CAPITO Washington, DC 20515 The Honorable J. Dennis Hastert Chairman House Office Building Commission United States House of Representatives Dear Mr. Chairman: I am transmitting herewith for your approval the Schematic Design Submission for the House shell space within the Capitol Visitor Center. Assuming that the development of the design. proceeds according to schedule, the final design and estimated cost will be submitted for your further approval in September of this year. I shall, of course, be pleased to provide any additional information you may deem desirable. Chairman LEWIS. Thank you. I don't want to dominate this meeting with my own questions, but when I do come back for a round myself, I will be asking you questions about the House office building master plan. But from there, could I call upon Mr. Frelinghuysen? HOUSE OFFICE BUILDINGS Mr. FRELINGHUYSEN. Good afternoon. Everyone on the panel is concerned about the escalating costs of the project. From a personal viewpoint, you have 55 percent complete, and I think we need to get the job done and I assume everybody desires to keep costs under control. You mentioned and maybe you should define what work orders are all about. But where I come from, 30,000 work orders added to a project, was that for this year or last year? And what were the figures for the previous year? That spells trouble. I would like to know what the origin of some of these work orders are. Are these congressional demands, House demands, Senatorial demands, things that relate to issues of public security-which I think is your highest priority, to have a safe environment for our visitors as well as staff and Members of Congress? Could you comment on the work order issue, and has that been partially why costs have escalated so much? Mr. HANTMAN. The 30,000 work order issues I referred to before were basically in the House office buildings and nothing to do with this project. CVC CHANGE ORDERS Mr. FRELINGHUYSEN. How many work orders have been related to this project, the Capitol Visitor Center? Bad enough to hear what the House office buildings has in terms of work orders. Mr. HIXON. We have had a large number of change orders. It is not unusual for a construction project of this type to have changes that need to be made. There are errors discovered in the drawings and different site conditions. Whenever the contractor encounters an issue that is not addressed by the drawings, a change is required. In this case, we have had a significant number of changes. The number I don't have readily at hand. And we can provide that for you. [The information follows:] Question. How many change orders have been issued against the CVC project? Response. To date, for the 2 CVC construction contracts, we have issued 82 change orders to the Sequence 1 Contractor (Centex Construction). Total value of these change orders is $32,350,351 of which $10,302,692 represents compensation for delay/extended performance issues. On the Sequence 2 contract (Manhattan Construction), we have issued 49 change orders totaling $66,138,721. Of this amount, $35,704,000 is for the House and Senate Expansion Space Build-out and $6,430,241 is for the Exhibit Gallery Space Build-out which were added to the Sequence 2 contract through a competitive procurement process, rather than awarding directly to separate firms, to keep the overall construction responsibility under Manhattan Construction. Two other Sequence 2 modifications are currently being processed for award with a total value of $377,513. Mr. FRELINGHUYSEN. Do the change orders relate to the escalating costs? I understood what Mr. Obey said about work space versus show space. Are there things that are occurring over the last 2 or 3 years where individual Members of Congress, House and Senators, have said we need to do this, we need to do that? Do they consequently show up in work orders or change orders, or is that all architectural related? Mr. HIXON. We have not been getting changes requested from the Members. Most of all of our changes and the cost impact to the job are not related to that kind of issue, they are related to delay costs, different site conditions, correction of deficiencies that we discover within our documents where somebody has made a mistake. Those are pretty minor. Most of the issues relate to delay costs. CVC DELAY COSTS Mr. FRELINGHUYSEN. Let us talk about some of those delay costs. I think Mr. Hantman in another setting recently stated that 77 percent of the cost increases were beyond or largely beyond your control. What is meant by "largely beyond your control"? Could you review those with us and do that for the public record. Mr. HANTMAN. Yes. Basically Chairman LEWIS. This is by way of suggesting that most of us have had a little bit of experience out there and it is my understanding that contractors just love change orders. Mr. HANTMAN. Any change to the contract clearly could delay the work. If you are changing something, there are opportunities to earn additional profits, no question about that, when changes occur. And I think it is important to focus on, and I thank you for raising it, Mr. Frelinghuysen. This is a summary of GAO's reasons for construction cost increases on the project, the big picture. And the quote that you made about three-quarters of the 250 million increase due to factors largely beyond AOC's control is GAO's statement. The scope additions that we talked about here are the House and Senate expansion space. As I indicated before, some $70 million was added to the project to finish what essentially was going to be future expansion space. That was added in. And, in fact, when those pieces of work were put out on the street for bids, the market conditions had changed significantly from when the budget was essentially determined, so that they came in with another $10, $15 million worth of requirements as well to fulfill the original program budget. [CLERK'S NOTE.-The Government Accountability Office estimates that delays within the control of the Architect cost $58 million.] CVC SECURITY AND LIFE SAFETY Mr. HANTMAN. The second bullet is security and life/safety enhancements. The Department of Defense has come through on many occasions over here. And I think what we are living through here, Mr. Chairman and Mr. Frelinghuysen, is something where we are kind of paralleling the whole homeland security situation post9/11. And in fact, in the newspaper in the last 2 weeks, I have been reading that at the former World Trade Center site in New York, the first tower to be built-which is the 1776-foot-high Freedom Tower has been delayed by several months because the police in New York City are taking another look at the security provisions delays, 4-month delays when DTRA came in and did an assessment for us. When we talk about filtration and air intakes, all of these things were put into the project after the project had been designed, while we are under construction, and we had to accommodate it; and, in fact, there are still other security issues being discussed as part of this contract going forward as well. CVC BID ESTIMATES EXCEED ESTIMATES The next item was bid prices exceeding estimates. I reviewed that a little bit. What we did in this contract, we have two cost estimating firms, one through our construction manager Gilbane. The other is an outside, purely professional cost-estimating firm. We had two estimates done. We compared the two estimates and tried to reconcile those issues and made sure that we were moving ahead in the most professional way we could. The reality is that the market tells you what the prices are when you go out to bid. And the market in the Washington area in the last year alone has seen something like a 22 percent increase for everything that has not been awarded yet. That has really impacted our project. That is 77 percent basically of the cost increases. The next 8 percent is designed to budget items impacted by several factors: the market volatility since the budget for the House and Senate expansion space was established, material price increases. From my perspective, limited competition due to a saturated construction market has also hurt us. Another added cost to the bids includes extra security screening measures. Mr. Chairman, we have a truck inspection station on the Mall. Every truck has to go through this big archway, be screened. The trucks drive up to First Street and are screened again as they are coming onto the site make sure that the seal has not been broken and nothing added to that truck. Every worker on our site has to pass a security background check. Many workers in this industry, whether they are masons, stone workers, or electricians, may have a police record. Those people cannot work on our job. The difficulty of our contractors in finding qualified people in a saturated market has impacted our bids, as has low estimates and design changes. One of our missions from day one, Mr. Chairman, was to come in and make sure that what we built here was appropriate for an addition to the United States Capitol. I know that when I was undergoing my review to become Architect of the Capitol, Senator Kay Bailey Hutchison said, "Mr. Architect, if you are going to build a Visitor Center over here, make sure you don't build it like the Howard Johnson's we just built on the west front of the Capitol. Make sure you use quality materials that are appropriate for future generations to have.' And that is essentially what we have done. When we went out to bid and the bid for stones came in higher our contractors told us if we had bid stones on the international market, we could have saved $10 million. All this stone is American-fabricated here, installed here and quarried here. To have lower estimates, yes, we could have taken out the stone and put in sheet rock. Would that have satisfied the needs of a multigenerational facility at the United States Capitol? That was another 8 percent increase. The last, costs associated with delays. The first item talks about design changes associated with scope increases. All of that $140 million we added to it delayed the project. One of the fundamental issues that we started this project on was, in fact, that we tried to do it between two Inaugurals. The 2001 Inaugural was accomplished and then we were trying to accommodate to the greatest extent possible the 2005 Inaugural. Driving the project, after we had $140 million of new work added to it to try, and accommodate that Inaugural hurt us tremendously. Bidders just were not willing to accommodate that kind of schedule and the competitiveness of that bid as well. Essentially we supported the Inaugural, but completing the rest of the project certainly will go into September of Chairman LEWIS. Thank you, Mr. Frelinghuysen. Mr. Moran. 06. CVC STAFFING Mr. MORAN. Thank you, Mr. Chairman, for having this hearing. I think that most of us would agree we are not after the contractors, and we are sure that you have first-class corporations performing the construction work and we are sure that you want a first-class product when we are finished. But I am also sure, Mr. Architect, that you can understand the angst of the Congress when this was supposed to be a project paid with private money. We were going to be well finished before January of 05 and have the Inauguration with a fully completed Capitol Visitor Center. So the frustration of it being 22 times the cost and several years overdue is something that can't be avoided. I don't think you would feel that we are being unfairly critical in asking these kinds of questions and I appreciate your cooperation. In the budget submission, you request 280 new full-time positions at a cost of about $12.1 million. If the Visitor Center isn't going to be open for use until 2007, why do we need them now? Mr. HANTMAN. Excellent question, Mr. Moran. The issue of hiring people in advance of opening a facility is critical, to be able to train the people and make sure they are there on day one when it opens. As I indicated in my opening statement, the original dollars for payroll of some $12 million can be reduced to $7 million because of the September opening as opposed to a June opening which we had been projecting before. And those are FTEs, not necessarily full-year type of things, but in terms of ultimately, the dollars for these people will be phased in as they are hired. So our total operations budget-and again, from the perspective of the Architect of the Capitol, these dollars are put in here, not knowing who is going to be using these dollars or who is going to be in charge of operating the facility. Clearly an executive director needs to be hired. The projections by the associates who did the original outline of the 280 people needs to be looked at by a staff on board who has the expertise to look at that. Whether that number needs to be 240 or 210, or whatever, the number it needs to be determined by the staff who will run the facility and be responsible for |