[Administration of the Contract to Rehabilitate and Expand the Bryce Canyon Visitor Center]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 2003-I-0009

Title: Administration of the Contract to Rehabilitate and Expand
       the Bryce Canyon Visitor Center

Report No. 2003-I-0009  

Title: Administration of the Contract to Rehabilitate and Expand the Bryce Canyon Visitor Center 


Date:  January 22, 2003



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ADVISORY REPORT


Memorandum

To:  Regional Director, Intermountain Region, National Park Service 

From:  Anne L. Richards, Regional Audit Manager 

Subject:  Administration of the Contract to Rehabilitate and Expand the Bryce Canyon Visitor Center (No. 2003-I-0009)

The enclosed report (compact disc) presents the results of our observations concerning the National Park Serviceï¿½s (NPS) administration of a contract to rehabilitate and expand the visitor center at Bryce Canyon National Park in Utah.  We assessed the contract administration in conjunction with our audit of the contractorï¿½s costs.  We have issued a draft report on our audit of the costs to NPS contracting officials.  

We performed our review in accordance with the applicable ï¿½Government Auditing Standards,ï¿½ issued by the Comptroller General of the United States.  Accordingly, we included such tests of records and other auditing procedures that we considered necessary under the circumstances.  Our scope was limited to the administration of the contract to rehabilitate and expand the Bryce Canyon Visitorï¿½s Center.  To accomplish our objective, we reviewed the contract files of the Contracting Officers and the Contracting Officerï¿½s Representative.  We also interviewed the appropriate NPS officials at the Denver Service Center and the Park and officials from the Architectural/Engineering firm.  We reviewed the contractorï¿½s accounting system and records at the contractorï¿½s office in Cedar City, Utah.  We reviewed applicable sections of the Federal Acquisition Regulations and NPS-62, Acquisition Guideline.  We conducted our review between April and July 2002.   

Based on our assessment of contract administration, we concluded that NPS did not effectively administer the contract because it (1) selected an inappropriate contract type, (2) did not sufficiently monitor the contract, and (3) did not use cost containment strategies.

We believe that one of the principal causes for the problems encountered at Bryce Canyon may have been a lack of understanding of the various business/management processes involved.  Accordingly, we suggest that park superintendents and other NPS managers be advised of the lessons to be learned from the Bryce Canyon experience so that similar mistakes can be avoided on future recreational fee demonstration or other off-budget construction projects undertaken at the parks.  To assist in that effort, we have prepared our report as a PowerPoint presentation that can be used as a training aid.

We are prepared to assist in your efforts to broadcast this information.  Specifically, we would make available to you one of our team members to present the material and discuss any questions your staff may have regarding the information. 

We wish to thank officials from the Intermountain Region and Bryce Canyon National Park for their assistance in obtaining the information needed to prepare this presentation.  If you have any questions regarding our review or the presentation, please feel free to contact me at (303) 236-9243. 

Enclosure


ENCLOSURE

Office of Inspector General 
Department of the Interior
Contract Administration
Bryce Canyon Visitor Center Rehabilitation and Expansion

Observations

National Park Service
December 2002
Introduction and 
Background
With Fee Demonstration and Franchise Fee revenues, Parks now have the capacity to take on large, high dollar rehabilitation, maintenance, and improvement projects. 

Bryce Canyon National Park recently completed a project to rehabilitate and expand its visitor center using Fee Demonstration monies.  Total cost of the project was $4.8 million.


Introduction and Background
 
A private, non-profit organization contracted with an A/E firm to design the project and donated the results of the A/E firmï¿½s work to NPS.  The A/E firm included rough estimates of line item quantities and unit prices in the information provided to NPS.

The Denver Service Center, which has a quality control review process for construction projects, is not involved in the management of this or other Fee Demonstration projects. 


Introduction andBackground
 
NPS requested an audit of contract costs for the rehabilitation and expansion of the Bryce Canyon Visitor Center.  As part of our cost audit, we examined aspects of the contract administration, including selection of the contract type, efforts to monitor contractor performance, and application of available cost reduction strategies.

The Park Superintendent and the Contracting Officer (CO) who initiated and directed the project have both retired.

Results of Review
NPS did not effectively administer the Bryce Canyon Visitor Center construction contract.  Specifically, NPS:

> Selected an inappropriate contract type.

> Used rough estimates of quantities and prices as project specifications.

> Insufficiently monitored contractor performance.

> Did not use available cost containment strategies.


Inappropriate Contract  

NPS selected a fixed unit-price contract - this type of contract is not normally used for building construction.

> A fixed unit-price contract breaks down the project into units or parts, such 
  as framing or installing carpet.  The units have a set price, and the total 
  contract cost varies based on the quantity of units completed or used.

> A fixed unit-price contract provides no positive incentive to the contractor 
  for cost control or labor efficiency; therefore, significant Government 
  monitoring of contractor performance is necessary.


Inappropriate Contract

> A fixed-price lump-sum contract would have been more appropriate because this 
  type of contract shifts the burden of cost containment to the contractor.

The decision to use a fixed unit-price contract was made by the previous Park Superintendent and CO against the advice of experienced professionals.

> The A/E firm, the Contracting Officerï¿½s Representative (COR), and the Park 
  Facility Manager advised the Park Superintendent and the CO of the 
  difficulties of using a fixed unit-price contract.


Inaccurate Specifications

NPS used the rough estimates of line item quantities to prepare the bid schedule and as the basis for the government cost estimate.  Thus the bid schedule and the government estimate were inaccurate.

> The A/E firm did not prepare detailed estimates of line item quantities nor 
  intend for the rough estimates to be used as a bid schedule.  It advised the 
  Park Superintendent and the CO that these estimates were not suitable to be 
  used for the bid schedule.

> The estimates and specifications did not go through the normal NPS quality 
  control review because there was no contractual relationship between the A/E 
  firm and the NPS. 

Inaccurate Specifications
  Using inaccurate specifications resulted in:

> Quantity increases to 60 original line items.

> The addition of 45 line items for work changed
  or not in the original scope of the contract.

> Project cost increases from $3.9 million to
  $4.8 million ï¿½ a 24 percent cost escalation.
  Contract Monitoring

NPS did not sufficiently monitor the contract and performed only limited construction supervision of the project.

> NPS excluded the A/E firm from the construction phase of the project.  Using
  an A/E firmï¿½s construction administration services adds expertise which may 
  improve NPSï¿½ monitoring capability.

> The previous Park Superintendent, according to Park staff, believed that the
  A/Eï¿½s services were too expensive. 

Contract Monitoring

> NPS had only one full-time on-site employee, the COR, dedicated to the 
  project.  The CORï¿½s duties included supervising the construction and verifying 
  line item quantities.

> NPS did not effectively verify quantities used by the contractor.  This 
  deficiency, along with weaknesses in the contractorï¿½s accounting records, 
  prevented our audit from verifying costs per contract line item.  

> NPS would typically have two or three full-time on-site employees for a 
  project like this - a complete rehabilitation and expansion of a visitor 
  center.

Contract Monitoring

The previous CO had limited involvement in the administration of the contract, leaving responsibility in the hands of the COR.

> The COï¿½s limited involvement resulted in the COR directing the contractor to 
  perform additional work without the COï¿½s approval.

> This resulted in apparent unauthorized  procurement actions which are 
  undergoing review by the Office of the Solicitor.

Cost Containment Efforts

The Park Superintendent did not exercise alternative options for cutting costs after determining that the contract costs would exceed the budget authority in the Parkï¿½s Recreational Fee Demonstration account. 

> The Park Superintendent was given alternative suggestions for cutting costs by 
  the Parkï¿½s Facility Manager, such as using in-house park maintenance staff for 
  painting and trim work and delaying completion of over-capacity office space; 
  however, he took no action to implement cost control options.

Cost Containment Efforts

> The initial CO did not renegotiate unit prices for the line items exceeding 
  15 percent of the original quantity estimates as allowed in the contract.

> The excessive contract costs contributed to deficit balances in the Parkï¿½s 
  Recreational Fee Demonstration account of $614,000 for FY 2000 and $761,000 
  for FY 2001.  The Region covered these deficits from its Fee Demonstration 
  account.

Suggestions

Partnerships should be encouraged, but care must be taken to ensure that goods or services provided by partners meet the standards required by NPS and that the Governmentï¿½s interests are adequately protected.

Parks need to use sound business judgment to manage these projects effectively. 

Parks should seek and follow the advice of experienced professionals when undertaking significant construction projects.