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Division and Washington support costs were not separated in the brochure.

The brochure also included statements about the legal aspects of the Corps establishing a program percentage rate as a firm cost for accomplishment of the postal program. The Corps concluded that it may not provide a predetermined unadjustable rate or amount for performing postal work because, if such rate or amount should prove to be less than actual costs, it had no appropriation or fund which could legally be charged with the deficit.

The March 11, 1971, agreement between the Department and Corps provided that the Corps would establish controls over its operations to ensure that its costs for supervision of design, engineering, construction and mechanization services will not exceed 5.5 percent of the total program payments to contractors for design, construction and mechanization and for any Corps in-house design. The agreement also provides for an annual review of the costs comprising the 5.5 percent limitation with consideration given to the need for any adjustments.

Because the Corps had, prior to the agreement, estimated that its in-house costs would range between 5.5 and 6.98 percent of the construction contract, we asked the Corps why the 5.5 percent rate was placed in the agreement. The Corps, by memorandum dated May 5, 1971, presented the following explana

tion:

"'*** the Postmaster General insisted upon a ceil-
ing figure. The 5.5% ceiling was arrived at based
upon:

"(1) Historical cost data ***.
"(2) Considerations of the specific nature of

the Postal Public Building Program to
include the fact that these are large
projects near District offices, the con-
struction schedules are relatively short,

etc., and
"(3) The following assumptions contained in

the 11 March 1971 Agreement signed by the
Postmaster General and the Chief of Engi-
neers:
"(a) a continuing program of not less

than $250 million annually and
"(b) a schedule of projects at least

six months in advance of dates on

which services are required." The memorandum also noted that inclusion in the agreement of the architect-engineering design cost as a part of the total program cost would result in a decrease in the percentage of such costs that would be needed to recover the Corps in-house

costs.

Corps district officials stated that they believe the Corps can serve the Department and stay within the 5.5 percent rate on the total major facilities program, as contemplated by the March 11, 1971, agreement. They predicted that costs on small projects would be higher and on larger projects lower than the 5.5 percent rate. Further, the district officials stated that as a means of controlling costs, they expect to place greater reliance on the "performance of work" clause in architect-engineering contracts for the design of postal facilities and provide less technical review of the design than furnished past projects in military construction.

Slippage in fiscal year 1971 postal' building program

A Department monthly summary report as of May 28, 1971, shows that its fiscal year 1971 major postal facilities construction program consists of 36 active projects and that the Department has been unable to meet many of its target objectives. For example, the Department planned to start construction on 33 projects by May 28, 1971; however, only 4 projects were under construction by that date. The information available to us did not show all reasons contributing to delays; however, information on recent critical developments which have affected the schedules for nine postal projects showed that the reasons stated for changing the schedules were generally of a nature which required resolution by the Department and involved such matters as need for further economic analysis and changes in operational concepts.

As of May 28, 1971, 20 of the 36 fiscal year 1971 projects and two fiscal year 1972 projects had been transferred to the Corps for services. Corps officials at two of the three design offices informed us that all fiscal year 1971 projects for which they had anticipated to perform services had not been received. Corps officials also advised us that the construction periods assigned to the projects received were optimistic.

Many of the fiscal year 1971 projects have estimated construction periods of 12 months. In this regard, the Jacksonville District of the Corps made an evaluation concerning the 12-month construction period required for the Jacksonville postal facility estimated to cost $7 million and concluded that if construction was completed in 12 months it

would cost an additional $2.6 million. The district recommended a construction period of 18 months. At the time of our review, an agreement concerning the construction time for the Jacksonville facility had not been reached. Similar situations have also developed on the Fort Lauderdale, Florida, and Roanoke, Virginia, postal projects. Corps construction time on comparable projects

One of the reasons the Department approached the Corps to undertake the major construction program was the belief the Corps could deliver the completed projects on schedule. In order to obtain some insight as to the Corps performance in completing projects in a timely manner, we obtained from the Corps' Washington office a list of projects the Corps had constructed during the past five years that are comparable, in type, magnitude and complexity, to those it will construct for the Department, in accordance with the March 11, 1971, agreements. From this list we reviewed 12 projects and found overruns in construction time ranging from 30 days to 542 days, averaging 227 days. The overruns were due primarily to design changes and work stoppages caused by strikes and inclement weather.

COMPARISON OF LAND ACQUISITION AND LEASE

CONSTRUCTION PROCEDURES

In the Chairman's letter dated June 2, 1971, it was requested that we compare the land acquisition procedures used by the Department, GSA, and the Corps and the lease construction procedures used by GSA and the Department. The following comparison of procedures pertain to those procedures in effect before July 1, 1971. COMPARISON OF LAND ACQUISITION PROCEDURES

GSA and the Corps acquire land, primarily for Government-owned new construction projects, whereas the Department acquired land primarily for lease-construction projects. The GSA and Corps land acquisition procedures which were similar in many respects differed from the Department's procedures.

GSA and the Corps, generally, acquire land by negotiated direct purchase and occasionally by donation or exchange, and as a last resort by condemnation. The Department generally obtained control of a site in one of the following ways, in order of preference: (1) assignable site option--$1 consideration, (2) letter of intention, (3) assignable site option--reasonable fee, (4) assignable ground lease, (5) direct purchase, and (6) condemnation. The assignable site optionreasonable fee and assignable ground lease methods were seldom used, and the letter of intention method was restricted solely to acquiring control of land in a federally financed urban renewal project.

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