Smithsonian Institution: Facilities Management Reorganization Is Progressing, but Funding Remains a Challenge
Published: 2005-04-25T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Smithsonian is the world's largest museum complex and research organization, with 18 museums and galleries, 10 science centers, and a zoological park. The age of the structures, past inattention to maintenance needs, and high visitation have left its facilities in need of revitalization and repair. Currently, the Smithsonian estimates $2.3 billion in costs for revitalization, construction, and maintenance projects between 2005 and 2013. This report addresses (1) how the current condition of the Smithsonian's facilities has affected access to the collections, and the collections themselves; (2) what changes the Smithsonian has made to its organization, practices, and prioritization processes to improve its facilities management; and (3) the estimated costs and status of the Smithsonian's facilities projects and their funding sources.
section_title: What GAO Found
paragraphs: To date, facilities-related problems at the Smithsonian have resulted in a few building closures and access restrictions and some cases of damage to the collections. For example, structural deterioration has caused closure of the 1881 Arts and Industries Building on the National Mall pending major repair and revitalization, as well as some facilities at the National Zoo. Concern over asbestos in a number of storage buildings has led to restricted access to the items within them. Some artifacts, such as two historic aircraft, have been damaged by water leaks from deteriorated pipes and roofing elements. Stopgap measures, such as draping plastic sheeting over artifacts in areas experiencing leaks, have prevented or minimized damage in other cases. Maintaining desired humidity and temperature levels for conserving the collections is a pervasive problem in some older Smithsonian facilities. These problems are indicative of a broad decline in the Smithsonian's aging facilities and systems that pose a serious long-term threat to the collections. The Smithsonian recently centralized its facilities organization, adopted industry best practices to maximize the effectiveness of its resources, reviewed its operating procedures, standardized its cost-estimating practices, and established processes for prioritizing work and allocating funds. These changes resulted from an internal review and a 2001 report by the National Academy of Public Administration, which recommended that the Smithsonian centralize its then highly decentralized approach to facilities management and budgeting in order to promote uniform policies and procedures, improve accountability, and avoid duplication. The Smithsonian created the Office of Facilities Engineering and Operations (OFEO) in 2003 to assume responsibility for all facilities-related programs and budgets--formerly divided among four administrative offices and the individual museums and centers. Most of the museum and center directors were either positive or neutral about the effectiveness of the reorganization so far. Overall, the reorganization appears to be moving in the right direction, though it has been hindered by reductions in OFEO's staffing and budget. The Smithsonian currently estimates that its planned capital and maintenance projects for 2005 through 2013 will cost about $2.3 billion, though this could grow because it is largely based on preliminary assessments. Of 13 revitalization and construction projects active during our review, most were on time and within budget. The Smithsonian's annual operating and capital program revenues come from its own trust fund assets and its federal appropriation (totaling $904.0 million in fiscal year 2004, with $184.4 million for facilities). Funding at this level would not be sufficient to cover the facilities projects planned for the next 9 years. Ensuring credible, long-term budget planning for sustaining and modernizing facilities involves the Smithsonian, the Office of Management and Budget, and the Congress in examining viable funding options. While Smithsonian officials have discussed funding options internally and with various stakeholders, no consensus has emerged on how to deal with this funding challenge.

section_title: Letter
paragraphs: In January 2004, the Smithsonian Institution (the Smithsonian) closed its  1881 Arts and Industries Building to the public over concern about its  deteriorating roof structure. During 2003, the roofs of two historic  buildings of similar age and design had partially collapsed under heavy  snowfall. Arts and Industries—used most recently for special exhibits and  administrative offices—will need major renovation and revitalization work,  including the replacement of its aging electrical, plumbing, and heating and  cooling systems, before it can be returned to service. The failing condition  of this National Mall (the Mall) landmark is the most extreme example of  what a Smithsonian official has characterized as a “broad decline” in its  extensive physical plant.
This decline can, paradoxically, be linked to the Smithsonian’s remarkable  success in carrying out its mission: “the increase and diffusion of  knowledge among men.” In the years since its founding in 1846, the  Smithsonian Institution has preserved—and shared—our nation’s most  precious objects and become an international leader in scholarship and  scientific discovery. From its original building on the Mall (commonly  known as “the Castle”), the Smithsonian has evolved into the world’s  largest museum complex and research organization, with 18 museums and  galleries, 10 science centers, a zoological park, and various other  facilities—in total, more than 660 owned and leased buildings and other  structures, with an estimated replacement value of about $4.7 billion for  owned space as of June 2004. About 143.7 million objects and specimens  are safeguarded, studied, and displayed within its facilities, including  research collections in natural history and biology, as well as icons of our  national history such as the Fort McHenry “Star Spangled Banner” and the  Apollo 11 command module. Two of the Smithsonian’s museums on the  Mall are the most visited in the world, with a third rivaling visitation at the  British Museum and the Louvre.
With this tremendous physical expansion and popularity, however, have  come related facilities problems that include the structural deterioration of  aging buildings; heating, cooling and electrical systems that are well past  their normal life expectancy; leaks from roofs and pipes that jeopardize the  collections; inadequate exhibition and storage space; and maintenance  levels that have not kept pace with the wear and tear from millions of  visitors each year. A 2001 report by the National Academy of Public  Administration (NAPA)—based on a review requested by the Congress— highlighted the need for major changes in the Smithsonian’s facilities  management practices to help address these problems. In response to  NAPA’s recommendations, as well as its own internal review, the  Smithsonian has been transforming its approach to facilities management.  The NAPA report also found that, prior to 2000, the Smithsonian  underestimated its revitalization needs, which were significantly larger  than were identified in its budget requests. The Smithsonian has updated  its funding requirements and has a 9-year estimate for the revitalization of  its older buildings, new construction, and minor repair and maintenance  (maintenance) work that now stands at about $2.3 billion.
In light of ongoing concerns over the state of its facilities, you asked us to  review the Smithsonian’s facilities management. Accordingly, we addressed  the following questions:  How does the current condition of the Smithsonian’s facilities affect  public and scientific access to the collections, and the collections  themselves?
What changes to its organizational structures and practices has the  Smithsonian put in place to manage its facilities, and how does the  Smithsonian now prioritize its revitalization, construction, and  maintenance projects?
What are the estimated costs and status of the Smithsonian’s major  revitalization, construction, and maintenance projects, including those  that have been deferred, and what are the funding sources for these  projects?
In addition, you asked us to provide information on how the Smithsonian  uses its trust fund resources and federal appropriations to fund its  operations, as well as information on the basic legal authorities under  which the Smithsonian runs its revitalization, construction, and  maintenance programs. This information is included as appendix I of this  report.
To address these issues, we visited 11 Smithsonian facilities to view and  discuss problem areas with staff from the Smithsonian’s Office of Facilities  Engineering and Operations (OFEO) and the directors of the individual  facilities. The Smithsonian identified these facilities as having significant  facilities-related problems. Several facilities that we visited consisted of  multiple buildings, such as the National Zoological Park (the National Zoo),  which has more than 40 buildings. We interviewed the OFEO director and  other appropriate OFEO staff, project executives, and project managers, as  well as the Smithsonian’s chief financial officer, associate general counsel,  and 16 directors of museums, galleries, the National Zoo, a program and a  research center (all internal customers of OFEO). We reviewed a variety of  Smithsonian handbooks and guidance related to facilities project  management, prioritization criteria, decision-making processes, and best  practices. We also reviewed the NAPA report, the Smithsonian inspector  general’s reports, and other appropriate reports. We researched the  Smithsonian’s enabling legislation, the statutes under which it currently  operates, including appropriations acts and numerous statutes authorizing  Smithsonian Institution facilities from the 1950s. We also reviewed the  Smithsonian’s congressional budget requests and audited financial  statements for fiscal years 2002, 2003, and 2004. The information we  gathered was sufficiently reliable for the purposes of our review. We  conducted our work between April 2004 and April 2005 in accordance with  generally accepted government auditing standards. See appendix VII for a  more detailed explanation of our scope and methodology.
subsections: section_title: Background
paragraphs: The Congress established the Smithsonian Institution in 1846 to administer  a large bequest left to the United States by James Smithson, an English  scientist, for the purpose of establishing in Washington, D.C., an institution  “for the increase and diffusion of knowledge among men.” In accepting  Smithson’s bequest on behalf of the nation, the Congress pledged the “faith  of the United States” to carry out the purpose of the trust. To that end, the  act establishing the Smithsonian provided for the administration of the  trust, independent of the government itself, by a Board of Regents and a  Secretary, who were given broad discretion in the use of the trust funds.  The board was composed of both private citizens and members of all three  branches of the federal government, in order to ensure “the wise and  faithful use” of the Institution’s funds. The trust funds were permanently  loaned to the Treasury to be maintained in a separate account; and the  principal was to be maintained and the interest from that money used for  the operation of the Institution. Although the Smithsonian has grown  greatly since its founding nearly 160 years ago, it retains its essential  character as a trust establishment of the United States.
Over the last 150 years, the Smithsonian’s facilities inventory has expanded  to include 18 museums and galleries, 10 science centers, a zoo, and other  facilities—most located in or near Washington, D.C., with others in  Massachusetts, New York, Florida, Arizona, Hawaii, and the Republic of  Panama. (See fig. 1.) These facilities include about 660 buildings and  structures, owned and leased, ranging from major museum buildings to  storage buildings and storage sheds. There are about 8.6 million square feet  of owned space and 1 million square feet of leased space. The Smithsonian  has estimated the replacement value for owned space at about $4.7 billion  as of June 2004. In 2003, an estimated 25 million people visited Smithsonian  museums, and researchers made 39,000 visits to use its facilities.
The major buildings owned by the Smithsonian range in age from about 160  years old to less than a year old, with most of the facilities growth  occurring since the 1960s. (See fig. 2.) More than half of these buildings are  more than 25 years old, 6 are designated as National Historic Landmarks,  and about 40 are listed on the National Register of Historic Places or  otherwise eligible for special consideration under federal guidelines for  historic buildings. Not all of these buildings involved new construction.  For example, the Patent Office Building, Renwick Gallery, and Cooper- Hewitt Museum were transferred to the Smithsonian after they were built,  and the Victor Building was purchased for use as administrative offices.  The two latest additions to the Smithsonian are the Steven F. Udvar-Hazy  Center (phase I), which is part of the National Air and Space Museum and  opened in December 2003, and the National Museum of the American  Indian, which opened in September 2004. The Smithsonian’s growth will  continue with the construction of an aircraft restoration area at the Udvar- Hazy Center (phase II), which the Smithsonian plans to complete in 2008,  and the design and construction of a National Museum of African American  History and Culture, authorized by the Congress in 2003. Beyond this, some  members in both houses of Congress have expressed interest in developing  a National Museum of the American Latino Community.
In 1995, a commission established by the Smithsonian’s Board of Regents  reported that the Institution’s facilities were deteriorating at an accelerated  rate because of their age, the large number of visitors, and the  Smithsonian’s failure to invest sufficient resources to repair, revitalize, and  maintain them. The commission concluded that over the next decade, a  total of $50 million a year would be needed to restore the Institution’s  facilities (excluding the National Zoo) to the point of being safe for people  and appropriate for collections. This estimated annual need was more  than double the fiscal year 1995 appropriation for these purposes.
Generally, the Congress provided increased funding in the late 1990s, but in  2000 the newly appointed Secretary of the Smithsonian testified that he  believed the Smithsonian’s buildings were in poor condition and that the  cost to restore them would be substantially more than previously  identified. The Secretary stated that the Smithsonian “has hesitated to  represent to Congress the full scale of the need. Instead, we’ve tried to  make do.” In response, the Congress directed the Smithsonian to contract  with NAPA for a review to obtain a better understanding of the use of funds  that had been provided to date. Specifically, NAPA was to determine (1)  how the Smithsonian had expended federal funds for repair and restoration  of its facilities, (2) what progress had been made in restoring the facilities,  and (3) what tasks lay ahead.
NAPA reported in July 2001 that the federal funds appropriated for the  Smithsonian’s facilities had been used properly; the Smithsonian’s facility  requirements exceeded the amounts provided in the institution’s annual  budgets; and the Smithsonian’s 2000 estimates were based on a reasonable,  building-by-building approach and were more realistic than previous  estimates. NAPA found that the Smithsonian had used the funds for high- priority repair and restoration projects but that its needs were far greater  than those identified in its budget requests. While validating the  Smithsonian’s 10-year estimate of about $1.2 billion in repair and  revitalization projects, NAPA noted that this estimate could increase to at  least $1.5 billion because it was not adjusted for the effects of inflation and  reflected only rough “orders of magnitude” estimates for later-year  requirements. The report also recommended management improvements,  including centralizing the Smithsonian’s decentralized facilities  management under a single organization and implementing a more  structured maintenance program. At the beginning of our review, the  Smithsonian had implemented 25 of the 30 recommendations, including a  fundamental reorganization of its facilities management organization,  funding, and staffing and the other 5 recommendations were in the process  of being implemented. (See app. II for a listing of NAPA’s recommendations  and the status of the Smithsonian’s implementation of them.) In addition to  the need for management improvements, NAPA highlighted the importance  of a “continuing and substantial infusion of funds” to address facilities  needs.
We alluded to the Smithsonian’s facilities problems in our High Risk Series  report on federal real property. The Smithsonian is one example of the  problem facing agencies across the federal government, which have  accumulated significant backlogs of maintenance and renovation needs  and face serious deterioration problems. Overall, we found that the  condition of federal facilities is one of alarming and accelerating  deterioration.
section_title: Facility Conditions Have Generally Had Limited Effects on Access and Collections, but Some Chronic Problems Present Ongoing Risks
paragraphs: Facilities-related problems at the Smithsonian have resulted in a few  building closures and access restrictions and, in some cases, harm to the  collections. The problems range from major structural deterioration to  chronic leaks that have damaged a few collections and threatened others.  While the impact of these problems thus far has been limited, ongoing  deterioration continues to present serious long-term risks to collections’  accessibility and safety.
subsections: section_title: Restrictions on Access
paragraphs: Serious structural problems have led to the closure of the third-oldest  building in the Smithsonian’s inventory, the Arts and Industries Building, as  well as several buildings at the National Zoo. The roof panels of the Arts  and Industries Building, which opened in 1881, have deteriorated to the  point where they are considered unsound. The building was closed to the  public in 2004 and will be closed to staff in 2005. Prior to its public closure,  the Arts and Industries Building housed collections and received more than  900,000 visitors annually. The building also provided the Smithsonian with  a venue for functions related to fund-raising. No date has been set for  reopening this museum. Figure 3 shows a comparison of the North Hall of  the Arts and Industries building in 1977 and February 2005.
At the National Zoo, facilities such as the sloth bear enclosure and the flight  cage for birds of prey have been rendered unusable because of  deterioration. In 2002, the National Zoological Park Director testified to the  Congress that over half of the National Zoo’s buildings have seriously  compromised structural, mechanical, electrical, and fire and life-safety  systems. The National Zoo has begun a revitalization program that  currently is being funded. Figure 4 shows the deterioration at the zoo’s  sloth bear facility.
In addition to structural deterioration, problems with asbestos have  restricted researchers’ access to certain collections. At the Garber Facility,  a complex used for storage and other support purposes, researchers’  access to 5 of the complex’s 40 buildings has been restricted because of  asbestos. In these 5 buildings, the stored items must be covered with  plastic, and access is limited to a few staff. Figure 5 shows the interior of  building 16 at the Garber Facility, which provides storage for artifacts for  the National Museum of American History.
Both public and researchers’ access to facilities and collections also can be  temporarily restricted by revitalization projects. For example, the Patent  Office Building, the second oldest building in the Smithsonian’s inventory,  has been closed to the public since 2000 for revitalization. This building is  the home of the National Portrait Gallery and Smithsonian American Art  Museum. The Smithsonian has tried to limit the impact of the closure for  revitalization by loaning art work from these collections to other museums  or having traveling exhibits. Parts of the National Museum of American  History, the National Museum of Natural History, and the National Zoo also  have been closed to the public during revitalization projects. At the  National Museum of Natural History, the mammal collection was closed to  researchers for 2 years while the exhibit hall was undergoing revitalization.
section_title: Damage and Threats to Collections
paragraphs: Besides affecting access to the collections, the condition of Smithsonian  buildings can also affect the collections themselves. The greatest dangers  to the collections to date have been posed by water. For example, at the  National Air and Space Museum, Smithsonian officials showed us that  leaks have damaged both the Lilienthal Hang Glider, which helped pioneer  early flight design by influencing the Wright Brothers, and the Douglas  Skyrocket, D558, the first airplane to break Mach 2. (See figs. 6 and 7.)  Water also damaged 200 books at the Smithsonian Institution Archives due  to a drain back-up.
Smithsonian officials identified several incidents and vulnerabilities related  to water, including:  In February 2005, a broken pipe at the National Zoo’s mechanical room  that supports the pools for the seals and sea lions flooded the room with  8 feet of water and damaged controls, pumps, and motors. The pipes  were scheduled for replacement this spring. See figure 8.
At the Smithsonian Institution Archives, 19 water emergencies have  occurred since June 2002, and the facility has formed an emergency  response team to deal with them. “We are excellent drapers of plastic,”  according to an Archives official. Some of the leaks were directly above  collections, but quick action by the staff averted damage to the  collections.
At the National Museum of African Art, breaches in the roof membrane,  malfunctioning valves, and clogged pipes often leak over galleries,  collection storage areas, and offices. Replacing the roof and the water  condensate system could address these problems, but other, higher  priorities have received funding instead.
At the Renwick Gallery, gutters have leaked into the Grand Salon and  adjacent gallery, but damage to artwork has been avoided. Repairs are  scheduled for fiscal year 2005.
At the Freer and Sackler Galleries, water has leaked many times in  storage areas and the library, and condensation poses a serious problem  in the Freer Gallery’s exhibition areas. To date, no major damage to the  collections has occurred.
Another area of concern is related to fluctuating temperature and humidity,  particularly in a museum setting where collections must be stored and  displayed in precise ways. While we toured various facilities, operations  and maintenance managers showed us aging heating, ventilation, and air- conditioning systems that, the managers said, were no longer consistently  maintaining the temperature and humidity needed to protect collections  from deterioration. At the Renwick Gallery, for example, fluctuations in  temperature and humidity produced by steam outages have caused  weeping of the plaster on the gallery walls and could potentially damage art  work. Poor ventilation at the Smithsonian Institution Archives caused high  humidity, resulting in mold damage that made some records unreadable.
Lastly, safety concerns and hazardous materials also threaten some  collections. For example, at both the National Museum of Natural History  and the Smithsonian Environmental Research Center, biological specimen  collections are preserved in an alcohol solution that poses a safety risk  from fire or explosive vapor that has to be controlled. Additionally, at the  Smithsonian Environmental Research Center, collections are stored in  deteriorating surplus trailers, many of them over 20 years old. Figures 9 and  10 depict problems with the storage of specimens stored in alcohol-filled  containers of various sizes at the National Museum of Natural History.  Several large rooms of about 10,000 square feet are used to store these  containers, though current code limits such rooms to 500 square feet for  safety purposes. Figure 9 shows that the storage containers are not  enclosed, and figure 10 shows alcohol storage rooms that do not have  current code-required explosion proof electrical equipment and fixtures.
The Smithsonian is working to address these situations. Containment for  these collections that is up to code is costly and will require new  construction, which is currently under way.
section_title: Smithsonian Has Centralized Its Facilities Management Organization and Budget to Improve the Efficiency and Effectiveness of Its Operations
paragraphs: The Smithsonian has recently reorganized its facilities management  function to improve its operational effectiveness and make more efficient  use of limited staffing and funding resources. In July 2001, NAPA reported  that the Smithsonian’s decentralized organizational structure and  management practices, in some cases, had a direct and adverse effect on  the planning, design, and construction activities that were integral to the  institution’s revitalization, construction, and maintenance programs. In  response to NAPA’s recommendations for improvement and its own  internal review, the Smithsonian began in fiscal year 2001 to centralize its  facilities management, adopted a variety of industry best practices for  managing facilities projects, and established a priority process for facilities  management. Because of the relative newness of the reorganization, it is  too early to assess its effectiveness, though it appears to be moving in the  right direction. Smithsonian museum, program, and center directors (the  internal customers directly affected by the reorganization) had generally  positive or neutral reactions to the reorganization, although several  directors believed that OFEO needed to improve communications with  them. Many of the directors, as well as OFEO officials, noted that  reductions in OFEO’s staffing and budget have hindered fully implementing  the reorganization.
subsections: section_title: Smithsonian Has Centralized the Responsibility for Facilities Management
paragraphs: At the time of NAPA’s 2001 report, the Smithsonian’s facilities operations  were decentralized. Three distinct organizations—the offices of Physical  Plant, Environmental Management and Safety, and Protection Services— were loosely integrated under the central Office of Facilities Services, but  each organization had its own director and budget. The Office of Physical  Plant was further divided into 14 different divisions and offices. These  organizations were responsible for facility planning, design, construction,  and maintenance activities for the museums and research facilities.  However, the National Zoo had its own budget and on-site staff to perform  these functions for itself and for its Conservation and Research Center at  Front Royal, Virginia. In addition, each museum or other major facility had  its own separate funding and organization for providing custodial services,  loading dock management, trash collection, and minor maintenance.
In its 2001 report, NAPA found that the sheer size of the Office of Physical  Plant (with a span of control encompassing 14 different units) and the wide  diversity of its functions (operations, repair, restoration, planning, design,  and maintenance) led to a hybrid organization that was awkward to  manage, diffused responsibility and accountability, and did not facilitate a  focus on the office’s three primary responsibilities: (1) operation and  maintenance of the physical plant; (2) repair and restoration of facilities;  and (3) new construction. NAPA also noted that the functions and tasks  associated with operating and maintaining facilities were common to all of  the Smithsonian buildings and that overlap and duplication were likely  when more than one organization was responsible for carrying out the  same functions. NAPA concluded that centralizing facilities management  should enable the Smithsonian to provide more efficient and effective  services by putting a single organization in charge. According to NAPA, this  centralization would promote uniform policies and procedures, improve  accountability, and avoid overlap and duplication.
In March 2001, before NAPA issued its report, the Smithsonian hired the  former director of Facilities Engineering at the National Aeronautics and  Space Administration to lead the reorganization of the facilities program  and to head the new organization. The Director met with the NAPA team  and studied its findings and recommendations. He also met with the  Smithsonian’s senior leadership and, with the help of a small internal team,  listened to priorities and suggestions from various customers,  stakeholders, and other Smithsonian staff in developing a plan for the  reorganization.
The result of this effort was the creation, in fiscal year 2004, of the Office of  Facilities Engineering and Operations (OFEO), a new, flatter facilities  management organization. OFEO assumed responsibility for all facility- related programs and budgets that had been divided among four offices the  National Zoo, and each museum or other major facility. OFEO consists of  eight offices—Project Management; Facilities Planning and Resources;  Engineering, Design, and Construction; Facilities Reliability; Facilities  Management; Protection Services; Safety and Environmental Management;  and the Smithsonian Tropical Research Institute Facilities Operations—all  reporting directly to the OFEO director and funded through one budget  (see fig. 11). OFEO received its first budget in fiscal year 2004.
Appendix III provides a detailed description of the responsibilities of each  OFEO office. While all eight OFEO offices play a role in the facilities  program, the Office of Project Management oversees all revitalization and  construction projects, and two offices—Facilities Management and  Facilities Reliability—manage maintenance projects. The Office of Project  Management develops preliminary project scopes, schedules, and budgets;  monitors, directs, and reports on updated scopes, schedules and budgets  for projects; and coordinates the efforts of stakeholders, designers, and  construction execution. Major projects (in excess of $5 million) are  overseen by project executives, small projects ($5 million and less.) by  project managers. For major projects, such as the construction of the  National Museum of the American Indian and the revitalization of the  Patent Office Building, monthly reports indicate the status of each project’s  cost and schedule. The OFEO director attends a monthly operational  review of major revitalization and construction projects with museum  directors, and the Smithsonian’s deputy secretary/chief operating officer,  general counsel, and chief financial officer are briefed approximately  quarterly on the major projects. The Office of Project Management is also  responsible for the initial prioritization of revitalization and construction  projects.
The Office of Facilities Management provides day-to-day facilities  maintenance services, including preventive maintenance, janitorial and  grounds maintenance, transportation and mail delivery, building  management for leased facilities, landscaping, and system start-ups for  newly completed facilities. The responsibility for maintenance is divided  among eight zones. A zone may consist of one or more buildings. Each zone  has a manager who is responsible for maintenance in that zone. If Facilities  Management staff cannot perform the work, then the work is sent to the  Office of Facilities Reliability.
The Office of Facilities Reliability provides strategic planning and oversight  for maintenance, manages the Reliability-Centered Maintenance program,  develops tasks and processes and then monitors work efforts, collects and  analyzes data and metrics on the maintenance program, purchases utilities,  manages agencywide service contracts, operates building automation  services, and repairs large equipment in central shops. The office uses both  in-house and contractor personnel to accomplish its objectives. When a  minor repair is too large for Facilities Management, Facilities Reliability  uses its staff or contracts out the work. About 15 percent of minor repairs  are performed in-house, and about 85 percent are contracted out. Working  with Facilities Management and others, Facilities Reliability is responsible  for prioritizing minor repair projects. When we concluded our review in  April 2005, the offices of Facilities Management and Facilities Reliability  were being consolidated into one office that will be responsible for all  maintenance projects.
section_title: Smithsonian Has Adopted Industry Best Practices to Improve Its Management of Facilities Projects
paragraphs: In reorganizing its facilities management, the Smithsonian is incorporating  recognized industry best practices so that its resources would go as far as  possible toward addressing its rapidly growing revitalization, new  construction, and maintenance workload.
For example, OFEO’s framework for project management is considered a  best practice, according to an independent review of an OFEO project by a  contactor working for the Smithsonian Inspector General. OFEO also has  been developing several handbooks to establish procedures and provide  guidance on various aspects of facilities management. Its Facilities Project  Management Handbook specifically addresses the Construction Industry  Institute’s (CII) practices of benchmarking and metrics, partnering, and  preproject planning. OFEO has begun to implement these practices by, for  example, establishing and tracking metrics, such as holding contract  schedule growth to 10 percent or less and contract cost growth to 2 percent  or less. Both Facilities Management and Facilities Reliability periodically  survey their internal customers to determine their level of satisfaction with  the services provided to them. Furthermore, OFEO has adopted CII’s Pre- Project Planning Handbook and uses CII’s Project Definition Rating Index  to evaluate the progress of projects at various stages—both tools  recommended by CII to support the best practice of preproject planning.  OFEO has also just begun to use CII’s Estimate Score Program, a tool  designed to enhance the accuracy of early estimates. CII’s best practices  form the core of the practices taught to OFEO staff, and according to  OFEO officials, these practices are routinely used in various phases of  projects. In addition, staff participate in CII committees and teams,  including those that develop best practices and participate in Federal  Facilities Council committees.
The Smithsonian has also adopted leading practices in capital decision  making, such as identifying its inventory of assets, determining their  condition and the gap between current and needed capabilities, and  ranking and selecting projects according to their priority, type of work, and  fiscal year. (See app. IV for more detail on how the Smithsonian is  implementing these practices.) Other industry practices that OFEO has  adopted include reliability-centered maintenance, which covers predictive  testing and inspection, and preventive maintenance.
section_title: Smithsonian Has Established a Prioritization Process for Allocating Limited Funds to Revitalization, Construction, and Maintenance Projects
paragraphs: OFEO’s Offices of Project Management and Facilities Reliability share  responsibility for prioritizing projects—Project Management for  revitalization and construction projects and Facilities Reliability for  maintenance projects. Other organizations throughout the Smithsonian  have input into these decisions. The Smithsonian’s Capital Planning  Board, Secretary, and Board of Regents approve prioritizations of  revitalization and construction projects in the institution’s 5-year capital  program, and the OFEO director approves prioritizations of maintenance  projects.
The Office of Project Management, working with the museums and other  facility groups, develops an annual list of new and previously submitted  projects to be prioritized for inclusion in the annual 5-year capital plan.  Using OFEO’s priority code assignment matrix, the office assigns each  project one of four condition levels (catastrophic, critical, routine, and can  defer) and one of five project types (shell/system failure, code  compliance/security, nonroutine capital repairs, energy/operational  efficiency, and alterations and modifications). This assignment determines  the project’s priority code, which may be from one to five. For example, a  shell/system failure project assigned a catastrophic condition level would  receive a top priority code of “one” for the budget year in which funding is  sought. (See app. V for the priority code assignment matrix and definitions  of its elements.). After Project Management completes the prioritized list, it  sends the list to the Smithsonian under secretaries and directors for review  and approval. Project Management then uses the approved list to update  the 5-year capital plan and sends the updated plan to the Smithsonian’s  Capital Planning Board for review. The Capital Planning Board reviews the  plan in the context of the Smithsonian’s guidelines and needs. Only projects  supported by this review and then by the Smithsonian Secretary’s review  are included in the updated 5-year capital plan, which accompanies the  annual budget submission to the Office of Management and Budget. The  Board of Regents approves the Smithsonian’s annual budget submission,  including the 5-year capital plan. According to Smithsonian officials, this  process ensures that the institution’s limited capital funding is allocated to  the highest priority needs.
The Office of Facilities Reliability, in conjunction with the museums and  other facility groups, identifies maintenance projects, taking into account  customer input; annual safety, health and environmental inspections; code  and regulatory requirements; and facility assessments. Facilities Reliability  then ranks these projects on a scale from 1 to 10. For example, a project to  address an imminent facility failure that poses a potential safety, health, or  environmental issue is ranked as a 1, the highest priority; a project to  address a moderate disruption to a facility’s functions is ranked as a 6, and  a project that involves no expectation of failure or effect on safety or health  is ranked as a 10, the lowest priority. Facilities Reliability then uses a  funding matrix to determine which projects will be funded. Any projects  that cannot be funded go into the office’s inventory of projects. (See app. VI  for the priority decision-making flowchart and maintenance ranking scale.)  According to Facilities Reliability officials, if facilities-related emergencies  occur during a year, funds obligated for other projects may have to be  deobligated.
section_title: Directors Generally Expressed Positive or Neutral Reactions to OFEO but Noted That Restructuring Has Been Hindered by Staffing and Budget Reductions
paragraphs: The 16 Smithsonian directors of museums, galleries, research centers, the  National Zoo, and a program office that we interviewed expressed a range  of opinions about the reorganization’s impact on facilities services. Five  directors said that services had improved substantially and 9 others were  generally positive or neutral about the reorganization. Two directors said  that services had deteriorated since the reorganization. Various directors,  including the 2 that had expressed negative views, pointed out that after  OFEO was reorganized, the Smithsonian had a staff buyout that led to  staffing and funding reductions in OFEO. In total, OFEO lost 109 of about  1,750 staff and the funding for their positions—59 in maintenance, 39 in  security, and 11 in other OFEO offices, according to a Smithsonian official.  These reductions, together with the recent opening of the National  Museum of the American Indian, have negatively affected both  maintenance and security services, according to various directors. Also,  several directors, including some with positive reactions to OFEO, noted  that communications from OFEO to its internal customers could be  improved.
Although implementation of the centralization effort is still a work in  progress, senior OFEO officials believe the reorganization is progressing  well. While full implementation has been hindered by both staffing  shortages and budget constraints, OFEO has obtained permission to fill 19  of these positions in crucial areas.
section_title: Estimated Costs of Facilities Projects Have Grown, Posing Serious Funding Challenge
paragraphs: The Smithsonian currently estimates that it will need about $2.3 billion for  fiscal years 2005 through 2013 for its planned revitalization, construction,  and maintenance projects, but this estimate could change as information is  updated and new facilities are opened or authorized. As of April 2005, of  the 13 funded major revitalization and construction projects that are active  or were completed in fiscal year 2004, most were on time and within  budget. Given its level of annual operating and capital program revenues  (about $904 million in fiscal year 2004, including about $184.4 million for  the facilities) for all of its activities, it is unclear how the Smithsonian’s  planned facilities needs will be funded over the next 9 years.
subsections: section_title: Current $2.3 Billion Estimate Reflects Updates but Could Change
paragraphs: The Smithsonian’s $2.3 billion estimate for the next 9 years includes about  $1.43 billion for revitalization projects (including facilities planning and  design), about $136.2 million for construction projects, and about $713.9  million for its maintenance program. Table 1 breaks down these estimates  by project and year. Like all estimates, these are based on the information  that is available at the time they are made, and they are subject to change  as new information becomes available. Additionally, the estimates for  revitalization and construction, which total almost $1.57 billion, are largely  based on preliminary planning documents, such as master plans and  facility assessments, (some still in progress), and on preliminary designs.  According to Smithsonian documents, about 86 percent of the estimates for  revitalization and construction projects, which account for about $1.27  billion—or nearly 81 percent—of the $1.57 billion total, are “order-of-  magnitude” estimates. Such estimates have a range of accuracy of plus or  minus 30 to 50 percent. Thus, the $1.57 billion estimate for revitalization  and construction projects could fall as low as about $875 million or rise as  high as about $2.3 billion. The cost estimates for maintenance projects are  based on facility assessments, guidance issued by the National Research  Council and the Federal Facilities Council, and a formula Facility  Reliability has developed for estimating maintenance costs.
The revitalization and new construction costs presented in table 1 are  driven, in part, by the need to modernize or add systems—fire detection  and alarm; security; electrical; heating, ventilation, and air-conditioning  (including environmental ventilation) systems, and elevators and  escalators—and to comply with newer code requirements, such as those  for air pressurization to keep stairwells clear of smoke and handicapped  accessibility to buildings and restrooms. Figures 12 through 15 show  revitalization projects that are included in the Smithsonian’s estimate of  $1.43 billion. Figure 16 illustrates new construction planned to address the  safety problems with alcohol storage depicted in figures 9 and 10 that are  included in the Smithsonian’s estimate of $136.2.
The Smithsonian’s current $2.3 billion estimate exceeds NAPA’s $1.2 billion  estimate because it reflects more recent and comprehensive assessments  of the Smithsonian’s revitalization needs, covers new construction  (including about $103 million to address security requirements), and  incorporates more complete information about the maintenance program.  After NAPA issued its July 2001 report, the Smithsonian implemented  NAPA’s recommendations that it revalidate its revitalization requirements  and separate its maintenance budget from its revitalization budget. In  September 2001, the Smithsonian issued a report outlining its revitalization  objectives, and it has since been updating facility assessments and  completing master plans to identify further revitalization costs. It has also  taken other steps to improve its cost estimation, including establishing a  cost-engineering unit and attempting to implement a NAPA  recommendation that calls for linking requests for construction funding to  progress in completing design drawings. Table 2 provides the Smithsonian’s  January 2005 cost estimates for major revitalization projects, NAPA’s July  2001 estimates, and summaries of the reasons for differences between the  estimates. Further discussion of the Smithsonian’s cost estimation methods  follows the table.
To estimate the costs of its revitalization projects and construction, the  Office of Project Management may use facility assessments, fire and safety  inspections, customer input, contracted cost estimates of projects,  feasibility studies, design documents at various stages (preliminary, 35  percent, or 100 percent), and the input of the various experts in OFEO,  according to OFEO officials. The developmental phase of a project  determines the types of information that are available for use in estimating  its cost. Depending on the types of information used, Project Management  can assign a range of accuracy to an estimate, applying a four-class system  that the Construction Industry Institute (CII) uses to categorize cost  estimates. Estimates in each class—order of magnitude, factored, control,  and detailed/definitive—are based on different, increasingly reliable  documents and have increasingly narrow ranges of accuracy. Whereas an  order-of-magnitude estimate could be based on a feasibility study alone and  would have an range of accuracy of plus or minus 30 to 50 percent, a  detailed/definitive estimate could be based on detailed drawings and could  have a narrower accuracy range of plus or minus less than 10 percent. As  discussed, the majority of the Smithsonian’s estimates for revitalization and  construction projects are order-of-magnitude estimates.
To provide better estimates of its future needs, OFEO has established a  Cost Engineering Division, which recently has been fully staffed. This  division is to provide revitalization and construction cost estimates for  projects at the project development stage. The division is also to revise  construction cost estimates for each project throughout its life cycle to  reflect changes and current market conditions. The recently hired  associate division director has developed a draft Cost Management Guide  that is currently being reviewed. According to the associate division  director, the guide is to standardize the estimating process throughout  OFEO, including the process for developing cost estimates for the  Smithsonian’s 5-year capital plan, and to provide an audit trail for  estimates. He is also introducing CII’s Estimate Score Program to enhance  the accuracy of early estimates. He expects his division to have a major  role in developing all future project estimates.
NAPA recommended that, to improve its cost estimates, the Smithsonian  not request construction funding from the Congress until it has completed  partial (35 percent) design drawings for its projects. According to the  OFEO director, OFEO is having difficulty meeting this recommendation  because of chronic underfunding in the design category. OFEO currently  can barely keep up with the requirements for complete (100 percent)  design drawings for the next year’s capital program, the director said, and  little funding is available to meet the longer-term requirements for partial  (to 35 percent) designs. Ideally, the 35-percent design drawings should be  complete before OFEO develops the request for construction funding to  the Office of Management and Budget. The director believes that if OFEO  had a larger pool of design funds, he could provide the Congress with more  accurate information for making funding decisions and develop projects in  a timely manner.
subsections: section_title: Smithsonian Now Tracks Maintenance Project Costs Separately from Revitalization and Construction Project Costs
paragraphs: As NAPA recommended, the Smithsonian separated maintenance costs  from revitalization and construction costs and now tracks and manages  them through separate offices. Using facility assessments, the Office of  Facilities Reliability determined an inventory of about $329 million in  deferred maintenance projects as of October 2004. Figure 17 shows the  breakdown of the inventory by type and total dollar value.
HVAC ($22.8)    Plumbing ($14.0)
Renovation--minor ($25.6)    Site repairs ($71.1)
Architectural ($5.8)    Accessibility ($1.9)    Conveyances ($14.9)    Exterior facade ($9.3)    Interior finishes ($33.6)    Roofing ($20.0)    Structural ($59.5)
According to Facilities Reliability officials, the yearly cost estimates for  maintenance projects in table 1 provide for maintaining facilities at their  current levels in fiscal years 2005 and 2006 as well as reducing the  inventory of deferred maintenance in fiscal years 2007 through 2013 if  funded at these levels. To calculate these estimates, Facilities Reliability  first (1) considers the building’s condition, as measured against a facility  condition index that ranges from 1 (the worst condition) to 5 (the best  condition); (2) determines an allowance (between 2 percent and 6 percent,  depending on the building’s condition) of the building’s current  replacement value; and (3) applies a formula that includes the building’s  total square footage. Facilities Reliability then adjusts the results of its  calculations according to the type of maintenance work and the input of  staff. Finally, Facilities Reliability combines the estimated maintenance  costs for all the buildings to determine the estimated maintenance needs  for a fiscal year. The deferred maintenance inventory rises and falls as  maintenance projects are completed, new projects are identified, and the  estimated replacement value of the facility inventory changes.  Underfunding maintenance needs in a given year increases the deferred  maintenance inventory.
section_title: Cost Estimates Could Change
paragraphs: For a variety of reasons, the Smithsonian’s cost estimates for revitalization,  construction, and maintenance could change. First, as noted, the estimates  for about 86 percent of the revitalization and construction projects are  order-of-magnitude estimates with an accuracy range of plus or minus 30 to  50 percent. An OFEO official pointed out that the costs are not likely to fall  unless the projects are reduced in scope. Additionally, the estimates could  increase further because assessments for the National Museum of Natural  History, the National Zoo, and the Smithsonian Astrophysical Observatory  are still in progress and could identify new needs. Moreover, as other  facilities continue to deteriorate, additional revitalization needs could  arise.
Second, the annual costs for maintenance are expected to increase due to  the addition of the National Museum of the American Indian and the Steven  F. Udvar-Hazy Center to the Smithsonian’s building inventory in fiscal year  2004, and with the planned completion of the Patent Office’s revitalization  in 2006. According to the National Research Council’s standards for  maintenance, the Smithsonian’s maintenance budget should increase by at  least 2 percent of these buildings’ current replacement value to cover their  maintenance. However, a Smithsonian official told us that the Smithsonian  received an increase in maintenance funding for fiscal year 2005 to provide  for the National Museum of the American Indian of only $700,000 of the  $2.5 million needed. Unfunded maintenance costs increase the  Smithsonian’s deferred maintenance inventory.
Third, the estimated costs for both construction and maintenance do not  include the National Museum of African American History and Culture,  which Congress authorized in 2003. This new museum is in its planning  stage, and the timing and cost of its construction are still unknown, though  it is likely to be several hundreds of millions of dollars. In addition, some  members of Congress have expressed interest in developing a National  Museum of the American Latino Community.
section_title: Most Funded Major Revitalization and Construction Projects Are on Time and Within Budget
paragraphs: The Smithsonian has 13 funded major revitalization and construction  projects that are currently active or were completed in fiscal year 2004. As  table 3 indicates, 8 of the 13 projects were within budget and on time (or  were completed on time) as of April 2005. Of the remaining 5 projects, 1  was both over budget and behind schedule (Museum Support Center, Pod  5); 2 had increases in their budgets, but were on schedule (Ocean Exhibit  and Patent Office Building, Phase II); 2 were behind schedule, but within  their budgets (Patent Office Building Phase I and Mall-wide Permanent  Security Barriers). For each major project, table 3 identifies the budget,  current working estimate, schedule, and comments.
The current working estimate of the National Museum of Natural  History’s Ocean exhibit increased from about $34.1 million to $40.5  million. This $6.4 million increase reflects higher costs for renovations  ($2.2 million for heating, ventilation, and air-conditioning  work  required to support the planned exhibits’ advanced technology and  more interactive components) and $4.2 million for specific additional  exhibits that the donor has suggested. The National Museum of Natural  History is reprioritizing its capital projects to cover the higher HVAC  costs. The donor will provide the $4.2 million in additional funds for the  specific exhibits requested, or the additional exhibits will not be  included in the project.
The current working estimate of Phase II of the Patent Office Building  renovation was increased to reflect desired enhancements should  additional trust fund monies become available. The current courtyard  enclosure is within the original target.
The current working estimate of the Museum Support Center Pod 5  project increased from $30.0 million to $42.7 million. The additional  costs include $9.8 million for a laboratory, $400,000 for further design  work, and $2.5 million due to a longer contract period, delays in  obtaining program funds, and later separate contract awards. The  purpose of this Pod is to store collection specimens preserved in  alcohol-filled containers in a code-compliant building. According to the  project manager, the design costs were higher than expected because it  is difficult to design a storage facility to contain such a large quantity of  alcohol.
Delays in the three projects that were behind schedule were due to  unexpected construction problems during renovation (Patent Office  Building, Phase I), a design problem (Museum Support Center, Pod 5), and  the late award of a construction contract (Mall-wide Permanent Security  Barriers). According to a Smithsonian official, they are trying to minimize  the impact of the construction delay on the Patent Office Building so that  the public spaces can be opened on time. The project manager for the  Museum Support Center believes that they can make up the delay. The  project manager for the Mall security barriers is still working to determine  the potential effects of the delay.
In fiscal years 2002 and 2003, the Smithsonian’s Office of Inspector General  completed management reviews of three Smithsonian projects—the  construction of National Museum of the American Indian, the Steven F.  Udvar-Hazy Center, and the revitalization of the Patent Office Building. The  reviews of the National Museum of the American Indian and of the Steven  F. Udvar-Hazy Center showed that, overall, project management practices  were effective and financial management controls were adequate to ensure  compliance with contract terms. The third review, on the Patent Office  Building, was performed by a contractor for the Office of Inspector General  who found that adequate controls were in place to oversee the project’s  management and the existing cost-accounting system was effective in  tracking the project’s execution costs, which were managed by OFEO.  While all three reports were generally positive, they included  recommendations on how OFEO could improve its operations. OFEO has  taken actions to adopt the recommendations.
section_title: Funding Its Planned Revitalization, Construction, and Maintenance Remains a Key Challenge for the Smithsonian
paragraphs: NAPA’s report focused strongly on improvements to the Smithsonian’s  facilities management. But the report also drew attention to the need for a  substantial and ongoing infusion of funds to deal with the deterioration of  the physical plant. Funding the $2.3 billion in planned facilities programs is  an imposing challenge for the Smithsonian, the Administration, the  Congress, and private sector supporters of the institution.
Funding for the Smithsonian’s annual operations and capital programs  comes from two general sources: its trust funds and federal appropriations.  Trust funds are used to carry out innovative research, expand the national  collections, fund new exhibits, and support outreach activities to  communities. The Smithsonian has been successful in attracting  substantial philanthropic contributions to its trust fund that have been  critical to the development and construction of new facilities. For example,  most of the Udvar-Hazy Center’s $218 million construction cost and $100  million of the $219 million of the National Museum of the American Indian’s  construction cost were funded through the trust funds. Smithsonian  officials noted, however, that it is difficult to attract donor support for  general revitalization and maintenance projects. Therefore, in these types  of efforts, federal appropriations have been important. According to the  Smithsonian, Congress first began to provide the Smithsonian with annual  federal funding in 1858 to cover the cost of caring for objects of art and  natural history belonging to the United States. Today, federal  appropriations are used to operate, maintain, and protect the Smithsonian’s  facilities; conserve the national collections; sustain basic research; educate  the public; provide administrative and support services; and support  revitalization and construction. (See app. I for additional details on the  Smithsonian’s trust funds and appropriations.)
For fiscal year 2004, about 34 percent of Smithsonian’s $904 million in  revenues for operations and capital programs came from its trust fund  assets, with the remainder coming from direct federal appropriations. Of  this total amount, about $184.4 million was designated for facilities  revitalization, construction and maintenance. While recognizing that future  funding decisions could result in different levels of funding, annual  revenues at the 2004 level would fall well short of the $2.3 billion estimate  for the revitalization, construction, and maintenance needs identified for  the next 9 years. In our High Risk Series report on federal real property, we  highlighted the importance of ensuring credible, long-term budget planning  for sustaining and modernizing facilities. Such planning involves key  stakeholders in government—the property-holding agency, the Office of  Management and Budget, and the Congress—in examining viable funding  options. In the case of the Smithsonian, the importance of this approach is  underlined by the trust-trustee relationship that defines the relationship  between the institution and the federal government. We asked Smithsonian  officials if a strategic approach had been developed for funding the planned  facilities work. Officials told us that various funding approaches and  options have been discussed by the staff, the Board of Regents, and with  congressional leaders but said that no consensus for dealing with this issue  has emerged.
section_title: Conclusion
paragraphs: As an organization that relies heavily on federal support to maintain its  facilities, the Smithsonian Institution is part of the general challenge facing  the federal government in real property management. As we noted in our  2003 High Risk Series report on federal real property, the overall condition  of the federal facilities portfolio is one of alarming deterioration, with the  problem accelerating in recent years due to the age of the buildings.  Greatly improved management processes and tens of billions of dollars will  be needed to restore federal real property assets and make them fully  functional. At stake with the Smithsonian are not just the buildings  themselves, but the irreplaceable scientific and cultural assets that they  contain.
To address its own set of problems, the Smithsonian has taken major steps,  in line with NAPA’s 2001 recommendations, to reorganize its facilities  management structure to achieve improved accountability and operational  efficiency. OFEO is incorporating industry best practices for facilities  management and has established processes for prioritizing work with the  aim of leveraging its limited staffing and funding resources to the  institution’s best advantage. OFEO has also put processes in place to  develop more accurate estimates of its facilities funding needs. The  reorganization appears to be going in the right direction, though it is still in  an early stage of implementation and its long-term effectiveness has yet to  be determined. Full implementation of the restructuring effort has been  hindered by staffing and funding reductions that have occurred throughout  the Smithsonian due to budget constraints.
Along with recommending management improvements, NAPA pointed to  the need for a continuing and substantial infusion of funds for maintaining  and improving existing and new facilities. The federal government has  responded in recent years with increased levels of appropriations for the  Smithsonian’s facilities needs, and the Smithsonian itself has successfully  raised its share of private sector funding for the construction of its two  newest museums. Still, the estimated $2.3 billion in costs for facilities  needs over the next 9 years is beyond the current level of the Smithsonian’s  annual operating revenues from its trust funds and federal appropriations.  At present, it is unclear how, when, or to what extent the planned projects  will be funded.
section_title: Recommendation for Executive Action
paragraphs: Given the critical importance of correcting the deteriorating condition of  the Smithsonian’s facilities, we recommend that the Secretary of the  Smithsonian Institution establish a process for exploring and analyzing, in  a structured and reportable manner, various options for funding its  facilities needs (including options that may require legislative  authorization), together with the advantages and disadvantages of each.
This process would culminate with a method and time frame for engaging  the key stakeholders—the Smithsonian Board of Regents, the  Administration, and the Congress—in the development and  implementation of a strategic funding plan to address the revitalization,  construction, and maintenance projects identified by the Smithsonian.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the Smithsonian for comment. In  response, the Smithsonian provided us with both oral and written  comments, indicating that it concurred with our findings. In oral  comments, the Director of Government Relations stated that the  Smithsonian agreed with our recommendation. The Smithsonian also  offered some technical comments and updates that we incorporated where  appropriate. A letter from the Secretary of the Smithsonian commenting on  our report is included as appendix VIII.
As agreed with your office, 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 of this report to the  appropriate congressional committees, the Secretary of the Smithsonian  Institution, and the Director of the Office of Management and Budget. We  will make copies available to others upon request. In addition, this report  will be available at no cost on the GAO Web site at http://www.gao.gov. If  you have any questions about this report, please contact me at (202) 512- 2834 or goldsteinm@gao.gov. Key contributors to this report are listed in  appendix IX.
section_title: Funding Sources and Statutes Related to the Smithsonian’s Revitalization, Construction, and Minor Repair and Maintenance Programs
paragraphs: The Smithsonian uses funding from a variety of public and private sources  for revitalization, construction, and minor repair and maintenance  (maintenance) of its facilities. Currently, maintenance is funded primarily  through appropriations, according to a Smithsonian official. The  Smithsonian’s funding can be classified into two broad categories: trust  funds and congressional appropriations.
subsections: section_title: Trust Funds
paragraphs: Unrestricted trust funds—These funds are not subject to any donor- imposed or legal restrictions on the use of the monies. The Board of  Regents may expend these funds in any manner they deem appropriate in  promoting the Smithsonian’s mission. The unrestricted trust fund includes  income from investment earnings; income from Smithsonian Business  Ventures, which includes revenue from the Smithsonian’s magazines and  other publications, museum stores, mail-order catalogs, concessions, IMAX  theater, and licensing and media enterprises; and income from government  grants and contracts. Unrestricted trust funds are often devoted to  programs, collections, and general administration, but could be used for  revitalization, construction, and minor repair and maintenance. Various  government agencies and departments provide grants and contracts for  projects that only the Smithsonian can conduct because of its expertise in a  particular area of science, history, art, or education and because of its  ability to respond quickly to certain needs. At the end of fiscal year 2004,  government grants and contracts accounted for about 12 percent of the  Smithsonian’s revenue. At the end of fiscal year 2004, the Smithsonian’s  unrestricted operating revenues totaled $399.4 million, of which $173.1  million was spent to operate the Smithsonian’s businesses that generated  $195.0 million in revenues, according to its audited financial statement.
Temporarily restricted trust funds—These funds include donations,  earnings on endowments, and private grants that are subject to donor- imposed stipulations on how the money is spent. The types of restrictions  imposed by donors include limitations on the use of funds for the  construction or renovation of a specific museum or facility or support for a  specific program or exhibit. For example, the construction of the Steven F.  Udvar-Hazy Center was funded by numerous private contributions that  were classified as temporarily restricted and could only be spent on  construction of the Hazy Center. At the end of fiscal year 2004, the  Smithsonian’s temporarily restricted operating revenues totaled $83.9  million, according to its audited financial statement.
Permanently restricted trust funds—These funds include donations,  earnings on endowments, and bequests that are subject to donor-imposed  stipulations that the principal be maintained permanently. Donors of these  funds permit the Smithsonian to use all or part of the income earned from  these funds for either general or donor-specified purposes. James  Smithson’s original bequest is included within this category. At the end of  fiscal year 2004, the Smithsonian’s permanently restricted operating  revenues totaled $0.5 million, according to its audited financial statement.
section_title: Direct Federal Appropriations
paragraphs: Regular congressional appropriations for the Smithsonian began in 1858,  according to a Smithsonian official. In 1879, the Congress authorized and  appropriated $250,000 for construction of a National Museum (now known  as the Arts and Industries Building). Today, 20 U.S.C. § 53(a) provides that  appropriations are authorized for repairs and alterations of the  Smithsonian’s buildings and grounds. According to a Smithsonian official,  this is the authority the Smithsonian uses to perform revitalizations and  major repairs when there is no specific congressional authorization for a  project. For fiscal year 2004, federal appropriations were $596.3 million,  according to the audited financial statement.
We were told by a Smithsonian official that major Smithsonian facilities  (those that represent national landmarks or are otherwise significant) have  all been legislatively authorized by the Congress. According to a  Smithsonian official, it has built or replaced facilities without  congressional authorization, but those projects did not exceed a $1 million  cost ceiling agreed to with congressional staff and primarily have consisted  of administrative, utility, and laboratory facilities. Further, recent  appropriation acts have required the Smithsonian to consult with the  Appropriations Committees before planning or commencing any  construction projects, according to the same official. While the Congress  has authorized major new museums and facilities, the Congress has moved  away from fully funding the construction of these facilities beginning in  1982, when authorizing the construction of a building for the National  Museum of African Art and a Center for Eastern Art. The Congress limited  the federal funding to $36.5 million—just less than half of the estimated $75  million total cost of the project. The legislation directed that no  appropriated funds be obligated or expended except for planning,  administration, management expenses, and architectural or consulting  services until the Smithsonian had sufficient private funding in hand which,  when combined with federal funding, could complete the project.
More recently, the Congress required that not more than two-thirds of the  total cost of planning, designing, and constructing the National Museum of  the American Indian come from federal appropriations. The Congress  authorized the Udvar-Hazy Center and appropriated money for the design,  but it did not allow any appropriations to be used for construction. The  Smithsonian built the facility with private donations and a $78 million  general obligation bond. In 2003, the Congress authorized the Smithsonian  to plan, design, and construct a building for a National Museum of African  American History and Culture. The authorization provided that half of the  costs are to come from nonfederal sources.
Currently, maintenance projects are funded primarily through  appropriations, although the maintenance staff are funded by both  appropriations and trust monies according to a Smithsonian official. A  Smithsonian official also told us that the institution is moving toward trying  to get private donors to allow part of their donations to be set aside for  repair and maintenance of exhibits. Exhibits such as America on the Move  and The Price of Freedom have planned maintenance budgets of about $1  million each, some of which has already been raised from the private  sector. For The Star Spangled Banner, the Smithsonian is planning an  endowment fund of $4 million for maintenance. One donor has agreed to  let the Smithsonian use $1 million of his original gift for this exhibit to help  fund the endowment.
section_title: Selected Smithsonian Institution Legal Authorities Relating to Construction and Revitalization of Facilities
subsections: section_title: Enabling Laws
paragraphs: Act of 1836 – Accepted James Smithson’s bequest of his property to the  United States for the purpose of founding in Washington, D.C., the  Smithsonian Institution, an establishment for the increase and diffusion of  knowledge among men. Among other things, the act required the Treasurer  of the United States to account separately from all other accounts of his  office all sums received by virtue of Smithson’s bequest and for the funds to  be spent in such manner as the Congress later directed.
Act of 1846 – Established the Smithsonian Institution in its present form  and provided for the administration of the Smithsonian Institution trust by  a Board of Regents. The act appropriated from federal funds an amount  from the interest on Smithson’s bequest for the erection of suitable  buildings and other expenses of the institution. The act stated that all  appropriations and expenditures that would be made for the purpose of the  institution would be from the interest accrued and not from the principal of  the fund. The act authorized the Board of Regents to select a suitable site  for a building and contract for the construction of a suitable building  necessary for the institution. The act authorized the Secretary of the Board  of Regents to take charge of the building and property of the institution.  The act also reiterated that all money recovered by, or accruing to the  institution, would be paid into the United States Treasury and separately  accounted for as provided by the 1836 act.
section_title: Current Statues
paragraphs: 20 U.S.C. § 41 – Establishes the Smithsonian Institution for the increase and  diffusion of knowledge among men, with the powers, limitations, and  restrictions contained in the act.  20 U.S.C. § 42 – Establishes the members of the Board of Regents. 20 U.S.C. § 46 – Provides for the Secretary of the Board of Regents to take  charge of the buildings and property of the Institution.  20 U.S.C. § 53 - Provides that all laws relating to the protection of public  property in the District of Columbia shall apply to the lands, buildings, and  other property of the Smithsonian Institution. Also provides that all money  recovered by or accruing to the Smithsonian Institution shall be paid into  the Treasury of the United States, to the credit of the Smithsonian bequest,  and separately accounted for.  20 U.S.C. § 53a – Provides that appropriations are authorized for repairs  and alterations of buildings and grounds occupied by the Smithsonian  Institution in the District of Columbia and elsewhere. 20 U.S.C. § 54 – Provides that interest is appropriated for perpetual  maintenance and support of the institution. Also provides that all  expenditures and appropriations made from the Smithsonian Institution  treasury account for the purposes of the institution are to be made from the  interest and not the principal in the account.  20 U.S.C. § 55 – Provides that the Secretary is authorized to receive and  deposit in the Treasury on the same terms as the original bequest of James  Smithson’s, such sums that the Regents see fit to deposit. This section  specifically states that this shall not operate as a limitation on the power of  the Smithsonian Institution to receive money or property by gift, bequest,  or devise, and to hold or dispose of the same to promote the purposes of  the institution. 20 U.S.C. § 56 – Authorizes the Smithsonian Institution Board of Regents to  dispose of any money which has accrued as interest on the Smithsonian  fund, or not appropriated, as they deem best suited for the promotion of the  purpose of James Smithson’s bequest.
Annual Appropriations Acts – Appropriates funds for maintenance,  alteration, repair, revitalization, lease, and construction of facilities.
section_title: Selected Statutes Enacted Since 1955 Authorizing Smithsonian Institution Facilities
paragraphs: An Act to Authorize the Construction of a Building for the Museum of  History and Technology Including the Plans and Specifications Authorized the Board of Regents to prepare drawings and specifications  for, and to construct a suitable building for, a Museum of History and  Technology. Authorized to be appropriated such sums not to exceed  $36,000,000 as may be necessary to carry this out.
An Act to Authorize the Plans and Specifications for the Construction of a  Building for a National Air Museum   Authorized the Board of Regents to prepare plans, including drawings  and specifications, for the construction of a suitable building for a  National Air Museum and authorized to be appropriated such sums as  may be necessary to carry this out.
An Act for the Establishment of the Joseph H. Hirshhorn Museum and  Sculpture Gardens   Authorized the Board of Regents to remove any existing structure,  prepare architectural and engineering designs, plans, and specifications  and to construct a suitable museum and sculpture garden for the use of  the Smithsonian Institution within the area designated within the act for  the establishment of the Joseph H. Hirshhorn Museum and Sculpture  Garden. Pledged the faith of the United States to provide such sums as  may be necessary for the upkeep, operation, and administration of the  Joseph H. Hirshhorn Museum and Sculpture Garden. Authorized to be  appropriated not to exceed $15,000,000 for the planning and  construction of the Joseph H. Hirshhorn Museum and Sculpture Garden  and such additional sums as may be necessary for the maintenance and  operation of the museum and sculpture garden.
An Act to Authorize the Smithsonian Institution to Plan Museum Support  Facilities   Authorized the Board of Regents to prepare plans for museum support  facilities to be used for (1) the care, curation, conservation, deposit,  preparation, and study of the national collections of scientific, historic,  and artistic objects, specimens, and artifacts; (2) the related  documentation of such collections of the Smithsonian Institution; and  (3) the training of museum conservators. Authorized to be appropriated  such sums as may be necessary to carry this out. Provided that the  museum shall be located on federally owned land within the  metropolitan area of Washington, D.C., and authorized any federal  agency to transfer land under its jurisdiction to the Smithsonian  Institution for the site without reimbursement.
An Act to Authorize the Smithsonian Institution to Construct Museum  Support Facilities Amended an Act to Authorize the Smithsonian Institution to Plan  Museum Support Facilities, P.L. 94-98, to authorize the Smithsonian  Institution to construct museum support facilities. Authorized to be  appropriated $21,500,000 to carry this out.
An Act to Authorize the Smithsonian Institution to Plan for Development of  the Area South of the Original Smithsonian Institution Building   Authorized the Board of Regents to plan for the development of the area  south of the original Smithsonian Institution Building adjacent to  Independence Avenue at Tenth Street, Southwest, in Washington, D.C.  Authorized to be appropriated $500,000 to carry this out.
An Act to Authorize the Smithsonian Institution to Construct a Building for  the National Museum of African Art and a Center for Eastern Art Authorized the Board of Regents to construct a building for the National  Museum of African Art and a Center for Eastern Art together with  structures for related educational activities and authorized to be  appropriated $36,500,000 to carry this out. Provided that only funds  appropriated pursuant to this act may be obligated or expended for  planning, administration, management expenses, and architectural or  other consulting services, and no other funds appropriated pursuant to  this act shall be obligated or expended until such time as there is  available to the Board of Regents, from private donation or other  nonfederal sources, a sum combined with any appropriated funds in an  amount sufficient to carry this out.
An Act to Authorize the Smithsonian Institution to Purchase Land in Santa  Cruz County, Arizona   Authorized the Smithsonian Institution to purchase land in Santa Cruz  County, Arizona, for the permanent headquarters of the Fred Lawrence  Whipple Observatory and authorized to be appropriated $150,000 to  carry this out.
An Act to Authorize the Administrator of General Services to Transfer to  the Smithsonian Institution Without Reimbursement the General Post  Office Building and the Site Located in Washington, D.C.
Authorized the Administrator of General Services to transfer to the  Smithsonian Institution, without reimbursement, for use for art galleries  and related functions the General Post Office Building with any attached  underground structures and the site of the building located between  Seventh and Eighth Streets Northwest and E and F Streets Northwest, in  Washington, D.C. Authorized to be appropriated to the Board of Regents  of the Smithsonian Institution $40,000,000 for renovation and repair  after the transfer of the building is made to the Smithsonian Institution.
An Act to Authorize the Smithsonian Institution to Plan and Construct  Facilities for Certain Science Activities   Authorized the Board of Regents to plan and construct facilities for the  Smithsonian Astrophysical Observatory and the Smithsonian Tropical  Research Institute. Authorized to be appropriated $4,500,000 for the  Smithsonian Astrophysical Observatory and $11,100,000 for the  Smithsonian Tropical Research Institute.
An Act to Authorize the Smithsonian Institution to Construct the Charles  McC. Mathias, Jr., Laboratory for Environmental Research   Authorized the Board of Regents to construct the Charles McC. Mathias,  Jr., Laboratory for Environmental Research in Edgewater, Maryland.  Authorized to be appropriated $1,000,000 to carry this out.
An Act to Establish the National Museum of the American Indian within the  Smithsonian Institution Authorized the Board of Regents to plan, design, and construct a facility  to house the portion of the National Museum to be located in  Washington, D.C. at a site specified in the act. Provided that the Board of  Regents shall pay not more than two-thirds of the total cost of planning,  designing, and constructing the facility from funds appropriated to the  board with the remainder of the costs coming from nonfederal sources.
Authorized the Administrator of General Services to lease to the  Smithsonian Institution, at a nominal charge, space in the Old U. S.  Custom House in New York to house the portion of the National  Museum to be located in New York and designated as the “George  Gustav Heye Center of the National Museum of the American Indian.”  Authorized the Board of Regents to plan, design, and construct a facility  for the National Museum in the Old U. S. Custom House in New York  and authorized the Administrator of General Services to plan, design,  and construct an auditorium and loading dock for the shared use of all  the occupants of the Old U. S. Custom House in New York. The act  provided that the Board of Regents shall pay one-third of the costs of  planning, designing, and constructing the National Museum in New York  from funds appropriated to the board with the remainder of the costs  coming from nonfederal sources. The act limited the obligation of  federal funds for construction of the National Museum in New York in  any fiscal year, until nonfederal sources have paid to the Board of  Regents the nonfederal share of the costs which the board estimated  will be incurred in any such year. The act noted that New York City and  New York State each agreed to pay $8,000,000 or an amount equal to  one-third of the costs for planning, designing, and constructing the  facility, whichever is less. The act provided that after construction of the  National Museum in New York is completed that repairs and alterations  of the facility shall be the Board of Regents responsibility.
Authorized the Board of Regents to plan, design, and construct a facility  for the conservation and storage of the collections of the National  Museum at the Museum Support Center of the Smithsonian Institution  with a total aggregate square footage of at least 400,000 square feet.
Authorized to be appropriated to the Administrator of General Services  from the Federal Buildings Fund $25,000,000 to carry out the plan,  design, and construction of the auditorium and loading dock and to  make repairs and alterations to the portion of the Old U. S. Custom  House that is not leased to the Board of Regents.
Authorized to be appropriated to the Board of Regents such additional  sums as may be necessary to carry out the planning, design, and  construction of the National Museum to be located in Washington, D.C.,  the National Museum to be located in New York, and the Museum  Support Center for the collections of the National Museum.
An Act to Authorize the Smithsonian Institution to Plan, Design, Construct,  and Equip Space in the East Court of the National Museum of the Natural  History Building Authorized the Board of Regents to plan, design, construct, and equip  approximately 80,000 square feet of space in the East Court of the  National Museum of the Natural History Building. Authorized to be  appropriated $30,000,000 to carry this out.
An Act to Provide for Planning and Design of a National Air and Space  Museum Extension Authorized the Board of Regents to plan and design an extension of the  National Air and Space Museum at Washington Dulles International  Airport and authorized to be appropriated $8,000,000 to carry this out.
An Act to Authorize the Smithsonian Institution to Plan, Design, and  Construct the West Court of the National Museum of the Natural History  Building Authorized the Board of Regents to plan, design, and construct the West  Court of the National Museum of the Natural History Building. Provided  that no appropriated funds may be used to pay any expense for the  planning, design, and construction of the West Court.
An Act to Authorize Construction of a National Air and Space Museum  Dulles Center at Washington Dulles International Airport   Authorized the Board of Regents to construct the Smithsonian  Institution National Air and Space Museum Dulles Center at Washington  Dulles International Airport. Provided that no appropriated funds may  be used to pay for any expenses of construction.
An Act to Authorize the Smithsonian Institution to Plan, Design, Construct,  and Equip Laboratory, Administrative, and Support Space for the  Smithsonian Astrophysical Observatory Submillimeter Array Authorized the Board of Regents to plan, design, construct, and equip  laboratory, administrative, and support space to house base operations  for the Smithsonian Astrophysical Observatory Submillimeter Array in  Hilo Hawaii. Authorized to be appropriated specific amounts in various  fiscal years to carry this out.
Authorized the Board of Regents to plan, design, construct, and equip  additional special use storage and laboratory space at the museum’s  support facility in Suitland, Maryland. Authorized to be appropriated  specific amounts in various fiscal years and such additional sums as  necessary to carry this out.
Authorized the Board of Regents to plan, design, and construct  improvements to the interior and exterior of the Patent Office Building,  including the construction of a roof covering for the courtyard. Provided  that funds to carry this out will be from nonappropriated sources.
National Museum of African American History and Culture Act   Authorized the Board of Regents, in consultation with the National  Museum of African American History and Culture Council, to plan,  design, and construct a building for the museum. Provided that 50  percent of the costs to carry this out will be from federal funds and 50  percent of the costs to be from nonfederal sources. Authorized to be  appropriated such sums as necessary to carry this out.
An Act to Authorize Construction and Related Activities for Support of the  VERITAS on Kitt Peak, Arizona   To authorize the Board of Regents of the Smithsonian Institution to  carry out construction and related activities in support of the  collaborative Very Energetic Radiation Imaging Telescope Array System  (VERITAS) project on Kitt Peak near Tucson, Arizona. Authorized to be  appropriated $1,000,000 to carry this out.
section_title: Smithsonian Institution’s Status on the Implementation of the National Academy of Public Administration’s Recommendations
subsections: section_title: 1. Evaluation of the renovation, repair and alteration (RR&A) requirements
paragraphs: 1.1. Revalidate the total backlog of RR&A requirements. This  revalidation should include completing detailed facilities  condition assessments for all museums and other major  facilities that have not been surveyed for this purpose within  the preceding 3 years. In-house capability should be  supplemented with contract assistance, if necessary, to  expedite completion.
Implemented.
Completed September 2001 with publication of  Museums and Facilities: Critical Assessment  and Improvement Objectives.
1.2. Develop a fully integrated and prioritized 10-year plan for  executing the revalidated backlog of requirements and brief  the Office of Management and Budget (OMB) examiners and  congressional staffs on the total facilities requirements, even  though the annual budget constraints may preclude requesting  the full amount of funding actually needed.
Implemented.
Briefings with OMB and congressional staff held  Spring 2002 based on Museums and Facilities:  Critical Assessment and Improvement  Objectives; subsequent briefings held annually  to apprise of progress.
1.3. Cost estimates for all the capital improvements projects  that are included in the Smithsonian’s annual budget requests  to OMB and Congress should be based on the completion of  at least 35 percent of final design, with cost escalation  included to improve the accuracy and reliability of the  estimates.
Implementation under way.
Project Management Handbook includes this  provision. Discussions have already taken place  with OMB on this topic. Additional funding in  Facilities Planning and Design will be required  before the Smithsonian can consistently  complete 35-percent design of future year  projects before requesting construction funding.
1.4. Implement and adhere to strict control measures over  project scope and cost increases. For selected major capital  improvement projects, such as the Patent Office Building,  consider establishing a formal review group to help control  increases in project scope and cost.
Implemented.
Implemented.
1.5. The budget format for the RR&A program should be  changed and simplified to succinctly state the actual  requirements, estimated costs, and construction schedules.
Implemented.
Fiscal Year (FY) 2003 and 2004 budgets reflect  new format of project descriptions. New  structure for entire facilities program budget  request implemented with FY 2004 request.
2. Responsiveness to Congress and OMB 2.1. Place significantly increased emphasis on responding to  congressional questions and requests in a timely and accurate  manner.
Implemented.
All requests since 2002 have been dealt with  expeditiously.
3.1. Develop and implement a well-structured maintenance  program that includes preventive maintenance, periodic testing  and inspection, and programmed maintenance.
Implemented.
Plan provided to OMB and Congress January  2002. Funds received in FY 2004 and requested  for FY 2006 will begin to address capability to  focus on planned maintenance activities, as  guided by Reliability Centered Maintenance  (RCM).
3.2. Reorder budget priorities to provide for an increase to at  least $10 to $15 million annually in a preventive maintenance  category.
Implementation under  way.
Increase of $5.4 million received in FY 2004  Salaries and Expenses (S&E) appropriation as  an initial increment of increase. Additional  increase of $4.7 million included in FY 2006  request to Congress. Estimate of total  requirement revised upward to reflect National  Research Council (NRC) guidelines of 2-4  percent of physical plant Current Replacement  Value.
3.3. Consider budgeting all maintenance and minor repair  requirements, excluding personnel costs, in one separate  account in the RR&A budget to provide improved visibility and  funds control.
Implemented.
Budget restructured to create Facilities  Maintenance line item in the S&E portion of the  Smithsonian’s FY 2004 budget request.  Decision to include in S&E rather than Capital  portion of the budget discussed with OMB and  congressional staff.
3.4. Consider adopting the RCM approach that many federal  agencies use. RCM is a maintenance philosophy that  incorporates an effective mix of proactive, preventive,  predictive testing and inspection, and reactive maintenance  practices that focus on reliability and risk management.
Implemented.
Associate Director for Reliability hired in August  2002. Implementation plan developed and Office  Facilities Engineering and Operations (OFEO)  staff trained. Predictive testing and inspection  (PT&I) equipment purchased for vibration  analysis, thermography, and ultrasonic  thickness. Performance metrics identified and  key processes are being revised and validated.  PT&I tests were added as part of acceptance  testing to Hazy, National Museum of the  American Indian, and Patent Office Building  projects.
4.1. Use commonly accepted definitions for facilities  maintenance and repair as spelled out in the numerous NRC  reports on this subject.
Implemented.
The engineering study Museums and Facilities:  Critical Assessment and Improvement  Objectives contains specific definitions that are  in accord with NRC.
Implemented.
The Smithsonian no longer uses the term  "maintenance backlog," and appropriately  defines major repair and restoration  requirements under "Facilities Capital-- Revitalization Requirements." 5.1. Centralize facilities management functions, including the  National Zoo, under a single facilities organization. This  change would improve operational efficiency and  effectiveness, cost control, quality control, and accountability.
Implemented.
Office of Facilities Engineering and Operations  established.
5.2. Director of OFEO should be designated the principal  Smithsonian official for managing the facilities maintenance  activities, the RR&A program, and the construction program.
Implemented.
Director of OFEO has been given these  responsibilities by the Secretary.
5.3. The Office of Physical Plant (OPP) should be restructured  to place a stronger emphasis and focus on its three primary  responsibilities: (1) operation and maintenance of the  Smithsonian’s physical plant, (2) repair and restoration of  facilities to reduce the extensive backlog, and (3) construction  of new facilities.
Implemented.
Former Office of Physical Plant has been  reorganized into three separate entities to focus  upon specific facilities management functions.
5.4. If the Smithsonian’s RR&A program is substantially  increased, the OFEO staffing should accordingly be increased  to effectively manage the larger program.
Implementation under  way.
The Smithsonian received some staff to support  the capital program in FY 2003 and FY 2004;  construction supervision and administration staff  has been paid with project funding since FY  2003. Remaining staffing requirements for a  larger capital program will be requested in future  budgets as the program increases.
6.1. Conduct a comprehensive and detailed analysis to  determine whether or not the facilities operations and  maintenance functions that are performed by the OFEO in- house workforce could be accomplished more efficiently and  cost effectively if they were contracted out.
Implementation  under way.
In FY 2003, the Smithsonian awarded a contract  for operations and maintenance of the Hazy  Center in lieu of adding new staff, and  contracted out Heating, Ventilation and Air  Conditioning (HVAC) maintenance at  Smithsonian Environmental Research Center.  Maintenance resources added in FY 2004 are  being used primarily to augment staff capacity  with contracts for inspection, testing, and  preventive maintenance of automatic doors;  electrical panels; fire alarm systems and fire  sprinklers; testing and cleaning of cooling  towers; and thermographic and vibration  analysis. More analysis of contracting  opportunities will be conducted upon completion  of reorganization and filling of new positions in  OFEO.
6.2. Conduct a similar analysis of the facilities operations and  maintenance functions for the National Zoological Park  (National Zoo).
Implementation  under way.
The Smithsonian contracts for a number of  maintenance activities at the National Zoo,  including HVAC maintenance. More analysis of  contracting opportunities will be conducted upon  completion of reorganization and filling of new  positions in OFEO.
7. Capital Program Planning Board (CPPB) 7.1. The CPPB membership should be realigned and updated  to accommodate the Smithsonian’s current organization.
Implemented.
A new charter for the board, now named the  Capital Planning Board, reflects the current  Smithsonian organization.
7.2. The Director of OFEO should be designated the  Smithsonian’s principal and lead official for developing,  presenting, and defending all facilities programs and budgets  to the CPPB and to external organizations, such as OMB and  Congressional staffs, where required.
Implemented.
The board’s charter assigns overall  responsibility for the board to the Chief Financial  Officer. The Director, OFEO, has been directed  to lead the board’s deliberations for facilities  capital programs.
7.3. The CPPB should meet on a regularly scheduled basis to  review and recommend approval of the annual budget request  for the RR&A program, the maintenance program, and the  construction program, as well as the 5-year plans for each of  these facilities programs. Minutes of each meeting should be  recorded and provided to board members.
Implemented.
The board meets on a regular basis.
7.4. Board review results should be provided in the form of  formal written recommendations to the Secretary of the  Smithsonian Institution.
Implemented.
Board recommendations are incorporated into  overall budget recommendations made to the  Secretary.
8.1. Routinely include specific data in annual budget requests  on how the Smithsonian applied its RR&A funding from the  prior year.
Implemented.
The Smithsonian budget requests since FY  2003 include this prior year information in  summary and by major project.
9.1. The current Smithsonian Financial System (SFS) should  be replaced with an updated system. The Smithsonian should  ensure that the updated system is fully compatible with the  standards set by the Joint Financial Management  Improvement Program and reports obligations and outlays at  the program and project level. The Smithsonian should ensure  that program and major-unit managers, as well as working- level fund-control personnel, are consulted in the process of  defining requirements for the new system.
Implemented.
Phase I of the Institution’s new Enterprise  Resource Planning (ERP) PeopleSoft  implemented October 1, 2002. Capital Program  managers are participating in planning for Phase  II implementation, which will include the Asset  Management Module.
9.2. In the interim, terminology used in the SFS reports should  be clarified. If practical, SFS reports should be revised to  provide actual obligation data. Key personnel should be  trained to correctly apply the terms used in the federal  appropriation process and those used in internal operations.
Implemented.
Terminology clarified as part of ERP  development.
9.3. Recognize that managers will continue to rely on separate  cuff systems unless and until a new system is in place that  provides managers with the program and project-level  information they need and in which the managers have  confidence.
Implemented.
Capital Program cuff system (PFITS) will be  retained and has been updated to match new  PeopleSoft coding structure. Commercial Off  The Shelf (COTS) project management software  systems are being evaluated for potential use in  the future.
9.4. The cuff records used by the National Zoo should be  modified to more readily provide a basis for tracking  obligations as well as commitments.
Implemented.
Merger of National Zoo PFITS with PFITS was  completed in September 2003. All National  Zoological Park PFITS obligations,  commitments and expenses are now being  tracked.
9.5. Survey managers to determine which SFS reports are  actually providing useful data, which should be changed with  the current system’s capabilities, and which should be  discontinued.
Implemented.
Information on reporting requirements gathered  as part of new financial system (ERP)  development.
9.6. Modify SFS basic reports to provide separate reporting for  OPP and National Zoo transactions.
Implemented.
Separate codes have been established to  distinguish between OFEO and National Zoo  Facilities Capital financial activity.
9.7. Until a unified system is available, a sufficient number of  people should be trained to operate the various cuff systems  the Smithsonian uses so that the absence of any one  individual does not hamper operations.
Implemented.
Backups have been trained to support the OFEO  cuff system for the Capital Program (PFITS).
section_title: Organization and Responsibilities of the Smithsonian’s Office of Facilities Engineering and Operations
paragraphs: The office is responsible for facilities planning, master planning, and resource management including facility  project budget advocacy, development, policy and standards, fiduciary accountability, program oversight and  analysis. The office is also responsible for architectural history and historic preservation and real estate  policy utilization, guidance, and reporting, as well as facilities management systems.
The office provides comprehensive management of the Smithsonian’s facilities revitalization and  construction. It develops preliminary project scopes, schedules, and budgets; monitors, directs, and reports  on the updated scope budget and schedule of individual projects and major construction; and coordinates the  efforts of stakeholders, designers and construction execution on multiple projects.
The office serves as the focal point for facilities master planning and space-management issues and efforts.  It advises management on architectural history and historic preservation, conducts historic preservation  reviews, comprehensive facilities master planning studies, and space utilization studies, space inventories  and analysis of these issues. It also coordinates with government and community groups on facilities  planning, space management, and preservation matters and provides financial and administrative services  regarding facilities issues.
With oversight from the Office of Project Management, this office is responsible for project design and  construction oversight for all new construction and revitalization contracts.
The office administers architectural and engineering services for facility construction, revitalization and repair  that include developing design scopes for projects. It oversees contracted design efforts, provides limited in- house architectural and engineering design services, and is responsible to provide and ensure thorough  project reviews and code compliance.
The office provides construction administration services and operates field offices (resident engineer) at  large project sites. It directs and oversees contract services of construction contractors and construction  managers and is responsible for contract change order negotiations.
The office provides construction cost estimates for projects at the project development stage. It provides  revised construction cost estimates throughout the project life cycle to reflect changes and current market  conditions.
The office consolidates and maintains a comprehensive Geographical Information System database that  includes computer-aided drawings for Smithsonian facilities. It provides a central archive for facility  documentation, project files, drawings, specifications, operations and maintenance, equipment and shop  drawings files, as-built drawings and an improved as-built drawing capability for facilities management and  project development.
The office provides strategic planning and oversight to facilities operations and maintenance efforts. Its goal  is to reduce breakdowns and increase planned maintenance. It runs the Reliability Centered Maintenance  program utilizing predictive testing and inspection tools to manage facility equipment. It develops tasks and  processes then monitors work efforts, collects and analyzes data and metrics of the maintenance programs,  and adjusts the operation and maintenance process to gain further efficiencies. It also purchases utilities,  manages agency-wide service contracts, operates building automation services, and repairs large equipment  in central shops. It uses both in-house and contractor personnel to accomplish its objectives. It is directly  involved with new facility design inputs, new system start-ups and commissioning efforts.
The office performs day-to-day facilities maintenance services, including preventive maintenance, janitorial  and grounds maintenance; transportation and mail delivery services, building management services for  leased facilities; landscape services and is involved in new facility system start-ups upon completion. It  accomplishes its work through in-house; and contracted services. Currently comprised of seven zones, due  to its visibility it plays a critical role as ambassadors for OFEO.
The office ensures the safety and security of staff, visitors, properties, and collections through the use of  security forces, technology, and facility design and construction.
The office ensures the Smithsonian provides safe spaces for employees and visitors, oversees fire prevention  and protection, industrial hygiene and occupational health, environmental management, and radiation safety.  Conducts all safety, environmental, industrial hygiene, and occupational health compliance audits for the  Institution.
The office is responsible for both capital projects and operations, and minor repair and maintenance.
section_title: Smithsonian’s Efforts to Implement Leading Practices in Capital Decision-Making
paragraphs: Secretary’s Strategic Plan provides goals and specific objectives for all areas of the Institution.  Annually, OFEO aligns its goals with the strategic plan. These goals include targets for percentage  completion on particular projects, overall program performance, and targets for cost growth.
In September 2001, OFEO did a study Critical Assessment and Improvement Objectives, which  provides an inventory of assets and a comprehensive list of all the studies, design, and construction  to that date, along with a cost estimate for outstanding work and the basis for the estimates. Every 2  to 3 years facility assessments—in-depth condition reviews of a facility— are performed by the Facility  Assessment Branch. Zone Managers consolidate and advocate all facility requirements, including  noncapital minor repairs and maintenance.
OFEO has engaged in several noncapital approaches designed to maximize the buying power of the  funding received. Among these approaches is the use of continuing contract authority. This permits  multiyear funded major revitalization projects, such as the restoration of the Patent Office Building, to  proceed in a measured way in partnership with the contractor, so that current year funds can be  efficiently used, while not holding up the project until all funding is received. OFEO employees at all  levels are members and active participants in both the Federal Facilities Council and the Construction  Industry Institute. Both organizations promote best practices such as comprehensive preproject  planning, value engineering and constructability reviews that ensure the best use of available dollars  through project team alignment and technical innovation and flexibility.
OFEO’s Office of Project Management leads the annual formulation and revision of the Smithsonian’s  capital design and construction program. The process of evaluation and selection of projects begins  with consultation with all Smithsonian Institution units, in conjunction with the Office of Facilities  Reliability and the Office of Facilities Management. The staff of the Smithsonian units and the staff of  the Offices of the Deputy Secretary, the Under Secretary for Science and the Under Secretary for Art  participate in this process. Projects are rated and ranked according to criteria based on health and  safety concerns first, code compliance and security, and the need for repairs and operational  efficiency.
Once the cross-functional teams working at each facility rate and rank their projects by priority, type of  work and fiscal year, the plan is presented to the Smithsonian’s Capital Planning Board. The board  under the direction of the Chief Financial Officer meets throughout the year to consider capital  requests and balance needs of the design and construction program against other capital  investments.
A 5-year Facilities Capital Program Summary for funding is developed. The combined efforts of OFEO  and the Capital Planning Board ensure that the capital program receives wide-ranging review and  approval from all areas of the Smithsonian. The Audit and Review Committee of the Board of Regents  reviews the institution’s finances and the Board of Regents authorizes the submission of the budget,  which includes the 5-year plan to Congress.
As previously mentioned, continuing contract authority is used for multiyear funded major  revitalization, which allows for phased funding of projects and allows a project to proceed in a  measured way in partnership with the contractor. This process is also used for new construction such  as the recently completed National Museum of the American Indian on the Mall. The vast majority of  the Smithsonian’s Capital projects are under $1 million in cost, so the need for phased work is only  present in the very largest capital projects. A goal of OFEO, given adequate resources in the Facilities  Planning and Design account, is to have designs funded 2 years in advance of project execution, and  to have at least 35 percent of the design complete prior to final funding decisions.
Within the recent environment of constrained funding for the capital program, the Smithsonian has  engaged in unprecedented fund-raising for design and construction. Fully one third of the total project  costs of the National Museum of the American Indian on the Mall come from privately raised funds, as  does the entire construction of the National Air and Space Museum’s Steven F. Udvar-Hazy Center.  This kind of partnership with the private sector will continue to be an important source of support in  the completion of the Patent Office Building revitalization, the overhaul of the major exhibitions halls at  the National Museum of American History, and the future construction of the National Museum of  African American History and Culture.
Monitoring project performance is the fundamental responsibility of OFEO’s project, design and  construction managers. The requirements for project schedules, cost estimates, milestone  submissions and regular project meetings are outlined fully in the Project Management Handbook. In  addition, on the largest projects, monthly executive meetings with museum directors and the OFEO  director are held, as well as quarterly oversight meetings with the deputy secretary/chief operating  officer and chief financial officer. There are two primary incentives for accountability:  project status is  reported regularly to individuals outside the project authority, as noted above; and, project managers’  performance evaluations are based on qualitative and quantitative execution of their individual capital  programs.
OFEO project teams consist of a lead project manager, design manager, resident engineer, client  representatives, and contracting specialists and, during design reviews, representatives of the Offices  of Safety and Environmental Management, Protection Services, Facilities Planning and Resources,  Information Technology and others. Also see items II. 4. and IV. 9. above.
Performance metrics are a monthly feature of project management in OFEO. Measures of overall  capital performance, monthly contract obligations, time and cost growth on the largest projects and  preproject planning are included within the larger program of OFEO performance metrics. The  preproject planning reporting is particularly helpful in measuring customer satisfaction, as it monitors  the team’s alignment on scope throughout the life of the project, while there is still time to do  something about it if disagreements occur.
Documents such as the Project Management Handbook and the SD-410 are only useful if they are  up-to-date and used. Currently, both documents are being revised. Both revised documents are in the  review process and will be incorporated into OFEO standard practices. External evaluation of OFEO  projects is a useful tool for the largest and most complex projects. Within the past 2 years, the  Smithsonian’s Inspector General’s office has audited three projects and the Smithsonian has adopted  the recommendations made. Also sharing lessons learned outside the organization is a valuable  means of achieving feedback and OFEO staff has participated in events for numerous professional  organizations such as the Federal Facilities Counsel and the Construction Industry Institute.
section_title: Facility Revitalization and Construction Project Code Assignment Matrix
paragraphs: Catastrophic - Significant projects requiring immediate funding in order to correct severe safety  hazards, active failures, and prevent the loss of facilities. Asset Impact: Detrimental or irreversible  failure, immediate implementation.
Critical - High priority projects requiring funding in the next fiscal year to avoid failure or correct serious  safety/security deficiencies. Asset/Program Impact: Imminent failure, program begins in 1 to 3 years.
Routine - Predicted work that needs funding within 4 years. Asset/Program Impact: Moderate risk,  program begins in 4 to 5 years.
Can defer - Work that can be deferred for 5 years. Asset/Program Impact: Negligible risk, program  begins within 5+ years.
Shell/System failure - Roof leaks, building piping leaks, and utility system and equipment failures.
Code compliance/Security - Replacement/upgrade/modification to fire detection/suppression systems,  life safety/accessibility systems and security systems, and building modifications.
Nonroutine capital repairs - One-time repair work to correct significant problem (i.e., all the doors in a  building or a single HVAC component).
Energy/Operational efficiency - Projects with a 7-year cost-effective payback period.
Alterations and modification - Approved master plan projects and work to sustain existing or changing  missions.
section_title: Flow Chart of the Prioritization Decision- Making Process for Minor Repair and Maintenance
paragraphs: Annual safety, health  and environmental  inspections Physical/chemical  impact on collections’  storage and display Public perspective  (public relations)
Potential safety, health, or environmental issues. Failure imminent. Potential safety, health, or environmental issues. Failure will occur with warning. High disruption to facility function. All operations lost. High disruption to facility function. Significant delay in restoring function. Moderate disruption to facility function. Moderate delay in restoring function. Moderate disruption to facility function. 100 percent of operations delayed and/or interrupted. Moderate disruption to facility function. Some portion of operations delayed or interrupted. Minor disruption to facility function. Repair to failure may be longer than trouble call. Minor disruption to facility function. Repair to failure can be accomplished during trouble call. No reason to expect failure to have any effect on safety, or health.
section_title: Scope and Methodology
paragraphs: To determine how the condition of the Smithsonian’s facilities affects  public and scientific access to the collections, and the collections  themselves, we toured 11 facilities—the Arts and Industries Building, the  Smithsonian Administration Building, the Garber Center, the Cultural  Resource Center, the National Air and Space Museum, the National  Museums of American History and Natural History, National Zoological  Park, the Renwick Gallery, the Smithsonian Environmental Research  Center, and the Victor Building. We visited these facilities because the  Smithsonian identified them as having the most serious problems. The  Garber Center has about 40 buildings, the National Zoological Park has in  excess of 40 buildings and the Smithsonian Environmental Research  Center has in excess of 30 buildings. We interviewed OFEO zone mangers  and building mangers for the facilities we visited, and contacted directors  of other Smithsonian facilities, both local and nationwide, asking them to  identify their problems.
To determine how the Smithsonian has changed its facilities management  and prioritizes its revitalization, construction, and minor repair and  maintenance programs, we reviewed a variety of documents including the  National Academy of Public Administration’s (NAPA) 2001 report on the  Smithsonian, the facility organizational chart, Facilities Project  Management Handbook, drafts of the Operation and Maintenance  Handbook, Construction Procedural Guidelines, and Cost Management  Guide (for estimating costs), Facility Revitalization and Construction  Project Code Assignment Matrix, the Flow Chart of the Prioritization  Decision-Making Process for Minor Repairs and Maintenance, minutes of  the Capital Planning Board meetings and the Smithsonian Regents  meetings for 2002 through 2004, the National Research Council’s  Committing to the Cost of Ownership: Maintenance and Repair of  Buildings, Federal Facilities Council’s Budgeting for Facilites  Maintenance and Repair Activities and the Construction Industry  Institute Best Practices Guide. We also interviewed the director and chief  of staff of the Office of Facilities Engineering and Operations (OFEO) and  the eight heads of the offices making up OFEO, the staff responsible for  prioritizing both capital projects and minor repair and maintenance, and  the head of the Smithsonian’s Capital Planning Board.
To determine the cost and status of the Smithsonian’s major (more than $5  million) construction and revitalization projects and minor repair and  maintenance projects, we toured 11 facilities (as previously identified) to  view the Smithsonian’s facility problems; we reviewed the NAPA report,  three Smithsonian Inspector General reports on the construction of the  National Museum of the American Indian, the Patent Office Building, and  the Steven F. Udvar-Hazy Center, the 2006 to 2010 Facility Capital Program  Summary, minutes of the Capital Planning Board meetings and the  Smithsonian Board of Regents meetings for 2002 through 2004, individual  project operational reports, monthly executive reports, contractor progress  reports, facility assessments, and other appropriate reports; and  interviewed the OFEO director, the directors of all OFEO offices, and  project executives and project managers responsible for oversight of  projects. OFEO also provided cost estimates for revitalization and  construction projects and the minor repair and maintenance program. We  assessed the reliability of the estimates by reviewing the processes used to  determine both revitalization and construction estimates, and minor repair  and maintenance estimates. As noted in the main body of this report, most  of the revitalization and construction estimates are "order-of-magnitude"  estimates that can vary by plus or minus 30 to 50 percent. Because such  variation is typical for these types of cost estimates and our objective is to  use these figures to provide the estimated costs of the Smithsonian’s  facilities projects, we believe that these data are reliable for the purposes  of our report.
To determine under what basic authorities the Smithsonian operates its  revitalization, construction, and minor repair and maintenance programs,  and how the Smithsonian uses its federal appropriations and trust monies  to fund these programs, we researched the Smithsonian’s enabling  legislation; the statutes under which it currently operates, including  appropriations acts and numerous statutes authorizing Smithsonian  Institution facilities from the 1950s; congressional budget requests; fiscal  year 2002, 2003, and 2004 audited financial statements and management  letters; and project operational review reports. We interviewed the chief  financial officer, assistant general counsel, and other appropriate staff. We  conducted our work between April 2004 and April 2005 in accordance with  generally accepted government auditing standards.
section_title: Comments from the Smithsonian Institution
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to those named above, Bess Eisenstadt, Susan Michal-Smith,  Faye Morrison, and Lisa Wright-Solomon made key contributions to this  report.