ORA, under the direction of the Associate Commissioner for Regulatory Affairs, is responsible for carrying out FDA’s mission to ensure that foods, cosmetics, and medical products are safe, effective, and properly promoted and labeled. ORA provides a central point to which headquarters officials can turn for field support services. It also exercises direct line authority over field operations, which are generally divided into four branches: investigations, laboratory, compliance, and administrative management. Product sampling and analyses are conducted primarily in the field by ORA’s 21 district offices. Each office is headed by a district director responsible for operations. ORA’s laboratories play a major role in protecting consumers from unsafe, ineffective, and mislabeled products. They provide a scientific base to support ORA enforcement and regulatory activity. The laboratories test thousands of product samples annually for possible violations of federal laws. ORA operates 18 field laboratories nationwide, including 1 in Puerto Rico, which FDA either owns or leases from the commercial sector or from the General Services Administration (GSA). (See fig. 1.) The laboratories, which are collocated with district offices, provide two program functions: (1) surveillance and compliance and (2) research. Surveillance and compliance functions are conducted by investigators and laboratory analysts who inspect and investigate domestic establishments and imports; sample, collect, and analyze products; monitor compliance with existing regulations; initiate legal actions when health hazards are detected; and respond to crises, such as consumer tampering. Enforcement decisions are supported by research activities, such as identifying potential health hazards and developing efficient and effective laboratory testing methods. ORA spends about $17 million per year, excluding salaries, to operate its laboratories. The field locations employ about 650 operating personnel—which include chemists, microbiologists, entomologists, research analysts, engineers, and physicists—and about 275 support personnel. ORA refers to the plan for the proposed laboratory structure as ORA 21. According to ORA management, the plan is designed to be a flexible blueprint for the future, allowing for changes to be made as necessary, with a 20-year implementation period extending to the year 2014. The laboratory structure under the plan includes the following: five mega-labs located in New York City, New York; Atlanta, Georgia; Los Angeles, California; Seattle, Washington; and Jefferson, Arkansas, which will be expected to perform all laboratory functions; and four special-purpose laboratories located in Winchester, Massachusetts (radionuclide analysis and engineering center); Cincinnati, Ohio (forensic chemistry center); Philadelphia, Pennsylvania (drug analysis center); and San Juan, Puerto Rico (drug analysis center). Table 2 shows the expected laboratory closures and their scheduled closing dates. ORA was led to consider laboratory alternatives when it decided that many of its once state-of-the-art field laboratories built in the 1960s had become obsolete. Over the years, FDA management has considered several options for replacing these facilities, from one-for-one replacement to consolidation. In a 1986 consolidation plan, FDA proposed closing five laboratories to reduce the total capacity of its field laboratory system by about one-third.In the early 1990s, ORA considered one-for-one replacement of these labs. For example, in 1991 and 1992, ORA had planned to construct new labs in New York and Baltimore, respectively. However, changes to the government’s policy in 1992 precluded FDA from using GSA’s federal building fund to acquire new construction projects. This caused ORA to reconsider its overall restructuring strategy. Accordingly, when ORA senior staff met in January 1993, they decided to examine how to most effectively and efficiently meet ORA’s laboratory needs for the 21st century. To accomplish this, ORA established the Working Analysts’ Advisory Group (WAAG) in the summer of 1993 and the Laboratory Directors’ Steering Committee in the fall of 1993. The members of these groups included laboratory analysts and directors, a field science adviser, and a representative of FDA’s Division of Field Science. Also, during a strategic planning meeting in October 1993, the Associate Commissioner for Regulatory Affairs requested that the Regional Food and Drug Director for the Pacific Region develop an options paper to change ORA’s field organizational alignment, including the laboratory structure, by the year 2004. To evaluate the current field laboratory structure and to suggest modifications to it, the two committees assessed many issues, including positive and negative aspects of the current laboratories and other factors relevant to the selection of laboratory locations. The two groups presented their recommendations to ORA senior staff. WAAG recommended that the 18 laboratories remain open and receive adequate funding support, while the Laboratory Directors’ Steering Committee recommended that the 18 laboratories be reduced to 13. The committee noted, however, that it had recommended closing some laboratories because the field structure was overwhelmed with work due to overall staff attrition. According to one committee member, if FDA had adequately staffed each laboratory, the committee would not have recommended certain ones for closure. In December 1993, the Director for the Pacific Region issued the options paper, “Reorganizations of ORA for the 21st Century.” The paper presented five options for restructuring the field laboratories. The options ranged from maintaining the status quo to restructuring using various consolidation options. The recommendations made by WAAG and the Steering Committee were incorporated into the paper’s options and presented to ORA senior management before an ORA senior staff meeting in January 1994. Participants in the ORA senior staff meeting discussed and reviewed each option and reached a consensus to consolidate the laboratories by creating five multipurpose mega-labs and four special-purpose labs. (See fig. 2.) ORA’s analysis showed that its consolidation option saved money compared with continuing with the present structure by replacing labs when current leases expire. However, we found that ORA made assumptions that may have inflated the projected costs of replacing several laboratories. ORA compared the costs of two options—consolidating laboratories as proposed (ORA 21) and replacing all laboratories as their leases expire. The replacement option assumes using leased property; the consolidation plan envisions that three of the mega-lab facilities (in Los Angeles, Seattle, and Jefferson, Arkansas) would be government owned. The costs estimated for consolidating versus replacing all the laboratories were about $950 million and $1.041 billion, respectively. Using these figures, ORA projected that the savings from its consolidation plan would be about $91 millon over a 20-year period. ORA’s assumption that it would have to lease space to replace existing laboratories was based on the federal budgetary process. Under budget score-keeping rules, outlays are generally scored on a cash basis when they occur. Therefore, the full construction cost must be appropriated in 1 year, and FDA believed that it could not compete for such funds given HHS’ budget constraints. As we have pointed out previously, the federal government has often entered into leases to satisfy long-term space needs even though GSA analyses have showed leases to be more costly in the long run than ownership. Under its most recently revised replacement analysis (July 1995), ORA appears to have overstated the space requirement for some laboratories and the staff requirements for two proposed laboratories. Such overstatements would increase the cost estimate for replacing laboratories and, thus, increase the comparative estimated savings from consolidation. For the new facilities, ORA estimated laboratory space per analyst at 650 square feet and office space per nonanalyst at 230 square feet. (According to a GSA official, GSA considers occupied office space of about 153 square feet to be standard, but no standard exists for laboratory space.) ORA’s consolidated space estimates, however, exceed all of ORA’s existing laboratories’ space amounts. For example, ORA’s three newest laboratories—in Kansas City, San Francisco, and Seattle—currently operate with much less laboratory space per analyst. According to regional officials and laboratory analysts, the San Francisco facility, with 369 square feet per analyst, is state-of-the-art, and the Kansas City and Seattle laboratories, with 411 and 344 square feet per analyst, respectively, were similarly characterized in a 1994 FDA Division of Field Science report. Also, the Atlanta laboratory, a multipurpose lab, currently has 33,654 square feet of laboratory, light industrial, and general storage space and 92 analysts on board with a capacity for 100. ORA had originally planned to expand this laboratory by 20,000 additional square feet for 60 additional analysts or about 333 square feet per analyst. However, after we questioned this estimate, ORA revised it, increasing it to 39,000 square feet (650 square feet per 60 additional analysts). Even using ORA’s revised estimate of 39,000 square feet, the Atlanta laboratory would have only about 450 square feet per analyst for its expected total capacity after expansion. If the cost estimates for to-be-leased space were based more on the amount of space in ORA’s newer laboratories, the estimated costs of replacing laboratories would be significantly less than ORA has projected. Even if the estimates were based on the projected space for the Atlanta mega-lab after expansion, they would be about $2.2 million less per year than ORA has calculated. ORA feels justified in basing space requirements on 650 square feet per analyst and supplied us with a September 12, 1995, outside consultant’s analysis performed after completion of our audit work. Although the consultant supported ORA’s space requirement, this amount of space is nevertheless significantly greater than that being proposed for mega-labs in Atlanta and Seattle. Furthermore, ORA could not explain how and why existing space requirements in its newest laboratories (in San Francisco and Kansas) and in its proposed Atlanta and Seattle mega-labs are inadequate. ORA also overestimated the staffing requirements for new laboratories in New York and Los Angeles under its replacement option.