Smithsonian Institution: Funding Challenges Affect Facilities'	 
Conditions and Security, Endangering Collections (28-SEP-07,	 
GAO-07-1127).							 
                                                                 
The Smithsonian Institution (Smithsonian) is the world's largest 
museum complex and research organization. Its annual operating	 
and capital program revenues come from its own private trust fund
assets and federal appropriations, with the majority of funds for
facilities coming from federal appropriations. In 2005, GAO	 
reported that the Smithsonian's current funding would not be	 
sufficient to cover its estimated $2.3 billion in facilities	 
projects through 2013 and recommended that the Smithsonian Board 
of Regents, its governing body, develop and implement a funding  
plan. As requested, GAO described changes in the condition of the
Smithsonian's facilities and estimate for project costs since	 
2005, analyzed the Smithsonian's steps taken and challenges	 
regarding protecting and managing its real property portfolio,	 
and assessed the Smithsonian's efforts to develop and implement  
strategies to fund its facilities' projects. GAO reviewed	 
relevant documents and interviewed officials from the Smithsonian
and other organizations.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-1127					        
    ACCNO:   A76816						        
  TITLE:     Smithsonian Institution: Funding Challenges Affect       
Facilities' Conditions and Security, Endangering Collections	 
     DATE:   09/28/2007 
  SUBJECT:   Cost analysis					 
	     Facility repairs					 
	     Facility security					 
	     Federal facilities 				 
	     Federal funds					 
	     Fund audits					 
	     Funds management					 
	     Museums						 
	     National historic sites				 
	     Performance measures				 
	     Physical security					 
	     Real property					 
	     Strategic planning 				 
	     Facility management				 
	     Facility maintenance				 
	     Facility construction				 
	     Cost estimates					 

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GAO-07-1127

   

     * [1]Results in Brief
     * [2]Background
     * [3]Despite Some Improvements, Deteriorating Facilities Have Cau

          * [4]The Smithsonian Improved the Condition of a Number of Facili
          * [5]Problems with the Smithsonian's Facilities Since 2005 Have C
          * [6]Many Long-Term Facilities Problems Remain
          * [7]The Smithsonian's Estimated Cost for Facilities Projects thr

     * [8]The Smithsonian Follows Many Key Security Practices to Prote

          * [9]The Smithsonian Follows Key Security Practices
          * [10]The Smithsonian Faces Challenges in Ensuring That Museum and
          * [11]Due to Funding Constraints, Some Museum and Facility Directo

     * [12]The Smithsonian Has Taken Steps to Improve Real Property Por

          * [13]Several Factors Affect the Smithsonian's Real Property Manag
          * [14]The Smithsonian Has Taken Steps to Improve Its Real Property
          * [15]Smithsonian's Capital Planning Process Incorporates Many Cap
          * [16]Funding Constraints Have Presented Considerable Challenges
          * [17]The Smithsonian's Omission of Private Funds from Its Capital

     * [18]The Smithsonian Has Taken Some Steps to Develop and Implemen

          * [19]To Address Our Recommendation, the Smithsonian Requested an
          * [20]Some of Smithsonian's Evaluations of the Other Eight Funding

               * [21]Evaluation of the Option to Close Museums Is Not
                 Complete
               * [22]Evaluations of the National Fund-Raising Campaign and
                 Treasu
               * [23]Evaluation of Implementing a General Admission Fee
                 Program L

     * [24]Conclusions
     * [25]Recommendations for Executive Action
     * [26]Agency Comments and Our Evaluation
     * [27]Appendix I: Scope and Methodology
     * [28]Appendix II: Smithsonian's Efforts to Implement Key Security
     * [29]Appendix III: Comments from the Smithsonian Institution

          * [30]GAO Comments

     * [31]Appendix IV: GAO Contact and Staff Acknowledgments

          * [32]GAO Contact
          * [33]Staff Acknowledgments

               * [34]Order by Mail or Phone

Report to Congressional Requesters

United States Government Accountability Office

GAO

September 2007

SMITHSONIAN INSTITUTION

Funding Challenges Affect Facilities' Conditions and Security, Endangering
Collections

GAO-07-1127

Contents

Letter 1

Results in Brief 5
Background 9
Despite Some Improvements, Deteriorating Facilities Have Caused Further
Problems, and Cost Estimate for Facilities Projects Has Increased 18
The Smithsonian Follows Many Key Security Practices to Protect Its Assets
but Faces Communication and Funding Challenges 31
The Smithsonian Has Taken Steps to Improve Real Property Portfolio
Management but Faces Challenges Related to Funding Constraints and Its
Capital Plan 38
The Smithsonian Has Taken Some Steps to Develop and Implement Funding
Strategies, but Its Evaluation of Proposed Alternatives Has Been Limited
52
Conclusions 62
Recommendations for Executive Action 63
Agency Comments and Our Evaluation 64
Appendix I Scope and Methodology 67
Appendix II Smithsonian's Efforts to Implement Key Security Practices 71
Appendix III Comments from the Smithsonian Institution 74
GAO Comments 81
Appendix IV GAO Contact and Staff Acknowledgments 83

Tables

Table 1: Buildings Disposed of by the Smithsonian Since 2005, Including
Elements of Decision and Proceeds, as Described by Smithsonian Officials
42
Table 2: Smithsonian Facilities Capital and Maintenance Appropriations,
Fiscal Years 2002-2007 47
Table 3: Funding and Total Cost of Smithsonian Capital Projects That Have
Received Private Funds for Capital Costs, Fiscal Years 2002-2007 50
Table 4: Nine Funding Options Evaluated by the Ad-Hoc Committee on
Facilities Revitalization 53

Figures

Figure 1: Location of Smithsonian Institution Owned and Leased Facilities
11
Figure 2: Growth in Major Facilities Owned by the Smithsonian Institution,
in Square Feet 13
Figure 3: Key Security Practices in Facility Protection 14
Figure 4: Smithsonian Operating Revenue, Fiscal Year 2006 16
Figure 5: Obsolete Electrical Systems at the National Air and Space Museum
20
Figure 6: Plastic Sheeting Covers Native American Boats at the Cultural
Resources Center to Prevent Water Damage 21
Figure 7: Plastic Sheeting Put Up to Protect Collection Items from Water
Damage in a Storage Area of the Quadrangle Complex 23
Figure 8: The National Zoo's Invertebrate House, Located at the Back of
the Reptile Discovery Center 24
Figure 9: Ape House Exhibit at the National Zoo 26
Figure 10: Sea Lion Pool at the National Zoo 27
Figure 11: Leaking Skylight over the Museum of African Art 28
Figure 12: Security Officer Levels at Smithsonian Museums and Facilities,
2003 Compared with 2007 35
Figure 13: Timeline of the Ad-Hoc Committee on Facilities Revitalization
Key Events 55
Figure 14: Closing All Smithsonian Museums on the National Mall for 3 Days
a Week 57

Abbreviations

Air and Space Museum National Air and Space Museum
American Art Museum Smithsonian American Art Museum
Board of Regents Smithsonian Board of Regents
CCTV closed circuit television cameras
Cooper-Hewitt Museum Cooper-Hewitt National Design Museum
FEMA Federal Emergency Management Agency
Forest Service Department of Agriculture's Forest Service
Freer Gallery Freer Gallery of Art
FRPC Federal Real Property Council
IRC Independent Review Committee
ISC Interagency Security Committee
MOMA Museum of Modern Art
Museum of African American History and Culture National Museum of African
American History and Culture
Museum of African Art National Museum of African Art
Museum of American History National Museum of American History
Kenneth E. Behring Center
Museum of Natural History National Museum of Natural History
Museum of the American Indian National Museum of the American Indian
NAPA National Academy of Public Administration
National Zoo National Zoological Park
NHPA National Historic Preservation Act
NJTTF National Joint Terrorism Task Force
NPS National Park Service
OFEO Office of Facilities Engineering and Operations
OMB Office of Management and Budget
OPS Office of Protection Services
Portrait Gallery National Portrait Gallery
RCM reliability centered maintenance
Reynolds Center Donald W. Reynolds Center for American Art and
Portraiture
Sackler Gallery Arthur M. Sackler Gallery
Smithsonian Smithsonian Institution
Udvar-Hazy Center National Air and Space Museum Steven F. Udvar-Hazy
Center 

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United States Government Accountability Office
Washington, DC 20548

September 28, 2007

The Honorable Dianne Feinstein
Chairman
Committee on Rules and Administration
United States Senate

The Honorable Norman Dicks
Chairman
The Honorable Todd Tiahrt
Ranking Minority Member
Subcommittee on Interior, Environment, and Related Agencies
Committee on Appropriations
House of Representatives

The Smithsonian Institution (Smithsonian) has been referred to as
America's museum, as its museums hold and provide access to irreplaceable
national collections in American and natural history, art, and other
areas. The act establishing the Smithsonian in 1846 provided, among other
things, that the business of the Smithsonian be conducted by a board of
regents. Since its beginning, the Smithsonian has evolved into the world's
largest museum complex and research organization; two of its museums on
the National Mall in Washington, D.C., are the most visited in the world.
The Smithsonian has 19 museums and galleries, 9 science centers, a
zoological park, and various other facilities it uses to accomplish its
mission: "the increase and diffusion of knowledge among men." In recent
years, the National Academy of Public Administration (NAPA), the
Smithsonian, and we have reported on the deterioration of the
Smithsonian's facilities and the threat posed by this deterioration to the
Smithsonian's collections. For example, in April 2005, we reported that
the failing condition and closure of the Smithsonian's 1881 Arts and
Industries building on the National Mall was the most significant example
of a broad decline in the condition of the Smithsonian's facility
portfolio.^1 Moreover, we reported that structural deterioration and
failing systems in Smithsonian museums and other facilities presented
serious long-term risks to the Smithsonian's collections. A 2001 report by
NAPA found that prior to 2000, the Smithsonian had underestimated its
revitalization needs, which were significantly larger than were identified
in its budget requests.

^1GAO, Smithsonian Institution: Facilities Management Reorganization Is
Progressing, but Funding Remains a Challenge, [35]GAO-05-369 (Washington,
D.C.: Apr. 25, 2005).

The Smithsonian's annual operating and capital program revenues come from
its own private trust fund assets and federal appropriations; however, the
majority of funds for facilities come from the Smithsonian's federal
appropriations. Six percent of the Smithsonian's annual operating
revenue--about $58.2 million in fiscal year 2006--comes from unrestricted
private funds, and the Smithsonian's Board of Regents has the authority to
spend these unrestricted private funds for various purposes, including
facilities.^2 We reported in April 2005 that the Smithsonian's trust fund
assets and federal appropriations at current levels would not be
sufficient to cover the Smithsonian's estimated $2.3 billion in
revitalization, construction, and maintenance projects--which include
security-related projects--from 2005 through 2013. Given this significant
funding challenge, we recommended that the Smithsonian Board of Regents
(Board of Regents) develop and implement a strategic funding plan to
address the Smithsonian's facilities projects. In April 2007, we testified
that based on preliminary findings, the Smithsonian's estimated costs for
facilities projects had increased.^3 A June 2007 report commissioned by
the Board of Regents concluded that the Smithsonian had become more
dependent on federal funds from January 2000 through March 2007. As the
Smithsonian's chief decision-making body, the Board of Regents is
responsible for the long-term stewardship of the Smithsonian's mission,
which includes maintaining the Smithsonian's facilities and collections,
as well as ensuring that the Smithsonian has a funding strategy that
provides sufficient funds to support these activities.

The Smithsonian is not the only entity receiving federal funds that faces
challenges related to real property. We have found over the years that
many federal agencies face long-standing challenges involving
deteriorating facilities and protecting assets in the post-September 11
environment, among other things. These findings have led to our inclusion
of real property management on our high-risk list of federal programs
since January 2003.^4 To address the problems we identified related to our
high-risk designation, the administration added a real property initiative
to the President's Management Agenda, and the president issued Executive
Order 13327, which implements the real property initiative by outlining
several requirements intended to help agencies accurately account for,
maintain, and manage their real property assets. These requirements
include, among other things, systematizing agency procedures and actions
related to asset management through the development of an asset management
plan and developing and using a complete and accurate real property data
inventory and performance metrics. Although the Smithsonian is not covered
by the executive order, the administration has encouraged all agencies and
federal entities to use the executive order and related asset management
principles as guidance.

^2The Smithsonian's private trust funds are divided into two categories:
restricted and unrestricted. Restricted trust funds must be used for
specified purposes. Unrestricted trust funds can be used to support any
Smithsonian activity.

^3GAO, Smithsonian Institution: Funding for Real Property Needs Remains a
Challenge, [36]GAO-07-725T (Washington, D.C.: Apr. 11, 2007).

In light of ongoing concerns over the Smithsonian's particular challenges
in these areas, to address your request, we answered the following
questions: (1) How has the condition of the Smithsonian's facilities and
cost estimate for facilities projects changed since our 2005 report? (2)
What steps has the Smithsonian taken to protect its assets, and what
challenges has it experienced in doing so? (3) What steps has the
Smithsonian taken to improve the management of its real property
portfolio, and what challenges has it experienced in doing so? And (4) to
what extent has the Smithsonian developed and implemented strategies to
fund its revitalization, construction, and maintenance projects?

To obtain information on how the condition of the Smithsonian's facilities
has changed since our 2005 report, we interviewed the museum and facility
directors^5 of 14 Smithsonian facilities. To obtain information on new
facilities projects, problems with facilities, and adverse effects, if any
on collections, we toured 8 facilities identified by the Smithsonian as
having major revitalization projects or additional facilities-related
problems since our April 2005 report. To determine how the Smithsonian's
cost estimate for facilities projects has changed since our 2005 report,
we reviewed the Smithsonian's revised cost estimate for major
revitalization, construction, and maintenance projects from fiscal year
2005 through fiscal year 2013. To obtain information on the steps the
Smithsonian has taken to protect its assets and the challenges it has
experienced, we reviewed documents such as the Smithsonian's 2005 All
Hazards Risk Assessment Report and 2002 Disaster Management Program Master
Plan, and the federal government's Interagency Security Committee's (ISC)
key security practices. To obtain information on the steps the Smithsonian
has taken to improve the management of its real property portfolio, we
reviewed our prior work on this issue as well as Smithsonian documents
related to asset management, capital planning, and master planning. To
determine the extent to which the Smithsonian developed and implemented
strategies to fund its revitalization, construction, and maintenance
projects, we reviewed documents used by the Board of Regents to select a
funding strategy and interviewed members of the Board of Regents.

^4GAO, High-Risk Series: Federal Real Property,  [37]GAO-03-122
(Washington, D.C.: January 2003); and Federal Real Property: Progress Made
toward Addressing Problems, but Underlying Obstacles Continue to Hamper
Reform,  [38]GAO-07-349 (Washington, D.C.: Apr. 13, 2007).

^5For this report, the term museum and facility directors refers to
directors of museums, directors of nonmuseum facilities, such as research
and storage centers, and key facilities and security managers of these
museums and facilities.

To address all of the above objectives, we also interviewed appropriate
Smithsonian officials and conducted site visits at organizations in
California and New York with characteristics similar to those of the
Smithsonian, where we reviewed relevant documents, toured facilities, and
interviewed officials. We visited the following organizations with
characteristics similar to those of the Smithsonian: in California, the
California Academy of Sciences, the California State University Office of
the Chancellor, San Jose State University, San Francisco State University,
the University of California Office of the President, the University of
California at Berkeley, the University of California at San Francisco, and
the Zoological Society of San Diego, including the Wild Animal Park; in
New York, the American Museum of Natural History and the Museum of Modern
Art. We selected California because several facilities' management experts
recommended that a university system with old buildings and geographically
dispersed campuses would have characteristics similar to those of the
Smithsonian, and in California we could efficiently visit the University
of California system and the California State University system, both of
which meet these criteria, as well as a large and highly visited zoo and a
science academy undergoing a major capital construction project. We
selected New York so that we could efficiently go to two large and highly
visited museums with characteristics similar to those of some Smithsonian
museums. We conducted our work from September 2006 to September 2007 in
accordance with generally accepted government auditing standards. See
appendix I for a more detailed explanation of our scope and methodology.

Results in Brief

The Smithsonian has made a number of facilities improvements since our
2005 report, but the continued deterioration of many facilities has caused
further access restrictions and has threatened collections, and the
Smithsonian's cost estimate for facilities projects has increased. The
Smithsonian improved the condition of a number of facilities since our
2005 report. For example, the Smithsonian completed its revitalization of
the Donald W. Reynolds Center for American Art and Portraiture (Reynolds
Center), which houses the Smithsonian American Art Museum (American Art
Museum) and the National Portrait Gallery (Portrait Gallery). The
Smithsonian also completed the construction of Pod 5, a
fire-code-compliant space built to store alcohol-preserved specimens of
the National Museum of Natural History (Museum of Natural History). Many
of these specimens are currently stored within the museum building on the
National Mall in Washington, D.C., in spaces that do not meet fire-code
standards. Collections are scheduled to be moved to Pod 5 over the next 2
years. At the same time, problems with the Smithsonian's facilities have
resulted in additional access restrictions and damage and have continued
to threaten collections and cause other problems, according to museum and
facility directors:

           o At the National Air and Space Museum (Air and Space Museum),
           power capacity issues caused by inadequate electrical systems have
           forced the museum to occasionally close galleries to visitors.

           o A lack of temperature and humidity control at storage facilities
           belonging to the Air and Space Museum has caused corrosion to
           historic airplanes and increased the cost of restoring these items
           for exhibit.

           o Problems with the condensate system that provides humidification
           to the building housing the Arthur M. Sackler Gallery (Sackler
           Gallery) and National Museum of African Art (Museum of African
           Art) have caused unpredictable leaks throughout the complex,
           threatening collections.

           o Leaks in the National Zoo's sea lion and seal pools as of July
           2007 were causing an average daily water loss of 110,000 gallons,
           with a replacement cost of $297,000 annually.

           According to Smithsonian officials, repairs to some of these
           problems are scheduled to take place over the next several years.
           In light of such problems, the Smithsonian's cost estimate for
           facilities projects from fiscal year 2005 through fiscal year 2013
           for which it expects to receive federal funds has increased since
           April 2005 from about $2.3 billion to about $2.5 billion for the
           same time period. According to Smithsonian officials, this
           estimate could increase further.

           The Smithsonian follows key security practices to protect its
           assets, but it faces challenges related to ensuring that museum
           and facility directors are aware of important security information
           and related to funding constraints. The Smithsonian follows key
           security practices we have identified in prior work,^6 such as
           allocating resources to manage risk by developing a risk
           assessment report and leveraging security technology. In its risk
           assessment report, the Smithsonian identified the primary risks to
           over 30 of its facilities and made key risk reduction and
           mitigation recommendations. Despite these efforts, we found that
           nine museum and facility directors we spoke with were unaware of
           the contents of the Smithsonian's risk assessment report, and many
           stated that on any given day, they do not know how many security
           officers will show up at their facility. The Smithsonian's Office
           of Protection Services (OPS) is responsible for operating programs
           for security management at Smithsonian facilities. However, some
           museum and facility directors' lack of awareness of the risk
           assessment report limits their ability to work with OPS to
           identify, monitor, and respond to changes in the security of their
           facilities. Furthermore, some museum and facility directors cited
           an insufficient number of security officers to protect assets due
           to funding constraints. Smithsonian obligations for security have
           increased since September 11, 2001, from $37 million in 2001 to a
           high of $67 million in 2006, but certain needs have gone
           unaddressed. In addition, due to funding constraints, the
           Smithsonian's two most visited museums have experienced a 31
           percent decrease in security officers since 2003, and the overall
           number of security officers has decreased at a time when the
           Smithsonian's square footage has increased. Some of the
           Smithsonian's museum and facility directors said that in the
           absence of more security officers, some cases of vandalism and
           theft have occurred. In addition, two museum directors stated that
           it has become more difficult for them to acquire collections on
           loan because lenders have expressed concern with the lack of
           protection.

           Faced with deteriorating facilities and an increased cost estimate
           for facilities projects, the Smithsonian has taken steps to
           improve the management of its real property portfolio but faces
           challenges related to funding constraints and its capital plan.
           Several factors affect the Smithsonian's efforts to manage its
           real property portfolio, including historical preservation
           requirements. The Smithsonian's centralized office for real
           property management, known as the Office of Facilities Engineering
           and Operations (OFEO), has made significant strides in several
           areas related to real property portfolio management, including
           improving real property data and developing performance metrics
           on, for example, maintenance and customer satisfaction. Many of
           these steps incorporate the administration's real property
           guidance. In addition, the Smithsonian has refined its capital
           planning process to improve its real property portfolio
           management. At the same time, however, funding constraints have
           presented considerable challenges to OFEO's efforts. For example,
           while a majority of museum and facility directors stated that OFEO
           does a good job of prioritizing and addressing problems with the
           amount of funds available, several museum and facility directors
           expressed frustration that projects at their facilities had been
           delayed, and OFEO officials stated that a lack of sufficient funds
           for maintenance has limited their ability to optimally maintain
           equipment, leading to more expensive failures later on. OFEO has
           worked to justify an increase in federal funds for facilities.
           However, although private funds made up 39 percent of the
           Smithsonian's capital funds for facilities projects for fiscal
           years 2002 through 2007, the Smithsonian has omitted privately
           funded projects from its capital plan and its estimate of $2.5
           billion for facilities projects through 2013, making it
           challenging for the Smithsonian and other stakeholders to
           comprehensively assess the funding and scope of facilities
           projects. Smithsonian officials noted that the majority of these
           private funds were donated for the construction of new
           facilities--namely, the National Museum of the American Indian
           (Museum of the American Indian) and the National Air and Space
           Museum Steven F. Udvar-Hazy Center (Udvar-Hazy Center)--and there
           is no assurance that private funds would make up 39 percent of the
           Smithsonian's funds for capital projects in future years. Other
           organizations we visited include both private and public
           investments in their capital plans to inform their stakeholders
           about the scope of projects and the extent of such partnerships
           used to fund capital needs.
			  
^6GAO, Homeland Security: Further Actions Needed to Coordinate Federal
Agencies' Facility Protection Efforts and Promote Key Practices,
[39]GAO-05-49 (Washington, D.C.: Nov. 30, 2004).

           Funding constraints are clearly a common denominator with regard
           to the Smithsonian's security and real property management, but
           the Smithsonian Board of Regents' efforts to develop and implement
           strategies to fund its facilities revitalization, construction,
           and maintenance needs have been limited. The Board of Regents has
           taken some steps to address our 2005 recommendation regarding a
           strategic funding plan for facilities projects. After reviewing
           materials prepared by Smithsonian management that identified and
           evaluated nine options to address facilities projects--such as
           establishing a special exhibition fee and issuing a facilities
           revitalization bond--an ad-hoc committee established by the Board
           of Regents decided to request an additional $100 million annually
           in federal funds for facilities over its current appropriation for
           10 years, starting in 2008, for a total of an additional $1
           billion. To implement this recommendation, in September 2006,
           several members of the Board of Regents and the Secretary of the
           Smithsonian met with the President to discuss the issue of
           increased federal funding for the Smithsonian's facilities.
           According to two members of the Board of Regents, this option was
           selected because the Board of Regents believed that the
           revitalization, construction, and maintenance of Smithsonian
           facilities are federal responsibilities. According to Smithsonian
           officials, it is the position of the Smithsonian, based on an
           historical understanding, that the maintenance and revitalization
           of facilities are federal responsibilities. Smithsonian officials
           pointed out that as early as the 1850s, the federal government has
           provided appropriations to the Smithsonian for the care and
           presentation of objects belonging to the United States. The
           President's fiscal year 2008 budget proposal included an increase
           of about $44 million over the Smithsonian's fiscal year 2007
           appropriation, far short of what the Smithsonian requested, and it
           is not clear how much of this proposed increase would be used to
           support facilities. Our analysis of the Smithsonian's evaluations
           of the eight other funding options, including the potential
           benefits and drawbacks of each, showed that the evaluations were
           limited in that they did not always include a complete analysis,
           fully explain specific assumptions, or benchmark with other
           organizations, items crucial to determining each option's
           potential viability. For example, the Smithsonian's analysis of a
           general admission fee option included an adjustment of annual net
           gains to account for losses in revenue at restaurants and stores.
           However, the Smithsonian's materials did not discuss whether other
           museums had experienced such losses after establishing admission
           fees. We spoke with six other museums and a zoological park that
           stated that instituting or increasing admission fees did not
           decrease the amount of money visitors spent in restaurants and
           stores. In addition, although several of the nine options are
           dismissed because independently the options would not generate the
           amount of revenue required to address the Smithsonian's facilities
           projects, the evaluation did not consider the potential of
           combining options to generate more revenue.

           Clearly, the Smithsonian is at a crossroads, with significant
           security and facilities projects and funding constraints that have
           limited its ability to complete these projects in a timely manner.
           The Smithsonian also faces communication challenges regarding
           security, and its omission of private funds from its capital plan
           and cost estimate has reduced the ability of the Smithsonian and
           other stakeholders to comprehensively assess the funding and scope
           of facilities projects. We are therefore making recommendations
           designed to improve communication and information about security
           and to improve the comprehensiveness of the Smithsonian's capital
           plan and cost estimate. Moreover, if the Smithsonian does not
           develop a viable strategy to address its growing cost estimate for
           facilities projects, its facilities and collections face increased
           risk, and the ability of the Smithsonian to meet its mission will
           likely decline. We are therefore recommending that the Smithsonian
           Board of Regents perform a more comprehensive analysis of
           alternative funding strategies beyond principally using federal
           funds to support facilities and submit a report to Congress and
           the Office of Management and Budget (OMB) describing a funding
           strategy for current and future facilities needs. According to two
           members of the Board of Regents, the board recognizes that it may
           need to undertake further analysis of the funding options
           presented and consider additional funding options; and in June
           2007, the Board voted to turn the ad-hoc committee into a standing
           committee on facilities revitalization. These members of the Board
           of Regents also stated they recognized the need to work closely
           with Congress on this issue in the future. However, these regents
           told us that in light of other priorities, the board has not yet
           had time to fully reconsider funding strategies. In commenting on
           a draft of this report, the Smithsonian concurred with our
           recommendations and provided additional information, which we have
           incorporated where appropriate. The Smithsonian also expressed
           concerns about several issues in the report. A summary of these
           concerns and our responses to them can be found in Agency Comments
           and Our Evaluation. The Smithsonian's full comments and our more
           detailed response can be found in Appendix III.
			  
			  Background

           Congress established the Smithsonian in 1846 to administer a large
           bequest left to the United States by James Smithson, an English
           scientist, for the purpose of establishing, in Washington, D.C.,
           an institution "for the increase and diffusion of knowledge among
           men." In accepting Smithson's bequest on behalf of the nation,
           Congress pledged the "faith of the United States" to carry out the
           purpose of the trust.^7 To that end, the act establishing the
           Smithsonian provided for the administration of the trust,
           independent of the government itself, by a Board of Regents and a
           Secretary, who were given broad discretion in the use of the trust
           funds. The Board of Regents currently consists of nine private
           citizens as well as members of all three branches of the federal
           government, including the Chief Justice of the United States, the
           Vice President, three senators, and three representatives.^8 As
           the Smithsonian's chief decision-making body, the Board of Regents
           is responsible for ensuring the maintenance of the facilities and
           collections of the Smithsonian Institution. This includes ensuring
           that the Smithsonian has sufficient funds, from either public or
           private sources, to support these activities.
			  
^7A trust is a fiduciary relationship involving a right of property held
by the trustee for the benefit of another.

           Over the last 160 years, the Smithsonian's facilities inventory
           has expanded to include 19 museums and galleries, 9 research
           centers, a zoo, and other facilities--most located in or near
           Washington, D.C. These facilities include more than 700 buildings
           and structures, owned and leased, ranging from major museum
           buildings to storage buildings and storage sheds (see fig. 1).
			  
^8The three senators are appointed by the President of the Senate, the
three representatives are appointed by the Speaker of the House, and nine
citizens are appointed by joint resolution of Congress--two from the
District of Columbia and seven from the states.

Figure 1: Location of Smithsonian Institution Owned and Leased Facilities

Note: Facilities under 50,000 square feet are not represented.

The major buildings owned by the Smithsonian range in age from about 160
years old to less than 1 year old, with most of the facilities' growth
occurring since the 1960s (see fig. 2). The Smithsonian's growth will
continue, with the construction of an aircraft restoration area--phase II
of the Udvar-Hazy Center^9--and the design and construction of a National
Museum of African American History and Culture (Museum of African American
History and Culture), authorized by Congress in 2003. Beyond this, some
members in both houses of Congress have expressed interest in developing a
National Museum of the American Latino.^10

^9The Udvar-Hazy Center near Washington Dulles International Airport is the
companion facility to the Air and Space Museum on the National Mall and is
being built in two phases. Phase I opened in December 2003 and provides
enough space for the Smithsonian to display thousands of aviation and
space artifacts. Phase II will include a restoration hangar, archives,
collections processing unit, conservation laboratory, and collections
storage facility.

^10Several bills have been introduced in the 110th Congress to study the
potential creation of a National Museum of the American Latino and whether
the museum should be located within the Smithsonian. See S. 500, 110th
Cong. (2007); and H.R. 512, 110th Cong. (2007).

Figure 2: Growth in Major Facilities Owned by the Smithsonian Institution,
in Square Feet

Note: This figure tracks the square footage for all owned and leased
buildings as they were added to the inventory over time. Only the major
facilities are named in the figure, although the square footage of smaller
buildings is included. Also, in November 2005, the Smithsonian Institution
sold the Victor Building.

The physical security of federal facilities, including those on the
National Mall, has been a more urgent governmentwide concern after the
terrorist attacks of September 11, 2001. We have issued several reports,
including our November 2004 report, related to improving the physical
security of federal facilities.^11 In that report, we assessed the actions
of the ISC in coordinating federal facility protection efforts and
delineated a set of six key practices that had emerged from the collective
practices of federal agencies to provide a framework for guiding agencies'
facility protection efforts.^12 These key practices are briefly described
in figure 3.

^11 [40]GAO-05-49 .

Figure 3: Key Security Practices in Facility Protection

The Smithsonian significantly altered its facilities management approach
in the wake of a 2001 report by NAPA. NAPA's report highlighted the need
for major changes in the Smithsonian's facilities management practices to
help address problems with its facilities, and the report included a
number of recommendations. In March 2001, before NAPA issued its report,
the Smithsonian had hired a new director to lead the reorganization of the
facilities program. With the leadership of this director, in fiscal year
2004 the Smithsonian reorganized and centralized its facilities program
under the OFEO, a new, flatter facilities management organization. OFEO
assumed responsibility for all facility-related programs and budgets for
the Smithsonian. OFEO consists of six offices responsible for different
areas of facilities management.^13 One of these, OPS, is responsible for
operating programs for security management at Smithsonian facilities. All
OFEO offices report directly to the OFEO director and are funded through
one budget. OFEO received its first realigned budget in fiscal year
2004.^14 In our 2005 report, we found that the Smithsonian had implemented
the majority of NAPA's recommendations.

^12In October 1995, the President signed Executive Order 12977 to
establish ISC, which is chaired by the Department of Homeland Security and
has representation from all of the major federal real property holding
agencies. ISC has three primary security responsibilities for nonmilitary
activities: (1) establish policies for security in and protection of
federal facilities; (2) develop and evaluate security standards for
federal facilities, develop a strategy for ensuring compliance with such
standards, and oversee the implementation of appropriate security measures
in federal facilities; and (3) take such actions as may be necessary to
enhance the quality and effectiveness of security and protection of
federal facilities.

Although the Smithsonian is a trust instrumentality with a private
endowment, it is largely funded by federal appropriations. In fiscal year
2006, the Smithsonian's operating revenues were about $947 million, of
which about 65 percent were from federal appropriations. As shown in
figure 4, the Smithsonian's federal appropriations are divided into two
categories, both of which include some facilities-related funds. The
facilities capital appropriation, which was about $98.5 million in fiscal
year 2006, provides funds for construction and revitalization projects.
The salaries and expenses appropriation, which was about $516.6 million in
fiscal year 2006, includes funding for the program activities of each
museum and research center; rents; utilities; and facilities' operations,
maintenance, and security costs.

The remaining 29 percent of the Smithsonian's operating revenues in fiscal
year 2006 was from its private trust funds (private funds), which are also
divided into two categories: restricted and unrestricted. Restricted trust
funds include such items as gifts from individuals and corporations that
specify the purpose of the funds. Generally, restricted funds support a
particular exhibit or program, or are used to manage the collections or
support research projects. Restricted funds have also been provided for
some facilities' construction and enhancements related to revitalization
projects. Unrestricted trust funds include income from investment earnings
and net proceeds from business activities, and can be used to support any
Smithsonian activity. The Smithsonian typically has used unrestricted
trust funds, which in 2006 represented 6 percent of the Smithsonian's
total operating income, for fundraising, some salary costs, and central
administration costs. Although the Smithsonian can use unrestricted trust
funds for any purpose consistent with the Smithson Trust and therefore
could use them for facilities revitalization and maintenance, it has not
done so. Smithsonian officials stated that the unrestricted trust fund
budget is small and that if these salary and central administration costs
were not paid for with unrestricted trust funds, the Smithsonian would
have to use federal funds or eliminate positions or programs to cover
these expenses.

^13The Office of Facilities Engineering and Operations (OFEO) consists of
six offices, including Planning and Project Management; Engineering,
Design, and Construction; Facilities Management and Reliability;
Protection Services; Safety, Health and Environmental Management; and
Smithsonian Tropical Research Institute Facilities Operations.

^14According to Smithsonian officials, for fiscal year 2004, the
Smithsonian's budget justification to Congress was realigned to
accommodate facilities integration from the museums, other facilities, and
the National Zoo, as well as to reorganize the resources into the
categories of facilities maintenance, facilities operations, security and
support, and facilities capital.

Figure 4: Smithsonian Institution Operating Revenue, Fiscal Year 2006

In June 2007, at the request of the Board of Regents, a committee called
the Independent Review Committee (IRC) issued a report of its examination
of the former Smithsonian secretary's compensation and expenses and
related board governance. The report found that private funds raised
annually from donors declined over the former secretary's tenure, from
January 2000 through March 2007. In addition, the IRC found that business
revenue also dropped during the former secretary's tenure, while funds
from federal appropriations and governmental grants increased more than 60
percent. As a result, the IRC concluded that the Smithsonian became more
dependent on federal funds during the former secretary's tenure.^15 Also
in June 2007, the Board of Regents' Governance Committee issued a report
and recommendations to strengthen the Board of Regents' oversight of the
Smithsonian. One of several recommendations to the Board of Regents was
that its ad-hoc Committee on Facilities Revitalization should become a
standing committee in order to underscore the Board of Regents' commitment
to resolving the Smithsonian's April 2005 estimate of $2.3 billion for
facilities projects.

While Congress has authorized major new museums and facilities, Congress
has moved away from fully funding the construction of these facilities
beginning in 1982. At that time, Congress authorized $36.5 million for the
construction of the Museum of African Art and a Center for Eastern Art^16
and required that the Smithsonian pay for the balance of the project with
other funds. In 1989, Congress required that not more than two-thirds of
the total cost of the Museum of the American Indian come from federal
appropriations. More recently, in 2003, Congress also required that 50
percent of the cost to construct the Museum of African American History
and Culture come from nonfederal sources and the other 50 percent from
federal appropriations.

^15According to Smithsonian officials, the Smithsonian disputes the IRC
report's finding that overall private fund-raising declined during the
former secretary's tenure.

^16The legislation authorizing the construction of the National Museum of
African Art referred to a center for Eastern art or studies. See 20 U.S.C.
S 50 note. The Smithsonian Quadrangle complex houses the National Museum
of African Art, the Arthur M. Sackler Gallery, S. Dillon Ripley Center, an
auditorium, offices, and the Enid A. Haupt Garden. On July 28, 1982, the
Smithsonian entered into an agreement to name the western half of the
Quadrangle complex the Arthur M. Sackler Gallery, which was to be
dedicated to Eastern Art.

Despite Some Improvements, Deteriorating Facilities Have Caused Further
Problems, and Cost Estimate for Facilities Projects Has Increased

The Smithsonian has improved the condition of a number of facilities since
our 2005 report, such as the revitalization of the Reynolds Center and
parts of the National Zoo. However, problems with the Smithsonian's
facilities since 2005 have continued to cause access restrictions and
damage, and continue to threaten collections. Moreover, many long-term
facilities problems remain. According to Smithsonian officials, repairs to
some of these problems are scheduled over the next several years. At the
same time, the Smithsonian's cost estimate for facilities projects through
fiscal year 2013 has increased since April 2005, from $2.3 billion to $2.5
billion for the same time period.

The Smithsonian Improved the Condition of a Number of Facilities Since 2005

Since our 2005 report, the Smithsonian has improved the condition of a
number of its facilities through revitalization, construction, and repair
efforts. For example, it completed a $238 million revitalization of the
Reynolds Center, which houses the American Art Museum and the Portrait
Gallery. These museums were reopened to the public in July 2006. The
revitalization included upgrading the building's systems, such as heating,
ventilation, and air conditioning, electrical, and plumbing, and adding
life and safety upgrades. It also included a historical renovation of the
building. As part of this renovation, for example, ruined encausted tiles
on one floor were replaced with new tiles matching the original tiles, and
a skylight that had been covered over for many years was opened up and
restored. The renovation, which, according to Smithsonian officials, made
60,000 square feet of building space previously used for storage or staff
functions available for public use, also included several upgrades to the
building's original space--such as a conservation center and an
auditorium--that were paid for with private funds. In addition, the
Smithsonian completed the revitalization of one section of the National
Zoo (the Fujifilm Giant Panda Habitat and Asia Trail) in October 2006 and
is in the process of further revitalizations at the National Zoo as well
as major revitalizations at the National Museum of American History
Kenneth E. Behring Center (Museum of American History), which is currently
closed for revitalization, and the Museum of Natural History.

In addition, the Smithsonian completed construction of a new storage
facility known as Pod 5, which is located at the Museum Support Center at
the Suitland, Maryland, campus. Pod 5 was built to provide a
fire-code-compliant space to store and conduct research on
alcohol-preserved specimens of the Museum of Natural History, many of
which are currently stored within the museum building on the National Mall
in Washington, D.C., in spaces that do not meet fire-code standards.
Construction was completed in April 2007, and according to Smithsonian
officials, collections are scheduled to be moved to Pod 5 over the next 2
years.

The Smithsonian also made some improvements to facilities since 2005
through repairs. For example, according to the director of the Freer
Gallery of Art and Arthur M. Sackler Gallery (Freer and Sackler
Galleries), some external leaks along the perimeter of the Sackler Gallery
have been eliminated by the installation of copper flashing.

Problems with the Smithsonian's Facilities Since 2005 Have Caused Access
Restrictions and Damage, and Continue to Threaten Collections

Despite the progress the Smithsonian has made in improving a number of its
facilities since our 2005 report, the continued deterioration of many
facilities has caused further access restrictions and damage, and
continues to seriously threaten collections. According to Smithsonian
officials, repairs to some of the following problems are scheduled to take
place over the next several years. For example, the electrical systems at
the Air and Space Museum are scheduled to be replaced in fiscal years 2007
through 2010. Access restrictions and damage caused by facilities'
conditions include the following:

           o Power capacity issues caused by inadequate electrical systems
           have forced the Air and Space Museum to occasionally close
           galleries to visitors, according to the museum's director. The
           electrical systems at the Air and Space museum were installed in
           1975 and are obsolete and at the end of their useful life.
           Complete replacement is needed to avoid outages from equipment
           failure (see fig. 5).

           Figure 5: Obsolete Electrical Systems at the National Air and
           Space Museum

           o Recurring leaks in a Museum of African Art gallery that held an
           exhibit called Art of the Personal Object forced the museum to
           temporarily close the gallery several times from 2004 through 2006
           and take down part of the exhibit's collections until the leaks
           were repaired, according to the museum's director. Smithsonian
           officials noted that addressing such leaks is a regular
           maintenance issue.

           o Chronic leaks in the roof of the Cultural Resources Center at
           Suitland, Maryland, which was completed in 1998 and opened in 1999
           to hold collections of the Museum of the American Indian, have
           forced staff to place plastic over several shelving units used to
           store collections, such as a set of wooden boats that includes an
           Eskimo kayak from Greenland and a rare Yahgan dugout canoe from
           Tierra del Fuego, according to officials at this facility (see
           fig. 6).^17 The plastic sheeting limits visitors' visual access to
           the boats during open houses, which provide Native Americans and
           other groups with access to the collections. One museum official
           stated that it was also an embarrassment during open houses to
           have to explain that a roof leak threatens collections. According
           to Smithsonian officials, the building's roof is a spiral shape
           constructed with copper plate and compositional panels soldered
           together. However, the soldered joints on this complex roof design
           were not constructed well by the subcontractor responsible for
           building the roof. According to a Smithsonian official, the
           Smithsonian has worked with the company identified by the roofing
           manufacturer to assume the warranty for the roof to make repairs.
           While some of the costs to repair the roof were covered by
           warranty, others were not and were paid for by the Smithsonian.
			  
^17In addition to significant collections from the United States, the
Museum of the American Indian's collection also contains items from
throughout the Western Hemisphere.

           Figure 6: Plastic Sheeting Covering Native American Boats to
           Prevent Water Damage at the Smithsonian Institution's Cultural
           Resources Center

           o A lack of temperature and humidity control at the Museum of Air
           and Space's collection storage facilities in Suitland, Maryland,
           which have large doors that do not seal and let in rain, has
           caused corrosion to historic airplanes and other collections and
           increased the cost of restoring these items for exhibit, according
           to museum officials.

           In addition, two museum and facility directors told us of alarming
           "near misses"--events related to inadequate facilities that could
           have been catastrophic to collections had they occurred at
           different times. According to Sackler Gallery officials, in
           October 2006, a major leak unexpectedly occurred in a holding area
           used by the museum to store exhibits on loan three weeks before
           $500 million worth of art arrived to be held there. If the leak
           had occurred while the art was being stored in this space, the art
           could have been destroyed. The leak was caused by ongoing problems
           with the steam system used to provide humidification to the
           Quadrangle complex, known as the condensate system. Problems with
           this system--which the gallery shares with the other facilities
           that make up the Quadrangle, including the Museum of African
           Art--have caused unpredictable leaks throughout the complex since
           1993, continually threatening collections.^18 Museum officials
           stated that staff must routinely spend time each morning searching
           for new leaks in order to move or cover collections to keep them
           safe--time that could be used for programmatic efforts--and
           several officials emphasized they have been lucky to avoid major
           damage to the collections thus far. (See fig. 7.)

^18In this condensate system, steam is piped to humidifiers located
throughout the Quadrangle complex, which inject the steam into the air
flow to provide humidification. However, when these pipes periodically
clog up with metallic sediment, the steam turns into water and leaks
through pipe joints.

           Figure 7: Plastic Sheeting Protecting Collection Items from Water
           Damage in a Storage Area of the Smithsonian Institution's
           Quadrangle Complex

           In addition, the director of the National Zoo stated that because
           of inadequate fire protection in the zoo's invertebrate house, a
           fire in this building in 2006 did not set off a smoke alarm and
           could have burned down the entire building--which also includes
           the reptile discovery center. (See fig. 8.) The fire occurred
           during work hours and was quickly put out by staff, but the
           director stated that the incident alerted him to the potentially
           disastrous consequences of a fire at the National Zoo to
           facilities and the animals living in them. Moreover, the director
           stated that inadequate fire protection systems throughout much of
           the National Zoo threaten the zoo's collections overall. For
           example, most buildings do not have sprinklers, some fire hydrants
           do not have enough water pressure for sprinkler systems that are
           in place, and the zoo has no smoke evacuation systems designed to
           remove smoke from a building in the case of a fire to prevent the
           death of people or animals from smoke inhalation. The director
           stated that until the zoo's fire protection systems are upgraded,
           there is the potential that a fire could cause devastation similar
           to a 1995 fire at the Philadelphia Zoo's primate house, which
           destroyed the building and killed 23 animals.

           Figure 8: The National Zoo's Invertebrate House, Located at the
           Back of the Reptile Discovery Center

           Similar problems at other Smithsonian facilities also threaten
           staff and collections. For example, the director of the Freer and
           Sackler Galleries stated that the Freer Gallery has also had leaks
           caused by problems with its condensate system. In addition,
           according to the Director of the Smithsonian Environmental
           Research Center, temporary trailers that have been in place at the
           center for 3 to 35 years are degrading and do not have fire
           suppression systems for life safety. At one point, the floor fell
           out of a trailer due to decay, and the collections landed on the
           ground; in other trailers, hallway floors have fallen through.
			  
			  Many Long-Term Facilities Problems Remain

           Other long-term facilities issues have caused additional problems
           for the Smithsonian since 2005, including increasing the
           Smithsonian's energy consumption and reducing its ability to carry
           out its mission. Ongoing problems with facilities' conditions that
           museum directors described to us include the following:

           o The Hirshhorn Museum and Sculpture Garden's building is not well
           insulated and is the Smithsonian's largest (on a per-square-foot
           basis) consumer of energy; in addition, its fac,ade is leaking in
           places.

           o The National Zoo is currently unable to provide many of its
           animals with the state-of-the-art habitats required to meet the
           zoo's goal of providing the highest quality animal care. Many of
           the zoo's animal areas and facilities are in relatively poor
           condition. For example, some of the zoo's facilities, including
           the bird house, small mammals house, and the reptile house, were
           built in the 1920s, while others, including the lion and tiger
           area and the ape house, were built in the 1960s. Many of these
           facilities do not meet current code requirements (buildings are
           brought up to code at the time they are renovated) and have many
           failing systems. (See fig. 9.)

           Figure 9: Ape House Exhibit at the National Zoo

           o In addition, according to officials at the National Zoo, the
           zoo's sea lion and seal pools have major leaks the zoo has not
           been able to fix without overhauling these exhibits. In January
           2007, average daily water loss from these two pools was 140,000
           gallons, and the lost water flowed into the Washington, D.C.,
           sewer system. According to these officials, preliminary site
           investigation of the pool indicated that while the structures
           themselves appeared sound, the source of most of the water loss
           was a result of the old underground supply and return piping.
           Temporary supply lines were installed, and it appeared that the
           amount of water loss in the seal pool was greatly decreased,
           reducing the average daily water loss from the two pools to
           110,000 gallons as of July 2007, with a replacement cost of
           approximately $297,000. A camera scoping system was being used to
           identify where to make temporary repairs to the sea lion pool.
           (See fig 10.)

           Figure 10: Sea Lion Pool at the National Zoo

           o The Director of the Museum of African Art stated that leaks in a
           skylight since 2005 have at times forced the museum to cover the
           skylight with plastic to protect the building and its collections
           (see fig. 11). The Director stated that the skylights have leaked
           for many years, were repaired in 2004, and started leaking again
           in 2005. In addition, according to the Director, in 2006, leaks in
           the roof membrane of the pavilion by the main visitor entrance
           forced the museum to put up plastic around the entrance and remove
           art objects from the area, reducing the visual appeal of the
           museum's entrance.

           Figure 11: Leaking Skylight over the Museum of African Art

           The Smithsonian's collections storage, conservation, and research
           facilities located in Suitland, Maryland, have many significant
           long-term problems. These facilities not only hold collections but
           also are actively used by Smithsonian staff and outside
           researchers for conservation and research. For example, according
           to the Director of the Museum Conservation Institute, which is the
           Smithsonian's center for advanced scientific study of the care of
           museum collections, the institute's facility has leaks, an
           inadequate electrical supply, inadequate air handling, and a
           general lack of office and lab space that makes it more difficult
           for the institute to carry out its research and conservation work.
           The Museum Support Center, which contains storage pods, research
           labs, and administrative space, has inadequate air handlers for
           the pods that need replacing, and some of the labs lack necessary
           equipment. For example, a lab that belongs to the Museum of
           American History was temporarily turned over to the American Art
           Museum while the Reynolds Center was being revitalized. This
           museum stripped out existing exhaust hoods because it did not need
           that type of equipment for the conservation work it was doing in
           the lab. The lab has now been turned back over to the Museum of
           American History, but funds are lacking to reinstall the exhaust
           hoods, limiting the lab's usefulness as staff prepare new exhibits
           for the museum's reopening after its current revitalization.
           Furthermore, a greenhouse at Suitland that is used for botany
           research is no longer fully enclosed, as several large glass panes
           have slipped from their frames, leaving open spaces that allow
           conditioned air to escape, increasing energy costs, and reducing
           the Smithsonian's ability to maintain the optimal environment for
           the plants being studied.

           According to Smithsonian officials, repairs to some of the major
           problems with its facilities are scheduled to take place over the
           next several years. For example, the electrical systems at the Air
           and Space Museum are scheduled to be replaced in fiscal years 2007
           through 2010, a contract was recently awarded to address the
           problems with the condensate system at the Quadrangle complex, and
           the Smithsonian's capital plan includes projects intended to
           address the fire protection problems at the National Zoo in fiscal
           years 2008 through 2010 and to design and renew systems at the
           seal and sea lion exhibit in fiscal years 2008 and 2009.
			  
			  The Smithsonian's Estimated Cost for Facilities Projects through
			  Fiscal Year 2013 Has Increased Since 2005

           As of March 2007, the Smithsonian estimates it will need about
           $2.5 billion for revitalization, construction, and maintenance
           projects identified from fiscal year 2005 through fiscal year
           2013, an increase of about $200 million from its April 2005
           estimate of about $2.3 billion for the same time period. The
           Smithsonian's estimated revitalization and new construction costs
           are driven in part by the need to modernize or add systems, such
           as fire detection and alarm and security systems, and to comply
           with newer life safety code requirements, such as those for
           handicapped accessibility to buildings and restrooms. Maintenance
           costs include staff costs, minor repair and maintenance projects,
           and other contracts, supplies, materials, and equipment for
           Smithsonian's maintenance program. Smithsonian officials stated
           that to update its 2005 estimate, they identified changes that had
           occurred to the project cost figures used in the 2005 estimate and
           then subtracted from the new total the appropriations the
           Smithsonian had received for facilities revitalization,
           construction, and maintenance projects for fiscal years 2005
           through 2007.

           According to Smithsonian officials, this estimate includes only
           costs for which the Smithsonian expects to receive federal funds.
           Projects that have been or are expected to be funded through the
           Smithsonian's private trust funds were not included, although the
           Smithsonian has used trust funds to support some facilities
           projects. For example, the construction of Udvar-Hazy Center Phase
           I was funded through trust funds.^19 According to Smithsonian
           officials, maintenance projects are not generally funded through
           trust funds.^20
			  
^19The law that authorized the National Air and Space Museum Stephen F
Udvar-Hazy Center provided that no appropriated funds could be used to pay
for construction expenses. See 20 U.S.C. S 77 note.

^20According to Smithsonian officials, a small amount of unrestricted
trust funds have been used towards the salaries of some facilities'
maintenance managers. According to Smithsonian officials, restricted trust
funds have not been available for maintenance, as donors are not
interested in giving money towards facilities' maintenance and do not
donate funds for this purpose. The Smithsonian recently commissioned a
benchmarking survey on fund-raising for facilities; all 12 respondents to
the survey reported that efforts to secure support for deferred
maintenance have been unsuccessful, except when embedded in programmatic
improvements.

           The increase in the Smithsonian's cost estimate for
           revitalization, construction, and maintenance projects through
           fiscal year 2013 from about $2.3 billion in our April 2005 report
           to about $2.5 billion as of March 2007 was due to several factors,
           according to Smithsonian officials. For example, Smithsonian
           officials said that major increases had occurred in projects for
           the National Zoo and the Museum of American History because the
           two facilities had recently developed master plans that identified
           additional requirements.^21 In addition, according to Smithsonian
           officials, estimates for antiterrorism projects had increased due
           to adjustments for higher costs for security-related projects at
           the Air and Space Museum. According to Smithsonian officials, the
           increase also reflects the effect of delaying corrective work in
           terms of additional damage and escalation in construction costs.

^21A master plan is a proposal of a comprehensive renovation or expansion
of a complex that aligns the physical plant with the organization's
strategic goals. It includes proposals to make the complex conform to
current codes and meet technology and security requirements. This process
can also involve upgrading and replacing major building systems, including
the electrical, plumbing, fire suppression, and heating and air
conditioning systems; reinforcing the complex's structural integrity; and
removing asbestos. Master plans also identify changes in building use and
expansion requirements to meet mission needs.

           According to Smithsonian officials, the Smithsonian's March 2007
           estimate of about $2.5 billion could also increase, as the April
           2005 estimate of about $2.3 billion was largely based on
           preliminary assessments, and therefore, as Smithsonian completes
           more master plans, more items will be identified that need to be
           done. Moreover, this estimate does not include the estimated cost
           of constructing the Museum of African American History and
           Culture, which was authorized by Congress in 2003 and which the
           Smithsonian notionally estimates may cost about $500 million--half
           of which is to be funded by federal appropriations.
			  
           The Smithsonian Follows Many Key Security Practices to Protect Its
			  Assets but Faces Communication and Funding Challenges

           The Smithsonian follows key security practices to protect its
           assets but faces significant challenges ensuring that museum and
           facility directors are aware of important security information.
           Moreover, due to funding constraints, Smithsonian officials and
           some museum and facility directors cited an insufficient number of
           security officers to protect assets.
			  
			  The Smithsonian Follows Key Security Practices
			  
           We found that the Smithsonian follows key security practices we
           have defined in prior work. For example, in order to allocate
           resources more effectively to manage risk, in 2004, the
           Smithsonian contracted for an all-hazards risk assessment report.
           This report, which includes individual assessments for over 30
           Smithsonian facilities, was completed in 2005.^22 These
           assessments identify the primary risks to each facility and also
           describe the key observed vulnerabilities and risks, as well as
           the key risk reduction and mitigation recommendations proposed for
           each facility in order to help the Smithsonian effectively
           prioritize security projects. As a supplement to this report, in
           the spring of 2006, the contractor completed a strategy that
           included specific recommendations on how to use the Smithsonian's
           capital and maintenance funds to implement future security
           projects and operational changes aimed at reducing the risk for
           Smithsonian facilities.

           In another example, the Smithsonian leverages security technology
           to protect its assets by using technologies such as perimeter
           vehicle barriers, closed circuit television cameras (CCTV),
           emergency voice systems, window blast film, and electronic
           screening of visitors and mail. According to a Smithsonian
           official, the technologies used for its physical security
           plan--which primarily consists of two separate programs for
           mitigating the risks to the Smithsonian's staff, visitors,
           collection and facilities--allows OPS to extend the capabilities
           of security staff and to improve facility security. For more
           information on the Smithsonian's following of key security
           practices, see appendix II.
			  
^22According to Smithsonian officials, OPS consulted with the Federal
Emergency Management Agency (FEMA) on the methodologies and consultants to
use for the 2005 all-hazards risk assessment report. For a methodology,
FEMA recommended its Risk Management Series Publication 452. For
consultants, FEMA recommended the entity used to create the FEMA 452
Publication.	

           The Smithsonian Faces Challenges in Ensuring That Museum and Facility
			  Directors Are Aware of Important Security Information

           Although the Smithsonian follows many key security practices, many
           museum and facility directors we spoke to stated that they lacked
           information on key security measures. For example, although OPS
           sent a notification letter with the relevant section of the
           all-hazards risk assessment report to museum and facility
           directors in late 2006, nine museum and facility directors we
           spoke with told us they were unaware of the results of this report
           for their facility and had not seen or been briefed on this
           report. In contrast, five museum and facility directors stated
           that they were aware of this report. OPS is responsible for
           security at the Smithsonian's museums and facilities. However, the
           lack of awareness of some museum and facility directors about the
           all-hazards risk assessment report limits their ability to work
           with OPS to identify, monitor, and respond to changes in the
           security environment of their facilities.

           In addition, many museum and facility directors stated that they
           did not always receive useful information from OPS regarding
           security officer staffing levels and other security decisions. For
           example, although security officer staffing levels at museums and
           facilities can vary on a daily basis due to attrition, absences,
           and OPS temporarily moving security officers from one facility to
           another to address needs with available staff, many museum and
           facility directors stated that on any given day, they do not know
           how many security officers will show up at their
           facility--information needed to oversee mitigation efforts and
           manage security. These museum and facility directors stated that
           knowing the security staff level at their museums is important for
           several reasons, such as knowing which galleries do not have
           sufficient protection from vandalism and limiting response time to
           emergencies. For example, one director stated he once went to
           report an emergency to a security officer at an established post.
           However, when he got to the post, the security officer was absent,
           and the director had to search for an alternate security officer.
           The director stated that had he known that security officer levels
           were down that day, he could have directly reported this emergency
           to a post where he knew an officer was on duty, which would have
           reduced the emergency response time.

           Also, some museum and facility directors stated that they do not
           know when security upgrades are being installed at their
           facilities. According to one museum director, about 1 year ago,
           contractors working for OPS arrived at the museum without any
           prior communication with the museum staff--including the museum's
           director or the assistant director of protection services--to
           begin work installing a key card access system. Staff were not
           supplied with key cards or trained in the use of the new system;
           as a result, once the system was installed, they were denied
           access to critical areas of the building, such as offices and
           collection storage areas.
			  
			  Due to Funding Constraints, Some Museum and Facility Directors
			  Cite Insufficient Number of Security Staff to Protect Assets

           Funding constraints have also been a challenge to the
           Smithsonian's security efforts, according to museum and facility
           directors, some of whom stated that, in the absence of more
           security officers, some cases of vandalism and theft have
           occurred. According to OPS, 35 cases of vandalism were reported
           from January 2005 through August 2007. OPS officials stated that
           funding constraints have affected its ability to retain and
           recruit security officers. Following September 11, 2001, the
           Smithsonian's security costs significantly increased as a result
           of the mitigation recommendations of the 2002 Composite Risk
           Assessment.

           The Smithsonian's security efforts are funded entirely through
           federal funds.^23 Smithsonian obligations for security have
           increased since September 11, 2001--from $37 million in 2001 to a
           high of $67 million in 2006--but certain needs have gone
           unaddressed. For example, since 1999, the Smithsonian has
           identified $31.3 million in projects for its security system
           modernization program--which involves upgrading and integrating
           security capabilities across the organization--and thus far has
           received $17.6 million to complete security upgrades, such as CCTV
           and key card access systems. As a result, the Smithsonian has
           implemented some of these security systems upgrades at some
           facilities, but other facilities have not yet received the
           necessary funds to do so. Furthermore, the Smithsonian is still
           working on implementing blast and perimeter security projects,
           which were mitigation recommendations from its all-hazards risk
           assessment report. Completion of these projects depends on the
           availability of funds. Smithsonian officials noted that security
           projects compete with maintenance needs for facilities' funds.
           Therefore, the limited overall funds for these issues force a
           balancing of priorities in both areas, sometimes against one
           another.
			  
^23According to Smithsonian officials, it is the position of the
Smithsonian that the security of facilities is a federal responsibility,
based on an historical understanding as well as accepted practice among
federal entities. While Congress does appropriate funds every year for
security expenses, the Smithsonian could raise additional revenue or use
unrestricted trust funds for its security expenses.

           In addition, the number of Smithsonian security officers has been
           reduced steadily since May 2003, even as the Smithsonian's square
           footage has increased due to new museums being opened. As a
           result, there have been fewer officers and other security staff to
           cover more space. For example, from May 2003 to May 2007, 6 out of
           10 museums and facilities for which the Smithsonian provided data
           experienced a reduction in the number of security officers
           assigned to the facility; the reductions ranged from 4 percent to
           41 percent (see fig. 12). Smithsonian officials noted that some
           museums experienced a decrease in visitation during some of these
           years, and that OPS increased the use of technological security
           equipment, such as alarms and cameras, during this time.
			  
Figure 12: Security Officer Levels at Smithsonian Institution Museums and
Facilities, 2003 Compared with 2007

Note: Based on the data provided by the Smithsonian, we could compare 2003
levels to 2007 levels only for these 10 museums because some museums were
closed or opened between 2003 and 2007. For example, the Museum of
American History was closed for renovation in 2006 and will reopen in the
summer of 2008; therefore, its security staff was reduced from 2003
levels. The Museum of the American Indian opened to the public in 2004. In
addition, the National Air and Space Museum Stephen F. Udvar-Hazy Center
Phase I has contract security officers overseen by two OPS officers.

Five of the 10 Smithsonian facilities shown in figure 12 experienced
security officer reductions of 25 percent or more. For example, the
Smithsonian American Art Museum's Renwick Gallery experienced a 41 percent
reduction in security officers since 2003. In addition, the security
officer levels decreased significantly at both the Smithsonian Quadrangle
(25 percent) and the Cultural Resources Center (28 percent). Some of the
Smithsonian's most visited and largest facilities have experienced the
greatest reductions in security officers. The Air and Space Museum, which
contains 663,170 square feet, and the Museum of Natural History, which
contains 1.98 million square feet, both experienced a 31 percent reduction
in security officers in 2007 compared with 2003.

Additionally, attendance has increased recently at many of the museums,
intensifying the demands on the reduced security staff. Moreover, these
reductions in the numbers of security staff at museums and facilities
occurred even though the Smithsonian had one or more facilities closed for
renovations during this time, and OPS assigned some security officers from
the closed facility to other facilities. In the future, when the
Smithsonian has all of its facilities open, the need for security officers
will increase. For example, the Museum of American History currently is
closed to the public; as a result, 28 of its security officers are
temporarily reassigned to various museums. Smithsonian officials stated
that when the Museum of American History reopens, those 28 officers will
return to the Museum of American History, leading to vacancies at the
Museum of the American Indian and the Portrait Gallery.

All museum and facility directors we spoke with stated that the security
officer levels at their facilities are inadequate. Some museum and
facility directors stated that some of the galleries that used to have
several security officers have been reduced to sharing one security
officer with other galleries, resulting in too much square footage having
to be protected by one officer. Another facility director stated that
security alarms go off frequently and that a security officer is not
available to check the validity of the alarm because the facility does not
have an adequate amount of security officers. Moreover, one museum did not
have enough security officers for 2 days to staff the museum's main
entrance, resulting in the main entrance being closed. The museum was
still open to the public through the lower-level staff entrance; however,
the director of this facility stated that the closed main entrance
deterred many people from entering. Also, museum and facility directors at
other facilities stated they have strongly considered temporarily closing
galleries due to an inadequate level of security officers needed to
properly protect collections. Lastly, two museum directors stated that it
has become more difficult for them to acquire collections on loan because
lenders have expressed concern with the lack of protection.

Some of the Smithsonian's museum directors stated that insufficient
numbers of security officers contributed to some cases of vandalism and
theft. For example, one museum director stated that on or before November
2006, several mammalian fossils were stolen from an exhibit, and damage to
dinosaur exhibits has periodically occurred from visitors throwing water
bottles and other objects at them. Three other museum directors stated
that their museums have experienced increased rates of vandalism due to
the lack of security officers patrolling the galleries. At one museum, for
example, an object that resembles a telephone booth was continually
vandalized by visitors who would write on the exhibit. The vandalism
stopped when the museum convinced OPS to install a camera near the object.
In the same museum, visitors have in some instances spit on or kissed a
few pieces of artwork in the building. According to an OPS official, the
Smithsonian started a new program in the summer of 2007, in which college
students were hired as gallery attendants. The program places gallery
attendants in exhibits that cannot be manned by security guards. The
gallery attendants do not wear uniforms or fulfill any security officer
duties; however, they wear uniform polo shirts so they are easily
recognizable by the public and serve as additional eyes and ears for the
security officers.

In addition to having insufficient numbers of security officers, according
to a Smithsonian official, funding constraints have affected the
Smithsonian's ability to recruit and retain security officers, who are
able to find higher paying jobs at other federal agencies. According to
Smithsonian officials, officer attrition has increased every year since
2003. Smithsonian officials stated that after they invest in the training
of their security officers, many of them leave for federal agencies, such
as the Department of Defense, that can hire officers at a higher pay
grade. The Smithsonian's experience is not unique: as we reported in 2003,
more than 300 federal law enforcement officers in the Washington, D.C.,
area left their jobs to join the Transportation Security Administration
during fiscal 2002, which was able to offer air marshal recruits higher
compensation and more flexible benefit packages than many other federal
police forces.^24 After September 11, 2001, the Smithsonian attempted to
address this problem by increasing its entry level security officer pay
grade from a General Schedule-4 to General Schedule-5. However, according
to Smithsonian officials, this pay grade increase has been insufficient to
compete with other agencies and localities. OPS submitted a request
through its budget process to upgrade all entry level security officers to
a General Schedule-6 pay grade starting in fiscal year 2004, but the
request was denied by Smithsonian management due to inadequate funds in
the Smithsonian budget and higher internal budget priorities.

^24GAO, Federal Law Enforcement: Selected Issues in Human Capital
Management, [41]GAO-03-1034T (Washington D.C.: July 23, 2003).

The Smithsonian Has Taken Steps to Improve Real Property Portfolio Management
but Faces Challenges Related to Funding Constraints and Its Capital Plan

Faced with deteriorating facilities and an increased cost estimate for
facilities projects, the Smithsonian has taken steps to improve the
management of its real property portfolio but faces challenges related to
funding constraints and its capital plan. Several factors, such as
historic preservation requirements, affect the Smithsonian's efforts to
manage its real property portfolio within funding constraints. The
Smithsonian has taken steps to improve its real property portfolio
management that incorporate the administration's real property guidance.
These include improving real property data and developing performance
measures on, for example, facility condition and customer satisfaction. In
addition, the Smithsonian has taken steps to improve its capital planning
process, which is also an important part of real property portfolio
management. However, funding constraints have presented considerable
challenges, and, while OFEO has worked to justify an increase in federal
funding for facilities, the Smithsonian's capital plan omits privately
funded projects. Although information on the scope and funding of
privately funded projects is provided to stakeholders in other documents,
the lack of this information in the capital plan has limited the ability
of the Smithsonian and other stakeholders to comprehensively assess the
funding and scope of facilities projects.

Several Factors Affect the Smithsonian's Real Property Management Efforts

Several factors affect the Smithsonian's efforts to manage its real
property portfolio within funding constraints. As previously discussed,
the condition of many of the Smithsonian's facilities is deteriorating. In
addition, according to Smithsonian officials, many of the Smithsonian's
buildings are either historic or signature buildings, which can increase
the cost of revitalization or construction projects. Smithsonian officials
stated that, by law, the Smithsonian is required to comply with historical
preservation requirements and that preserving the historical character of
its facilities is in the interest of the public and Congress. Smithsonian
officials stated that the National Capital Planning Commission closely
monitors the Smithsonian's compliance with historical preservation
guidance.^25 As such, the Smithsonian's revitalization of historic
buildings has included restoring historical elements that have increased
the costs of these projects. For example, according to Smithsonian
officials, the Reynolds Center revitalization included replacing windows
with historically appropriate glass and replacing a ruined tile floor with
matching tile that had to be imported from England. OFEO officials stated
that they do not consider these decisions to be choices given the legal
requirements necessitated by historic preservation laws and regulations.

In addition, according to OFEO officials, when the Smithsonian is mandated
by Congress to build new museums, particularly when they are on the
National Mall or other prominent locations, the buildings, such as the
Museum of the American Indian, are considered signature or landmark
buildings and often have architectural elements that require innovative,
creative, and sometimes expensive architectural and engineering
techniques. This can increase not only the costs and difficulty of
constructing these buildings but also the cost and difficulty of
maintaining them after construction. However, OFEO officials stated that
the Smithsonian strives to fulfill the architect's vision since
stakeholders, including Congress and the public, expect these buildings to
be landmarks.

Another factor that affects the Smithsonian's efforts to manage its real
property portfolio within funding constraints is the number of its
facilities. Although the Smithsonian has disposed of a few facilities in
recent years, as discussed below, OFEO officials stated that the
Smithsonian considers its remaining facilities, in particular its museums
and research centers, as central to its mission and, therefore, worthy of
care and protection. According to OFEO officials, many Smithsonian units
were created by statute or restricted gift, and the Smithsonian is legally
limited in the kinds of decisions it can make about some of its
facilities. In April 2001, the Smithsonian proposed closing the National
Zoo's Conservation and Research Center in Front Royal, Virginia, but this
proposal generated considerable opposition and was abandoned. In recent
years, the Smithsonian's appropriations acts have included language
prohibiting the Smithsonian from using federally appropriated funds to
close facilities related to existing Smithsonian science programs without
the approval by the House and Senate Committees on Appropriations.^26

^25The National Historic Preservation Act (NHPA) requires federal agencies
to consider the effect of their actions on historic properties and to
undertake planning and actions necessary to minimize harm to the historic
property. The Smithsonian Facilities Authorization Act of 2003, 20 U.S.C.
S 75b note, states that in carrying out projects in the District of
Columbia that are subject to the review and approval of the National
Capital Planning commission, the Smithsonian Institution shall be deemed
to be an agency for purposes of compliance with regulations promulgated by
the Advisory Council on Historic Preservation pursuant to section 106 of
the NHPA. The standards require owners to maintain the original structure,
fabric, and character of the site (both interior and exterior) when making
additions or upgrades.

The Smithsonian Has Taken Steps to Improve Its Real Property Portfolio
Management and Incorporate Real Property Guidance

Faced with deteriorating facilities and an increased cost estimate for
facilities projects, the Smithsonian has continued to build on efforts to
improve its real property portfolio management that started in fiscal year
2001, when it began to centralize its facilities management in response to
NAPA's recommendations and its own internal review. In our 2005 report, we
found that in reorganizing its facilities management under OFEO, the
Smithsonian was incorporating recognized industry best practices so that
its resources would go as far as possible toward addressing its rapidly
growing revitalization, construction, and maintenance workload. Since
then, OFEO has continued some of these efforts as well as implemented new
ones. Specifically, OFEO has made significant strides in real property
guidance, real property data inventory, maintaining the Smithsonian's real
property at the right size and cost, facilities maintenance, and the
development and use of performance measures. Many of these steps
incorporate the administration's real property guidance.

The Smithsonian's steps to improve its guidance on real property
management are consistent with a goal of the real property initiative to
systematize agency procedures and actions related to asset management
through the development of an asset management plan. Since 2005, OFEO
finalized and put into effect its first Operations and Maintenance
Handbook and revised its Facilities Project Management Handbook to
streamline and update its content. These handbooks define the
Smithsonian's policies and procedures related to their respective
subjects, and OFEO officials told us they are in effect throughout the
Smithsonian. In addition, the Smithsonian has had a directive on real
estate asset management in effect since May 1, 2003, which establishes
policy for managing real estate assets. It is in the process of revising
this directive. According to OFEO officials, OFEO is also developing a
real estate management handbook that will articulate the Smithsonian's
policies related to real property acquisitions and disposals, among other
things. OFEO has also used a space utilization guide it developed in 2003
to standardize the amount of space given to areas such as offices and
conference rooms during new construction and new leases, and as it
reconfigures space during revitalizations.^27

26This prohibition was included in the Smithsonian's appropriations acts
for fiscal years 2005 and 2006. (Public Law 108-447, 118 Stat, 3089
(2004); Public Law 109-54, 119 Stat. 545 (2005). The Smithsonian's
appropriations acts for fiscal years 2002 through 2004 contained a similar
prohibition, except that for these years, approval to close such
facilities was required from the Smithsonian's Board of Regents acting on
recommendations from the Science Commission rather than from the House and
Senate Committees on Appropriations. (Public Law 107-63, 115 Stat. 461
(2001); Public Law 108-7,117 Stat. 11 (2003); Public Law 108-108; 117
Stat. 1298 (2003).

The Smithsonian has also recognized the importance of the real property
initiative's goal of a complete and accurate inventory of all constructed
assets to help with decision making. As part of the real property
initiative, the Federal Real Property Council (FRPC) identified and
defined 24 data elements that must be captured and reported by the 15
largest federal landholding agencies.^28 Although the Smithsonian is not
required to capture or report this data, the Smithsonian has developed a
database to do so. As of August, 15, 2007, a majority of the database was
complete, and the Smithsonian was continuing to add data to it. For
example, 80 percent of the data on the element of size was included in the
database, and according to Smithsonian officials, the missing data on size
were mostly for outlying and miscellaneous spaces that it will include
when reasonably available. Four of the 24 data elements established by the
FRPC are performance measures--utilization, condition index, mission
dependency, and annual operating and maintenance costs. Smithsonian
officials stated that the Smithsonian was currently in the process of
inputting the data on condition index, mission dependency, and annual
operating and maintenance costs into the database and that it planned to
include data on utilization by the end of fiscal year 2008.

OFEO has also taken steps to maintain the Smithsonian's real property
inventory at the right size and cost to meet the Smithsonian's mission.
For example, although OFEO officials described the Smithsonian's real
estate portfolio as stable and said there is little opportunity for
disposing of facilities, according to Smithsonian officials, since 2005,
OFEO spearheaded the disposal of the only three owned buildings that the
Smithsonian has disposed of in the past 20 years. According to Smithsonian
officials, these disposal decisions were made to eliminate unneeded space
or reduce costs, as shown in table 1.

^27OFEO officials stated that they are not attempting to reconfigure
spaces that are not being renovated to meet the space guidelines, as this
is not a high priority, but that moving forward, renovations of existing
space will incorporate these guidelines.

^28In addition to the performance measures, the 24 data elements include
elements designed to identify the property and describe the property's
type, use, status, size, value, and restrictions.

Table 1: Buildings Disposed of by the Smithsonian Since 2005, Including
Elements of Decision and Proceeds, as Described by Smithsonian Officials

                          Key elements of disposal                            
Building and purpose   decision                       Date and proceeds    
Bronx, New York,       No need for these warehouses   Sold in April 2005,  
warehouses used to     once these collections were    with proceeds of     
hold collections for   moved to the National Museum   $11.1 million, which 
the Museum of the      of the American Indian and the went to the          
American Indian        Conservation Research Center   Smithsonian trust    
                          in Suitland, Maryland.         and debt related to  
                                                         construction of      
                                                         National Museum of   
                                                         the American Indian. 
Victor Building in     Revitalization of area where   Sold in November     
Penn Quarter area of   building is located had        2005 with proceeds   
Washington, D.C., near increased the building's       of $59 million,      
the National Mall,     value; the Smithsonian         which went towards   
used for               determined it could reduce its relocating occupants 
administrative offices overall debt by selling,       to leased space and  
                          moving many of its offices to  to the Smithsonian   
                          more cost-effective real       trust.^a             
                          estate, and leasing back two                        
                          floors.                                             
Cinderbed Road         The Smithsonian determined     Sold in November     
warehouse in Virginia  that the building should be    2005 with proceeds   
used for collections   sold for a number of reasons,  of $8.7 million,     
storage                including its lack of          which went to the    
                          suitability for collections    Smithsonian trust.   
                          storage and the chance to                           
                          maximize its underlying                             
                          monetary value. The property                        
                          was not fully utilized and                          
                          more cost-efficient locations                       
                          were available. As a                                
                          short-term solution, the                            
                          Smithsonian leased back 50                          
                          percent of the building until                       
                          it consolidates the                                 
                          collections currently in this                       
                          warehouse into new leased                           
                          space, at which point it will                       
                          vacate the property.                                

Source: Smithsonian Institution.

aRegarding the proceeds from the Victor building, according to Smithsonian
officials, per instruction from the Smithsonian's auditor, the proceeds
from this sale were counted as cash in the Smithsonian's short-term
portfolio and must be recognized at a rate of $4 million per year.

OFEO has also taken steps to improve the maintenance of its facilities. In
2005, we reported that OFEO identified and prioritized maintenance
projects in conjunction with the museums and other facility groups by
taking into account customer input; annual safety, health, and
environmental inspections; code and regulatory requirements; and facility
assessments. Since that time, it has made its prioritization process for
maintenance projects more formal by establishing a 5-year maintenance plan
in which maintenance projects are prioritized using the same matrix OFEO
developed for capital projects.^29 OFEO also has been instituting a
maintenance and inspection process called reliability centered maintenance
(RCM) in an attempt to maximize the effectiveness of its maintenance
resources. This process uses a combination of time-based actions,
preventive maintenance, and run-to-failure approaches to reach the most
cost-effective approach. OFEO officials stated that as part of this
process, they completed an asset inventory and bar coding of all critical
equipment and are in the process of inputting this information into a
database that will produce work plans associated with each maintainable
asset using RCM technology. The goals are that the system will ensure that
predictive and preventive maintenance tasks are generated and performed
for these assets, will contain historical cost and repair information
about these assets, and will track the scheduling and completion of
maintenance activities. They stated that the system will provide much more
empirical data to make decisions with but that staff will need to be
trained and become comfortable with using the system. They expect it to
take 1 year before the system's data are fully accurate and useful.

OFEO has also taken significant steps to develop and use performance
metrics to monitor the effectiveness of its real property management
efforts and help with decision making, which is also highlighted in the
real property management initiative. OFEO has developed over 30 metrics
that OFEO's director monitors monthly in order to benchmark with other
organizations and spot possible problem areas. OFEO's metrics cover
capital planning, project management, maintenance, customer satisfaction,
worker safety statistics, and other areas. The director of OFEO requires
staff to report on these metrics each month; the director then compiles
the results and discusses them with Smithsonian leadership at a monthly
meeting. According to Smithsonian officials, the monthly results of the
metrics are also posted on the Smithsonian's intranet so that stakeholders
throughout the institution can stay informed.

Furthermore, OFEO has taken steps to improve its communications with
museum and facility directors. OFEO holds regular meetings with museum and
other facilities' directors in order to discuss and attempt to resolve any
issues. OFEO also uses customer surveys to elicit feedback on maintenance
and repair efforts, and it includes the results of these surveys as one of
its metrics. All of the directors of museums and other facilities we spoke
with said that OFEO communicates well with them. Several of the directors
of museums and other facilities who were not satisfied with OFEO's
customer service when we spoke with them for our 2005 report said that
OFEO's customer service had improved significantly since then.

^29Under OFEO's prioritization matrix, each project is assigned one of
four condition levels (catastrophic, critical, routine, and can defer) and
one of five project types (shell/system failure, code compliance/security,
nonroutine capital repairs, energy/operational efficiency, and
alternations and modifications). This assignment determines the project's
priority code, which may be from one (top priority for the budget year in
which funding is sought) to five (lowest priority).

Smithsonian's Capital Planning Process Incorporates Many Capital Planning
Principles

The Smithsonian has also taken steps to improve its real property
portfolio management by refining elements of its capital planning process,
which incorporates many capital planning principles as defined by our
prior work and OMB.^30 According to our prior work, effective capital
planning has clear implications for strategic real property management
because it can help agencies make the most of limited resources. A number
of laws enacted in the 1990s placed increased emphasis on improving
capital decision-making practices, and OMB's Capital Programming Guide has
attempted to address the government's shortcomings in this area.^31 In
recent work, we identified five key capital planning principles contained
in our and OMB's guidance. These principles are strategic linkage, needs
assessment and gap identification, alternatives evaluation, a review and
approval framework with established criteria for selecting capital
investments, and a long-term capital investment plan. The Smithsonian's
capital planning process incorporates elements of each of these
principles.

The Smithsonian's strategic planning and capital planning materials, such
as its current strategic plan, performance plan, and annual goals,
articulate strategic linkage between the Smithsonian's mission and the
Smithsonian's vision for capital planning. Moreover, there is a clear link
between the Smithsonian's vision for facilities expressed in these
documents and the Smithsonian's 5-year capital plan.

^30GAO, Federal Capital: Three Entities' Implementation of Capital
Planning Principles Is Mixed, [42]GAO-07-274 (Washington, D.C.: Feb. 23,
2007); GAO, Executive Guide: Leading Practices in Capital Decision-Making,
[43]GAO/AIMD-99-32 (Washington, D.C.: December 1998); OMB, Capital
Programming Guide (Version 2.0) Supplement to OMB Circular A-11, part 7:
Planning, Budgeting, and Acquisition of Capital Assets (Washington, D.C.,
June 2006).

^31OMB's revisions to Circular A-11 also attempt to address the
government's shortcomings in capital planning.

Regarding needs assessment and gap identification, the Smithsonian's
capital planning decision-making process is guided by a comprehensive
assessment of facilities' conditions and needs and the identification of
performance gaps between current and needed capabilities. This effort to
assess needs and identify performance gaps is informed by two processes:
facilities condition assessments and master planning. According to OFEO
officials, in July 2006, OFEO implemented a new system to conduct
condition assessments in order to be able to update its condition
assessments for all of its facilities annually. This system includes a
visual assessment and rating of the major building systems of each
facility to determine the costs of its deferred maintenance. OFEO expects
to have assessed all of its facilities under this system by August 2007.
In addition, during this process, OFEO has updated the current replacement
value of each facility and has found that the aggregate replacement value
for Smithsonian facilities is $4.7 billion.^32 It is also calculating each
facility's facility condition index, which is a ratio comparing a
facility's current replacement value to its deferred maintenance costs
that allows the Smithsonian to objectively compare its facilities to each
other and benchmark the condition of its facilities with other facilities
in order to assist in prioritization and decision making.

OFEO also uses facilities' master plans to help assess facilities projects
and identify gaps between current and needed capabilities. Currently, some
of the Smithsonian's owned facilities have ongoing or completed master
plans, and the Smithsonian plans to develop master plans for the rest of
its owned facilities by fiscal year 2015. Master plans for facilities such
as the Museum of American History include information on the current
condition of the facility, including deficiencies, a plan for correcting
these deficiencies, and a vision for improving the facility's space in
order to enhance the facility's ability to meet its mission. According to
OFEO officials, when a facility has an ongoing or completed master plan,
the master plan informs the development of projects for the Smithsonian's
capital plan. According to Smithsonian officials, facilities' master plans
also incorporate alternatives evaluation by considering several
alternative ways to meet a facility's defined mission.

As we reported in 2005, the Smithsonian's capital planning efforts also
include a review and approval framework with established criteria for
selecting capital investments and a long-term capital investment plan.
Each year, OFEO, working with the museums and other facility groups,
develops an annual list of new and previously submitted projects, which
are prioritized for inclusion in the annual 5-year capital plan using a
prioritization matrix previously described in conjunction with the
Smithsonian's 5-year maintenance plan. OFEO officials stated that they
have refined this process in recent years. For example, according to OFEO
officials, the discussions with the museums and research institutes now
include the maintenance program as well as the capital program to ensure
that all issues in each facility are taken care of in one of the programs.
After the capital plan has been revised to reflect any new projects or
changes in priorities, the updated capital plan is reviewed by the
Smithsonian's Capital Planning Board^33 and the Secretary of the
Smithsonian. After any revisions are made, the Board of Regents approves
the Smithsonian's capital plan as part of the Smithsonian's annual budget
submission to OMB, and then the entire budget submission is sent to OMB.

^32According to Smithsonian officials, this amount is undergoing
additional review and may increase following the addition of more
buildings to the equation.

Funding Constraints Have Presented Considerable Challenges

In spite of OFEO's efforts to effectively manage its real property
portfolio within funding constraints, these constraints have presented
considerable challenges. OFEO has not had sufficient federal funds to
address all of the facilities projects identified in its current estimate
of about $2.5 billion from fiscal year 2005 to year 2013, which comes to
an average of about $278 million annually. As shown in table 2, annual
federal capital and maintenance appropriations for Smithsonian facilities
in recent years have been considerably below $278 million.

^33The Smithsonian's Capital Planning Board is made up of the chief
financial officer (chairperson); deputy secretary and chief operating
officer; under secretaries for Science and Art; chief executive officer of
Business Ventures; chief information officer; general counsel; director of
Policy and Analysis; and OFEO director.

Table 2: Smithsonian Institution Facilities Capital and Maintenance
Appropriations, Fiscal Years 2002-2007

Dollars in millions                                                        
               Facilities capital                                             
Fiscal year      appropriation Facilities maintenance appropriation  Total 
2002                     $97.9                                $14.5 $112.4 
2003                      98.8                                 17.0  115.8 
2004                     107.6                                 39.6  147.2 
2005                     126.1                                 38.2  164.3 
2006                      98.5                                 45.0  143.5 
2007                      98.6                                 51.3  149.9 
Total                   $627.5                               $205.6 $833.1 

Source: Smithsonian Institution.

Note: According to Smithsonian officials, the facilities maintenance
appropriations for fiscal years 2002 and 2003 reflect the proportion of
the total salaries and expenses appropriation that went toward OFEO's
maintenance budget. However, these numbers do not reflect the total funds
used for maintenance by the Smithsonian for those years because some
maintenance was funded through individual facilities' budgets rather than
through OFEO's budget. Starting in fiscal year 2004, all facilities
maintenance was funded through OFEO's maintenance budget, and the
Smithsonian's maintenance appropriation reflected a line item in the
Smithsonian's budget justification request to Congress.

Funding constraints have reduced OFEO's ability to implement and complete
capital projects to address long-standing problems with facilities, such
as those described earlier in this report. The majority of museum and
facility directors stated that they think OFEO does a good job of
prioritizing and addressing problems with the amount of funds available,
and, as discussed previously, some of the major facilities problems they
identified to us are scheduled to be addressed in the next several years.
For example, the electrical systems at the Air and Space Museum are
scheduled to be replaced in fiscal years 2007 through 2010.

However, Smithsonian officials stated that, generally, funding is
available only for top-priority revitalization and emergency maintenance
projects. As a result, some high-priority repairs have been put on hold
while major revitalizations, such as the revitalization of the Reynolds
Center, are completed. According to OFEO officials, the Reynolds Center
revitalization became a top priority because the building was in such poor
condition that it would have become unusable without a major
revitalization. An OFEO official stated that prior to the revitalization,
due to problems with the facility's systems, the water was undrinkable and
there were incidents of bursting valves. Several museum and facility
directors expressed frustration that projects at their facilities had been
delayed. For example, the director of the Freer and Sackler Galleries
expressed frustration that fixing the Quadrangle's condensate system,
which threatens collections and has been a problem since 1993, was
originally in the capital plan to be fixed in fiscal year 2006 but was
delayed until fiscal year 2007 because of a lack of funding.

Funding constraints for facilities maintenance have also limited OFEO's
ability to implement its 5-year maintenance plan. OFEO officials stated
that current funding enables the execution of only about 30 percent of its
maintenance plan. As a result, OFEO is never able to get past the
top-priority maintenance projects in the plan to complete other important
maintenance projects. According to OFEO officials, a lack of sufficient
funds for maintenance has limited their ability to optimally maintain
their equipment, leading to more expensive failures later on and to
systems that need to be replaced--and thus end up in the capital
program--sooner than they might otherwise be.

Some museum and facility directors described reservations about the
centralization of facilities management under OFEO related to funding
constraints and maintenance issues. About half of the museum and facility
directors we spoke with were satisfied with OFEO's centralized facilities
management approach, and some noted that OFEO has brought a higher degree
of professionalism to the Smithsonian's real property management
activities. However, several museum and facility directors who were less
satisfied with OFEO's centralized facilities management approach cited a
neglect of day-to-day maintenance due to a lack of staffing and funding or
greater difficulty getting facilities funds to pay for small maintenance
or repair projects.

OFEO officials have attempted to get 2 percent of the Smithsonian's
facilities' current replacement value for the maintenance budget--which is
almost entirely federally funded--but they have not been able to do so.
According to the National Research Council, an industry group, a
maintenance budget of 2 percent to 4 percent of current replacement value
is recommended to meet the appropriate maintenance requirements of
facilities. Although the Smithsonian's maintenance appropriation increased
in fiscal year 2007, it represented a maintenance budget of 1 percent of
current replacement value.

The Smithsonian's Omission of Private Funds from Its Capital Plan Has Made It
Challenging for Stakeholders to Assess the Funding and Scope of Projects

The Smithsonian's omission of privately funded facilities projects from
its capital plan has added to its challenges in managing real property by
reducing the ability of the Smithsonian and other stakeholders to
comprehensively assess the funding and scope of facilities projects.
According to OFEO officials, OFEO's efforts related to securing increased
funds for facilities have centered on more effectively justifying to
Congress the need for an increase in federal funds for facilities.
According to OFEO officials, developing a funding strategy that goes
beyond federal funding is a matter for the Board of Regents to determine.

At the same time, while the Smithsonian has received private funds for
facilities projects through donations, the Smithsonian has omitted
privately funded projects from its capital plan. As discussed earlier in
this report, it also has not included privately funded projects in its
updated cost estimate of $2.5 billion for facilities projects through
fiscal year 2013. Its capital plan and cost estimate therefore lack
comprehensiveness and transparency and do not effectively communicate all
of the Smithsonian's scope and funding priorities to the Board of Regents,
OMB, and Congress in a way that could be helpful to considering funding
strategies that go beyond federal funding.^34 In prior work, we have
identified comprehensiveness as an important element of agencies'
long-term capital plans.

The Smithsonian includes information on the scope and funding of privately
funded projects in other documents that are provided to stakeholders, such
as the capital asset plans (Exhibit 300s) required to be submitted to OMB
for each major new and ongoing project. However, a Smithsonian official
described the capital plan as the primary document that defines the
Smithsonian's long-term capital strategy, and the Smithsonian has used its
cost estimate for facilities projects through 2013 to describe its
long-term funding needs for facilities to Congress and other stakeholders.
These two documents are therefore key places where the Smithsonian lays
out its overall facilities needs and its strategy for addressing those
needs. As a result, even though information on privately funded projects
is detailed elsewhere, the lack of such information in these documents
limits the ability of the Smithsonian and other stakeholders to
comprehensively assess the funding and scope of facilities projects in the
context of the Smithsonian's overall facilities' strategy--and
de-emphasizes the existing and potential role of private funding in this
strategy.

^34The Smithsonian submits its 5-year capital plan to Congress as part of
its annual budget justification. In recent work on capital planning, in
2007, we provided a matter for congressional consideration that Congress
require agencies to develop comprehensive, long-term capital plans and
submit them for congressional review in order to ensure that Congress is
receiving the capital planning information it needs to make informed
decisions. See [44]GAO-07-274 .

The omission of privately funded projects from these documents is
particularly noteworthy because in recent years, private funds have played
an important role in funding some of the Smithsonian's highest-priority
construction and revitalization projects. According to Smithsonian
officials, in fiscal years 2002 through 2007, the Smithsonian spent $393.4
million in private funds for capital and revitalization projects, as shown
in table 3.

Table 3: Funding and Total Cost of Smithsonian Capital Projects That Have
Received Private Funds for Capital Costs, Fiscal Years 2002-2007

Dollars in                                                                 
millions                                                                   
                       Private funds for                                      
                      capital costs (new    Federal funds for capital   Total 
                        construction and  costs (new construction and capital 
Capital project         enhancements)              revitalization)   costs 
National Museum of                                                         
the American                                                               
Indian                            $80                       $119.3  $199.3 
National Air and                                                           
Space Museum Steve                                                         
F. Udvar-Hazy                                                              
Center, Phase I                 176.3                          8.7     185 
National Air and                                                           
Space Museum Steve                                                         
F. Udvar-Hazy                                                              
Center, Phase II                  3.7                            0     3.7 
National Museum of                                                         
American History                 39.2                         50.7    89.9 
National                                                                   
Zoological Park                  22.2                         80.9   103.1 
Donald W. Reynolds                                                         
Center                             72                          166     238 
Total                          $393.4                       $425.6    $819 

Source: Smithsonian Institution.

These private funds have been important in supplementing the Smithsonian's
federal capital appropriations for facilities projects during this time
period. For fiscal years 2002 through 2007, the Smithsonian received
$627.5 million in federal capital appropriations, as shown previously in
table 2. Therefore, altogether, the Smithsonian's funds for capital
projects from fiscal years 2002 through 2007 was slightly over $1 billion
($393.4 million in private funds, used for new construction and
enhancements, and $627.5 million in federal appropriations, used for new
construction and revitalization). Private funds therefore made up 39
percent of its capital funds for facilities during these years.

Smithsonian officials stated that, generally, donors require that their
gifts be used toward new construction or enhancements that are part of
larger revitalizations, and that the majority of these private funds were
donated for the construction of new facilities--namely, the Museum of the
American Indian and the Udvar-Hazy Center. Smithsonian officials also
stated that there is no assurance that private funds would continue to
make up the same percentage of the Smithsonian's total funds for capital
projects in future years.

Other organizations we visited include both private and public investments
in their capital plans to inform their stakeholders about the scope of
projects and the extent of such partnerships used to fund capital needs.
According to a senior vice president at the American Museum of Natural
History in New York, describing the entire project and projected sources
of income to the city of New York in the capital plan helps the museum
make its case with the city and fosters a positive relationship. The
official also stated that including the entire project in the capital plan
can help show donors both the programmatic link to the museum's capital
requests and the support expected by the city, which can help with the
museum's private fund raising.

Smithsonian officials stated that they do not project future private funds
in the capital plan because of the uncertainty of what these amounts will
be. In contrast, the University of California acknowledges this
uncertainty in its capital plan but, nevertheless, includes privately as
well as publicly funded projects in its plan, along with tentative
projections and strategies for meeting those projections. It states, for
example, that the Berkeley campus seeks funds for capital construction
through targeted campaigns. In addition, the University of California
distinguishes in the plan between privately funded projects the campus is
committed to moving forward on in the 5-year period and privately funded
projects it would move forward on only when funds are available--while
including information on both. The lack of such information in the
Smithsonian's capital plan de-emphasizes the potential for private funds
to help address facilities projects and makes the capital plan less
comprehensive in describing the scope of planned projects at the
Smithsonian's facilities.

The Smithsonian Has Taken Some Steps to Develop and Implement Funding
Strategies, but Its Evaluation of Proposed Alternatives Has Been Limited

The Smithsonian Board of Regents has taken some steps to address our April
2005 recommendation to develop and implement a strategic funding plan to
address its facilities projects. The Board of Regents created an ad-hoc
committee, which, after reviewing nine funding options, requested an
increase of $100 million in its federal appropriations, but the success of
this strategy is uncertain. We found that some of the Smithsonian's
evaluations of the other eight funding options were limited in that they
did not always provide complete analysis, fully explain specific
assumptions, or benchmark with other organizations. Also, the evaluations
do not consider combining options in order to increase the amount of
revenue generated.

To Address Our Recommendation, the Smithsonian Requested an Increase of $100
Million in Its Federal Appropriations, but the Success of This Strategy Is
Uncertain

The Board of Regents has taken some steps to address our recommendation to
develop and implement a strategic funding plan to address the
Smithsonian's facilities projects. In June 2005, the Board of Regents
established the ad-hoc Committee on Facilities Revitalization to explore
options to address the Smithsonian's April 2005 estimated $2.3 billion for
facilities revitalization, construction, and maintenance projects through
fiscal year 2013.^35 In September 2005, the ad-hoc committee held a
meeting, at which it reviewed nine funding options that had been prepared
by Smithsonian management for addressing this estimated funding need. The
nine options are briefly described in table 4.

^35According to a Smithsonian official, at its June 2007 meeting, the
board approved that the ad-hoc Committee on Facilities Revitalization
become a standing committee.

Table 4: Nine Funding Options Evaluated by the Ad-Hoc Committee on
Facilities Revitalization

Funding option             Description                                     
Federal income tax         Federal income tax returns would include a      
check-off contribution     check-off box to allow taxpayers to designate   
                              some of their tax liability to a special fund   
                              for the Smithsonian's facilities.               
Heritage treasures excise  An excise tax would be created, and possibly    
tax                        levied on local hotel bills, to generate funds  
                              for the Smithsonian's facilities.               
National fund-raising      The Smithsonian would launch a national         
campaign                   campaign to raise funds for its facilities.     
General admission fee      The Smithsonian would institute a general       
program                    admission charge to raise funds for critical    
                              but unfunded requirements.                      
Special exhibition fee     The Smithsonian would charge visitors to attend 
program                    a select number of special exhibitions as a     
                              means to raise funds to meet critical but       
                              unfunded requirements.                          
Smithsonian treasures pass The Smithsonian would design a program through  
program                    which visitors could purchase a Smithsonian     
                              treasures pass with special benefits, such as   
                              no-wait entry into facilities or                
                              behind-the-scenes tours, to raise funds to meet 
                              critical but unfunded requirements.             
Facilities revitalization  The Smithsonian would borrow funds such as      
bond                       through a private or public debt bond for the   
                              Smithsonian's facilities.                       
Closing Smithsonian        The Smithsonian would permanently or            
museums                    temporarily close museums to the public in      
                              order to generate savings to help fund its      
                              facilities.                                     
Increasing Smithsonian     The Board of Regents and other friends of the   
appropriations             Smithsonian would approach the Administration   
                              about a dramatic appropriations increase to     
                              fund Smithsonian's facilities.                  

Source: Smithsonian Institution.

According to Smithsonian regents, after considering these nine proposed
options, the ad-hoc committee decided to request an increase in the
Smithsonian's annual federal appropriations, specifically deciding to
request an additional $100 million over the Smithsonian's current
appropriation annually for 10 years, starting in fiscal year 2008, to
reach a total of an additional $1 billion. According to two regents, this
option was selected for several reasons. First, they stated that although
the other eight options would generate some funding for the Smithsonian's
facilities projects, only an increase in appropriations had the potential
of reaching the April 2005 estimate of $2.3 billion for facilities
projects in nine years. Moreover, they stated that among Smithsonian
management and regents, there was a strong feeling that the
revitalization, construction, and maintenance of Smithsonian facilities
are federal responsibilities.^36

According to Smithsonian officials, it is the position of the Smithsonian,
based on an historical understanding, that the maintenance and
revitalization of facilities are a federal responsibility. Smithsonian
officials pointed out that as early as the 1850s, the federal government
has provided appropriations to the Smithsonian for the care of objects
belonging to the United States. In addition, the regents added that there
was a sentiment at the meeting that the Board of Regents should not offer
to replace public responsibilities with private dollars, since private
funding can be less reliable than annual federal appropriations.

^36While Congress does appropriate funds every year for the
revitalization, maintenance and security of facilities, the Smithsonian
could raise additional revenue or use existing unrestricted trust funds
for these purposes.

In September 2006, several members of the Board of Regents and the
Secretary of the Smithsonian met with the President to discuss the issue
of increased federal funding for the Smithsonian's facilities. According
to Smithsonian regents, during the meeting, among other things, the
regents discussed the problem of aging facilities and the need for an
additional $100 million in federal funds annually for 10 years to address
the institution's facilities revitalization, construction, and maintenance
needs. The representatives of the Smithsonian at the meeting told the
President that they had no other options to obtain this $100 million
except the Smithsonian's federal appropriation. These representatives said
the Smithsonian had made considerable expense cuts and raised substantial
private funds, but donors are unwilling to donate money to repair and
maintain facilities.

The President's fiscal year 2008 budget proposal, published in February
2007, proposed an increase of about $44 million over the Smithsonian's
fiscal year 2007 appropriation, representing an increase of about $9
million for its facilities capital appropriation and an increase of about
$35 million for its salaries and expenses appropriation--which includes
facilities maintenance.^37 However, funds in the salaries and expenses
appropriation also support many other activities, such as research,
collections, and exhibitions, and it is not clear how much of the $35
million increase the Smithsonian would use for facilities maintenance.
Moreover, Congress may choose to adopt or modify the President's budget
proposal when funds are appropriated for the fiscal year. According to two
regents, while the $44 million increase in the President's proposed budget
is good news for the Smithsonian and its facilities, it does not provide a
complete solution for the April 2005 estimate of $2.3 billion in
facilities projects, and, as a result, the Board of Regents will have to
consider and implement other options. Furthermore, given the previously
described increase in the Smithsonian's estimate for facilities projects
to about $2.5 billion, even if the Smithsonian were able to secure a $100
million increase in its federal appropriations for 10 years, to reach a
total of an additional $1 billion by 2013, it would not fully address the
Smithsonian's estimated funding needs for facilities projects. Figure 13
shows a timeline summarizing some of the key events that have occurred
since the Board of Regents established the ad-hoc Committee on Facilities
Revitalization.

^37Specifically, the President's fiscal year 2008 budget proposal for the
Smithsonian's appropriation proposed $107,100,000 for facilities capital,
which includes funding for facilities projects, and $571,347,000 for
salaries and expenses, which includes facilities maintenance.

Figure 13: Timeline of the Ad-Hoc Committee on Facilities Revitalization
Key Events

Some of Smithsonian's Evaluations of the Other Eight Funding Options Were
Limited

The Smithsonian's evaluation of the other eight funding options that were
presented in preparatory materials by Smithsonian management to the Board
of Regents included the potential benefits and drawbacks of each funding
option. However, we found that, in some cases, the Smithsonian's
evaluation of these options was limited in that it did not always provide
complete analysis, fully explain specific assumptions, or benchmark with
other organizations--items crucial to determining each option's potential
for reducing the April 2005 estimate of $2.3 billion in facilities
projects.

In the preparatory materials, several of the nine options are dismissed
because, independently, the options would not generate the sizable sums
required to address the Smithsonian's facilities projects. However, there
is no mention of combining options in order to increase the amount of
revenue generated. Combining options has the potential to raise more funds
to address the Smithsonian's revitalization, construction, and maintenance
projects at a faster rate than any one option independently. In fact, in
the wake of the Board of Regents' failure to secure an increase of $100
million from the President's proposed budget, one regent said that there
is no single solution and a combination of options will have to be used to
fund the Smithsonian's facilities projects. An analysis of the potential
of combining options could have been useful to members of the ad-hoc
committee in developing a funding strategy for the Smithsonian's
facilities projects.

  Evaluation of the Option to Close Museums Is Not Complete

In evaluating the option to close museums, the preparatory materials
provided to the ad-hoc committee did not provide a complete analysis of
the potential scenarios for closing museums in order to determine how this
option could be implemented in a way that would maximize cost savings
while minimizing revenue losses. This is important since the Smithsonian
based its analysis of this option on the costs saved (i.e., for security
and custodial staff) versus forgone concession revenue. For example, in
one scenario, the Smithsonian proposed to close all museums on the
National Mall 1 day a week (Tuesday), which would result in the
Smithsonian earning zero concessions revenue from visitors on that day. On
the other hand, the Smithsonian did not consider closing museums 1 day a
week on a staggered schedule so that visitors would have a choice of some
open museums each day of the week. This scenario would allow the
Smithsonian to capture concessions revenue each day of the week--versus
the scenario provided in the preparatory materials, in which there would
be 1 day (Tuesday) with no opportunities for a visitor to spend money at
the Smithsonian.

In another scenario, the Smithsonian considered closing all museums on the
National Mall for 3 days a week, except for the American Indian Museum,
which would be closed for 2 days a week. Although, unlike in the previous
scenario, the Smithsonian did stagger the three days on which the museums
would be closed, the scenario included closing the three most visited
museums in 2006--Air and Space Museum, Museum of American History, and
Museum of Natural History--on some of the same days (see fig. 14).

Figure 14: Smithsonian Institution's Scenario for Closing All Smithsonian
Museums on the National Mall for 3 Days a Week

As shown in Figure 14, the scenario of closing National Mall museums 3
days a week included closing all of the art museums on the National Mall
on the same day two times a week. Furthermore, the Smithsonian only
considered this one scenario for closing museums on multiple days a week,
rather than considering several scenarios to find the optimum combination
of providing visitors with museum variety each day in order to maximize
potential revenues. For example, Smithsonian did not analyze the following
scenarios:

           o Limiting the days the three museums with the highest visitation
           rates and concessions earnings are closed, while focusing on
           closing the museums that have the lowest visitation and
           concessions earnings rates.

           o Ensuring that one or more art museums are open each day so that
           visitors interested in art have an option to visit at least one
           art museum each day--and spend concessions dollars in art museum
           restaurants and stores.

           o Closing only one of the three most visited museums each day to
           provide visitors more choices of where to go and ensure that at
           least two of these museums are capturing revenue.

           In discussing these two scenarios for closing museums, the
           Smithsonian did not explain why these options were evaluated over
           other options. It is also not clear why the Smithsonian chose to
           evaluate museum closures only on the National Mall. The
           Smithsonian has several other museums not located on the National
           Mall that it could also consider closing to save costs.
			  
			    Evaluations of the National Fund-Raising Campaign and Treasures
				 Pass Program Options Have Unclear Assumptions

           In the preparatory materials provided to the ad-hoc committee, the
           Smithsonian's evaluation of implementing a national fund-raising
           campaign does not fully explain some of the assumptions used to
           determine the revenues, costs, and length of the campaign
           described. The analysis predicts that a Smithsonian national
           fund-raising campaign could generate $13 million to $16 million
           and limits the life of the campaign to 2 to 4 years. However, it
           is unclear how the Smithsonian developed these revenue and time
           figures, especially since the analysis cites the experiences of
           other campaigns whose revenue and time figures are much different.
           For example, the analysis describes the experience of the campaign
           for the World War II Memorial, which raised $165 million in 8
           years, or $20.6 million per year. In another example, the analysis
           describes the campaign for the Statue of Liberty and Ellis Island
           Foundation, which raised $540 million in 19 years, or $28.4
           million per year.

           The Smithsonian's analysis also states that a national
           fund-raising campaign would require deferring fund-raising efforts
           from other Smithsonian-wide direct marketing efforts and cost $3
           million. However, the analysis does not estimate the cost of
           deferring current fund-raising efforts or explain how the $3
           million cost assumption was derived. Moreover, the analysis
           suggests that the costs of deferring current fund-raising efforts,
           plus the $3 million to implement a national fund-raising campaign,
           would outweigh any revenue gained; however, this might not be the
           case.

           With regard to the treasures pass program option, the analysis
           states that this option would generate a total annual net revenue
           of $8.4 million. This analysis is limited because it assumes that
           the cost to administer this program would be 40 percent of
           revenues--an estimated reduction of $5.6 million per year.
           However, it is unclear how the Smithsonian developed this
           assumption because its basis was not provided or discussed in the
           preparatory materials. In addition, the analysis discusses five
           other cultural organizations' use and cost to visitors of programs
           similar to a treasures pass program, such as the Longwood Gardens
           in Pennsylvania and the Field Museum in Chicago, but the analysis
           does not include information on these organizations' costs to
           administer this type of program.
			  
			    Evaluation of Implementing a General Admission Fee Program Lacks
				 Benchmarks

           The Smithsonian's evaluation of establishing a general admission
           fee program does not use information from other organizations to
           comprehensively assess the option's potential benefits. In some
           instances, the Smithsonian did not perform research with other
           organizations, including one of its own, to gauge if its
           assumptions were reasonable. The analysis provided to the ad-hoc
           committee in preparatory materials states that a general admission
           fee program--which includes a mandatory admission fee for entry
           into any museum and the National Zoo and revenue from purchases of
           the Smithsonian's membership program that would provide free
           admission as a benefit --would generate a total annual net revenue
           of about $57.6 million ($50.7 million in admission fee revenue
           plus $6.9 million in new membership revenue).^38

           The analysis states that an admission fee could reduce the amount
           of money visitors spend at Smithsonian restaurants and gift stores
           and assumed a 10 percent reduction to annual net gains on the
           basis of visitor surveys. According to the Smithsonian's
           evaluation materials, visitors have indicated that if they had to
           pay an admission fee to enter Smithsonian museums, they would
           spend less once inside the museums. However, the Smithsonian's
           materials do not benchmark this assumption with the experiences of
           other museums that have established admission fees. We spoke with
           the directors or facility directors of six museums and one
           zoological park who stated that instituting or increasing
           admission fees did not decrease the amount of money visitors spent
           in museum restaurants and stores. One of these museums, the
           Cooper-Hewitt Museum, is the only Smithsonian museum that charges
           an admission fee.^39 The Cooper-Hewitt Museum director told us
           that he has not seen an effect on restaurant or gift shop sales
           when admission fees are raised. He stated that the increase in
           admission fees over the past three fiscal years has coincided with
           a period of uninterrupted growth in shop revenues. The stated
           experiences of these other museums suggest that the Smithsonian
           may need to analyze this assumption further by measures such as
           benchmarking with other museums.
			  
^38The Smithsonian's general admission fee program estimate of $57.6
million assumes about 7.8 million visitors and 540 new memberships.
Visitor admission fees range from $3 to $10, and memberships are $16.

^39According to Smithsonian officials, the Cooper-Hewitt Museum was
already charging admission fees when it joined the Smithsonian. In
addition, it is located in New York City, where admission fees for museums
are common.

           The Smithsonian's analysis of the general admission fee program
           also included an adjustment of the gross revenues to cover the
           cost of operating and administering an admission fee program. The
           Smithsonian estimates that the cost of operating a general
           admission fee program is 20 percent of gross revenues based on the
           experience of the Department of the Interior's National Park
           Service (NPS) and the Department of Agriculture's Forest Service
           (Forest Service) under the Recreation Fee Demonstration
           Program.^40 However, it is unclear in the analysis if the
           Smithsonian consulted directly with NPS or the Forest Service to
           better understand this estimate. According to the First Triennial
           Report to Congress Fiscal Year 2006 on the Recreational Fee
           Demonstration Program,^41 the average cost of collections for four
           federal agencies over fiscal years 2000 through 2003 has remained
           constant at about 20 percent of gross fee revenue. However, for
           fiscal year 2003, the cost of collection for NPS was about 22
           percent and for the Forest Service about 14 percent. While the
           Smithsonian may have chosen to use 20 percent in its analysis
           because it was the average cost of collections for four federal
           agencies over 4 years, given the variation in these numbers and
           the differences between NPS and the Smithsonian, more analysis may
           be warranted to determine the Smithsonian's likely costs of
           administering an admission fee program.

           For example, the analysis is unclear if the Smithsonian consulted
           with NPS to understand whether NPS's costs to operate the
           admission fee program would be similar to the Smithsonian's costs
           for an admission fee program. According to an NPS official, there
           are many factors that affect the cost to administer the NPS fee
           program, especially those costs related to the method by which
           fees are collected and administered, such as personnel costs,
           credit card processing costs, and the costs to transport and
           safeguard funds. For example, NPS collects fees from about 1,000
           locations and has costs associated with vehicles--sometimes
           armored--used to retrieve cash and deposit it into a bank. This
           cost can be high because many locations are geographically
           remote--i.e., the Grand Canyon and parks in Alaska. Since
           Smithsonian museums are not located in geographically remote
           areas, its costs to transport money could be lower than NPS's
           costs, and, therefore, a reason why the NPS fiscal year 2003
           estimate of 22 percent to administer the Recreational Fee
           Demonstration Program may not be applicable to the Smithsonian.

^40In 1996 Congress established an experimental initiative called the
Recreational Fee Demonstration Program, which was scheduled to expire on
December 31, 2005. The program focused on the activities of four land
management agencies: the National Park Service, Fish and Wildlife Service,
Bureau of Land Management, and Department of Agriculture's Forest Service.
Under the fee demonstration program, the participating agencies were
authorized to establish, charge, collect, and use fees at a number of
sites to enhance visitor services and to address a backlog of needs for
maintenance and repair, among other uses. New authority, the Federal Lands
Recreation Enhancement Act, was enacted by Congress as part of the fiscal
year 2005 Omnibus Appropriations Bill, and the program is authorized for
10 years.

^41The First Triennial Report to Congress Fiscal Year 2006 is the most
recent report to Congress on the Recreational Fee Demonstration Program.
The Recreational Fee Demonstration Program ended in December of 2004 and
was replaced by the Federal Lands Recreation Enhancement Act.

           We found that museums have different experiences with the costs
           associated with administering an admission fee program, and,
           therefore, it may not have been comprehensive enough for
           Smithsonian to look at the experiences of two federal agencies. An
           official from the Corcoran Gallery of Art--which is located in
           Washington, D.C., and is a private not-for-profit art
           museum--stated that initially there was a fixed cost to
           implementing the admission collection system, but once the system
           was implemented, the labor costs associated with administering the
           admission fee program were not directly measured because they were
           embedded in the operating costs of the organization. For example,
           employees assigned to administering the tickets serve multiple
           other functions, such as assisting visitors. The Corcoran official
           also stated that the revenue gained from admission fees exceeds
           the cost of administration. An official from the Museum of Modern
           Art (MOMA)--which is located in New York City and is a private
           not-for-profit art museum--expressed a similar point. The official
           stated that MOMA has no reason to measure the cost of
           administering the admission fee program because it is not a direct
           cost to the museum since this function is one of several assigned
           to museum employees. According to the MOMA official, absent an
           admission fee program, MOMA would still need the same number of
           staff to assist visitors at the museum.

           Two museums that measure the cost to administer the admission fee
           program had different experiences. An official with the Phillips
           Collection--which is located in Washington, D.C., and is a private
           not-for-profit art museum--told us that admission expenses as a
           percentage of admissions gross revenue averaged 26 percent over a
           3-year period. In contrast, an official from the American Museum
           of Natural History--which is located in New York City and is a
           private not-for-profit natural history museum--stated that
           admission expenses as a percentage of admissions gross revenue
           were approximately 13 percent for 2006.

           According to two members of the Board of Regents, the board
           recognizes that it may need to undertake further analysis of the
           funding options presented and consider additional funding options.
           In June 2007, the board voted to turn the ad-hoc committee into a
           standing Committee on Facilities Revitalization. The members of
           the Board of Regents also stated they recognized the need to work
           closely with Congress on this issue in the future. However, these
           regents told us that in light of other priorities, the board has
           not yet had time to fully reconsider funding strategies.
			  
			  Conclusions

           Clearly, the Smithsonian is at a crossroads, with significant
           construction, revitalization, and maintenance projects--including
           security-related projects--needed to better protect the
           Smithsonian's visiting public, staff, facilities, and collections;
           as well as funding constraints that have limited its ability to
           complete these projects in a timely manner. Adding to these
           strains is that the Smithsonian will continue to grow, with the
           congressionally authorized Museum of African American Culture and
           History. The Smithsonian's strengths in following key security
           practices and taking steps to effectively manage its real property
           portfolio are limited by these funding constraints.

           Moreover, while the Smithsonian has taken steps to effectively
           prioritize security projects, such as developing an all-hazards
           risk assessment report, the lack of awareness of many museum and
           facility directors of this report limits their ability to work
           with OPS to identify, monitor, and respond to changes in the
           security of their facilities, which may limit the Smithsonian's
           ability to ensure it is prioritizing existing resources as
           effectively as possible to minimize security risks. In addition,
           the Smithsonian's omission of privately funded projects from two
           key documents--its updated cost estimate of facilities projects
           through 2013 and its capital plan--makes these documents less
           transparent and comprehensive and thus of less value in
           communicating the full scope and funding needs of projects for
           capital decision making. The omission of private funds from these
           documents also de-emphasizes the existing and potential role of
           private funds in the Smithsonian's facilities strategy and the
           Smithsonian's flexibility to raise and use private funds for these
           projects.

           The Smithsonian's lack of resources to address urgent security and
           facilities needs underscores the importance of the Board of
           Regents' efforts to develop a more effective funding strategy.
           While the Board of Regents has considered a variety of funding
           options, at this point in time, it has yet to implement a strategy
           other than requesting increased federal funds. Moreover, since the
           Board of Regents did not analyze the nonfederal funding options in
           a comprehensive manner, it lacks vital information needed to
           develop a funding strategy that goes beyond federal funding.

           Further delays in implementing a viable strategy to fund the
           significant number of facilities projects at many Smithsonian
           facilities increase the risks to these facilities' collections. At
           some point, damage to priceless items may occur, and the ability
           of the Smithsonian to meet its mission will decline.
           Notwithstanding that the federal government has appropriated funds
           for facilities' revitalization, maintenance, and security, the
           Smithsonian could raise additional funds or use existing
           unrestricted trust funds for these purposes. It would appear that
           the Board of Regents' stewardship role, at a time of significant
           real property challenges and relatively constrained federal funds,
           obligates them to consider providing more private funds to meet
           the funding requirements of its overall mission.
			  
			  Recommendations for Executive Action

           We are making three recommendations to the Secretary of the
           Smithsonian and two recommendations to the Board of Regents.

           To ensure that the Smithsonian's museum and facility directors
           have the information they need to work with OPS to identify,
           monitor, and respond to changes in the security of their
           facilities, and to increase the comprehensiveness of key documents
           used to present the Smithsonian's long-term facilities needs and
           strategy, we recommend that the Secretary of the Smithsonian

           o ensure that museum and facility directors are aware of and
           understand the all-hazards risk assessment report for their
           facility, including how it affects the prioritization of security
           projects;

           o ensure that museum and facility directors receive daily
           information related to security issues, including the number of
           security officers assigned to the facility; and

           o include in the Smithsonian's estimate for facilities
           revitalization, construction, and maintenance projects through
           2013 and in the Smithsonian's capital plan the full scope of
           planned projects and information on planned funding
           sources--federal or private funds--for each.

           To address the Smithsonian's funding needs for facilities
           projects, we recommend that the Board of Regents

           o analyze, in a more comprehensive manner, the eight proposed
           nonfederal funding strategies, along with any additional
           strategies, for its facilities projects, including developing a
           clearer explanation of assumptions and incorporating the results
           of discussions with other cultural organizations and a
           consideration of combining funding options in this analysis; and

           o submit, following its completion of the comprehensive analysis,
           a report to OMB and Congress that describes a funding strategy to
           meet the needs of its revitalization, construction, and
           maintenance projects, so that OMB and Congress can understand the
           steps the Smithsonian is taking to meet these needs in addition to
           its requests for federal funding.
			  
			  Agency Comments and Our Evaluation

           We provided a draft of this report to the Smithsonian for its
           official review and comment. The Smithsonian concurred with the
           report's recommendations and generally concurred with the report's
           findings, including the strengths and challenges related to OFEO's
           efforts to manage the Smithsonian's real property portfolio and
           the strengths and challenges related to OPS's security efforts.
           Regarding our recommendations for improving the Smithsonian's
           communication on security issues, the Smithsonian stated that
           OPS's leadership understands the importance of communication with
           the management and staff of the facilities for which it provides
           security, and described specific actions OPS would take to
           implement our recommendations.

           Regarding our recommendations to the Board of Regents, the
           Smithsonian stated that the Board of Regents' Committee on
           Facilities Revitalization is working to address the Smithsonian's
           facilities needs through further evaluation of potential funding
           options. The Smithsonian stated that this committee is also
           planning to review existing Smithsonian funding priorities to
           determine if any funds are available to redirect toward facilities
           needs. Furthermore, the Smithsonian stated that the result of
           these efforts will inform the committee's plan to address the
           Smithsonian's facilities funding requirement, which will be
           presented in draft form to the full Board of Regents at its
           November 2007 meeting and in final form to OMB and Congress by the
           end of the year.

           Although the Smithsonian agreed with our recommendations, the
           Smithsonian expressed concerns about several issues in the report.
           The Smithsonian stated that we implied that the Smithsonian's
           private trust funds offer a solution to the Smithsonian's
           facilities crisis and that we reference the possibility of raising
           private funds to address facilities needs when, according to the
           Smithsonian, both of these approaches have difficulties associated
           with them. In general, we have suggested that both of these
           approaches may have the potential to increase the amount of funds
           available for the Smithsonian's facilities--to some extent.
           Furthermore, we have concluded that the difficulties associated
           with these approaches and alluded to by the Smithsonian underscore
           the need for our recommendation that the Board of Regents analyze
           a variety of funding options, many of which do not depend on
           convincing donors to give funds for facilities' needs, and develop
           a funding strategy.

           The Smithsonian also stressed its position that the revitalization
           and maintenance of federal facilities are federal
           responsibilities. We have concluded that the Board of Regents'
           stewardship role, at a time of significant real property
           challenges and relatively constrained federal funds, obligates
           them to consider providing more private funds to meet the funding
           requirements of its overall mission.

           In addition, while the Smithsonian concurred with our
           recommendation to include privately funded projects as well as
           federally funded projects in its capital plan and cost estimate of
           facilities projects through fiscal year 2013, the Smithsonian
           noted that much of this information is already available to
           stakeholders in other documents. We have concluded that,
           notwithstanding the fact that this information appears in other
           documents, it is important to incorporate it into these two
           documents, as these documents should comprehensively describe the
           Smithsonian's long term facilities' funding needs and strategy.
           The Smithsonian's full comments on our report and our more
           detailed response to these comments can be found in appendix III.

           In addition, the Smithsonian provided separate technical comments,
           which we incorporated into the final report, where appropriate.

           We are sending copies of this report to other interested
           congressional committees, the Chairman of the Smithsonian Board of
           Regents, and the Acting Secretary of the Smithsonian. We will also
           make copies available to others upon request. In addition, the
           report will be available at no charge on the GAO Web site at
           [45]http://www.gao.gov .

           If you have any questions about this report, please contact me at
           (202) 512-2843 or [46][email protected] . Contact points for our
           Offices of Congressional Relations and Public Affairs may be found
           on the last page of this report. Key contributors to this report
           are listed in appendix IV.

           Mark L. Goldstein
			  Director, Physical Infrastructure Issues
			  
			  Appendix I: Scope and Methodology

           To determine how the condition of the Smithsonian's facilities has
           changed since our 2005 report, we interviewed the directors,
           Office of Facilities Engineering and Operations (OFEO) zone
           managers, and building managers for 14 Smithsonian facilities to
           obtain information on new facilities projects, continuing
           problems, and any adverse effects on collections. In addition, we
           toured eight facilities identified by the Smithsonian as having
           major revitalization projects or additional facilities-related
           problems since our April 2005 report to view facilities
           improvements or problems that have limited access to or had
           adverse effects on collections. The facilities we toured were the
           Cooper-Hewitt National Design Museum (Cooper-Hewitt Museum);
           Donald W. Reynolds Center for American Art and Portraiture, which
           houses the National Portrait Gallery and the Smithsonian American
           Art Museum; National Museum of African Art; National Museum of
           American History Kenneth E. Behring Center; National Museum of the
           American Indian; National Museum of Natural History (Museum of
           Natural History); National Zoological Park (National Zoo); and the
           Smithsonian's Suitland campus, which includes the Cultural
           Resources Center, Garber Facility, and Museum Support Center. The
           Garber Facility has about 40 buildings, and the National Zoo has
           more than 40 buildings. To obtain information on how the cost of
           Smithsonian facilities projects has changed since our 2005 report,
           we reviewed the Smithsonian's revised estimated costs for major
           revitalization, construction, and maintenance projects from fiscal
           year 2005 through fiscal year 2008 and interviewed Smithsonian
           officials.

           To determine the steps the Smithsonian has taken to protect its
           assets and the challenges it has experienced, we reviewed key
           security-related documents, such as Smithsonian's 2002 Disaster
           Management Program Master Plan, 2004 All-Hazards Risk Assessment
           Report, and 2007 Disaster Management Risk Mitigation Plan, Office
           of Protection Services (OPS) policies and procedures, and the
           Interagency Security Committee's key security practices. We also
           interviewed appropriate Smithsonian officials, including key
           personnel from OPS and the museum directors and building managers
           of the facilities we visited to obtain information on the security
           challenges OPS and each facility experiences. To obtain
           information on the methodology and purpose of some key
           security-related documents, we interviewed URS Corporation, which
           performed the Smithsonian's 2004 All-Hazards Risk Assessment
           Report and 2007 Disaster Management Risk Mitigation Plan and
           Applied Research Associates, which performed the Smithsonian's
           2002 Disaster Management Program Master Plan. Additionally, we
           interviewed various security organizations and committees on key
           practices for cultural property protection. The security
           organizations and committees include the American Association of
           Museums, APPA,^1 ASIS International's Museum, Library and Cultural
           Properties Council,^2 the Federal Facilities Council, the
           International Association of Museum Facility Administrators, and
           the International Facility Management Association and its
           Museum/Cultural Institutions Council. To obtain information on the
           Smithsonian's security cost trends from fiscal years 2001 through
           2005, we reviewed the Smithsonian's federal appropriations,
           obligations, and expenditures on security programs. To obtain
           information on the Smithsonian's security officer levels, we
           analyzed monthly staffing reports from March 2003 through March
           2007. We assessed the reliability of the security officer data
           from the Smithsonian by interviewing knowledgeable agency
           officials about data-collection methods, how the data is used, and
           steps taken to test the data. We determined that the data were
           sufficiently reliable for the purposes of reporting on security
           officer levels for March 2003 through March 2007.

           To determine the steps the Smithsonian has taken to improve the
           management of its real property portfolio, we reviewed our prior
           work on this issue and a variety of Smithsonian documents related
           to its real property asset management practices, including
           handbooks on project management, operations and maintenance, and
           real estate. We also reviewed Smithsonian documents related to
           capital planning and master planning, such as the fiscal year 2007
           through fiscal year 2012 Facilities Capital Program, the Museum of
           Natural History and the National Zoo's master plans, and minutes
           of the Capital Planning Board meetings. To obtain information on
           the Smithsonian's fiscal years 2002 through 2007 facilities
           capital and maintenance appropriations, we reviewed the
           Smithsonian's federal appropriations and spoke to Smithsonian
           officials. To obtain information on the Smithsonian's fiscal years
           2002 through 2007 private funds, we reviewed audited financial
           statements and spoke to Smithsonian officials. We found this data
           reliable for the purposes of reporting on the amount of the
           Smithsonian's federal appropriations for fiscal years 2002 through
           2007 used for facilities maintenance, revitalization, and
           construction. To obtain information on the progress of the
           Smithsonian's inventory of real property, we reviewed data from
           its real property information system. We also reviewed monthly
           metrics reports to obtain information on the Smithsonian's capital
           and maintenance benchmarks used for decision making. We also
           interviewed the director and chief of staff of OFEO, several heads
           of the offices making up OFEO, and the staff responsible for
           prioritizing both capital projects and minor repair and
           maintenance. We also reviewed documents relevant to the management
           of real property, such as Executive Order 13327, the Federal Real
           Property Council's Guidance for Asset Management, the General
           Services Administration's Federal Management Regulation: Real
           Property Asset Management Guiding Principles, and the Office of
           Management and Budget's Capital Programming Guide. We also
           obtained information from several facility organizations on key
           practices related to the management of real property portfolios.
           These organizations include APPA, the Federal Facilities Council,
           the International Association of Museum Facility Administrators,
           and the International Facility Management Association.
			  
^1APPA is an association for educational facilities professionals,
formerly called the Association of Physical Plant Administrators.

^2Founded in 1955 as the American Society for Industrial Security (ASIS),
the organization officially changed its named to ASIS International in
2002. ASIS International is a not-for-profit organization, disseminating
information and educational materials to enhance security knowledge,
practice, and performance.

           To determine the extent to which the Smithsonian developed and
           implemented strategies to fund its revitalization, construction,
           and maintenance projects, we reviewed materials developed by
           Smithsonian management for the consideration from the Board of
           Regents' ad-hoc Committee on Facilities Revitalization, which
           included an analysis of each of the nine funding options. In
           addition, we reviewed minutes of the Board of Regents' meetings
           that document efforts taken to develop and implement facilities
           funding strategies. We interviewed Smithsonian management and two
           members of the Board of Regents' ad-hoc Committee on Facilities
           Revitalization, including the chairman of this committee, to
           obtain information on how the nine funding options were developed
           and selected for implementation. To obtain information on other
           organizations' funding strategies for facilities projects, we
           spoke with officials from the Department of the Interior's
           National Park Service, the Chicago Museum of Science and Industry,
           the Corcoran Gallery of Art, the National Building Museum, and the
           Phillips Collection. We also reviewed the President's fiscal year
           2008 proposed budget and the Smithsonian's annual appropriations
           from fiscal years 2005 through 2007.

           To address all of the above objectives, we also conducted site
           visits at organizations in California and New York that have
           characteristics similar to those of the Smithsonian, where we
           reviewed relevant documents, toured facilities, and interviewed
           officials. In New York, we visited the American Museum of Natural
           History and the Museum of Modern Art. In California, we visited
           the California Academy of Sciences; the California State
           University Office of the Chancellor; San Jose State University;
           San Francisco State University; the University of California
           Office of the President; the University of California at Berkeley;
           the University of California at San Francisco; and the Zoological
           Society of San Diego, including the Wild Animal Park. We selected
           these organizations because they all have some features in common
           with the Smithsonian, including public and private funding,
           capital projects, real property portfolio make-up, and
           organizational mission. We selected New York to efficiently go to
           two large and heavily visited museums with characteristics similar
           to Smithsonian museums. We selected California because several
           facilities' management experts recommended that a university
           system with old buildings and geographically dispersed campuses
           would have similar characteristics to the Smithsonian, and in
           California we could efficiently visit the University of California
           system and the California State University system, both of which
           meet these criteria, as well as two other organizations with
           characteristics similar to those of the Smithsonian: a large and
           highly visited zoo and a science academy undergoing a major
           capital construction project.

           We conducted our work in New York City; San Diego and San
           Francisco; and Washington, D.C., from September 2006 to September
           2007 in accordance with generally accepted government auditing
           standards.
			  
			  Appendix II: Smithsonian's Efforts to Implement Key Security
			  Practices

           o Allocating resources using risk management. In order to allocate
           resources more effectively to manage risk, in 2002, OPS hired a
           contractor to develop a disaster management program master plan
           that combines disaster and emergency management planning and
           continuity of operations at all levels of the Smithsonian. The
           program addresses the three phases of a disaster or emergency:
           preparedness, response, and recovery. One aspect of the
           preparedness phase of the program recommended developing a risk
           assessment and risk management program. In order to develop the
           recommended risk management plan, in 2004, the Smithsonian
           contracted for an all-hazards risk assessment report, which
           includes individual assessments for over 30 Smithsonian facilities
           and was completed in 2005.^1 These reports identify the primary
           risks to each facility and also describe both the key observed
           vulnerabilities and risks and the key risk reduction and
           mitigation recommendations proposed for each facility to help the
           Smithsonian prioritize security projects. As a supplement to this
           report, in Spring 2006, the contractor completed a strategy that
           included specific recommendations on how to use the Smithsonian's
           capital and maintenance funds to implement future security
           projects and operational changes aimed at reducing the risks for
           Smithsonian facilities. From this strategy, the Smithsonian will
           develop a new performance metric to track risk mitigation efforts
           across its facilities. Many of the protective measures identified
           in the all-hazards risk assessment report have been implemented,
           will be addressed in the capital program, or can be integrated
           into an ongoing nonsecurity capital project. The Smithsonian uses
           these measures to determine the appropriate capital improvements,
           maintenance projects, and operational procedures to reasonably
           reduce the risk to Smithsonian staff, visitors, collections, and
           facilities.

           o Leveraging security technology. The Smithsonian's Physical
           Security Plan primarily consists of two separate programs for
           mitigating the risks to the institution's staff, visitors,
           collections, and facilities. The two programs, the security system
           modernization program and the anti-terrorism program, both
           leverage security technology to protect the Smithsonian's assets.
           The security system modernization program consists of measures
           that primarily support cultural property protection through the
           installation of electronic security systems. The Smithsonian uses
           a wide variety of technologies to meet the security system
           modernization program requirements. Smithsonian officials reported
           installing closed circuit television cameras (CCTV) and access
           entry technologies to augment existing security systems or
           establish a new program at some facilities. In addition, the
           security system modernization program plans to install additional
           electronic systems in several other Smithsonian facilities as soon
           as more funds become available. The anti-terrorism program
           consists of physical security measures and procedures that are
           primarily intended to mitigate the risk of a terrorist attack
           against the Smithsonian. The anti-terrorism program includes
           technologies such as perimeter vehicle barriers, CCTV, emergency
           voice systems, window blast film, and electronic screening of
           visitors and mail. According to a Smithsonian official, the
           technologies used for its physical security plan allow OPS to
           extend the capabilities of security staff and to improve facility
           security.
			  
^1OPS consulted with the Federal Emergency Management Agency (FEMA) on the
methodologies and consultants to use for the 2005 all-hazards risk
assessment report. For a methodology, FEMA recommended its Risk Management
Series Publication 452. For consultants, FEMA recommended the entity used
to create the FEMA 452 Publication.

           o Performance measurement and testing. Smithsonian officials
           stated that the Smithsonian follows Interagency Security Committee
           (ISC) guidelines for setting performance measures for
           anti-terrorism measures it has implemented, in addition to
           performing some testing on its own security practices. As
           mentioned above, the Smithsonian is developing a measure to track
           the funding and implementation of recommended risk mitigation
           projects. Also, the Smithsonian designed and tested its own
           vehicle barriers and uses computer modeling to determine the best
           mitigation practices. Regarding OPS operations, the Smithsonian
           logs the number of visitor complaints on security staff and
           security practices at all facilities. To test its disaster
           response plans, the Smithsonian conducts regular mock evacuations.
           While many of these mock evacuations are done without visitors
           present, according to Smithsonian officials, in May 2007, OPS
           conducted a public evacuation drill of the Castle when visitors
           were present, and a similar drill is planned for the National Zoo.
           Following a mock or an actual evacuation, the Smithsonian conducts
           sessions to identify areas of improvement. For example, in June
           2006 the Smithsonian had to close facilities affected by flooding
           along the National Mall. Following these closures, the Smithsonian
           held meetings about improving facility evacuations. As a result,
           the Smithsonian altered its Disaster Management Plan because of
           lessons learned from the event, thereby demonstrating quickness in
           response and action.

           o Strategic human capital management. To strategically manage
           human capital as it relates to security, the Smithsonian has
           instituted training courses on terrorism awareness, emergency
           procedures, and shelter-in-place procedures for its security
           staff. Before September 11, 2001, security officer training was a
           two-week program; now the program is five weeks long, providing
           customer service training and instruction on the use of
           magnetometers, X-rays, and bag searches.
           o Aligning assets to mission. Smithsonian officials stated that
           none of its buildings on the National Mall are excess or
           underutilized, and, therefore, opportunities to align assts to
           mission by reducing excess or underutilized property in order to
           reduce overall vulnerabilities are limited. However, according to
           Smithsonian officials, any future building disposals will include
           the consideration of reducing security costs in order to more
           effectively use security resources at fully utilized buildings.

           o Information sharing and coordination. Smithsonian officials
           reported sharing and coordinating information with several
           external stakeholders through periodic meetings with many
           government and private sector organizations. As a national icon
           located on the National Mall, the Smithsonian coordinates with
           several law enforcement entities, including the Federal Bureau of
           Investigation, the Department of Homeland Security; the U.S. Park
           Police, the Metropolitan Police Department, and a local Joint
           Terrorism Task Force.^2 In addition, OPS also shares information
           with government and private sector security groups including ASIS
           International's Museum, Library and Cultural Properties Council,
           Interagency Security Committee, and the National Monuments and
           Icon Sector of the National Infrastructure Protection Plan.
			  
^2The National Joint Terrorism Task Force (NJTTF) is an effort by the
Federal Bureau of Investigation to coordinate the efforts of local
joint-terrorism task forces in 100 cities nationwide. Local joint
terrorism task forces include various local and state law enforcement
entities and federal agencies, such as the Department of Homeland Security
and the Central Intelligence Agency. NJTTF was created to enhance the
FBI's ability to promote coordinated terrorism investigations between its
field offices and with its counterparts in federal, state, and local law
enforcement agencies, and other federal agencies.

Appendix III: Comments from the Smithsonian Institution

Note: GAO comments supplementing those in the report text appear at the
end of this appendix.

See comment 1.

See comment 3.

See comment 2.

See comment 2.

See comment 4.

See comment 5.

The following are GAO's comments on the Smithsonian Institution's letter
dated September 19, 2007.

GAO Comments

           1. The Smithsonian cited in its letter some accomplishments of its
           facilities management approach. While our report discusses steps
           the Smithsonian has taken to improve the management of its real
           property portfolio, we did not evaluate all of the accomplishments
           cited in the Smithsonian's letter.
           2. The Smithsonian stressed in its response that both the
           Smithsonian and donors believe that the revitalization and
           maintenance of the Smithsonian's facilities are federal
           responsibilities. We recognize that the federal government has
           played--and is likely to continue to play--an important role in
           funding the Smithsonian's facilities needs. However, as the
           Smithsonian has not received sufficient funds from the federal
           government to meet its facilities needs in recent years, and in
           light of the threat posed by many deteriorating facilities to the
           Smithsonian's collections and the public's access to these
           collections, we have concluded that the Board of Regents'
           stewardship role, at a time of significant real property
           challenges and relatively constrained federal funds, obligates
           them to consider providing more private funds to meet the funding
           requirements of its overall mission.
           3. The Smithsonian expressed concern that we implied that the
           Smithsonian's private trust funds offer a solution to the
           Smithsonian's facilities crisis. In our report, we pointed out
           that unrestricted trust funds could be used for facilities needs,
           including maintenance, revitalization, or security needs, but have
           not been used for such purposes. We recognize that such funds made
           up 6 percent of the Smithsonian's operating budget in fiscal year
           2006 and went towards other expenses. We did not analyze the
           Smithsonian's decision-making on how it distributed these
           unrestricted funds; however, it appears that the stated plan of
           the Smithsonian's Board of Regents' Committee on Facilities'
           Revitalization to review existing funding priorities to determine
           if any funds are available to redirect toward facilities needs is
           a positive step. The focus of our report is on the need for the
           Smithsonian to develop new strategies to raise additional revenue
           in order to significantly increase the amount of unrestricted
           funds that are available to be used for facilities needs.
           4. The Smithsonian expressed concern that we referenced the
           possibility of raising private funds to address facilities needs,
           and the Smithsonian stressed the difficulty of raising funds from
           donors for the operations, revitalization, and maintenance of
           facilities. The difficulty described by the Smithsonian of raising
           such funds from donors underscores the need for the Smithsonian to
           develop new funding strategies--that do not rely on individual
           donors' preferences--to raise revenue for these needs. For
           example, most of the eight funding options that the ad hoc
           committee on facilities revitalization considered (in addition to
           the option of seeking increased federal funds) and that we
           describe in our report do not depend on convincing donors to
           provide funds for facilities. Indeed, this difficulty demonstrates
           the importance of our recommendation that the Board analyze these
           eight proposed funding strategies in a more comprehensive manner
           in order to develop and implement a funding strategy. At the same
           time, the finding of the Smithsonian's commissioned report on
           fund-raising that all 12 organizations surveyed reported that the
           effort to secure support for deferred maintenance has been
           unsuccessful, except when embedded in programmatic improvements,
           describes both a perceived difficulty in securing private funds
           for deferred maintenance in general, but also the potential to do
           so when such projects are embedded in programmatic improvements.
           5. While the Smithsonian concurred with our recommendation to
           include privately funded projects as well as federally funded
           projects in its capital plan and cost estimate of facilities
           projects through fiscal year 2013, the Smithsonian noted that much
           of this information is already available to stakeholders in other
           documents and during processes such as congressional hearings. We
           recognize the Smithsonian includes information on privately funded
           projects in various documents that go to OMB, Congress, and other
           stakeholders. However, given that the capital plan is the primary
           document that defines the Smithsonian's long-term capital
           strategy, and that the Smithsonian has used its cost estimate for
           facilities' projects through 2013 to describe its long-term
           funding needs for facilities to Congress and other stakeholders,
           it is important that private trust funds be included in these
           documents so that the documents will provide a comprehensive
           picture of the full scope of facilities needs and the
           Smithsonian's long-term strategy for meeting those needs.

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contact

Mark L. Goldstein, (202) 512-2834 or [email protected]

Staff Acknowledgments

In addition to the contact named above, David Sausville, Assistant
Director; Brandon Haller; Susan Michal-Smith; Alwynne Wilbur; Carrie
Wilks; and Adam Yu made key contributions to this report.

(543180)

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Highlights of [52]GAO-07-1127 , a report to congressional requesters

September 2007

SMITHSONIAN INSTITUTION

Funding Challenges Affect Facilities' Conditions and Security, Endangering
Collections

The Smithsonian Institution (Smithsonian) is the world's largest museum
complex and research organization. Its annual operating and capital
program revenues come from its own private trust fund assets and federal
appropriations, with the majority of funds for facilities coming from
federal appropriations. In 2005, GAO reported that the Smithsonian's
current funding would not be sufficient to cover its estimated $2.3
billion in facilities projects through 2013 and recommended that the
Smithsonian Board of Regents, its governing body, develop and implement a
funding plan. As requested, GAO described changes in the condition of the
Smithsonian's facilities and estimate for project costs since 2005,
analyzed the Smithsonian's steps taken and challenges regarding protecting
and managing its real property portfolio, and assessed the Smithsonian's
efforts to develop and implement strategies to fund its facilities'
projects. GAO reviewed relevant documents and interviewed officials from
the Smithsonian and other organizations.

[53]What GAO Recommends

GAO recommends that the Smithsonian (1) increase awareness of security
issues; (2) include privately funded projects in its capital plan, and (3)
comprehensively analyze funding options and report to Congress and the
Office of Management and Budget on a funding strategy. The Smithsonian
concurred with the report's recommendations.

The Smithsonian has made some facilities improvements since our 2005
report, but the continued deterioration of many facilities has caused
further access restrictions and has threatened collections. The
Smithsonian's cost estimate for facilities projects has increased to $2.5
billion from $2.3 billion in April 2005. For example, a lack of
temperature and humidity control at National Air and Space Museum storage
facilities has caused corrosion to historic airplanes and increased the
cost of restoring these items for exhibit.

While the Smithsonian follows key security practices to protect its
assets, it faces challenges related to ensuring that museum and facility
directors are aware of security information and related to funding
constraints. Some directors' lack of awareness of security information
limits their ability to respond to changes in the security of their
facilities. Also, some museum and facility directors stated that in the
absence of more security guards, some cases of vandalism and theft have
occurred. In addition, the Smithsonian has made significant strides in
improving its real property portfolio management, such as improving its
real property data and using performance metrics. However, the Smithsonian
has omitted privately funded projects from its capital plan, making it
challenging for the Smithsonian and stakeholders to comprehensively assess
the funding and scope of projects.

To address GAO's April 2005 recommendation regarding implementing a
funding plan for its facilities projects, the Board of Regents created an
ad-hoc committee, which, after reviewing nine options, requested increased
federal funding. We found that some of the Smithsonian's evaluations of
the nine funding options were limited in that they did not always provide
complete analysis, fully explain specific assumptions, or benchmark with
other organizations. Also, some options were dismissed because
independently they would not generate enough revenue, but the evaluations
do not consider combining options to increase revenues.

Facilities Problems Include Leaks in the National Zoological Park's Sea
Lion Pool and the Roof of the National Museum of African Art

References

Visible links
  35. http://www.gao.gov/cgi-bin/getrpt?GAO-05-369
  36. http://www.gao.gov/cgi-bin/getrpt?GAO-07-725T
  37. http://www.gao.gov/cgi-bin/getrpt?GAO-03-122
  38. http://www.gao.gov/cgi-bin/getrpt?GAO-07-349
  39. http://www.gao.gov/cgi-bin/getrpt?GAO-05-49
  40. http://www.gao.gov/cgi-bin/getrpt?GAO-05-49
  41. http://www.gao.gov/cgi-bin/getrpt?GAO-03-1034T
  42. http://www.gao.gov/cgi-bin/getrpt?GAO-07-274
  43. http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-99-32
  44. http://www.gao.gov/cgi-bin/getrpt?GAO-07-274
  45. http://www.gao.gov/
  46. mailto:[email protected]
  47. http://www.gao.gov/
  48. http://www.gao.gov/fraudnet/fraudnet.htm
  49. mailto:[email protected]
  50. mailto:[email protected]
  51. http://www.gao.gov/cgi-bin/getrpt?GAO-07-1127
  52. http://www.gao.gov/cgi-bin/getrpt?GAO-07-1127
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