National Parks: Views on the Denver Service Center and Information on
Related Construction Activities (Letter Report, 06/23/95,
GAO/RCED-95-79).

Pursuant to a congressional request, GAO reviewed the quality and
timeliness of services provided by National Park Services' (NPS) Denver
Service Center, focusing on: (1) how NPS sets priorities for funding
construction projects and how Congress modifies those priorities during
consideration of annual NPS budget requests; (2) the process NPS uses to
develop project cost estimates; and (3) the makeup of the projects'
contingency and supervision funds.

GAO found that: (1) park managers were generally satisfied with the
Center's service quality and timeliness for projects completed during
fiscal year (FY) 1991 through FY 1993; (2) reported problems did not
appear to be systemic, since they varied among the construction projects
and park units; (3) park managers' decisions not to use the Center's
services were generally not based on concerns about the quality of those
services; (4) NPS sets construction priorities through a bottom-up
decision making process with input from individual park units; (5) NPS
is planning to revise its priority-setting process, since the current
process is not based on objective criteria; (6) Congress often funds
construction projects in addition to those on the NPS priority list, and
also provides funding levels far above those requested by NPS; (7) the
gap between NPS budget requests and appropriations is narrowing because
of annual limits on discretionary spending; (8) although the Center
develops and refines cost estimates prior to funding requests,
congressionally designated projects are often funded before they are
planned and designed; (9) contingency and project supervision costs are
usually included in project cost estimates; and (10) historically,
contingencies and project supervision have accounted for 16 percent and
15 percent, respectively, of a project's cost, but there are no
standards for reasonable contingency or supervision costs.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-95-79
     TITLE:  National Parks: Views on the Denver Service Center and 
             Information on Related Construction Activities
      DATE:  06/23/95
   SUBJECT:  National parks
             Facility construction
             Construction costs
             Evaluation methods
             Appropriated funds
             Prioritizing
             Project monitoring
             Oversight by Congress
             Construction contracts
IDENTIFIER:  National Park System
             
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Cover
================================================================ COVER


Report to Congressional Requesters

June 1995

NATIONAL PARKS - VIEWS ON THE
DENVER SERVICE CENTER AND
INFORMATION ON RELATED
CONSTRUCTION ACTIVITIES

GAO/RCED-95-79

Denver Service Center


Abbreviations
=============================================================== ABBREV


Letter
=============================================================== LETTER


B-259778

June 23, 1995

The Honorable Ralph Regula
Chairman
The Honorable Sidney R.  Yates
Ranking Minority Member
Subcommittee on Interior and Related Agencies
Committee on Appropriations
House of Representatives

The Honorable Bruce F.  Vento
House of Representatives

The National Park System is composed of over 360 units, including
parks, monuments, and historic sites, and is administered by the
Department of the Interior's National Park Service (Park Service). 
One of the major organizational units of the Park Service is the
Denver Service Center (the Center), whose mission, among other
things, is supporting construction activities throughout the park
system.  In performing its mission, the Center works with individual
park units in planning, designing, and constructing projects, which
range from rehabilitating historic structures to building new visitor
centers to repairing and replacing utility systems.  Park units are
expected to use the Center's services for projects costing over
$250,000.  However, there are exceptions.  Individual park units can
perform projects costing over $250,000 if they have the expertise at
the park and the approval of Park Service headquarters.  The Center
awarded 62 contracts, totaling $105.2 million, for construction
projects in fiscal year 1993 (the latest year for which such data
were available). 

Because of your concern about the quality of the services provided by
the Center, you asked us to obtain park managers' views on the
quality and timeliness of those services.  In addition, you asked us
to provide information on three other aspects of the Park Service's
construction program.  Specifically, you asked us to (1) describe how
the Park Service sets priorities for funding construction projects
and how the priorities may be modified during congressional
consideration of the Park Service's annual appropriations requests,
(2) describe the process the Park Service uses to develop projects'
cost estimates, and (3) provide information on the makeup of
projects' contingency and supervision funds. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Park managers who responded to the questionnaires we sent to all park
units were generally satisfied with the quality and timeliness of the
services the Center provided during fiscal years 1991 through 1993.\1
When problems with the Center were reported, they varied among
projects and park units and did not appear to be systemic.  When park
managers chose not to use the Center, they did so because they had
capable staff available within the unit to do the work or because the
projects were small.  The quality and timeliness of the Center's
services were not cited as factors when decisions were made not to
use the Center. 

To rank construction projects for funding, the Park Service begins
with input from the individual park units.  From this input, it
develops a Park Service-wide project priority list.  From the Park
Service-wide priority list, the Park Service selects construction
projects to be included in annual appropriations requests.  In a
February 1995 report to the Congress, the Department of the Interior
acknowledged that the Park Service's current decision-making process
for ranking construction projects is flawed because it lacks
objective criteria.\2 And as a result, the agency is planning to
revise the process.  Each year, as the Congress considers the Park
Service's annual appropriations requests, it identifies other
construction projects for funding.  For example, during fiscal years
1985 through 1994, the Park Service requested funding for 157
projects, while the Congress identified another 520 projects for
funding.  In any given year, some of the projects identified by the
Congress are from the Park Service's priority list, and some are not. 
In its recent report, Interior acknowledged that some congressionally
identified projects have affected the Park Service's construction
priorities.  However, the report makes no recommendations
specifically addressing this matter. 

In estimating the cost of a project on the Park Service-wide priority
list, the Center generally develops and refines estimates during the
project's planning and design phases, which usually occur before
congressional funding is requested.  For projects identified by the
Congress, construction funding is often provided before the planning
and design work has been performed. 

Cost estimates for each project identified by the Park Service for
funding from construction appropriations include costs for
contingencies and project supervision.  Contingency costs, which
include expenses for contract modifications, have historically
amounted to about 16 percent of each project's total construction
costs.  Project supervision costs, which include expenses for on-site
supervision by Center personnel during construction, have generally
amounted to about 15 percent of each project's total construction
costs.  We found that there were no governmentwide or industrywide
standards for what could be considered acceptable or appropriate
contingency and project supervision costs.  When we checked with
several other federal agencies, we found that contingencies accounted
for 5 to 10 percent and project supervision accounted for 5 to 20
percent of the total construction costs. 


--------------------
\1 We selected fiscal years 1991 through 1993 because this period
would provide us with the most recent projects completed as well as
with a mix of planning, design, and construction projects.  We also
believed that the employees most familiar with the projects would
still be employed at the park at the time of our review. 

\2 Opportunities for the Improvement of the National Park Service
Line Item Construction Program:  Definition, Control and Priority
Setting, U.S.  Department of the Interior (Feb.  1995). 


   BACKGROUND
------------------------------------------------------------ Letter :2

The Center serves all park units and is responsible for (1)
developing planning documents, such as management plans and
environmental documents; (2) designing facilities; and (3)
contracting for and supervising major construction projects. 
Construction projects include not only new facilities but also
preservation, rehabilitation, and restoration work on historic
structures.  The Center provides these services either through its
own staff or by contract with architectural, engineering, and other
firms. 

The Center is headed by the Assistant Director for Design and
Construction, who reports to the Park Service Associate Director for
Planning and Development.  As of September 30, 1994, the Center
employed a total of 710 staff.  Center staff include architects;
landscape architects; civil, general, mechanical, and electrical
engineers; historians; archaeologists; and biologists.  Of the 710
staff, 529 were assigned to geographical teams that serve the
eastern, central, and western park units.  Other Center staff were
assigned to divisions such as those providing information and
production services, engineering services, contract administration,
and concessions planning and analysis. 

Each year, the Congress appropriates a fixed amount--a lump sum--for
the Park Service's construction projects.  The conference report for
the Department of the Interior's annual appropriations request
identifies the amount of funding expected to be spent on each
specific project.  Park Service headquarters allocates the
appropriated funds to regional offices responsible for the projects
and not to the Center.  The allocations for the projects are made in
accordance with the language in the conference report. 

Funding for the Center's activities comes from the Park Service's
overall construction appropriation and from funds provided by other
federal, state, and nonprofit agencies.  For example, in fiscal year
1994, the Center received total funding of $74.9 million.  Of this
amount, $53.3 million came from the Park Service's construction
appropriation--$6.1 million for general management plans, $29.8
million for construction planning, and $17.4 million for construction
supervision.  In addition, the Center received $6.5 million for its
involvement in road planning and design and an additional $15.1
million for professional and technical advice and assistance provided
to parks and other agencies.\3

In addition, the Center carried over prior year funds amounting to
$19.7 million. 

The Congress has been concerned about the construction programs in
the Department of the Interior.  As a result, the conference report
accompanying Interior's fiscal year 1994 appropriations bill required
the Department to review the Park Service's, Fish and Wildlife
Service's, and Bureau of Land Management's construction programs. 
The requirement for the study was based, in part, on a concern that
the agencies lacked objective criteria to allocate limited
construction funding and that actual construction costs frequently
appeared to significantly deviate from initial cost estimates.  The
conference report stated that a task force should be established to
conduct the study.  After discussions with congressional staff, it
was decided that the task force, composed of Interior employees and
private sector consultants, would focus on the Park Service because
its construction program was the largest.  The task force addressed
two major topics:  (1) the process used to prepare the Park
Service-wide priority list of construction projects and (2) the
process used to ensure that construction projects are cost-effective. 
The task force also wanted to develop an alternative process to the
one currently being used. 


--------------------
\3 The road planning and design funds were provided by the Department
of Transportation's Federal Land Highway Program; the advice and
assistance funds were provided through refunds and reimbursements
from other federal, state, and nonprofit agencies that had received
advice or assistance from the Center. 


   PARK UNIT OFFICIALS' GENERAL
   SATISFACTION WITH CENTER'S
   SERVICES
------------------------------------------------------------ Letter :3

The responses to the questionnaires we sent indicated that, in
general, park units that had worked with the Center on projects
completed during fiscal years 1991 through 1993 were satisfied with
the services provided.  While some units expressed dissatisfaction
with the Center's performance on some projects, the reasons for their
dissatisfaction varied from project to project and were not systemic. 
For units that completed projects without the Center's assistance,
their reasons for doing so did not focus on concerns about the
Center's quality of service or timeliness. 


      UNITS THAT HAD USED THE
      CENTER'S SERVICES WERE
      SATISFIED WITH QUALITY AND
      TIMELINESS
---------------------------------------------------------- Letter :3.1

To get an indication of whether units that had used the Center were
satisfied with its performance, we developed separate questionnaires
for planning, design, and construction projects.  We sent a separate
questionnaire to each unit for which the Center had completed a
planning project, a design project, or a construction project during
fiscal years 1991 through 1993.  (A detailed discussion of our scope
and methodology is contained in app.  I.)

For all three types of projects, the respondents reported
satisfaction with the quality, timeliness, and overall adequacy of
the services provided by the Center.  Table 1 shows the numbers and
types of questionnaires sent and the numbers of responses received. 



                           Table 1
           
           Numbers and Types of Questionnaires Sent
                         and Received

                                  Number    Number  Response
Type                                sent  received      rate
------------------------------  --------  --------  --------
Planning                              12        12     100.0
Design                               164       159      97.0
Construction                         112       109      97.3
============================================================
Total                                288       280      97.2
------------------------------------------------------------
Because the responses to all three of the questionnaires were so
similar, we combined the responses for reporting purposes.  Table 2
shows the combined responses to issues in the project-specific
questionnaires. 



                           Table 2
           
              Respondents' Experiences With the
            Center's Services on Specific Projects


Issue                           Positive   Neutral  Negative
------------------------------  --------  --------  --------
Adequacy with which product           91         5         4
 met unit's needs
Quality of Center's services          66        27         7
Timeliness of Center's                73        16        10
 services
Adequacy of communication             86         9         5
 between Center and unit
 staffs
Consistency of Center's               89         8         4
 product with unit's
 expectations
Adequacy of unit's level of           81        16         3
 involvement
Time it took to complete the          81        15         5
 project
------------------------------------------------------------
\a Percentages may not total to 100 because of rounding. 

The questionnaire responses did not indicate a great level of
dissatisfaction with the services provided by the Center. 
Specifically, for the 280 questionnaires for which we received
responses, unit officials expressed some dissatisfaction with the
Center's services on 32 of them--about 11 percent.  These 32
questionnaires represented projects in 20 different parks. 

To see if any patterns or consistencies existed in the park unit
managers' reasons for dissatisfaction, we visited 7 of the 20 park
units that had reported dissatisfaction with the Center's services on
specific projects.  Collectively, these seven units had completed 38
questionnaires and had expressed some dissatisfaction on 9 of them. 
We also visited five other units whose managers had expressed general
concerns about the Center's services.\4 In each of the 12 units we
visited, we discussed the officials' experiences with the Center. 
(App.  II lists the park units that we visited.)

The types of problems that generated dissatisfaction, we found, were
not systemic; rather, they varied widely among projects.  The
following are examples of the problems that unit officials cited
during our visits: 

  The Center's staff lacked awareness of local practices and site
     conditions. 

  Continuity in construction supervision was lacking. 

  The park unit did not have the opportunity to provide enough input
     during the design phase. 

  The Center's services were too expensive. 

  Operations and maintenance manuals and drawings were not provided
     in a timely manner. 

  Problems occurred with revegetation after the project was
     completed. 

  The contractor's work was untimely and of poor quality. 


--------------------
\4 We selected units to obtain a variety of geographic locations,
types of park units, and types of reported concerns. 


      QUALITY OF THE CENTER'S WORK
      WAS NOT A SIGNIFICANT FACTOR
      IN DECISIONS NOT TO USE THE
      CENTER'S SERVICES
---------------------------------------------------------- Letter :3.2

To elicit the reasons underlying decisions not to seek the Center's
assistance on projects, we sent a second questionnaire to all park
units asking whether they had completed any planning, design, or
construction projects during fiscal years 1991 through 1993 without
assistance from the Center and, if so, why.  The 301 park units that
responded (a 90.4-percent response rate) reported having completed
over 2,000 projects without the Center's assistance, compared with
the 288 projects that park units had completed with the Center's
assistance.  The respondents consistently cited certain factors as
being important to their decision not to use the Center in
accomplishing projects.  The top factors were as follows: 

  The unit had available staff with the requisite skills and
     abilities to complete the project. 

  The project was not on the Park Service-wide priority list. 

  The Center's overhead costs were perceived to be too high; that is,
     Center-provided projects were viewed as being more costly than
     projects completed by park personnel. 

Many respondents commented that the park units generally do not seek
the Center's assistance for projects that can be done by unit staff. 
These projects are generally small and not complicated.  Several
respondents commented that the types of projects their units had
chosen to do themselves included constructing information kiosks,
storage sheds, administration buildings, and trails.  Similar views
were expressed by the Park Service Associate Director for Planning
and Development.  According to this official, projects that units
accomplish themselves are generally small and below the cost
threshold for the Center's involvement. 

In addition, according to almost half--46 percent--of the
respondents, the fact that projects did not meet the cost threshold
for the Center's involvement (under $250,000) was very important in
their decisions to handle the projects within the unit.  Again, these
were generally smaller projects. 

The Center has recognized that its overhead charges may be perceived
as being too high.  In an effort to address this issue, the Center
has distributed a Superintendents' Quick Reference Guide, which
details the services provided by the Center and includes an
explanation of what goes into the overhead charges.  The guide states
that since all of the Center's charges are for specific projects, the
projects must share in the costs of managing the infrastructure of
the Center.  The guide also recognizes that parks have overhead but
concludes, on the basis of a 1990 study, that the overhead costs in
mid-size to large parks are generally about the same or somewhat
higher than the Center's. 

The factors that were least influential in units' decisions to
perform projects within the unit were the quality, availability, and
timeliness of the Center's services.  The quality of the Center's
services was identified as being a very important factor by 10
percent of the respondents, and the availability of the Center's
staff was a very important factor to 13 percent of the respondents. 
The timeliness of the Center's services was very important to 40
percent of the respondents.  Again, the Center, recognizing that
timeliness is important to its customers, explained in its
Superintendents' Quick Reference Guide that its services may not
always be timely because its workload and construction activities
nearly tripled during fiscal years 1988 through 1992, while the staff
increased only 27 percent.  The guide also describes the average
amount of time needed for the various stages of a project.  (App. 
III contains detailed questionnaire responses for this portion of our
analysis.)


   THE PARK SERVICE'S CONSTRUCTION
   PRIORITIES
------------------------------------------------------------ Letter :4

The Park Service determines its construction priorities through a
bottom-up decision-making process.  The process ends with the
compilation of a national priority list for construction projects
throughout the park system from which the Park Service selects
construction projects for inclusion in its annual appropriations
requests.  However, Interior has recognized problems with the Park
Service's priority-setting process and has recommended changes to the
process.  Specifically, Interior acknowledged that the Park Service
has not adequately defined its objectives for setting construction
priorities and that the current process for making such decisions
lacks objectivity.  Since at least 1985, in addition to the Park
Service's priority projects, additional projects have been identified
for funding during congressional consideration of the Park Service's
annual appropriations requests.  Moreover, beginning in fiscal year
1991, requested funding for some Park Service-determined priority
projects was either eliminated and/or reduced in response to the
conference report on Interior's appropriations in order to fund
congressionally identified projects. 


      PARK SERVICE'S PROJECT
      PRIORITIES ARE MODIFIED
      DURING CONGRESSIONAL
      CONSIDERATION OF
      APPROPRIATIONS REQUESTS
---------------------------------------------------------- Letter :4.1

The process of determining construction project priorities begins at
the individual parks, whose officials identify and justify the
projects needed in their units and assign each a priority.  The unit
officials then send these lists to their respective regional offices. 
At each of the 10 regional offices, officials review and rank the
listed projects from the park units within the region on the basis
of, among other things, health and safety considerations, historic
preservation needs, and facilities for developing park units.  Each
region's list of priorities is then addressed at a meeting (held once
every 3 to 5 years) of the Park Service director, the associate
directors, and the 10 regional directors.  These officials evaluate
each listed project and reach consensus on the Park Service-wide
priorities.  The result is a Park Service-wide priority list of
projects to be completed over a 4- to 10-year period. 

The resulting Park Service-wide construction project priority list
remains fairly constant for 3 to 5 years.  As of January 1994, the
Park Service-wide project priority list included 121 projects with an
estimated aggregate cost of about $1.6 billion.  At any time,
however, project priorities can change, generally as a result of an
emergency.  For example, when Hurricane Andrew severely damaged
structures in the Everglades National Park in Florida, project
priorities were realigned to accomplish needed repairs. 

Each year, Park Service officials select projects for inclusion in
the construction program, generally from the top of the priority
list, and appropriations are requested.  Each year over the past
decade, additional construction projects have been identified for
funding during congressional consideration of the Park Service's
annual appropriations requests.  Some of the congressionally
identified projects are from the Park Service's priority list; others
are not.  In each fiscal year since at least 1985, the amount
appropriated for construction projects has exceeded the amount
requested by the Park Service for priority projects.  According to
Park Service officials, this situation occurred because the Congress
did not believe the level of funding requested for the Park Service's
construction projects was adequate, and funding for additional
projects was added.  During this time, the Park Service's annual
requests for construction appropriations averaged $47.4 million,
while the amount appropriated averaged $138.7 million.  Figure 1
shows the difference in the project construction amounts requested
and appropriated over the 10-year period. 

As figure 1 shows, while the gap between the amounts requested and
appropriated is relatively large, it was greatest in fiscal year 1991
and has since narrowed.  In large part, according to a Park Service
official, the recent narrowing is due to the implementation of the
Budget Enforcement Act of 1990, which established annual limits for
total discretionary spending.  As a result, beginning in fiscal year
1991, expected funding for Park Service-requested projects was either
eliminated or reduced in order to fund congressionally identified
projects. 

   Figure 1:  Construction Funding
   Requested and Appropriated

   (See figure in printed
   edition.)

Source:  National Park Service. 

Prior to fiscal year 1991, the Park Service's priority projects were
fully funded along with the projects identified by the Congress. 

Table 3 compares, since fiscal year 1985, the number of Park
Service-requested projects and the number of congressionally
identified projects.  For fiscal years 1991 through 1994, the Park
Service received appropriations for 355 construction projects; 87
were Park Service-requested projects, and 268 were congressionally
identified. 



                           Table 3
           
               Number of Park Service-Requested
            Priority Projects and Congressionally
            Identified Projects, Fiscal Years 1985
                         Through 1994


                                  Park
                              Service-  Congressionall
                             requested    y identified  Tota
Fiscal year                 priorities        projects     l
------------------------  ------------  --------------  ----
1985                                16              30    46
1986                                23              34    57
1987                                 7              35    42
1988                                11              30    41
1989                                 4              63    67
1990                                 9              60    69
1991                                18              69    87
1992                                22              87   109
1993                                23              64    87
1994                                24              48    72
============================================================
Total                              157             520   677
------------------------------------------------------------
Source:  National Park Service. 

The total amount of appropriations for fiscal years 1991 through 1994
for the 355 projects was $753.5 million.  Of this amount, $301.8
million, or 40 percent, was attributable to the 87 Park
Service-requested priority projects, and $451.7 million, or 60
percent, was attributable to the 268 congressionally identified
projects.  According to a Park Service official, 83 of the 268
congressionally identified projects were on the Park Service's
priority list, and 185 projects were determined not to be priority
needs by Park Service officials.  While Park Service officials
acknowledge that congressionally identified projects help meet many
of the Park Service's facility improvement needs, they are frequently
not among those that Park Service officials have determined to be the
most needed. 

In fiscal years 1991 through 1994, funding attributable to Park
Service-requested priority projects totaling $87.8 million was either
reduced or eliminated in order to fund projects identified by the
Congress.  Included in this total were 11 priority projects that were
funded at less than the amount requested by the Park Service (a total
reduction of $42.2 million) and 13 Park Service priority projects
that received no funding (an elimination of $45.6 million). 

In its February 1995 report, the congressionally chartered task force
that examined the Park Service's construction program reported that
the Park Service has not adequately defined its objectives for
establishing Park Service-wide construction priorities.  The report
also noted that the decision process for setting Park Service-wide
construction priorities lacked objectivity. 

Although the task force's report did not make any recommendations
about projects identified during congressional consideration of the
Park Service's annual appropriations requests, the report recognized
that congressional identifications occur.  The task force made
recommendations in three areas intended to provide opportunities for
improving the cost management of the Park Service's construction
program.  First, cost-benefit assessments should be applied during
the initial stages of project planning and design.  Second, the
responsibility of line management for oversight of construction
projects from project definition to design should be strengthened. 
Third, projects on the Park Service-wide priority list should be
selected and ranked by an objective process that responds to a
comprehensive strategy for systemwide development.  Within the three
broad areas are specific implementing recommendations.  Park Service
officials informed us that the task force's recommendations will be
implemented in calendar year 1995. 


   ESTIMATING PROJECT COSTS
------------------------------------------------------------ Letter :5

Project cost estimating is one of the services provided by the
Center.  In carrying out this responsibility, the Center has
developed a process that relies on three types of project cost
estimates.  The three types of estimates are for various phases of a
project--planning, design, and construction--and get increasingly
more specific as a project proceeds from initial planning to
construction. 

For the Park Service's priority projects, associated planning and
design work is funded from annual planning and design appropriations
that go directly to the Center.  Early in the project planning phase,
before design work has begun, the Center prepares a rough, or class
C, estimate.  A class C estimate is a conceptual estimate based on
the square-foot cost of similar construction.  After the designers at
the Center, park unit officials, and cognizant regional Park Service
officials have reached agreement on the preliminary design, including
the type and scope of work to be performed and the materials to be
used, a more detailed estimate is prepared.  This estimate, called a
class B estimate, is based on the approved preliminary design and is
generally the one used in the Park Service's request for construction
appropriations.  Finally, prior to advertising the project for
competitive bid, a class A estimate is prepared that is based on
completed construction drawings, specifications, and quantities of
materials. 

According to Park Service officials and the task force's report on
the Park Service's construction program, often little or no planning
has been performed on the projects identified during congressional
consideration of the Park Service's annual appropriations requests. 
Even though these projects may be on the Park Service-wide priority
list, they are not among the top-priority projects identified by the
Park Service--those on which planning and design work has been
performed prior to requesting construction funding.  As a result,
according to both Park Service headquarters and Center officials,
without the requisite planning or design work, the cost estimates
attached to the projects identified by the Congress are sometimes
less accurate than those for projects that have gone through the
regular planning and design cycles. 


   USE OF CONTINGENCY AND
   SUPERVISION FUNDS
------------------------------------------------------------ Letter :6

The Park Service's cost estimates for each of the projects identified
for funding from construction appropriations include costs for
project contingencies and for construction supervision.  The amount
for project contingencies is 16 percent of each project's estimated
cost and is to be used to pay for things such as cost increases due
to contract modifications and higher than expected bids by
contractors.  The amount for project supervision is 15 percent of
each project's estimated cost and is to be used to pay for all
construction supervision activities, including the inspection of
contractors' work and the evaluation of completed facilities.  These
amounts reflect the Park Service's past experience with managing
construction activities. 

A hypothetical example demonstrates how the process actually works. 
If construction costs for a project were estimated to be $1 million,
the Park Service would request $1.31 million for the project.  In
addition to the $1 million in construction cost for the project, the
Park Service would request $160,000 for project contingencies and
$150,000 to fund project supervision costs.  Once the contract for
the project is awarded, the responsible Park Service region receives
$1 million for the project's construction.  However, both the
contingency and supervision funds are controlled by the Park Service
headquarters office in Washington, D.C.  The Center, as the office
assigned the responsibility for managing construction projects, is
authorized to use the contingency funds as needed, with the
Washington office's approval.  The Center is also authorized to use
the construction supervision fund but only to fund the supervision
cost it has estimated for a specific project. 

Historically, according to top-level Center officials, the majority
(about two-thirds) of the expenditures from the contingency fund has
been for contract modifications, such as minor changes in the scope
or materials to be used.  The remaining one-third has been spent for
contingencies such as bid protests and variations in the bid
process--for example, when the lowest bid is not accepted.\5

As for the construction supervision fund, according to top level
Center officials, about 70 percent of construction supervision costs
has historically been for Center personnel located on-site to ensure
that contractors comply with plans and specifications.  The remaining
30 percent has been about evenly divided between travel costs for
Center personnel and nonlabor costs, such as supplies and telephone
services for Center personnel while on-site.  According to the
Center's December 1987 study of 101 projects completed in fiscal
years 1985 and 1986, the average construction supervision costs were
19.1 percent of the final contract amount.  According to the
Associate Director for Planning and Development, no more recent study
has been performed. 

To determine whether there were any industrywide standard rates for
project contingencies and project supervision, we contacted officials
from the Association of General Contractors and the Daily Journal (a
construction trade industry publication).  These officials said that
there were no such standards and that contingency and project
supervision costs vary by the size, type, and location of the
project. 

To get an indication of the rates used for project contingencies and
construction supervision by other federal agencies, if any, we
judgmentally selected four agencies to contact.  These were the
Department of the Interior's Bureau of Reclamation and Fish and
Wildlife Service, the General Services Administration, and the
Department of the Army's Corps of Engineers.  At these agencies,
according to officials we contacted, contingency funds ranged from 5
to 10 percent of a project's cost and contract supervision accounted
for 5 to 20 percent of the construction costs.  None of the officials
we contacted indicated that costs for contingencies and project
supervision are routinely added to project costs in the manner that
the Park Service uses.  The officials said that contingency and
project supervision amounts were estimated on a project-by-project
basis.  The officials also cautioned that their amounts for
contingencies and project supervision varied by the size and type of
the project. 


--------------------
\5 Emergencies such as fire fighting or law enforcement activities
are often covered with unobligated contingency funds.  Such
expenditures are generally reimbursed through supplemental funding. 


   CONCLUSIONS
------------------------------------------------------------ Letter :7

According to responses to questionnaires we sent to all park units,
when park managers used the Center for design, planning, and
construction activities, they were generally satisfied with the
services provided.  When park managers did not use the Center, the
quality and timeliness of the Center's services were generally not
factors in the decision.  The Park Service uses a process for
establishing construction priorities.  In at least each of the past
10 years, the priorities developed by the Park Service have been
modified by the addition of projects identified during congressional
consideration of the Park Service's annual appropriations requests. 
Over the past several years, about one-fourth of the projects funded
have been Park Service-requested priority projects; the remainder
have been congressionally identified projects.  A congressionally
requested study is recommending changes to address problems with the
Park Service's process for selecting priority projects.  The Park
Service's cost estimate for each of the projects it has identified
for funding from construction appropriations includes costs for
project contingencies and for construction supervision--about 16
percent and about 15 percent of a project's total cost, respectively. 
We found no governmentwide or industrywide standards that could be
used as a benchmark for determining the reasonableness of the Park
Service's contingency and project supervision costs; however, they
were similar to those charged by several other federal agencies. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :8

We provided copies of a draft of this report to the Department of the
Interior and the Park Service for their review and comment.  On May
5, 1995, we met with Interior officials, including the Assistant to
the Assistant Secretary for Fish, Wildlife, and Parks, and Park
Service officials, including the Associate Director for Planning and
Development and the Associate Director for Budget and Administration,
to obtain their comments on the draft report.  Overall, the officials
agreed with the factual content and conclusions of the report.  In
commenting on the draft report, the officials suggested that we
clarify some of the language and provided us with updated information
on funding for the Service Center and the status of the task force's
report on the Park Service's construction activities.  Changes have
been made to the final report to reflect the updated information as
appropriate. 


---------------------------------------------------------- Letter :8.1

We conducted our review between January 1994 and May 1995 in
accordance with generally accepted government auditing standards.  A
detailed discussion of our objectives, scope, and methodology is
contained in appendix I. 

Please call me at (202) 512-7756 if you or your staff have any
questions.  Major contributors to this report are listed in appendix
IV. 

James Duffus III
Director, Natural Resources
 Management Issues


OBJECTIVES, SCOPE, AND METHODOLOGY
=========================================================== Appendix I

The Chairman and Ranking Minority Member, Subcommittee on Interior
and Related Agencies, House Committee on Appropriations, and
Representative Bruce F.  Vento asked us to obtain National Park
Service managers' views on the quality and timeliness of the Denver
Service Center's services.  In addition, the Members asked us to
provide information on three other aspects of the Park Service's
construction program.  Specifically, the Members asked us to (1)
describe how the Park Service sets priorities for funding
construction projects and how the priorities may be modified during
congressional consideration of the Park Service's annual
appropriations requests, (2) describe the process the Park Service
uses to develop projects' cost estimates, and (3) provide information
on the make-up of projects' contingency and supervision funds. 

To determine park unit officials' views on the quality and timeliness
of the Center's services, we developed separate questionnaires for
planning, design, and construction projects.  We developed separate
questionnaires for each phase of a project because (1) the services
are discrete phases of a project which are typically funded
separately and (2) we wanted to obtain park unit officials' views on
the services provided by the Center during each phase of the project. 
For each phase of a project, the questionnaires asked similar
questions about the quality, timeliness, and overall adequacy of the
services provided by the Center. 

We sent a separate questionnaire for each project that had been
completed during fiscal years 1991 to 1993.  We selected the period
from fiscal years 1991 through 1993 because it would provide us with
the most recent projects completed; in addition, by choosing a 3-year
period we would obtain a mix of planning, design, and construction
projects.  We also believed that by choosing this period, employees
most familiar with the projects would still be employed at the park. 
Some unit officials received several questionnaires.  For example,
due to the number of projects completed within the 3-year period at
Golden Gate National Recreation Area in San Francisco, California,
the head of that unit received eight project questionnaires--one for
a planning project, four for design projects, and three for
construction projects completed with the Center's assistance.  We
also visited 12 park units, where we discussed unit managers'
experiences with the Center.  Appendix II lists the park units we
visited. 

To determine why park units did not use the services of the Center,
we developed another questionnaire that asked whether the park unit
had completed any planning, design, and construction projects during
fiscal years 1991 through 1993 and, if so, why they did not use the
services of the Center.  For this questionnaire, we started with a
universe of 380 park units.  From this universe, we excluded from our
questionnaire mailing the nine units that had no facilities managed
by Park Service personnel.  Additionally, we combined some units to
ease the response burden.  That is, in some cases, one park unit
official supervises more than one unit--for example, the Statue of
Liberty and Ellis Island in New York City.  In those cases, we sent
only one general questionnaire to cover all applicable units.  The
resulting universe was 333 park units that received these overall
questionnaires; we received responses from 301 park units (a
90.4-percent response rate). 

To gain an understanding of how Park Service projects are ranked for
funding, how the priorities may be modified during congressional
consideration of the Park Service's annual appropriations requests,
and how cost estimates are developed, we reviewed budget and
construction program documents and interviewed officials at the
Center and at Park Service headquarters who are responsible for
various aspects of construction program management.  In conducting
our work on how the Park Service ranks projects and develops cost
estimates, we limited our work to describing how the process works. 
We did not review the methodology the Park Service uses to rank its
construction projects or the accuracy of the cost estimates since
these were objectives of the congressionally chartered task force
that examined the Park Service's construction program. 

In describing the make-up of contingency and project supervision
funds, we interviewed Center and headquarters officials to determine
what went into the funds and how expenditures were made.  We did not
independently verify the charges to the funds since we were asked
only to describe what was included in the charges.  We did contact
several other federal agencies to determine what made up their
contingency and supervision funds and checked with a private
contracting organization. 

Our work was conducted primarily at the Center (in Lakewood,
Colorado) and at the individual park units.  As mentioned above, we
also interviewed headquarters officials responsible for setting
project priorities, cost estimating, and the makeup of contingency
and project supervision funds. 


NATIONAL PARK UNITS VISITED BY GAO
========================================================== Appendix II


      EASTERN AREA
------------------------------------------------------ Appendix II:0.1

Delaware Water Gap National Recreation Area; Bushkill, Pennsylvania

Harper's Ferry National Historical Park; Harper's Ferry, West
Virginia

New River Gorge National River; Glen Jean, West Virginia

Springfield Armory National Historic Site; Springfield, Massachusetts


      CENTRAL AREA
------------------------------------------------------ Appendix II:0.2

Cuyahoga Valley National Recreation Area; Brecksville, Ohio

Fossil Butte National Monument; Kemmerer, Wyoming

Hot Springs National Park; Hot Springs, Arkansas

Indiana Dunes National Lakeshore; Porter, Indiana


      WESTERN AREA
------------------------------------------------------ Appendix II:0.3

Fort Vancouver National Historic Site; Vancouver, Washington

North Cascades National Park; Sedro Woolley, Washington

Saguaro National Monument; Tucson, Arizona

Sequoia National Park; Three Rivers, California


RESPONSES TO THE GENERAL
QUESTIONNAIRE
========================================================= Appendix III

We sent a general questionnaire to 333 national park units.\1

This questionnaire sought information on whether the units had
accomplished any planning, design, or construction projects within
the last 3 fiscal years without assistance from the Center and, if
so, why.  The questionnaire asked similar questions as to why the
park unit did not use the Center for either planning, design, or
construction projects.  Officials of 301 park units responded (a
response rate of 90.4 percent). 

The responses to the questionnaires, regardless of whether it was
about the planning, design, or construction phase of a project, were
consistent.  Accordingly, we combined the responses for reporting
purposes.  The most commonly reported reasons for not using the
Center's services were that the unit had the staff and capabilities
in house, that its projects were not on the Park Service's priority
list, and that it perceived the Center's overhead costs to be too
high.  The quality of the Center's work was not identified as a major
concern. 

Respondents were asked to characterize, by one of three categories,
the importance of certain factors in their decision not to use the
Center's services.  Following are the factors and the percent of
responses in each category.  (Response percentages may not total to
100 due to rounding.)

Factor: Staff were available within the park unit. 

Response: Extremely or very important:  64 percent
Moderately important:  10 percent
Somewhat or not important:  25 percent

Factor: Capabilities were available within the park unit. 

Response: Extremely or very important:  63 percent
Moderately important:  10 percent
Somewhat or not important:  27 percent

Factor: Project was not on the Park Service-wide priority list. 

Response: Extremely or very important:  61 percent
Moderately important:  11 percent
Somewhat or not important:  28 percent

Factor: Overhead charged by the Center. 

Response: Extremely or very important:  61 percent
Moderately important:  13 percent
Somewhat or not important:  26 percent

Factor: Park unit had greater knowledge of local conditions. 

Response: Extremely or very important:  56 percent
Moderately important:  16 percent
Somewhat or not important:  28 percent

Factor: Project was below the cost threshold for the Center's
involvement. 

Response: Extremely or very important:  46 percent
Moderately important:  16 percent
Somewhat or not important:  38 percent

Factor: Park unit was concerned about the Center's timeliness. 

Response: Extremely or very important:  40 percent
Moderately important:  14 percent
Somewhat or not important:  46 percent

Factor: Center staff were not available. 

Response: Extremely or very important:  13 percent
Moderately important:  15 percent
Somewhat or not important:  73 percent

Factor: Park unit was concerned about quality of the Center's work. 

Response: Extremely or very important:  10 percent
Moderately important:  16 percent
Somewhat or not important:  73 percent


--------------------
\1 From the universe of 380 park units, we excluded from our
questionnaire mailing the 9 units that had no facilities managed by
Park Service personnel.  Additionally, we combined some units to ease
the response burden.  That is, in some cases, one park unit official
supervises more than one unit.  In those cases, we sent only one
general questionnaire to cover all applicable units. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IV

RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION, WASHINGTON,
D.C. 

Jonathan T.  Bachman
Clifton W.  Fowler
John S.  Kalmar, Jr.

DENVER REGIONAL OFFICE

Diane S.  Lund
William J.  Temmler
Pamela K.  Tumler
Felicia A.  Turner

