Afghanistan: Embassy Construction Cost and Schedule Have Increased, and Further Facilities Planning Is Needed
Published: 2015-07-09T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Since re-opening in 2002, the U.S. embassy in Kabul has experienced a dramatic increase in staffing, followed by a gradual drawdown. State has invested or plans to invest a total of $2.17 billion in its facilities in Kabul to address current and projected space needs in a difficult environment with constantly evolving security threats. State awarded two contracts in 2009 and 2010 to construct additional on-compound housing and office facilities.
This statement summarizes GAO’s May 2015 report on the status of construction at the U.S. embassy in Kabul (GAO-15-410). Like its May 2015 report, this testimony discusses (1) the extent to which construction cost and schedule have changed and why, (2) State’s use of temporary facilities on-compound, and (3) State’s planning for projected embassy facility needs. For its May 2015 report, GAO examined agency planning, funding, and reporting documents and interviewed officials from State’s Bureau of Overseas Buildings Operations, Bureau of Diplomatic Security, and other offices. The review included fieldwork and associated follow-up in Kabul, Afghanistan throughout 2014.
section_title: What GAO Found
paragraphs: Cost and schedule have increased for the Kabul embassy construction project, in part due to incomplete cost and risk assessment. Cost for the 2009 and 2010 contracts has increased by about 27 percent, from $625.4 million to $792.9 million, and is likely to increase further. Projected completion has been delayed over 3 years to fall 2017. The Department of State (State) did not follow its cost containment and risk assessment policies, resulting in lost opportunities to mitigate risks. These risks, such as delays in the sequencing of the two contracts, eventually materialized, increasing cost and extending schedule. Unless State follows its policy, it may be unable to avoid or mitigate risks to cost and schedule on future projects.
Since 2002, State has built over $100 million in temporary buildings (intended for no more than 5 years' use) to meet space needs on-compound but has no security standards tailored to those facilities. On completing the project in 2017, all temporary facilities will be nearly 5 to 10 years old, and their continued use is likely. Without security standards or other guidance to guide temporary facility construction in conflict environments, State inconsistently applied alternative security measures that resulted in insufficient and different levels of security for temporary offices and housing, as well as increased cost and extended schedules. Without temporary facility security standards or guidance, future construction in conflict environments could encounter similar problems.
State's lack of a strategic facilities plan and policies governing such planning has led to coordination challenges in addressing the embassy's future facility needs. Industry standards cite the value of plans that comprehensively assess existing facilities, identify needs, and document decisions on meeting those needs. Additionally, State formally assigns responsibility for strategic facilities planning but lacks policy that governs implementation of such planning. State intends to make additional facility investments to address future facility needs. Without a strategic facilities plan and policy to guide its development, coordination to address these needs will continue to be difficult.
section_title: What GAO Recommends
paragraphs: In its May 2015 report, GAO recommended that State (1) adhere to its cost containment and risk assessment policies, (2) consider establishing security standards or guidance for temporary buildings in conflict zones, (3) develop a strategic facilities plan for Kabul, and (4) clarify its strategic facilities and master planning policy. State concurred with the first, third, and fourth recommendations and partially concurred with the second but discussed actions that could address the intent of GAO’s recommendation.

section_title: Letter
paragraphs: I am pleased to be here to discuss our work regarding the Department of  State’s (State) construction efforts at the U.S. embassy in Kabul,  Afghanistan. Since re-opening in 2002, the U.S. embassy in Kabul has  experienced a dramatic increase in staffing, followed by a gradual  drawdown. State has invested or plans to invest a total of $2.17 billion in  its facilities in Kabul to address current and projected space needs in a  difficult environment with constantly evolving security threats.
My testimony summarizes our May 2015 report on the status of  construction at the U.S. embassy in Kabul. Like our May report, this  testimony discusses (1) the extent to which construction cost and  schedule have changed and why, (2) State’s use of temporary facilities  on-compound, and (3) State’s planning for projected embassy facility  needs. For our May 2015 report, we examined agency planning, funding,  and reporting documents and interviewed officials from State’s Bureau of  Overseas Buildings Operations (OBO), Bureau of Diplomatic Security  (DS), and other offices. The review included fieldwork and associated  follow-up in Kabul, Afghanistan throughout 2014. Additional details on our  scope and methodology can be found in our May 2015 report. All of our  work was performed in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.
Briefly, we found the following: First, contract costs have risen and  schedule has been extended following State’s incomplete risk  assessment, and further cost increases are likely. Second, State will  continue using temporary facilities but lacks specific security standards  for them, contributing to increased costs and extended schedules. And  third, lack of strategic facilities planning has led to challenges in  addressing the embassy’s future facility needs. In our May 2015 report,  we made recommendations to State to help address these issues which  are discussed later in this statement along with State’s response.
subsections: section_title: Contract Costs Have Risen and Schedule Has Been Extended following State’s Incomplete Risk Assessment; Further Cost Increases Are Likely
paragraphs: As part of recent construction of Kabul facilities, in fiscal years 2009 and  2010, State awarded two contracts originally worth $625.4 million to meet  growing facility requirements at the U.S. embassy in Kabul. Table 1  details the original scope of each contract.
Figure 1 depicts the compound upon completion of current construction.
State’s plans called for sequencing construction under the two contracts  and also entailed acquiring the Afghan Ministry of Public Health site  adjacent to the compound to build parking facilities for approximately 400  embassy vehicles. In September 2011, after State determined that the  planned transfer of the Afghan Ministry of Public Health site would not  happen, State removed the parking and vehicle maintenance facilities  from the project. State also partially terminated elements of the first  contract in September 2011—specifically one of the permanent office  annexes and one of the staff apartment buildings—for the convenience of  the U.S. government, in part, due to concerns about contractor  performance and schedule delays. The 2009 contractor completed the  temporary offices and housing units, but State transferred contract  requirements for those permanent facilities not begun by this contractor to  the 2010 contract, which increased cost and extended schedule.
The cost for the 2009 and 2010 contracts has increased by about 27  percent, from $625.4 million to $792.9 million (see table 2).
As of March 2015, OBO and the 2010 contractor were negotiating the  value of several potential contract changes that will likely result in  increased costs. For example, the contractor has asserted that site areas  it needed were not available to start construction as planned. With regard  to schedule, projected completion has been delayed over 3 years to fall  2017, although the 2010 contract had not yet been revised to reflect that  date as of May 2015.
We found that State did not follow its cost containment and risk  assessment policies, resulting in lost opportunities to mitigate risks. The  U.S. Office of Management and Budget (OMB) requires value  engineering (referred to here as cost containment) for certain  construction projects. In addition, OBO’s standard operating procedures  require risk assessment studies to reduce and manage risks to a project.
For the 2009 contract, State confirmed that it did not conduct either type  of assessment. For the 2010 contract, State did complete a cost  containment study and a risk assessment in March 2010.
The 2010 cost containment study made 31 recommendations to  streamline construction and improve the project. State accepted 18,  rejected 12, and partially accepted 1 of these recommendations. The risk  assessment identified over 30 risks to the project. In particular, it  identified the interface between the 2009 and 2010 contracts as a major  source of risk. The study raised concerns about how State could best  coordinate the 2010 contract with the 2009 contract without sufficient  information about the first contractor’s design plans, which were under  development. Examples of other major risks identified included (1) that  adjacent Afghan Ministries of Public Health and Defense sites that State  planned to acquire might not be available in time, or at all, to enable  construction to proceed as planned, and (2) that there might be  insufficient space for two contractors to stage construction concurrently.
The consultant responsible for the risk assessment recommended risk  mitigation actions, which State did not act on, that aligned with the cost  containment recommendations. For example, two of the  recommendations were that State (1) facilitate greater project  coordination between the two contracts, and (2) divide the 2010 contract  into two separate contracts so that if the 2009 contract was delayed, the  2010 contract would not also be delayed.
One State official indicated that, given concerns about security in Kabul  and pressure to get permanent, hardened facilities built as soon as  possible, State was not going to act on any recommendation that would  delay getting the contracts awarded and the facilities built. A senior State  management official acknowledged that State did not fully follow its cost  and risk policies, and said that had State more fully considered the cost  containment and risk assessment study recommendations, there might  have been a decision to delay award of the 2010 contract, which would  have slowed efforts to provide facilities as quickly as possible. Several  risks noted by that study eventually materialized, such as the loss of the  Afghan Ministry of Health site and insufficient space that interfered with  the sequencing of construction. These factors contributed to increased  cost and extended schedule. Thus, in our May 2015 report, we  recommended that State ensure existing cost containment and risk  assessment policies are followed in future Kabul construction projects.  State concurred.
section_title: State to Continue Use of Temporary Facilities but Lacks Specific Security Standards for Them, Contributing to Increased Costs and Extended Schedules
paragraphs: Since 2002, State has spent over $100 million to construct temporary  facilities on the embassy compound to accommodate evolving staffing  needs and provide temporary office and housing space as permanent  facilities are built. OBO building guidance from 2009 states that  “temporary facilities” are facilities that will be occupied for no more than 5  years or until a permanent building is constructed, whichever is sooner.  The guidance also indicates that temporary facilities include, but are not  limited to, containerized housing/office units, modular units, modified  shipping containers, and trailers. On completing the project in 2017, all  temporary facilities on-compound will be nearly 5 years old or more, and  a smaller subset will be more than 10 years old. Based on numbers  provided by State, those temporary facilities will likely consist of over a  third of available desks and beds. State officials indicated that continued  use of these temporary facilities is likely, as some may be used by  contractors that will provide support services following the U.S. military’s  drawdown. For more information, see appendix 1.
The lack of security standards for temporary facilities contributed to  insufficient and differing levels of protection, increased costs, and  extended schedule. Prior to building additional temporary facilities under  the 2009 contract, State informed Congress in its fiscal year 2008  Supplemental Appropriations Justification of its concerns about threats  posed from potential incoming weapons fire—amid increasing attacks  around Kabul—and indicated that overhead protection was required to  protect staff in existing temporary facilities on compound. Also, State  security standards in 2009 indicated that housing constructed as an  integral part of or adjoining the chancery (i.e., office building) should be  constructed to meet chancery physical security standards.
State has physical security standards governing construction of offices  and housing that State seeks to meet regardless of whether a facility is  permanent or temporary. However, according to DS officials, State does  not have security standards specifically tailored to temporary facility  construction. For practical purposes, DS officials said that State’s physical  security standards governing new construction—regardless of whether a  facility is permanent or temporary—are standards that only permanent  construction can meet. Where newly constructed temporary facilities— unlike newly constructed permanent facilities—cannot be constructed to  meet all State’s security standards, State has the discretion to grant  exceptions from those standards and to specify mitigating alternative  security measures that will be provided.
In the absence of minimal security standards (or guidance) to guide  planning for temporary facility construction, State inconsistently applied  alternative security measures, resulting in insufficient and different levels  of security between the temporary offices and housing. When awarding  the 2009 contract, State did not specify that overhead protection was  required for either the temporary housing or offices, even though State  had previously expressed to Congress concerns about the threat posed  from incoming weapons fire in 2008. Furthermore, the only security  protection measure specified in the 2009 contract for the temporary  housing was shatter-resistant window film. By comparison, temporary  offices were to receive forced entry and ballistic protection. State  subsequently took corrective action through modifications on the 2009  contract that increased cost and extended schedule. State likely paid  more than it would have had the security requirements been included in  the original contract requirements.
Thus, to address this issue, in our May 2015 report, we recommended  that State consider establishing minimum security standards or other  guidance for the construction of temporary structures, especially those  used in conflict environments. State partially concurred. State does not  support separate standards for temporary structures, reiterating that it  aims to meet Overseas Security Policy Board security standards in all  environments. Where this is not possible, State asserts it works to meet  the intent of these standards through alternative security mitigation  measures via its “waivers and exceptions” process. However, State  commented that it does believe that there is value in documenting  standard operating procedures and best practices associated with the  deployment and protection of temporary structures in high-threat and  conflict environments. State noted that while such documentation would  not constitute security standards and would not circumvent risk  management integral to its waivers and exceptions process, it would  provide templates from which to base the design of future projects in  exigent environments. Should State produce such documentation, we  believe that this could meet the intent of our recommendation.
section_title: Lack of Strategic Facilities Planning and Policy Has Led to Coordination Challenges in Addressing Future Needs in Kabul
paragraphs: As discussed in our May 2015 report, since the U.S. embassy in Kabul  reopened in 2002, the unpredictable operating environment of  Afghanistan has produced changing facility needs that have continually  outpaced the post’s existing capabilities. This has been due to various  factors such as policy and program changes, staffing fluctuations, and  changes in the security environment. To meet these needs, State has  made or plans to make approximately $2.17 billion in infrastructure  investments in Kabul.
During this time, the embassy has used a variety of off-compound  facilities to meet some needs that could not be met on-compound. Key  off-compound facilities include Camp Sullivan, a 20.9-acre property near  Kabul International Airport; Camp Seitz, a 7-acre facility southwest of the  embassy that serves as housing and office space for security contractors;  and Camp Eggers, a 16.8-acre former Department of Defense (DOD)  facility southwest of the embassy planned to serve as a contractor camp.  In addition, State is upgrading Camp Alvarado, a property located near  the airport that serves as the main aviation hub for the embassy’s air  transport and counternarcotics operations. As of March 2015, these off- compound properties represented a total State investment of almost  $731.4 million. The relative locations of these properties are shown in  figure 2.
State plans to use $394.9 million to address unmet facility needs on- and  off-compound in fiscal year 2015. State is also seeking future funding for  additional facility investments, such as upgrading the remaining  temporary facilities and constructing the parking facilities that State had to  remove from the current project.
The post’s current facility needs stem primarily from changing  circumstances inherent to the operating environment in Kabul. For  example, when the Afghan Ministry of Public Health site became  unavailable for construction, OBO was forced to remove the parking  garage, vehicle maintenance facility, and fuel point from the current  project. Although the post has a temporary vehicle maintenance facility  and fuel point, it is located where apartment buildings 2 and 3 will be built  and must be demolished. State has explored interim solutions to provide  a temporary vehicle maintenance facility at off-compound sites, but a  permanent location had not been identified as of May 2015.
Changes in the security environment in Kabul, including attacks against  the compound in September 2011, have also affected post needs. For  example, security concerns were a primary factor in DS and the post’s  acquisition of the Camp Seitz and Camp Eggers, as this would allow, for  example, the relocation of the Kabul Embassy Guard Force closer to the  embassy.
The withdrawal of the U.S. military has also produced new needs for the  post. For example, this has driven recent post requests for a medical  trauma facility and helicopter landing zone, as well as past and future  planned upgrades at Camp Alvarado. In addition, as of March 2015, State  continued to develop a contract to replace support services such as food,  fuel, medical, and fire protection previously provided by DOD. According  to State, this transition will also require further infrastructure upgrades on- compound. State officials at the post noted that the future embassy needs  will likely exceed the available space on-compound and will require  prioritization of needs as well as high-level policy and management  decisions on staffing presence.
State stakeholders in Washington and at the post are working to identify,  prioritize, and address these facility needs through various coordination  meetings and working groups. However, State does not have a strategic  facilities plan for Kabul that documents current and future embassy  needs, comprehensively outlines existing facilities, analyzes gaps,  provides projected costs, and documents decisions made. Lack of such a  plan has inhibited coordination and undermined the continuity necessary  to address the embassy’s emergent needs.
International Facility Management Association (IFMA), GAO, and OMB  guidance recommend that an organization view all real property asset  investments as a single portfolio with strategic linkages when determining  the right mix of projects to undertake. IFMA describes a strategic facility  plan as a 2- to 5-year facilities plan that contains a needs statement (i.e.,  mission need), analysis of all real property assets and their condition,  analysis of gaps between needs and current capabilities,  recommendations for new spaces or buildings, and facility cost  projections. IFMA also indicates the plan should document findings to  include expected timelines for implementation but allow for updates, as  appropriate. Similarly, GAO and OMB capital planning guidance  emphasize the importance of identifying current capabilities of real  property assets, determining gaps between current assets and needed  capabilities, deciding how best to meet the gap by identifying and  evaluating alternative approaches, documenting decisions, and making  updates as needed.
State officials responsible for embassy management, facilities, security,  and construction all cited the lack of an overarching plan as an obstacle  to coordination intended to address emergent post needs. According to  State officials in Kabul and Washington, coordination to address the  embassy’s future needs is particularly difficult due to the large number of  stakeholders in Kabul and in Washington. Additionally, the constant  personnel turnover caused by the typical 1-year duty tours results in lack  of continuity in decision making.
Without a comprehensive plan that provides a strategic framework, the  competing proposals of the post’s many stakeholders are difficult to  manage, prioritize, and reconcile. Consequently, State has been  challenged to efficiently address changing embassy needs in several  instances on- and off-compound. Examples of those challenges include  issues related to: (1) proposed projects conflicting with on-compound  construction, (2) implementation of on-compound physical security  upgrades, and (3) ineffective coordination of off-compound construction  projects.
When asked about strategic facilities planning, State officials provided a  series of planning coordination tools as alternatives. These included  OBO’s 2010 site master plan for the embassy compound and a 2014 draft  update of that master plan. Although these tools did perform some  coordination functions, they do not substitute for a strategic facilities plan.
OBO’s use of the term “master plan” created some false expectations  among non-OBO stakeholders in Kabul and Washington. For example,  officials from post and DS believed the 2014 master plan update would  comprehensively identify the post’s needs and take into account all  facilities—to include off-compound projects—when determining  capabilities and alternatives for meeting those needs; instead, the update  was limited to the compound. When OBO presented the 2014 Master  Plan Update to the post in September 2014, post officials told OBO that  the site plan did not address all of the embassy’s needs. In addition, they  told us that limited space on-compound requires the continued use of off- compound facilities. OBO continues to work with stakeholders in Kabul  and Washington to find ways to incorporate as many post needs on- compound as possible. While the 2014 Master Plan Update may  eventually be used to inform a series of new construction projects, it  remains a compound-specific document and does not address how  embassy needs will be met at off-compound facilities in the interim. Thus,  in our May 2015 report, we recommended that State develop a Kabul  strategic facilities plan. State concurred.
From April 1990 through December 2013, OBO had a policy and  procedures directive that required strategic facility planning (termed long- range facilities plans) for posts meeting certain criteria. State  documentation shows that between 2004 and 2008, OBO prepared 16  long-range facilities plans (strategic facility plans) for selected posts with  challenging real property issues. In 2008, OBO’s then director also  reported to State’s Undersecretary for Management that long-range  facilities plans were essential precursors to the development of individual  projects. However, OBO produced no long-range facilities plans after  2008.
In December 2013, OBO rescinded its long-range facilities plans policy  and procedures directive based on an explanation that the office  responsible for that function no longer existed and that the function had  been replaced by master planning. However, the action did not indicate  what master planning entailed within OBO, nor did it explain and justify  how master planning could substitute for strategic facilities planning. OBO  was unable to provide any current policy governing either post strategic  facilities planning or site master planning. Without policies that clearly  define strategic facilities planning and master planning, as well as outline  the content and methods to conduct such planning, it will be difficult for  OBO to fulfill these responsibilities. Therefore, in our May 2015 report, we  recommended that State establish policy and procedure directives  governing the definition, content, and conduct of post-wide strategic  facilities planning and master planning. State concurred.
Chairman Chaffetz, Ranking Member Cummings, Members of the  Committee, this completes my prepared statement. I would be pleased to  respond to any questions that you may have at this time.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: For further information about this testimony, please contact Michael J.  Courts, Director, International Affairs and Trade at (202) 512-8980 or at  courtsm@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this  statement. GAO staff who made key contributions to this testimony are  Leslie Holen (Assistant Director, International Affairs and Trade), Michael  Armes (Assistant Director, Physical Infrastructure), David Hancock, John  Bauckman, Eugene Beye, Mark Dowling, and David Dayton.
section_title: Appendix I: Temporary Facilities in Kabul, Afghanistan
paragraphs: Based on numbers provided by State, as of February 2015, temporary  facilities on the embassy compound provided nearly 1,100 desks and 760  beds. Figure 3 shows some of the temporary facilities that the post has  used to meet interim space needs.
Temporary office facilities that are to remain can provide space for 875  desks. By comparison, permanent office facilities (existing and newly  constructed) in fall 2017 will provide 1,487 desks.
The number of temporary housing facilities that are to remain has not  been finalized. The number of beds likely to remain within the temporary  housing facilities will range from approximately 472 to 640 beds. By  comparison, 819 permanent beds will be provided within permanent  apartment facilities (existing and newly constructed) upon construction  completion.
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