Architect of the Capitol: Management Challenges Remain
Published: 2006-02-21T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Architect of the Capitol (AOC) is responsible for the maintenance, renovation, and new construction of the Capitol Hill complex, which comprises more than three dozen facilities and consists of nine jurisdictions, such as the U.S. Capitol and the Senate and House Office Buildings. In 2003, at the request of Congress, GAO issued a management review of AOC that contained recommendations in seven areas to help AOC become more strategic and accountable. GAO reported on AOC's progress in implementing those recommendations in January and August 2004. In 2005 and 2006, GAO briefed Congress on AOC's recent progress in implementing GAO's recommendations and on issues related to AOC's project and facilities management. This report summarizes GAO's (1) assessment of AOC's progress in implementing previous GAO recommendations and in improving project and facilities management and (2) delineation of remaining management challenges.
section_title: What GAO Found
paragraphs: Overall, AOC is making progress in implementing GAO's previous recommendations and in improving project and facilities management. For example, AOC has implemented 21 of 54 recommendations, established a central organization for managing major projects, and completed assessments of nearly all of the agency's facilities, for use in developing a comprehensive facility maintenance and building renewal plan. AOC has also begun initiatives to develop meaningful performance measures and to restructure its project management information systems to provide better data for monitoring and reporting. These initiatives, though encouraging, are in their early stages, and it is too early to determine their success. In recent briefings provided to AOC management and congressional staff, GAO made additional recommendations to improve the accountability and effectiveness of AOC's project and facilities management initiatives. AOC has made progress in some areas, but still has a significant amount of work ahead to achieve its ultimate goal of establishing a strong strategic management and accountability framework. Specifically, it has not completed initiatives to address two critical issues--communication with external stakeholders and development of internal controls--identified in previous GAO recommendations or in independent audits of AOC's 2003 and 2004 balance sheets. These issues affect a wide range of AOC operations. For example, communication with congressional stakeholders is essential to establish and clarify service and expectation levels. Internal controls, such as reliable cost account system, sound procurement practices, and a comprehensive information security program, are necessary to, respectively, improve project and facilities management, strengthen the integrity of AOC's procurement processes, and effectively safeguard AOC's data and information access. Leadership support is vital to ensure that needed improvements are given urgent attention; this support is also essential to ensure that improvements that have already been made are continuously evaluated and refined as needed. However, the key leadership positions of Chief Operating Officer, Chief Financial Officer, Chief Administrative Officer, Director of the Capitol Power Plant, Director of Congressional and External Relations, and Director of Planning and Project Management are currently vacant. Furthermore, the term for the current Architect of the Capitol will expire in less than a year. AOC is at a critical juncture in its efforts to become more strategic and accountable. Quickly filling the vacant management positions with qualified people is essential for AOC to sustain and extend its recent improvement and to have a cohesive management team in place in the event of a turnover in the Architect of the Capitol position. AOC is now attempting to fill the vacant leadership positions, and, to mitigate the impact of these vacancies, it recently appointed an Acting Chief Operating Officer--who is also temporarily serving as the Acting Chief Financial Officer--and an Acting Chief Administrative Officer to help guide the agency's improvement efforts.

section_title: Letter
paragraphs: The Architect of the Capitol (AOC) is responsible for the maintenance,  renovation, and new construction of the Capitol Hill complex, which  comprises more than three dozen facilities, nearly 15 million square feet of  space, and 370 acres of ground developed over 200 years. Organizationally,  AOC consists of a centralized staff that perform administrative functions  and staff who oversee nine “jurisdictions” or operational units that handle  their own day-to-day operations. AOC’s jurisdictions include the buildings  and grounds of the U.S. Capitol, the Library of Congress, and the Supreme  Court; the House and Senate Office Buildings; the Capitol Power Plant  (CPP); the Botanic Garden, and Security Programs. AOC operates in a  challenging environment: the agency must preserve and modernize these  high-profile, historic buildings while meeting the needs of Congress— including its leadership, committees, individual members, and staffs—and  the visiting public. AOC has managed major projects at the Library of  Congress, the Supreme Court, and CPP, and is currently managing the  construction of the Capitol Visitor Center (CVC)—the largest increment of  growth in the history of the Capitol. However, Senate and House  Appropriations Committees have raised concerns about management  shortcomings at AOC. For example, in 2001, the Senate Appropriations  Committee cited several management issues, including a lack of strategic  planning, inadequate financial and project management controls, and an  unacceptably high level of worker injuries.
To address congressional concerns, AOC has been working for several  years to transform itself into a more strategic and accountable organization  and to improve worker safety. This transformation is a long-term effort that  involves a fundamental change in AOC’s culture. For example, AOC faces  the challenge of how best to marshal its jurisdiction-based resources to  address the strategic planning and other functional issues that cut across  the organization. AOC also faces the challenge of how to shift from reacting  to problems as they arise to proactively preventing problems by identifying  and addressing their root causes. Changes of this magnitude require the  sustained commitment of the agency’s top leadership.
In January 2003, at the request of Congress, we issued a management  review of AOC that contained recommendations that were intended to  assist AOC in establishing a strategic management and accountability  framework to drive its agency transformation efforts and address long- standing program issues, such as project management and worker safety.  In February 2003, Congress further directed us to monitor AOC’s progress  in implementing these recommendations and to assess the plan prepared  by AOC’s Chief Operating Officer (COO) for describing the policies,  procedures, and actions to carry out the responsibilities of that position.   In response to these mandates, we issued two reports in January 2004 and  August 2004, which concluded the following:   AOC was making progress on all recommendations. For example, to  improve project management, AOC created a clearly defined, well- documented, and transparent process for evaluating and prioritizing  projects. To improve worker safety, AOC developed several broad  performance measures, including two measures of the extent to which  unsafe conditions exist within AOC and two measures to assess  employees’ perception of safety.
AOC’s progress on individual recommendations, while commendable,  represented only initial steps toward the agency’s goal of becoming a  more strategic and accountable organization. Substantial work  remained to achieve sustained, long-term management improvements,  and greater effort would be needed to expedite these improvements.
Sustained commitment and assertive involvement of AOC’s leadership  would be key to addressing AOC’s long-standing weaknesses and  instilling lasting change.
The COO’s plan—issued in December 2003—included action items  related to several critical areas of improvement, such as strategic  planning, organizational management and structure, project  management, customer service, and communications. However, the  plan was not sufficiently detailed to guide and communicate the  agency’s performance and progress in these areas.
Our most recent efforts to monitor AOC’s progress included an evaluation  of (1) the agency’s overall progress in responding to our recommendations  in seven areas—strategic management, human capital management,  project management, worker safety, recycling, financial management, and  information technology (IT) management; (2) issues related to project  management, including the extent to which AOC meets its original budget  and schedule targets for major construction projects (i.e, projects over  $250,000), and the initiatives that AOC is implementing to improve project  management; and (3) issues related to facilities management, including the  extent to which AOC tracks facilities management performance and the  initiatives that AOC is implementing to improve facilities management. We  provided briefings to our congressional requesters on the results of our  work in September and December 2005 and January 2006. This report  summarizes those briefings and supplements the information presented in  the briefings with examples from our other recent work related to AOC’s  CVC project and financial management efforts.
To evaluate AOC’s progress in responding to our recommendations, we  interviewed AOC officials responsible for implementing the  recommendations and analyzed documents related to AOC’s actions. To  assess AOC’s progress and challenges in improving project management,  we interviewed AOC officials, analyzed project budget and schedule data,  and conducted seven project case studies. To assess AOC’s progress and  challenges in improving facilities management, we interviewed AOC  officials, interviewed officials from comparable organizations (including  the Smithsonian Institution, the state capitol complexes of Iowa and  Virginia, and the University of Virginia), compared the performance  measures for facilities management that AOC currently tracks with those  used by industry associations and similar institutions, and analyzed  information about facilities management initiatives at AOC. We conducted  our work on the three reviews from December 2004 through January 2006  in accordance with generally accepted government auditing standards.
subsections: section_title: Progress Made on Prior Recommendations but AOC Has Not Implemented Some Key Recommendations in Critical Areas
paragraphs: AOC has implemented 21 of 54 recommendations that span seven areas— strategic management, human capital management, project management,  worker safety, recycling, financial management, and IT management. The  agency is making progress primarily in the areas of strategic management,  human capital management, project management (covered in the next  section), worker safety, and recycling. For example, to improve strategic  management, AOC released accountability reports in fiscal years 2003 and  2004, developed a summary document to track key performance goals,  established processes for obtaining employee and customer feedback, and  initiated several new methods for communicating with employees.  However, AOC has not implemented a key recommendation related to  communicating with external stakeholders—to develop protocols that  establish and clarify service and expectation levels with congressional  stakeholders. AOC’s Acting COO recognizes the importance of  communication with congressional members and staff. Since October 2005,  the Acting COO has met regularly with congressional stakeholders,  including Appropriations Committee staff, and is developing further  strategies to improve communication with congressional stakeholders.  AOC is also hiring a Director of Congressional and External Relations who  will be responsible for developing and maintaining positive relations with  congressional members and staff.
In addition, to strengthen human capital management, AOC has, among  other things, linked its employee evaluation system to mission-critical  goals, established monthly management meetings to share and assess data  from employee relations offices, and identified a number of ways to collect,  report, and analyze workforce data. However, with a large portion of  employees with knowledge in specific trades eligible for immediate  retirement, AOC leadership needs to ensure progress continues to identify  current and future workforce gaps and develop strategies to address these  gaps. To improve worker safety, AOC has made progress in developing  safety policies, implementing a system to track investigations of incidents  and follow up, completing a job hazard analysis process to report hazards,  and establishing a safety-training curriculum that fully supports the goals of  the safety policies. From fiscal year 2000 to 2005, AOC’s injury and illness  rate declined from 17.9 to 5.7 injuries or illnesses per 100 employees.  However, until AOC’s safety policies are fully implemented, the agency will  not have a comprehensive picture of safety hazards. To improve recycling,  AOC has significantly expanded the recycling program; developed a clear  mission, goals, and performance measures for the program; and issued an  environmental program plan. However, the agency still needs to evaluate  the impact of the new performance measures on its current evaluation  criteria and make any necessary changes.
While AOC has made progress in financial management, substantial work  remains to fulfill recommendations related to this area. For example, AOC  had independent audits of its balance sheets for fiscal years 2003 and 2004 conducted. AOC received an unqualified or “clean” opinion of the balance  sheets, but the audits identified a number of material weaknesses related to  internal controls. For example, the audit for fiscal year 2004 found that  AOC’s procurement system lacked controls to ensure that contract  modifications were properly executed prior to initiation of the work,  project costs were properly classified, and contract executed amounts  were compared to contract value. Similarly, our separate, ongoing  monitoring of the CVC project showed that AOC needed to take additional  steps to ensure that it was: (1) receiving reasonable prices for proposed  contract modifications, (2) obtaining adequate support for contractors’  requests for reimbursement of incurred costs, (3) adequately overseeing its  contractors’ performance, and (4) taking appropriate steps to see that  contractors were not doing work before it was appropriately authorized  under approved contractual arrangements. AOC is working to correct  these weaknesses.
To further improve financial management, AOC is developing an  agencywide internal control framework and a cost accounting system,  which are essential to improving accountability across all AOC operations.  The internal control framework initiative is scheduled to be implemented  by June 30, 2006, while the cost accounting system is scheduled to be  implemented by September 30, 2006. However, this schedule is likely to be  delayed by a lack of funding and qualified staffing resources. At the  beginning of fiscal year 2006, AOC requested the contractors leading these  initiatives to significantly scale back their development efforts, citing a lack  of fiscal year 2006 funding resources. At that time, the Office of the CFO  estimated that 10 positions—including senior manager level positions to  help lead these initiatives—would be needed to implement the initiatives  on schedule. AOC recently transferred authority to fill some of the  positions from within AOC and reprogrammed funds to help continue these  initiatives; as of January 2006, the contractors have resumed their  development efforts. However, AOC transferred authority for only 4 of the  estimated 10 positions, none of which were at the senior manager level.
As of February 8, 2006, AOC had posted vacancy announcements to fill  three of the four positions, but filling these positions could take several  months. Leadership support—especially from the Architect, COO, and  CFO—is critical to ensure that these important initiatives are appropriately  funded, staffed, and monitored. Until these initiatives are implemented and  operating effectively, AOC faces substantial risk in financial management.
AOC also has begun several initiatives to improve IT management, but  substantial work remains, particularly in information security. To improve  information security, AOC has issued a policy and a plan for performing  risk assessments, issued and implemented an IT security training policy,  and developed a plan to monitor and evaluate the effectiveness of IT  security policies and controls. However, AOC has yet to establish and  implement key information security practices, such as completing risk  assessments on all of its major applications, documenting the identified  risks in system security plans, and developing and implementing  appropriate security controls to mitigate the risks—including developing  contingency plans for all systems and applications. Until AOC implements  key information security practices, it will be challenged to effectively  safeguard its data and information assets.
As part of our review of AOC’s progress in responding to previous  recommendations, we followed up on our recommendation related to the  COO action plan—issued by AOC’s previous COO in December 2003. In  August 2004, we found that the plan was not sufficiently detailed to guide  and communicate the agency’s performance and progress and  recommended that the Architect of the Capitol and the COO consult with  members of Congress and key committees on the specific information  regarding AOC’s plans, policies, procedures, actions, and proposed  organizational changes in order to enhance the usefulness of the COO  action plan. The COO subsequently departed AOC and, despite the absence  of a permanent COO, the agency has been continuing to follow the steps  laid out in the action plan. For example, AOC has made progress in  addressing elements of AOC project management that were recommended  to be included in the action plan and has consulted with congressional  stakeholders on project management initiatives, such as prioritizing  projects and establishing a new project management organization.
According to AOC officials, the action plan will be updated when a  permanent COO is in place.
Appendix I provides a more complete summary of AOC’s progress in  responding to recommendations. Appendix IV lists all 54 recommendations  from previous reports—as well as recommendations from the recent  project management and facilities management reviews—and details  AOC’s progress on each recommendation.
section_title: Progress and Challenges in Project Management
paragraphs: According to AOC, 84 major construction projects (all 41 projects that were  completed since January 1, 2003, in addition to all 43 active projects) were  meeting budget targets as of September 2005. However, in some cases,  AOC’s budget targets included higher construction contingency allowances  than are typical for industry or AOC’s guidance. Furthermore, the budget  status of projects constructed “in house” by AOC’s Construction Branch  (rather than by contractors) could not be accurately determined because  overhead costs for the branch may not have been charged to the  appropriate project. AOC officials believe they are using appropriate  contingency allowances, but acknowledged that estimating and accounting  for the costs of projects could be improved. AOC also reported that about  half of the projects were behind schedule based on the original estimated  contract completion date, in part because of scope changes and unforeseen  conditions. However, additional measures that reflect the customer’s  needs, such as the “beneficial occupancy date,” could provide a more  complete picture of AOC’s schedule performance.
AOC has initiatives—such as establishing an organization dedicated to  managing major construction projects and reinstating a quarterly report on  the budget and schedule progress of projects—that should improve project  management and related communications with congressional  stakeholders. However, AOC’s major construction projects generally take  between 5 and eight years to complete, so it is too early to determine the  results of AOC’s initiatives to improve project management. Meanwhile,  better internal controls are needed to improve management and  accountability, particularly in establishing and tracking budget targets,  revising guidance manuals, and implementing controls concerning the  quality of reports. We made recommendations aimed at improving internal  controls in these areas, and AOC has made progress on these  recommendations since we provided the briefings in September 2005. For  example, AOC has begun an internal review of its Construction Branch  operations and included a “beneficial occupancy date” in tracking project  schedules.
Appendix II provides a more complete summary of AOC’s progress in  improving project management.
section_title: Progress and Challenges in Facilities Management
paragraphs: AOC tracks performance measures for the quality and timeliness of its  facilities management services, but does not track comprehensive cost  measures or evaluate (“benchmark”) its performance against that of any  similar facilities management organizations. AOC’s current measures show  that AOC’s customers are satisfied with the quality of AOC’s services and  that AOC is meeting or exceeding the targets for its timeliness measures.  However, the timeliness measures could be improved to better represent  the amount of time required for—and spent on—specific tasks. Industry  best practices that would improve accountability and provide useful  information on trends in costs include developing and tracking cost  performance measures and benchmarking performance against that of  other organizations. AOC officials plan to develop cost measures after the  completion of the new cost accounting system and the installation of a new  CAFM system.
To improve facilities management, AOC has several initiatives, including  assessing the condition of its facilities to develop a comprehensive plan for  facility maintenance and building renewal and switching to a new CAFM  system that should enhance AOC’s tracking and reporting capabilities.  These initiatives can help improve AOC’s ability to develop facilities  management cost measures to facilitate the benchmarking of performance,  as well as improve overall facilities management. However, assessing  facility conditions has brought to light the magnitude of AOC’s deferred  maintenance and other projects—at least $2.6 billion over nine years as  initially estimated by an AOC contractor (and now being validated by  AOC)—and the challenge of funding these projects. In addition, the new  CAFM system will not be fully effective until, among other things, it is  linked to the planned cost accounting system, the development and  implementation of which has been delayed. In our briefings in December  2005 and January 2006, we made recommendations aimed at improving  AOC’s facilities management performance measures and the effectiveness  of the new computer system.
Appendix III provides a more complete summary of AOC’s progress in  improving facilities management.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided the Architect of the Capitol a draft of this report for review  and comment. We received oral comments from AOC officials stating that  they generally agreed with the content of the information presented in this  report—including the implementation status of recommendations made to  AOC in our previous reports and recommendations based on our recent  reviews of project and facilities management. AOC officials emphasized  that GAO’s findings regarding project management largely reflected past  problems and that AOC’s new Project Management Organization (now a  division within AOC) is proceeding with a number of initiatives that are  targeted to correct past problems and has plans to start additional  initiatives. AOC officials also provided technical corrections to the report,  which we have incorporated, as appropriate.
We are sending copies of this report to the appropriate congressional  committees. We are also sending this report to the Architect of the Capitol.  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. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report. If  you or your staff have any questions about this report, you may contact me  at (202) 512-2834 or at daltonp@gao.gov, or Sara Vermillion at (202) 512- 9913 or at vermillions@gao.gov. Major contributors to this report are listed  in appendix V.
section_title: Summary of AOC’s Progress on General Management Review Recommendations
paragraphs: Under the congressional mandate to monitor the Architect of the Capitol’s  (AOC) progress, we evaluated AOC’s response to 54 recommendations in  seven areas: strategic management, human capital management, project  management, worker safety, recycling, financial management, and  information technology (IT) management. We provided briefings on our  work in September 2005. Appendix IV lists all 54 recommendations and  details AOC’s progress on each recommendation. Appendix IV also  includes the most recent recommendations resulting from our review of  AOC’s project management and facilities management.
AOC has implemented 21 of 54 recommendations and is making progress  primarily in the areas of strategic management, human capital  management, project management (discussed in detail in app. II), worker  safety, and recycling, although work remains in all of these areas. While  AOC has also made progress in financial management and IT management,  substantial work remains to fulfill recommendations related to these areas,  particularly in financial management. Many of the recommendations that  have not been implemented require significant organizational changes;  leadership support for these changes is vital to ensure their success as well  as the continued success of initiatives that AOC has in place.
subsections: section_title: Strategic Management
paragraphs: Strategic management recommendations were designed to help AOC  improve strategic planning efforts and organizational alignment, establish  meaningful performance measures, obtain feedback from employees and  customers, improve internal and external communications, and strengthen  the relationship between AOC and congressional stakeholders. In  response, AOC released accountability reports for fiscal years 2003 and  2004 and developed a summary document to track performance for each of  its strategic goals. The agency has also established processes for obtaining  feedback from employees and customers, which should improve  communications with these groups. To further improve communication  with employees, AOC has implemented a variety of communication  methods to convey information to employees, including a weekly  newsletter on project updates, policy announcements, management and  communication tips, and other agencywide messages. However, AOC still  needs to improve communication with external stakeholders. For example,  AOC has not fully implemented protocols to establish and clarify service  and expectation levels with congressional stakeholders. Without such  protocols, neither AOC nor congressional stakeholders can be assured that  agency efforts and resources are targeted to their highest priorities. The  Acting Chief Operating Officer (COO) recognizes the importance of  communication with congressional members and staff. Since October 2005,  the Acting COO has been meeting regularly with congressional  stakeholders, including Appropriations Committee staff, and is developing  further strategies to improve communication with congressional  stakeholders. AOC is also in the process of hiring a Director of  Congressional and External Relations who will be responsible for  developing and maintaining positive relations with congressional members  and staff. In addition, AOC has not developed a comprehensive set of  outcome-based and performance-based measures that would enable AOC  and Congress to assess AOC’s progress. AOC has developed a document— the “AOC dashboard”—that includes several high-level indicators to track  performance for each of its strategic goals as well as a target goal for each  indicator. The dashboard is a positive step that needs further development  as AOC revises its goals and objectives and assign measures to each area in  fiscal year 2006.
Human Capital Management Human capital management recommendations were aimed at  strengthening AOC’s human capital policies and performance. In response,  AOC implemented a performance management approach by developing  strategic goals and measuring performance and linked its employee  evaluation system to mission-critical goals. In addition, AOC management  has improved the way it gathers and assesses data from employee relations  offices by holding monthly meetings to share and discuss data, make  recommendations, and take action. AOC has also identified a number of  ways to collect, report, and analyze workforce data and has developed a  report that forecasts future workforce needs. However, with a large portion  of employees with knowledge in specific trades eligible for immediate  retirement, AOC leadership needs to ensure progress continues to  complete ongoing efforts to identify gaps in current and future workforce  needs and develop strategies to address these gaps. Completing these  efforts should further improve its employee evaluation system and AOC’s  ability to strategically plan for future workforce needs.
section_title: Worker Safety
paragraphs: Worker safety recommendations were designed to enhance AOC’s ongoing  efforts to establish a strategy for the worker safety program by developing  performance measures for safety goals and objectives, establish policies  for reporting hazards, establish a system for conducting investigations and  follow-up, and implement a safety-training curriculum. In response, AOC  has developed 23 of 35 specialized safety policies; implemented a system to  track investigations of incidents and follow-up; completed a job hazard  analysis process to report hazards; and established training that supports  the goals of the safety policies. Overall, AOC’s injury and illness rate  declined from 17.9 in fiscal year 2000 to 5.7 in fiscal year 2005. However,  until AOC fully implements the specialized safety policies, particularly a  policy on hazard assessment and control, the agency will not be able to  develop a comprehensive picture of AOC hazards. During our Capitol  Visitor Center (CVC) monitoring work, we noted that worker injury rates  for the CVC construction site were higher than the rates for comparable  sites and that gaps existed in the management of worker safety at the CVC  site. AOC has taken action to address this issue; the injury and illness rate  for the CVC project declined from 9.1 in 2003 and 12.2 in 2004, to 5.9 for the  first 10 months of 2005—below the 2003 industry average of 6.1.
section_title: Recycling
paragraphs: Recycling recommendations were designed to help AOC adopt a strategic  approach to recycling by developing a mission and goals for the recycling  program, establishing performance measures for the program, examining  the roles and responsibilities of recycling staff, and holding staff  accountable for achieving goals. In response, AOC has developed a clear  mission, goals, and performance measures for AOC’s recycling program  and issued an environmental program plan. AOC has also included  recycling tasks in recycling staff position descriptions and recycling  objectives in AOC’s evaluation system for recycling managers. However,  AOC still needs to evaluate the impact of the new performance measures  on its current evaluation criteria and make any necessary changes.
According to AOC officials, the AOC recycling program has undergone  significant expansion over the past five years, while at the same time  becoming more efficient. Initially consisting of recycling of paper, cans,  bottles, and scrap metal, the AOC recycling program has now been  expanded to include items such as toner cartridges, carpeting, concrete,  ceiling tiles, batteries, pallets, wooden spools, hard plastics, and electronic  wastes such as computers. The program has also been expanded by  increasing the number of locations at which recycling is taking place. The  paper recycling program has maintained a “zero percent off-specification”  (formerly referred to as “contamination”) rate for the past two years, down  from historical contamination rates as high as 50 percent.
section_title: Financial Management
paragraphs: Financial management recommendations were aimed at helping AOC  improve financial management by institutionalizing sound financial  management practices; strengthening accountability and control through  senior management’s visible support for efforts to prepare auditable  financial statements and implement internal controls; and enhancing the  successful development of appropriate cost accounting and meaningful  financial, cost, and performance reporting. AOC made progress in financial  accountability by issuing its initial agencywide accountability reports in  December 2004 and February 2006, in which the results of audits covering  AOC’s fiscal year 2003 and 2004 balance sheets, respectively, were  presented; requesting a full-scope audit of a complete set of its financial  statements and related note disclosures for fiscal year 2005; and beginning  development of an AOC-wide internal control framework and a cost  accounting system. While these initiatives reflect progress, until they are  implemented AOC will continue to face significant risk in financial  management and program operations.
The AOC received an unqualified or “clean” opinion on its balance sheet for  fiscal year 2003 and its comparative balance sheet for fiscal years  2003/2004. However, the Independent Auditor’s Report on Internal Control  for fiscal year 2003 noted a number of internal control weaknesses that  AOC has been working to correct, including weaknesses in the areas of:  capitalizing work-in-process expenses, allocating overhead to project  costs, accounts payable cutoff, capital and operating leases, payroll record  retention, and IT controls. As reported in AOC’s 2004 Accountability  Report, the AOC has fully addressed six out of seven material weaknesses  identified in the fiscal year 2003 auditor’s report. The fiscal year 2004  auditor’s report identified weaknesses in the areas of: internal control  assessments, annual leave processing, timekeeping controls, procurement  system controls for contracts, procurement processes for capital and  operating leases, and IT security.
To further improve financial management, AOC is developing an  agencywide internal control framework and a cost accounting system,  which are essential to improving accountability across all AOC operations;  however, it is unlikely that these initiatives will be completed by their  scheduled implementation dates of June 30, 2006, and September 30, 2006.  During fiscal year 2005, AOC approved the establishment of an AOC-wide  internal control framework. AOC began developing a process to formally  evaluate, document, and recommend improvements on the effectiveness of  the design and operations of its internal control structure. In developing  this framework, AOC has begun to identify key financial and operational  processes, updating process documentation and flowcharts, perform risk  analyses, update and benchmark controls, and document any identified  deficiencies. In addition, in an effort to move AOC’s financial system from a  budget-based system to a performance-based system, AOC is developing a  cost accounting system, which would align goals, activities, and outputs; it  would also improve systems and reporting across the agency, including  project management and facilities management. AOC plans to implement  the new performance-based system in phases to make an orderly transition  from the current budget-based financial system. Those plans include pilot  deployment of an interim cost structure for managers through fiscal year  2006, followed by the development of a structure for general and  administrative cost reporting, and the development of a structure for  jurisdictional services in fiscal year 2007. However, AOC’s schedule for  implementing these key initiatives is likely to be delayed by a lack of  funding and qualified staff resources. At the beginning of fiscal year 2006,  AOC requested the contractors leading the internal control and cost  accounting initiatives to significantly scale back their development efforts,  citing a lack of fiscal year 2006 funding resources. At that time, the Office of  the Chief Financial Officer (CFO) estimated that 10 positions—including  senior manager level positions to help lead these initiatives—would be  needed to implement the initiatives on schedule. AOC recently transferred  authority to fill some of the positions from within AOC and reprogrammed  funds to help continue these initiatives; as of January 2006, the contractors  have resumed their development efforts. However, AOC transferred  authority for only four of the estimated 10 positions—none were at the  senior manager level. As of February 8, 2006, AOC had posted three of the  four vacancy announcements (two Senior Accountant positions and one  Junior Accountant position), but filling these positions could take several  months. Leadership support—especially from the Architect of the Capitol,  COO, and CFO—is critical to ensure that these important initiatives are  appropriately funded, staffed, and monitored. Until these initiatives are  implemented and operating effectively, AOC faces substantial risk in  financial management.
In total, the extent of progress on the financial management reporting  improvement efforts has been limited. Successful completion of the  development and implementation of these important financial management  initiatives will require additional AOC funding and qualified staff, close  monitoring, and strong and visible support of these initiatives by AOC  leadership. AOC will continue to face significant risk in financial  management and its program operations until these key accountability and  management control initiatives are fully implemented.
section_title: IT Management
paragraphs: IT management recommendations were designed to help AOC adopt an  agencywide approach to information management by: developing and  implementing IT investment management processes to support informed  executive decision making; developing, implementing, and maintaining an  enterprise architecture to guide and constrain IT investments throughout  AOC; and establishing and implementing an information security program.  In response, AOC established a Director of the Office of Information and  Resource Management to manage IT across the agency. AOC has also taken  important initial steps to address the management and structure needed to  establish a sound IT investment management process, such as assigning  roles, responsibilities, and the authority needed to manage its IT  investment portfolio. AOC, moreover, is in the process of instituting an  approval process and mechanism to screen all proposed IT projects using  standardized criteria. Further, AOC has established the management  structure for developing, implementing, and maintaining an enterprise  architecture, such as designating a chief enterprise architect to guide  architecture development and maintenance and developing an updated  version of its architecture that was approved by the senior policy  committee, which includes senior representatives from across the agency.  In addition, AOC has established some aspects of an effective information  security program, such as issuing a policy and a plan for performing risk  assessments; issuing and implementing an IT security training policy; and  developing a plan to monitor and evaluate the effectiveness of IT security  policies and controls.
However, more work remains to be done to fully implement our  recommendations. In particular, AOC has yet to fully develop and  implement important key steps in their IT investment management  process, such as developing an overall approach to portfolio management  that incorporates existing and proposed projects into the investment  decision making process and documenting and implementing a sound  investment control process to monitor all current and proposed IT  investments. Furthermore, AOC has yet to establish and implement key  practices associated with developing, implementing, and maintaining an  enterprise architecture, such as ensuring that the architecture addresses  security and ensuring that metrics are used to measure progress, quality,  compliance, and return on investment. Moreover, as stated above, the  agency has yet to establish and implement key information security  practices, such as completing risk assessments on all of its major  applications, documenting the identified risks in system security plans, and  developing and implementing appropriate security controls to mitigate the  risks—including developing contingency plans for all systems and  applications. Until AOC completes and implements plans for improvement  that are consistent with all our recommendations, it will be challenged in  its ability to effectively use IT to optimize mission performance.
section_title: COO Action Plan
paragraphs: As part of our progress review, we followed up on our recommendation  related to the COO action plan—issued by AOC’s previous COO in  December 2003—which recommended that the Architect of the Capitol and  the COO consult with members of Congress and key committees on the  specific information regarding AOC’s plans, policies, procedures, actions,  and proposed organizational changes in order to enhance the usefulness of  the COO action plan. The agency has been continuing to follow the steps  laid out in the action plan, despite the absence of a permanent COO. For  example, AOC has made progress in addressing elements of AOC project  management that were recommended to be included in the action plan.  According to AOC officials, the action plan will be updated when a  permanent COO is in place.
section_title: Progress and Challenges in Improving Project Management
paragraphs: To evaluate AOC’s efforts to improve project management, we (1)  determined the extent to which AOC is meeting it original budget and  schedule targets for major construction projects (projects costing over  $250,000, not including four construction projects—building the CVC,  modernizing the Supreme Court, expanding the West Refrigeration Plant,  and increasing Perimeter Security) and (2) identified initiatives that AOC is  implementing to improve project management and challenges that remain.  We provided briefings on this work in September 2005.
At the time of our briefings, AOC reported that all recent major projects  were meeting budget targets. However, AOC’s budget targets are based on  cost estimates that include construction contingencies that are sometimes  5 percent higher than both industry standards and AOC’s own guidance.  Although higher budget targets reduce the need for AOC to request  additional funds to complete projects, higher targets could also reduce the  incentive for AOC to prudently manage project funds and tie up excess  funds that could be used for other capital projects. For example, 41  projects completed from January 2003 to April 2005 had excess funding  totaling about $5.5 million. In addition, the overhead costs of projects  constructed “in house” by AOC’s Construction Branch (rather than by  contractors) may not have been accurately charged to the correct project  because these charges do not receive the same level of review as those of  outside contractors. According to AOC officials, using a contingency higher  than 10 or 15 percent requires documented rationale for why the  percentage is higher than prescribed by AOC guidance. AOC officials stated  that they believe that their contingency allowances are appropriate for the  environment in which AOC operates, but acknowledged that estimating  and accounting for the costs of projects could be improved.
AOC also reported that about half of recent projects were behind schedule  based on the original estimated contract completion date, in part because  of scope changes, unforeseen conditions, and changes in jurisdictions’ (the  customers’) priorities. However, additional measures that reflect the  customers’ needs, such as the “beneficial occupancy date” could provide a  more complete assessment of AOC’s schedule performance. Since our  briefings, AOC has tracked the beneficial occupancy date, as well as the  original estimated contract completion date.
AOC has initiatives in several areas—planning, project management  organization and accountability, and communication—that are designed to  improve project management. For example, AOC continues to refine its  planning process to identify, develop, and prioritize capital projects. The  most recent refinements include adding the results of completed facility  condition assessments and using two new criteria to evaluate projects— “urgency” and “type of project.” AOC also implemented a Project  Management Organization to align project and construction management  to provide “cradle to grave” project oversight. Under this new organization,  AOC is:  using “jurisdictional executives” as liaisons with jurisdictions;  tracking performance measures for budget and completion dates and  quality of project design;  using a governmentwide system to evaluate and record contractor   maintaining central files for key project documentation to improve  access and accountability; and   enforcing liquidated damages against contractors on delayed projects to  motivate them to meet contract commitments.
Finally, AOC has reinstated a quarterly report to Congress to communicate  the budget and schedule status of ongoing projects.
While these initiatives are promising, AOC faces the challenge of  developing better internal controls to improve management oversight and  accountability. Meeting this challenge will improve the chances of success  for AOC’s initiatives. For example, AOC’s planning process would benefit  from more complete information on the initial scope of projects. For the  new Project Management Organization, AOC has not implemented a  customer satisfaction survey to track the quality of construction services,  fully clarified staff roles and responsibilities, or updated guidance manuals.  The quarterly report does not accurately reflect the performance of  projects constructed by AOC’s Construction Branch because the agency  does not have a method for calculating current working estimates for this  branch. Furthermore, the quarterly report must be compiled manually  because AOC’s information systems do not adequately support project  management and reporting needs.
subsections: section_title: Recommendations in September 2005 Briefing
paragraphs: To improve internal controls related to project management, we  recommended that AOC:  develop a method to establish and track more accurate budget targets,  which could include tracking and reporting on the accuracy of cost  estimates compared with bids, the accuracy of project budgets  compared with final project costs, the amount of excess project funds  and how these funds are used, and cost data for the Construction  Branch;  expedite the development of a customer satisfaction survey for   clarify the roles and responsibilities of staff in the new Project   revise project management guidance manuals; and   develop or modify information systems to provide needed cost and  schedule data on projects and track reasons for changes across all  projects.
AOC generally agreed with our recommendations and, since September  2005, has made progress in addressing these recommendations by   developing and tracking new cost measures on a monthly basis,   piloting the use of a project closeout sheet to verify reallocation of   initiating an internal review of AOC's Construction Branch’s operations,  initiating the development of a customer satisfaction survey for   communicating and clarifying staff roles through regular staff meetings,   analyzing the Project Management Organization’s information needs to  determine the requirements for a new or revised information system.
section_title: Progress and Challenges in Improving Facilities Management
paragraphs: To evaluate AOC’s efforts to improve facilities management, we reviewed  (1) the extent to which AOC tracks facilities management performance and  (2) the initiatives AOC is implementing to improve facilities management  and the challenges that remain. We provided briefings on our work in  December 2005 and January 2006.
AOC tracks performance measures for quality and timeliness of facility  management services; these measures indicate that AOC’s customers are  satisfied with the quality of AOC’s services and that AOC is providing the  services in a timely manner. For example, in 2004, all but one of AOC’s  quality ratings were above 80 percent and almost half were above 90  percent. AOC is also meeting or exceeding its timeliness targets. For  example, in September 2005, AOC closed 88 percent of the demand work  orders that were closable that month and completed 95 percent of the  orders in less than 30 days. However, AOC’s timeliness measures could be  improved to better represent the amount of time required for specific tasks.  AOC uses a standard timeliness measure of 30 days for all tasks, even  though many tasks take less time to complete. For example, the Senate  jurisdiction allots 24 hours for decorative paint repair, 1 week to paint an  entire area, and 2 weeks to refinish furniture. The Smithsonian Institution,  an organization with characteristics similar to AOC, tracks multiple time  frames that are more relevant for specific tasks, such as 24 hours, 3 days,  and within 30 days. Not tracking more specific timeliness measures hinders  AOC in accurately determining whether tasks are completed in a timely  manner, and identifying which tasks may need additional resources.
AOC does not track comprehensive cost performance measures or evaluate  (or “benchmark”) its performance with that of similar facilities  management organizations. While AOC has the capability to track a limited  number of annual complex-wide cost measures, it does not  comprehensively and routinely track specific cost measures, such as the  cost per square foot of cleaning or maintenance and repairs. By not  tracking these performance measures, AOC cannot understand how those  costs compare with those of similar institutions, or identify how its costs  may be increasing or decreasing over time. However, to track cost  performance measures, AOC must first develop and implement a cost  accounting system. As discussed earlier in this report, development and  implementation of this cost accounting system has been delayed due to  lack of adequate resources and personnel. Furthermore, while AOC  internally compares the performance of individual jurisdictions in areas  such as customer satisfaction and timeliness, the agency does not  benchmark its performance against that of external organizations. Even  though AOC’s facilities are somewhat unusual, benchmarking could help  identify areas where costs may be high or cost trends differ. AOC officials  told us that the agency has implemented cost accounting pilot initiatives in  several jurisdictions and acknowledge that benchmarking performance  against that of comparable external organizations would be beneficial.
AOC has several initiatives under way that should help improve its ability  to develop and track cost performance measures and benchmark  performance.
Conducting facility assessments to develop a comprehensive plan for  facility maintenance and building renewal: The Facility Condition  Assessment (FCA) initiative establishes an ongoing process for  monitoring facility conditions and enables AOC to develop a  comprehensive plan for facility maintenance and building renewal.  FCAs help AOC prioritize projects for budget requests and increase  AOC’s accountability, since they enable AOC to directly link facility  needs and budget plans. AOC has completed all but two FCAs—for the  Library of Congress Building and Grounds and the Supreme Court.  While FCAs have enabled AOC to develop a comprehensive plan for  facility maintenance and building renewal, the assessments have also  documented the magnitude of AOC’s deferred maintenance and other  projects—$2.6 billion over nine years—and the challenge of funding  these projects. Funding for only a limited number of these projects has  been integrated into AOC’s Capital Improvement Plan process.  According to AOC officials, they plan to discuss funding needs with  appropriators as part of the Capital Improvement Plan process, using  the FCA results to help appropriators better understand the funding  needs.
Switching to a new Computer-Aided Facility Management (CAFM)  system to enhance tracking and reporting capabilities: AOC uses its  current CAFM system to track demand work orders, but does not  consistently track preventive maintenance work orders (even though  the current system is capable of tracking these work orders). By not  tracking preventive maintenance work orders, AOC cannot compare  how much preventive maintenance jurisdictions are performing with  how much is recommended. AOC is replacing its existing CAFM system  because the vendor is phasing out support for that system. According to  AOC officials, the new system will have improved tracking and reporting  capabilities, which will make it easier for the jurisdictions to use the  system to track preventive maintenance work orders, as well as develop  cost performance measures. However, the new CAFM system must be  used in conjunction with a new cost accounting system (as noted above,  development and implementation of this system has been delayed)  before AOC will be able to fully utilize data provided by the new CAFM  system.
Consolidating service contracts to save money on contract  administration: AOC jurisdictions consolidate contracts for some  services, such as elevator maintenance and hazardous waste disposal.  Currently, 20 percent of services conducted in multiple jurisdictions are  under consolidated contracts. Contract consolidation can save money  because the administrative functions for the contract are centralized;  AOC could also gain from additional economies of scale. AOC officials  acknowledge that there are additional opportunities for consolidation,  including window cleaning and fire alarm testing and certification.
Standardizing facility inspection practices to make inspections  consistent across jurisdictions: AOC has a comprehensive,  jurisdictionwide inspection program. For example, over 95 percent of  AOC’s assets are being inspected through modes such as FCAs and  Night Custodial Inspections. Although jurisdictions currently conduct  inspections independently using their own procedures, AOC plans to  evaluate the inspections and merge them into a comprehensive  inspection manual that standardizes the preferred inspection  procedures across jurisdictions. According to AOC officials, the  standardization of inspections across jurisdictions will help ensure that  inspections are performed consistently across jurisdictions and that  they are completed as efficiently as possible using a minimum of  resources.
subsections: section_title: Recommendations Made in December 2005 and January 2006 Briefings
paragraphs: To improve how AOC measures its performance in the areas of timeliness  and cost, the agency should:  develop and track more specific timeliness measures that more  accurately reflect the amount of time required to complete tasks;  develop the capability to comprehensively and routinely track cost   benchmark appropriate existing and new performance measures against  those of similar institutions, such as the Smithsonian Institution and  state capitols.
AOC should use the new CAFM system to track preventive maintenance  and demand work orders across all jurisdictions, including the time taken  to complete work orders.
AOC generally agreed with our findings and the areas identified for  improvement, such as developing cost measures, benchmarking, and  tracking preventive maintenance work orders. AOC officials noted that  they also had identified these areas and have taken steps toward  implementing improvements.
section_title: Status of AOC’s Progress on Recommendations
paragraphs: The following table includes all recommendations made as part of our  general management review. In addition, the table includes new  recommendations resulting from our reviews of project management and  facilities management. For recommendations that have been implemented,  the “status” column includes the month and year of the GAO report that  acknowledges the completion of that recommendation.
section_title: Major Contributors