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  • NATIONAL AIR AND SPACE MUSEUM

    Smithsonian’s Efforts to Improve Reliability of Its Revitalization Project's Cost Estimate Are Ongoing

    Report to Congressional Committees

    October 2018

    GAO-19-78

    United States Government Accountability Office

  • United States Government Accountability Office

    Highlights of GAO-19-78, a report to congressional committees

    October 2018

    NATIONAL AIR AND SPACE MUSEUM

    Smithsonian’s Efforts to Improve Reliability of Its Revitalization Project’s Cost Estimate Are Ongoing

    What GAO Found

    The Smithsonian Institution (Smithsonian) has completed planning and design work for its National Air and Space Museum revitalization project and started the first of two construction phases in October 2018. This phased approach should allow the building to remain open to the public during construction. In August 2018, the Smithsonian finalized a “guaranteed maximum price” (GMP) contract, which generally sets the maximum amount that the Smithsonian is to pay for construction services. In preparation for construction, Smithsonian also awarded a contract for demounting and transporting the museum’s artifacts to off-site storage. To date, the Smithsonian has used or allotted $250 million of its prior- year appropriations for the project’s planning, design, and initial construction. The Smithsonian plans to request $400 million in total from fiscal years 2019 through 2022 to fund construction and other project-related activities.

    National Air and Space Museum on the National Mall

    GAO found that the Smithsonian’s December 2017 cost estimate substantially met three of the four best practices outlined in GAO’s Cost Estimating and Assessment Guide and that the Smithsonian is taking steps to institute practices to enhance the estimate’s credibility. GAO’s best practices help ensure reliable cost estimates that are comprehensive, well documented, accurate, and credible. The Smithsonian’s cost estimate substantially met comprehensive, well- documented, and accurate characteristics because, among other attributes, it included ground rules and assumptions, documented steps to calculate cost components, and was adjusted for inflation. The Smithsonian’s cost estimate only partially met best practices for the credible characteristic. Specifically, while the Smithsonian had completed a risk analysis and a sensitivity analysis when the project design was 35 percent complete, it postponed updating the analyses when the design was completed because it determined that the analyses could benefit from project schedule information that was concurrently being developed. By postponing the update, the Smithsonian did not have current information available to inform its GMP contract negotiations and was therefore not able to consider how existing risks may have changed or to ensure that the cost of the GMP contract appropriately reflected new risks. However, in May 2018 the Smithsonian contracted to have these analyses updated based on the revised estimate that incorporates the negotiated GMP cost. By updating the analyses, the Smithsonian will be better able to make decisions and mitigate risks as construction progresses. Further, updating these analyses will improve the credibility of the cost estimate and better position the Smithsonian to make well- informed budget requests to Congress for remaining project costs.

    View GAO-19-78. For more information, contact Heather Krause at (202) 512-2834 or krauseh@gao.gov.

    Why GAO Did This Study

    The Smithsonian’s National Air and Space Museum is home to the world’s largest collection of historic aircraft and spacecraft, attracting millions of visitors annually (see fig.). Since the museum on the National Mall opened in 1976, substantial degradation of the building’s mechanical systems and exterior façade has occurred, posing risks to the museum’s collections, staff, and visitors. To address these and other issues, the Smithsonian is undertaking a federally funded whole- building revitalization project, with construction planned for late 2018 through mid-2024. The Smithsonian estimated the total project costs at $666 million but committed to identifying cost savings to cap the budget at $650 million.

    The Explanatory Statement accompanying the Consolidated Appropriations Act, 2017, included a provision for GAO to review and analyze these cost estimates. This report: (1) describes the status of the National Air and Space Museum revitalization project and (2) examines the extent to which the Smithsonian’s estimate has the characteristics of a reliable cost estimate.

    GAO analyzed project documents; interviewed Smithsonian officials, contractors, and consultants; and compared the Smithsonian’s methodologies for developing its December 2017 cost estimate for the National Air and Space Museum revitalization, which was based on the project’s fully developed design, with best practices identified in GAO’s Cost Estimating and Assessment Guide.

    https://www.gao.gov/products/GAO-19-78 https://www.gao.gov/products/GAO-19-78 mailto:krauseh@gao.gov

  • Page i GAO-19-78 National Air and Space Museum

    Letter 1

    Background 3

    Smithsonian Has Completed Planning and Design Work and Has

    Begun First Phase of 6-Year Construction Project 6

    Smithsonian’s Cost Estimate Has Most Characteristics of a

    Reliable Cost Estimate, and Smithsonian Is Planning to

    Improve the Estimate’s Credibility 10

    Agency Comments 15

    Appendix I Organizations Contacted 16

    Appendix II GAO Contact and Staff Acknowledgments 17

    Table

    Table 1: GAO’s Assessment of How the Smithsonian Institution’s

    Cost Estimate for the National Air and Space Museum’s

    Revitalization Project Aligns with Best Practices for Cost

    Estimating 11

    Figures

    Figure 1: Smithsonian’s Air & Space Museum on the National Mall 3

    Figure 2: Warping of the Exterior’s Limestone Panels at the

    Smithsonian’s Air and Space Museum 5

    Figure 3: Sequencing of Work for the National Air and Space

    Museum’s Revitalization Project 7

    Figure 4: Planned Phasing of Construction Work for the National

    Air and Space Museum’s Revitalization 8

    Contents

  • Page ii GAO-19-78 National Air and Space Museum

    Abbreviations

    CMc construction manager as constructor

    CWE current working estimate

    GMP guaranteed maximum price (contract)

    This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

  • Page 1 GAO-19-78 National Air and Space Museum

    441 G St. N.W. Washington, DC 20548

    October 25, 2018

    The Honorable Lisa Murkowski

    Chairman

    The Honorable Tom Udall

    Ranking Member

    Subcommittee on Interior, Environment, and Related Agencies

    Committee on Appropriations

    United States Senate

    The Honorable Ken Calvert

    Chairman

    The Honorable Betty McCollum

    Ranking Member

    Subcommittee on Interior, Environment, and Related Agencies

    Committee on Appropriations

    House of Representatives

    The Smithsonian Institution’s (Smithsonian) National Air and Space

    Museum (Air and Space Museum) on the National Mall is home to the

    world’s largest collection of historic aircraft and spacecraft and annually attracts millions of visitors.1 However, substantial degradation of the

    museum’s mechanical systems used for heating and cooling and to its

    exterior façade poses risks to its collections, staff, and visitors. The

    building’s original mechanical systems have exceeded their 40-year

    lifespans and cannot maintain desired temperature and humidity levels,

    exposing the collections to potential damage. Further, warped and

    cracked limestone panels on the building’s exterior are at risk of falling, a

    risk that could create a safety hazard for staff and visitors. To address

    these deficiencies, the Smithsonian is undertaking a whole-building

    revitalization project, budgeted to cost $650 million, to modernize building

    systems and replace the limestone façade. Among other improvements,

    the project aims to increase energy efficiency and strengthen the

    building’s capacity to withstand blasts and earthquakes.

    A reliable cost estimate provides the basis for informed investment

    decision making, realistic budget formulation, and resource allocation.

    1Smithsonian’s National Air and Space Museum also includes the Steven F. Udvar-Hazy Center in Chantilly, Virginia. For the purpose of this report, Air and Space Museum refers only to the building located on the National Mall in Washington, D.C.

    Letter

  • Page 2 GAO-19-78 National Air and Space Museum

    The Explanatory Statement accompanying the Consolidated

    Appropriat