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)				 

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GAO-08-382R

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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. ï¿½ 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 buildingsï¿½ 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. ï¿½ 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] 

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