(U) Audit of the Planning, Design, Construction, and Commissioning of the Central Power Plant at U.S. Embassy Baghdad, Iraq

AUD-GEER-24-02
    Report Contents
    Unclassified
    Unclassified

    (U) What OIG Audited
    (U) In January 2009, the Department of State (Department) opened the Baghdad Embassy Compound at U.S. Embassy Baghdad, Iraq. The compound included a power plant to generate all the compound’s electrical power. However, the plant had deficiencies, and the Department took actions to replace the plant with a new central power plant. In 2012, the Bureau of Administration, Office of Acquisitions Management (AQM), awarded a contract, and the Bureau of Overseas Buildings Operations (OBO) constructed the plant. The plant came online in 2018 and has since experienced significant performance issues.

    (U) The Office of Inspector General (OIG) conducted this audit to determine whether the Department followed federal and Department requirements and guidelines in the planning, design, construction, and commissioning of the central power plant at Embassy Baghdad.

    (U) What OIG Recommends
    (U) OIG made 13 recommendations to the Bureau of Administration and OBO to improve planning processes, contract administration, design review, record retention, and management of future OBO projects involving power plants. Based on management’s response to a draft of this report (see Appendices D and E), OIG considers 11 recommendations resolved, pending further action, and 2 recommendations unresolved. A synopsis of management’s comments on the recommendations offered and OIG’s replies follow each recommendation in the Audit Results section of this report. OIG’s replies to technical comments provided by OBO and Embassy Baghdad are presented in Appendix F.

    (U) What OIG Found
    (U) The Department did not always follow federal and Department requirements and guidelines in the planning, design, and commissioning of the new central power plant at Embassy Baghdad and missed opportunities to correct identified deficiencies at each project phase, even during the construction phase when the deficiencies became apparent.

    (U) With respect to the planning phase, AQM did not comply with federal regulations regarding fair and reasonable pricing when awarding the task order to develop a site utilization plan for Embassy Baghdad. With respect to the design phase, OBO and AQM did not comply with requirements for selecting the most highly qualified architect-engineer to design the power plant at a fair and reasonable price. Also, the design review process failed to identify inadequate air flow in the design. With respect to the construction phase, technical issues with the design were identified during construction but were not always addressed. With respect to the commissioning phase, commissioning for the plant began 14 months after the construction phase began, contrary to OBO’s guidance stating that it begins before the design phase for the purposes of identifying problems early. In addition, OBO concluded the commissioning process without resolving outstanding concerns regarding inadequate ventilation and airflow and ignored results of power plant performance testing and recommendations to conduct further testing.

    (U) Embassy and contractor personnel acknowledged that OBO and AQM did not always follow federal and Department requirements when executing the power plant project. This was primarily due to the desire to expedite completion of the project. Consequently, Department officials missed opportunities to address known deficiencies that have now become liabilities. Specifically, persistent performance problems with the central power plant have required the Department to incur significant costs. Until the deficiencies that allowed OBO and AQM to depart from federal and Department requirements are corrected, ongoing and future power plant projects undertaken by the Department could be in jeopardy and experience similar, costly results.

    Recommendation Number
    1
    Open Resolved Significant

    OIG recommends that the Bureau of Administration, in coordination with the Bureau of Overseas Buildings Operations, issue a directive (1) emphasizing the requirement to comply with Federal Acquisition Regulation 36.605(b), which states that access to information concerning the independent government cost estimate shall be limited to government personnel whose official duties require knowledge of the estimate and (2) underscoring accountability and identifying penalties for noncompliance.

    Recommendation Number
    2
    Open Resolved Significant

    OIG recommends that the Bureau of Overseas Buildings Operations develop, implement, and communicate a process to require documentation that comprehensive needs assessments are conducted, detailed options are discussed, and written justifications are made when deciding to construct major projects at overseas posts.

    Recommendation Number
    3
    Open Resolved Significant

    OIG recommends that the Bureau of Administration, in coordination with the Bureau of Overseas Buildings Operations, develop, implement, and communicate a process to ensure that new work that is not within the general scope of the contract or task order is treated as a new procurement, preventing out-of-scope modifications, as required by federal regulations and Department requirements.

    Recommendation Number
    4
    Open Resolved Significant

    OIG recommends that the Bureau of Administration, in coordination with the Bureau of Overseas Buildings Operations, issue a directive (1) emphasizing that acquisition planning and market research are completed and documented prior to initiating new projects at overseas posts, as required by federal regulations and Department of State requirements, and (2) underscoring accountability and identifying penalties for noncompliance.

    Recommendation Number
    5
    Open Resolved Significant

    OIG recommends that the Bureau of Administration, in coordination with the Bureau of Overseas Buildings Operations, issue a directive (1) emphasizing that the most highly qualified Architect/Engineering firm shall be selected, as required by public law, federal regulations, and Department of State requirements, and (2) underscoring accountability and identifying penalties for noncompliance.

    Recommendation Number
    6
    Open Started Significant

    OIG recommends that the Bureau of Overseas Buildings Operations develop, implement, and communicate a requirement to complete an Owner’s Project Requirements document that details the functional requirements of a project and the expectations of how it will be used and operated.

    Recommendation Number
    7
    Open Resolved Significant

    OIG recommends that the Bureau of Overseas Buildings Operations develop, implement, and communicate a process that ensures that reviews for all technical disciplines are completed and documented at all interim design submissions.

    Recommendation Number
    8
    Open Resolved Significant

    OIG recommends that the Bureau of Overseas Buildings Operations develop, implement, and communicate a process to (1) document a description of the design change, the necessity of the design change, the potential cost impact, the potential schedule impact, and management approvals when Department of State-initiated design changes require modification to the design contract and (2) ensure the Basis of Design includes all design changes.

    Recommendation Number
    9
    Open Resolved Significant

    OIG recommends that the Bureau of Overseas Buildings Operations develop, implement, and communicate a process requiring it to address significant design deficiencies in facilities when deficiencies are identified during construction rather than after the facilities have been constructed.

    Recommendation Number
    10
    Open Started Significant

    OIG recommends that the Bureau of Overseas Buildings Operations issue a directive (1) emphasizing Department of State policy that the commissioning process begins before the design phase and that the process continues until the expiration of the 1-year warranty period of the operations and maintenance phase and (2) underscoring accountability and identifying penalties for noncompliance.

    Recommendation Number
    11
    Open Resolved Significant

    OIG recommends that the Bureau of Overseas Buildings Operations (OBO) develop, implement, and communicate a process requiring responsible OBO officials to document specific and detailed reasons and associated risks, proportional to the level of specificity and detail in the commissioning testing results, if OBO disagrees with commissioning testing results.

    Recommendation Number
    12
    Open Resolved Significant

    OIG recommends that the Bureau of Overseas Buildings Operations (OBO) develop, implement, and communicate processes requiring responsible OBO officials to document specific and detailed reasons, proportional to the level of specificity detailed in the commissioning reports, if OBO disagrees with commissioning report recommendations. This process must include, at a minimum, written documentation of an assessment of the risks associated with dismissing commissioning report recommendations, a comprehensive plan to mitigate those risks, and management’s approval of these actions.

    Recommendation Number
    13
    Open Resolved Significant

    OIG recommends that the Bureau of Overseas Buildings Operations develop an action plan and budget for implementing recommendations to improve the performance and correct deficiencies of U.S. Embassy Baghdad, Iraq’s central power plant, as recommended in the technical study report by the Miller Hull Partnership, LLP, and Mason and Hanger, Inc. This action plan should include a timeline with milestones for implementation and should report progress to the Under Secretary of State for Management.