The Federal Reserve’s  payments are deposited into BEP’s revolving fund; the revolving fund is  used for BEP’s operational expenses, including note production. 1). BEP’s Proposal for a New Production Facility Considered Project Costs and Feasibility, Security, Efficiency, Safety, and Future Flexibility BEP Studies from 2010 to 2017 Determined the Cost and Feasibility of Multiple Alternatives

From 2010 through 2017, BEP contracted for various studies to  investigate alternatives, costs, potential sites, and program requirements  to ensure future currency production in the D.C. area (see table 1 for  details of the studies). In BEP’s 2013 study and since then, the agency  has focused on three alternatives:  “Renovation”—a major renovation of the current facility  “New build”—a new building in a different location that would house  currency production and all administrative functions  “Hybrid”—a new building in a different location that would house  currency production, but having administrative functions in one of its  current buildings  According to BEP officials, the cost estimates in the 2013 study were an  important factor in their preference for a new facility instead of a  renovation. According to Treasury officials, the ability  for other Treasury employees to co-locate in the Main Building after the  repurposing is completed would also provide long-term cost benefits to  Treasury because Treasury could save on expensive lease agreements  in downtown Washington, D.C. Further, Treasury officials noted that it is  important that the Treasury Department maintain the Main Building as an  asset because of its location and history, and Treasury officials prefer that  BEP maintain some functions in the building. The 2017 study provided  cost estimates of BEP’s and Treasury’s preferred hybrid option, as well as  the renovation option that BEP officials said they would pursue if BEP  does not receive the necessary legal authority to construct a new facility. Federal Reserve officials told us they concur with the 2013 study that a  new facility is warranted, that a renovation of the existing facility would be  more costly than a new facility, and a renovation would not provide the  same degree of efficiency. However,  BEP officials also told us that if BEP does not get the legal authority  necessary to use its revolving fund to purchase land and build a new  facility in 2018, BEP will pursue a renovation of the existing D.C. facility  beginning at the end of 2018. According to BEP production data, from 2013 to 2016, manufacturing  costs were higher at the D.C. facility for all comparable denominations. BEP officials said that, while the D.C. facility could be renovated to  accommodate larger equipment, it would not be possible to replicate the  large, open production floor of the Fort Worth facility, which allows for  simple installation of equipment. BEP officials told us that, unlike the  current D.C. facility, a new production facility would be able to easily  accommodate the printing equipment necessary for security features that  BEP is currently developing for the next currency redesign. Specifically, should production demand increase, a new production facility  could be designed to easily scale to meet new production requirements. BEP Generally Followed Leading Capital-Planning Practices, and Its 2017 Cost Estimate Partially Met the Characteristics of a Reliable Cost Estimate

		BEP Generally Followed Applicable Leading Capital-Planning Practices

Capital investments in infrastructure can require significant resources to  construct, operate, and maintain over the course of their life-cycle. Long-term capital plan: BEP followed this leading practice, which calls for  a capital plan that documents an agency’s decisions and describes its  mission, planning process, and risk management, among other things. That guidance did not refer to  leading practices for cost estimates that are identified in GAO’s Cost  Guide. GSA has recently updated its guidance to refer to the leading  practices in GAO’s Cost Guide, and BEP officials told us that they will  follow this updated GSA guidance when developing any future cost  estimates. For example, the estimate included most  life-cycle cost components, defined the program and its current schedule  and included a consistent work breakdown structure. Credible: BEP’s 2017 cost estimate partially met the credible  characteristic. Ability to Sell or Repurpose Potentially Vacant Space Could Affect the Total Cost to the Federal Government

The alternative that BEP pursues could have a financial effect on the  federal government and ultimately taxpayers. 2). For example, changes in the Washington, D.C., real estate  market could affect the opportunity to sell the Annex. homeless use), or being sold to a private  party via a public sale. Agency Comments

We provided copies of the draft report to the BEP, GSA, the Federal  Reserve, and Treasury for review and comment. BEP coordinated with  Treasury in providing comments. In these comments, reproduced in  Appendix I, BEP emphasized the factors that led BEP to determine that a  new facility is the preferred alternative for its currency production process  and acknowledged our findings on those factors. BEP and the Federal  Reserve also provided technical comments, which we incorporated as  appropriate. GSA did not provide comments.
Why GAO Did This Study

BEP, within Treasury, designs and produces U.S. currency notes at BEP's facilities in Washington, D.C., and Fort Worth, Texas. The Federal Reserve pays for BEP's operational expenses, including currency production. BEP is requesting legal authority to purchase land and construct a new production facility in the D.C. area. BEP officials told GAO that, if it does not receive the necessary legal authority for a new production facility, it will renovate the D.C. facility.
GAO was asked to review BEP's facility planning process. This report: (1) describes the results of facility studies that BEP has funded and factors that led BEP to propose a new production facility, (2) examines the extent to which BEP's actions align with leading capital planning and cost estimating practices, and (3) describes other factors that could affect total federal costs of BEP's actions.
GAO analyzed BEP documents and data from 2010-2017 on currency note production, visited both BEP production facilities, assessed BEP's actions against leading capital planning and cost estimating practices, and interviewed officials from BEP, GSA, the Federal Reserve, and Treasury.
GAO provided the draft report to BEP, GSA, the Federal Reserve, and Treasury for review. BEP coordinated with Treasury in its comments. In the comments, reproduced in Appendix I, BEP emphasized the factors that led BEP to determine that a new facility is the preferred alternative. BEP and the Federal Reserve also provided technical comments, which we incorporated as appropriate. GSA did not provide comments.

What GAO Found

The Bureau of Engraving and Printing's (BEP) studies and research determined that a new production facility would be less expensive and better address BEP's need for secure, efficient, and flexible currency production than a renovation of its Washington, D.C. facility. According to 2017 cost estimates, BEP's preferred option—a new production facility in the Washington, D.C., area and some renovated administrative space in its current D.C. facility—would cost approximately $1.4 billion, while a renovation of its current facility for both production and administrative functions would cost approximately $2.0 billion. A new facility similar to BEP's Texas facility could have a secure perimeter that meets federal building security standards. Such a perimeter is not possible with the current facility. A new facility could also house production on a single production floor to allow for a more efficient production process.
BEP generally followed leading capital-planning practices, and its 2017 cost estimate of a new production facility partially met the characteristics of a reliable cost estimate. BEP's capital planning followed leading practices, for example, by including a needs assessment, a link to BEP's strategic plan, and a long-term capital plan. BEP's cost estimate partially followed leading practices, for example, by including most life-cycle cost components and documentation of the data used for the estimate. However, it did not include sufficient sensitivity analyses, which identify a range of costs-based on varying assumptions. BEP officials stated that they plan to follow the updated GSA guidance that includes GAO's cost-estimating leading practices when updating this early stage estimate.
The ability to sell or repurpose any part of the current D.C. facility could affect the total federal costs of BEP's actions. According to officials from the Department of the Treasury (Treasury) and the General Services Administration (GSA), there could be savings if Treasury could consolidate staff or operations into the vacated facility. There could also be savings if the unneeded facility could be sold to a private buyer. However there would be costs to prepare the facility for use by other entities or if the unneeded facility does not sell. Agency officials said that it is too early to determine specific costs and savings.