1). In  addition, U.N. officials and their security subconsultant followed a process  consistent with recognized guidelines to develop plans for improving  security at the U.N. complex. Estimated Financial Impact of the Renovation to the United States

The Secretary-General has indicated that the United Nations anticipates  that the United States would provide a no-interest loan to finance the U.N.  renovation. This amount would vary  depending on the terms and conditions of the financing arrangement. Financial Impact of the Renovation to the Federal Government Is over $700 Million

We estimate the potential financial impact to the federal government as  both lender to United Nations and member state would be over $700  million for a $1.2 billion no-interest loan. Key Milestones in the Renovation Process

To continue the planning process, key efforts must be pursued and critical  milestones met. However, U.S. and U.N. officials stated that neither the  United States nor the United Nations have specified the nature of a  financing commitment. Furthermore, with established mission and program goals, the department  could specify resource needs, including appropriate skills needed to  achieve a successful outcome of the project. Conclusions

The United Nations has used a reasonable process thus far to develop its  renovation plans, but it is still early in the project and changes in the  schedule and cost estimates are to be expected. While the General  Assembly has funded the project’s design, a commitment to finance the  renovation will be needed by October 2003 for the United Nations to  remain on its current schedule and sign a lease for the swing space. Recommendations for Executive Action

We recommend that the Secretary of State, in consultation with  appropriate administration officials and other U.N. members, direct the  U.S. representative to the United Nations to  encourage the United Nations to complete and implement an effective  project management plan that will guide decision making and  coordination throughout the renovation project, and   encourage the United Nations to provide the Office of Internal Oversight  and the Board of Auditors with the resources needed to conduct  effective oversight of the Capital Master Plan as the project progresses. To assess U.N. and Department of State efforts to monitor and oversee the  renovation, we reviewed U.N. documents such as the Capital Master Plan,  the U.N. renovation project management plan, the U.N. resolution  pertaining to oversight of the Capital Master Plan, and the mission  statements of the Office of Internal Oversight Services and the Board of  Auditors. GAO Comments

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Why GAO Did This Study

The United Nations (U.N.) estimates that its planned renovation of the seven buildings on the Headquarters complex could cost almost $1.2 billion. As the host country and the largest contributor to the United Nations, the United States has a significant interest in this project. This report (1) assesses the reasonableness of the U.N. process to develop the renovation plans, (2) analyzes the potential cost to the United States, (3) identifies critical milestones before construction can begin, and (4) discusses efforts to monitor and oversee the project.

What GAO Found

U.N. officials followed a reasonable process consistent with leading industry practices and recognized guidelines in developing the headquarters renovation plan--the first phase of a five-phase renovation process. As the project advances, changes in scope, schedule, and cost are to be expected. To finance the renovation, the Secretary-General anticipates a no-interest loan from the United States. However, U.S. and U.N. officials stated that neither the United States nor the United Nations have specified the nature of any financing commitment. GAO estimates that the financial impact of the renovation to the federal government, including providing a $1.2 billion no-interest loan and repaying a share as a U.N. member, would be over $700 million, depending on the loan terms and conditions. Several critical milestones must be met for construction to begin as planned, including securing a financing commitment and signing a lease for a building where U.N. staff and delegates would relocate during the renovation. As the renovation project progresses, additional management, oversight, and monitoring is needed. The United Nations plans to complete a project management plan, which would help the United Nations control cost and schedule. While the United Nations has approved initial funding for the Board of Auditors to conduct oversight of the renovation and the board is preparing its audit strategy, the Office of Internal Oversight Services does not have the resources or audit strategies needed to effectively conduct oversight of the renovation. The Department of State has assembled a task force to monitor the renovation, but the department will need to define the task force's mission and program goals. Doing so would allow the department to develop strategies for employing the appropriate skill mix needed to achieve a successful outcome for the task force.