Architect of the Capitol: Management Challenges Remain
Released: 2006-02-22T00:00:00

Letter

Progress Made on Prior Recommendations but AOC Has Not Implemented Some Key Recommendations in Critical Areas

AOC has implemented 21 of 54 recommendations that span seven areas— strategic management, human capital management, project management, worker safety, recycling, financial management, and IT management. The agency is making progress primarily in the areas of strategic management, human capital management, project management (covered in the next section), worker safety, and recycling. For example, to improve strategic management, AOC released accountability reports in fiscal years 2003 and 2004, developed a summary document to track key performance goals, established processes for obtaining employee and customer feedback, and initiated several new methods for communicating with employees. However, AOC has not implemented a key recommendation related to communicating with external stakeholders—to develop protocols that establish and clarify service and expectation levels with congressional stakeholders. AOC’s Acting COO recognizes the importance of communication with congressional members and staff. Since October 2005, the Acting COO has met regularly with congressional stakeholders, including Appropriations Committee staff, and is developing further strategies to improve communication with congressional stakeholders. AOC is also hiring a Director of Congressional and External Relations who will be responsible for developing and maintaining positive relations with congressional members and staff.

In addition, to strengthen human capital management, AOC has, among other things, linked its employee evaluation system to mission-critical goals, established monthly management meetings to share and assess data from employee relations offices, and identified a number of ways to collect, report, and analyze workforce data. However, with a large portion of employees with knowledge in specific trades eligible for immediate retirement, AOC leadership needs to ensure progress continues to identify current and future workforce gaps and develop strategies to address these gaps. To improve worker safety, AOC has made progress in developing safety policies, implementing a system to track investigations of incidents and follow up, completing a job hazard analysis process to report hazards, and establishing a safety-training curriculum that fully supports the goals of the safety policies. From fiscal year 2000 to 2005, AOC’s injury and illness rate declined from 17.9 to 5.7 injuries or illnesses per 100 employees. However, until AOC’s safety policies are fully implemented, the agency will not have a comprehensive picture of safety hazards. To improve recycling, AOC has significantly expanded the recycling program; developed a clear mission, goals, and performance measures for the program; and issued an environmental program plan. However, the agency still needs to evaluate the impact of the new performance measures on its current evaluation criteria and make any necessary changes.

While AOC has made progress in financial management, substantial work remains to fulfill recommendations related to this area. For example, AOC had independent audits of its balance sheets for fiscal years 2003 and 2004 conducted. AOC received an unqualified or “clean” opinion of the balance sheets, but the audits identified a number of material weaknesses related to internal controls. For example, the audit for fiscal year 2004 found that AOC’s procurement system lacked controls to ensure that contract modifications were properly executed prior to initiation of the work, project costs were properly classified, and contract executed amounts were compared to contract value. Similarly, our separate, ongoing monitoring of the CVC project showed that AOC needed to take additional steps to ensure that it was: (1) receiving reasonable prices for proposed contract modifications, (2) obtaining adequate support for contractors’ requests for reimbursement of incurred costs, (3) adequately overseeing its contractors’ performance, and (4) taking appropriate steps to see that contractors were not doing work before it was appropriately authorized under approved contractual arrangements. AOC is working to correct these weaknesses.

To further improve financial management, AOC is developing an agencywide internal control framework and a cost accounting system, which are essential to improving accountability across all AOC operations. The internal control framework initiative is scheduled to be implemented by June 30, 2006, while the cost accounting system is scheduled to be implemented by September 30, 2006. However, this schedule is likely to be delayed by a lack of funding and qualified staffing resources. At the beginning of fiscal year 2006, AOC requested the contractors leading these initiatives to significantly scale back their development efforts, citing a lack of fiscal year 2006 funding resources. At that time, the Office of the CFO estimated that 10 positions—including senior manager level positions to help lead these initiatives—would be needed to implement the initiatives on schedule. AOC recently transferred authority to fill some of the positions from within AOC and reprogrammed funds to help continue these initiatives; as of January 2006, the contractors have resumed their development efforts. However, AOC transferred authority for only 4 of the estimated 10 positions, none of which were at the senior manager level.

As of February 8, 2006, AOC had posted vacancy announcements to fill three of the four positions, but filling these positions could take several months. Leadership support—especially from the Architect, COO, and CFO—is critical to ensure that these important initiatives are appropriately funded, staffed, and monitored. Until these initiatives are implemented and operating effectively, AOC faces substantial risk in financial management.

AOC also has begun several initiatives to improve IT management, but substantial work remains, particularly in information security. To improve information security, AOC has issued a policy and a plan for performing risk assessments, issued and implemented an IT security training policy, and developed a plan to monitor and evaluate the effectiveness of IT security policies and controls. However, AOC has yet to establish and implement key information security practices, such as completing risk assessments on all of its major applications, documenting the identified risks in system security plans, and developing and implementing appropriate security controls to mitigate the risks—including developing contingency plans for all systems and applications. Until AOC implements key information security practices, it will be challenged to effectively safeguard its data and information assets.

As part of our review of AOC’s progress in responding to previous recommendations, we followed up on our recommendation related to the COO action plan—issued by AOC’s previous COO in December 2003. In August 2004, we found that the plan was not sufficiently detailed to guide and communicate the agency’s performance and progress and recommended that the Architect of the Capitol and the COO consult with members of Congress and key committees on the specific information regarding AOC’s plans, policies, procedures, actions, and proposed organizational changes in order to enhance the usefulness of the COO action plan. The COO subsequently departed AOC and, despite the absence of a permanent COO, the agency has been continuing to follow the steps laid out in the action plan. For example, AOC has made progress in addressing elements of AOC project management that were recommended to be included in the action plan and has consulted with congressional stakeholders on project management initiatives, such as prioritizing projects and establishing a new project management organization.

According to AOC officials, the action plan will be updated when a permanent COO is in place.

Appendix I provides a more complete summary of AOC’s progress in responding to recommendations. Appendix IV lists all 54 recommendations from previous reports—as well as recommendations from the recent project management and facilities management reviews—and details AOC’s progress on each recommendation.

Progress and Challenges in Project Management

According to AOC, 84 major construction projects (all 41 projects that were completed since January 1, 2003, in addition to all 43 active projects) were meeting budget targets as of September 2005. However, in some cases, AOC’s budget targets included higher construction contingency allowances than are typical for industry or AOC’s guidance. Furthermore, the budget status of projects constructed “in house” by AOC’s Construction Branch (rather than by contractors) could not be accurately determined because overhead costs for the branch may not have been charged to the appropriate project. AOC officials believe they are using appropriate contingency allowances, but acknowledged that estimating and accounting for the costs of projects could be improved. AOC also reported that about half of the projects were behind schedule based on the original estimated contract completion date, in part because of scope changes and unforeseen conditions. However, additional measures that reflect the customer’s needs, such as the “beneficial occupancy date,” could provide a more complete picture of AOC’s schedule performance.

AOC has initiatives—such as establishing an organization dedicated to managing major construction projects and reinstating a quarterly report on the budget and schedule progress of projects—that should improve project management and related communications with congressional stakeholders. However, AOC’s major construction projects generally take between 5 and eight years to complete, so it is too early to determine the results of AOC’s initiatives to improve project management. Meanwhile, better internal controls are needed to improve management and accountability, particularly in establishing and tracking budget targets, revising guidance manuals, and implementing controls concerning the quality of reports. We made recommendations aimed at improving internal controls in these areas, and AOC has made progress on these recommendations since we provided the briefings in September 2005. For example, AOC has begun an internal review of its Construction Branch operations and included a “beneficial occupancy date” in tracking project schedules.

Appendix II provides a more complete summary of AOC’s progress in improving project management.

Progress and Challenges in Facilities Management

AOC tracks performance measures for the quality and timeliness of its facilities management services, but does not track comprehensive cost measures or evaluate (“benchmark”) its performance against that of any similar facilities management organizations. AOC’s current measures show that AOC’s customers are satisfied with the quality of AOC’s services and that AOC is meeting or exceeding the targets for its timeliness measures. However, the timeliness measures could be improved to better represent the amount of time required for—and spent on—specific tasks. Industry best practices that would improve accountability and provide useful information on trends in costs include developing and tracking cost performance measures and benchmarking performance against that of other organizations. AOC officials plan to develop cost measures after the completion of the new cost accounting system and the installation of a new CAFM system.

To improve facilities management, AOC has several initiatives, including assessing the condition of its facilities to develop a comprehensive plan for facility maintenance and building renewal and switching to a new CAFM system that should enhance AOC’s tracking and reporting capabilities. These initiatives can help improve AOC’s ability to develop facilities management cost measures to facilitate the benchmarking of performance, as well as improve overall facilities management. However, assessing facility conditions has brought to light the magnitude of AOC’s deferred maintenance and other projects—at least $2.6 billion over nine years as initially estimated by an AOC contractor (and now being validated by AOC)—and the challenge of funding these projects. In addition, the new CAFM system will not be fully effective until, among other things, it is linked to the planned cost accounting system, the development and implementation of which has been delayed. In our briefings in December 2005 and January 2006, we made recommendations aimed at improving AOC’s facilities management performance measures and the effectiveness of the new computer system.

Appendix III provides a more complete summary of AOC’s progress in improving facilities management.

Agency Comments and Our Evaluation

We provided the Architect of the Capitol a draft of this report for review and comment. We received oral comments from AOC officials stating that they generally agreed with the content of the information presented in this report—including the implementation status of recommendations made to AOC in our previous reports and recommendations based on our recent reviews of project and facilities management. AOC officials emphasized that GAO’s findings regarding project management largely reflected past problems and that AOC’s new Project Management Organization (now a division within AOC) is proceeding with a number of initiatives that are targeted to correct past problems and has plans to start additional initiatives. AOC officials also provided technical corrections to the report, which we have incorporated, as appropriate.

We are sending copies of this report to the appropriate congressional committees. We are also sending this report to the Architect of the Capitol. We will make copies available to others upon request. In addition, this report will be available at no cost on the GAO Web site at http://www.gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. If you or your staff have any questions about this report, you may contact me at (202) 512-2834 or at daltonp@gao.gov, or Sara Vermillion at (202) 512- 9913 or at vermillions@gao.gov. Major contributors to this report are listed in appendix V.

Summary of AOC’s Progress on General Management Review Recommendations

Under the congressional mandate to monitor the Architect of the Capitol’s (AOC) progress, we evaluated AOC’s response to 54 recommendations in seven areas: strategic management, human capital management, project management, worker safety, recycling, financial management, and information technology (IT) management. We provided briefings on our work in September 2005. Appendix IV lists all 54 recommendations and details AOC’s progress on each recommendation. Appendix IV also includes the most recent recommendations resulting from our review of AOC’s project management and facilities management.

AOC has implemented 21 of 54 recommendations and is making progress primarily in the areas of strategic management, human capital management, project management (discussed in detail in app. II), worker safety, and recycling, although work remains in all of these areas. While AOC has also made progress in financial management and IT management, substantial work remains to fulfill recommendations related to these areas, particularly in financial management. Many of the recommendations that have not been implemented require significant organizational changes; leadership support for these changes is vital to ensure their success as well as the continued success of initiatives that AOC has in place.

Strategic Management

Strategic management recommendations were designed to help AOC improve strategic planning efforts and organizational alignment, establish meaningful performance measures, obtain feedback from employees and customers, improve internal and external communications, and strengthen the relationship between AOC and congressional stakeholders. In response, AOC released accountability reports for fiscal years 2003 and 2004 and developed a summary document to track performance for each of its strategic goals. The agency has also established processes for obtaining feedback from employees and customers, which should improve communications with these groups. To further improve communication with employees, AOC has implemented a variety of communication methods to convey information to employees, including a weekly newsletter on project updates, policy announcements, management and communication tips, and other agencywide messages. However, AOC still needs to improve communication with external stakeholders. For example, AOC has not fully implemented protocols to establish and clarify service and expectation levels with congressional stakeholders. Without such protocols, neither AOC nor congressional stakeholders can be assured that agency efforts and resources are targeted to their highest priorities. The Acting Chief Operating Officer (COO) recognizes the importance of communication with congressional members and staff. Since October 2005, the Acting COO has been meeting regularly with congressional stakeholders, including Appropriations Committee staff, and is developing further strategies to improve communication with congressional stakeholders. AOC is also in the process of hiring a Director of Congressional and External Relations who will be responsible for developing and maintaining positive relations with congressional members and staff. In addition, AOC has not developed a comprehensive set of outcome-based and performance-based measures that would enable AOC and Congress to assess AOC’s progress. AOC has developed a document— the “AOC dashboard”—that includes several high-level indicators to track performance for each of its strategic goals as well as a target goal for each indicator. The dashboard is a positive step that needs further development as AOC revises its goals and objectives and assign measures to each area in fiscal year 2006.

Human Capital Management Human capital management recommendations were aimed at strengthening AOC’s human capital policies and performance. In response, AOC implemented a performance management approach by developing strategic goals and measuring performance and linked its employee evaluation system to mission-critical goals. In addition, AOC management has improved the way it gathers and assesses data from employee relations offices by holding monthly meetings to share and discuss data, make recommendations, and take action. AOC has also identified a number of ways to collect, report, and analyze workforce data and has developed a report that forecasts future workforce needs. However, with a large portion of employees with knowledge in specific trades eligible for immediate retirement, AOC leadership needs to ensure progress continues to complete ongoing efforts to identify gaps in current and future workforce needs and develop strategies to address these gaps. Completing these efforts should further improve its employee evaluation system and AOC’s ability to strategically plan for future workforce needs.

Worker Safety

Worker safety recommendations were designed to enhance AOC’s ongoing efforts to establish a strategy for the worker safety program by developing performance measures for safety goals and objectives, establish policies for reporting hazards, establish a system for conducting investigations and follow-up, and implement a safety-training curriculum. In response, AOC has developed 23 of 35 specialized safety policies; implemented a system to track investigations of incidents and follow-up; completed a job hazard analysis process to report hazards; and established training that supports the goals of the safety policies. Overall, AOC’s injury and illness rate declined from 17.9 in fiscal year 2000 to 5.7 in fiscal year 2005. However, until AOC fully implements the specialized safety policies, particularly a policy on hazard assessment and control, the agency will not be able to develop a comprehensive picture of AOC hazards. During our Capitol Visitor Center (CVC) monitoring work, we noted that worker injury rates for the CVC construction site were higher than the rates for comparable sites and that gaps existed in the management of worker safety at the CVC site. AOC has taken action to address this issue; the injury and illness rate for the CVC project declined from 9.1 in 2003 and 12.2 in 2004, to 5.9 for the first 10 months of 2005—below the 2003 industry average of 6.1.

Recycling

Recycling recommendations were designed to help AOC adopt a strategic approach to recycling by developing a mission and goals for the recycling program, establishing performance measures for the program, examining the roles and responsibilities of recycling staff, and holding staff accountable for achieving goals. In response, AOC has developed a clear mission, goals, and performance measures for AOC’s recycling program and issued an environmental program plan. AOC has also included recycling tasks in recycling staff position descriptions and recycling objectives in AOC’s evaluation system for recycling managers. However, AOC still needs to evaluate the impact of the new performance measures on its current evaluation criteria and make any necessary changes.

According to AOC officials, the AOC recycling program has undergone significant expansion over the past five years, while at the same time becoming more efficient. Initially consisting of recycling of paper, cans, bottles, and scrap metal, the AOC recycling program has now been expanded to include items such as toner cartridges, carpeting, concrete, ceiling tiles, batteries, pallets, wooden spools, hard plastics, and electronic wastes such as computers. The program has also been expanded by increasing the number of locations at which recycling is taking place. The paper recycling program has maintained a “zero percent off-specification” (formerly referred to as “contamination”) rate for the past two years, down from historical contamination rates as high as 50 percent.

Financial Management

Financial management recommendations were aimed at helping AOC improve financial management by institutionalizing sound financial management practices; strengthening accountability and control through senior management’s visible support for efforts to prepare auditable financial statements and implement internal controls; and enhancing the successful development of appropriate cost accounting and meaningful financial, cost, and performance reporting. AOC made progress in financial accountability by issuing its initial agencywide accountability reports in December 2004 and February 2006, in which the results of audits covering AOC’s fiscal year 2003 and 2004 balance sheets, respectively, were presented; requesting a full-scope audit of a complete set of its financial statements and related note disclosures for fiscal year 2005; and beginning development of an AOC-wide internal control framework and a cost accounting system. While these initiatives reflect progress, until they are implemented AOC will continue to face significant risk in financial management and program operations.

The AOC received an unqualified or “clean” opinion on its balance sheet for fiscal year 2003 and its comparative balance sheet for fiscal years 2003/2004. However, the Independent Auditor’s Report on Internal Control for fiscal year 2003 noted a number of internal control weaknesses that AOC has been working to correct, including weaknesses in the areas of: capitalizing work-in-process expenses, allocating overhead to project costs, accounts payable cutoff, capital and operating leases, payroll record retention, and IT controls. As reported in AOC’s 2004 Accountability Report, the AOC has fully addressed six out of seven material weaknesses identified in the fiscal year 2003 auditor’s report. The fiscal year 2004 auditor’s report identified weaknesses in the areas of: internal control assessments, annual leave processing, timekeeping controls, procurement system controls for contracts, procurement processes for capital and operating leases, and IT security.

To further improve financial management, AOC is developing an agencywide internal control framework and a cost accounting system, which are essential to improving accountability across all AOC operations; however, it is unlikely that these initiatives will be completed by their scheduled implementation dates of June 30, 2006, and September 30, 2006. During fiscal year 2005, AOC approved the establishment of an AOC-wide internal control framework. AOC began developing a process to formally evaluate, document, and recommend improvements on the effectiveness of the design and operations of its internal control structure. In developing this framework, AOC has begun to identify key financial and operational processes, updating process documentation and flowcharts, perform risk analyses, update and benchmark controls, and document any identified deficiencies. In addition, in an effort to move AOC’s financial system from a budget-based system to a performance-based system, AOC is developing a cost accounting system, which would align goals, activities, and outputs; it would also improve systems and reporting across the agency, including project management and facilities management. AOC plans to implement the new performance-based system in phases to make an orderly transition from the current budget-based financial system. Those plans include pilot deployment of an interim cost structure for managers through fiscal year 2006, followed by the development of a structure for general and administrative cost reporting, and the development of a structure for jurisdictional services in fiscal year 2007. However, AOC’s schedule for implementing these key initiatives is likely to be delayed by a lack of funding and qualified staff resources. At the beginning of fiscal year 2006, AOC requested the contractors leading the internal control and cost accounting initiatives to significantly scale back their development efforts, citing a lack of fiscal year 2006 funding resources. At that time, the Office of the Chief Financial Officer (CFO) estimated that 10 positions—including senior manager level positions to help lead these initiatives—would be needed to implement the initiatives on schedule. AOC recently transferred authority to fill some of the positions from within AOC and reprogrammed funds to help continue these initiatives; as of January 2006, the contractors have resumed their development efforts. However, AOC transferred authority for only four of the estimated 10 positions—none were at the senior manager level. As of February 8, 2006, AOC had posted three of the four vacancy announcements (two Senior Accountant positions and one Junior Accountant position), but filling these positions could take several months. Leadership support—especially from the Architect of the Capitol, COO, and CFO—is critical to ensure that these important initiatives are appropriately funded, staffed, and monitored. Until these initiatives are implemented and operating effectively, AOC faces substantial risk in financial management.

In total, the extent of progress on the financial management reporting improvement efforts has been limited. Successful completion of the development and implementation of these important financial management initiatives will require additional AOC funding and qualified staff, close monitoring, and strong and visible support of these initiatives by AOC leadership. AOC will continue to face significant risk in financial management and its program operations until these key accountability and management control initiatives are fully implemented.

IT Management

IT management recommendations were designed to help AOC adopt an agencywide approach to information management by: developing and implementing IT investment management processes to support informed executive decision making; developing, implementing, and maintaining an enterprise architecture to guide and constrain IT investments throughout AOC; and establishing and implementing an information security program. In response, AOC established a Director of the Office of Information and Resource Management to manage IT across the agency. AOC has also taken important initial steps to address the management and structure needed to establish a sound IT investment management process, such as assigning roles, responsibilities, and the authority needed to manage its IT investment portfolio. AOC, moreover, is in the process of instituting an approval process and mechanism to screen all proposed IT projects using standardized criteria. Further, AOC has established the management structure for developing, implementing, and maintaining an enterprise architecture, such as designating a chief enterprise architect to guide architecture development and maintenance and developing an updated version of its architecture that was approved by the senior policy committee, which includes senior representatives from across the agency. In addition, AOC has established some aspects of an effective information security program, such as issuing a policy and a plan for performing risk assessments; issuing and implementing an IT security training policy; and developing a plan to monitor and evaluate the effectiveness of IT security policies and controls.

However, more work remains to be done to fully implement our recommendations. In particular, AOC has yet to fully develop and implement important key steps in their IT investment management process, such as developing an overall approach to portfolio management that incorporates existing and proposed projects into the investment decision making process and documenting and implementing a sound investment control process to monitor all current and proposed IT investments. Furthermore, AOC has yet to establish and implement key practices associated with developing, implementing, and maintaining an enterprise architecture, such as ensuring that the architecture addresses security and ensuring that metrics are used to measure progress, quality, compliance, and return on investment. Moreover, as stated above, the agency has yet to establish and implement key information security practices, such as completing risk assessments on all of its major applications, documenting the identified risks in system security plans, and developing and implementing appropriate security controls to mitigate the risks—including developing contingency plans for all systems and applications. Until AOC completes and implements plans for improvement that are consistent with all our recommendations, it will be challenged in its ability to effectively use IT to optimize mission performance.

COO Action Plan

As part of our progress review, we followed up on our recommendation related to the COO action plan—issued by AOC’s previous COO in December 2003—which recommended that the Architect of the Capitol and the COO consult with members of Congress and key committees on the specific information regarding AOC’s plans, policies, procedures, actions, and proposed organizational changes in order to enhance the usefulness of the COO action plan. The agency has been continuing to follow the steps laid out in the action plan, despite the absence of a permanent COO. For example, AOC has made progress in addressing elements of AOC project management that were recommended to be included in the action plan. According to AOC officials, the action plan will be updated when a permanent COO is in place.

Progress and Challenges in Improving Project Management

To evaluate AOC’s efforts to improve project management, we (1) determined the extent to which AOC is meeting it original budget and schedule targets for major construction projects (projects costing over $250,000, not including four construction projects—building the CVC, modernizing the Supreme Court, expanding the West Refrigeration Plant, and increasing Perimeter Security) and (2) identified initiatives that AOC is implementing to improve project management and challenges that remain. We provided briefings on this work in September 2005.

At the time of our briefings, AOC reported that all recent major projects were meeting budget targets. However, AOC’s budget targets are based on cost estimates that include construction contingencies that are sometimes 5 percent higher than both industry standards and AOC’s own guidance. Although higher budget targets reduce the need for AOC to request additional funds to complete projects, higher targets could also reduce the incentive for AOC to prudently manage project funds and tie up excess funds that could be used for other capital projects. For example, 41 projects completed from January 2003 to April 2005 had excess funding totaling about $5.5 million. In addition, the overhead costs of projects constructed “in house” by AOC’s Construction Branch (rather than by contractors) may not have been accurately charged to the correct project because these charges do not receive the same level of review as those of outside contractors. According to AOC officials, using a contingency higher than 10 or 15 percent requires documented rationale for why the percentage is higher than prescribed by AOC guidance. AOC officials stated that they believe that their contingency allowances are appropriate for the environment in which AOC operates, but acknowledged that estimating and accounting for the costs of projects could be improved.

AOC also reported that about half of recent projects were behind schedule based on the original estimated contract completion date, in part because of scope changes, unforeseen conditions, and changes in jurisdictions’ (the customers’) priorities. However, additional measures that reflect the customers’ needs, such as the “beneficial occupancy date” could provide a more complete assessment of AOC’s schedule performance. Since our briefings, AOC has tracked the beneficial occupancy date, as well as the original estimated contract completion date.

AOC has initiatives in several areas—planning, project management organization and accountability, and communication—that are designed to improve project management. For example, AOC continues to refine its planning process to identify, develop, and prioritize capital projects. The most recent refinements include adding the results of completed facility condition assessments and using two new criteria to evaluate projects— “urgency” and “type of project.” AOC also implemented a Project Management Organization to align project and construction management to provide “cradle to grave” project oversight. Under this new organization, AOC is: using “jurisdictional executives” as liaisons with jurisdictions; tracking performance measures for budget and completion dates and quality of project design; using a governmentwide system to evaluate and record contractor maintaining central files for key project documentation to improve access and accountability; and enforcing liquidated damages against contractors on delayed projects to motivate them to meet contract commitments.

Finally, AOC has reinstated a quarterly report to Congress to communicate the budget and schedule status of ongoing projects.

While these initiatives are promising, AOC faces the challenge of developing better internal controls to improve management oversight and accountability. Meeting this challenge will improve the chances of success for AOC’s initiatives. For example, AOC’s planning process would benefit from more complete information on the initial scope of projects. For the new Project Management Organization, AOC has not implemented a customer satisfaction survey to track the quality of construction services, fully clarified staff roles and responsibilities, or updated guidance manuals. The quarterly report does not accurately reflect the performance of projects constructed by AOC’s Construction Branch because the agency does not have a method for calculating current working estimates for this branch. Furthermore, the quarterly report must be compiled manually because AOC’s information systems do not adequately support project management and reporting needs.

Recommendations in September 2005 Briefing

To improve internal controls related to project management, we recommended that AOC: develop a method to establish and track more accurate budget targets, which could include tracking and reporting on the accuracy of cost estimates compared with bids, the accuracy of project budgets compared with final project costs, the amount of excess project funds and how these funds are used, and cost data for the Construction Branch; expedite the development of a customer satisfaction survey for clarify the roles and responsibilities of staff in the new Project revise project management guidance manuals; and develop or modify information systems to provide needed cost and schedule data on projects and track reasons for changes across all projects.

AOC generally agreed with our recommendations and, since September 2005, has made progress in addressing these recommendations by developing and tracking new cost measures on a monthly basis, piloting the use of a project closeout sheet to verify reallocation of initiating an internal review of AOC's Construction Branch’s operations, initiating the development of a customer satisfaction survey for communicating and clarifying staff roles through regular staff meetings, analyzing the Project Management Organization’s information needs to determine the requirements for a new or revised information system.

Progress and Challenges in Improving Facilities Management

To evaluate AOC’s efforts to improve facilities management, we reviewed (1) the extent to which AOC tracks facilities management performance and (2) the initiatives AOC is implementing to improve facilities management and the challenges that remain. We provided briefings on our work in December 2005 and January 2006.

AOC tracks performance measures for quality and timeliness of facility management services; these measures indicate that AOC’s customers are satisfied with the quality of AOC’s services and that AOC is providing the services in a timely manner. For example, in 2004, all but one of AOC’s quality ratings were above 80 percent and almost half were above 90 percent. AOC is also meeting or exceeding its timeliness targets. For example, in September 2005, AOC closed 88 percent of the demand work orders that were closable that month and completed 95 percent of the orders in less than 30 days. However, AOC’s timeliness measures could be improved to better represent the amount of time required for specific tasks. AOC uses a standard timeliness measure of 30 days for all tasks, even though many tasks take less time to complete. For example, the Senate jurisdiction allots 24 hours for decorative paint repair, 1 week to paint an entire area, and 2 weeks to refinish furniture. The Smithsonian Institution, an organization with characteristics similar to AOC, tracks multiple time frames that are more relevant for specific tasks, such as 24 hours, 3 days, and within 30 days. Not tracking more specific timeliness measures hinders AOC in accurately determining whether tasks are completed in a timely manner, and identifying which tasks may need additional resources.

AOC does not track comprehensive cost performance measures or evaluate (or “benchmark”) its performance with that of similar facilities management organizations. While AOC has the capability to track a limited number of annual complex-wide cost measures, it does not comprehensively and routinely track specific cost measures, such as the cost per square foot of cleaning or maintenance and repairs. By not tracking these performance measures, AOC cannot understand how those costs compare with those of similar institutions, or identify how its costs may be increasing or decreasing over time. However, to track cost performance measures, AOC must first develop and implement a cost accounting system. As discussed earlier in this report, development and implementation of this cost accounting system has been delayed due to lack of adequate resources and personnel. Furthermore, while AOC internally compares the performance of individual jurisdictions in areas such as customer satisfaction and timeliness, the agency does not benchmark its performance against that of external organizations. Even though AOC’s facilities are somewhat unusual, benchmarking could help identify areas where costs may be high or cost trends differ. AOC officials told us that the agency has implemented cost accounting pilot initiatives in several jurisdictions and acknowledge that benchmarking performance against that of comparable external organizations would be beneficial.

AOC has several initiatives under way that should help improve its ability to develop and track cost performance measures and benchmark performance.

Conducting facility assessments to develop a comprehensive plan for facility maintenance and building renewal: The Facility Condition Assessment (FCA) initiative establishes an ongoing process for monitoring facility conditions and enables AOC to develop a comprehensive plan for facility maintenance and building renewal. FCAs help AOC prioritize projects for budget requests and increase AOC’s accountability, since they enable AOC to directly link facility needs and budget plans. AOC has completed all but two FCAs—for the Library of Congress Building and Grounds and the Supreme Court. While FCAs have enabled AOC to develop a comprehensive plan for facility maintenance and building renewal, the assessments have also documented the magnitude of AOC’s deferred maintenance and other projects—$2.6 billion over nine years—and the challenge of funding these projects. Funding for only a limited number of these projects has been integrated into AOC’s Capital Improvement Plan process. According to AOC officials, they plan to discuss funding needs with appropriators as part of the Capital Improvement Plan process, using the FCA results to help appropriators better understand the funding needs.

Switching to a new Computer-Aided Facility Management (CAFM) system to enhance tracking and reporting capabilities: AOC uses its current CAFM system to track demand work orders, but does not consistently track preventive maintenance work orders (even though the current system is capable of tracking these work orders). By not tracking preventive maintenance work orders, AOC cannot compare how much preventive maintenance jurisdictions are performing with how much is recommended. AOC is replacing its existing CAFM system because the vendor is phasing out support for that system. According to AOC officials, the new system will have improved tracking and reporting capabilities, which will make it easier for the jurisdictions to use the system to track preventive maintenance work orders, as well as develop cost performance measures. However, the new CAFM system must be used in conjunction with a new cost accounting system (as noted above, development and implementation of this system has been delayed) before AOC will be able to fully utilize data provided by the new CAFM system.

Consolidating service contracts to save money on contract administration: AOC jurisdictions consolidate contracts for some services, such as elevator maintenance and hazardous waste disposal. Currently, 20 percent of services conducted in multiple jurisdictions are under consolidated contracts. Contract consolidation can save money because the administrative functions for the contract are centralized; AOC could also gain from additional economies of scale. AOC officials acknowledge that there are additional opportunities for consolidation, including window cleaning and fire alarm testing and certification.

Standardizing facility inspection practices to make inspections consistent across jurisdictions: AOC has a comprehensive, jurisdictionwide inspection program. For example, over 95 percent of AOC’s assets are being inspected through modes such as FCAs and Night Custodial Inspections. Although jurisdictions currently conduct inspections independently using their own procedures, AOC plans to evaluate the inspections and merge them into a comprehensive inspection manual that standardizes the preferred inspection procedures across jurisdictions. According to AOC officials, the standardization of inspections across jurisdictions will help ensure that inspections are performed consistently across jurisdictions and that they are completed as efficiently as possible using a minimum of resources.

Recommendations Made in December 2005 and January 2006 Briefings

To improve how AOC measures its performance in the areas of timeliness and cost, the agency should: develop and track more specific timeliness measures that more accurately reflect the amount of time required to complete tasks; develop the capability to comprehensively and routinely track cost benchmark appropriate existing and new performance measures against those of similar institutions, such as the Smithsonian Institution and state capitols.

AOC should use the new CAFM system to track preventive maintenance and demand work orders across all jurisdictions, including the time taken to complete work orders.

AOC generally agreed with our findings and the areas identified for improvement, such as developing cost measures, benchmarking, and tracking preventive maintenance work orders. AOC officials noted that they also had identified these areas and have taken steps toward implementing improvements.

Status of AOC’s Progress on Recommendations

The following table includes all recommendations made as part of our general management review. In addition, the table includes new recommendations resulting from our reviews of project management and facilities management. For recommendations that have been implemented, the “status” column includes the month and year of the GAO report that acknowledges the completion of that recommendation.

Major Contributors