a

GAO

United States Government Accountability Office

Report to the Subcommittee on Interior, 

Environment, and Related Agencies, 

Committee on Appropriations, House of 

Representatives

September 2006 KENNEDY CENTER

Progress Made on 

GAO 

Recommendations, 

but Oversight 

Challenges Still Exist

GAO-06-1025
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

September 2006

KENNEDY CENTER

Progress Made on GAO 

Recommendations, but Oversight 

Challenges Still Exist 

Highlights of GAO-06-1025, a report to the 

Subcommittee on Interior, Environment, 

and Related Agencies, Committee on 

Appropriations, House of Representatives

In April 2005, GAO recommended

that the John F. Kennedy Center

for the Performing Arts (Kennedy 

Center) increase oversight of its 

management of federal funds, 

better comply with fire code, and 

conform to project management

best practices. GAO was asked to

evaluate (1) the progress the

Kennedy Center has made in 

implementing GAO’s April 2005

recommendations, (2) the status of 

federally funded capital projects 

and the planned spending of

federal funds for capital projects as 

indicated by the Kennedy Center’s

most recent comprehensive

building plan, and (3) the Kennedy 

Center Board of Trustees’ 

responsibilities for federally funded 

capital projects and the extent to

which the board fulfills these

responsibilities. To fulfill these

objectives, GAO examined 

Kennedy Center documents, visited

other arts organizations, and 

interviewed affected parties. 

What GAO Recommends

GAO recommends that the

Kennedy Center comply with the

FAR provision regarding 

alternative contracting methods,

improve information to the board 

on capital projects, and develop 

and implement procedures for the 

board on how to carry out its 

responsibilities for federal funds. 

The Kennedy Center disagreed with 

our recommendation that it

improve compliance with the FAR 

provision, but agreed generally 

with GAO’s other

recommendations. 

The Kennedy Center has taken steps to implement GAO’s oversight, fire 

safety, and capital project recommendations but more work remains. For 

example, to increase oversight of its management of federal funds, the 

Kennedy Center contracted with the Smithsonian Institution Office of the 

Inspector General for audits of federal funds used for capital projects. In 

addition, to better comply with fire safety code, the Kennedy Center has 

implemented GAO’s recommendations to obtain a peer review of its firemodeling study and manage the storage of combustible materials. As a 

result of the peer review, the center made changes to its fire-modeling study. 

Finally, to better align with project management best practices, the Kennedy 

Center has implemented GAO’s recommendations to design and implement 

contract, financial, and project management policies and procedures and 

control cost and schedule changes in future projects. 

Kennedy Center’s Progress in Implementing GAO’s Recommendations 

Recommendation has been

implemented.

Steps have been taken to

implement the recommendation,

but more work is needed.

Recommendation has not

been implemented.

Source: GAO.

Oversight

Fire safety

Management of

capital projects

The Kennedy Center’s 2005 comprehensive building plan (CBP)—or longterm renovation effort—shows that the center will not complete its capital 

renovations within the planned 2008 time frame and budgets. The estimated 

costs for the remaining CBP projects have increased from $48 million to $58 

million since the 2004 CBP, and the center plans to defer most terrace-level 

renovations beyond 2008, the original completion date. The 2005 CBP shows 

that the Family Theater was completed on schedule in 2005 with limited cost 

growth. However, despite improved contracting practices, GAO found that 

the Kennedy Center did not fully comply with the Federal Acquisition 

Regulation (FAR) when it used an alternative contracting method. In 

addition, it increased the risk of cost overruns by authorizing Family Theater

work to begin before establishing the contract’s guaranteed maximum price. 

The Kennedy Center Board of Trustees has delegated to management most 

of its responsibilities for federally funded capital projects, which is a typical 

board action. However, GAO found that several factors limit the board’s 

oversight of federally funded capital projects. The Kennedy Center Board of 

Trustees and its Operations Committee (1) lack procedures on how to carry 

out the board’s responsibilities for federally funded projects (2) have 

experienced low attendance at meetings, and (3) lack information needed to 

evaluate the implementation of capital projects. In addition, the Operations 

Committee has met infrequently, which further limits oversight.

www.gao.gov/cgi-bin/getrpt?GAO-06-1025.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Mark Goldstein 

at (202) 512-2834 or goldsteinm@gao.gov.
Page i GAO-06-1025 Kennedy Center

Contents

Letter 1

Results in Brief 4

Background 8

The Kennedy Center Has Taken Steps to Implement Our Oversight, 

Fire Safety, and Capital Project Recommendations, but More 

Work Remains 14

The Kennedy Center Will Not Complete All Planned Capital 

Renovations within CBP Budgets and Time Frames 29

The Kennedy Center Board of Trustees Has Delegated Its 

Responsibility for Federally Funded Capital Projects, but Has 

Provided Limited Oversight 36

Conclusions 49

Recommendations for Executive Action 50

Agency Comments and Our Evaluation 51

Appendixes

Appendix I: Scope and Methodology 53

Appendix II: Kennedy Center’s Implementation of Our Recommendation 

to Design and Implement Financial Policies and

Procedures 59

Appendix III: Comments from the John F. Kennedy Center for the 

Performing Arts 62

GAO Comments 69

Appendix IV: GAO Contacts and Staff Acknowledgments 72

GAO Contacts 72

Staff Acknowledgments 72

Figures Figure 1: Diagram of the Kennedy Center's Plaza-Level Public 

Spaces and Theaters 9

Figure 2: Organization of the Kennedy Center for Selected 

Positions and Offices 11

Figure 3: Kennedy Center’s Progress in Implementing Our 

Recommendations 15

Figure 4: Kennedy Center’s Progress in Implementing Our Fire 

Safety Recommendations 19

Figure 5: Location of Exit Signage at the Millennium Stages 21
Contents

Page ii GAO-06-1025 Kennedy Center

Figure 6: Kennedy Center’s Progress in Implementing Our 

Recommendations to Better Align Its Capital Project 

Management with Best Practices 23

Figure 7: The Kennedy Center’s Full Implementation of Financial 

Policies and Procedures in Several Specific Areas 25

Figure 8: Excerpt from The Kennedy Center’s 2005 CBP Showing 

Eisenhower Theater Budget Changes from the 2004 CBP 

and Projected Obligations, in Dollars 27

Figure 9: AFI Theater before and after Its Conversion to the Family 

Theater 32

Figure 10: Diagram of the Kennedy Center’s Terrace-Level Public 

Spaces and Theaters 34

Figure 11: Intervals between Operations Committee Meetings, 

January 1995 through April 2006 44

Figure 12: Attendance Rates at Operations Committee Meetings, 

January 1995 through April 2006 45

Figure 13: Budgeted and Actual Costs of Selected Federally Funded 

Kennedy Center Capital Projects 48

Figure 14: Recommendations to the Kennedy Center in Our April 

2005 Report 54

Figure 15: Implementation Status of our Financial 

Recommendations in Several Specific Areas 59
Contents

Page iii GAO-06-1025 Kennedy Center

Abbreviations

CMAR construction manager at risk

CBP comprehensive building plan

FMO Facilities Management Office 

FAR Federal Acquisition Regulation

GMP guaranteed maximum price

GSA General Services Administration

MOU memorandum of understanding

NARA National Archives and Records Administration

NPS National Park Service

OIG Office of the Inspector General

OMB Office of Management and Budget

PMO Project Management Office

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Page 1 GAO-06-1025 Kennedy Center

United States Government Accountability Office

Washington, D.C. 20548

A

September 15, 2006 Letr

The Honorable Charles Taylor

Chairman

The Honorable Norman Dicks

Ranking Minority Member

Subcommittee on Interior, Environment, 

and Related Agencies

Committee on Appropriations

House of Representatives

The John F. Kennedy Center for the Performing Arts (Kennedy Center) 

opened in 1971 as a national cultural arts center and presidential memorial. 

Every year, millions of people either visit the Kennedy Center to view the 

center and memorial or to attend live performances. Since at least 1990, the 

Kennedy Center facility has needed substantial capital repairs. At that time, 

officials from both the Kennedy Center1

 and the Department of the 

Interior’s National Park Service (National Park Service), which then shared 

responsibility for managing the Kennedy Center, acknowledged that the 

physical condition of the center had seriously deteriorated.

In 1994, legislation was enacted that gave the Kennedy Center Board of 

Trustees sole responsibility for managing the facility. As part of that 

responsibility, the legislation required the Kennedy Center Board of 

Trustees to develop, and annually update, a comprehensive building needs 

plan. In response, the Kennedy Center developed a comprehensive building 

plan (CBP) in 1995 that included an assessment of the facility and identified 

the capital projects considered necessary to repair the center and bring it 

into compliance with current codes for fire safety and disabled access.2

 The 

plan consisted of a long-term capital repair and upgrade project that, 

among other things, envisioned the center's meeting or exceeding relevant 

fire safety regulations by 2008 and addressing disabled access needs. To

1

For this report, the term Kennedy Center refers to the Board of Trustees and management 

officials unless otherwise specified.

2

The National Fire Prevention Association Life Safety Code is designed to protect building 

occupants from fire and other hazards. The code covers construction, protection, and 

occupancy features to minimize danger to life from fires, smoke, fumes, or panic before 

buildings are vacated. The Americans with Disabilities Act prohibits discrimination on the 

basis of disability in employment, services rendered by state and local governments, places 

of public accommodation, transportation, and telecommunications services.
Page 2 GAO-06-1025 Kennedy Center

implement its CBP, the Kennedy Center received almost $216 million3 in 

federal funds during fiscal years 1995 through 2006 for capital repairs and 

alterations.

For more than a decade, we have identified shortcomings in, and made 

recommendations to improve, the Kennedy Center's construction, 

planning, and management processes: (1) In the 1990s, we reported that the 

Kennedy Center did not have sufficient staff capability to effectively 

manage its capital improvement plans;4

 (2) In 2003, we reported that the 

Kennedy Center needed to strengthen its management and oversight of 

large construction projects, such as the garage expansion and renovation 

project;5

 and (3) In 2004, we reported that the Kennedy Center had 

implemented most of the projects in its CBP but would likely not complete 

its plan by 2008, given the number and size of the renovation projects that 

remained to be done, the amount of anticipated future appropriations, and 

the likelihood that project budgets may increase as designs are completed.6

 

Most recently, we reported that although the Kennedy Center completed 

four major renovations, each of these projects exceeded budget estimates, 

some by substantial amounts. We also found that the Kennedy Center 

lacked the comprehensive policies and procedures needed to adequately 

safeguard federal funds and did not appear to meet fire safety code 

requirements. Accordingly, we recommended in our April 2005 report that 

the Kennedy Center increase its oversight of federally funded capital 

projects, better comply with fire code, and better align its management of 

capital projects with best practices.7

 

3

This amount includes a beginning balance of $35.3 million, which is the value of transfers 

from the National Park Service and the Smithsonian Institution, and approximately $180.5 

million in federal appropriations.

4

GAO, Kennedy Center: Information on the Capital Improvement Program, GAO/GGD-93-

46 (Washington, D.C.: Feb. 9, 1993) and Kennedy Center: Information on Facility 

Management Capability, GAO/GGD-98-56 (Washington, D.C.: Mar. 25, 1998).

5

GAO, Kennedy Center: Improvements Needed to Strengthen the Management and 

Oversight of the Construction Process, GAO-03-823 (Washington, D.C.: Sept. 5, 2003).

6

GAO, Kennedy Center: More Information on Project Status and Budgets Needed to 

Understand the Impact of Future Funding Decisions, GAO-04-933 (Washington, D.C.: Sept. 

15, 2004).

7

GAO, Kennedy Center: Stronger Oversight of Fire Safety Issues, Construction Projects, 

and Financial Management Needed, GAO-05-516T (Washington, D.C.: Apr. 6, 2005) and 

GAO-05-334 (Washington, D.C.: Apr. 22, 2005).
Page 3 GAO-06-1025 Kennedy Center

To assist Congress, you requested that we examine the Kennedy Center’s 

management and oversight of federally funded capital projects. 

Accordingly, this report evaluates (1) the progress the Kennedy Center has 

made in implementing the recommendations in our April 2005 report; (2) 

the status of federally funded capital projects and the planned spending of 

federal funds for capital projects, as shown in the Kennedy Center’s most 

recent comprehensive building plan; and (3) the Kennedy Center Board of 

Trustees’ responsibilities for federally funded capital projects and the 

extent to which the board fulfills these responsibilities. 

To determine the progress the Kennedy Center has made in implementing 

our April 2005 recommendations to increase oversight of its management 

of federal funds, better comply with fire code, and better align its 

management of capital projects with best practices, we reviewed Kennedy 

Center documents, including a 2005 risk assessment and internal audit 

plan; peer reviews of the center’s fire-modeling study; annual CBPs; Family 

Theater contract modifications; and contract, financial, and project 

management policies and procedures. In addition, we spoke with 

management officials at the Kennedy Center, General Services 

Administration (GSA), and National Archives and Records Administration 

(NARA). To determine the status of federally funded capital projects and 

the planned spending of federal funds, as indicated by the Kennedy 

Center’s most recent CBP, we reviewed the Kennedy Center’s 1995 CPB and 

its 2004 and 2005 updates. Specifically, we examined the changes in the 

2005 CBP that were made since the 2004 CBP and developed a list of 

federally funded projects that the Kennedy Center plans to delay or defer 

and reviewed the Kennedy Center’s request for additional funds. To 

determine the Kennedy Center Board of Trustees’ responsibilities for 

federally funded capital projects and the extent to which the board fulfills 

these responsibilities, we analyzed various federal laws, documents from 

the Board of Trustees and its Operations Committee,8

 and the annual 

updates to the CBP. Specifically, to examine the extent to which the board 

fulfills its responsibilities for federally funded capital projects, we reviewed 

Board of Trustees and Operations Committee information packets and 

meeting minutes from January 1995 through April 2006 to determine how a 

variety of capital projects were overseen by the board. These projects 

included, but are not limited to, the Opera House renovation, fire alarm 

system replacement, public space modifications, site improvements 

8

The Board of Trustees created the Operations Committee to help the board carry out its 

responsibilities for capital projects. 
Page 4 GAO-06-1025 Kennedy Center

project, and the Family Theater. In addition, we interviewed current and 

previous trustees from the board and congressional staffers that are 

designees of Kennedy Center trustees. We also spoke with Kennedy Center 

management officials about the status of federally funded capital projects. 

To obtain information on how other boards govern, including their 

responsibilities for capital projects and oversight of public funds, we 

interviewed academics that focus on board governance; officials from 

nonprofit board governance associations, and officials from arts 

organizations that have characteristics similar to the Kennedy Center. We 

conducted our work in Los Angeles, California; New York City, New York; 

and Washington, D.C., between October 2005 and August 2006 in 

accordance with generally accepted government auditing standards (see 

app. I for more information on our scope and methodology).

Results in Brief The Kennedy Center has taken steps to implement our oversight, fire 

safety, and capital project recommendations, but more work is needed to 

fully implement them. Since April 2005, the Kennedy Center has fully or 

partially implemented all of our 12 recommendations related to increasing 

oversight of its management of federal funds, better complying with fire 

code, and better aligning its management of capital projects with best 

practices. Specifically:

• To increase oversight of its management of federal funds, the Kennedy 

Center has implemented our recommendation to work with an 

independent federal government oversight organization, such as the 

Smithsonian Institution Office of the Inspector General (OIG), for audits 

of the center’s use of federal funds. In August 2005, the Kennedy Center 

hired a nongovernmental organization to develop a risk assessment and 

audit plan to assist the Kennedy Center Board of Trustees in overseeing 

the center’s management of appropriated funds. In July 2006, the 

Kennedy Center finalized a memorandum of understanding (MOU) with 

the Smithsonian OIG for audits of federal funds used for capital 

projects. In addition, the Kennedy Center has contracted with a 

nongovernmental organization to implement the portion of the audit 

plan that covers the federal funds used for operations and maintenance 

activities. According to a Kennedy Center management official, the 

Kennedy Center selected a nongovernmental organization to audit the 

federal funds used for operations and maintenance activities because 

this approach was more efficient and cost effective than contracting 

with an independent federal government organization.
Page 5 GAO-06-1025 Kennedy Center

• To better comply with fire safety code, the Kennedy Center has 

implemented two of our five recommendations in this area—to (1) 

obtain a peer review of its performance-based fire-modeling study and 

(2) manage the storage of combustible materials. In addition, the center 

has partially implemented three of our fire safety recommendations—to 

(1) install exit signs, (2) correct a fire safety deficiency at the 

Millennium Stages, and (3) ensure that doors in key areas provide 

adequate separation from fire.

• To better align its management of capital projects with best practices, 

the Kennedy Center has implemented four of our six 

recommendations—to (1) design and implement contract and project 

management policies and procedures, (2) control cost growth and 

schedule changes in future capital projects, (3) design and implement 

comprehensive financial management polices and procedures, and (4) 

establish and enforce a documents retention policy. However, the center 

has only partially implemented the remaining two capital project 

management recommendations—to (1) develop as-built drawings to 

prevent costly unforeseen site conditions and (2) provide more timely 

and accurate information about capital projects to stakeholders and 

Congress. For example, the Kennedy Center has created a policy that 

requires as-built drawings of new construction improvements to the 

building. However, this policy does not require the center to integrate 

the individual new construction as-built drawings into one master set of 

centerwide drawings, nor does it require as-built drawings to be updated 

as additional changes to the center are made.

The most recent update of the CBP—the project-by-project plan for the 

comprehensive capital renovation of the Kennedy Center covering fiscal 

years 1995 through 2008—shows that the Kennedy Center will not 

complete all planned capital renovations within planned time frames and 

budgets. Although the 2005 CBP is better than previous versions because it 

provides information needed to evaluate the progress of federally funded 

capital projects, its new project-by-project budget reconciliations fail to 

show how changes in project budgets have affected the overall CBP 

budget, making it difficult to determine the overall impact of the changes 

on the CBP budget through 2008. According to our analysis, these changes 

will raise the cost of implementing the remainder of the CBP (for fiscal 

years 2006 through 2008) from $48 million to $58 million—a 21 percent 

increase over the 2004 CBP. To improve information to Congress and the 

Kennedy Center Board of Trustees, we are recommending that the Kennedy 

Center identify in the CBP the impact of changes to individual project 
Page 6 GAO-06-1025 Kennedy Center

budgets on the plan’s overall budget. The 2005 CBP further shows that the 

Family Theater was completed on schedule in 2005 with limited cost 

growth, unlike four federally funded capital projects that we reviewed in 

April 2005. According to our analysis, the Kennedy Center improved some 

of its contracting practices in completing the Family Theater project, but 

did not comply with the Federal Acquisition Regulation (FAR) in selecting 

its contracting method. In addition, the Kennedy Center authorized 

contractor work to begin on the Family Theater before establishing a 

guaranteed maximum price for the overall project. Consequently, had any 

cost increases occurred during construction, the Kennedy Center may have 

been obligated to pay for them. To comply with the FAR and prevent 

exposure to cost increases during construction, we are recommending that 

the center comply with the FAR provision regarding alternate contracting 

methods and ensure that contracting costs are agreed to before work 

begins on the project. The 2005 CBP also shows that the Eisenhower 

Theater renovations are scheduled to begin in fiscal year 2007, but may be 

delayed. Most terrace-level renovations will not be completed by 2008, even 

though they were originally scheduled for fiscal years 2000 through 2005. 

Finally, in addition to the changes identified in the 2005 CBP, more budget 

increases and project deferrals will be necessary before fiscal year 2008, 

according to Kennedy Center management officials. As a result, the 

Kennedy Center is seeking to extend the plan’s period of implementation 

from 2008 to 2012. 

The Kennedy Center Board of Trustees has delegated to management its 

responsibilities for federally funded capital projects, as is typical for 

governing boards; however, it has provided limited oversight for these 

projects. Under the Kennedy Center Act, the Kennedy Center Board of 

Trustees is responsible for developing and annually updating the CBP; 

planning, designing, and constructing capital projects; and preparing a 

budget. Although management performs these responsibilities, the board 

has provided limited oversight of the about $121 million appropriated to the 

center for capital projects since 2000. For example, for 2000 through 2005, 

we found no evidence that the board had approved the annual updates to 

the CBP, reviewed management’s performance in implementing capital 

projects, or approved the center’s proposed federal appropriation request, 

which includes funding for capital projects. These actions are all required 

by the board’s policies and procedures manual. We also found that the 

Operations Committee, which the board created to help it carry out its 

responsibilities for capital projects, receives the annual updates to the CBP 

after the center’s annual capital project budget is finalized, limiting the 

board’s ability to ensure that the federally funded capital projects proposed 
Page 7 GAO-06-1025 Kennedy Center

in the CBP are in accordance with the requirements of the Kennedy Center 

Act. 

According to our analysis, several factors limit the board’s oversight of 

federally funded capital projects. First, the Kennedy Center Board of 

Trustees lacks procedures on how the board and its Operations Committee 

are to carry out the board’s responsibilities for federally funded capital 

projects. Second, attendance at meetings of the Kennedy Center Board of 

Trustees and its Operations Committee has been low, and extended periods 

of time have elapsed between meetings of the Operations Committee. Since 

most of the board’s responsibilities are carried out at board and committee 

meetings, it is important for the board and its committees to hold regular 

meetings and for board members to attend these meetings. Lastly, the 

board and its Operations Committee lack information needed to monitor 

and evaluate whether all federally funded capital projects have been 

implemented efficiently and in accordance with the requirements in the 

Kennedy Center Act. Without information on original budgeted costs, the 

board and Operations Committee cannot hold management accountable 

for the implementation of federally funded capital projects. 

The board’s lack of oversight may have contributed to the Kennedy Center’s 

problems keeping federally funded capital projects within budget 

estimates—we found in 2005 that several of the Kennedy Center’s largest 

federally funded capital projects exceeded budget estimates by amounts 

ranging from 13 to 50 percent. To strengthen the role of the Kennedy Center 

Board of Trustees’, we are recommending that the board develop and 

implement procedures on how it is to carry out its responsibilities for 

federally funded capital projects and ensure that it receives information on 

how federal funds have been used for capital projects.

We provided a draft of this report to the Kennedy Center for review and 

comment. In written comments on the draft report, the Kennedy Center 

generally agreed with our findings and two of our three recommendations. 

Specifically, the Kennedy Center agreed to (1) improve the CBP in several 

areas and (2) review and revise, if necessary, procedures on how the 

Operations Committee is to carry out its responsibilities and to provide the 

CBP to the Operations Committee in a more timely fashion. The Kennedy 

Center disagreed with our recommendation that it improve compliance 

with the FAR provision regarding alternative contracting methods and that 

it establish the guaranteed maximum government price for a capital project 

before proceeding with construction. We disagree with the Kennedy 

Center’s assessment because we continue to believe that construction 
Page 8 GAO-06-1025 Kennedy Center

manager at risk is not covered by the FAR and that establishing a 

guaranteed maximum price prior to proceeding with work limits the 

government’s risk of cost overruns. Therefore, we are retaining the 

recommendation. See appendix III for the Kennedy Center’s comments and 

our responses.

Background The Kennedy Center opened in 1971 and is located on 17 acres along the 

Potomac River in Washington, D.C. The center houses numerous theater, 

exhibition, and rehearsal spaces; public halls; educational facilities; offices; 

and meeting rooms in about 1.1 million square feet of space. The plaza level 

is the primary focus for patrons and tourists, including three main theaters, 

the Grand Foyer, the Hall of States, and the Hall of Nations. Access to other 

areas, such as the roof terrace level, is provided through the Grand Foyer, 

Hall of States, and Hall of Nations. Figure 1 provides a diagram of the 

Kennedy Center's plaza level.
Page 9 GAO-06-1025 Kennedy Center

Figure 1: Diagram of the Kennedy Center's Plaza-Level Public Spaces and Theaters

The National Cultural Center Act of 1958 established the National Cultural 

Center as a bureau within the Smithsonian Institution and created a board 

responsible for constructing and administering the nation’s performing arts 

center. The John F. Kennedy Center Act of 1964 renamed the National 

Cultural Center as the John F. Kennedy Center for the Performing Arts. The 

Entrance Plaza

Potomac River

Eisenhower 

Theater

Millennium Stage Millennium Stage

Opera 

House

Concert 

Hall

Main entrance Main entrance Main entrance

Grand Foyer

Family Theater

Sources: Kennedy Center (data) and GAO (photos).

Hall of 

State

s

Hall of Nation

s

Grand Foyer
Page 10 GAO-06-1025 Kennedy Center

Kennedy Center is also a nonprofit organization with the authority to solicit 

and accept gifts. In 1972, Congress authorized the National Park Service to 

provide maintenance, security, and other services necessary to maintain 

the building, while making the Kennedy Center Board of Trustees 

responsible for performing arts activities at the Kennedy Center. Under this 

arrangement, the Kennedy Center facility incurred a backlog of capital 

repairs, in part because responsibility for identifying and completing 

capital repairs and improvements at the center was unclear. Legislation 

was enacted in 1990 that directed the National Park Service and the Board 

of Trustees to enter into a cooperative agreement clarifying their 

responsibilities for the maintenance, repair, and alteration of the center, 

but the parties were unable to reach an agreement. In 1994, legislation was 

enacted that gave the Board of Trustees sole responsibility for carrying out 

capital improvements at the Kennedy Center. One purpose of the 1994 

legislation was to provide autonomy for the overall management of the 

Kennedy Center, including better control over its capital projects, and to 

renovate the center. 

Under the Kennedy Center Act, the Kennedy Center Board of Trustees 

currently consists of 59 trustees: 23 are ex officio trustees, appointed by 

virtue of the office or position they hold, including congressional members, 

and 36 are general trustees appointed by the President of the United States. 

Each presidentially appointed trustee serves a term of 6 years. As the 

center’s chief decision-making body, the Kennedy Center Board of Trustees 

is responsible for maintaining the Kennedy Center as a living memorial to 

President John F. Kennedy and executing other functions required of the 

board under the act. The Kennedy Center Act requires the Board of 

Trustees to develop and annually update a CBP; plan, design and construct 

each capital project at the center; and prepare a budget. The board’s 

policies and procedures manual, which includes the board’s bylaws, states 

that board responsibilities include approving the annual CBP updates, 

reviewing management’s performance in implementing capital projects, 

and reviewing and approving the center’s annual capital project budget. 

The Kennedy Center Board of Trustees has a number of standing 

committees, including Executive, Audit, Finance, and Operations 

committees to assist with the board’s work. The Operations Committee is 

responsible for overseeing the general operations of the center, as well as 

all capital projects. Figure 2 shows the organization of the Kennedy Center, 

which includes the Board of Trustees and the center’s management 

structure as it applies to capital projects. 
Page 11 GAO-06-1025 Kennedy Center

Figure 2: Organization of the Kennedy Center for Selected Positions and Offices

Source: GAO analysis of Kennedy Center data. 

President 

Board of Trustees

Facilities Management 

Office 

Project Management Finance Office 

Office 

Executive Committee 

 Audit Committee 

Finance Committee 

Operations Committee 

Executive Vice 

President of 

Administration 

Plans and manages capital 

projects and related 

improvements

Manages operations, 

maintenance, security, and 

contracting 

Records, tracks, and accounts

for all public and private funds

collected and expended, 

including funds used for 

capital projects

Contracts Office Facility Operations and 

Maintenance Office 

Security, Fire, Life, and 

Occupational Safety Office 

Negotiates, enters, and 

manages contractual 

procurement of products and 

services, including those 

related to capital projects, 

security, fire life safety, and 

facility operations and 

maintenance 

Manages daily security of 

facility, grounds, traffic, fire 

and life safety, and is

responsible for ensuring a

safe environment for visitors, 

patrons, and employees

Manages the daily operations

and maintenance of the 

facility and grounds, including 

minor emergency repair 
Page 12 GAO-06-1025 Kennedy Center

As part of its responsibility under the 1994 legislation, the center published 

its first CBP in 1995, describing the goals of a long-term renovation effort, 

including addressing fire safety and disabled access code deficiencies, 

replacing inefficient building systems, and improving visitor services. This 

original building plan anticipated that the proposed capital projects would 

be completed in two stages. Projects in the first stage—fiscal years 1995 

through 1999—would address critical security and life safety measures and 

improve accessibility. Projects undertaken in the second stage—fiscal 

years 2000 through 20099

—would eliminate the backlog of deferred capital 

repair projects. In 1995, the Kennedy Center anticipated undertaking 

critical fire safety projects by the end of fiscal year 1999. However, to 

minimize disruption to performances, the Kennedy Center changed its 

approach to making capital improvements. Rather than undertaking broadscale projects that could disrupt the entire center, the Kennedy Center 

chose to renovate the center incrementally while keeping the rest of the 

center open and operating. 

The center receives annual federal appropriations for capital projects 

based on the CBP and also for the operation, maintenance, and security of 

the facility. The funds appropriated for capital projects remain available to 

the Kennedy Center until they are expended. To implement its CBP, the 

Kennedy Center has received about $216 million since fiscal year 1995. This 

includes $35.3 million transferred from the National Park Service and the 

Smithsonian Institution and about $180.5 million in appropriated funds. In 

fiscal year 2006, the Kennedy Center received $13 million in federal funds 

for capital improvement projects and $17.8 million for the operation, 

maintenance, and security of the facility.10 According to a Kennedy Center 

official, this amount represents about 18 percent of the Kennedy Center’s 

9

The 2002 building plan shows projects being completed in fiscal year 2008.

10The Kennedy Center’s appropriation for fiscal year 2006 is contained in the Department of 

the Interior, Environment, and Related Agencies Appropriations Act, P.L. 109-54, 119 Stat. 

499, 546 (2005). P. L. 109-54 appropriated to the Kennedy Center $13 million for capital 

improvements and $17.8 million for operations and maintenance. However two rescissions 

for fiscal year 2006 will affect the final amounts that the Kennedy Center will receive for 

capital improvements and for operations and maintenance. Section 439 of P.L. 109-54, 119 

Stat. 499, 559 (2005) provided for an across-the-board rescission of 0.476 percent of the 

budget authority provided for fiscal year 2006 for any discretionary appropriation in the act, 

which would include the Kennedy Center appropriation. The second rescission is an acrossthe-board rescission of budget authority equal to 1 percent for most agencies in any other 

fiscal year appropriation act, which also includes the Kennedy Center. See Department of 

Defense, Emergency Supplemental Appropriations to Address Hurricanes in the Gulf of 

Mexico, and Pandemic Influenza Act, 2006, P.L. 109-148, 119 Stat. 2680, 2791 (2005).
Page 13 GAO-06-1025 Kennedy Center

anticipated fiscal year 2006 total operating expenses. The Kennedy Center 

generates the majority of its revenues from performances at the center, 

contributions, and investments. The center’s federal appropriations are not 

used for performance-related expenses. 

The law governing facility construction or alteration at the Kennedy Center 

requires that the center be in compliance with nationally recognized model 

building codes and other applicable nationally recognized fire safety codes 

to the maximum extent feasible.11 As is the case for federal agencies, the 

Kennedy Center is the authority that makes the final determination on 

whether the center is complying with the fire safety code.12 The Kennedy 

Center policy on building codes states that, where feasible, the center will 

comply with the International Building Code (2003), International Fire 

Code (2003), and selected provisions of the National Fire Prevention 

Association Life Safety Code (NFPA 101) (2003).

The John F. Kennedy Center Act Amendments of 1994 amended the 

Kennedy Center Act to designate the center as a federal entity for purposes 

of the Inspector General Act of 1978 (IG Act), as amended. The Kennedy 

Center Act states that only federally appropriated funds are subject to the 

requirements of a federal entity under the IG Act. The Kennedy Center Act 

authorizes the Smithsonian Institution OIG to audit and investigate 

activities of the Kennedy Center involving federal appropriated funds, on a 

reimbursable basis, if requested by the Board of Trustees. In July 2006, the 

Kennedy Center finalized an MOU with the Smithsonian OIG for audits of 

federal funds used for capital projects.

1140 U.S.C. §3312.

12Under certain laws, the Kennedy Center is treated as a federal agency.
Page 14 GAO-06-1025 Kennedy Center

The Kennedy Center 

Has Taken Steps to 

Implement Our 

Oversight, Fire Safety, 

and Capital Project 

Recommendations, but 

More Work Remains

Recently, we recommended that the Kennedy Center increase oversight of 

its management of federal funds, ensure the fire safety of the center, and 

better align its management of capital projects with best practices.13 While 

the Kennedy Center has fully or partially implemented all 12 of our 

recommendations, more work is needed to fully implement some 

recommendations in the areas of fire safety and management of capital 

projects. In particular, the Kennedy Center has taken steps to (1) address 

fire code deficiencies at the Millennium Stages, such as providing marked 

exit routes for occupants; (2) ensure that doors in key areas provide 

adequate separation from fire; (3) develop as-built drawings of the center; 

and (4) provide timely and accurate information about capital projects to 

stakeholders (see fig. 3).

13GAO-05-334.
Page 15 GAO-06-1025 Kennedy Center

Figure 3: Kennedy Center’s Progress in Implementing Our Recommendations

Recommendation Status

Recommendation has been implemented.

Steps have been taken to implement the recommendation, but more work is needed.

Recommendation has not been implemented.

Source: GAO.

Oversight

Categories

Fire safety

 

Management of

capital projects

Work with an independent federal government

oversight organization.

Provide more timely and accurate information

about capital projects to stakeholders.

Take steps to control cost growth and schedule

changes in future capital projects.

Design and implement comprehensive contract

and project management policies and procedures.

Establish and enforce a documents retention

policy that allows for accountability of the

Kennedy Center's federal funds.

Design and implement comprehensive financial

policies and procedures to address several

specific areas.

Develop as-built drawings and better track

changes to the center.

Develop and implement a program to manage

the storage of combustible materials.

Ensure that doors in key areas provide adequate

separation from fire.

Seek peer review by a knowledgeable third party

of the egress and fire-modeling study.

Install a smoke control system that is integrated

with a sprinkler system and smoke detectors

over the Millennium Stages.

Implement fire-modeling peer review

recommendations, including marked exit routes for

occupants at the Millennium Stages.
Page 16 GAO-06-1025 Kennedy Center

The Kennedy Center Has 

Contracted for Audits of Its 

Management of Federal 

Fund Expenditures

In April 2005, we reported that the Kennedy Center had limited external 

reviews of how it maintains assurance regarding appropriate management 

of federal funds. Specifically, we found that the costs of four federally 

funded Kennedy Center capital projects exceeded the original budgeted 

costs and that a lack of comprehensive policies and procedures limited the 

Kennedy Center’s ability to adequately manage federal funds. In addition, in 

April 2005, we reported that the Kennedy Center had not reported annually 

to Congress and the Office of Management and Budget (OMB) on its audit 

and investigative activities as required by the IG Act.14 To increase 

oversight of the Kennedy Center’s management of federal funds, we 

recommended in April 2005 that the Kennedy Center work with an 

independent federal government oversight organization, such as the 

Smithsonian Institution OIG, for audits of the center’s use of federal 

funds.15 

In response to our recommendation, the Kennedy Center hired a 

nongovernmental organization in August 2005 to develop a risk assessment 

and audit plan to assist the Kennedy Center Board of Trustees in its 

oversight of the center’s management of federal funds. Specifically, the risk 

assessment and audit plan were created for the Facilities Management 

Office (FMO) and Project Management Office (PMO) because the Kennedy 

Center receives federal funds to support the activities of both offices. FMO 

manages operations, maintenance, and contracting, and PMO is one of 

three offices that conduct capital projects for the center.16 The risk 

assessment was designed to provide a summary of the center’s potential 

risks for facilities and project management, including the specific risks the 

14See IG Act of 1978, as amended, 5 U.S.C. § app. 3, section 8G, and 2005 and 2006 List of 

Designated Federal Entities and Federal Entities, at 71 Fed. Reg. 24872 (Apr. 27, 2006).

15The Kennedy Center Act provides that only federally appropriated funds are subject to the 

requirements for a federal entity under the IG Act of 1978 (5 U.S.C. App. 3). As a federal 

entity, the Kennedy Center is not required to establish an OIG; however, the center is 

required to report annually to Congress and OMB on its audit and investigative activities 

(See IG Act of 1978, as amended, 5 U.S.C. § app. 3, section 8G, and 2005 and 2006 List of 

Designated Federal Entities and Federal Entities, at 71 Fed. Reg. 24872 (Apr. 27, 2006)). The 

Kennedy Center Act authorizes the Kennedy Center to request the Smithsonian OIG to 

conduct audits related to the expenditure of federal funds on a reimbursable basis (20 

U.S.C. §76l(d)).

16The Kennedy Center conducts capital projects primarily through three offices—Project 

Management, Contracts, and Finance. The Contracts Office is under the Facilities 

Management Office and negotiates, enters into, and manages procurements of products and 

services, including those related to capital projects.
Page 17 GAO-06-1025 Kennedy Center

center faces in its use of federal funds. One such risk identified for project 

management is that capital projects could incur cost and time overruns if 

the project budget or schedule does not sufficiently allow for 

contingencies. The nongovernmental organization also prepared an audit 

plan, which was based on the center’s potential facilities and project 

management risks. This audit plan was designed to address the key risk 

issues identified in the risk assessment and provide a strategy for another 

organization to review each risk. For example, to address the potential for 

cost and schedule overruns, an audit of the center’s project management 

process was proposed. 

On May 16, 2006, the Kennedy Center awarded a contract to a 

nongovernmental organization to implement the audit plans for FMO 

activities. A Kennedy Center official told us that the nongovernmental 

organization began the FMO audit work several days after the contract was 

awarded. On July 25, 2006, the Kennedy Center finalized an MOU for the 

Smithsonian Institution OIG to conduct audits, on a reimbursable basis, of 

PMO activities. Specifically, the Smithsonian Institution OIG will conduct 

two audits on aspects of the center’s capital project management process. 

The Smithsonian OIG expects that these two audits will take about 1 year. 

In addition, the Smithsonian Institution OIG will submit proposals to the 

Kennedy Center Board of Trustees for subsequent audit coverage. As we 

reported in April 2005, ongoing oversight of the center’s use of federal 

funds is necessary to maintain assurance that they are managed 

appropriately. Therefore, to ensure ongoing oversight of the center’s use of 

federal funds, it is important that the board examine and pursue future 

audit proposals from the Smithsonian OIG.

The Kennedy Center Has 

Taken Some Steps to 

Implement Our Fire Safety 

Recommendations, but 

More Work Is Needed

In April 2005, we reported that the Kennedy Center did not appear to meet 

some fire safety code requirements. Specifically, we identified problems 

with the performance-based approach the center used to overcome a 

deficiency in the number of emergency exits at the center,17 and we 

identified other code deficiencies in the center that were not covered by 

the performance-based approach. First, we found that the Kennedy Center 

had not fully implemented the conditions associated with its performancebased approach, which included installing sprinklers at the Millennium 

17Fire code allows an entity to provide an alternative to complying directly with fire code. 

This alternative, which allows people to exit the building safely in case of fire, is called a 

performance-based approach.
Page 18 GAO-06-1025 Kennedy Center

Stages and developing and implementing a program to manage the storage 

of scenery, props, and other combustible materials. In addition, the Board 

of Trustees had not accepted and adopted the terms of the performancebased approach as described in fire code. Since these steps had not been 

taken, we concluded that the performance-based approach was not yet 

valid for satisfying fire code. We also found that the fire-modeling study, on 

which the Kennedy Center’s performance-based approach was based, had 

not undergone a peer review. Peer review of modeling studies is a common 

industry practice outlined in fire code. In addition, we concluded that a 

peer review was particularly important for the Kennedy Center because the 

center lacked sufficient on-staff expertise to adequately interpret and 

evaluate the modeling study, and the Kennedy Center’s fire safety decisions 

were not subject to external review. Other fire code deficiencies remained 

to be addressed. For example, we found that there were no fire-rated doors 

in some areas that contain key emergency systems, and the Millennium 

Stages did not have two different, marked exit routes for occupants or an 

integrated smoke control, sprinkler, and smoke detector system over the 

stage area, as required by fire code. As a result, we recommended that the 

Kennedy Center improve its compliance with applicable fire codes in a 

number of ways (see fig. 4). 
Page 19 GAO-06-1025 Kennedy Center

Figure 4: Kennedy Center’s Progress in Implementing Our Fire Safety 

Recommendations

• The Kennedy Center has implemented our recommendation to obtain 

a peer review of its fire-modeling study. In April 2005, we 

recommended that the Kennedy Center seek a peer review of its firemodeling study of the Grand Foyer, Hall of States, and Hall of Nations to 

determine if the study could be substituted for certain prescriptive fire 

code solutions. In July 2005, the Kennedy Center initiated two separate 

peer reviews, one with GSA and another with a nongovernmental fire 

protection consultant firm. Both peer reviews provided comments and 

expressed concerns about the assumptions used in the center’s study. In 

response to the peer reviewers’ comments and concerns, the Kennedy 

Center improved and updated its fire-modeling study, which was 

finalized in March 2006. The revised, peer-reviewed modeling study 

concludes that patrons can exit the Kennedy Center before it becomes 

untenable provided that (1) fire protection from the Lower Gift Shop is 

provided and (2) exit signs are installed in the Grand Foyer, Hall of 

States, and Hall of Nations. The Kennedy Center Board of Trustees is the 

authority responsible for determining if a performance-based design 

meets its objectives, as described in fire code. The Chairman of the 

Category Recommendation Status

Fire safety

 

Recommendation has been implemented.

Steps have been taken to implement the recommendation, but more work is needed.

Recommendation has not been implemented.

Source: GAO.

Develop and implement a program to manage

the storage of combustible materials.

Ensure that doors in key areas provide adequate

separation from fire.

Seek peer review by a knowledgeable third party

of the egress and fire-modeling study.

Install a smoke control system that is integrated

with a sprinkler system and smoke detectors

over the Millennium Stages.

Implement fire-modeling peer review

recommendations, including marked exit routes for

occupants at the Millennium Stages.
Page 20 GAO-06-1025 Kennedy Center

Kennedy Center Board of Trustees stated that after the updated study is 

finalized, the board will determine if it meets design objectives and then 

will formally accept the study and adopt its terms. Although the updated 

study was finalized in March 2006, the Board of Trustees has yet to 

formally accept the study and adopt its terms. The board’s approval of 

the assumptions and conditions of the updated study is the final step in 

fully implementing our recommendation.

• The Kennedy Center has implemented our recommendation to manage 

the storage of combustible materials. In April 2005, we recommended 

that the Kennedy Center meet the objectives of its performance-based 

study by developing and implementing a program to manage the storage 

of scenery, props, and other combustible materials. In April 2005, the 

Kennedy Center developed and implemented a policy to manage fuel 

load by limiting the storage of scenery, stage props, and other 

combustible materials. To implement this policy, a Kennedy Center 

official conducts compliance inspections using a fire and life-safety 

checklist prior to each new show. 

• The Kennedy Center has taken steps to implement our 

recommendation to address the code deficiencies at the Millennium 

Stages. In April 2005, we recommended that the Kennedy Center, in 

accordance with fire code, install an integrated smoke control, 

sprinkler, and smoke detector system over each Millennium Stage area 

and provide two different, marked exit routes for occupants at each 

Millennium Stage. The Kennedy Center believes the Millennium Stages 

have sufficient fire protection systems in place based on the results of 

its performance model. The revised, peer-reviewed modeling study 

concludes that smoke exhaust and sprinkler protection are not needed 

for the Millennium Stages provided the conditions of the revised 

modeling study are met. The Kennedy Center plans to adequately 

separate the Lower Gift Shop and the plaza-level public spaces as part of 

its life-safety improvements by spring 2007. Second, a Kennedy Center 

official said that exit signage is temporarily installed to mark the interior 

exit path during Millennium Stage performances and that the center 

plans to begin installing exit signs on the external doors in the Grand 

Foyer by the end of September 2006 (see fig. 5). Once the two 

conditions of the revised modeling study have been met, the Kennedy 

Center will have fully implemented our recommendation.
Page 21 GAO-06-1025 Kennedy Center

Figure 5: Location of Exit Signage at the Millennium Stages

• The Kennedy Center has taken some steps to implement our 

recommendation to ensure that doors in key areas provide adequate 

separation from fire. In April 2005, we recommended that the Kennedy 

Center comply with fire safety code by ensuring that fire-rated doors are 

installed in key areas to provide adequate separation from fire. In March 

and May 2006, the Kennedy Center had a fire protection inspector assess 

the fire rating of the doors in the fire pump room, Fire Command Center 

and Concert Hall exits. The fire protection inspector found that these 

doors needed some repairs in order to obtain the fire-rating label. In 

response, the Kennedy Center repaired the doors in the fire pump room 

and Fire Command Center and, therefore, the fire protection inspector 

was able to certify that these doors provide adequate separation from 

Entrance Plaza 

Potomac River 

Eisenhower 

Theater 

Millennium Stage Millennium Stage 

Opera 

House 

Concert 

Hall 

Grand Foyer 

Stage area 

Stage area Stage area Family Theater

Grand Foyer 

Sources: Kennedy Center; GAO. 

Hall of 

State

s

Hall of Nation

s

Exit points leading outside building

During a Millennium Stage performance, exit signage is temporarily installed at the interior exit path

Exit signage to be installed at exterior exit path near Millennium Stage
Page 22 GAO-06-1025 Kennedy Center

fire. In addition, the Kennedy Center is making the necessary repairs to 

the doors at the Concert Hall exits to ensure that they provide adequate 

separation from fire. A Kennedy Center official stated that he plans to 

have the Concert Hall exit doors repaired, inspected, and labeled as firerated by the end of December 2006. Once the Concert Hall exit doors 

have been repaired, inspected, and labeled as fire-rated, the Kennedy 

Center will have fully implemented our recommendation.

The Kennedy Center Has 

Taken Some Steps to 

Implement Best Practices to 

Improve Its Capital Project 

Management, but More 

Work Is Needed

In April 2005, we reported that although the Kennedy Center achieved its 

goal of renovating four key federally funded capital projects, costs 

exceeded budget estimates for each project. Project cost growth resulted 

from modifications made during the renovation process, in part, because 

the Kennedy Center lacked knowledge of the building’s site conditions. 

Modifications led to overtime charges paid to meet tight construction 

schedules. In addition, the center may have paid more than necessary by 

negotiating contract modification values after work was completed. A lack 

of comprehensive policies and procedures limited the Kennedy Center’s 

ability to adequately safeguard federal funds. In addition, the Kennedy 

Center did not always communicate timely or accurate information on 

project cost growth and schedule delays to its board or Congress. In April 

2005, we made several recommendations to better align the Kennedy 

Center’s capital project management with best practices (see fig. 6).
Page 23 GAO-06-1025 Kennedy Center

Figure 6: Kennedy Center’s Progress in Implementing Our Recommendations to 

Better Align Its Capital Project Management with Best Practices

• The Kennedy Center has implemented our recommendation to design 

and implement contract and project management policies and 

procedures in accordance with prescribed federal guidance. In January 

2006, the Kennedy Center designed and implemented contract and 

project management policies and procedures to guide various activities 

related to the acquisition of goods and services for its capital 

improvements program. The contract and project policies and 

procedures were drawn from the FAR, which generally applies to 

federal contracting activities. We did not assess the effectiveness of 

these policies and procedures because they were recently implemented. 

• The Kennedy Center has implemented our recommendation to control 

cost growth and schedule changes in the Family Theater by setting 

more flexible construction schedules and improving its management 

of contract modifications. In February 2006, the Kennedy Center 

implemented a contract and project management policy that requires 

contract modification values to be negotiated before work is completed. 

Category Recommendation Status

Management of

capital projects

Recommendation has been implemented.

Steps have been taken to implement the recommendation, but more work is needed.

Recommendation has not been implemented.

Source: GAO.

Provide more timely and accurate information

about capital projects to stakeholders.

Take steps to control cost growth and schedule

changes in future capital projects.

Design and implement comprehensive contract

and project management policies and procedures.

Establish and enforce a documents retention

policy that allows for accountability of the

Kennedy Center's federal funds.

Design and implement comprehensive financial

policies and procedures to address several

specific areas.

Develop as-built drawings and better track

changes to the center.
Page 24 GAO-06-1025 Kennedy Center

For this report, we performed a limited assessment of the center’s 

implementation of this policy based on a review of some Family Theater 

contract modifications. We found that the Family Theater was 

completed on schedule and with limited cost growth. In particular, 

contractors did not proceed with additional work until it was approved 

by the contracting officer, and overtime was not paid to accelerate the 

schedule. The Kennedy Center’s progress in setting more flexible 

schedules and improving its management of contract modifications on 

larger federally funded projects, such as the Eisenhower Theater, will 

better indicate whether the center can effectively control cost growth 

and schedule changes. The Kennedy Center estimates that the 

construction period for this project will be from spring 2007 through 

summer 2008. 

• The Kennedy Center has implemented our recommendation to design 

and implement financial policies and procedures to strengthen 

financial management controls in several specific areas (see fig. 7). In 

January 2006, the Kennedy Center designed and implemented financial 

policies and procedures for activities funded by federal appropriations. 

The financial policies and procedures were drawn from various laws 

and regulations, including the FAR. Our analysis found that the Kennedy 

Center has implemented our recommendations to ensure that complete, 

up-to-date costs are recognized and used to prepare financial reports 

and that payments to other federal agencies are consistent with the 

Economy Act agreement.18 In addition, the Kennedy Center 

implemented a procedure to ensure that receipt information is recorded 

and compared with field inspection reports to verify the validity of 

invoices prior to payment. The Kennedy Center also developed and 

effectively implemented new policies and procedures to ensure that (1) 

invoices contain sufficient detail to support their accuracy and validity 

and (2) invoices match with inspection reports and previously paid 

invoices to prevent duplicate payments. A more detailed discussion of 

our analysis of the Kennedy Center’s implementation of its financial 

policies and procedures can be found in appendix II.

1831 U.S.C. §§1535 and 1536.
Page 25 GAO-06-1025 Kennedy Center

Figure 7: The Kennedy Center’s Full Implementation of Financial Policies and 

Procedures in Several Specific Areas

• The Kennedy Center has implemented our recommendation to 

establish and enforce a documents retention policy that allows for 

accountability of the center’s federal funds. In June 2006, the Kennedy 

Center established and enforced a documents retention policy and 

issued a procedures manual for federal and nonfederal documents 

based on guidance from several sources, including the Internal Revenue 

Service, NARA, and the Smithsonian Institution. In conjunction with this 

manual, the center developed and implemented a computerized system 

to assist in the storage, retrieval, and destruction of all records. 

• The Kennedy Center has taken some steps to implement our 

recommendation to better develop as-built drawings and better track 

future changes to the center. In January 2006, the Kennedy Center 

created a project management policy that requires as-built drawings of 

any new construction improvements to the building. As-built drawings 

of the new construction will allow the center to better track future 

Recommendation Status

Recommendation has been implemented.

Steps have been taken to implement the recommendation, but more work is needed.

Recommendation has not been implemented.

Source: GAO.

Category

Management of

capital projects:

financial policies

Management of

capital projects:

financial policies

Design and implement comprehensive financial policies

and procedures to address several specific areas to

ensure that:

complete up-to-date costs for construction and 

other services are recognized and used to prepare 

financial reports and manage project costs;

for Economy Act transactions, payments to other 

federal agencies are for actual costs consistent 

with the Economy Act agreement;

receiving reports are prepared when goods or 

services are received to verify the validity of 

invoices;

invoices match with inspection reports and 

previously paid invoices to prevent duplicate 

payments. 

invoices contain sufficient detail to support their 

accuracy and validity; and
Page 26 GAO-06-1025 Kennedy Center

changes to these areas. However, this policy does not require the center 

to integrate the individual new construction as-built drawings into one 

master set of centerwide drawings nor does it require updating as-built 

drawings as additional changes to the center are made. A Kennedy 

Center official told us that the center agrees that as-built drawings of the 

entire center are needed to prevent costly unforeseen site conditions; 

however, assembling and updating a master set of as-built drawings is 

expensive and not a Kennedy Center priority. Nevertheless, since 

incomplete knowledge of site conditions has contributed to cost 

overruns in the past, it remains important for the Kennedy Center to 

start assembling and consistently updating a comprehensive set of asbuilt drawings of the entire center.

• The Kennedy Center has taken some steps to implement our 

recommendation to provide timely and accurate information about 

capital projects by detailing their budget, scope, and cost and 

providing to stakeholders an annual reconciliation of the status of all 

planned, delayed, eliminated, and actual projects. We found that the 

2005 CBP is better than previous versions because it includes the details 

of, and explanations for, project budget changes since the 2004 CBP. The 

2005 CBP also includes the actual and projected obligations for each 

capital project by fiscal year through 2008, the last year of the CBP. 

Figure 8 illustrates how the Kennedy Center’s 2005 CBP conveys actual 

and projected obligations for the Eisenhower Theater for this period. 

These actions are responsive to our recommendation that the Kennedy 

Center provide more timely and accurate information to Congress and 

the Board of Trustees on the status of all planned and actual projects.
Page 27 GAO-06-1025 Kennedy Center

Figure 8: Excerpt from The Kennedy Center’s 2005 CBP Showing Eisenhower Theater Budget Changes from the 2004 CBP and 

Projected Obligations, in Dollars

Note: The Kennedy Center’s 2005 CBP section titled “Eisenhower Theater Renovation: Comparison 

with Previous CBP” does not show that the numbers indicate dollars.

Source: Kennedy Center.
Page 28 GAO-06-1025 Kennedy Center

In some instances, we found that the 2005 CBP did not provide timely or 

accurate information about federally funded capital projects. First, the 

2005 CBP does not include original budgets for several federally funded 

projects, which would be needed to compare actual costs with originally 

budgeted costs to identify project cost overruns. Without this information, 

the Kennedy Center Board of Trustees and Congress lack accurate 

information to monitor and evaluate whether federally funded capital 

projects have been implemented effectively and efficiently. Second, the 

2005 CBP remains unnecessarily difficult to understand. Specifically, it 

describes its capital renovation efforts in two different sections of the 

report. The first section provides an assessment of the different parts of the 

center and makes recommendations for improvement, and the second 

section lays out specific CBP capital projects and budgets. However, there 

is no crosswalk between the recommendations and the federally funded 

capital projects, making it difficult to identify how, or if, each project 

addresses specific facility issues. For example, although the 2005 CBP 

establishes a project numbering system, it does not use the numbering 

system in the other sections of the report to link specific projects to the 

issues discussed, making it difficult to understand how each project 

addresses these issues. 

In addition, the center has not provided accurate or timely information to 

the Kennedy Center Board of Trustees or OMB about the cost of federally 

funded capital projects. The Kennedy Center sends monthly reports to 

OMB that provide detailed information, project by project, on budgets and 

schedules. However, we identified eight capital project budgets in the 

December 2005 OMB reports that do not match the capital project budgets 

in the most recent CBP, which was finalized in December 2005. For 

example, the most recent CBP shows that the total projected obligations 

for the Eisenhower Theater are about $15.8 million, whereas the OMB 

report lists the project budget at about $16.8 million. While one of these 

two budget figures may be accurate, it is impossible for stakeholders to 

know which is accurate because the publication date for both is the same, 

December 2005.
Page 29 GAO-06-1025 Kennedy Center

The Kennedy Center 

Will Not Complete All 

Planned Capital 

Renovations within 

CBP Budgets and Time 

Frames 

The Kennedy Center’s 2005 CBP indicates that the center will need 

additional budget resources to complete the federally funded projects 

remaining in its CBP and that the terrace-level renovations will be deferred 

until after the CBP ends in 2008. However, the 2005 CBP fails to calculate 

the sum of individual project cost changes, making it difficult to determine 

the overall impact of these changes. We found that the total budget for the 

22 planned, ongoing, or recently completed projects in the 2005 CBP has 

increased by $10 million, or 21 percent, since 2004, bringing the total cost 

of the remaining CBP projects to $58 million. The 2005 CBP indicates that 

the Kennedy Center completed the Family Theater renovation on schedule 

in 2005 with limited cost growth and plans to begin renovating the 

Eisenhower Theater in 2007. However, the 2005 CBP also indicates that 

Kennedy Center deferred most terrace-level renovations that had originally 

been planned for the CBP, including renovations to the Terrace Theater, 

Theater Lab, States and Nations Galleries, and Atrium. In addition, the 

Kennedy Center has acknowledged, since the 2005 CBP was issued, that 

more budget increases and project deferrals may be necessary before the 

CBP is scheduled to end in 2008. 

Estimated Costs for 

Remaining CBP Projects 

Have Increased by $10 

Million, or 21 Percent, Since 

2004

In accordance with our April 2005 recommendation, the 2005 CBP now 

reconciles the budget changes from the 2004 CBP to the 2005 CBP for the 

22 planned, ongoing, or recently completed projects in the CBP, allowing 

readers to more easily track budget changes for individual projects.19 

However, these new reconciliations fail to calculate the sum of individual 

project changes, making it difficult to determine their overall impact on the 

CBP budget through 2008. Our analysis shows that the cost of the 

remaining CBP has increased about $10 million, or 21 percent, since 2004, 

bringing the total cost of the remainder of the CBP from about $48 million 

to $58 million for fiscal years 2006 through 2008.20 Although the budgets for 

a number of projects have changed since the 2004 CBP, our analysis shows 

that the net increase of about $10 million was generally attributable to large 

increases in the following five projects:

19However, as we previously noted, it is impossible to identify how some project budgets 

have shifted without original budgets. 

20The $10 million increase includes about $2.5 million in cost growth for projects in fiscal 

year 2005.
Page 30 GAO-06-1025 Kennedy Center

• The Site Improvements project budget increased by $4.2 million, or 71 

percent, from the 2004 CBP. The 2005 CBP indicated that the Kennedy 

Center needed additional funds to address unforeseen site conditions, 

construction problems, and outstanding contractor claims. Although not 

detailed in the 2005 CBP, outstanding contractor claims on the Site 

Improvements project may cost millions of dollars in federal funds to 

settle, according to a Kennedy Center official. The project includes 

improvements to the service tunnel, plaza, west fascia and safety railing, 

garage, and the streets surrounding the Kennedy Center.

• The Toilet Room Renovation project budget increased by $2.3 million, 

or 94 percent, from the 2004 CBP. The 2005 CBP indicated that the 

Kennedy Center had expected the project to proceed several years 

earlier than currently scheduled, the planned project costs have since 

escalated, and further increases are anticipated. This project will focus 

on upgrading the toilet rooms throughout the center, including finishes, 

equipment, and flooring of toilet rooms throughout the center. 

• The Level A Back-of-House Renovations project budget increased by $2 

million, or 97 percent, from the 2004 CBP. According to the 2005 CBP, 

the budget increased because work was rescheduled to coincide with 

related renovation efforts, such as theater renovations, and changed 

market conditions. This project’s goal is to renovate offices, training 

rooms, locker rooms, backstage areas, dressing rooms, wardrobe areas, 

and other miscellaneous nonpublic spaces.

• The Curtain Wall/Door Replacement project budget increased by $1.5 

million, or 28 percent, from the 2004 CBP. The 2005 CBP indicated that 

the budget grew because of project deferrals, market conditions, and 

extremely high inflation in recent construction costs. This project will 

replace the acoustical glazing on the curtain (nonweight bearing) walls 

for the west plaza level, hall entrances, and roof terrace-level.

• The Hazardous Materials Abatement project budget increased by about 

$900,000, or 72 percent, from the 2004 CBP. The 2005 CBP indicated that 

the budget increase was due to the asbestos abatement associated with 

the Eisenhower Theater project. Originally, the Kennedy Center planned 

to leave the asbestos undisturbed and unabated, but later decided to 

remove it. The 2005 CBP indicates that the scope of the project 

increased when planning for the Eisenhower Theater revealed a greater 

need for abatement than was previously anticipated.
Page 31 GAO-06-1025 Kennedy Center

Most Plaza-Level 

Renovations Have Been 

Completed, but the 

Eisenhower Theater 

Renovation Is Still in the 

Planning Stage

According to the 2005 CBP, the Kennedy Center still plans to complete 

renovations to the major performance and public spaces located on the 

plaza level within the CBP time frame. The plaza level includes interpretive 

displays about John F. Kennedy and the Kennedy Center and consists 

primarily of four theaters—the Opera House, Concert Hall, Eisenhower 

Theater, and Family Theater (formerly the AFI Theater)—and of three main 

public spaces—the Grand Foyer, Hall of States, and Hall of Nations. We 

reported in 2005 that the Kennedy Center had completed renovations to the 

Concert Hall, Opera House, and plaza-level public spaces but that the 

projects all experienced cost growth because of management and 

construction problems.21 

The 2005 CBP indicates that the conversion of the AFI Theater into the 

Family Theater was completed in 2005, within established time frames and 

with limited cost growth (see fig. 9). The cost of the project was about $9.1 

million—an amount that included cost growth, due to change orders, that 

was within the amount allocated for contingency. With seating for 320 

people, the Family Theater renovation project was smaller in scale than 

other theaters on the plaza level. Kennedy Center management officials 

said that the lower grade finishes of the AFI Theater reduced the need to 

retain acoustic integrity and allowed for more detailed investigations 

during the project’s design stage. These investigations likely limited the 

number and severity of unexpected site conditions, which contributed to 

cost overruns for the Concert Hall and Opera House renovations.

21GAO-05-334.
Page 32 GAO-06-1025 Kennedy Center

Figure 9: AFI Theater before and after Its Conversion to the Family Theater

We also found that the Kennedy Center was more careful in the way it 

handled contract modifications during the construction of the Family 

Theater, which may have contributed further to limiting cost overruns on 

the project. In addition, Kennedy Center management officials said that the 

use of a different contracting approach, called construction manager at risk 

(CMAR), helped the Kennedy Center complete the project within budget 

and on schedule. Under a CMAR arrangement, a construction manager is 

hired as a general contractor to provide services during project design and 

then take over construction as the general contractor. We do not believe 

Sources: GAO; Kennedy Center.

Family Theater

AFI Theater
Page 33 GAO-06-1025 Kennedy Center

that the use of CMAR had a significant impact on the final cost or 

timeliness of the Family Theater’s construction. This is because CMAR 

contractors increase the price of their bid to compensate for the additional 

risk they take on as part of the contract. In addition, we found that the 

Kennedy Center’s use of CMAR did not comply with the FAR.22 Specifically, 

the Kennedy Center did not obtain a required deviation from the FAR, and 

it authorized contractor work to begin on the Family Theater before 

establishing the guaranteed maximum price of the project. These actions 

undermined the Kennedy Center’s claim of compliance with the FAR. In 

addition, the center’s negotiation of prices after work had begun placed the 

government at increased risk of cost overruns. 

The last major project on the plaza level is the renovation of the 

Eisenhower Theater, which will address life safety concerns, upgrade 

finishes, and make the theater accessible to the disabled. With seating for a 

total of 1,100 people in three tiers, the Eisenhower Theater is larger than 

the former AFI Theater. The 2004 CBP indicated that the Eisenhower 

Theater renovation work would begin in fiscal year 2007, assuming 

adequate funding, a schedule that was reiterated in the 2005 CBP. The 

project’s budget was stable through the 2004 and 2005 CBPs at about $15.8 

million. However, since December 2005, the project’s cost has increased 

$900,000, or 6 percent, because of what the Kennedy Center describes as 

escalating construction costs, among other things.23 The 2005 CBP also 

indicated that the Kennedy Center would need to calculate another cost 

estimate once the schematic design is completed. Continued cost growth 

may hamper the Kennedy Center’s ability to complete the Eisenhower 

Theater renovation within the CBP’s budget and time frame. The President 

of the Kennedy Center told the Board of Trustees’ Operations Committee in 

September 2005 that the Eisenhower Theater renovation was then in 

jeopardy because of funding concerns. 

22The Kennedy Center follows FAR when procuring contracts utilizing appropriated funds. If 

the center elects not to follow FAR, it must seek a FAR deviation. FAR Subpart 1.4, 

Deviations (January 2006).

23The budget for the Eisenhower Theater renovation actually increased by about $2.1 

million, but about $1.2 million of that increase was caused by the Kennedy Center’s shifting 

resources from the Hazardous Materials Abatement project to the Eisenhower Theater 

renovation. 
Page 34 GAO-06-1025 Kennedy Center

The Kennedy Center Will 

Not Complete Terrace-Level 

Renovations by the End of 

the CBP as Planned

Although the Kennedy Center’s original goal for the CBP was to completely 

renovate the Kennedy Center and meet all life safety and accessibility 

requirements by the end of 2008, we concluded in 2004 that it was unlikely 

that the Kennedy Center would be able to meet that goal because of 

increasing project costs and time lines.24 Nevertheless, the Kennedy Center 

indicated in 2004 that it still intended to complete the vast majority of the 

projects in the CBP. However, the 2005 CBP shows that the center now 

plans to defer most terrace-level renovations beyond the end of the CBP. 

The terrace level of the Kennedy Center sits above the plaza level and 

comprises the Terrace Theater, the Theater Lab, States and Nations 

Galleries, Atrium, and two restaurants.25 (See fig. 10).

Figure 10: Diagram of the Kennedy Center’s Terrace-Level Public Spaces and 

Theaters

According to the 2005 CBP, sprinklers were extended into the Terrace 

Theater in 2005, and the remaining life safety deficiencies will be addressed 

as part of the Roof Terrace Life Safety Project. The 2005 CBP does not 

describe the Roof Terrace Life Safety Project; but allocates $4.5 million for 

24See GAO-04-933.

25We do not address the condition of the restaurants, since they are outside the scope of the 

CBP. 

Sources: Kennedy Center; GAO.

Restaurant

Cafe

Theater Lab

Terrace 

Gallery

Terrace

Theater States Gallery

Nations Gallery 

East Terrace Terrace level

West Terrace

Atrium
Page 35 GAO-06-1025 Kennedy Center

the project and schedules the bulk of the work for fiscal year 2007. This 

budget and schedule, however, are likely to change, possibly slipping until 

after 2008. The budget for the Roof Terrace Life Safety Project was 

estimated in 2002, before the scope was set or any detailed planning or 

design work had been conducted. The 2005 CBP further notes that the Roof 

Terrace Life Safety Project may be deferred to ensure that the Eisenhower 

Theater renovation can continue on schedule. Given the recent cost growth 

in that project, deferral of the Roof Terrace Life Safety Project seems 

increasingly likely. The scope of the Roof Terrace Life Safety Project has 

still not been set, making it difficult to evaluate the feasibility or adequacy 

of the project. The 2005 CBP indicates that the project will extend 

sprinklers to the States and Nations Galleries, protect the Terrace Theater 

exit stairway from fire, and consider other projects unrelated to life safety 

during planning.

Apart from the Roof Terrace Life Safety Project, the 2005 CBP indicated 

that the Kennedy Center is deferring or placing a low priority on other 

terrace-level projects. Specifically, the Kennedy Center is deferring the 

following projects:

• Terrace Theater renovation. Originally scheduled for fiscal year 2005, 

the major portions of the Terrace Theater renovation have been 

deferred beyond the time frame of the CBP,26 including associated 

renovations to the auditorium, lobby, hallways, backstage areas, and 

some technical systems. With seating for 513 people, the Terrace 

Theater is the largest performance space on the terrace level. It was 

opened in 1978 and is in need of renovation because it does not 

currently offer accessibility for the disabled throughout the auditorium 

and suffers from other deficiencies in acoustics and finishes. 

• Theater Lab renovation. Originally scheduled for fiscal year 2001, 

renovations of the Theater Lab—a 398 seat theater—have mostly been 

deferred, including previous plans to address deficiencies related to 

disabled access, acoustics, and support spaces. 

• Terrace-level public spaces. Originally scheduled for fiscal year 2000, 

repairs of known architectural and finish deficiencies throughout the 

terrace-level public spaces will not be done as part of the CBP. Affected 

26The Kennedy Center added handrails and sprinklers to the Terrace Theater as part of the 

CBP.
Page 36 GAO-06-1025 Kennedy Center

spaces include the States and Nations galleries and the atrium. 

According to the 2005 CBP, the terrace-level public spaces suffer from a 

number of problems—including deteriorated floor tiles, poor 

accessibility to restrooms, inadequate circulation patterns, and muddled 

acoustics—that will only be considered as funding allows. 

Since the 2005 CBP was issued, the Kennedy Center has indicated that 

additional deferrals will be necessary. The President’s fiscal year 2007 

budget provides $4.9 million less than was projected in the 2005 CBP. If this 

amount becomes the final budget, the Kennedy Center will further defer or 

reduce several projects whose costs have grown, including the 

Curtain/Wall Door Replacement, Toilet Room Renovation, and Level A 

Back-of-House renovation. In addition, the Eisenhower Theater 

renovation’s cost growth may necessitate additional deferrals to other 

projects. Because the CBP will not be completed in 2008 as planned, the 

Kennedy Center has hired a consulting firm to survey the Kennedy Center 

and recommend center upgrades that have not yet been completed, with a 

goal of extending the CBP’s implementation period to 2012. A Kennedy 

Center official told us that projects not completed by 2008 as planned will 

be included in this new building survey.

The Kennedy Center 

Board of Trustees Has 

Delegated Its 

Responsibility for 

Federally Funded 

Capital Projects, but 

Has Provided Limited 

Oversight 

Under the Kennedy Center Act, the Board of Trustees is responsible for 

developing and annually updating the CBP; planning, designing, and 

constructing capital projects; and preparing a budget. Consistent with the 

practices of other governing boards, the Kennedy Center Board of Trustees 

has delegated these responsibilities to management. Although a board can 

delegate responsibilities to management, it remains responsible for 

overseeing management’s work. We found that the Kennedy Center Board 

of Trustees provides limited oversight of its federally funded capital 

projects. Specifically, we found no evidence that the board, as required by 

its policies and procedures manual, approves the annual updates to the 

CBP, reviews management’s performance in implementing capital projects, 

or approves the annual capital project budget. Furthermore, the Kennedy 

Center Board of Trustees has provided limited oversight to ensure that its 

appropriated funds are used efficiently, effectively, and in compliance with 

applicable laws. Three factors limit the board’s oversight of federally 

funded capital projects. First, it lacks procedures on how to carry out its 

responsibilities for federal funds. Second, attendance at board and 

Operations Committee meetings has been low, and the Operations 

Committee has met infrequently and at irregular intervals. Third, the board 
Page 37 GAO-06-1025 Kennedy Center

does not receive information needed to evaluate whether federally funded 

capital projects have been implemented efficiently.

The Kennedy Center Board 

of Trustees Provides 

Limited Oversight of 

Federally Funded Capital 

Projects

According to the Kennedy Center Act, it is the board’s responsibility to 

develop and annually update the CBP, which serves as the center’s longterm capital planning document. The board has delegated the annual 

update of the CBP to the center’s PMO and a consulting firm.27 Although 

such delegation is not uncommon for a governing board, we found that the 

Kennedy Center provides limited oversight of its federally funded capital 

projects in a number of ways. Our analysis of board meeting minutes and 

information packets, from January 2000 through January 2006, and 

interviews with Kennedy Center officials revealed no evidence that the 

board reviews or approves CBP projects and budgets as it is responsible for 

doing, according to its policies and procedures manual. A center official 

told us that each trustee of the board does not receive the CBP: only 

trustees on the Operations Committee are in receipt of this document. The 

Chairman of the Board told us that because of its large size, the board 

rarely discusses policy issues at board meetings. Instead, the chairman 

stated, full board meetings are used as a forum for announcements about 

upcoming programs and events. Without an opportunity to review the CBP, 

the board cannot ensure that federally funded capital projects planned for 

construction at the center are in accordance with the requirements of the 

Kennedy Center Act and that the expenditure of federal funds is 

reasonable. 

Both the Kennedy Center Act and the board’s policies and procedures 

manual assign budgeting responsibilities to the board for appropriations. 

Under the act, the board is responsible for preparing a budget in 

accordance with specified federal statutes, and under the manual, the 

board is responsible for approving the Kennedy Center’s budget, which 

includes private and federal funds. The President of the Kennedy Center 

stated that management verbally presents the proposed federal 

appropriation request to the board, which is the federal portion of the 

center’s budget, for approval. In addition, the President of the Kennedy 

Center told us that the Operations Committee also approves the proposed 

federal appropriation request for the center’s capital projects and 

27Although a full architectural/engineering survey by an outside consulting firm is planned 

every 4 to 5 years in accordance with typical industry practices, the CBP is updated by the 

center’s PMO annually.
Page 38 GAO-06-1025 Kennedy Center

operations and maintenance. However, in our analysis of board and 

Operations Committee meeting minutes from January 1998 through 

September 2005, we found no evidence that the board or its Operations 

Committee had approved the center’s proposed federal appropriation 

request. For example, in the September 2005 Operations Committee 

meeting minutes, a Kennedy Center official reported to the trustees of the 

Operations Committee that the center’s fiscal year 2007 request for 

appropriations had already been submitted to OMB. In addition, the 

Chairman of the Board of Trustees and the Chairman of the Operations 

Committee told us that they were not certain if the board approved the 

federal portion of the center’s budget. However, although this report does 

not include a review of the center’s private funds, our analysis of board 

meeting minutes found that the Kennedy Center Board of Trustees 

approves the center’s budget for trust funds.

In contrast, we found that the Smithsonian Institution Board of Regents—

which also oversees federal appropriations for capital projects and trust 

funds, oversees several arts organizations, and has its board membership 

defined by legislation—does review and approve the federal portion of its 

budget.28 Our analysis of Smithsonian Institution Board of Regents meeting 

minutes found that this board first reviews the Smithsonian Institution’s 

budget request for appropriated funds. Next, the Board of Regents votes to 

approve the budget request before it is presented to OMB. Finally, the 

resolution made by the Board of Regents states that any changes made to 

this federal request for appropriated funds can be made only with the 

approval of the Board of Regents or the Executive Committee. Since the 

Smithsonian Institution Board of Regents has been authorized to plan and 

construct numerous facilities with federal funds, the board’s review and 

approval of the Smithsonian Institution’s federal budget request is 

important to ensure that the request for the money is consistent with its 

responsibilities under the law. 

According to the Kennedy Center board’s policies and procedures manual, 

it is the board’s responsibility to “formulate the organization’s policies and 

review management’s performance in achieving them,” as well as, “assist 

the Chairman in selecting, monitoring, appraising, advising, stimulating, 

and rewarding the President.” However, in our analysis of board and 

Operations Committee meeting minutes, as well as in interviews with 

28The Smithsonian Institution Board of Regents also approves the Institution’s budget for 

nonfederal funds. 
Page 39 GAO-06-1025 Kennedy Center

members of management and board members, we found no evidence that 

the board formally evaluates management’s performance or monitors the 

president’s implementation of federally funded capital projects. In addition, 

the Operations Committee, which receives most of the information on 

capital projects, does not receive the information it needs to evaluate 

federally funded capital projects. For example, the Operations Committee 

does not receive key indicators, such as the original versus the actual 

budget and schedule, to determine if all federally funded capital projects 

are implemented on time and within budget. The President of the Kennedy 

Center told us that he annually writes his self-assessment and presents it to 

the Chairman of the Board and to the Personnel Committee. However, the 

President of the Kennedy Center and the Chairman of the Board told us 

that there are no formal evaluation criteria. In particular, there is no 

standard or goal to measure the president’s performance in implementing 

federally funded capital projects. In lieu of formal criteria, the Chairman of 

the Board told us that he uses his intuition to assess the president’s overall 

performance, including the president’s implementation of capital projects. 

In contrast, a Smithsonian Institution official said that the Smithsonian 

Institution Board of Regents evaluates the secretary’s performance 

annually. According to this official, the secretary, with the Board of 

Regents’ approval, sets goals each year that include the secretary’s ability 

to complete capital projects on time and within budget. At the end of the 

year, the Board of Regents rates the secretary’s performance, comparing 

outcomes with the secretary’s established goals. In addition, several 

experts on nonprofit boards noted that a formal, periodic, and 

comprehensive evaluation of a nonprofit organization’s chief executive is 

needed to ensure that the organization’s goals are reached. Furthermore, a 

routine evaluation of a chief executive’s work allows the board to see if its 

decisions are being properly executed by management. The board and 

chief executive need to agree on the purpose and process of a formal 

performance evaluation, including the primary criteria to be used for 

review, such as the chief executive’s annual goals and objectives for the 

organization.

Several Factors Limit the 

Board’s Oversight of 

Federally Funded Capital 

Projects

Like other organizations that receive federal funds, the Kennedy Center 

Board of Trustees must ensure that appropriated funds are used as 

productively as possible, achieve intended goals and objectives, and are 

spent in compliance with applicable laws. However, several factors limit 

the Kennedy Center Board of Trustees’ oversight for federally funded 

capital projects. 
Page 40 GAO-06-1025 Kennedy Center

The Board and Its Operations 

Committee Lack Procedures on 

How to Carry Out Their 

Responsibilities for Federally 

Funded Capital Projects

The Kennedy Center Act generally describes the board’s responsibilities for 

capital projects, such as its duty to maintain the functionality of the center 

at current standards of life, safety, security, and accessibility. Although, the 

act is not specific about how the board is to carry out its responsibility for 

federally funded capital projects, it authorizes the board to create bylaws, 

rules, or regulations, as it deems necessary, to administer its 

responsibilities under the Kennedy Center Act. When the Kennedy Center 

Act was amended in 1994 to give the board sole responsibility for capital 

projects, the board used this authority to create the Operations 

Committee—a committee of the board—to help it carry out this 

responsibility. 

The board’s policies and procedures manual provides information on the 

board’s responsibilities, the center’s organizational structure, and 

performance activities. In addition, the board has created bylaws that 

describe the general duties of board members, officers of the board, and a 

certain number of committees of the board. However, neither the manual 

nor the bylaws describe how the board or its Operations Committee is to 

administer its responsibility under the Kennedy Center Act for federally 

funded capital projects. This lack of procedures hinders the board and its 

Operations Committee in assessing whether federal funds for capital 

projects have been spent efficiently, effectively, and legally. In addition, a 

board expert stated that committees need clear direction to perform well 

and to avoid confusion and conflict over their responsibilities and the 

amount of authority delegated to them. This board expert also stated that 

carefully written policies are needed to help avoid unnecessary confusion 

and conflicts.

The board’s lack of procedures for carrying out its Kennedy Center Act 

responsibilities relating to federally funded capital projects has led to a 

number of different interpretations by Kennedy Center trustees and a 

management official on how the board accomplishes its responsibilities for 

federally funded capital projects and on the Operations Committee’s 

overall responsibility. For example, the board has created and relies on the 

Operations Committee to assist in the oversight of federal funds spent for 

capital projects. Although a Kennedy Center management official, a 

previous trustee, and a current trustee stated that the Operations 

Committee had some jurisdiction over capital projects, they did not agree 

on the committee’s responsibilities and how it accomplishes its 

responsibilities. The previous trustee stated that the responsibility of the 

Operations Committee is to keep Members of Congress that are trustees 

abreast of how capital projects are progressing. The current trustee stated 
Page 41 GAO-06-1025 Kennedy Center

that the Operations Committee’s responsibility is strictly one of oversight 

for capital projects and that any policies relating to capital projects are 

made by the board’s Executive Committee. The Kennedy Center 

management official stated that the Operations Committee’s responsibility 

is to make policies relating to capital projects and oversee the 

implementation of these policies. Furthermore, we reported in 1998 that 

the Operations Committee provided policy guidance, resolved the most 

serious issues requiring board input, and functioned as the eyes and ears of 

center operations. 

Board Meeting Attendance Rates 

Have Been Low, and the 

Operations Committee Has Not 

Met Regularly

Since most of a board’s responsibilities are carried out at board and 

committee meetings, it is important for a board and its committees to hold 

meetings regularly and for board members to attend these meetings. 

However, we found that attendance at board and Operations Committee 

meetings has been low and that the Operations Committee has met 

infrequently and at irregular intervals. Low attendance rates and infrequent 

committee meetings limit the board’s ability to monitor and review 

management’s implementation of federally funded capital projects. 

Despite congressional and board efforts to develop more active trustees 

and increase attendance rates, trustee attendance rates at regularly 

scheduled board meetings have been low. In 1994, when Congress amended 

the Kennedy Center Act and gave the board sole responsibility for capital 

projects, it also reduced the term length of trustees from 10 to 6 years. 

Congress believed that the shorter term would result in the selection of 

trustees who would be more active members of the board. Despite this 

change, the percentage of trustees attending each board meeting from 1995 

through 2005 has ranged between 29 and 58 percent. The Executive 

Committee first tried in 1997 to improve attendance at board meetings by 

reducing the annual number of meetings from four to three because of low 

attendance. Then in 2000, a private consulting firm, hired by the Kennedy 

Center, found that the board’s governance could be strengthened by 

creating mechanisms to ensure more balanced involvement from all 

trustees. The consulting firm recommended that the center use attendance 

at meetings as a requirement for retaining board membership. In response, 

the board instituted an attendance policy that requested trustees to attend 

a minimum of three full board or committee meetings annually to retain 

their trustee status. However, despite these efforts, attendance rates at 

board meetings have never been above 58 percent. Trustees told us that the 

volunteer nature of board membership and the geographic location of 

members’ residences have led to poor attendance rates. Another trustee 

said that many trustees see their appointments as “honorific” and that their 
Page 42 GAO-06-1025 Kennedy Center

main responsibilities are to make donations to and raise funds for the 

center. The trustee further stated that the majority of decisions are made by 

the president and not by the board.

In analyzing attendance rates for meetings of the Smithsonian Institution 

Board of Regents, we found that from January 2000 through September 

2005, the median attendance rate at board meetings was 69 percent and 

ranged from about 47 percent to 94 percent (i.e., one-half of these meetings 

had attendance rates above 69 percent). In contrast, from April 2000 

through September 2005, the median attendance rate at regularly 

scheduled Kennedy Center Board of Trustees meetings was 49 percent and 

ranged from about 37 percent to 58 percent.

In addition, we found that some Kennedy Center trustees send designees to 

represent them at board and committee meetings. Board experts with 

whom we spoke expressed different opinions about trustees sending 

designees to represent them at board and committee meetings. For 

example, some experts stated that sending a designee to a board or 

committee meeting is not conducive to board governance and is contrary to 

volunteerism. However, another expert told us that there could be 

situations in which the use of a designee would be appropriate, provided 

the designee’s responsibility and authority is clarified in the board’s bylaws. 

We found that it is unclear what responsibility and authority designees have 

for carrying out the board’s responsibilities under the Kennedy Center Act. 

Currently, neither the board’s policies and procedures manual nor its 

bylaws address designees’ responsibility or authority. We found that the 

Lincoln Center for the Performing Arts—which is also a performing arts 

organization with a governing board of comparable size—has defined the 

responsibility and authority of its Board of Directors and of designees in its 

bylaws. For example, the bylaws state that any Lincoln Center board 

member entitled to a vote at a meeting may appoint any other person to act 

as such member’s proxy in that member’s capacity. In addition, each 

designee’s authority shall be revocable at the pleasure of the member who 

appointed the designee, and the designee can serve no longer than 11 

months from date of appointment unless otherwise stated by the member.

The Operations Committee has also met infrequently, and attendance at its 

meetings has been low. In 1994, when the board was given responsibility 

for the center’s capital projects, the board created the Operations 

Committee to ensure the appropriate use of federal funds spent for capital 

projects at the Kennedy Center. However, the Operations Committee’s 

ability to ensure the appropriate use of federal funds has been hindered by 
Page 43 GAO-06-1025 Kennedy Center

the infrequent meetings and low trustee attendance rates. From 1995 to 

1998, the Operations Committee met three times a year. However, from 

1998 through 2005, the Operations Committee met inconsistently and 

infrequently, even though several federally funded capital projects were in 

progress at the Kennedy Center (see fig. 11). For example, during the most 

recent period without a committee meeting, which lasted about 12 months, 

center management obligated about $21 million for 13 federally funded 

capital projects. The Operations Committee Chairman told us that 

currently the committee meets twice a year and that this is sufficient to 

oversee capital projects. 
Page 44 GAO-06-1025 Kennedy Center

Figure 11: Intervals between Operations Committee Meetings, January 1995 through April 2006

January 18, 1995 meeting

June 15, 1995 meeting

September 27, 1995 meeting

March 21, 1996 meeting

October 1, 2002 meeting

January 10, 2003 meeting

March 30, 2004 meeting

April 21, 2005

September 29, 2005

April 26, 2006

June 11, 1996 meeting

September 19, 1996 meeting

April 10, 1997 meeting

June 10, 1997 meeting

September 16, 1997 meeting

January 27, 1998 meeting

September 23, 1999

September 28, 2000

 24 month lapse

(September 29, 2000 - September 30, 2002)

20 month lapse

(January 28, 1998 - September 22, 1999)

12 month lapse

(September 24, 1999 - September 27, 2000)

12.5 month lapse 

(April 1, 2004 - April 20, 2005)

 14.5 month lapse

(January 11, 2003 - March 29, 2004)

Source: GAO analysis of Kennedy Center Operations Committee meeting minutes. 

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006
Page 45 GAO-06-1025 Kennedy Center

In addition, trustee attendance rates at Operations Committee meetings 

have been low. From January 1995 through April 2006, there were 18 

Operations Committee meetings, of which attendance records were 

available for 13. Of these 13 meetings, 10 had attendance rates of 50 percent 

or less (see fig. 12). A former Operations Committee Chairman stated that, 

because the Operations Committee was composed of ex-officio 

congressional members, it was difficult to schedule a time when members 

could be present. 

Figure 12: Attendance Rates at Operations Committee Meetings, January 1995 through April 2006

Note: The Operations Committee met 18 times from January 1995 through April 2006. However, 

attendance data were available for only 13 of these meetings, as indicated in figure 12.

Source: GAO analysis of Operations Committee information packets.

Date

Percentage

0

10

20

30

40

50

60

70

80

90

100

 

September 2005

April 2005

October 2002

September 2000

September 1999

January 1998

September 1997

April 1997

September 1996

June 1996

September 1995

June 1995

January 1995

69%

50%

43%

23%

38%

67%

38%

54%

40%

31%

20% 21%

16%
Page 46 GAO-06-1025 Kennedy Center

Lack of Information Has 

Prevented the Board and Its 

Operations Committee from 

Monitoring the Implementation 

of Federally Funded Capital 

Projects

In general, to measure if a capital project has been successfully 

implemented, a board or committee would need information on (1) the 

actual cost of the project versus the budgeted cost, (2) the actual schedule 

of the project versus the original schedule, and (3) if the project provided 

the benefits intended.29 Providing these types of information to the board 

pressures the project team to meet the established cost, schedule, and 

performance goals for the project. 

Although the Operations Committee receives some of this information on 

federally funded capital projects, we found that it lacks key information 

needed to ensure that the project team is implementing capital projects 

within cost and schedule goals. The Operations Committee is to meet 

twice a year, and its trustees receive an information packet before each 

meeting. In reviewing meeting packets for January 2000 through September 

2005, we found that these packets generally included information on 

ongoing federally funded capital projects, such as the amount of previous, 

actual, and projected obligations for each capital project, by fiscal year, and 

a description for each capital project. This information is useful to 

understand current and future obligations for each project. However, the 

meeting packets did not include the baseline cost and schedule estimates 

that would indicate if an ongoing project is within the budget or on 

schedule. Without baseline cost and schedule estimates, the Operations 

Committee and subsequently the board cannot identify project cost growth 

or schedule changes. For example, our analysis found that during a January 

2003 Operations Committee meeting, a Kennedy Center official stated that 

the site improvement project would not require more than $40 million in 

federal funds. However, in April 2005, an Operations Committee 

information packet indicated that the center had obligated approximately 

$49.8 million for the site improvement project. The most recent CBP states 

that the total anticipated federal portion of the project’s cost will be about 

$54.7 million, or about $15 million more in federal funds than center 

management officials told the Operations Committee in 2003. Although the 

Operations Committee had received information anticipating that 

additional funds would be needed for the site improvement project, it did 

not simultaneously receive information on the project’s original budgeted 

cost, which would have indicated the degree of cost growth on the project. 

Without information on original budgeted costs, the committee cannot hold 

29GAO, Executive Guide: Leading Practices in Capital Decision Making, GAO/AIMD-99-32

(Washington, D.C.: December 1998).
Page 47 GAO-06-1025 Kennedy Center

management accountable for the successful implementation of capital 

projects paid for with federal funds.

The President of the Kennedy Center stated that the Operations Committee 

does receive information on capital projects that enables it to compare 

actual costs with budgeted costs and schedules. However, our analysis of 

Operations Committee meeting packets from January 1998 through 

September 2005 found no indication that Operations Committee members 

received information for comparing the actual cost with the original 

budgeted cost. Additionally, although the center’s most recent Operations 

Committee packet, dated April 2006, contains the original budgeted costs 

for 6 capital projects, this information is missing for the remaining 17 

capital projects listed. Thus, although this packet provides improved 

budget information to stakeholders, it does not allow trustees to monitor 

the implementation of all federally funded capital projects. In addition, 

when we spoke with the Operations Committee Chairman about the 

board’s use of budgeted versus actual information, he stated that he leaves 

it up to management to ensure that costs are within established budgets.

As we have reported previously, the implementation of a capital project’s 

success is determined primarily by whether the project was completed on 

schedule, within budget, and provided the benefits intended.30 Without this 

information the Operations Committee is unable to assist the board in its 

oversight of the federal funds spent for capital projects. For example, in 

April 2005, we reported that since 2003, each of the three federally funded 

capital projects that we reviewed had experienced cost overruns, one as 

great as 50 percent (see fig. 13). However, we did not find any evidence that 

the board or its Operations Committee was informed of these cost 

overruns, such as the Opera House’s $4 million cost increase. For example, 

two trustees that served on the board during the implementation of these 

projects told us that they did not know of any capital projects that had cost 

overruns. One of these trustees said that the Opera House renovation was 

on budget. 

30GAO/AIMD-99-32.
Page 48 GAO-06-1025 Kennedy Center

Figure 13: Budgeted and Actual Costs of Selected Federally Funded Kennedy 

Center Capital Projects

In addition to the information packets, the Operations Committee receives 

the center’s annual CBP. Previously, we mentioned that the center’s 2005 

CBP is better than previous versions because it includes the details of, and 

explanations for, project budget changes since the 2004 CBP. The 2005 CBP 

also includes the actual and projected obligations for each capital project, 

by fiscal year, through the end of the CBP in 2008. However, the 2005 CBP 

does not provide original project budgets for all capital projects. Therefore 

there is no way to quantify how well the project’s implementation matched 

the center’s original comprehensive plan. In addition, we found that 

trustees of the Operations Committees did not receive the most recent CBP 

in a timely manner. For example, the Operations Committee received the 

most recent CBP in January 2006, about 4 months after the center’s fiscal 

year 2007 budget was submitted to OMB. Without an opportunity to review 

the CBP before the budget is submitted to OMB, the committee cannot 

ensure that federally funded capital projects planned for construction at 

the center are authorized by the Kennedy Center Act. 

0 

5 

10 

15 

20 

25 

Public space 

modifications

Fire alarm 

system 

Opera House 

renovation 

Source: GAO analysis of Kennedy Center data.

Dollars in millions

21% 

increase 

50%

increase

13%

increase

Estimated budget 

Actual cost 
Page 49 GAO-06-1025 Kennedy Center

Conclusions We have made numerous recommendations to the Kennedy Center within 

the past 9 years to improve its use and oversight of the federal funds that it 

receives, and the Kennedy Center has made significant improvements. 

Specifically, the Kennedy Center has made considerable progress over the 

past year in implementing our recommendations to improve fire safety and 

project management and to better align its activities with capital project 

best practices. Nevertheless, although some of our recommendations have 

not been fully implemented, it is critical that the Kennedy Center fully 

implement our recommendations and ensure that these changes become 

permanent.

Changes to the Kennedy Center’s contracting practices and CBP provide 

good illustrations of the progress that the Kennedy Center has made and 

the work that remains. Since 1993, when we first began reporting on its 

capital improvement plan, the Kennedy Center has made a number of 

important improvements to its contracting management practices and to 

the CBP. For example, in 2005, the Kennedy Center added project-byproject reconciliations to the CBP as recommended in order to illustrate 

changes in project budgets and schedules over time. However, the Kennedy 

Center placed federal funds at risk by not fully complying with the FAR, 

and the CBP does not yet fully disclose the overall financial impact of 

project changes. During a time when the Kennedy Center is deferring many 

of its terrace-level renovations, the price of the CBP’s implementation is 

growing because of steep increases in the costs of some of the remaining 

projects. While many of the key facts are included in the 2005 CBP, putting 

the whole picture together requires gathering and analyzing information 

from previous and current versions of the CBP to ascertain how budget 

changes to individual projects affect the overall CBP budget through 2008.

Much of our Kennedy Center work has found insufficient oversight for 

federally funded capital projects. Although the board has delegated much 

of the day-to-day work of running the center to the center management, the 

board retains ultimate responsibility for safeguarding funds and holding the 

center management accountable for its actions. Yet the board is providing 

limited oversight of its federal funds spent on capital projects; it does not 

approve CBP updates, does not review management’s performance in 

implementing capital projects in a structured way, and does not meet 

regularly. It may be telling that the board provides more oversight of its 

nonappropriated funds, including programming revenue and investment 

income. More detailed, transparent, and timely information on how federal 

funds have been budgeted and spent would allow the board to hold center 
Page 50 GAO-06-1025 Kennedy Center

managers accountable for completing federally funded capital projects on 

time and within budget estimates. 

Recommendations for 

Executive Action

1. To improve compliance with the FAR, the Chairman of the Board of 

Trustees should direct the President of the Kennedy Center to properly 

obtain the required FAR deviation when using the construction 

manager at risk contracting method. In addition, the Kennedy Center 

should establish the guaranteed maximum government price for a 

capital project before proceeding with construction.

2. To improve the information the Kennedy Center provides to Congress 

and the Board of Trustees, the Chairman of the Board of Trustees 

should direct the President of the Kennedy Center to improve the 

Comprehensive Building Plan by taking the following two actions: 

• Clearly identify the overall impact that changes to individual project 

budgets from the previous year will have on the overall plan’s budget.

• Clarify which federally funded projects the Kennedy Center intends 

to complete as part of the plan and which ones will be deferred. In 

doing so, establish clear scope and budget estimates for the Roof 

Terrace Life Safety project for the 2006 update of the Comprehensive 

Building Plan.

3. To strengthen the Kennedy Center Board of Trustees’ role in overseeing 

federally funded capital projects and to improve the board’s ability to 

carry out its responsibilities under the Kennedy Center Act, we 

recommend that the Chairman and Trustees of the Board take the 

following two actions:

• Develop and implement procedures on how the board and its 

Operations Committee are to carry out their duties under the 

Kennedy Center Act and their responsibilities for overseeing federal 

funds, including a clarification of the roles and responsibilities of the 

Operations Committee;

• Ensure that the board receives detailed, transparent, and timely 

information on how federal funds for capital projects have been 

budgeted and spent on capital projects, such as information on 

original versus actual project budgets and schedules.
Page 51 GAO-06-1025 Kennedy Center

Agency Comments and 

Our Evaluation

We provided a draft of this report to the Kennedy Center for its review and 

comment. The Kennedy Center provided written comments, which appear 

in appendix III, together with our responses. In general, the Kennedy 

Center agreed with the draft report’s findings and with two of the report’s 

three recommendations. The Kennedy Center agreed to (1) improve the 

CBP in several areas and (2) review and revise, if necessary, procedures on 

how the Operations Committee is to carry out its responsibilities and to 

provide the CBP to the Operations Committee in a more timely fashion. 

The Kennedy Center disagreed with our recommendation to better comply 

with a provision of the FAR and establish the guaranteed maximum 

government price for a capital project before proceeding with 

construction. However, based on our discussions with a GSA official, we 

are retaining the recommendation. The CMAR contracting method is not 

covered by the FAR and, consequently, requires a deviation. We also believe 

that the Kennedy Center could have limited the government’s risk of cost 

overruns by establishing the guaranteed maximum price for the project 

before authorizing the contractor to begin. The Kennedy Center provided 

technical comments and clarifications, which we have incorporated as 

appropriate throughout this report. 

As arranged with your offices, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days after the 

date of this letter. At that time, we will send copies to interested 

congressional committees, the Chairman of the Kennedy Center Board of 

Trustees, and the President of the Kennedy Center. We will also make 

copies available to others on request. In addition, the report will be 

available at no charge on the GAO Web site at http://www.gao.gov.
Page 52 GAO-06-1025 Kennedy Center

If you or your staff has any questions, please contact me at (202) 512-2834 

or goldsteinm@gao.gov. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. 

See appendix IV for a list of the major contributors to this report.

Mark L. Goldstein

Director, Physical Infrastructure Issues
Page 53 GAO-06-1025 Kennedy Center

Appendix I

Scope and Methodology AAppenednxidexiIs

This report responds to your request that we conduct a study on The John 

F. Kennedy Center for the Performing Arts’ (Kennedy Center) management 

and oversight of federal funds spent for Kennedy Center projects. Our 

objectives were to determine (1) the progress the Kennedy Center has 

made in implementing the recommendations in our April 2005 report, (2) 

the status of capital projects and the planned spending of federal funds for 

capital projects as indicated by the Kennedy Center’s most recent 

comprehensive building plan, and (3) the Kennedy Center Board of 

Trustees’ responsibilities for federally funded capital projects and the 

extent to which the board fulfills these responsibilities.1

To determine the progress Kennedy Center has made in implementing the 

recommendations in our April 2005 report, we interviewed Kennedy Center 

management officials and reviewed Kennedy Center documents (see fig. 14 

for a list of our April 2005 recommendations). Specifically, to assess the 

steps taken to implement the first of these recommendations—that the 

Chairman of the Kennedy Center Board of Trustees increase oversight of its 

management of federal funds by working with an independent federal 

government oversight organization—we analyzed the Kennedy Center’s 

risk assessment and internal audit plan for the ongoing oversight of the 

center’s use of federal funds. In addition, we interviewed Kennedy Center 

management officials to determine how the Kennedy Center intends to 

implement its internal audit plan. We also reviewed the John F. Kennedy 

Center Act, as amended, and the Inspector General Act of 1978, as 

amended.

1

For this report, we did not examine the Kennedy Center’s use of nonfederal funds to 

finance capital improvements. In particular, we did not review the center’s use of private 

funds or bonds in the garage and site improvements projects.
Appendix I

Scope and Methodology

Page 54 GAO-06-1025 Kennedy Center

Figure 14: Recommendations to the Kennedy Center in Our April 2005 Report

To assess the steps taken by the Chairman of the Kennedy Center Board of 

Trustees to implement our April 2005 recommendations on fire safety, we 

analyzed the two peer reviews of the Kennedy Center’s fire-modeling study 

used as a substitute for prescriptive code solutions that were conducted by 

the General Services Administration (GSA) and a nonfederal entity. 

Additionally, we interviewed Kennedy Center management and GSA 

officials to determine the actions taken to implement recommendations 

from the two peer reviews. To further asses the steps taken to ensure fire 

Recommendation

Source: GAO.

Oversight

Categories

Fire safety

 

Management of

capital projects

Work with an independent federal government

oversight organization.

Provide more timely and accurate information

about capital projects to stakeholders.

Take steps to control cost growth and schedule

changes in future capital projects.

Design and implement comprehensive contract

and project management policies and procedures.

Establish and enforce a documents retention

policy that allows for accountability of the

Kennedy Center's federal funds.

Design and implement comprehensive financial

policies and procedures to address several

specific areas.

Develop as-built drawings and better track

changes to the center.

Develop and implement a program to manage

the storage of combustible materials.

Ensure that doors in key areas provide adequate

separation from fire.

Seek peer review by a knowledgeable third party

of the egress and fire-modeling study.

Install a smoke control system that is integrated

with a sprinkler system and smoke detectors

over the Millennium Stages.

Implement fire-modeling peer review recommendations,

including marked exit routes for occupants at the

Millennium Stages.
Appendix I

Scope and Methodology

Page 55 GAO-06-1025 Kennedy Center

safety, we reviewed the Kennedy Center’s policy and procedure for 

managing the storage of combustible materials; reviewed the Kennedy 

Center’s inventory of doors in key areas that needed to be fire rated; and 

toured the Kennedy Center to visually examine the exit signage installed at 

the Millennium Stages during a performance. We also interviewed a 

Kennedy Center management official to determine how the Kennedy 

Center implements its combustibles policy and procedure; the time frame 

for inspecting and installing fire-rated doors in key areas; and the 

installation of exit signs in the Grand Foyer at the Millennium Stages. 

To assess the steps taken by the Chairman of the Kennedy Center Board of 

Trustees to implement our April 2005 recommendations on managing 

capital projects, we interviewed Kennedy Center management officials and 

analyzed Kennedy Center documents. Specifically, to determine how the 

Kennedy Center provides more timely and accurate information about 

capital projects to stakeholders, we reviewed the Kennedy Center’s 2004 

and 2005 comprehensive building plans (CBP); fiscal year 2007 budget 

justification to Congress; information packets and minutes from Board of 

Trustees and Operations Committee meetings (for 2004 through 2006); and 

the monthly reports the Kennedy Center sends to the Office of Management 

and Budget (OMB) that provide information on capital projects. To 

evaluate the steps taken by the Kennedy Center to control cost growth and 

schedule changes in future capital projects, we conducted a limited 

assessment of Family Theater contract modifications. The contract 

modifications we reviewed each had cost changes over $15,000 and in total 

represented about 58 percent of all cost changes for this project. We 

examined these contract modifications to evaluate whether the 

contractors’ proposals were fair and reasonable; the Kennedy Center had 

established the scope and cost for the modifications before directing the 

contractor to proceed with the work; and the Kennedy Center paid 

overtime to accelerate the project’s schedule. To obtain information on the 

construction manager at risk (CMAR) method of delivery, we reviewed the 

Federal Acquisition Regulation (FAR), GSA policy, and industry standards. 

We contacted GSA officials and an industry official. To assess the steps 

taken by the Kennedy Center to strengthen financial management controls, 

we analyzed the Kennedy Center’s contract, financial, and project 

management policies and procedures as they relate to the 

recommendations in our April 2005 report. In addition, we discussed with 

Kennedy Center management officials the time frame for implementation 

and the federal guidance used for the development of its contract, financial, 

and project management policies and procedures. While we did not assess 

the implementation of the Kennedy Center’s contract and project 
Appendix I

Scope and Methodology

Page 56 GAO-06-1025 Kennedy Center

management policies and procedures because they were recently 

implemented, we were able to assess the adequacy of the Kennedy Center’s 

financial policies and procedures that relate to our specific financial 

recommendations. We reviewed the financial policies and procedures and 

spoke with management officials to verify that the policies and procedures 

contained guidance to address our recommendations. Specifically, we 

reviewed receipt information contained on recent invoice certification 

forms, and we also reviewed invoices paid from the Project Management 

Office contractor files where we had noted exceptions in our April 2005 

report. To determine the status of the Kennedy Center’s document 

retention policy, we interviewed Kennedy Center management officials to 

discuss the steps taken to establish and enforce a policy. In addition, we 

spoke with National Archives and Records Administration (NARA) officials 

about the requirements for a federal records management policy, and we 

reviewed legislation and regulations relating to NARA. To determine the 

status of the Kennedy Center’s steps to better track future changes to the 

center, we spoke with Kennedy Center management officials and reviewed 

the center’s project management policy that addresses as-built plans.

To determine the status of capital projects and the planned spending of 

federal funds for capital projects as indicated by the Kennedy Center’s most 

recent CBP, we reviewed the Kennedy Center’s initial 1995 CBP and its 2004 

and 2005 updates to the plan. Specifically, we examined the changes in the 

2005 CBP made since the 2004 CBP and developed a list of projects the 

Kennedy Center plans to delay or defer and the additional funds needed. To 

determine the accuracy of some of the data in the 2005 CBP, we reviewed 

the monthly reports the Kennedy Center sends to OMB; the Kennedy 

Center’s fiscal year 2007 budget justification to Congress; and the 

President’s fiscal year 2007 budget for the Kennedy Center. In addition, we 

spoke with Kennedy Center management officials to obtain justifications 

for the projects it intends to delay or defer. 

To determine the Kennedy Center Board of Trustees’ responsibilities for 

federally funded capital projects and the extent to which the board fulfills 

these responsibilities, we analyzed Board of Trustees and Operations 

Committee documents; appropriation laws; the John F. Kennedy Center 

Act, as amended; the CBP and its various updates; and the monthly reports 

the Kennedy Center sends to OMB. Specifically, to examine the extent to 

which the board fulfills its responsibilities for federally funded capital 

projects we reviewed Board of Trustees and Committee information 

packets and meeting minutes from January 1995 through April 2006 to 

determine how a variety of capital projects were overseen by the board. 
Appendix I

Scope and Methodology

Page 57 GAO-06-1025 Kennedy Center

These projects included, but are not limited to, the Opera House 

renovation, fire alarm system replacement, public space modifications, site 

improvements project, and Family Theater. In addition, we interviewed 

current and previous trustees from the board and its Operations and 

Executive Committees. We spoke with two previous and four current 

trustees about the board’s responsibilities for overseeing federal funds, 

including the types of information used to make decisions on capital 

projects. In addition, we spoke with congressional staffers that are 

designees for two Kennedy Center Trustees and the President of the 

Kennedy Center. We selected trustees for interviews by first constructing a 

list of trustees that served on the board from 1995 to 2006. We choose 1995 

because it was the year that Congress transferred responsibility for capital 

projects from the National Park Service to the Kennedy Center Board of 

Trustees. From this list, we selected previous and current trustees of the 

board and its Operations and Executive Committees who were either 

chairpersons or had not missed more than one board meeting per year of 

their tenure. In addition, we interviewed Kennedy Center executives to 

understand management’s role in the supervision of capital project costs 

and schedules and management’s responsibilities to the Board of Trustees.

We calculated Board of Trustees and Operations Committee attendance 

rates and meeting frequencies using the information packets, which 

included meeting minutes, sent to trustees before scheduled board and 

committee meetings from January 1995 through April 2006. For the Board 

of Trustees meetings, we calculated attendance rates by comparing the 

number of trustees present at each regularly scheduled meeting with the 

total number of trustees designated under the Kennedy Center Act. For 

Operations Committee meetings, we calculated attendance rates by 

comparing the number of trustees present at each meeting with the 

information packet distribution list and the board’s policies and procedures 

manual. We calculated Operations Committee meeting attendance rates for 

the 13 of 18 meetings for which we had distribution lists. To ensure that the 

Kennedy Center provided us with all of the Board of Trustees and 

Operations Committee information packets and meeting minutes from 

January 1995 through April 2006, we cross referenced the materials we 

received against a list that was verified for a previous GAO report2

 and 

against the Board of Trustees’ annual list of scheduled meetings. We are 

confident that we have accounted for all Board of Trustees and Operations 

Committee information packets and meeting minutes from 1995 through 

2

GAO-04-334.
Appendix I

Scope and Methodology

Page 58 GAO-06-1025 Kennedy Center

2006 and therefore believe that the attendance rate and meeting frequency 

data are reliable for the purposes of this report. To calculate attendance 

rates for the Smithsonian Institution Board of Regents, from January 2000 

to September 2005, we compared the number of regents present and absent 

at each regularly scheduled board meeting with the total number of regents 

set forth in law relating to the Smithsonian Institution. In some instances, 

we found that the number of regents attending and absent from meetings 

did not match the number of regents set forth in the law. For example, 

there were times when a vacancy on the board occurred while legislation to 

appoint a regent was pending. In these instances, we had Smithsonian 

Institution officials verify that during some board meetings, the number of 

regents attending and absent from these meetings did not match the 

number of regents set forth in law. Therefore, we believe that the 

attendance rate data are reliable for the purposes of this report.

To obtain information on board governance practices, we interviewed 

academics, board organizations, and officials of other arts organizations. 

We reviewed relevant articles on board governance to select the academic 

and board organizations. To obtain information on how other boards 

govern, including their responsibilities for overseeing capital projects, we 

interviewed officials and reviewed documents from other arts 

organizations, including the Lincoln Center for the Performing Arts, the Los 

Angeles Music Center, the National Gallery of Art, and the Smithsonian 

Institution. We selected these organizations because they all have some 

features in common with the Kennedy Center, including authorizing 

legislation; capital projects; board member composition; organizational 

mission; and federal funding.

We conducted our work in Los Angeles, California; New York City, New 

York and Washington, D.C., between October 2005 and August 2006 in 

accordance with generally accepted government auditing standards.
Page 59 GAO-06-1025 Kennedy Center

Appendix II

Kennedy Center’s Implementation of Our 

Recommendation to Design and Implement 

Financial Policies and Procedures ApendxiI

In April 2005, we recommended that the Kennedy Center strengthen 

financial management controls by designing and implementing financial 

policies and procedures in accordance with prescribed federal guidance. 

Specifically, we recommended that the financial policies and procedures 

address several areas, as detailed in figure 15. In January 2006, the Kennedy 

Center designed and implemented financial policies and procedures for 

activities funded by federal appropriations. The financial policies and 

procedures were drawn from various laws and regulations including the 

FAR. As shown in figure 2 and as discussed in the remainder of this 

appendix, the Kennedy Center has fully implemented our financial 

recommendations in several specific areas. 

Figure 15: Implementation Status of our Financial Recommendations in Several 

Specific Areas

As figure 15 indicates, we recommended that the Kennedy Center 

recognize and use complete up-to-date costs for construction and other 

services to prepare financial reports and manage project costs. In response 

Recommendation Status

Recommendation has been implemented.

Steps have been taken to implement the recommendation, but more work is needed.

Recommendation has not been implemented.

Source: GAO.

Category

Management of

capital projects:

financial policies

Management of

capital projects:

financial policies

Design and implement comprehensive financial policies

and procedures to address several specific areas to

ensure that:

complete up-to-date costs for construction and 

other services are recognized and used to prepare 

financial reports and manage project costs;

for Economy Act transactions, payments to other 

federal agencies are for actual costs consistent 

with the Economy Act agreement;

receiving reports are prepared when goods or 

services are received to verify the validity of 

invoices;

invoices match with inspection reports and 

previously paid invoices to prevent duplicate 

payments. 

invoices contain sufficient detail to support their 

accuracy and validity; and
Appendix II

Kennedy Center’s Implementation of Our 

Recommendation to Design and Implement 

Financial Policies and Procedures 

Page 60 GAO-06-1025 Kennedy Center

to our recommendation, the Kennedy Center now submits monthly 

progress reports on its obligations for services and capital federal 

expenditures to OMB. For each capital project, the reports contain the 

month’s anticipated, actual, and total up-to-date obligations made with 

federal funds. The center uses a cash basis to report costs in monthly 

financial reports on capital federal expenditures, which is acceptable to 

OMB. Therefore, this recommendation has been implemented.

In our previous report, we recommended that for Economy Act 

transactions, payments to other federal agencies be for actual costs 

consistent with the Economy Act agreement. In response to our 

recommendation, the Kennedy Center established a policy that requires 

other federal agencies to clearly indicate that they are charging the center 

for actual costs incurred, under an Economy Act agreement. In addition, 

the policy includes an example of a letter that provides clear guidance to 

contracting staff on the language needed to ensure that an agency is 

charging the center for actual costs incurred. Therefore, this 

recommendation has been implemented.

We recommended that financial policies and procedures ensure that 

receiving reports are prepared when goods or services are received to 

verify the validity of invoices. In response to our recommendation, the 

center’s procedures direct staff to enter receiving information on an invoice 

certification form—once the invoice is received—and to compare 

construction invoices to the architect’s field inspection reports. We 

examined recent invoice certification forms and found that they contained 

the project title and the period of performance. Each invoice certification 

form we reviewed also included a schedule of values detailing (1) the work 

being billed and (2) the percentage of work completed to date. The project 

title and the period of performance provide the information necessary to tie 

the construction services performed to the invoice and to Kennedy Center 

records. Therefore, this recommendation has been implemented. 

We recommended that financial policies and procedures ensure that 

invoices contain sufficient detail to support their accuracy and validity. In 

response to our recommendation, the center’s procedures direct staff to 

contact the vendor if additional detail is needed to support information on 

goods or services billed. We reviewed recent invoices and found that they 

now contain sufficient detail to support the accuracy and validity of the 

amounts invoiced. Therefore, this recommendation has been implemented.
Appendix II

Kennedy Center’s Implementation of Our 

Recommendation to Design and Implement 

Financial Policies and Procedures 

Page 61 GAO-06-1025 Kennedy Center

Finally, we recommended that the financial policies and procedures ensure 

that invoices are matched against inspection reports and previously paid 

invoices prior to payment to prevent duplicate payments. In response to 

our recommendation, the center’s procedures direct staff to consider 

whether goods and services have been billed on a previously approved 

invoice. This procedure also directs staff to look for any charges outside 

the period of billing and provides further detail instructing staff on data 

sources to consider in determining if payment has already been made. 

Therefore, this recommendation has been implemented.
Page 62 GAO-06-1025 Kennedy Center

Appendix III

Comments from the John F. Kennedy Center 

for the Performing Arts ApendxiI

See comment 1.

Note: GAO comments 

supplementing those in the 

report text appear at the end 

of this appendix.
Appendix III

Comments from the John F. Kennedy Center 

for the Performing Arts

Page 63 GAO-06-1025 Kennedy Center
Appendix III

Comments from the John F. Kennedy Center 

for the Performing Arts

Page 64 GAO-06-1025 Kennedy Center

See comment 2.
Appendix III

Comments from the John F. Kennedy Center 

for the Performing Arts

Page 65 GAO-06-1025 Kennedy Center

See comment 3.

See comment 4.
Appendix III

Comments from the John F. Kennedy Center 

for the Performing Arts

Page 66 GAO-06-1025 Kennedy Center

See comment 5.
Appendix III

Comments from the John F. Kennedy Center 

for the Performing Arts

Page 67 GAO-06-1025 Kennedy Center

See comment 6.

See comment 7.

See comment 8.

See comment 9.

See comment 10.

See comment 11.
Appendix III

Comments from the John F. Kennedy Center 

for the Performing Arts

Page 68 GAO-06-1025 Kennedy Center

See comment 12.
Appendix III

Comments from the John F. Kennedy Center 

for the Performing Arts

Page 69 GAO-06-1025 Kennedy Center

The following are GAO’s comments on the John F. Kennedy Center for the 

Performing Arts’ (Kennedy Center) letter dated August 24, 2006.

GAO Comments 1. We disagree with this interpretation. Construction manager at risk is 

not covered by the FAR; and, consequently, a deviation must be 

authorized and justified in the contract file. We also continue to believe 

that establishing a Guaranteed Maximum Price (GMP) prior to 

proceeding with work limits the government’s risk of cost overruns. 

During the audit, we spoke with an official in the GSA Office of the 

Chief Architect who advises GSA staff on construction issues. The GSA 

official said that a GMP should be established in order to effectively use 

the construction manager at risk project delivery method and a 

deviation from the FAR is required. Because the Kennedy Center stated 

in its comments that it consulted with GSA and was told that it did not 

need a deviation for the contract, we reconfirmed the situation with 

GSA and were advised again that a deviation is required because of the 

use of the GMP. 

2. We updated the report to indicate that the Kennedy Center and the 

Smithsonian Office of the Inspector General finalized a memorandum 

of understanding, in July 2006, that establishes audits of federal funds 

used for capital projects. In addition, we incorporated into the report, 

the Kennedy Center’s rationale for selecting a nongovernmental 

organization to audit the federal funds used for operations and 

maintenance activities. 

3. The revised, peer-reviewed modeling study concludes that smoke 

exhaust and sprinkler protection are not needed on the Millennium 

Stages, provided that the conditions of the revised modeling study are 

met. Once the two conditions of the revised modeling study have been 

met, the Kennedy Center will have fully implemented our 

recommendation to install smoke exhaust and sprinkler protection at 

the Millennium Stages.

4. We disagree with the Kennedy Center’s approach to this 

recommendation, which is to assemble all existing as-built drawings 

into a single set. The Kennedy Center can accomplish our 

recommendation in a cost-efficient way by integrating the as-built 

drawings from each successive capital project into a master plan for 

the center and by updating the drawings as additional changes to the 

center are made. This would ensure that the Kennedy Center is tracking 
Appendix III

Comments from the John F. Kennedy Center 

for the Performing Arts

Page 70 GAO-06-1025 Kennedy Center

future changes to the center and using the most up-to-date drawings of 

site conditions. Our report notes that it is important for the Kennedy 

Center to start assembling and consistently updating a comprehensive 

set of as-built drawings of the entire center to prevent costly 

unexpected site conditions.

5. We agree that the difference between a project’s original budget and the 

final cost does not, by itself, necessarily indicate ineffective or 

inefficient management. However, we do believe that the Kennedy 

Center Board of Trustees and Congress need information on project 

cost overruns in order to monitor and evaluate whether federally 

funded capital projects have been implemented effectively and 

efficiently.

6. We believe our point is accurate and have further clarified the report to 

indicate that the cost of the Family Theater project was about $9.1 

million, which includes cost growth, due to change orders, that was 

within the amount allocated for contingency.

7. The most recent Operations Committee meeting was held on April 

2006; and as of this meeting, the Roof Terrace Life Safety Project scope 

was not developed. In addition, neither our review of Kennedy Center 

documents nor discussions with Kennedy Center officials indicated 

that the scope of the Roof Terrace Life Safety Project was developed. 

Although the Kennedy Center states that the scope of the Roof Terrace 

Life Safety project was developed in April 2006, they did not provide the 

details of this scope in their agency comments.

8. The Kennedy Center has deferred many of the terrace-level projects 

that were planned for the CBP beyond the scheduled completion of the 

plan in 2008, which significantly reduced the scope of the CBP. 

9. See comment 6.

10. We agree that an ongoing capital plan is essential for the maintenance 

of the Kennedy Center as a presidential memorial and national 

performing arts center. The report notes that the Kennedy Center has 

hired a consulting firm to survey the center and recommend upgrades 

that have not been completed. This survey will cover years 2008 

through 2012. We added into the report that a Kennedy Center official 

told us that the new survey will include projects listed in the CBP that 

were not completed in 2008 as planned, as well as new projects. 
Appendix III

Comments from the John F. Kennedy Center 

for the Performing Arts

Page 71 GAO-06-1025 Kennedy Center

Therefore, we consider the survey an extension of the original CBP. 

Although the extended CBP may include new projects to facilitate 

ongoing capital planning, it will include deferred projects that were 

originally scheduled to be completed in 2008.

11. We did not include designees’ attendance in our calculations of board 

and Operations Committee attendance rates for several reasons. First, 

membership on the Kennedy Center Board of Trustees is set forth in the 

Kennedy Center Act and does not include designees. Therefore, we 

based our calculations on the attendance records for those persons 

legally serving as trustees. In addition, since designees have no legal 

authority for making decisions, including those with respect to 

federally funded capital projects, we did not consider their 

participation in board and committee meetings. Lastly, in analyzing 

board meeting minutes, we found instances in which a trustee sent 

more than one designee to a meeting. In these cases, attendance rates 

would be inflated if designees were included in the attendance 

calculations. As noted in the report, we found that it is unclear what 

responsibility and authority designees have for carrying out the board’s 

responsibilities under the Kennedy Center Act, which limits the board’s 

oversight of federally funded capital projects.

12. We agree that a lack of attendance at board and committee meetings 

does not necessarily indicate that a trustee is not informed or engaged. 

However, during our audit we found, as noted in the report, that with 

respect to capital projects, trustees were not informed of project cost 

overruns, project budgets, or proposed projects. For example, as 

highlighted in the report, in April 2005, we reported that since 2003, 

each of the three federally funded capital projects that we reviewed had 

experienced cost overruns, one as great as 50 percent. However, we did 

not find any evidence that the board or its Operations Committee was 

informed of these cost overruns, such as the Opera House’s $4 million 

cost increase. For example, two trustees that served on the board 

during the implementation of these projects told us that they did not 

know of any capital projects that had cost overruns. One of these 

trustees said that the Opera House renovation was on budget.
Page 72 GAO-06-1025 Kennedy Center

Appendix IV

GAO Contacts and Staff Acknowledgments ApendxiIV

GAO Contacts Mark Goldstein, (202) 512-2834

Tammy Conquest, (202) 512-2834

Staff 

Acknowledgments

In addition to those named above, Michael Armes, Keith Cunningham, 

George Depaoli, Bess Eisenstadt, Craig Fischer, Brandon Haller, John 

Krump, Susan Michal-Smith, Josh Ormond, Julie T. Phillips, and Carrie 

Wilks made key contributions to this report.

(543150)
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