Lots of controversy about the costs of 1700 G. St. NW
No 'sound business case' for what is now a $215M renovation of 1700 G St. NW, IG reports
The Federal Reserve System’s inspector general is struggling to make a “sound business case” for what is now the $215 million overhaul of 1700 G St. NW for the Consumer Financial Protection Bureau. The General Services Administration is now managing the 1700 G renovation for the CFPB, an independent agency created in 2010 by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The agency has more than 1,000 employees, two-thirds of whom will be based in the G Street building once the renovations are complete. A CFPB spokesman said the agency is proceeding with the work.
The audit, requested by U.S. Rep. Patrick McHenry, R-N.C., chairman of the House Commission on Financial Services’ subcommittee on oversight and investigations, is not a full castigation of the project. But it does indicate that the cost has spiraled and that a full review of all the options for CFPB — leasing multiple buildings, relocating to a single, less-expensive property — were not analyzed.
“We cannot conclude whether a complete analysis would have altered the decision to approve funding for the renovation,” the IG writes in the report. “However, without this analysis, the value of the [CFPB’s Investment Review Board] process as a funding control is diminished and a sound business case is not available to support the funding of the renovation.”
The project’s price tag was first pegged at $55 million, but that was in 2010, when the renovation was to be phased over 10 years. It rose to $95 million in early fiscal year 2013, and then $114.4 million in May 2013 and $145.1 million in September 2013, as the full breadth of the project was entered into the budget calculator.
The IG has ratcheted that up again, to $215 million, or $579 per square foot, citing the “all-in costs” of construction, construction management, GSA fees, design and engineering, swing space and moving costs. The 503,000-square-foot building (371,000 square feet in the main office building plus two levels of parking) is owned by the Office of the Comptroller of the Currency. “The findings of the Inspector General’s investigation are deeply troubling and lead to even more questions about the unaccountable design of the CFPB," McHenry said in a statement. "The continuously growing price tag is a tremendous waste of funds and, amazingly, there is still no assurance the $216 million price tag won’t grow higher."
Congressional Republicans, led by McHenry and Financial Services Chairman Jeb Hensarling, R-Texas, have hammered the project for the last year as "splurging" and unnecessary. Skidmore, Owings & Merrill LLP drew up the schematic design for the project. A solicitation has been issued for a design-build contractor. The modernization is planned to include a rooftop play yard to serve the basement child care center, a green roof, interior renovations and lobby redesign, new mechanical and HVAC systems, new exterior security measures, new landscaping to create a public plaza, and the addition of slot windows on the facade to allow light into the stairwells. A once-planned seventh story on the building has been nixed to reduce costs.
Sen. Elizabeth Warren (D-MA), who came up with the idea and led the start-up of the “Consumer Financial Protection Bureau” as a federal watchdog to prevent financial institutions from abusing U.S. consumers, is now at the center of the a scandal regarding the vanished authorization to spend $215.8 million on a luxurious remodel that included a new penthouse floor and indoor waterfall for the bureau’s rented Washington, D.C. office space. The Office of Inspector General of the United States Federal Reserve (OIG) was requested by the House Financial Services Oversight and Investigations Committee on January 29, 2014, to evaluate the Consumer Financial Protection Bureau’s (CFPB) headquarters renovation costs that rose from $55 million to at least $215.8 million.
The OIG report revealed that the CFPB “approved formalized policies for budgeting and funding investments prior to obligating funds” on October 1, 2012. These policies required a focus on “a return on investment when making a sound business case.” The policies also stressed that a “quantitative analysis” must be performed that included life cycle costs, cost savings, and productivity enhancements to promote “financial efficacy.”
The OIG report appears to put Senator Elizabeth Warren “in this together” on the design and approval of the luxurious remodel of the Consumer Finance Protection Bureau Headquarters. With hundreds of millions of dollars of unauthorized money spent and the documents regarding the remodel mysteriously disappearing, Elizabeth Warren is about to be at the center of the Obama Administration’s newest scandal.
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