	KMCC Currently Experiencing Substantial Cost, Schedule, and Performance Problems

The KMCC currently faces significant cost, schedule, and performance  problems, and it is unclear as to when the project will be completed and at  what cost. Despite being originally scheduled to open in early 2006, neither  LBB-Kaiserslautern nor the Air Force can estimate a completion date for  the project because of the widespread construction management  problems. The cost to repair damage caused by the vandalism is  estimated to be over $1 million. Reduction of construction workers: In the past several months, the  KMCC has faced a drastic reduction of the number of workers on-site. Currently, the number of workers on the site is  routinely less than 50. KMCC Problems Caused by Overseas Construction Risks, LBB-Kaiserslautern Management Deficiencies, and Lack of Air Force Controls

Current problems facing the KMCC have been caused by the additional  risks associated with overseas construction, project management  deficiencies by LBB-Kaiserslautern, and the Air Force’s lack of effective  controls to mitigate project risks. Instead, the Air  Force did not have basic oversight and in some cases has circumvented  controls in order to expedite payments. LBB-Kaiserslautern’s deficiencies in these areas have contributed  to additional costs, schedule delays, and increased financial risk to the  U.S. government for the KMCC project. The following are some examples of design and construction flaws for the  KMCC project:    Exhaust ducts: During review of the initial KMCC design, Air Force  identified and commented to LBB-Kaiserslautern and JSK that the exhaust  ducts used in the restaurant kitchens did not meet U.S. fire safety  standards. Ineffective Project Management

LBB-Kaiserslautern did not effectively manage the KMCC project. Because of  this, the Air Force is facing potentially millions of dollars in additional  costs to replace the poorly built roof. KMCC Problems May Adversely Affect Military Members and Future Construction Projects

The substantial schedule and cost overruns of the KMCC may affect  military personnel and have major implications for future projects in  Germany. Absent better Air Force controls, these projects may experience the same  types of heightened risks associated with KMCC. In addition, we conducted interviews with officials  from the Air Force, Landesbetrieb Liegenschafts- und Baubetreuung (LBB)  the German government construction agency, and the U.S. Army Corps of  Engineers. In order to determine the management weaknesses of LBB and the Air  Force, we interviewed officials from both organizations, conducted  interviews with other organizations affected by the KMCC project  including the Air Force Office of Special Investigations (AFOSI), Air Force  Audit Agency, Air Force Services Agency, and the Army and Air Force  Exchange Service.
Why GAO Did This Study

According to the Air Force, the Kaiserslautern Military Community Center (KMCC), an over 800,000 square-foot facility, is currently the Department of Defense's largest single-facility project under construction. It is intended to provide lodging, dining, shopping, and entertainment for thousands of U.S. military and civilian personnel and their families in the Kaiserslautern, Germany, area. Initial costs for the KMCC were estimated at about $150 million, with funding coming from a variety of appropriated and nonappropriated fund sources. The construction for the project, which began in late 2003, was originally scheduled to be completed in early 2006. This testimony discusses GAO findings to date related to the KMCC. The testimony describes (1) current problems facing the KMCC, (2) causes for identified problems, and (3) the effect of problems identified and their implications for future projects in Germany. To address our objectives, we interviewed officials from the U.S. Air Force, Army and Air Force Exchange Service, U.S. Army Corps of Engineers, and German government. We also conducted a site visit and reviewed relevant KMCC documents. We plan to continue our work and make recommendations to the Air Force as appropriate.

What GAO Found

The KMCC project has encountered cost, schedule, and performance problems. Currently neither Landesbetrieb Liegenschafts- und baubetreuung's office in Kaiserslautern (LBB-Kaiserslautern), the German government construction agency in charge of the project, nor the Air Force have a reliable estimated completion date or final cost for the project. Problems facing KMCC include construction flaws, vandalism of property, repeated work stoppages and slowdowns by contractors, and ongoing criminal investigations. Because of financial problems facing the project, the number of workers on-site has dwindled from several hundred to less than 50, which will likely further delay completion of the project. In addition, the KMCC's multimillion dollar "green" roof is experiencing water leaks, and will likely require the Air Force to spend millions of dollars for its replacement. The KMCC faced a high level of risk from its inception, which was not effectively mitigated by the Air Force. Increased risks included an overseas project controlled by LBB-Kaiserslautern with financial risks borne by the Air Force and its funding partners. Unfortunately, LBB-Kaiserslautern did not effectively manage the design and construction of the project. Rather than increase controls to mitigate project risks, the Air Force provided minimal oversight and in some cases circumvented controls to expedite the invoice payment process in an attempt to complete the project. Because this project is funded primarily with nonappropriated funds, the likely substantial cost increases in the project will be borne by military servicemembers, civilians and their families. Further, absent better Air Force controls, future projects may experience the same types of heightened risks associated with KMCC.