Report Contents
What OIG Audited
Prior to closing out a capital construction project, such as building a new U.S. embassy, many critical requirements must be followed in accordance with Federal law and Department of State (Department) policy and guidance. The Department’s Bureau of Overseas Buildings Operations (OBO), Office of Construction Management, is responsible for managing major construction projects and applying closeout procedures involving major systems commissioning, the certification of substantial completion, and activities leading to the certification of final acceptance.
The Office of Inspector General (OIG) conducted this audit to determine whether OBO personnel executed construction project closeout procedures in accordance with Federal, Department, and project-specific requirements. OIG performed fieldwork for this audit in the Washington, DC, metropolitan area as well as New Embassy Compound (NEC) London, the United Kingdom; NEC The Hague, the Netherlands; and NEC N’Djamena, Chad.
What OIG Recommends
OIG made 11 recommendations to improve OBO’s execution of closeout procedures for capital construction projects. In a response to a draft of this report, OBO concurred with the recommendations offered and stated that it had taken, or planned to take, action to address them. On the basis of OBO’s response, OIG considers five recommendations closed and six resolved pending further action. A synopsis of OBO’s response to the recommendations offered and OIG’s reply follow each recommendation in the Audit Results section of this report. OBO’s response to a draft of this report is reprinted in its entirety in Appendix B.
What OIG Found
OBO personnel did not consistently execute construction project closeout procedures in accordance with Federal, Department, and project-specific requirements at two of the three locations selected for this audit. Specifically, at NECs London and The Hague, OBO personnel did not ensure that major systems were commissioned prior to declaring the projects substantially complete, as required. In addition, when the projects were declared substantially complete, OBO personnel did not provide the construction contractor with a consolidated list of all remaining work to be performed, completed, or corrected before final acceptance. Furthermore, final completion activities performed at NECs London and The Hague, such as obtaining complete and accurate as-built drawings (drawings of the construction as actually completed) and tracking warranty items, need improvement. In contrast, OIG found that OBO personnel overseeing the construction of NEC N’Djamena generally followed construction closeout procedures. Final acceptance of the project occurred in October 2018.
The exceptions noted at NECs London and The Hague occurred for a variety of reasons, some of which are project specific. For example, at NEC London, a financial incentive to occupy the NEC because of a costly lease-back arrangement drove OBO personnel to deviate from typical closeout procedures. However, these conditions occurred for both projects, partly, because OBO personnel did not perform adequate quality assurance to identify and address schedule delays and their effect on the commissioning process. As a result, as of April 2020, the contractor had not completed all work required for final acceptance of NEC London, and the Project Director at NEC The Hague had not recommended to the Contracting Officer final acceptance of this project. For both projects, it has been more than 2 years since substantial completion was declared.
Report Terms
Report Recommendations
OIG recommends that the Bureau of Overseas Buildings Operations establish and implement procedures that require Project Directors assigned to execute a construction project to establish attainable project milestones and update those milestones when contract modifications are executed to ensure all major building systems are tested and commissioned before issuing the Certificate of Substantial Completion.
OIG recommends that the Bureau of Overseas Buildings Operations establish and implement procedures, when circumstances warrant deviation from standard construction project closeout procedures, that require the Project Director to justify and document the decision to issue the Certificate of Substantial Completion before all major building systems are tested and commissioned, including how such decisions influence project milestones, the additional costs to be incurred, and the projected final acceptance date of the project.
OIG recommends that the Bureau of Overseas Buildings Operations establish and implement procedures requiring Project Directors assigned to execute a construction project to ensure that a complete and accurate punch list is provided to the contractor with the issuance of the Certificate of Substantial Completion.
OIG recommends that the Bureau of Overseas Buildings Operations establish and implement procedures, when circumstances warrant deviation from standard construction project closeout procedures, that require the Project Directors to justify and document the decision to issue the Certificate of Substantial Completion without promptly providing a consolidated, complete, and accurate punch list to the contractor, including the impact of such decisions on the projected final acceptance date of the project and the additional costs to be incurred as a result.
OIG recommends that the Bureau of Overseas Buildings Operations establish and implement staffing plans for all capital construction projects, especially those projects that are complex, large scale, and costly (such as New Embassy Compound London) to ensure that the staff assigned are available and onsite at key junctures of the construction project to ensure quality assurance is effectively performed and project milestones are met.
OIG recommends that the Bureau of Overseas Buildings Operations establish and implement procedures, when circumstances warrant deviation from established staffing plans for capital construction projects, that require the Project Director to document the deviation from the staffing plan, including the effect of such decisions on project milestones, the additional costs to be incurred, and the projected final acceptance date of the project.
OIG recommends that the Bureau of Overseas Buildings Operations develop or adopt guidance and contract requirements used by the U.S. Army Corps of Engineers for as-built drawings and documentation to ensure complete and accurate final as-built drawings are consistently obtained.
OIG recommends that the Bureau of Overseas Buildings Operations establish and implement procedures that require Project Directors involved with the execution of a construction project to verify that the contractor populates the Global Maintenance Management System in accordance with contract requirements prior to issuing substantial completion.
OIG recommends that the Bureau of Overseas Buildings Operations establish and implement procedures, when circumstances warrant deviation from standard construction project closeout procedures, that require the Project Director to justify and document the decision to issue the Certificate of Substantial Completion before the contractor completes the population of the Global Maintenance Management System in accordance with contract requirements.
OIG recommends that the Bureau of Overseas Buildings Operations update the OBO Construction Management Guidebook to clarify that punch list items must be documented and tracked separately from warranty list items to avoid ambiguity.
OIG recommends that the Bureau of Overseas Buildings Operations, in concert with Recommendation 10, establish and communicate the required process to track and clear punch list and warranty list items to ensure consistent application of the process across all construction projects.