Capitol Visitor Center: Update on Schedule and Cost (16-NOV-05,  
GAO-06-251T).							 
                                                                 
This testimony discusses the progress on the Capitol Visitor	 
Center (CVC) project. Specifically, this testimony discusses (1) 
the status of the project schedule since Congress's October 18,  
2005, hearing on the project, (2) the project's costs and	 
funding, and (3) worker safety issues. We will discuss the	 
progress made and problems encountered in completing scheduled	 
construction work and in continuing to develop the project	 
schedule, as we indicated during Congress's October 18 hearing;  
however, we will not be able to estimate specific completion	 
dates until the project schedule is stable and the Architect of  
the Capitol (AOC) and its construction management		 
contractor--Gilbane Building Company--have completed their	 
assessments of the schedule and we have had an opportunity to	 
evaluate them. Also, we will update the information we previously
provided on the project's costs and funding, using readily	 
available data, but we will wait until the project schedule is	 
stable and has been fully reviewed before we comprehensively	 
update our November 2004 estimate of the cost to complete the	 
project and update the provision in our estimate for risks and	 
uncertainties facing the project.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-251T					        
    ACCNO:   A41578						        
  TITLE:     Capitol Visitor Center: Update on Schedule and Cost      
     DATE:   11/16/2005 
  SUBJECT:   Construction contracts				 
	     Contract administration				 
	     Contract oversight 				 
	     Contract performance				 
	     Contractors					 
	     Cost analysis					 
	     Cost overruns					 
	     Facility construction				 
	     Federal facilities 				 
	     Federal funds					 
	     Future budget projections				 
	     Occupational safety				 
	     Public visitor-centers				 
	     Schedule slippages 				 
	     Cost estimates					 
	     Capitol Visitor Center Project			 

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GAO-06-251T

Testimony

Before the Subcommittee on the Legislative Branch, Committee on
Appropriations, U.S. Senate

United States Government Accountability Office

GAO

For Release on Delivery Expected at 11:00 a.m. EST

Wednesday, November 16, 2005

CAPITOL VISITOR CENTER

Update on Schedule and Cost

Statement of Bernard L. Ungar, Director Terrell Dorn, Assistant Director
Physical Infrastructure Issues

GAO-06-251T

Mr. Chairman and Members of the Subcommittee:

We are pleased to be here today to assist the Subcommittee in monitoring
progress on the Capitol Visitor Center (CVC) project. Our remarks will
focus on (1) the status of the project schedule since the Subcommittee's
October 18, 2005, hearing1 on the project, (2) the project's costs and
funding, and (3) worker safety issues. We will discuss the progress made
and problems encountered in completing scheduled construction work and in
continuing to develop the project schedule, as we indicated during the
Subcommittee's October 18 hearing; however, we will not be able to
estimate specific completion dates until the project schedule is stable
and AOC and its construction management contractor-Gilbane Building
Company-have completed their assessments of the schedule and we have had
an opportunity to evaluate them. Also, we will update the information we
previously provided on the project's costs and funding, using readily
available data, but we will wait until the project schedule is stable and
has been fully reviewed before we comprehensively update our November 2004
estimate of the cost to complete the project and update the provision in
our estimate for risks and uncertainties facing the project.

Our remarks today are based on our review of schedules, financial reports,
and worker safety information for the CVC project and related records and
reports developed or maintained by AOC and its construction management
contractor; our review of AOC's consultant's-McDonough Bolyard Peck
(MBP)-November 1, 2005, report updating its October 2004 estimate of the
cost to complete the project; our observations on the progress of work at
the CVC construction site; and our discussions with CVC project staff
(including AOC and its major CVC contractors), AOC's Chief Fire Marshal,
U.S. Capitol Police representatives, and officials responsible for
managing the Capitol Power Plant (CPP). We did not perform an audit;
rather, we performed our work to assist Congress in conducting its
oversight activities.

In summary, construction work in several areas has moved forward since the
Subcommittee's October 18 CVC hearing, but additional delays have
occurred, and AOC's construction management contractor has identified
several concerns with the schedule that raise questions about its proposed
mid-December 2006 opening of the base CVC project to the public.2

1See GAO, Capitol Visitor Center: Status of Schedule, Fire Protection,
Cost, and Related Issues, GAO-06-180T (Washington, D.C.: Oct. 18, 2005).

           o  Construction work has continued on all interior CVC levels,
           various sections of the House and Senate expansion spaces, the
           plaza, and the House connector and utility tunnels. Overall,
           however, the work, especially stonework, has taken longer than
           scheduled. For example, the installation of interior wall stone
           fell behind about 2 weeks because of delays in receiving needed
           stone. Work on the utility tunnel was delayed by a similar amount
           of time for a variety of reasons.
           o  Efforts by the sequence 2 contractor to resequence activities
           involved in testing, balancing, and commissioning the heating,
           ventilation, and air-conditioning (HVAC) system had the net effect
           of moving the base project's completion date forward 3 days. AOC's
           construction management contractor has accepted this resequencing.
           However, other scheduling issues could delay completion. For
           example, AOC's Fire Marshal Division has raised several concerns
           about the schedule for testing and inspecting the CVC's fire
           protection system, and the construction management contractor has
           identified a number of critical activities whose completion dates
           slipped from the September to the October schedule. Delays in
           completing these critical activities affect the progress of the
           project because other work cannot continue until they are
           completed. Critical stonework activities pose particular concerns,
           given the problems with labor and supplies that the project has
           experienced. For example, in October, the sequence 2 contractor
           received less than 20 percent of the stone expected.
           o  AOC's construction management contractor's evaluation of the
           duration of selected activities, completed last week, points to a
           later completion date than is currently scheduled unless
           additional actions are taken. This evaluation identified
           unrealistic durations for the selected activities (especially
           stonework), concerns about the schedule's logic, and inaccuracies
           in reflecting the impact of delays and sequence 2 contract changes
           to date. The construction management contractor made a number of
           recommendations based on its findings. The contractor's evaluation
           has reinforced our view that the base project would be difficult
           to complete in 2006 and is more likely to be completed in early to
           mid-2007 unless AOC and its contractors take extraordinary action
           or change the project's scope, which could increase the
           government's costs. Our belief is based on the project's history
           of delays; the views of project personnel that several activities
           (such as the installation of interior wall stone) are likely to
           take longer than scheduled; the large number of critical
           activities in the current project schedule; and the risks and
           uncertainties that continue to face the project.

           AOC and its construction management contractor expect to resolve
           outstanding scheduling concerns and issues by the end of this
           year. When AOC and its construction management contractor have
           prepared what they consider to be a reasonably stable project
           schedule, we will reevaluate the schedule and inform the
           Subcommittee of our results. In the interim, to help ensure that
           Congress has better information for making CVC-related decisions,
           we are recommending that AOC (1) implement the recommendations for
           obtaining a more reliable project schedule contained in its
           construction management contractor's November 2005 report, which
           are consistent with our previous recommendations on schedule
           management, and (2) reassess its proposed December 2006 date for
           opening the CVC to the public when it has a more reliable
           construction schedule.

           Our preliminary work indicates that the entire CVC project is
           likely, at a minimum, to cost $542.9 million. This preliminary
           estimate falls about midway between our September 15, 2005,
           interim estimate of $525.6 million, which did not provide for
           risks and uncertainties, and our November 2004 estimate of about
           $559 million, which did provide for risks and uncertainties.
           Specifically, this current $542.9 preliminary estimate is about
           $17.3 million more than the September 15 interim estimate and
           about $16.1 million less than the November 2004 estimate. The
           current $542.9 million preliminary estimate does not provide for
           risks and uncertainties or for additional payments to contractors
           to cover the costs of certain delays and other contingencies. Even
           without providing for risks and uncertainties, though, we have
           increased our cost estimate since September 15 because additional
           and more expensive changes to the project have been identified; we
           have increased our allowance for contingencies; and we have added
           funding for AOC and contractor staff that we believe are likely to
           be working on the project through the spring of 2007. Our
           preliminary estimate substantially exceeds MBP's November 2005
           updated estimate of $481.9 million, largely because MBP's estimate
           does not cover a number of project components and does not, in our
           view, provide adequately for contingencies. In total, the funds
           specifically provided for project construction to date-about
           $528.4 million-are $14.5 million less than our preliminary $542.9
           million cost estimate. In addition, another $7.7 million has been
           provided to cover either CVC construction or operations, although
           at this time AOC does not plan to use any of these funds for
           construction. Congress has limited the amount of federal funds
           that can be used for the construction of the tunnel connecting the
           CVC with the Library of Congress to $10 million.3 As of October
           31, 2005, AOC estimated that the tunnel would cost about $8.8
           million to construct; however, AOC had not yet awarded the
           contract for certain modifications to the tunnel project.
           Nevertheless, AOC believes that it will be able to keep the
           tunnel's construction cost below the congressional limitation, and
           both we and AOC plan to monitor the tunnel's construction cost
           closely.

           According to our analysis of CVC data, worker safety rates have
           improved substantially this year, although the lost-time rate
           remains above industry norms. The injury and illness rate for the
           first 10 months of 2005 declined 52 percent from the rate for
           2004, putting the CVC site's rate 3 percent below the average for
           comparable construction sites. The lost-time rate decreased 62
           percent during the same period, but the CVC site's rate is still
           29 percent higher than the average rate for comparable
           construction sites. AOC and its contractors have taken a number of
           actions during 2005 to improve safety performance on the project,
           such as conducting training to elevate safety awareness and
           placing safety posters around the worksite. In addition, senior
           managers are meeting periodically to develop strategies to improve
           safety. Poor housekeeping, however, has been an ongoing issue at
           the site, and the sequence 2 contractor has recently taken actions
           to address this issue.

           Work in several areas has moved forward since the Subcommittee's
           October 18 CVC hearing, but additional delays have occurred, and
           AOC's construction management contractor has identified several
           concerns about the project schedule. AOC has been addressing
           previously identified schedule-related problems.

           According to the October 2005 schedule prepared by AOC's sequence
           2 construction management contractor, the base CVC project can
           open to the public in December 2006, and the House and Senate
           expansion spaces will be finished by the end of February 2007. The
           contractor's October schedule indicates that, with some
           exceptions, construction work on the base CVC project will be
           essentially complete by September 15, 2006, and the remaining work
           will be completed by December 8, 2006. This remaining work
           includes testing, balancing, and commissioning the HVAC system;
           testing and inspecting the fire protection system; completing
           punch-list items; and preparing for operations. For the East
           Front, the October schedule shows construction work, such as the
           roof restoration, finish work, and elevator/escalator
           installation, completed after September 15, 2006. The October
           schedule also shows other construction work, such as the
           installation of ceiling panels in the orientation lobby and
           painting in the atria, extending after September 15, 2006. AOC
           expects all this construction work to be done and the base CVC
           project to be ready for operations between September 15, 2006, and
           mid-December 2006, enabling the facility to open to the public in
           mid-December. Additionally, under the October project schedule,
           the House and Senate expansion spaces will be completed in
           December 2006, and the testing, balancing, and commissioning of
           the HVAC system and the testing of the fire protection system will
           be finished by February 26, 2007. According to AOC's sequence 2
           and construction management contractors, it is not yet clear
           whether the expansion space construction work will have progressed
           far enough to omit the temporary fire safety measures once
           considered necessary to open the CVC to the public. They said they
           are still analyzing the work associated with the areas where the
           base project and the expansion spaces come together to determine
           whether and how the need for temporary fire safety measures can be
           minimized or eliminated.

           Since the Subcommittee's October 18 CVC hearing, construction work
           has continued on the CVC, the East Front, the plaza, the House and
           Senate expansion spaces, and the House connector and utility
           tunnels. For example, the installation of wall stone has continued
           in the auditorium, the orientation theaters, and the upper west
           lobby. Mechanical, electrical, and plumbing work has also been
           proceeding in the CVC.

           Overall, however, construction work, especially stonework, has
           taken longer than scheduled. Between the Subcommittee's October 18
           hearing and November 10, the sequence 2 contractor completed 8 of
           the 16 activities that we and AOC have been tracking for the
           Subcommittee, but only 3 of these activities were completed by the
           target dates shown in the contractor's September 2005 schedule.
           (See app. I.) Delays have also occurred in interior stonework and
           in work on the East Front, the utility tunnel, and the penthouse's
           mechanical systems. For example, according to AOC's construction
           management contractor, similar to what happened in September, the
           sequence 2 contractor lost about 10 out of 21 possible workdays,
           both on critical interior stonework and on the utility tunnel.
           According to the construction management contractor, the stonework
           was delayed by the slow and late delivery of stone, a lack of
           critical pieces of stone, the need to address problems arising
           from sequence 1 work, and a shortage of stone masons. During
           October, the installation of wall stone in the great hall and
           exhibit gallery was especially impeded because the stone supplier
           failed to meet scheduled delivery dates and the sequence 2
           contractor received less than 20 percent of the stone the supplier
           had agreed to provide. Moreover, according to the sequence 2
           contractor, during several preceding months, deliveries of stone
           were only about half as large as expected. Additionally, the
           contractor said, the delivered stone was not in the appropriate
           sequence and did not cover complete areas. To help mitigate these
           problems, during October, the sequence 2 contractor transferred
           stone masons from areas such as the exhibit gallery, for which no
           wall stone was available, to the auditorium, for which wall stone
           was available.

           AOC's construction management contractor cited other delays in
           October, especially in the utility tunnel and in the exhibit
           gallery. For instance, work on First Street for the utility tunnel
           was delayed by unforeseen site conditions, rain, and the need to
           do unanticipated work. However, the construction management
           contractor said that steps have been taken to mitigate the impact
           of the delays, including the sequence 2 contractor's hiring of
           another subcontractor and the installation of piping in the
           tunnel. In the view of the construction management contractor and
           the sequence 2 contractor, these steps will enable the CVC's
           air-handling units to start up in February 2006 rather than in
           March 2006, as indicated in the October schedule. In the exhibit
           gallery, besides the delay in wall stone installation, the
           construction management contractor identified several problems,
           including delays in drawings for marble and finishes and concerns
           about the acceptability of the gallery's fire suppression system,
           that could further delay work in the exhibit gallery.

           The sequence 2 contractor resequenced activities involved in
           testing, balancing, and commissioning the HVAC system and made
           other schedule changes that had the net effect of moving the base
           project's completion date forward 3 days. While the resequencing
           will result in a loss of 10 workdays for the HVAC activities,
           according to the contractor's revised schedule, the other changes
           have advanced the base project's scheduled completion date to
           December 8, 2006, rather than December 11, 2006, as indicated in
           the September schedule. AOC's construction management contractor
           reports that it, the sequence 2 contractor, and AOC's
           commissioning contractor have generally agreed on the revised
           schedule for testing, balancing, and commissioning the HVAC
           system. However, AOC's Fire Marshal Division has not yet agreed on
           the schedule for those activities that relate to the CVC's fire
           protection system, such as testing and inspecting the smoke
           control system, the fire alarm system, and stair pressurization.
           On October 31, the division provided its comments on the revised
           schedule for the fire protection system. The division's Deputy
           Fire Marshal expressed several significant concerns about the
           schedule. AOC and its construction management contractor expect to
           complete their reviews of this part of the schedule and resolve
           the Fire Marshal Division's concerns by December 31, 2005.

           The construction management contractor has identified 14 critical
           activity paths in the October schedule that will extend the base
           project's completion date beyond AOC's September 15, 2006, target
           date if expected lost time cannot be recovered or further delays
           cannot be prevented. Eleven of the 14 critical activity paths in
           the October schedule were also identified in the September
           schedule. For 4 of these 11 paths, such as the auditorium wall
           stone installation and the orientation theater millwork, the
           completion dates showed improvement compared with the September
           schedule, but for the other 7 paths, such as the utility tunnel
           and the exhibit gallery stonework, the completion dates slipped.
           The 3 paths newly identified in October are elevator installation,
           exhibit gallery steel framing, and 10- and 12-inch water line
           installation,4 each of which could delay the project if expected
           lost time cannot be recovered. In addition, our analysis of
           productivity data for interior wall stone installation, coupled
           with the sequence 2 contractor's analysis of stone deliveries,
           indicates that AOC is not likely to meet its September 15, 2006,
           target date for completing the base project's construction without
           significant increases in the pace of wall stone deliveries and
           installation. That is, without more stone masons and/or more work
           hours, more stone delivered more quickly, and faster stone
           installation, AOC is unlikely to meet its target schedule. The
           sequence 2 contractor believes that stone masons will be able to
           install more wall stone per day in some areas, such as the exhibit
           gallery, because the work is not as difficult as in the great hall
           or orientation theaters. However, the pace of this installation
           remains uncertain, in our view. Furthermore, given the project's
           experiences to date with the number of stone masons, the quantity
           of stone deliveries, and the pace of installation, AOC's
           construction management contractor notes that the completion of
           wall stone installation could extend up to several months beyond
           the July 2006 date shown in the project schedule without more work
           hours, higher productivity, and sufficient stone. The pace of wall
           stone installation is especially important because it affects the
           timing of other critical work necessary for the project's
           completion, such as the ceiling's installation and the HVAC
           system's testing, balancing, and commissioning. The stone supply
           problem is the subject of litigation between the sequence 2
           contractor and its subcontractors, and the sequence 2 contractor
           has been working to resolve the problem. However, at this time, it
           is not clear how or when this issue will be resolved.

           Most of the activities we have been discussing, such as the wall
           stone installation, fire safety inspections, and House connector
           tunnel construction, are among the activities that we previously
           identified as likely having optimistic durations, suggesting that
           those activities could take longer to complete than shown in the
           project schedule. These activities served as the basis for our
           September 15 recommendation that AOC rigorously evaluate the
           durations for the activities shown in the project schedule. Last
           week, AOC's construction management contractor finished evaluating
           these durations and the logic for what it considered the most
           critical activities, such as wall stone installation, and
           discussed the impact of delays and sequence 2 contract changes on
           the project schedule. In its November 9 report to AOC, the
           construction management contractor said that (1) it was generally
           difficult to identify any activities that were completed within
           the planned duration; (2) none of the activities underway,
           primarily stonework, can be projected to be completed within the
           planned duration unless additional resources are applied; (3) the
           durations for a number of activities exceed 40 days compared with
           the contractual limit of 20 days; and (4) the sequence 2
           contractor's resequencing of work to mitigate the impact of delays
           will result in a "stacking of trades,"5 which will require more
           manpower. Moreover, although the sequence 2 contractor has said
           that the project schedule reflects the impact of contract
           modifications executed to date and delays, the construction
           management contractor noted that the schedule does not accurately
           reflect the impact of contract changes and of delays due to the
           schedule's logic and raised concern about whether the schedule
           fully reflected the impact of changes and delays given their
           magnitude.

           The construction management contractor made several
           recommendations to AOC based on its findings. For example, the
           construction management contractor recommended the development of
           a revised schedule that reflects (1) enhanced logic and sequencing
           of work, (2) activity durations more in line with the contract's
           20-day maximum requirement, and (3) the impact of all delays and
           contract changes encountered to date and the use of available
           resources. The construction management contractor also recommended
           the development of a recovery schedule for each recognized delay,
           an analysis of the impact of the recovery activities on required
           resources, and an examination of the amount of time required to
           prepare for operations between completing construction and opening
           to the public. The construction management contractor's findings
           and recommendations concerning the project schedule are generally
           consistent with ours.6

           Although the sequence 2 contractor has taken, plans to take, and
           is considering various actions to recover lost time and prevent or
           mitigate further delays, we continue to believe that the
           contractor will have difficulty completing construction before
           early to mid-2007. Among our reasons for concern are the
           uncertainty associated with the fire protection system schedule,
           including the concerns expressed by AOC's Fire Marshal Division
           and our earlier work that raised questions about the amount of
           time being provided for system testing and inspections; the
           schedule slippages to date; the optimistic durations for a number
           of activities based on the views of CVC team members and the
           results of the construction management contractor's recently
           completed review; the large number of activity paths that are
           critical; and the risks and uncertainties that continue to face
           the project. In addition, the continued schedule slippages
           indicate that more and more work will have to be done in a
           diminishing amount of time, and we are concerned-as is the
           construction management contractor-that the project schedule may
           not reflect the impact of changes to sequence 2 work resulting
           from contract modifications. Many changes, some substantial, have
           been made to the sequence 2 contract since it was initially
           awarded in April 2003. Yet, according to the construction
           management contractor, none of the modifications that have added
           work to the sequence 2 contract or changed the facility's design
           have been reflected in the project schedule. Moreover, as AOC's
           construction management contractor has noted, several problems
           have developed with activities associated with the exhibit
           gallery, and delays in completing CVC ceiling work necessary for
           the HVAC and fire protection systems could be problematic,
           although the CVC team is considering ways to mitigate these risks.
           We also note that the Chief Fire Marshal has not yet approved the
           construction drawings for the fire protection system or the
           schedule for the system's commissioning and testing.

           AOC and its construction management contractor have been working
           to implement recommendations we have made to improve AOC's
           schedule management and to address other schedule-related issues
           we have identified.

           o  We have recommended for some time that AOC improve its schedule
           management and analyze and document delays and the reasons and
           responsibilities for them on an ongoing basis-at least monthly. In
           an October 20, 2005, letter, AOC asked its construction management
           contractor to implement this recommendation. The construction
           management contractor has begun to establish a process for doing
           so and plans to have it operational by December 31.
           o  We have also recommended that the project schedule show the
           resources to be applied to meet the schedule dates. While the
           sequence 2 contractor has shown proposed resource levels for many
           activities, it has not done so for many of the new activities
           added to the project schedule. The lack of such information can
           complicate the analysis of delays, including their causes and
           costs. AOC's construction management contractor has expressed
           particular concern about the resources for the stone and finishing
           work and has requested additional resource information from the
           sequence 2 contractor for these activities.
           o  We have further recommended that AOC develop plans to mitigate
           risks and uncertainties facing the project. In July 2005, AOC
           asked one of its consultants-MBP-to assist it in identifying risks
           and developing plans to address those risks. As of November 1, AOC
           had identified 55 risks facing the project and had begun to
           develop and implement plans for managing these risks. As of
           November 1, AOC said that it had developed mitigation plans in
           varying levels of detail for about 30 risks and has been
           discussing or plans to discuss the remaining risks at a weekly
           meeting. AOC also said that it plans to add new risks to its list
           and develop mitigation plans for other risks as appropriate.
           o  In our October 18 testimony, we noted several problems
           associated with the CPP that could adversely affect the CVC, as
           well as other congressional buildings, if they are not corrected
           or addressed. For example, potential delays in completing the West
           Refrigeration Plant Expansion project and storm damage to
           electrical equipment that has precluded the use of an East
           Refrigeration Plant chiller could limit the ability of the CPP to
           provide enough steam and chilled water for the CVC's air handlers
           to begin operating in March 2006, as shown in the October 2005
           schedule. Staffing and training issues associated with operating
           the new equipment and a vacant CPP director position also pose
           management concerns. Work on the West Refrigeration Plant
           Expansion project could be delayed because AOC has directed the
           contractor to proceed with two significant contract modifications
           since the Subcommittee's October 18 CVC hearing. Specifically, the
           contractor is authorized to (1) reconfigure piping so that the
           existing West Refrigeration Plant can be operated independently of
           the West Refrigeration Plant Expansion to enhance the CPP's
           chilled water production capability and (2) change the design of
           the control system that will serve both the West Refrigeration
           Plant and new West Refrigeration Plant Expansion. These changes
           could affect the March 2006 completion date for the expansion
           project; however, AOC believes it will have sufficient chilled
           water capacity for the CVC even if the expansion project's
           completion is delayed. Furthermore, AOC plans to restore power to
           the chiller in the East Plant by realigning existing equipment and
           is still determining why the electrical equipment (e.g., aging
           equipment, inadequate maintenance) was vulnerable to storm damage.
           Finally, the period for applying for the plant's vacant director's
           position closed on November 4. According to AOC, it received 26
           applications and expects to fill the position in December. As part
           of a separate review for this Subcommittee, we are continuing to
           assess certain CPP issues, such as the staffing and training for,
           and the estimated cost to complete, the West Refrigeration Plant
           Expansion project.
           o  In our October testimony, we identified problems with
           coordination between the CVC project team and AOC's Fire Marshal
           Division. To address these problems, AOC and its construction
           management contractor have established a process for the team and
           the division to arrange for and document CVC inspections.

           To help ensure that Congress receives a more reliable estimate of
           the project's completion date in order to plan for the CVC's
           opening to the public and make more informed decisions about AOC's
           funding needs for CVC construction and operations, we recommend
           that the Architect of the Capitol (1) implement the
           recommendations (which are consistent with our prior
           recommendations on schedule management) made by its construction
           management contractor in its November 9 report on its schedule
           evaluation; and (2) reassess its proposal to open the CVC in
           mid-December 2006 when it is confident that it has a project
           schedule that reflects realistic durations, enhanced logic, the
           resolution of concerns expressed by the Fire Marshal Division, and
           the impact of delays and contract changes.

           Mr. Chairman, our preliminary work shows the cost to complete the
           entire CVC project at around $542.9 million without provision for
           risks and uncertainties. This preliminary estimate falls between
           our September 15, 2005, interim estimate of $525.6 million without
           provision for risks and uncertainties, and our November 2004
           estimate of about $559 million with provision for risks and
           uncertainties. Our current estimate is substantially higher than
           MBP's updated estimate, and it exceeds the funding provided for
           the project to date. As we said at the Subcommittee's October 18
           hearing, we are waiting for the project schedule to stabilize
           before we comprehensively update our November 2004 estimate of the
           cost to complete the project, including any costs to the
           government for delays. We plan to provide this updated estimate
           with and without allowances for risks and uncertainties and with
           adjustments for specific expected project completion dates.

           We would now like to discuss the basis for our estimate and why we
           expect the project's costs to increase, why our estimate differs
           from MBP's, how much funding is currently available for CVC
           construction and how much more may be needed, and how much the
           Library of Congress tunnel's construction is likely to cost.

           Our preliminary estimate of the cost to complete the entire CVC
           project, which we will discuss today,7 is based on information
           provided by AOC and its construction management contractor. It
           reflects our review of MBP's November 1, 2005, final report, which
           updates MBP's October 2004 estimate and includes supporting data;
           our review of CVC contract modifications and changes proposed
           between August 1, 2005, and October 31, 2005;8 the knowledge and
           experience we have gained from monitoring this and other major
           construction projects; and our view that the base CVC project in
           not likely to be completed before the spring of 2007. We have
           discussed our preliminary estimate with AOC; however, we have not
           completed other work needed for a comprehensive update of our
           cost-to-complete estimate. For example, we have not updated our
           previous discussions of the project's expected costs, risks, and
           uncertainties with other CVC project team members and fully
           assessed the schedule's impact on costs, because the schedule has
           not been stabilized. Furthermore, we have not incorporated any
           costs for delays over and above the amount included in our
           November 2004 estimate. Delays have occurred since then, but as of
           October 31, 2005, CVC construction contractors had not filed any
           requests for adjustments or claims with AOC for delays occurring
           after November 2004. AOC nevertheless expects to receive
           additional requests for adjustments, and AOC's construction
           management contractor believes that AOC may incur more costs than
           budgeted for delays. At this time, it is unclear who will bear
           responsibility for the various delays that have occurred at the
           CVC site, and it is therefore difficult to estimate their possible
           costs to the government.

           Assuming that the base project and the House and Senate expansion
           spaces are completed in the spring of 2007 and considering the
           qualifications just discussed, our preliminary estimate of the
           cost to complete the entire project is about $542.9 million
           without provision for risks and uncertainties. This estimate is
           about $17.3 million greater than our September updated estimate of
           $525.6 million without provision for risks and uncertainties and
           about $16.1 million less than our November 2004 estimate of about
           $559 million with provision for risks and uncertainties. The $17.3
           million increase is due largely to the following:

           Our preliminary $542.9 million estimate of the cost to complete
           the CVC project is significantly higher than MBP's November 1,
           2005, $481.9 million estimate for several reasons.

                        1. Actual and anticipated changes in the project's
                        work scope. Most of these changes were associated
                        with sequence 2 work, but some also occurred or are
                        expected in other project components, such as
                        preconstruction. Significant sequence 2 changes
                        include the modifications to the CVC fire protection
                        system that we discussed at the Subcommittee's
                        October 18 CVC hearing, changes to the building's
                        automated control system, and additional work to
                        address gaps in the scopes of sequence 1 and sequence
                        2 work, such as additional waterproofing. Changes in
                        the preconstruction component include moving security
                        screening trailers and doing additional materials
                        testing.
                        2. Additional contingency funds. We believe that AOC
                        will need significantly more contingency funds for
                        the remainder of the project for three major reasons:
                        First, the actual or estimated costs for changes in
                        sequence 2, the East Front interface, and the
                        preconstruction project components either exceed or
                        account for the majority of the funds budgeted for
                        unanticipated work, and available information
                        indicates that additional changes in these areas are
                        likely as the project progresses. For example, the
                        actual and proposed sequence 2 changes to date are
                        more numerous and more costly (without any provision
                        for risks and uncertainties) than we, AOC, and MBP
                        anticipated in late 2004, and the actual and
                        estimated value of the already identified changes
                        greatly exceeds the budgeted contingency funding.
                        Moreover, according to AOC's construction management
                        contractor, only about half the value of sequence 2
                        work is complete. Given that about half the work
                        remains and changes to the project have been frequent
                        thus far, we believe that more changes are likely to
                        require funding in the future. Second, a number of
                        issues that were not included in MBP's analysis, such
                        as the need for temporary dehumidification, have
                        arisen. Proposed change orders for work to address
                        these issues were not completed in time for the work
                        to be included in MBP's report. Third, as MBP pointed
                        out, the costs of many pending (proposed, but not yet
                        approved) changes that were included in its report
                        may be understated because they are based on AOC's
                        and its construction management contractor's
                        estimates rather than on the contractor's price.
                        According to MBP, historically, AOC's construction
                        management contractor has significantly understated
                        the costs of pending changes. Thus, additional funds
                        are likely to be needed to cover the difference
                        between the estimated and actual costs of the
                        approved changes.
                        3. Delay-related project management costs. The
                        schedule analysis underlying our November 2004
                        cost-to-complete estimate suggested that the CVC base
                        project would most likely be completed in December
                        2006, and our November 2004 and September 2005 cost
                        estimates therefore included funding for AOC's CVC
                        staff and architectural and construction management
                        contractors through that time. Although the specific
                        expected completion date for the base project is
                        still uncertain because AOC and its contractors have
                        not yet finished their schedule reassessment, our
                        work indicates that the base project is unlikely to
                        be done before early 2007. Thus, our preliminary
                        estimated cost to complete includes the estimated
                        costs for extending AOC's CVC staff and architectural
                        and construction management contractors for the base
                        project to March 2007.9

           o  Our estimate includes the costs for the CVC's air filtration
           system; MBP's does not.
           o  MBP assumed the base project would be completed in December
           2006; we considered the spring of 2007 more likely.
           o  MBP did not include the costs of all CVC construction-related
           work, such as the fabrication and installation of wayfinding signs
           or the fit-out of the gift shops. Our estimate includes these
           costs.
           o  MBP provided less contingency funding than we did for a number
           of project components (sequence 2, the House connector tunnel, the
           East Front interface with the CVC, and the House and Senate
           expansion spaces). We believe that our larger allowance is
           warranted, given the complexity of the work, the CVC project's
           experience with changes, and our experience in monitoring other
           Capitol Hill construction projects.

           About $528.4 million has been provided for CVC construction, and
           an additional $7.7 million has been provided for CVC construction
           or operations.10 The $528.4 million consists of

           o  the 527.9 million we discussed during the Subcommittee's
           October 18 CVC hearing and
           o  $500,000 that the Department of Defense (DOD) originally
           provided to AOC for security enhancements for the East Front of
           the Capitol and that AOC now intends, with DOD's approval, to use
           for security enhancements related to the CVC's air filtration
           system.

           According to AOC, it does not currently plan to use any of the
           $7.7 million for CVC construction. Thus, our preliminary $542.9
           million cost-to-complete-estimate indicates that AOC would need
           about $14.5 million more to complete the project, assuming it is
           completed in March 2007. As noted, this estimate is preliminary
           and does not provide for contractor delay costs beyond the amount
           included in our November 2004 cost estimate.

           AOC does not believe that future changes will require as much
           funding as we do. We recognize that the total amount of funds that
           will be needed for contingencies, as well as for adjustments to
           contracts to offset the costs of delays, is unclear at this time
           and is subject to differing views. Nevertheless, the costs for
           these items will be a major factor in determining whether AOC will
           need additional appropriated funds. We plan to address both issues
           when we do our comprehensive cost-to-complete update early next
           year.

           Public Law 108-83 limits to $10 million the amount of federal
           funds that can be obligated or expended for the construction of
           the tunnel connecting the CVC with the Library of Congress. As of
           October 31, 2005, AOC estimated that the tunnel's construction
           would cost about $8.8 million, and AOC had obligated about $4.7
           million for it. The remaining estimated costs are for
           modifications to the Jefferson building to accommodate the tunnel
           and for contingencies. AOC expects to receive the bids for the
           Jefferson building work by November 22. Given that the work
           associated with the Jefferson building has not started and
           involves risks and uncertainties (since it will create an opening
           in the building's foundation and change an existing structure), we
           believe that AOC could receive higher-than-expected bids and is
           likely to encounter unforeseen conditions that could increase
           costs significantly. Both we and AOC plan to monitor the tunnel's
           construction closely to ensure that the statutory limit is not
           exceeded.

           Worker safety will remain an important issue at the CVC site as
           new hazards arise with changes in the site's physical structure
           and increases in the number of employees and subcontractors in the
           months ahead. Since we testified in May 2005 on worker safety, AOC
           and its contractors have achieved improvements in key worker
           safety measures and actions. For example, the CVC injury and
           illness rate 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. Furthermore, the CVC lost-time rate declined, from 8.1 in
           2003 and 10.4 in 2004, to 4.0 for the same 10-month
           period-approaching the 2003 industry average of 3.1. The quality
           of the construction management contractor's monthly CVC progress
           reports has also improved. Whereas the reports for 2003 and 2004
           contained inaccurate data for key worker safety measures, as we
           testified in May 2005, the reports since June 2005 have contained
           accurate worker safety data. (In one instance, however, the draft
           report we received from the construction management contractor
           contained inaccurate worker safety data, which were corrected
           after we pointed them out to the construction management
           contractor.) Finally, AOC's reporting of lost-time rates is now
           consistent with an updated definition issued by the Bureau of
           Labor Statistics in 2003.

           AOC and its contractors have taken a number of actions during 2005
           to improve worker safety at the CVC site. For example, they have

           o  held periodic safety meetings with senior managers to elevate
           safety issues (and will schedule additional meetings as needed);
           o  held a project safety day to increase CVC project employees'
           safety awareness;
           o  provided and scheduled training on fall protection and
           electrical safety, for example, to elevate safety awareness and
           avoid accidents;
           o  posted safety-related signs and banners around the CVC site to
           reinforce safety messages; and
           o  added a second safety professional at the CVC project.

           In addition, since this past summer, AOC's Central Safety Office
           has been involved in CVC worker safety. Specifically, the
           responsible official has (1) clarified his role on the project
           with the CVC Project Executive, (2) visited the CVC project site
           to obtain an understanding of general site conditions, (3)
           attended periodic CVC safety meetings and (4) reviewed
           safety-related data, reports, and meeting minutes. Drawing upon
           these efforts, the official has made suggestions to CVC management
           on ways to improve worker safety.

           Poor housekeeping has been an ongoing issue at the site, and the
           sequence 2 contractor has recently taken actions to address this
           issue. Piles of construction debris and trash, improperly stored
           equipment and materials, and poorly maintained employee break
           areas have been identified in the construction management
           contractor's past safety audits. Although no injuries have been
           attributed to housekeeping issues, the construction management
           contractor and the sequence 2 contractor have recognized that
           these issues present an ongoing problem. To address these issues,
           the sequence 2 contractor is daily (1) cleaning up construction
           material debris and other items, (2) cleaning up the site's three
           assigned eating areas, and (3) removing five to seven truckloads
           of trash. In addition, the sequence 2 contractor has placed more
           bait traps around the site to control rodents.

           Mr. Chairman, this concludes our statement. We would be pleased to
           answer any questions that you or Members of the Subcommittee may
           have.

           For further information about this testimony, please contact
           Bernard Ungar at (202) 512-4232 or Terrell Dorn at (202) 512-6923.
           Other key contributors to this testimony include Shirley Abel,
           Michael Armes, John Craig, George Depaoli, Maria Edelstein,
           Elizabeth Eisenstadt, Brett Fallavollita, Jeanette Franzel, Jackie
           Hamilton, Bradley James, Scott Riback, and Kris Trueblood.

           Source: AOC's September 2005 CVC sequence 2 construction schedule
           for the scheduled completion dates and AOC and its construction
           management contractor for the actual completion dates.

           Note: Actual completion information was obtained on November 10,
           2005.

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2AOC set September 15, 2006, as the contractual date for completing the
base project's construction and for opening the CVC facility to the
public. The House and Senate expansion spaces were scheduled to be
completed after that date. AOC set the September contract completion date
in November 2004, when it reached agreement with the contractor on a new
date for starting sequence 2 that reflected the delays experienced on
sequence 1. On September 6, 2005, AOC informed Capitol Preservation
Commission representatives that it still expected the base project's
construction to be substantially complete on September 15, 2006, but was
postponing the date for opening the facility to the public to December 15,
2006, so that it could complete system tests, minor punch-list work, and
preparations for operations.

3Public Law 108-83, 117 Stat. 1007, 1026 (Sept. 30, 2003).

Work and Revisions to the Project Schedule Continue, but Delays Hamper Progress

AOC Continues to Project a Mid-December 2006 Opening for the Base CVC Project

Construction Work Continued, but Problems with Stonework and Other Issues Caused
Delays

Schedule Revisions Saved Some Time, but Many Activities Are Highly Vulnerable to
Delay

4The construction management contractor identified the water lines as an
issue in September but did not list them as critical until October.

Construction Management Contractor's Evaluation and Our Analysis Point to a
Later Completion Date

5This situation can occur when workers from different trades, such as
stone masons, electricians, plumbers, or plasterers, have to work in the
same area at the same time to meet a schedule, sometimes making it
difficult to ensure sufficient space and resources for concurrent work.

6On November 14, 2005, AOC provided us with MBP's draft report on MBP's
assessment of the schedule durations for 19 activities. We did not,
however, have sufficient time to evaluate the report for discussion in
this statement.

AOC Has Been Addressing Previously Identified Schedule-Related Issues

                      Recommendations for Executive Action

Project's Estimated Cost to Complete Expected to Increase, but Our Comprehensive
                    Assessment Awaits Schedule Stabilization

Estimate Is Preliminary

CVC Costs Are Likely to Increase, Largely Because of Actual and Anticipated
Changes and Delays

7We previously updated our November 2004 estimate ($515.3 million) of the
cost to complete the project without provision for risks and uncertainties
for the Subcommittee's September 15, 2005, CVC hearing. See Capitol
Visitor Center: Schedule Delays Continue; Reassessment Underway,
GAO-05-1037T (Washington, D.C.: Sept. 15, 2005).

8MBP's estimate was based on contract modifications and proposed changes
as of July 31, 2005, except that for sequence 2, MBP included updated
information from AOC on contract modifications executed through October
14, 2005. Also, MBP initially issued its report on October 11, but issued
a revision on November 1, 2005, based on comments it had received from
AOC.

Our Estimate Differs from MBP's Estimate Largely Because We Included More Items
in the Project Scope and More Funds for Contingencies

9This time extension estimate is largely based on information provided by
AOC and MBP.

Available Funding Is Unlikely to Be Sufficient

10AOC had planned to use $100,000 of its fiscal year 2006 appropriation
for CVC construction to move a fire alarm control panel in the Capitol
building to the CVC. If the control panel is to be moved, AOC will then
decide what appropriation account will be used to pay for this move. If
other than CVC funds are used, the $100,000 would be available for other
CVC construction purposes subject to the approval of the House and Senate
Committees on Appropriations. As we reported in September, AOC had also
used about $805,000 in CVC operations funds for certain construction work
that had been funded by the fiscal year 2006 construction appropriation.
These funds also could be used for other CVC work subject to the
Committees' approval. AOC previously had about $7.8 million remaining
available for CVC operations or construction, but about $100,000 has been
rescinded.

Estimated Construction Costs for Library of Congress Tunnel under Limit, but
Could Increase

                           Worker Safety Has Improved

                          Contacts and Acknowledgments

Appendix I: Capitol Visitor Center Critical Construction Milestones
October 19-November 17, 2005

                                                 September 2005               
                                                 scheduled finish Actual      
Activity             Location                 date             finish date
Orientation Lobby    Perimeter CMU walls      10/13/05         
Upper Level Assembly Topping slab             10/20/05         10/20/05    
Room                                                           
East Front           Interior CMU walls       10/27/05         
Subbasement                                                    
Exhibit Gallery      Wall stone Area 2 base   10/31/05         
Congressional        Wall Stone Area 1        11/3/05          10/26/05    
Auditorium                                                     
Upper Level Assembly Wall stone area 1 layout 11/9/05          10/24/05    
Room                                                           
Exhibit Gallery      Wall stone Area 3 base   11/10/05         
Orientation Lobby    Interior CMU walls       11/15/05         
Exhibit Gallery      Wall stone Area 1        11/16/05         
Congressional        Wall Stone Area 2        11/17/05         
Auditorium                                                     
Utility Tunnel       Excavate/shore Station   10/6/05          10/24/05    
                        Sta. 0.00-1.00                            
Utility Tunnel       Concrete Working Slab    10/11/05         10/26/05    
                        Sta. 0.00-1.00                            
Utility Tunnel       Waterproof Working Slab  10/14/05         10/31/05    
                        Sta. 0.00-1.00                            
Utility Tunnel       Install Mat Slab Sta.    10/20/05         11/10/05    
                        0.00-1.00                                 
Utility Tunnel       Install Mat Slab Sta.    10/24/05         11/07/05    
                        1.00-2.00                                 
Utility Tunnel       Install Walls Sta.       11/4/05          
                        1.00-2.00                                 

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