Smithsonian Institution: Facilities Management Reorganization Is Progressing, but Funding Remains a Challenge
Released: 2005-05-25T00:00:00

Letter

Background

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.

Facility Conditions Have Generally Had Limited Effects on Access and Collections, but Some Chronic Problems Present Ongoing Risks

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.

Restrictions on Access

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.

Damage and Threats to Collections

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.

Smithsonian Has Centralized Its Facilities Management Organization and Budget to Improve the Efficiency and Effectiveness of Its Operations

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.

Smithsonian Has Centralized the Responsibility for Facilities Management

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.

Smithsonian Has Adopted Industry Best Practices to Improve Its Management of Facilities Projects

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.

Smithsonian Has Established a Prioritization Process for Allocating Limited Funds to Revitalization, Construction, and Maintenance Projects

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.

Directors Generally Expressed Positive or Neutral Reactions to OFEO but Noted That Restructuring Has Been Hindered by Staffing and Budget Reductions

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.

Estimated Costs of Facilities Projects Have Grown, Posing Serious Funding Challenge

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.

Current $2.3 Billion Estimate Reflects Updates but Could Change

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.

Smithsonian Now Tracks Maintenance Project Costs Separately from Revitalization and Construction Project Costs

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.

Cost Estimates Could Change

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.

Most Funded Major Revitalization and Construction Projects Are on Time and Within Budget

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.

Funding Its Planned Revitalization, Construction, and Maintenance Remains a Key Challenge for the Smithsonian

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.

Conclusion

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.

Recommendation for Executive Action

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.

Agency Comments

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.

Funding Sources and Statutes Related to the Smithsonian’s Revitalization, Construction, and Minor Repair and Maintenance Programs

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.

Trust Funds

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.

Direct Federal Appropriations

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.

Selected Smithsonian Institution Legal Authorities Relating to Construction and Revitalization of Facilities

Enabling Laws

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.

Current Statues

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.

Selected Statutes Enacted Since 1955 Authorizing Smithsonian Institution Facilities

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.

Smithsonian Institution’s Status on the Implementation of the National Academy of Public Administration’s Recommendations

1. Evaluation of the renovation, repair and alteration (RR&A) requirements

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).

Organization and Responsibilities of the Smithsonian’s Office of Facilities Engineering and Operations

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.

Smithsonian’s Efforts to Implement Leading Practices in Capital Decision-Making

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.

Facility Revitalization and Construction Project Code Assignment Matrix

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.

Flow Chart of the Prioritization Decision- Making Process for Minor Repair and Maintenance

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.

Scope and Methodology

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.

Comments from the Smithsonian Institution

GAO Contacts and Staff Acknowledgments

GAO Contacts

Staff Acknowledgments

In addition to those named above, Bess Eisenstadt, Susan Michal-Smith, Faye Morrison, and Lisa Wright-Solomon made key contributions to this report.