Federal Courthouse Construction: Estimated Costs to House the L.A. District Court Have Tripled and There Is No Consensus on How to Proceed
Released: 2008-09-12T00:00:00

Letter

Background

The L.A. courthouse operations currently are split between two buildings—the Spring Street Courthouse built in 1938 and the Roybal Federal Building built in 1992. The Spring Street building currently consists of 32 courtrooms—11 of which do not meet the judiciary’s minimum design standards for size. It also does not meet the security needs of the judiciary. The Roybal Federal Building, on the other hand, consists of 34 courtrooms (10 district, 6 magistrate, and 18 bankruptcy).

The space within the L.A. Court’s buildings, like most courthouses, are divided into courtroom space with associated jury and public spaces, chamber space where the judge and staff office space is located, cell blocks and other USMS spaces, and other support spaces, such as administrative offices.

Since 2000, the construction of a new L.A. courthouse has been a top priority for the judiciary because of the current buildings’ space, security, and operational problems. Since fiscal year 2001, Congress has made three appropriations totaling about $400 million for a new L.A. courthouse. In fiscal year 2001, Congress provided $35.25 million to acquire a site for and design a 41-courtroom building, and in fiscal year 2004, Congress appropriated $50 million for construction of the new L.A. Courthouse. In fiscal year 2005, Congress appropriated $314.4 million for the construction of a new 41-courtroom building in Los Angeles, which Congress designated to remain available until expended for construction of the previously authorized L.A. Courthouse.

Construction of a New Federal L.A. Courthouse Has Experienced Repeated Delays Due to Changes in Project Scope, Unforeseen Construction Cost Escalation, and Procurement Issues

Since 2000 when GSA originally proposed building a new courthouse in downtown Los Angeles, the project has experienced repeated delays in its schedule. In 2000, GSA projected occupancy of a new L.A. courthouse by fiscal year 2006. However, after proposing several changes in project scope and design and repeated delays, GSA projected in 2008 the completion of a new courthouse by fiscal year 2014—a delay of 8 years as of now (see table 1). GSA has spent $16.3 million designing a new courthouse and $16.9 million acquiring and preparing a new site for it in downtown Los Angeles. Since no construction has occurred, about $366.45 million remains in GSA’s Federal Building Fund for the construction of a 41-courtroom L.A. Courthouse.

The delays were initially caused by GSA’s decision to design a courthouse much larger than what was authorized by Congress. In fiscal year 2001, Congress appropriated funds for project design for a 1,016,300-square-foot courthouse that corresponded with plans for a 41-courtroom courthouse. In November 2001, however, GSA designed a 1,279,650-square-foot courthouse that contained 54-courtrooms. GSA officials said that GSA increased the scope of the project to accommodate the judiciary’s stated need. Judiciary officials stated that the decision was made jointly with GSA and that changes to GSA’s planning criteria contributed to the increased scope. GSA officials disagreed and stated that GSA’s planning criteria did not contribute to the increase in the scope of the project. A year and a half later, after it had conducted the environmental assessments and purchased the site for the new courthouse, GSA informed Congress that it had designed a 54-courtroom courthouse in a May 2003 proposal. However, OMB did not include the 54-courtroom building plan in the President’s fiscal year 2005 budget, which caused GSA to revise its plans and reduce the number of courtrooms in the plans for the new L.A. courthouse to 41. According to GSA, the 54-courtroom courthouse plan was designed to be readily adaptable to a reduced scope, if a larger scope was not approved. Nonetheless, a senior GSA official estimated that the initial decision to design a 54-courtroom courthouse delayed the project 2 years due to redesign and re-procurement requirements.

This delay caused the project as initially planned to go over budget due to inflationary cost escalations, and GSA needed to make further reductions to the courthouse in order to procure it within authorized and appropriated amounts. However, GSA and L.A. Court officials were slow to reduce scope, which caused additional delays and led to the need to make additional reductions. For example, GSA did not simplify the building-high atrium and associated curtain wall that were initially envisioned for the new courthouse until January 2006 even though the judiciary had expressed repeated concerns about the construction and maintenance costs of the atrium since 2002. In July 2005, GSA advised the judiciary that the project could not be constructed for the appropriated amounts because of material shortages and other market factors, and in January 2006, GSA completed a redesigned plan with a simplified atrium and curtain wall. In addition, it took 18 months for GSA to formally propose reducing the number of courtrooms in an attempt to reduce costs. In March 2006, GSA cancelled the procurement of the new courthouse due to insufficient competition when one of the two construction contractors bidding on the 41 courtroom project withdrew. Yet, it was not until the following year in May 2007 that the judiciary proposed reducing the number of courtrooms in a new building to 36, and another 4 months before GSA delivered a revised 36-courtroom proposal to Congress.

Additionally, an unforeseen, rapid increase in construction costs contributed to delays in the L.A. courthouse project. According to GSA officials, construction costs escalated in the L.A. market at more than twice the inflation factor used by GSA, necessitating scope reductions and redesigns and causing more delays. GSA officials stated that the escalations in construction costs, which went as high as 16 percent in 2006, were unprecedented and unpredictable. According to information provided by GSA, construction costs escalated nationwide and also affected the construction of a California State courthouse in Long Beach, California, which is near Los Angeles.

Other issues related to the procurement process for the new courthouse also contributed to the delays in the L.A. courthouse project by diminishing contractor interest in the project or diverting contractors to other projects. For example, GSA solicited bids for the construction of the neighboring San Diego and L.A. courthouses around the same time. According to GSA officials, in hindsight, this may have limited the number of potential bidders for the construction of the L.A. courthouse as contractors with limited regional capacity chose to bid on the smaller San Diego project instead of the L.A. project. Furthermore, the L.A. courthouse project was competing with other public works construction in the Los Angeles area. GSA officials estimated that $50 billion worth of public construction projects in the L.A. market, which includes increased spending to renovate local schools, further limited the number of potential bidders for the L.A. courthouse project. GSA officials also stated that they chose a procurement approach designed to provide contractors with flexibility in meeting budgeted construction costs, but this approach may in actuality have lowered contractor interest by making the contractor responsible for more of the risk of cost overruns.

Delays Contributed to L.A. Project Cost Estimates Nearly Tripling and Current Problems Persisting

Over 8 years of delay in GSA’s estimated occupancy of the new L.A. courthouse, estimates have nearly tripled, rendering GSA’s currently authorized 41-courtroom courthouse unachievable. In May 2004, GSA estimated the 41-courtroom courthouse project would cost about $400 million, but current estimates for building a new federal courthouse of similar scope now exceed $1.1 billion. At this rate, each day of additional delay costs about $54,000, assuming current escalation rates, according to GSA. Consequently, every 44 days of additional delay cost as much as one 2,400-square-foot district courtroom.

GSA is currently at a standstill because current cost estimates for a 41- courtroom courthouse exceed authorized and appropriated amounts and the President’s fiscal year 2009 budget request did not include any funds for the L.A. courthouse project. Consequently, GSA will need to obtain congressional approval to move forward on any plan. Specifically, all options currently under consideration would require approval of a new prospectus and an estimated appropriation of from $282.1 million to $733.6 million if cost estimates are still viable.

Because of the delays in the courthouse project, the operational, space, and security issues that made the new courthouse a top priority have persisted and in some cases worsened.

The L.A. Court’s operational problems continue. Housing district and magistrate judges in both the Spring Street and the Roybal buildings causes operational inefficiencies, according to judiciary officials. For example, judges, prisoners, juries, and evidence must be transported between buildings, and many judicial offices need to be duplicated. In addition, a high-level L.A. Court official said that the judiciary has stopped investing in the parts of the Spring Street Courthouse for which it is responsible because it expects the judiciary to move into a new building.

The L.A. Court’s space needs persist. L.A. Court officials said that the court does not have chamber or courtroom space for four pending district judgeships and that it currently faces growing deficits in a number of support areas (see table 2).

Severe security problems at Spring Street remain. According to USMS officials, the Roybal building has strong security, but security at the Spring Street building is poor and cannot be improved due to the age and design of the building. The Spring Street building lacks a secure parking area and secure prisoner corridors for 20 of its 32 courtrooms. In addition, USMS officials said that they do not use the prisoner corridors that do exist because they are unsafe and do not have holding cells just outside the courtrooms in accordance with judiciary security standards. In addition, USMS officials said that the security situation is worsening in Los Angeles because logs showed a five-fold increase in suspicious activities in L.A. federal courthouses from 2004 to 2007.

Options for the Future of the Project Require Balancing Court Needs with Additional Costs and Other Factors

Since 2000, GSA has developed eight different proposals for housing the L.A. court. Three of them are still under consideration (see table 3); proposals still under consideration are bolded in the table and identified as options in the rest of the report. Each of the options under consideration would require balancing court needs with costs, obtaining a new authorization and appropriation, and considering other benefits and challenges.

Each of these remaining options expands the use of Roybal as a federal courthouse to varying degrees and only one option would continue to use the Spring Street building as a courthouse (see table 4).

Each of these options would require congressional approval beyond what GSA has already received. In September 2007, GSA drafted the 36- courtroom building proposal, but the President did not include any funds for the project in his fiscal year 2009 budget request to Congress. Then, in March 2008, GSA developed the 20-courtroom building proposal, but it has not been authorized and no funds have been appropriated to for it.

Option 1: Build a 36- Courtroom, 45-Chamber Building and Add 4 Courtrooms to Roybal

GSA estimated that this proposed project would cost $1.1 billion—$733.6 million more than Congress has already appropriated—and be completed by 2014 if construction starts in 2009. This project would provide the L.A. Court with 74 courtrooms in total, including 36 district courtrooms, 20 magistrate courtrooms, and 18 bankruptcy courtrooms, all of which would meet or exceed the judiciary’s current design standards for size and security. The main advantage of this project is that it would allow a division of operational and support activities between the new courthouse and the Roybal building according to the function and responsibilities of the judges, which court officials and judges said would be more efficient than the current split. All the district and senior judges would be housed in the new courthouse, while the magistrate and bankruptcy judges would be in the Roybal building. In addition, because this plan includes a large new building, its implementation would not disrupt court operations by substantially renovating space the court simultaneously is using. The court favors this plan, in part, because it would fulfill its need for a larger building through courtroom sharing among senior judges who would occupy the extra chambers in the new building. The challenges of building a 36-courtroom courthouse are the high costs and the possibility that GSA would face the same problems attracting contractors as it did when it attempted to contract for the construction of a 41-courtroom building.

Option 2: Build a 20- Courtroom, 20-Chamber Building and Add 12 Courtrooms to Roybal

GSA estimated that this proposed project would cost $701.1 million— $301.5 million more than Congress has already appropriated—and be completed by 2014 if construction starts in 2009. This project would provide the L.A. Court with 66 courtrooms in total, including 36 district courtrooms, 20 magistrate courtrooms, and 10 bankruptcy courtrooms. With congressional approval, GSA could use existing funds to begin planning and constructing the new building. In addition, the planned 20- courtroom building may be expandable at some future time. This plan would also maximize the use of Roybal as a courthouse. The challenges of building the 20-courtroom courthouse are that district judges would continue to be split between two buildings and it is unclear what support operations would move to the new building. In addition, the success of this plan relies on GSA’s obtaining an authorization and appropriation to add 12 courtrooms in Roybal. Without that appropriation, the L.A. Court would likely have to remain in the Spring Street building—meaning it would be split between three buildings, not just two, as is currently the case. Another challenge related to the 20-courtroom building plan is that GSA would need to build the new courtrooms in Roybal while the building is occupied by the L.A. Court. GSA officials said that this type of renovation is possible if the most disruptive work is done at night and on weekends. However, judiciary officials said that court officials often need to work at nights and on weekends. In addition, the L.A. district judges unanimously opposed it because it would split district judges over a further distance. The proposed location of the 20-courtroom building is about a third of a mile further from Roybal and the Spring Street Courthouse is. The L.A. Court also opposes this plan because it believes that GSA has underestimated the costs, overstated the end capacity, and would have trouble attracting bidders for the project.

Option 3: Add 13 courtrooms to Roybal and Upgrade Spring Street Building Security

GSA estimated that this project would cost $648.4 million—$282.1 million more than Congress has already appropriated. In 2008, GSA estimated that it could complete the project by 2016, but to do so, it would have had to start work in January, which it did not do. For example, GSA’s time line for this project assumed that procurement of the design contract would be completed by April 2008; that work has not yet begun. This proposal would provide the L.A. Court with 64 courtrooms in total, which would be composed of 29 district courtrooms, 17 magistrate courtrooms, and 18 bankruptcy courtrooms. GSA’s proposal indicated that some of the courtrooms would not meet the judiciary’s design standards for size. The advantages of this plan are that it would maximize the use of GSA’s current stock of owned buildings in downtown Los Angeles, and that, with congressional approval, GSA could use existing funds to begin working on the project. Another advantage would be that GSA could sell the site it initially purchased for the new courthouse in order to help offset the costs of the project. The plan also would attempt to address the security concerns that currently exist in the Spring Street building. However, many of the same challenges for the 20-courtroom courthouse also exist for this plan, including the need to renovate occupied space and a lack of clarity about where different support operations would be located. In addition, the court’s operations would be split further among the Spring Street building, the Roybal building, and the federal building located between those two buildings. Also, the estimate only covers security upgrades for the Spring Street building, not a complete renovation. This project also has the longest time until completion of the three projects, putting it at greater risk for additional cost escalations. Finally, the L.A. Court considers this the worst of the three options.

Option 4: Restart Planning Process and Possibly Use Remaining Funds for Other Purposes

Because there is neither consensus nor adequate funding to complete any of the plans currently under consideration, another option is for GSA and the judiciary to restart the planning process and develop a new proposal to meet the long-term needs of the L.A. Court that all stakeholders can support. Since GSA has developed numerous proposals on housing the L.A. Court, it is difficult to know which one it believes is the best solution, and the district judges assigned to the L.A. Court unanimously opposed GSA’s most recent proposal to build a 20-courtroom building. Restarting the planning process would help avoid implementing one of the plans that the judiciary does not support. The remaining $366.5 million appropriated for the project could remain in place for meeting the judiciary’s needs in Los Angeles once a project is agreed upon, or the funds could be used for other purposes, such as addressing GSA’s $6.6 billion repair and maintenance backlog by receiving congressional approval to transfer or rescind the funds. This option would not address any of the L.A. Court’s long-standing space deficits, operational problems with a split court, or security and other problems related to the Spring Street building, and some of the problems would likely worsen until a long-term solution could be found.

We are not advocating this or any of the other three options. Our intent is to identify current options so that Congress and stakeholders can evaluate them. Nonetheless, it is clear the current process is deadlocked.

Agency Comments and Our Evaluation

We provided the Administrative Office of the U.S. Courts and GSA with draft copies of this report for their review and comment. In written comments, the Administrative Office of the U.S. Courts indicated that the report reflects the general sequence of events and circumstances that have led to the current situation. The letter also provided technical comments that we incorporated, as appropriate. The letter and our comments are contained in appendix II.

In written comments, GSA indicated that it partially agreed with the report’s findings related to the delays in the L.A. Courthouse project and provided additional technical comments that we incorporated, as appropriate. In the technical comments, GSA indicated that the judiciary has been reluctant to consider any reduction in the scope of the project as requested by GSA. Our report indicates that GSA and the judiciary were slow to reduce scope to stay on budget. GSA’s written comments are contained in appendix III.

We are sending copies of this report to the GSA Administrator and the Director of the Administrative Office of the U.S. Courts. We also will make copies available to others upon request. In addition, the report will be available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions regarding this report, please contact me at (202) 512-2834 or goldsteinm@gao.gov. Contact points for our Office of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff that made key contributions to this report are listed in appendix IV.

Appendix I: Los Angeles Courthouse Construction Project Briefing

Key Questions

1. What is the status of the construction of a new federal

courthouse in Los Angeles? 2. What effects have any delays in the project had on project costs and court operations? 3. What are the options for the future of the project?

Scope and Methodology

Reviewed key documents dating from 1996 to present,

including project time line, project options analysis, planning studies, proposals, and other budget data.

Toured L.A. federal court sites, including the Spring Street Courthouse, the Edward R. Roybal Federal Building and Courthouse, the federal building on Los Angeles Street, and the planned courthouse site.

Interviewed L.A. district and magistrate judges and other court officials, the Administrative Office of the Federal Courts, the General Services Administration (GSA), and the U.S. Marshals Service (USMS).

Scope and Methodology (continued)

We conducted our work in Los Angeles, California, and

Washington, D.C., from January 2008 to May 2008 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Concluding observations

Delays from exceeding the congressional authorization and

slow decision making, paired with unexpectedly high cost escalation rates, rendered the currently authorized prospectus for a new 41-courtroom building unachievable with currently appropriated funds.

Stakeholders do not agree on how to proceed.

GSA has developed numerous proposals on the L.A. courthouse and currently supports the 20-courtroom courthouse. The federal judges in Los Angeles unanimously opposed GSA’s most recent proposal to build a 20- courtroom building.

Appendix II: Comments from the Administrative Office of the U.S. Courts

The following are GAO’s comments on the Administrative Office of the U.S. Courts’ letter dated August 25, 2008.

GAO Comments

1. The Administrative Office of the U.S. Courts indicated that additional details on the reasoning behind the decision to propose a 41- courtroom courthouse would be helpful. GSA officials said that the decision to propose a 41-courtroom courthouse was based on 80 percent of the federal judiciary’s stated need at the time—80 percent of 51 courtrooms is approximately 41—and that the judiciary could fit within that space by sharing courtrooms. We added this information to the body of the report. 2. We clarified the report in response to this comment. 3. We did not do a detailed assessment of the possible 20-courtroom courthouse plan and, consequently, did not assess whether it provides space for future expansion. However, there may be design concepts that would leave sufficient room for expansion on the 3.7-acre site, which originally supported the 54-courtroom courthouse plan developed by GSA. 4. Our report does not make any statements related to the number of bankruptcy courtrooms required by the federal judiciary in Los Angeles, but does list the number of those courtrooms that GSA projects for each of the current options thus shows that the 20- courtroom courthouse option would provide 8 fewer bankruptcy courtrooms in Los Angeles than the other options currently being considered. 5. Assessing the validity of GSA’s project budget and schedule were outside the scope of this report. The U.S. House of Representatives, Committee on Transportation, Subcommittee on Economic Development, Public Buildings, and Emergency Management requested this information from the GSA Inspector General. 6. We have clarified the report to reflect that the estimated costs to house the L.A. Court have tripled. 7. We clarified the report to reflect that Roybal currently houses 10 district, 6 magistrate, and 18 bankruptcy courtrooms.

Appendix III: Comments from the General Services Administration

Appendix IV: GAO Contact and Staff Acknowledgments

Staff Acknowledgments

In addition to the individual named above, David Sausville, Assistant Director; Keith Cunningham; Bess Eisenstadt; Susan Michal-Smith; Jennifer Kim; and Susan Sachs made key contributions to this report.