formal modification being executed by the Contracting Officer. Therefore, it required ratification as an unauthorized procurement in FY 2005. The Program Office was Project Management.

40. Contract AOC0000045, Modification 022 dated December 15, 2004 for $315,600. On October 7, 2004, the Procurement Division received Requisition CB050018 for enhanced security along with a contractor's related fee proposal for $315,600. This fee proposal had been in the AOC's possession since February 3, 2004 for work related to significant changes to the HVAC design criteria that Beyer Blinder Belle (BBB)/Flack & Kurtz were directed to provide to the AOC. The contractor stated that the changes were provided to them by the Program Office, their incorporation was essential to the successful completion of the Master Plan, and they proceeded with the work. Therefore, it required ratification as an unauthorized procurement. The Program Office was the Engineering Division.

41. Contract AOC0400027 for an estimated $145,000. The Procurement Division received Requisition VC40043 in the amount of $500,000 in January 2004 for services that had been performed as unauthorized work (beginning December 10 2003) as well as future services through September 30, 2004. The contract award executed the future services and also ratified the unauthorized services. The portion of the contract performed as unauthorized work is estimated as $145,000. The Program Office was the Capitol Visitors Center.

42. Contract AOC-0200011, Task Order 1 for $174,025. On December 11, 2002, the Procurement Division received Requisition GA30091 for services to be performed December 1, 2002 to March 31, 2003 in the amount of $174,025.00. As the requisition was received after performance began, it required ratification of an unauthorized procurement. The Program Office was the Engineering Division.

43. Contract AOC0000045. On January 9, 2003, the Procurement Division received a fee proposal for $172,900 from the firm of Beyer Blinder Belle (BBB) referencing U.S. Capitol Infrastructure Modernization, stating that "BBB and Flack & Kurtz were notified on September 17, 2002, of significant changes to the HVAC design criteria. These changes were provided to them by the Program Office and that their incorporation was essential to the successful completion of the Master Plan." BBB further states that, "In the interest of proceeding with the Master Plan project in a timely and responsible manner, we have proceeded with this work." Therefore, it required ratification as an unauthorized procurement. The Program Office was the Engineering Division.

44. In April 2005, the Procurement Division received an invoice dtd 10/30/01 and a requisition to Vador Ventures for installation of a drop ceiling for the Postal Square Building that was performed in June 2001. This unauthorized procurement is still being researched before a ratification determination is issued. The Program Office is the Senate Office Buildings.

45. The Architect of the Capitol entered into contract I00402381 with Ecolochem for water softening chemicals, etc. on June 24, 2004 with a performance period of August 1

October 31, 2004. In March 2005, it was discovered that supplies were ordered after the expiration of the contract. The Procurement Division is working with the Capitol Power Plant and the contractor to rectify this matter. A ratification determination is pending. The Program Office is the Capitol Power Plant.

Capitol Power Plant

Question. As you know, GAO has made recommendations to cut operating costs at the Capitol Power Plant. Do you have any plans to implement these recommendations in FY 2006 and if so, how is it reflected in your budget?

Response. The GAO report made two specific recommendations to cut operating costs at the Capitol Power Plant: 1) Reduce current staffing levels and 2) Use the most economical fuel to operate the steam boilers. The start-up, testing, and post-construction activities for the West Refrigeration Plant Expansion and Centralized Digital Control System projects will commence in the 1st quarter of FY06 and is projected to be completed in the 3rd quarter. Due to the nature of these manpower intensive activities, it is unlikely that we will be able to reduce current staffing levels in FY06. The recommendation to use the most economical fuel to operate the steam boilers has been implemented and we expect to save approximately $3,000,000 in FY06.

Project Management

Question. This committee has learned that AOC does not maintain consistent baseline data in its Project Information Center to track changes to project costs and schedules. Why not? When will AOC have an information system that maintains and tracks to this baseline?

Response. One of the greatest challenges the AOC has faced is how to satisfy the many demands to report project status both internally and externally. Each entity wants to know basically the same things: is a project within budget, is it on time, and will it meet the customer's needs? The challenge in the past has been that the various entities have asked for project performance indicators in many different ways. In the attempt to satisfy the many different but similar questions, the AOC has not done a good job of being consistent with the data being reported.

Complicating this challenge has been the fact that the AOC's Project Information Center (PIC) uses as the basis for its project data collection and reporting a number of interfaced databases. In addition, PIC is linked to other AOC systems, such as FMS. The software linking these databases utilizes an information updating process that differs depending on the type of data field. If the field is a “text” field, new information is added and the old information is kept. However, if the data field is a simple data field (e.g., a number, dollar amount from FMS, a date, a brief comment, etc.) then the updating process clears out old data when new information is provided. Thus, project baseline data for budget and schedules was being overwritten when project managers provided

These compounding challenges have been recognized by the AOC. The plan to correct these challenges is as follows.

In September 2004, when the pilot organization was initiated, project reporting through PIC was suspended due to recognition of the lack of consistent baseline metrics, and pursuant to senior management's interest in reporting on contract status in lieu of project status. A manually-produced report was developed that clearly indicated contract status, and the data could easily be verified by comparison to financial and procurement documents. These "COTR reports" have been kept internally since September 2004, and provide consistent and accurate baseline data for contract performance. The initial reports have all been produced manually using a spreadsheet application.

Over the past few months, the AOC has been working closely with the General Accountability Office during the current cycle of its General Management Review. The GAO had asked that the AOC provide yet another series of project performance indicators. On a parallel path, the AOC project management team had been developing a report format that would answer recurring questions asked over the past several years, as well as satisfy a requirement to report project status on a quarterly basis while retaining baseline performance. The report format uses project performance indicators based on verifiable contract and financial data, but also includes a text status. The format has been reviewed by some of the Superintendents, who have given it favorable comments related to its ability to accurately portray project status.

Together, the AOC and the GAO are working to assure that this format, along with definitions, would satisfy internal and external project reporting requirements. The AOC published a manually produced version of this report at the end of March 2005.

Feedback on this report is being gathered before any attempt is made to make changes in PIC to produce the report from an automated system.

One of the initial comments from the Senate was that although the report accurately reflects the current status of a project, it does not provide a forecasted view of future project performance. The AOC acknowledges that there is no future "intelligence" to this report; its value lies solely in reflecting a project's actual contractual status today. The AOC is committed to being able to accurately report on the actual and potential future status of its construction program. The March Quarterly Report completed the first step: accurate reporting on the actual status using verifiable metrics. By June 2005, the AOC will have in place a means of forecasting potential future performance. There are several options for identifying performance indicators and using them to establish a benchmark forecast. The AOC is in ongoing communication with its Superintendents and the GAO working towards identifying an optimal solution.

The House has indicated that in addition to project performance metrics and status, certain financial data be included, such as reflecting the amount and year funds were appropriated for the project, the type of funding (Annual, NY, MY), whether or not a reprogramming or transfer has occurred, and what the current budget amount for the project is.

The pilot organization will continue to work with the Budget Office and stakeholders in determining what format changes will be made for the next Quarterly Report. We want to be very accommodating in providing as much of the desired information in the report as possible, without the report becoming too complex to accurately prepare or too

Once all of these feedback issues are resolved, the AOC will make the necessary modifications to PIC so that future reports can be processed using its present automated systems. The goals will be to retain appropriate baseline data so future project performance can be tracked against it, establish clear definitions for all fields, provide multiple types of reports that satisfy both internal and external information needs, and rely on minimal manual data input by maximizing use of existing data residing in other systems.

Question. Why does AOC no longer report the status of ongoing projects through quarterly reports as required?

Response. The quarterly report format has undergone many iterations of change over the last several years. Data being reported was either too extensive to digest or the data being reported did not accurately reflect the key project metrics. In September 2004, when the pilot organization was initiated, project reporting through PIC was suspended due to recognition of the lack of consistent baseline metrics, and pursuant to senior management's interest in reporting on contract status in lieu of project status. A manually-produced report was developed that clearly indicated contract status, and the data could easily be verified by comparison to financial and procurement documents. These "COTR reports" have been kept internally since September 2004, and provide consistent and accurate baseline data for contract performance. The initial reports have all been produced manually using a spreadsheet application.

Over the past few months, the AOC has been working closely with the General Accountability Office during the current cycle of its General Management Review. The GAO had asked that the AOC provide yet another series of project performance indicators. On a parallel path, the AOC project management team had been developing a report format that would answer recurring questions asked over the past several years, as well as satisfy a requirement to report project status on a quarterly basis while retaining baseline performance. The report format uses project performance indicators based on verifiable contract and financial data, but also includes a text status. The format has been reviewed by some of the Superintendents, who have given it favorable comments related to its ability to accurately portray project status.

Together, the AOC and the GAO have worked to assure that this format, along with definitions, would satisfy internal and external project reporting requirements. The AOC published a manually produced version of this report at the end of March 2005 which has been forwarded to both Appropriations' staffs.

Project Management (PM) Group

The AOC has proposed to create a new project management group. Fundamentally, the concept of a PM group is worthy of consideration. However, the plan raises some questions that should be resolved prior to approval.

The AOC is planning to increase the staff of PM from 6 to 32. The increase of 26 positions consists of 15 permanent positions transferred from the AOC Architecture and Engineering groups; 9 temporary employees from the Construction Management

Division (CMD) and 2 new high level positions that have not been requested through the budget.

Question. It is estimated that the transferred temporary positions and the new positions will add $1.2 million to your annual budget in general administration. How do you commit to an annual increase of this magnitude on a permanent basis when project work ebbs and flows with actual work requirements, funding availability, and economic conditions?

Response. The recently submitted Capital Improvements Plan for Fiscal Years 2006 2010 clearly indicates and justifies a substantial requirement for ongoing funding for the AOC's capital investment, and reinvestment programs. In fact, the program's size and cost rise dramatically in the out years as the potential results of the Facility Condition Assessments and Capitol Complex Master Plan are realized. The potential dollar value of implementing necessary life safety improvements alone is significant. In summary, it appears that the project work for the near future will be absent of any "ebbs". Subsequently, some form of funding will be required for these positions, either directfunding through the general administration budget, or project-funding, in order to develop and execute projects.

Funding for construction managers and inspectors will be necessary whether they are AOC staff, contractors or outsourced to other government agencies - under any execution model, there will be a requirement to fund them.

Question. Nine of these positions are currently paid from project funds and two positions are planned will be new, but they have not been requested through the budget. How do you plan to fund these positions?

Response. One of the positions indicated on the proposed pilot project management alignment is for a Deputy position. If the pilot organization is approved then the AOC will need to determine whether an additional FTE and funding for that position would be requested. The same situation would be true for the position that has been proposed for the Director of Planning and Project Management.

With respect to the other nine positions within the pilot Project Management Division, these are at present funded against projects, and the FTE allocations are assessed against the appropriation accounts from which they are paid. These are the Senior CM position, five CM positions, and three Inspector positions.

As the Committee is aware, for many years the AOC has included overhead funding in its project cost estimates for construction specifically to account for these types of staffing requirements. This process worked very well for large, one time capital programs such as construction of the James Madison Memorial Building and the Hart Senate Office Building, when large teams of staff were needed to effectively manage those projects during construction. After completion, construction management staffing requirements no longer required at that level, and the staff was then terminated. This same staffing and funding model has been employed with current large one time capital investment programs such as the CPP West Refrigeration Plant and the CVC.

However, the Project Management Division has been charged with developing and executing the AOC's ongoing Capital Improvements Plan projects. As noted before,