assessments, would be the 

simplest and most cost-effective approach to funding the CMP. Under this 

approach, member states would pay their portion of the renovation in 

single- or multiyear payments. According to the CMP office, this could 

lower member states’ total assessments because the UN could invest these 

funds and earn interest on them, if received in advance of use.16 For 

example, member states would need to pay the UN $1.24 billion in 2007 to

fund the remaining $1.43 billion renovation cost if the project was funded 

 15These assessments were based on the rate of their annual dues to the UN. The United 

States currently contributes 22 percent of the UN’s annual operating budget. The 

President’s fiscal year 2007 budget allocated $22 million to fund the U.S. portion of the

$100.5 million that the UN appropriated in calendar year 2006; however, the fiscal year 2007

budget has not yet been approved. 

16To calculate the payment rate, the UN assumed annual interest income of 3.5 percent on 

invested contributions. 

Page 17 GAO-07-31 United Nations
with one lump-sum assessment. As table 3 shows, the total amount 

member states would be assessed increases as the number of assessment 

periods increases, since there is less time for interest to accrue and offset 

costs. 

Table 3: Approximate Yearly Cost to Member States of Cash Assessments 

Dollars in millions 

Years of

assessments 2007 2008 2009 2010 2011 

Total

assessed

Estimated 

interest 

income

Total

available

1 year $1,243 0 0 0 0 $1,243 $184 $1,428

4 years 357 357 357 279 0 1,350 78 1,428

5 years 286 286 286 286 231 1,373 55 1,428

Source: GAO analysis and United Nations A/60/550, Third Annual Progress Report on the Implementation of the Capital Master Plan, 

November 11, 2005. 

Note: Numbers do not include cost of scope options and may not add up due to rounding. 

If the United States paid for its portion of the renovation in one lump sum, 

Table 4 shows that it would owe the UN approximately $274 million in 

2007 under the 2005 cost estimate. If the United States paid over five years,

it would pay a total of $302 million. 

Table 4: Approximate Yearly Cost to the United States of Cash Assessments 

Dollars in millions 

Years of assessments 2007 2008 2009 2010 2011 Total assessed

1 year $274 0 0 0 0 $274

4 year 79 79 79 61 0 297

5 year 63 63 63 63 51 302

Source: GAO analysis of United Nations A/60/550, Third Annual Progress Report on the Implementation of the Capital Master Plan,

November 11, 2005. 

Note: Calculations are based on the United States paying 22 percent of the renovation’s cost. 

Numbers may not add up due to rounding. 

If the General Assembly decides to finance the renovation through 

multiyear assessments, the UN may use a commercial letter of credit to 

demonstrate to its construction contractors that it has funding available 

for the project before construction begins and to meet short-term 

Page 18 GAO-07-31 United Nations
financing needs.17 Consistent with U.S. industry practice, construction 

contractors are not expected to agree to begin work without proof that the 

UN can pay the entire cost of the renovation work. To purchase a letter of

credit, the UN would pay a fee based on the total amount of the letter of 

credit and the degree of risk the lender estimates the UN represents as a 

borrower. According to UN officials, the transaction fee associated with a 

letter of credit could range from $3 to $21 million, depending on whether 

or not a member state loan is available to back up the letter of credit. The 

cost of these fees has not been included in the UN’s cost estimate for the 

renovation. If the UN decides to purchase a letter of credit, these fees 

would represent an additional yearly cost to the member states. According 

to the CMP office, the fees would decrease over time as the UN pays for 

portions of the project, thus decreasing the amount it would need to have 

covered by a letter of credit. 

In addition, the Secretary-General has noted that the UN would need a 

working capital reserve if the General Assembly agreed to multiyear 

assessments. In the event of delays in member state payments, the UN 

periodically may not have sufficient funds to pay contractors. A working 

capital reserve of $45 million could be used to cover temporary cash flow 

shortages. Subsequently, the letter of credit could also supplement shortterm cash flow needs in the event of delays in member state payments. 

Under such circumstances, the UN could rely on the commercial letter of 

credit as a source of short-term borrowing to pay its contractors and then 

repay the lender with interest when member states pay their assessments. 

A Renewed U.S. Loan 

Offer Could Reduce Cost 

of UN Commercial 

Borrowing 

If the UN decides to finance the renovation using cash assessments, the 

United States could explore the viability of renewing a prior loan offer to 

the UN, which could decrease the cost of a commercial letter of credit or 

short-term borrowing. In March 2005, the U.S. offered the UN a $1.2 billion

loan at 5.54 percent interest that could act as a line of credit or a loan 

guarantee.

18 The UN had anticipated receiving a noninterest-bearing loan 

 17Construction contractors would be able to draw on the letter of credit if the UN is unable 

to pay them on time and in full. 

18While the original U.S. loan offer to the UN was authorized for $1.2 billion, subsequent 

legislation stipulated that the Secretary of State must notify Congress of the 2005 cost of 

the renovation and any cost containment measures if a U.S. loan to the UN exceeds $600 

million for the renovation. The Senate also passed a nonbinding “sense of the Senate” 

resolution stating that the amount of any loan for the UN renovation should not exceed 

$600 million. Sec. 412, Pub. L. 109-108, Science, State, Justice, Commerce and Related

Agencies Appropriations Act, 2006.

Page 19 GAO-07-31 United Nations
from the United States, and the General Assembly did not accept the U.S.

offer. Although member states are no longer considering a U.S. loan to 

finance the renovation, if the UN were to accept a renewed loan offer, the 

UN could use it to reduce the cost of commercial borrowing needed under 

a multiyear cash assessment plan. The UN would represent a lower credit 

risk, and commercial lenders would likely charge the UN less to purchase 

a letter of credit. In addition, the UN would likely pay less to arrange 

short-term borrowing if it needed to borrow funds to pay its construction 

contractors. 

The United States could explore renewing its loan offer because Congress 

appropriated $6 million to cover the cost of the loan and directed that the 

funds remain available until spent.19 However, under current U.S. law, U.S. 

assessments cannot go toward interest payments on UN external 

borrowing, including a loan from the United States. While Congress passed 

a statute for fiscal year 2005 specifically exempting U.S. assessments for 

the renovation from this provision, State Department officials stated that 

this is an annual provision that was not renewed for fiscal year 2006. 

The CMP’s current schedule could be delayed and costs could increase if 

the General Assembly does not make certain decisions by the end of 2006. 

Specifically, the UN would need a decision by the General Assembly on a 

financing arrangement and a total CMP budget to ensure that funds could 

be available by December 2007 so that the UN can procure construction 

services.20

Without a General Assembly decision on a financing arrangement and 

approval of a total CMP budget by the end of 2006, the CMP office may not 

be able to determine a start date for renovation work. The CMP office 

plans to temporarily move UN staff and activities to off-site office space 

during the renovation. However, without a start date, it may be more 

Decisions Needed by 

December 2006 to 

Maintain the Current 

Start Date and Avoid 

Increased Costs 

 19This amount was appropriated to cover the cost of a U.S. loan to the UN, including the 

risk of the borrower defaulting. To offer a loan guarantee to the UN, the State Department

and the Office of Management and Budget would need to (1) establish the terms of the loan

guarantee, including the amount guaranteed, interest rate, maturity, repayment schedule, 

and default risk profile of the borrower and (2) compute the net present value cost of the 

offer in accordance with the Federal Credit Reform Act of 1990. 

20The CMP office is also awaiting the General Assembly’s decision on whether to include 

the scope options in the renovation. Inclusion of these options would increase the total 

cost of the renovation. 

Page 20 GAO-07-31 United Nations
difficult for the CMP office to lease and prepare this space in an efficient 

and timely manner, which could delay the start date and increase project 

costs. According to the current CMP schedule, the UN would sign leases 

for temporary space by the end of 2006, begin preparing that space in early 

2007, and relocate no later than early 2008. 

The start of renovation work could also be delayed if the General 

Assembly does not decide on a financing arrangement that ensures funds 

are available for the CMP by December 2007. To remain on the current 

schedule, the CMP office would need the first assessment paid by the end 

of 2007. A delay in the beginning of renovation work is likely to increase 

the project’s cost due to future inflation and overhead costs. As previously 

discussed, a significant portion of the increase in the 2005 cost estimate 

was due to moving the start date of the renovation from 2005 to 2008. The 

UN’s most 2005 cost estimate applies an inflation rate of 4 percent for 

2007. 

OIOS and the UN Board of Auditors have continued their oversight of the 

CMP since 2003. However, the extent to which OIOS must negotiate with 

the UN Office of Program Planning, Budget, and Accounts (OPPBA) for 

future funding could affect OIOS’s ability to conduct effective oversight of 

the CMP. In addition, State has continued to monitor the CMP and inform 

U.S. policy on the renovation. 

OIOS has been conducting oversight of the CMP office since 2003 and has 

not found any material weaknesses in its work.21 Specifically, OIOS has 

reviewed draft procurement documents and participated in regular 

meetings with CMP, UN Procurement Services, and Office of Legal Affairs

officials concerning the contracting of design and consulting services. 

OIOS found that the draft procurement documents needed to be modified 

to reflect the project’s complexity and size. OIOS also found that the CMP 

office’s process for procuring consulting services, such as a real estate

broker to find temporary space for UN activities, was fair. Further, OIOS 

concluded that the CMP office had generally used its resources in 

UN Entities Have 

Continued Oversight 

of the CMP and State 

Has Monitored CMP 

Progress 

OIOS Has Conducted 

Oversight of the CMP 

Office 

 21OIOS conducts oversight of UN activities that are under the authority of the SecretaryGeneral through monitoring, inspection, and evaluation. OIOS submits its reports to the 

Secretary-General; they are also available to member states upon request. 

Page 21 GAO-07-31 United Nations
accordance with UN financial rules. Currently, OIOS is developing an audit 

plan to guide its oversight during the construction phase, according to 

OIOS officials. OIOS will need additional staff with expertise in 

construction oversight as the work becomes more technical and complex 

and is considering hiring an outside consulting firm to assist with its 

oversight responsibilities as the renovation proceeds. 

OIOS’s Oversight Impaired 

by Its Funding 

Arrangement 

OIOS relies on funds from the CMP budget to conduct effective oversight 

of the CMP, which may impair its ability to secure sufficient funds. 

Generally, OIOS derives its funding through its regular budget and through 

extrabudgetary resources that come from the budgets for a variety of 

specific projects and activities, including the CMP office. To oversee the 

CMP, OIOS submitted work plans to the OPPBA and requested 

extrabudgetary funds from the CMP budget. OIOS noted in October 200422

and August 200523 that it required two full-time auditors to provide 

adequate audit coverage of the CMP. However, OPPBA determined that 

only one auditor was needed to complete the oversight activities that OIOS 

proposed, given the early stage of the CMP, according to an OPPBA 

official. 

We previously reported that OIOS’s reliance on extrabudgetary funds and

limitations on how OIOS may spend its funds constrains its ability to 

conduct effective oversight.24 When relying on extrabudgetary funds, OIOS 

must obtain permission to perform audits or investigations from the 

managers of funds and programs, and negotiate the terms and funds for its 

oversight work. In addition, UN rules and regulations severely limit OIOS’s 

ability to reallocate resources from different sources. Therefore, OIOS 

cannot always direct resources to oversight of high-risk areas as they 

arise. The extent to which OIOS must negotiate for future funding during 

the construction phase of the renovation will affect OIOS’s ability to 

conduct effective oversight. Indeed, in a June 2006 resolution, the General

 22United Nations General Assembly, Report of the Office of Internal Oversight Services on

the United Nations Capital Master Plan for the Period from August 2003 to July 2004, 

A/59/420. 

23United Nations General Assembly, Report of the Office of Internal Oversight Services on

the Capital Master Plan for the Period from August 2004 to July 2005, A/60/288. 

24GAO, United Nations: Funding Arrangements Impede Independence of Internal 

Auditors, GAO-06-575 (Washington, D.C.: Apr. 25, 2006). 

Page 22 GAO-07-31 United Nations
Assembly noted that the CMP office will provide OIOS with resources to 

conduct an appropriate construction audit of the CMP.25

UN Board of Auditors has 

Conducted Oversight of 

CMP 

The UN Board of Auditors, an external oversight entity that reports to the 

General Assembly, has conducted yearly audits of the CMP financial 

statements since 2003.26 The board’s four objectives have been to 

• evaluate the CMP office’s project accounting, payment and reporting 

systems; 

• ascertain the CMP office’s compliance with UN regulations and rules on 

procurement and contracting; 

• determine whether CMP contractors have adhered to the terms of 

contract, such as deliverables, time, and materials provisions; and 

• review the CMP office’s controls and processes established to properly 

manage the project. 

In reports on the CMP office released in September 2004 and August 

2005,

27 the board found that delays in the planning process had impacted 

the schedule for the completion of design development. The board also 

found that an advisory board for the Secretary-General had not been 

formed. The board did not note any instances of fraud or presumptive 

fraud within the CMP office. 

As the renovation proceeds with construction, the UN Board of Auditors 

will develop a new audit plan. The board will likely consider the CMP 

office’s new cost system for tracking funds and expenditures an important 

issue to address when the construction phase begins, according to board 

officials. The board will conduct a risk assessment of the CMP office’s 

general controls and accounting system in fall 2006. Based on the audit 

 25United Nations General Assembly, Resolution Adopted by the General Assembly

A/RES/60/282, June 30, 2006. 

26The UN Board of Auditors audits the financial statements of the UN Secretariat and UN

funds and programs. 

27United Nations General Assembly, Report of the Board of Auditors on the Capital Master

Plan for the Biennium Ended 31 December 2003, A/59/161 and Report of the Board of 

Auditors for the Year Ended 31 December 2004, A/60/5 (Vol. V). 

Page 23 GAO-07-31 United Nations
plan and risk assessment, the board will determine the financial resources 

it will need to conduct future audits of the CMP office. 

Since 2003, State has maintained a working group to monitor the CMP 

planning process and inform U.S. policy on the CMP. This task force is 

composed of officials from multiple departments within State and the 

Office of Management and Budget that meet at least once every 3 months. 

State has also engaged a part-time consultant with building construction 

and security experience to review security enhancements and advise the

task force. The task force mission includes coordinating all U.S. 

government participation in the CMP process, evaluating the feasibility of 

the renovation project, and performing technical reviews. For example, 

officials from State’s Bureau of Overseas Buildings Operations (OBO) 

reviewed design documents and the 2005 cost estimate and found that 

they were developed in a manner consistent with industry practices. 

OBO’s assessment was included in a decision memorandum encouraging 

U.S. support for a decision to go forward with the renovation in June 2006. 

Based on its monitoring work, State has not identified any significant 

concerns with the renovation planning process, according to State 

officials. 

Since 2000, the UN has been developing its CMP, a comprehensive 

renovation of its headquarters complex. Because the complex does not 

meet current fire, life safety, and other building codes and does not meet 

UN technology or security requirements, it is a potentially hazardous 

environment for UN employees and visitors. Much of the design work has 

been done and the UN has funded completion of design and leasing of 

temporary space to relocate UN staff and activities for the duration of the

renovation. The UN has also begun the process of procuring a 

construction management firm to undertake the renovation work. The UN 

could spend more than an additional $1.4 billion to complete the 

renovation. These funds could be at risk if the UN does not ensure that 

CMP procurements are protected from weaknesses in the current 

procurement system. In addition, OIOS will need sufficient funds to 

oversee compliance with UN financial rules and regulations, as applied to 

the CMP project. 

State Has Continued Its 

Monitoring Activities 

Conclusion 

Page 24 GAO-07-31 United Nations
We recommend that the Secretary of State and the U.S. Permanent 

Representative to the United Nations work with other member states to 

• ensure that the Secretariat identifies a procurement strategy for the CMP 

to mitigate the impact of weaknesses in UN procurement processes and 

• ensure that OIOS receives sufficient funding for its oversight of the CMP. 

The Department of State, the UN, and OIOS provided written comments 

on a draft of this report, which are reproduced in appendixes II through IV. 

State agreed with our conclusions and endorsed our recommendations, 

stating that they were consistent with State’s policy goals for CMP 

procurement and OIOS funding. The UN found our report to be a valuable

and accurate assessment of the current state of planning for the UN 

renovation project and generally concurred with our findings and 

recommendations. Furthermore, in response to our recommendation 

concerning CMP procurement, the UN noted that an independent bid 

protest mechanism has been designed for a major CMP procurement. The 

UN also noted that the Secretary-General’s fourth annual progress report 

on the CMP has been prepared and contains updated information on the 

CMP.28 OIOS also agreed with our conclusions and recommendations and 

noted that OIOS’s current resources do not allow it to provide adequate 

audit coverage. State and the UN also provided us with a number of 

technical suggestions and clarifications that we have addressed in this 

report, as appropriate. 

As agreed with your offices, we will make copies of this report available to

interested members of Congress, the Secretary of State, and the U.S. 

Permanent Representative to the United Nations. We will also make copies 

available to others upon request. In addition, the report will be available at 

no charge on the GAO Web site at http://www.gao.gov. 

Recommendations 

Agency Comments 

 28Secretary-General’s Fourth Annual Progress Report on the Implementation of the 

Capital Master Plan, A/61/549. 

Page 25 GAO-07-31 United Nations
If you or your staff have any questions about this report, please contact 

Thomas Melito at (202) 512-9601 or melitot@gao.gov or Terrell Dorn at 

(202) 512-6923 or dornt@gao.gov. Contact points for our Office of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made major contributions to this report are 

listed in appendix V. 

Thomas Melito 

Director, International Affairs and Trade 

Terrell Dorn 

Director, Physical Infrastructure Issues 

Page 26 GAO-07-31 United Nations
Appendix I: Scope and Methodology Appendix I: Scope and Methodology 

To determine whether the continued development of the UN’s renovation 

project was consistent with leading industry practices, we reviewed UN 

records, including reports and designs developed by the architectengineering firms. We also researched industry practices related to 

construction project planning, development, and design. We compared the 

Secretariat’s efforts in project planning and design with industry practices, 

as identified by the Federal Facilities Council and the Construction 

Industry Institute. We discussed various aspects of the project, including 

management and the design process for the Capital Master Plan (CMP) 

with UN renovation project staff and consultants. 

To examine the factors that contributed to the increase in the 2005 cost 

estimate and determine whether the cost estimate was updated using 

industry practices, we researched industry practices related to 

construction project cost estimating. We compared the Secretariat’s 

efforts in cost estimating with industry practices, as identified by the 

Construction Industry Institute. We also reviewed the 2005 cost estimate 

and identified the factors that were used to update the cost estimate. To 

assess the reliability of the UN’s cost estimate data, we interviewed UN 

officials responsible for compiling the estimate and reviewed how the cost 

estimate was complied but we did not verify the accuracy of the figures. 

We determined that the data were sufficiently reliable for the purposes of 

our report. We received the Secretary-General’s fourth annual progress 

report on the CMP with an updated cost estimate as our report was going 

to press. Although we did not have sufficient time to analyze the cost 

estimate, we included information from the Secretary-General’s report to 

the extent possible.1

To describe the financing options being discussed, we reviewed UN data 

concerning the yearly cash assessments under consideration. To report on 

the total amount of a 1-year assessment, we calculated the net present 

value of the total funds needed for the renovation. To calculate the 

estimated interest income, we subtracted the total assessments from the 

total amount of funds needed for the renovation. To determine the U.S. 

share of cash assessments, we calculated 22 percent of the total cash 

assessments. To assess the reliability of the UN data, we interviewed UN 

officials to determine how the data was derived and determined that the

data were sufficiently reliable for the purposes of our report. 

 1

General Assembly, Fourth Annual Progress Report on the Implementation of the Capital 

Master Plan, A/61/549. 

Page 27 GAO-07-31 United Nations
Appendix I: Scope and Methodology 

To identify key decisions to be made and their impact, we reviewed the 

CMP office’s estimated schedules for leasing swing space, hiring a 

construction management firm, and the beginning of renovation work. We 

identified remaining decisions that require General Assembly approval and 

that are needed for the renovation to proceed. We then reviewed the 

schedules to determine if the timing of these decisions could substantially 

impact the beginning of the renovation. 

To review UN oversight efforts and State monitoring activities, we 

reviewed UN documents such as the Office of Internal Oversight Services 

(OIOS) and Board of Auditor reports submitted to the General Assembly, 

OIOS management letters to the CMP office, UN resolutions pertaining to 

the oversight of the CMP, and the mission statements of OIOS, the Board 

of Auditors, and State’s working group on the CMP. We also interviewed

officials from OIOS, the Board of Auditors, and the Department of State to

clarify information in these documents. 

In conducting our review, we received full cooperation from the UN and 

the Department of State. We conducted our work at the UN in New York 

City and at State in Washington, D.C., from August 2005 to September 2006 

in accordance with generally accepted government auditing standards. 

Page 28 GAO-07-31 United Nations
Appendix II: Comments from the Department Appendix II: Comments from the Department of State 

of State 

Page 29 GAO-07-31 United Nations
Appendix II: Comments from the Department 

of State 

Page 30 GAO-07-31 United Nations
Appendix II: Comments from the Department 

of State 

Page 31 GAO-07-31 United Nations
Appendix III: Comments from the United Appendix III: Comments from the United Nations 

Nations 

Page 32 GAO-07-31 United Nations
Appendix III: Comments from the United 

Nations 

Page 33 GAO-07-31 United Nations
Appendix IV: Comments from OIOS Appendix IV: Comments from OIOS 

Page 34 GAO-07-31 United Nations
Appendix IV: Comments from OIOS 

Page 35 GAO-07-31 United Nations
Appendix V: 

A

GAO Contact and Staff 

cknowledgments 

Page 36 GAO-07-31

Appendix V: GAO Contact and Staff 

Acknowledgments 

Thomas Melito, (202) 512-9601 or melitot@gao.gov

Terrell Dorn, (202) 512-6923 or dornt@gao.gov

In addition to the persons named above, Phyllis Anderson and Maria 

Edelstein, Assistant Directors; Michaela Brown; Debbie J. Chung; Bruce 

Kutnick; Valérie L. Nowak; and J.J. Marzullo made key contributions to this 

report. Mark Dowling provided technical assistance. 

 United Nations

GAO Contact 

Staff 

Acknowledgments 

(320378) 
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