Feasibility of Outsourcing the Management and Operation of the
Capitol Power Plant (31-JAN-08, GAO-08-382R).
The Capitol Power Plant (CPP), managed by the Architect of the
Capitol (AOC), provides heating and cooling for the U.S. Capitol
and surrounding facilities. This plant, which provides steam and
chilled water year-round for about 16 million square feet of
space in 24 facilities, consists of 4 main components--the steam
plant, the East Refrigeration Plant, the West Refrigeration
Plant, and the administration building. In 2003, CPP awarded a
construction contract that involved a major effort both to expand
the capacity of the plant to meet the growing heating and cooling
needs of the U.S. Capitol and to update plant equipment. The
centerpiece of this expansion effort is the West Refrigeration
Plant Expansion project, a $100.9 million project scheduled for
completion in March 2008. For more than a decade, potential
overstaffing at CPP has been a principal concern. In 1996, an AOC
engineering consultant for CPP asserted that CPP was overstaffed
and recommended reducing staff as a way to deliver CPP services
more costeffectively. In 2004, in response to a congressional
mandate to assess CPP operations and infrastructure, we
recommended that AOC update the consultant's 1996 study and
examine the advantages and disadvantages of outsourcing CPP
operations. More recently, in response to congressional concerns
about CPP staffing levels, we reported on AOC's management of CPP
and made recommendations on CPP's staffing levels. In 2005, we
recommended that AOC develop an implementation plan for adjusting
staff levels based on a 2004 study conducted by another AOC
engineering consultant that found staffing levels higher at CPP
than at comparable plants. Because AOC has made little progress
in reducing CPP staffing levels and examining sourcing options,
congressional concerns about the overall management of CPP
persist. Accordingly, we were directed to examine the feasibility
of AOC's entering into a contract with a private entity for the
management and operation of the CPP. In response, this report
discusses (1) the actions that CPP has taken since 2004 to reduce
operating costs and increase efficiencies and (2) the challenges
that AOC will need to address before it can make future sourcing
decisions about CPP operations.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-08-382R
ACCNO: A80339
TITLE: Feasibility of Outsourcing the Management and Operation
of the Capitol Power Plant
DATE: 01/31/2008
SUBJECT: Cost control
Cost effectiveness analysis
Facility management
Federal facilities
Financial management
Human capital
Human capital management
Human capital planning
Performance measures
Powerplants
Program management
Strategic planning
Program implementation
Capitol Power Plant (DC)
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO Product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
******************************************************************
GAO-08-382R
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
United States Government Accountability Office:
Washington, DC 20548:
January 31, 2008:
Congressional Addressees:
Subject: Feasibility of Outsourcing the Management and Operation of the
Capitol Power Plant:
The Capitol Power Plant (CPP), managed by the Architect of the Capitol
(AOC), provides heating and cooling for the U.S. Capitol and
surrounding facilities. This plant, which provides steam and chilled
water year-round for about 16 million square feet of space in 24
facilities,[Footnote 1] consists of 4 main components--the steam plant,
the East Refrigeration Plant, the West Refrigeration Plant, and the
administration building. In 2003, CPP awarded a construction contract
that involved a major effort both to expand the capacity of the plant
to meet the growing heating and cooling needs of the U.S. Capitol and
to update plant equipment. The centerpiece of this expansion effort is
the West Refrigeration Plant Expansion project, a $100.9 million
project scheduled for completion in March 2008.
For more than a decade, potential overstaffing at CPP has been a
principal concern. In 1996, an AOC engineering consultant for CPP
asserted that CPP was overstaffed and recommended reducing staff as a
way to deliver CPP services more cost-effectively. In 2004, in response
to a congressional mandate to assess CPP operations and infrastructure,
we recommended that AOC update the consultant's 1996 study and examine
the advantages and disadvantages of outsourcing CPP operations. Such
assessments have been occurring in the federal government for some
time. This approach became an emphasis for the federal government in
2001 and is seen as a way for federal agencies to improve their
operational efficiency and performance by determining whether services
should continue to be provided in-house or be outsourced.[Footnote 2]
More recently, in response to congressional concerns about CPP staffing
levels, we reported on AOC's management of CPP and made recommendations
on CPP's staffing levels.[Footnote 3] In 2005, we recommended that AOC
develop an implementation plan for adjusting staff levels based on a
2004 study conducted by another AOC engineering consultant that found
staffing levels higher at CPP than at comparable plants. Again in 2006,
we reported that although AOC has long recognized that CPP is
overstaffed, staffing reductions had not been implemented, and that AOC
had only recently made plans to establish a new CPP staffing structure.
Because AOC has made little progress in reducing CPP staffing levels
and examining sourcing options, congressional concerns about the
overall management of CPP persist. Accordingly, we were directed to
examine the feasibility of AOC's entering into a contract with a
private entity for the management and operation of the CPP.[Footnote 4]
In response, this report discusses (1) the actions that CPP has taken
since 2004 to reduce operating costs and increase efficiencies and (2)
the challenges that AOC will need to address before it can make future
sourcing decisions about CPP operations.
To identify the actions that CPP has taken since 2004 to reduce
operating costs and increase efficiencies, we interviewed AOC and CPP
officials and the AOC consultant who performed the 2004 staffing study.
We also contracted with a technical consultant who specializes in
renovation and construction of heating and cooling plants to perform a
peer review of an updated staffing study completed by the AOC
consultant in 2006. We reviewed and analyzed relevant agency documents
and available data on actions to reduce costs and increase
efficiencies, and we reviewed applicable laws that would apply to CPP
if AOC outsourced its operations. We interviewed agency officials and
two utility outsourcing experts in the Washington, D.C., metropolitan
area, as well as reviewed relevant studies and reports, to identify
challenges that CPP could face when making future sourcing decisions.
We conducted this performance audit from October 2007 through January
2008 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
Results in Brief:
According to CPP officials, they have taken two actions to reduce costs
and increase efficiencies--using more coal and advancing the West
Refrigeration Plant Expansion modernization project. The West
Refrigeration Plant Expansion project, for example, is expected to
yield annual savings of over $2 million, according to CPP estimates.
Although CPP officials were able to provide some documentation on the
degree to which these actions will reduce costs and increase operating
efficiencies, they did not have documentation on the full range of
benefits and costs associated with these actions or on how these
actions will affect CPP's expected staffing structure and staffing
levels. CPP's staffing structure and levels have not changed
significantly for several years, despite recommendations that we and
AOC's consultant have made to reduce staffing levels by more than one
third. In response, CPP officials explained that they have developed a
new staffing structure through a reorganization plan that is currently
being reviewed by the Acting Architect of the Capitol and are
developing a staffing reduction plan. However, we found that the
reorganization plan consists of a one-page organizational chart that
does not reflect how the new staffing structure was determined, and the
staffing reduction plan does not reflect how staffing levels at various
facilities were determined or include an action plan for implementing
the reductions. AOC and CPP officials stated that even if the staffing
reduction plan is eventually approved, they would not consider
implementing staffing reductions until the West Refrigeration Plant
Expansion modernization project is completed and all project components
have been implemented. According to agency officials, the project is
scheduled for completion in March 2008 and project components will be
implemented sometime in 2009. Furthermore, CPP officials expressed
doubts about the viability of cross-training employees, as suggested by
AOC's consultant as a way to reduce staffing levels. Even though CPP
has no inventory of its workers' skills, a CPP official stated that
staff cannot be cross-trained to the extent the consultant reported
because CPP jobs are too specific and CPP employees should not be
expected to successfully transition to responsibilities outside of
their primary specialization. For example, CPP officials assert that it
would be difficult for personnel responsible for operating equipment to
assume responsibilities involving equipment maintenance and vice versa.
Finally, through our discussions with two industry experts, we
determined that because CPP did not complete appropriate assessments of
its equipment and workload, it is unable to accurately determine future
staffing needs. According to industry experts with whom we spoke and
our technical consultant, industry practice involves inventorying plant
equipment and workload to inform decisions about what maintenance will
be required to keep the equipment running safely and efficiently and
determine what tasks are performed by various personnel. Without a
complete equipment inventory and comprehensive workload analysis, CPP
lacks the data necessary to accurately determine how many staff are
required to operate the plant reliably.
AOC faces two formidable challenges that it will need to address before
it can make future sourcing decisions about CPP operations. First, AOC
will have to address existing staffing concerns that we and others have
identified by developing a staffing plan that captures the appropriate
staffing structure and staffing levels for CPP. In developing a
staffing plan, AOC must assess their staffing needs by (1) developing a
complete equipment inventory and a comprehensive workload analysis,
(2) determining how the modernization effort will potentially affect
future staffing levels, and (3) evaluating the abilities of its staff
to operate the modernized plant. Second, even after the existing
concerns are addressed, AOC faces the challenge of developing
procedures and guidelines for making sourcing decisions. According to a
recent study performed by the Commercial Activities Panel, a working
group composed of experts in competitive sourcing and headed by the
Comptroller General of the United States, sourcing procedures and
guidelines should be integrated with an agency's strategic and human
capital plans. Although there are no legal restrictions that prohibit
AOC from pursuing outsourcing options, AOC will have to consider a
number of issues when developing procedures and guidelines that fit
with existing agency plans--including identifying activities to
outsource, training staff in making sourcing decisions, and addressing
legal issues.
We are recommending that AOC quantify cost savings and increase
efficiencies from actions taken since 2004; complete activities to
support future sourcing decisions, including developing a comprehensive
staffing plan and establishing procedures and guidelines to guide
future decisions; and after completing necessary actions, pursue a
competitive sourcing strategy. In commenting on a draft of this report,
the Architect of the Capitol agreed with its contents and the
recommendations.
Background:
AOC manages the Capitol Hill Complex, which consists of various House,
Senate, and other buildings that are among a number of facilities
served by CPP. CPP currently provides year-round heating and cooling
for the U.S. Capitol and 23 other buildings. (See the enclosure for a
list of the buildings served.) To do this, it employs 83 full-time-
equivalent staff and has a fiscal year 2007 operating budget of more
than $75 million. Chilled water is provided to 19 of its facilities;
steam is provided to all 24 facilities it serves.[Footnote 5] CPP will
also serve the 580,000-square-foot Capitol Visitor Center (CVC), which
is under construction. Located not far from the U.S. Capitol Building
in Washington, D.C., the heating and cooling plant consists of the
steam plant, constructed in 1908; the East Refrigeration Plant,
constructed in 1938; and the West Refrigeration Plant and
administration building, constructed in 1978. (See fig. 1)
Figure 1: CPP West Refrigeration Plant Expansion Project Site and New
Chiller (photo):
[See PDF for image]
This figure is a map of the area around the West Refrigeration Plant,
with a photograph inlaid to depict the West Refrigeration Plant
expansion.
Source: GAO (map); AOC (photo).
[End of figure]
While its buildings and much of its equipment have remained basically
unchanged since their initial construction, CPP is now in the process
of a major renovation. In 2003, CPP began what has become a $100.9
million effort--the West Refrigeration Plant Expansion (WRPE) project-
-to expand the capacity of the plant to meet the U.S. Capital's growing
heating and cooling needs, and to update the plant's equipment. The
first phase of the project, completed in September 2007, added 25,000
square feet to the West Refrigeration Plant and is used to house new
machines for generating chilled water. (See highlighted portion of fig.
1.) Also added during the first phase of the project was a Distributed
Controls System (DCS) that enables CPP's chillers to be monitored and
controlled centrally. The second phase of the project will implement a
DCS into CPP's boiler plant and is slated for completion in April
2008.[Footnote 6]
Given past concerns over CPP's management dating back to the 1990s,
alternative ways of managing CPP have been suggested. In 2004, we
recommended that AOC examine the advantages and disadvantages of
outsourcing CPP's operations. We reported on the issue again in
February 2007, and noted that AOC had not comprehensively reviewed all
of its services to determine whether any could be provided more cost-
effectively through outsourcing.
Our past recommendation that CPP examine the advantages and
disadvantages of outsourcing its operations coincides with
governmentwide initiatives--spurred by advancements in technology,
increased pressure for demonstrable results, and constrained budgets--
to reexamine how government services are provided. The development of a
sourcing strategy is one component of this reexamination process.
Studies have shown that outsourcing commercial functions has the
potential to address shortages of skilled workers, stabilize costs,
improve agencies' effectiveness and responsiveness, and refocus
agencies on their core missions. Within the federal government,
assessing the feasibility of outsourcing government functions has been
emphasized since 2001, when the President directed executive branch
agencies to implement competitive sourcing programs where possible to
determine whether functions and services should be kept in-house or
outsourced to achieve increased savings and improve performance.
According to the Office of Management and Budget (OMB), when agencies
subject in-house functions to competition, they can achieve cost
savings, regardless of whether a private contractor or the government
wins the competition.[Footnote 7] Although there are a number of
benefits to implementing competitive sourcing programs, we have also
reported in past work that agencies have had some difficulties with
implementing this process.[Footnote 8] In particular, it has been shown
that the impact on the morale of the federal workforce has been
profound. Moreover, there have been concerns in both the public and
private sectors about the timeliness and fairness of the process and
the extent to which there is a level playing field for conducting
public-private competitions. While competitive sourcing is expected to
encourage innovation and improve efficiency and performance, it also
represents a major management change for most agencies.
CPP Has Identified Two Actions to Reduce Costs and Increase
Efficiencies and Made Limited Progress to Address Prior Staffing
Concerns:
CPP officials identified two actions they have undertaken to reduce
costs and enhance operating efficiency--using more coal as a main fuel
source and advancing a major modernization project.[Footnote 9]
Although CPP provided some documentation on the degree to which the
actions will increase efficiencies or decrease costs, it has not fully
documented the results of these actions. Without further information,
AOC is limited in its ability to make informed decisions about its
staffing structure and staffing levels, which remain basically
unchanged from 2004 levels.
Although CPP Has Made Some Efforts to Reduce Costs and Increase
Efficiencies, the Results of these Efforts Have Not Been Fully
Documented:
Although CPP has taken two actions to reduce costs and increase
efficiencies--using more coal as a main fuel source and modernizing
through the WRPE project--CPP has not fully documented the results of
these actions. CPP has not examined the full range of benefits and
costs associated with the measures, determined how the measures affect
CPP's staffing structure and levels, or determined what future
maintenance and capital resources will be needed as a result of these
measures. For example:
* Promoting use of the most economical fuel. Consistent with
recommendations made by AOC's consultant and by us,agency officials
reported that in 2005, CPP began to focus on using the most
economically priced fuel (coal) to operate its steam boilers. However,
CPP has not documented the benefits and operational impacts of using
more coal. While coal is still less expensive than other fuels to
purchase, AOC could make more informed decisions about the use of
different fuels by analyzing the full range of benefits and costs
associated with using each fuel. The analysis would involve an
evaluation not only of the costs to purchase fuels but also of the
capital expenses and operating and maintenance costs associated with
each fuel. Furthermore, the analysis should take into account other
important trade-offs associated with each fuel, including impacts on
the environment, public health, and the plant's efficiency and
reliability.
* Advancing the WRPE modernization effort. The WRPE project is expected
to increase CPP's chilled-water production capacity by 23 percent and
yield efficiency improvements. Some of the WRPE efficiency improvements
are expected to occur through the use of a DCS, which is a computer
program that enables CPP chillers to be monitored and controlled
centrally, thereby potentially reducing the number of staff needed to
operate the facility. CPP officials said that prior to the initiation
of the project, CPP conducted a cost-benefit analysis estimating
projected benefits from improvements to the chillers. Through this
analysis, CPP conservatively estimated annual savings of over $2
million associated with projected efficiencies of the new chillers
added during the WRPE. However, beyond their assertions that
efficiencies will be gained through a reduction in energy consumption,
CPP has made no further assessment to determine whether performance
targets or other planned benefits to be achieved through the expansion
have been met. Not having these data prevents CPP from making informed
operating, maintenance, and staffing decisions that could improve
performance and better achieve planned benefits.
According to CPP officials, studies are under way to identify future
efficiency measures and to guide the agency's future actions, including
a long-term strategic plan and an evaluation of energy savings
performance contracts. For example, CPP officials explained that the
strategic plan, scheduled for completion in March 2008, is intended to
help guide the identification and implementation of the most effective
technological options for producing steam and chilled water in the
future.[Footnote 10] However, CPP officials did not provide details
about the internal process for developing these studies, and, because
studies are preliminary, they did not elaborate on any possible
efficiency gains to be achieved from these studies.
While CPP officials say they have made efforts to reduce costs and
increase efficiencies, the results of these efforts have not been fully
documented and absent more comprehensive information, AOC lacks the
fundamental elements of accountability and oversight that allow the
Congress to reliably determine whether CPP's services are being carried
out cost-effectively and whether funded projects are achieving their
intended benefits. Our past work has demonstrated the importance of
developing such information and performance measures for capital
investments, like the WRPE project, to better ensure accountability for
meeting cost, schedule, and performance goals. Sound data on cost,
performance, and operations are important in making resource allocation
decisions, including decisions about staffing levels and the future
maintenance and capital resources needed to meet CPP's goals and
objectives.
CPP Has Made Little Progress in Analyzing or Adjusting Staffing Levels:
CPP has made little progress in either assessing needed staffing levels
or adjusting them in accordance with recommended levels. In a November
2004 study, a consultant that AOC hired to update a 1996 technical and
economic evaluation of CPP operations recommended that CPP reduce its
staff from 88 to 46 positions.[Footnote 11] In April 2005, we
recommended that AOC develop a plan for implementing the consultant's
staffing recommendations.[Footnote 12] AOC disagreed with the
consultant's 2004 staffing analysis and asked the same consultant to
reevaluate staffing levels in 2006. The consultant reaffirmed the
earlier assessment and recommended that CPP reduce its staff to 57
full-time employees by 2011.[Footnote 13] In both its 2004 and 2006
studies, AOC's consultant promoted the cross-training of CPP employees-
-teaching operations personnel to maintain equipment and teaching
maintenance personnel to operate the equipment--as a way to reduce
staffing levels. However, even though CPP has no inventory of its
workers' skills, CPP officials cited doubts about its consultant's
recommendation about cross-training.[Footnote 14] According to a CPP
official, staff cannot be cross-trained to the extent the consultant
reported because CPP jobs are too specific and because CPP employees
should not be expected to successfully transition to responsibilities
or tasks outside of their primary specialization.
Notwithstanding our and others' recommendations to reduce staffing
levels, AOC has taken limited action to develop a new staffing
structure and a staffing reduction plan. During our work at CPP in late
2006, AOC officials told us that a plan for a new staffing structure--
a staff reorganization plan--would be submitted to the Congress for
approval in March 2007.[Footnote 15] A plan was not submitted, but AOC
officials explained that they have developed a reorganization plan that
is currently being reviewed by the Acting Architect of the Capitol. CPP
officials shared the draft plan with us, and it consisted of a one-page
organizational chart that did not reflect how the new structure was
determined. In addition, AOC officials stated that they are in the
preliminary stages of developing a staffing reduction plan that AOC
officials also shared with us. The draft staffing reduction plan showed
desired staffing levels at various facilities, but it did not
demonstrate how these levels were determined. Furthermore, beyond a
statement by officials that reductions would be achieved through
attrition, there was no associated action plan or timetable for
implementing the staff reductions. AOC officials told us that even if
the staffing reduction plan is eventually approved, they have no
immediate plans to reduce staffing levels at any of the CPP facilities.
The officials stated they will not consider a reduction in staffing
until the DCS is completely implemented, citing concerns that staffing
reductions before that time may jeopardize the plant's operational
reliability. In a 2005 report, however, we recommended that CPP not
wait to implement prudent operational and incremental organizational
changes until all WRPE components have been completed. We determined
that anticipated workforce reductions, if carefully planned, could be
managed so as to minimize adverse impacts. The DCS is scheduled to be
completely implemented sometime in 2009, but even then, CPP officials
said that staffing numbers will remain consistent with current levels.
Through our discussions with agency officials, we also determined that
CPP has not performed the assessments needed to fully inform decisions
about staffing structure and levels. CPP has not yet conducted a
complete inventory of its equipment or a comprehensive analysis of its
employees' workload. Industry practice often involves inventorying
plant equipment and workload to inform decisions about what maintenance
will be required to keep the equipment running safely and efficiently
and to determine what tasks are performed by various personnel. Without
a complete equipment inventory and a comprehensive workload analysis,
CPP lacks the data necessary to accurately determine how many staff are
required to operate the plant reliably. According to one CPP official,
CPP conducted a partial equipment inventory in 2005, but CPP has not
used data from the inventory to inform its decisions about staffing
levels.[Footnote 16] Rather, CPP officials told us that they have an
informal process by which they determine staffing levels by estimating
workload based on upcoming projects, reviewing maintenance reports, and
talking with supervisors about the duties of their employees. Only
recently has CPP used benchmarks or metrics to determine what type of
preventative maintenance the equipment requires.
AOC Will Have to Address Staffing Concerns and Develop Procedures and
Guidelines for Making Future Sourcing Decisions:
AOC faces two major challenges in making future sourcing decisions
about CPP operations. First, AOC has to address existing staffing
concerns by developing a comprehensive staffing plan that involves
determining the appropriate staffing structure and staffing levels for
CPP. Second, AOC has to develop procedures and guidelines for guiding
future sourcing decisions.
Addressing Existing Staffing Concerns Poses a Major Challenge for CPP:
Before AOC can begin making sourcing decisions, it faces a major
challenge in addressing and resolving the existing concerns that we and
others have identified that are associated with CPP's staffing
structure, staffing levels, and training. Because CPP has not completed
an inventory of equipment, tasks, and staff capabilities, or fully
documented the results of completed and ongoing efforts, AOC lacks the
information needed to develop a sound staffing structure or to
determine the appropriate staffing levels. A number of difficult steps
lie ahead to address this challenge, including the following:
(1) CPP has not completed an inventory of equipment, tasks, and future
needs to help inform sourcing decisions. Information obtained through
an inventory can be used to inform decisions about staffing structure
and levels. This information can also be used to determine service
delivery expectations should operations be outsourced.
* Informing decisions about staffing structure and levels. A complete
inventory is necessary for a facility, such as CPP, to develop an
accurate picture of the level of work needed to maintain the plant, the
tasks required to perform the work, and the time needed to accomplish
the needed tasks. One approach that CPP has used is to base all
activities on past experience and activities. However, as we have
previously noted, this approach is inconsistent with the approach other
industry providers may use to determine the work needs at their plants.
Assessing the age and condition of equipment through use of an
equipment inventory and using this information to determine the level
of effort required to accomplish plant tasks (i.e., workload analysis),
as other industry providers often do, could help CPP develop a more
complete assessment of the plant's work needs. While CPP has partially
begun assessing workload in this manner through the use of a
computerized system that helps determine preventative maintenance
measures required for plant equipment, at least 20 percent of CPP's
equipment still is not accounted for in the system. Comprehensive
application of this approach across the entire plant can help CPP
determine the level of effort required to accomplish plant tasks, and,
as a result, officials can determine the number of staff needed to
perform the tasks.
* Determining service delivery expectations. Information collected
through a complete inventory can also be used to determine service
delivery expectations. According to the two district-area industry
experts with whom we spoke, information collected through an inventory
can help an agency determine the needs of the agency and the level of
reliability it wants to obtain. This information would help AOC to
better define whether it might be more cost-effective and efficient to
outsource its operations or maintain those operations in-house. If AOC
determines that CPP operations should be outsourced, such an assessment
can provide the information needed to craft the agency's request for
proposal and the subsequent contract, which should set forth the goals
and expectations of both parties.
(2)AOC has not determined how the modernization effort--the recently
completed WRPE and the soon-to-be-completed DCS--will potentially
affect future staffing levels. A thorough understanding of this
information is needed to develop a viable staffing structure and to
determine optimal staffing levels for operating and maintaining the
modernized facility. For example, the installation of the DCS, which
enables chillers to be monitored and controlled centrally, should
eliminate the need for continuous personnel monitoring the chilled-
water plant, which should equate to a reduction in operator hours. Once
the DCS is provided for the boiler plant, similar reductions in
operator hours should be expected. A combination of installing the DCS
and using an industry standard computerized system like the one
previously mentioned would allow CPP to control when maintenance is
performed and help decision makers determine the staffing levels
needed.
(3)AOC has not examined its existing staff capabilities--that is, the
ability of its staff to assume new responsibilities and operate the
modernized equipment. This type of an examination is a key step in the
development of any staffing plan. According to two industry experts
with whom we spoke, it is important for an agency to review and address
the training needs of its staff and the changes in position duties and
responsibilities that are required to respond to changing needs. In the
case of CPP's modernization effort, CPP should be reviewing not only
its staffing levels, but also the capabilities of existing staff in
concert with these technological improvements. Conducting a skills
inventory, which CPP has not yet done, would be helpful in determining
what skills are available; if they are sufficient; and, if not, what
skills are needed to fill the gaps. According to AOC's consultant, more
efficient staffing levels can be achieved at CPP through attrition and
cross-training, which would enable staff consolidation of
responsibilities and lead to staffing reductions.
After developing a staffing plan, AOC faces the challenge of
establishing methods and processes for implementing the plan. For
example, if the plan called for reorganizing or reducing staff, AOC
would have to establish processes for reassigning or reducing staff.
AOC's Workforce Planning and Human Capital offices would likely have to
be involved in developing policies and procedures for a reassignment or
reduction in force.
Developing Procedures and Guidelines for Making Sourcing Decisions Is a
Second Challenge for CPP:
Even after resolving existing concerns, AOC faces the challenge of
developing procedures and guidelines for making future sourcing
decisions. According to a recent study performed by the Commercial
Activities Panel, a working group headed by the Comptroller General of
the United States and composed of experts and academia, sourcing
procedures and guidelines should be integrated with an agency's
strategic and human capital plans.[Footnote 17] In developing
procedures and guidelines that fit with existing agency plans, AOC will
have to consider a number of issues, including the following:
* Identifying activities to outsource. According to our prior work, and
OMB guidance, it would be prudent for AOC to identify those activities
that can be outsourced and performed by the private sector.[Footnote
18] By outsourcing activities, an agency can address many concerns,
including addressing shortages of skilled workers, improving the
agency's effectiveness, and refocusing on core activities (i.e.,
activities that should be kept in-house). In the federal government,
for example, executive branch agencies that have competitive sourcing
programs are required to develop inventories of all activities
performed by federal personnel and to identify those activities that
are inherently governmental and those that are commercial activities.
Through competitive sourcing, commercial activities are opened to
competition between the public and private sectors.
* Training staff in making sourcing decisions. AOC would have to train
employees in sourcing processes and practices and incorporate this
training into their strategic and human capital plans. We have said in
the past that developing and maintaining a skilled acquisition
workforce is a first step in managing a procurement
environment.[Footnote 19] When studying the practices of leading
companies in the area of service acquisitions, we have found that a
leading practice includes creating the structure, processes, and roles
that will support the management and coordination of their services.
* Addressing legal issues. Although there are no legal restrictions
prohibiting AOC from pursuing outsourcing options, AOC would have to
develop procedures and guidelines to address legal issues associated
with reducing staff.
Conclusions:
While CPP has taken some actions since 2004 to reduce costs and enhance
operating efficiencies, it has not adequately addressed prior staffing
concerns, namely to produce a staffing plan for the Congress and reduce
staffing levels in line with our previous recommendations and those of
its own consultant. Moreover, because CPP has not fully documented the
results of its efforts, it cannot adequately quantify the cost savings
or efficiencies gained by the actions it has taken. The Architect of
the Capitol and the Congress needs such information to oversee CPP
operations and hold CPP officials accountable for their actions. In
addition, AOC has not taken the steps necessary to determine whether
keeping CPP operations in-house or outsourcing those operations would
result in better service delivery. These challenges and the continued
concerns about AOC management costs and efficiencies should provide an
incentive for AOC to address lingering issues regarding its staffing
levels. By quantifying the cost savings and efficiency results of its
actions, CPP could better determine whether its current improvements
and future plans would achieve any increased efficiencies or cost
savings. Moreover, developing a more formal process for making sourcing
decisions would enable AOC to assess the risks, advantages, and
feasibility of outsourcing versus maintaining its operations in-house,
and provide CPP with the tools it needs to better inform its future
staffing decisions.
Recommendations for Executive Action:
To determine the most efficient manner to operate CPP, we are
recommending that the Architect of the Capitol take the following
actions:
* Quantify for the Congress the cost savings and increased efficiencies
generated from completed and ongoing actions taken since 2004.
Complete activities to support future sourcing decisions, including:
- developing a comprehensive staffing plan by completing an equipment
inventory and comprehensive workload analysis, determining how the
modernization effort will affect future needs, and examining existing
staffs' capabilities and;
- establishing procedures and guidelines to guide future sourcing
decisions that take into account activities that can be outsourced,
staff training in sourcing processes and practices, and legal issues.
* After completing necessary actions, pursue a competitive sourcing
strategy.
Agency Comments:
We provided a draft copy of this report to AOC for review and comment.
In commenting on the draft of this report, the Architect of the Capitol
agreed with its contents and recommendations.
We are sending copies of this report to the appropriate congressional
committees. We are also sending this report to the Architect of the
Capitol. We will make copies available to others upon request. In
addition, this report will be available at no cost on the GAO Web site
at [hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at:
(202) 512-6923 or [email protected]. Major contributors to this report
include Elizabeth McNally (Assistant Director), Tonnye Conner-White,
Amanda Seese, Bess Eisenstadt, Susan Michal-Smith, Crystal Wesco, Paul
Wengert, Sara Ann Moessbauer, Jay Cherlow, William Woods, and Jessica
Berkholtz.
Signed by:
Terrell Dorn:
Director, Physical Infrastructure Issues:
Enclosure:
List of Congressional Addressees:
The Honorable Nancy Pelosi:
The Speaker of the House of Representatives:
The Honorable Robert C. Byrd:
Chairman:
The Honorable Thad Cochran:
Ranking Member:
Committee on Appropriations:
United States Senate:
The Honorable Dianne Feinstein:
Chairman:
The Honorable Bob Bennett:
Ranking Member:
Committee on Rules and Administration:
United States Senate:
The Honorable David R. Obey:
Chairman:
The Honorable Jerry Lewis:
Ranking Member:
Committee on Appropriations:
House of Representatives:
The Honorable Robert A. Brady:
Chairman:
The Honorable Vernon Ehlers:
Ranking Member:
Committee on House Administration:
House of Representatives:
[End of correspondence]
Enclosure:
Facilities Supplied with Steam, Chilled Water, or Both:
1. Capitol Power Plant Complex (4 buildings):
2. U.S. Capitol:
3. Rayburn House Office Building:
4. Longworth House Office Building:
5. Cannon House Office Building:
6. Hart Senate Office Building:
7. Dirksen Senate Office Building:
8. Russell Senate Office Building:
9. Capitol Police Building:
10. U.S. Supreme Court:
11. Madison Building Library of Congress:
12. Jefferson Building Library of Congress:
13. Adams Building Library of Congress:
14. House East Garage:
15. House West Garage:
16. Legislative Garage:
17. U.S. Botanical Garden:
18. 501 First St., S.E.
19. House Page Dormitory:
20. Thurgood Marshall Building[Footnote 20]
21. Union Station[Footnote 21]
22. Postal Square[Footnote 22]:
23. Government Printing Office[Footnote 22]:
24. Folger Library:
[End of enclosure]
Footnotes:
[1] CPP provides chilled water to 19 of the 24 facilities and steam to
all 24 facilities. Five of the buildings are not part of the Capitol
Hill Complex; however, they are served by CPP and are billed for
services provided. CPP will also serve the 580,000-square-foot Capitol
Visitor Center upon completion.
[2] For most of the federal government, the process for determining
whether commercial activities should be performed by the public or
private sector is set forth in the Office of Management and Budget's
Circular No. A-76. The circular is only applicable to executive branch
agencies and not to AOC or CPP. However, according to an AOC official,
if AOC were to look at guidelines for making future sourcing decisions,
it would attempt to follow the spirit of the A-76 process.
[3] GAO, Capitol Power Plant: Actions Needed to Improve Operating
Efficiency (Washington, D.C.:
Apr. 8, 2005), issued as an unnumbered correspondence. This work was
mandated in the Consolidated Appropriations Act for Fiscal Year 2005,
Pub. L. No. 108-447 (2004), see 2 U.S.C. � 2162 note, and GAO,
Architect of the Capitol: Addressing Staffing and Training Issues Is
Important for Efficient and Safe West Refrigeration Plant Operations,
GAO-06-321R (Washington, D.C.: Feb. 10, 2006).
[4] H.R. Rep. No. 110-198, at 30 (2007).
[5] CPP does not currently produce electric power. CPP stopped
producing power in 1952.
[6] The full modernization of CPP will also require the addition of a
DCS into Boilers 1 through 3 and the relocation of the East
Refrigeration Plant Chillers to a designated location in the WRPE.
These two projects are scheduled to be designed in 2009 and constructed
in 2011.
[7] OMB, Competitive Sourcing: Conducting Public-Private Competition in
a Reasoned and Responsible Manner (Washington, D.C.: July 2003).
[8] GAO, Competitive Sourcing: Greater Emphasis Needed on Increasing
Efficiency and Improving Performance, GAO-04-367 (Washington, D.C.:
Feb. 27, 2004); Competitive Sourcing: Implementation Will Be Key to
Success of New Circular A-76, GAO-03-943T (Washington, D.C.: June 26,
2003); and Competitive Sourcing: Implementation Will Be Challenging for
Federal Agencies, GAO-03-1022T (Washington, D.C.: July 24, 2003).
[9] AOC officials also identified savings through an electric contract
that is managed by the General Services Administration (GSA). Several
Capitol Hill buildings� electric bills have been consolidated
into a single contract. GSA assembled this contract to consolidate the
electricity requirements of several governmental agencies in order to
procure electricity at a reduced price. The annual savings for AOC to
use this contract is approximately $9 million. Although this action
will result in savings, it falls outside of the scope of our review
because we do not consider this an action that was initiated by AOC.
[10] In November 2004, AOC's consultant conducted a technical and
economical evaluation of CPP's operation, which resulted in a
recommendation to CPP to focus on using the most economically priced
fuel. In April 2005, GAO made the recommendation that AOC adopt the
consultant's recommendations. See Capitol Power Plant: Actions Needed
to Improve Operating Efficiency. This work was mandated in the
Consolidated Appropriations Act for Fiscal Year 2005, Pub. L. No. 108-
447 (2004), see 2 U.S.C. � 2162 note.
[11] According to CPP officials, draft submission of the study will be
presented to a panel of industry experts to be convened by the National
Academy of Sciences. CPP officials also noted that the final
publication may be delayed based on panel comments or recommendations.
[12] CPP's staffing level as of January 2008 is 83 full-time employees.
[13] Capitol Power Plant: Actions Needed to Improve Operating
Efficiency.
[14] In December 2007, we hired an independent technical consultant who
validated the 2006 recommendation made by AOC's consultant with respect
to reduced staffing levels.
[15] AOC is administering a questionnaire to gather data on the
training that its employees have received throughout their careers, but
officials remain uncertain about when the results of the questionnaire
will be available or how they will be used.
[16] GAO, Architect of the Capitol: Committed, Sustained Leadership
Needed to Continue Progress, GAO-07-407 (Washington, D.C.: Feb. 28,
2007).
[17] CPP officials expect to complete the equipment inventory by
September 2008.
[18] The Commercial Activities Panel was created as a result of
legislation enacted by the Congress mandating a study of the government
competitive sourcing process. In its report, the panel lays out
sourcing principles and recommendations, which provide a road map for
improving sourcing decisions across the federal government. See
Commercial Activities Panel, Improving the Sourcing Decisions of the
Government: Final Report (Washington, D.C.: Apr. 30, 2002).
[19] GAO-04-367; GAO, Competitive Sourcing: Challenges in Expanding A-
76 Governmentwide,
[20] GAO-02-498T (Washington, D.C.: Mar. 6, 2002); and OMB, Circular A-
76 (Washington, D.C.: May 29, 2003).
[21] GAO-03-1022T.
[21] AOC is responsible for this building, and the tenants pay rent.
[22] These buildings are not part of the Capitol Hill Complex;
however, they are served by CPP and are billed for the services
provided.
[End of section]
GAO's Mission:
The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the performance
and accountability of the federal government for the American people.
GAO examines the use of public funds; evaluates federal programs and
policies; and provides analyses, recommendations, and other assistance
to help Congress make informed oversight, policy, and funding
decisions. GAO's commitment to good government is reflected in its core
values of accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each
weekday, GAO posts newly released reports, testimony, and correspondence
on its Web site. To have GAO e-mail you a list of newly posted products
every afternoon, go to [hyperlink, http://www.gao.gov] and select
"Subscribe to Updates."
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. Government Accountability Office:
441 G Street NW, Room LM:
Washington, D.C. 20548:
To order by Phone:
Voice: (202) 512-6000:
TDD: (202) 512-2537:
Fax: (202) 512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]:
E-mail: [email protected]:
Automated answering system: (800) 424-5454 or (202) 512-7470:
Congressional Relations:
Gloria Jarmon, Managing Director, [email protected]:
(202) 512-4400:
U.S. Government Accountability Office:
441 G Street NW, Room 7125:
Washington, D.C. 20548:
Public Affairs:
Chuck Young, Managing Director, [email protected]:
(202) 512-4800:
U.S. Government Accountability Office:
441 G Street NW, Room 7149:
Washington, DC 20548:
*** End of document. ***