United States General Accounting Office

GAO Testimony

Before the Subcommittee on the District of Columbia,

Committee on Appropriations, House of Representatives

For Release on Delivery

Expected at

9 a.m.

Wednesday,

June 24, 1998

DISTRICT OF COLUMBIA

PUBLIC SCHOOLS

Status of Fiscal Year 1998

Roof Projects

Statement of Gloria L. Jarmon

Director, Health, Education, and Human Services

Accounting and Financial Management Issues

Accounting and Information Management Division

GAO/T-AIMD-98-219

Mr. Chairman and Members of the Subcommittee:

We are pleased to be here today to update you on the District of Columbia

Public Schools’ (DCPS) roof replacement work for fiscal year 1998. On

June 17, 1998, your office indicated that the Subcommittee had received

information that questioned DCPS’ ability to complete the roof repairs

without delaying the opening of schools in September 1998. In response to

your specific questions, my statement today covers four points:

• the availability of funds to pay for roof repairs,

• the current status of the roof repair process,

• the estimated cost of the roof repairs, and

• additional capital improvements in fiscal year 1999 and beyond.

Background In fiscal year 1997, roof repairs were done at 61 District of Columbia

schools, with the General Services Administration (GSA) managing the

work at 10 schools and DCPS at 51. DCPS records show that as of February 4,

1998, the total cost of the fiscal year 1997 roof repair projects, including

change orders and consulting fees, was about $37 million. At that time, the

DCPS capital improvement program budget indicated that about $35 million

was expected to be spent on 40 school roof projects in fiscal year 1998.

To determine the status of the District’s fiscal year 1998 school roof

projects, we obtained and reviewed pertinent documents provided by

DCPS, the Financial Responsibility and Management Assistance Authority

(Authority), and the Army Corps of Engineers. We interviewed (1) DCPS

officials responsible for the capital improvement program, (2) Army Corps

of Engineers officials who were hired by DCPS to manage the District’s 1998

capital improvement program, (3) GSA officials who are managing the roof

replacement contracts for 8 District schools, and (4) an official from the

21st Century School Fund to obtain information on the current roof

projects.

We did not evaluate the contractor proposals to ascertain which proposals

would result in the least cost to the District. Furthermore, we did not audit

the cost estimates for reasonableness. Accordingly, we do not express an

opinion or any other form of assurance on the procurement process or the

cost estimates. We conducted our work in June 1998.

Page 1 GAO/T-AIMD-98-219
Availability of Funds As indicated in table 1, at least $84 million is designated for roofing and

other capital improvement work during fiscal year 1998. As discussed in

our March 1998 report,1

 sufficient funding was available to enable DCPS to

get an early start on the fiscal year 1998 roof repairs. In September 1997,

the Authority received about $36.8 million from the sale of Student Loan

Marketing Association (Sallie Mae) stock warrants. The Authority received

an additional $5 million in Sallie Mae funds in October 1997 to satisfy fiscal

year 1998 capital program needs. Bond proceeds of $40 million became

available in April 1998, and an additional $2.3 million in revenue generated

from the sale of schools was available by May 1998.

Table 1: Funds Available for Fiscal

Year 1998 DCPS Capital Projects Dollars in millions

Date Funds Available Source of Funds Amount

September 1997 Sallie Mae $36.8

October 1997 Sallie Mae 5.0

April 1998 Bond Proceeds 40.0

May 1998 Revenue from School Sales 2.3

Total $84.1

About $6.4 million had been spent by June 11, 1998. This included 5 school

roofing projects, at a cost of $4.1 million completed by November 1997,

and $2.3 million for other capital improvement projects.

Current Status of Roof

Replacement Projects

Our March report indicated that DCPS planned to perform roof

replacements at 40 schools in fiscal year 1998. Currently, DCPS records

show that 38 schools will have roof replacement work in fiscal year 1998,

including the 5 schools that were completed in the fall of 1997. Regarding

the 2 schools for which work was planned and subsequently canceled, the

funds intended for roof replacement at one school were redirected to

securing the school’s structure after recent fires, and DCPS subsequently

determined that the other school did not need a new roof at this time.

For the remaining 33 schools, DCPS will contract for roof work at 25

schools. According to DCPS officials, the former Chief Operating Officer

arranged to have GSA handle the contracting details for the work at the

remaining 8 D.C. schools.

1

District of Columbia Public Schools: Availability of Funds and the Cost of the Fiscal Year 1997 Roof

Projects (GAO/AIMD-98-82, March 9, 1998).

Page 2 GAO/T-AIMD-98-219
Due to weaknesses in procurement procedures and internal controls

identified in a fiscal year 1997 performance audit,2 DCPS officials stated that

they decided to follow the Federal Acquisition Regulations (FAR). Last

week, DCPS awarded seven contracts, covering 23 of the 25 school roof

projects for which it is handling the contract details. The total amount of

the DCPS contracts awarded was $11.6 million, all to firms from the

Washington, D.C., metropolitan area. DCPS officials told us that they expect

an additional contract for the two remaining projects to be awarded

shortly. DCPS officials told us that they had hoped to be further along in

their contracting and construction activities at this time. DCPS officials

expect that the projects they are managing will be substantially complete

by August 15, 1998, in time for the September 1, 1998, school opening. GSA

is currently negotiating school roof replacement contracts for the

remaining 8 D.C. schools with its preapproved contractors and has a goal

of completing the roof work by September 1, 1998.

The former DCPS Chief Executive Officer hired the U.S. Army Corps of

Engineers to provide capital projects management assistance to DCPS for

fiscal year 1998. As capital project manager, the Army Corps of Engineers

will be on site and will be providing the superintendent of schools with

weekly progress reports on the ongoing renovation work at the D.C. public

schools, including the status of roofing projects. DCPS officials provided

copies of several other management reports that they intend to prepare

and use to ensure that the capital projects are on track, including a Capital

Improvements and Assets Weekly Summary and a Tracking of FY98

Capital Program Obligation and Execution Status Report.

Cost of Roof Repairs According to DCPS’ June 12, 1998 Breakout of FY98 Capital Program by

Subproject and by Ward management report, DCPS’ fiscal year 1998 roof

replacement costs are expected to be about $34 million. The budgeted

amount includes $28.4 million for construction contracts and about

$5.8 million for design work, contract management fees charged by GSA

and the Army Corps of Engineers, DCPS salaries, and an 8 percent

contingency factor. According to DCPS officials, the roofing projects are

very similar to those completed in fiscal year 1997, which included an

extensive amount of work to ensure that facilities were structurally sound

and watertight.

2

The audit report District of Columbia Public Schools Performance Audit: Fiscal Year 1997 Capital

Improvement Program Procurement Process was issued on January 12, 1998 by Cotton & Company,

LLP.

Page 3 GAO/T-AIMD-98-219
Future Capital

Improvements

The FY 1999 to FY 2004 Capital Improvement Plan and FY 1999 Capital

Budget (CIP) that the District submitted to the Congress on June 1, 1998,

includes a 6-year total of $343.5 million in capital improvement

expenditures for D.C. schools. About $97 million in capital improvement

expenditures is planned for fiscal year 1999. The CIP indicates that DCPS

will spend about $27 million on school roof replacements during the 6-year

period, with about $14 million designated for roof replacements during

fiscal year 1999.

Mr. Chairman, this concludes my statement. I will be happy to answer any

questions that you or Members of the Subcommittee may have.

(916255) Page 4 GAO/T-AIMD-98-219
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