	Contract Costs Have Risen and Schedule Has Been Extended following State’s Incomplete Risk Assessment; Further Cost Increases Are Likely

As part of recent construction of Kabul facilities, in fiscal years 2009 and  2010, State awarded two contracts originally worth $625.4 million to meet  growing facility requirements at the U.S. embassy in Kabul. The cost for the 2009 and 2010 contracts has increased by about 27  percent, from $625.4 million to $792.9 million (see table 2). With regard  to schedule, projected completion has been delayed over 3 years to fall  2017, although the 2010 contract had not yet been revised to reflect that  date as of May 2015. We found that State did not follow its cost containment and risk  assessment policies, resulting in lost opportunities to mitigate risks. The consultant responsible for the risk assessment recommended risk  mitigation actions, which State did not act on, that aligned with the cost  containment recommendations. Thus, in our May 2015 report, we  recommended that State ensure existing cost containment and risk  assessment policies are followed in future Kabul construction projects. State concurred. State to Continue Use of Temporary Facilities but Lacks Specific Security Standards for Them, Contributing to Increased Costs and Extended Schedules

Since 2002, State has spent over $100 million to construct temporary  facilities on the embassy compound to accommodate evolving staffing  needs and provide temporary office and housing space as permanent  facilities are built. On completing the project in 2017, all  temporary facilities on-compound will be nearly 5 years old or more, and  a smaller subset will be more than 10 years old. The lack of security standards for temporary facilities contributed to  insufficient and differing levels of protection, increased costs, and  extended schedule. In the absence of minimal security standards (or guidance) to guide  planning for temporary facility construction, State inconsistently applied  alternative security measures, resulting in insufficient and different levels  of security between the temporary offices and housing. Thus, to address this issue, in our May 2015 report, we recommended  that State consider establishing minimum security standards or other  guidance for the construction of temporary structures, especially those  used in conflict environments. State partially concurred. Lack of Strategic Facilities Planning and Policy Has Led to Coordination Challenges in Addressing Future Needs in Kabul

As discussed in our May 2015 report, since the U.S. embassy in Kabul  reopened in 2002, the unpredictable operating environment of  Afghanistan has produced changing facility needs that have continually  outpaced the post’s existing capabilities. To meet these needs, State has  made or plans to make approximately $2.17 billion in infrastructure  investments in Kabul. However, State does not have a strategic  facilities plan for Kabul that documents current and future embassy  needs, comprehensively outlines existing facilities, analyzes gaps,  provides projected costs, and documents decisions made. According to  State officials in Kabul and Washington, coordination to address the  embassy’s future needs is particularly difficult due to the large number of  stakeholders in Kabul and in Washington. Examples of those challenges include  issues related to: (1) proposed projects conflicting with on-compound  construction, (2) implementation of on-compound physical security  upgrades, and (3) ineffective coordination of off-compound construction  projects. Thus,  in our May 2015 report, we recommended that State develop a Kabul  strategic facilities plan. OBO  was unable to provide any current policy governing either post strategic  facilities planning or site master planning. Without policies that clearly  define strategic facilities planning and master planning, as well as outline  the content and methods to conduct such planning, it will be difficult for  OBO to fulfill these responsibilities.
Why GAO Did This Study

Since re-opening in 2002, the U.S. embassy in Kabul has experienced a dramatic increase in staffing, followed by a gradual drawdown. State has invested or plans to invest a total of $2.17 billion in its facilities in Kabul to address current and projected space needs in a difficult environment with constantly evolving security threats. State awarded two contracts in 2009 and 2010 to construct additional on-compound housing and office facilities.
This statement summarizes GAO’s May 2015 report on the status of construction at the U.S. embassy in Kabul (GAO-15-410). Like its May 2015 report, this testimony discusses (1) the extent to which construction cost and schedule have changed and why, (2) State’s use of temporary facilities on-compound, and (3) State’s planning for projected embassy facility needs. For its May 2015 report, GAO examined agency planning, funding, and reporting documents and interviewed officials from State’s Bureau of Overseas Buildings Operations, Bureau of Diplomatic Security, and other offices. The review included fieldwork and associated follow-up in Kabul, Afghanistan throughout 2014.

What GAO Found

Cost and schedule have increased for the Kabul embassy construction project, in part due to incomplete cost and risk assessment. Cost for the 2009 and 2010 contracts has increased by about 27 percent, from $625.4 million to $792.9 million, and is likely to increase further. Projected completion has been delayed over 3 years to fall 2017. The Department of State (State) did not follow its cost containment and risk assessment policies, resulting in lost opportunities to mitigate risks. These risks, such as delays in the sequencing of the two contracts, eventually materialized, increasing cost and extending schedule. Unless State follows its policy, it may be unable to avoid or mitigate risks to cost and schedule on future projects.
Since 2002, State has built over $100 million in temporary buildings (intended for no more than 5 years' use) to meet space needs on-compound but has no security standards tailored to those facilities. On completing the project in 2017, all temporary facilities will be nearly 5 to 10 years old, and their continued use is likely. Without security standards or other guidance to guide temporary facility construction in conflict environments, State inconsistently applied alternative security measures that resulted in insufficient and different levels of security for temporary offices and housing, as well as increased cost and extended schedules. Without temporary facility security standards or guidance, future construction in conflict environments could encounter similar problems.
State's lack of a strategic facilities plan and policies governing such planning has led to coordination challenges in addressing the embassy's future facility needs. Industry standards cite the value of plans that comprehensively assess existing facilities, identify needs, and document decisions on meeting those needs. Additionally, State formally assigns responsibility for strategic facilities planning but lacks policy that governs implementation of such planning. State intends to make additional facility investments to address future facility needs. Without a strategic facilities plan and policy to guide its development, coordination to address these needs will continue to be difficult.

What GAO Recommends

In its May 2015 report, GAO recommended that State (1) adhere to its cost containment and risk assessment policies, (2) consider establishing security standards or guidance for temporary buildings in conflict zones, (3) develop a strategic facilities plan for Kabul, and (4) clarify its strategic facilities and master planning policy. State concurred with the first, third, and fourth recommendations and partially concurred with the second but discussed actions that could address the intent of GAO’s recommendation.