“._.__ _._ .-...-.-_IJrli--_-____ t.wi St,a.t,w Gthner;tl Account.iIlg .l”l.-.“.. Office ---- I: GAO I’act, Sheet, f’or t,he Hmorable 1hwck Adams, U.S. Senate ..““_-- ..““l*“, “I II *” .*-” . . . ..- -.-.“---“... “““_.“--_---“__-~~-~-~.~~-~.“.------ ----- . Ihw~lrlh~r I!~!~0 U.S. EMBASSY, MOSCOW Alternatives for Reconstruction and Their Costs RELEASED RESTRICTED --Not to be released outside the General Accounting Offlce unless specifically approved by the Offlcq of Congressional Relations. GAO/NSIAIM~I -43FS ,. .II_...._,.._ _^. “_._l.._. I--.,. *l_..l~.-.“l.-. _-- -...--.“_l.-“_.-..-___...______ ~ _.__.~~ United States GAO General Accounting Office Washington, D.C. 20548 National Security and International Affairs Division B-241619 December 28,lQQO The Honorable Brock Adams United States Senate Dear Senator Adams: As you requested, we reviewed the basis for the State Department’s pro- posal to demolish the unfinished U.S. embassyoffice building in Moscow and build a new one. Specifically, we examined (1) the basis for the cur- rent cost estimate of $270 million for demolition and reconstruction and (2) the alternatives considered by the State Department for a new embassyin Moscow and their costs. This fact sheet is the unclassified version of a classified fact sheet on the same subject. Based on several agreementswith the Soviet Union, the United States Background began constructing a new eight-story embassybuilding in 1979. In August 1985, the United States locked the Soviet construction workers out of the site becauseof security concerns.Subsequentinspection of the building indicated that it was permeated with Soviet eavesdropping devices. The building is approximately 65 percent complete as it stands today. Since 1987, the State Department has considered several options for completing the embassyproject. In late 1989, the administration pro- posed to demolish the current structure, with the exception of the foun- dation and basement, and build a new eight-story building on the current site. The State Department requested $270 million in its fiscal year 1991 budget submission for this purpose.1 The State Department’s $270 million cost estimate is based on the esti- Results in Brief mated cost of reconstruction from a security engineering study prepared by the BDM/M.K. Ferguson companiesand on the State Department’s estimates of special security requirements and administrative costs. Security-related items account for the majority of the $270 million. The State Department considers Moscow to be one of the most technologi- cally hostile intelligence-gathering locations, requiring the highest level of security. ‘The Congress did not fund the project for fiscal year 1991. The State Department plans to request funding again for fiscal year 1992. Page 1 GAO/NSIAD-9143FS Reconstruction of U.S. Embassy, Moscow The current $270 million cost estimate to demolish and rebuild the office building may be understated because(1) an actual building design has not been completed,(2) the milestonesfor completing design work and reaching a construction agreementwith the Soviet government have been exceeded,and (3) the projected inflation rates used for the $270 million estimate are lower than current projected rates. We esti- mate that the revised inflation forecasts and scheduledelays have increasedreconstruction costs by about $13 million.2 Three other options, basedon engineeringconceptsand ranging in esti- mated costs from $222 million to $336 million, were also consideredby the State Department. These included (1) tearing the building down to the fourth floor and reconstructing on the present site, (2) constructing a new office building on a different site and converting the current structure into apartments, and (3) constructing a secure eight-story annex on a different site and completing the current structure for non- secure purposes. These options were not favored by the State Depart- ment becausethey did not fully meet security needs,were too costly, or would take too long to complete. The cost estimates for these options may also have been understated for the same reasonsas stated for the selectedoption. Although the State Department would prefer to proceed with its proposal to demolish the unfinished building with the exception of the foundation and the basementand construct on the same location, State has been directed by Congressto conduct further design work on two of the four options. Regardlessof which option is eventually funded, the construction of a new embassyoffice building is linked to U.S. efforts to negotiate new agreementswith the Soviet Union for facility and land use in Moscow. Current negotiations involve construction agreementsfor the new office building and other land and buildings in adjacent areas. State officials noted that they believe an agreementcovering construction of the new building on its current site could be negotiated separately from the other property issues.However, another agreementcovering a number of properties and issueswould be necessarybefore work on the two off- site options could proceed. Further delays in concluding either agree- ment might affect the cost and schedulein completing a new building. In addition, State has not prepared cost estimates on the additional prop- erty and facility needsfor the remaining Moscow complex. 21ncurrent dollars. Page 2 GAO/NSIAD-9142FS Reconstruction of U.S. Embassy, Moscow E!u1619 We interviewed officials and reviewed records at the Department of Scope and State and BDM Corporation. We also reviewed (1) cost data and assess- Methodology ments of construction alternatives prepared by BDM/M.K. Ferguson companiesand other independent consultants and (2) studies on the structural integrity of the current structure by the National Bureau of Standards and engineering firms. We did not visit the unfinished U.S. embassybuilding or the new embassycompound in Moscow. Also, we did not independently evaluate security requirements for the embassy site. Our review was conducted from April through September 1990 in accordancewith generally acceptedgovernment auditing standards. As requested, we did not obtain written agency comments.However, we discussedthe information in this fact sheet with responsible State Department officials and have included their comments as appropriate. Unless you publicly announcethe contents of this fact sheet earlier, we plan no further distribution until 30 days from the date of this fact sheet. At that time, we will send copies to the Secretary of State, appro- priate congressionalcommittees and members of the Congress,and other interested parties. Copies will also be made available to others on request. The information for this fact sheet was developed by Jess T. Ford, Assistant Director; Elena L. Boshier, Evaluator-in-Charge; and Beth A. Hoffman, Evaluator, Security and International Relations Issues.Please call me on (202) 275-4128 if you or your staff have any questions. Sincerely yours, Joseph E. Kelley Director, Security and International Relations Issues (4625Bl5) Page 3 GAO/N&ID-91&F’S Reconstruction of U.S. Embassy, Moecow Ordc~t-ing Informat.ion ‘I’htt first fivtb tv~pit~s of each GAO report are free. Addit.ioual c*opivs art’ $2 teach. Orders should be sent to t,he following addrtbss, accompanittd by a check or money order made ou(. t,o l.htb Sopt!rint,t!ndt~nt. of Documents, when necessary. Orders for 100 or mart! tropics t.o be mailed to a single address art: discounted 25 pttrccnt.. 1J.S. Gt*nt:ral Act*ount,ing Office I’. 0. Box 60 I A G;tithtbrst)urg, MI) 20877 Ortltbrs may also be placed by calling (202) 275-624 1. .” .^ . . .._ ..--._. .._. .- .._.... -. ..-._ ..- ,__.. -. -..- ..__.._.______..__-_____---- I’1lit(a(l Stiltt’?, (;c~~~cbr;tlAWOIIII~ ilip, O I’f’iu- U’it~tiirlgCtori, I).( 1. 2054X
U.S. Embassy, Moscow: Alternatives for Reconstruction and Their Costs
Published by the Government Accountability Office on 1990-12-28.
Below is a raw (and likely hideous) rendition of the original report. (PDF)