The Status and Problems in Constructing the National Visitor Center

Published by the Government Accountability Office on 1977-04-04.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                             DICSPlBRT nSUEB
01136 - [A10520031

The Status and Probles in Constructing the ational Visitor
center. PSAD-77-93; B-158792. April , 1977. 29 pp. + appendices
 (26 pp.).
Report to the Congress; by      luer B. Staats, Cocptroller General.
Issue 2.rea: ederal Procuremeat of Goods and Services:      otifying
    the Congress of States of    Important Procurement Prograas
    (1905); Land Use Planning and Control (2300);Transportation
    Systems and Policies (2400).
Contact: Procurement and Systems Acquisition Div.
Budget unction: atural Resources,       nvironlent, and nerglj:
    Recreational Resources  (303);  Commerce  and Transportation:
    Ground Transportation  (04).
Organization Concerned: Department of thA Interior; Department
    of Transportation; ational Capital Planning Commission;
    George Hyaan Cnstruction Co., GA; Washington Terminal Co.
Congressional Relevance: House Committee on Interior and Insular
    Affairs; Senate Coaaittee on nvironment and Public Works;
Authority: latical  Visitor Center Facilities Act of 168, as
    amended (P.L. 90-261; P.L. 93-62). P.L. 90-209. P.L. 93-478.
          The probles encountered urine the development and
constrouction of the ational Visitor Center in Union Station in
  ashington, D.C. were reviewed.       inings/onclusionu       s: The
project evolved fromue a plan for the DepaLtaent of the Interior
 CDINT) to lease the privately developed Center froa the owners
of Union Station. The complex financial and management
arrangement did not adequately prot.fct the Government. Congress
was not informed of costly changes in plans and increased costs
in other areas until too late to cobsider alternative. The
Station owners contracted!with a construction company that
became its own subcontractor--a questionable procedure. Costs to
date are some $S5 million, of which some $28 million is the
Government's share for a partially compli.ted facility. The
Government had not planned to py for constructicn, only for
rental. To complete it,    estimated costs range from S115 to 180
sillion. The Department of Transportation is interested in
assuming Interior's lease on the structure.             ecoameLdat'.ons:
The agency designated for managing       the  Center    shceld (1)
deteraine whether the lease could      be  renegotiated      with a view
towards using   valuable air   rights;   and   (2)  develop   a utilization
plan to use the upper and    lower   levels   of   the  station.  It should
be decided whether to finish      only the   incoapleted     structure  or
build the   entire project  to   conform  with    the  approved  design.
Before authorizing any additional construction, the final
project design and costs, as tell as the agency responsible for
completing the project should be determined. If construction is
to continue, responsibility should go to an agency familiar with
such projects (such as General Services dministration or Corps
of Bgineers). This agency should submit periodic
to Congress and use fixed price contracts tc       ,ttus reports
overruns, (DJE)                              avoid .. ,st


The Status And Problems
In Constructing The
National Visitor Center
Departments of Transportation and
  the Interior
National Capital Planning Commission

The National Visitor Center project in the
Nation's Capital was authorized by the Con-
gress in 1968 to provide visitors with tourist
services and parking. After nearly 9 years, the
project is incomplete and has evolved from a
plan for the Government to lease the facility
into a complex financial and management
The Government has paid about $28 million
in construction funds for a partially corn-
pleted facility. 1he Government had not
planned to pay for construction, only for
rental. Estimated co s to complete the pro-
ject now range fron. $115 million to $180

PSAD-77-93                                        AP I   4, 1 9 77
                            WAHrINSOWC    Oc.   men


To the President of the Senate and the
Speaker of the House of Representatives

     This report describes the problems encountered during
development and construction of the National Visitor Center.
We initiated this review as part of our overall review
of major acquisitions from appropriated funds. It was
also requested by the Chairman, of the former Subcommittee
on Buildings and Grounds, Senate Committee on Public Works,
now the Subcommittee on Regional and Community Development,
Senate Committee on Environment and Public Works.

     We made our review pursuant to the Budget and Account-
ing Act, 1921 (31 U.S.C. 53), and the Accounting and Audit-
ing Act of 1950 (31 U.S.C. 67).

     We are sending copies of this report to the Director,
Office of Management and Budget; the Secretaries of Trans-
portation and the Interior; and to the Executive Director,
National Capital Planning Commission.


                                         Comptroller General
                                         of the United States
                             NATIONAL VISITOR CENTER
                             Departments of Transportation
                             and the Interior
                             National Capital Plarlning
       This report shows the importance of properly
       managing a Federal Government project when
       there are several participants--in this case,
       the Department of the Interior, the Congress,
       and private railroad companies.
       In the mid-1960's the Union Station in Washing-
       ton, D.C., was selected by the National Visitor
       Center Study Commission as the site for a Na-
       tional Visitor Cente; this project was ong
       perceived as a necessity for the capital of
       the United States. At that time, the 70-year-
       old station was a historic monument in danger
       of being demolished.
       As authorized by the Congress, the Center was
       to provide facilities for visitors by converting
       and renovating the station and by constructing
       a parking garage nearby to accommodate about
       4r000 automobiles.

       The National Visitor Center Facilities Act of
       1968 stipulated that the Secretary of the In-
       terior enter into agreements and leases    th
       the owners of the station, the Washington
       Terminal Company, and others to meet these

       The authorizing legislation, which was based
       on recommendations of the study commission,
       anticipated that the owners would invest $16
       million for renovation and construction of
       the Center and parking facility. The property
       would then be leased to the Government for
       25 years at a total cost of $87.5 million.

          nod hmeon
     rc.Xmbe                 i                PSAD-77-93
  Many of the project's current
  from the Government's urgency problems stem
  get underway what was widely to finally
  as a longstanding public need.acknowledged
  of this urgency, adequate and     ecause
  estimates were not prepared.   detailed  cost
                                 The project has
  evolved from a simple straightforward
  arrangement by the Government           leasing
                                 to a complex
  financial and management arrangement.

 The circumstances were these:
  -- The Department of the Interior
     a leasing agreement with the     entered into
     Station, but the agreement did owners  of Union
                                      not adequately
     protect the Government.   (See pp. 11 to 12.)
 -- The Congress was not informed
    changes in the project's scope of costly
    creasing costs in other project and of in-
     it was too late to express its areas until
    consider alternatives.            desires or
                             (See pp. 17 to 18.)
 -- The owners of the station entered
    contract with the George Hyman       into a
    Company as contractor-agent,
    firm to become its own subcontractor--athe
    questionable procedure.   (See p. 20.)
On July 4, 1976, more than
passage of the legislation, years after the
                             the renovated blt
unfinished Union Station portion
Center project was officially     of the Visitor
lic. Because of the unavailability to the pub-
Interior terminated construction      of funding,
in November 1976.                 of  the project

The costs for work from the
project thriugh contract termination of the
$44.8 million, of which $28.4         is about
                              million is the
Federal Government's contribution.

As of Janiuary, 1977, one wall
was still incomplete and the of the Center
                               remaining portions
Jf the 1,200-c&r parking facility
operational. Estimated costs        were not fully
acquiring the project now range for completing and
lion to about $180 million.       from $115 mil-

The Department of Transportation
in assuming Interior's lease     is interested
                             on the Center and

    developing it primarily for transportation pur-
    poses while retaining a small visitor orienta-
    tion center. A bill has been introduced in
    the Senate to transfer responsibility for the
    project to Transportation.
    Today there is still no agreement on how much
    of the .pproved design of the visitor center
    complex will be constructed. In the meantime,
    the Government is paying over $3 million a year
    to rent a partially completed facility that has
    serious structural defects due to the age of U-
    nion Station. (See pp. 4,5, 25, and 26.)
    Several important lessons can be learned from this

    -- If the Government enters into a construction-
       lease arrangement, the scope of the project
       and the occupancy date should be clearly
       defined so that the Government is not forced
       into such an untenable position.
    --Arrangements for construction and/or leasing
      should be managed by a Government agency
      very familiar with similar construction
      projects (such as the General Services
      Administration or the Army orps of Engi-

    -- The Congress should insist on receiving pe-
       riodic reports on the status of all major
       projects. The reports should be similar to
       those prepared by the Department of Defense
       on major we3pon systems. (See also GAO's report
       PSAD-77-5, Dec. 29, 1976.)
    The termination of work on the project has
    presented n opportunity for the Congress
    to resolve whetheL the project should be
    oriented toward visitors or rail passengers;
    and whether the Center will be managed, over
    the term of the lease, by Interior or Trans-

    GAO recommends that the Congress require the
    agency designated for managing the Center to:

T    ShI   t
-- Determine whether any other public use is
   intended for the unused leased air rights
   so that it may seek to renegotiate the lease
   for the value of the air rights being used
   for the project.

-- Develop a utilization plan for the upper and
   lower levels of the station.
Another issue concerns whether it should
finish only the incomplete structure or build
the entire project to conform with the ap-
proved design. Before authorizing any addi-
tional construction, there should be a clear
agreement among the Congress and the Depart-
ments of Transportation and the Interior on
the final project design and cost limits as
well as which agency should be assigned
responsibility for completing the project.
If a decision is made to continue construc-
tion, GAO recommends that the Congress as-
sign responsibility for construction to a
Government agency familiar with construc-
tion of similar projects, such as the
General Services Administration or the Army
Corps of Engineers.

GAO also recommends that the Congress require
the ageicy responsible for construction to:

-- Submit to the Congress periodic status
   reports on this project similar to the
   Selected Acquisition Reports submitted
   by the Department of Defense on major
   weapon systems.

--Use fixed price contracts to avoid further
  cost overruns and to establish better con-
  trol of construction.

Interior and Transportation both said they
have the expertise to manage future construc-
tion on the Center and should not have to
rely on another Government agency for this.
GAO believes a Government agency familiar with
construction of this type should do better
than either Interior or Transportation.


DIGEST                                                i

   1      INTRODUCTION                                1
              Description of the project              1
              Scope                                   2

   2      STATUS, SCHEDULE, AND COST                  3
              Schedule                                3
              Cost                                    4
                   Structural problems may affect
                     the soundness of the building    4
                   Funding                            5
              Conclusion                              7
                   Architect's comments               7

   3      PROJECT PLANNING                            9
              The start of the project: The
                  National Visitor Center
                  Study Commission                    9
              Lease negotiation and agreement        10
              Conclusions                            12
              Agency comments                        12
            PROJECT                                  13
              The intermodal transportation
                concept:  its beginnings             13
              Initial design                         14
              Limiting scope to available funds      17
              Congressional funding                  17
              Conclusions                            18
   5      MANAGEMENT                                 19
              Owners' management                     19
              Interior's management                  21
                  First letter agreement             21
                  Changes due to Amtrak suit         22
                  Second let' r agreement            23
                  ProblamF    resuming work          23
                  Project     ination                24
                  Reportii. _ project problems       27
              Conclusions                            27
              agency comments                        28
              Aecommendations                        28
       I    Letter to the Comptroller General from the
              Chairman, Subcommittee on Buildings and
              Grounds, Senate Committee on Public Works    30
      II    Schematic design completed in February 1971    31
  III       Letter dated February 18, 1977, from Acting
              Assistant Secretary - Administration-and
              Management, Department of the Interior       32
  IV        Letter dated February 18, 1977, from
              Executive Director, National Capital
              Planning Commission
      V     Letter dated February 23, 1977, from
              Seymour Auerbach                             37
  VI        Letter dated February 16, 1977, from the
              Vice President, The George Hyman
              Construction Company
 VII        Letter dated February 18, 1977, from
              Executive Vice President, Terminal Realty
              Baltimore Company
VIII        Letter dated March 9, 1977, from Assistant
              Secretary for Administration, Department
              of Transportation
  IX        Principal officials responsible fcr
              administering activities discussed in this

GAO             General Accounting Office
NCPC            National Capital Planning Commission
                        CHAPTER 1

     The need for an orientation center for visitors to
the Nation's Capital has been longstandirg, with strong
interest from the Congress, the executive branch, and the
general public. Although many proposals for a visitor
center had been made over the years, none had ever progressed
beyond the discussion stages.  In l966, however, the Congress
decided that the need for such a center could no longer be
postponed and created a study commission to investigate
possible sites for a facility.
     This report reviews the problems encountered in the
construction and management of the Visitor Center. The
Department of the Interior, through the National Park Service,
is the principal U.S. Government representative. Seymour
Auerbach is the architect; George Hyman Construction Company
is the contractor-agent and principal subcontractor. The
owners of Union Station are the Terminal Realty Penn Company
and Terminal Realty Baltimore Company. The new passenger
station is owned and operated by the Washington Terminal

     The National Visitor Center Facilities Act of 1968
(Public Law 90-264) provided for the conversion of the
station into a visitor center. The act stipulated that:

     -- The Secretary of the Interior, in consultation
        with the Administrator of General Services,
        negotiate and enter into agreements and leases
        with the wner(s) of Union Station for its
        use as a National Visitor Center and for a
        related parking facility;
     -- The owners should make such alteration to the
        Union Station as the Secretary o the Interior
        determines necessary to provide adequate facilities
        for visitors at a cost not to exceed $5 million;
     -- The owners should construct a parking facility,
        including necessary approaches, to accommodate as
        nearly as possible 4,000 cars, at a cost not
        to exceed $11 million plus any portion of the
        above $5 million not used;

        -- Lease of Union Station by the Government shall
           begin when such facilities are available for
           public use, for a period not to exceed 25 years;
        -- Aggregate annual lease cost to the United States
           shall not exceed $3.5 million;
        -- The United States shall have the option to purchase
           all of the leased property any time after the
           first year of the lease;
        -- The owners shall construct a new railroad passenger
           station in he area beneath or adjacent to the
           parking facility.
     We reviewed files made available by the Department
of the Interior; the Department of Transportation; the
National Capital Planning Commission; Monk Dunstone
Associates, the cost consultant to the National Park
Service; and Seymour Auerbach, the architect. We also
obtained data from the other private parties involved--the
Washington erminal Company; George Hyman Construction
Company; the Potomac Group, architectural consultant
to the National Park Service; and Amtrak. In addition,
we reviewed congressional testimony, transcripts of
the Nional Visitor Study Commission, and National Visitor
Facilities Advisory Commission meetings.

                        CHAPTER 2
                STATUS, SCHEDULE, AND COST
     More than 8 years after the passage of the National
Visitor Center Facilities Act, the renovated Union Station
portion of the Visitor Center project was officially opened
to the public on July 4, 1976, to commemorate the Nation's
bicentennial observance. By January 19, 1977, one wall of the
Center was still incomplete, and the remaining portions of
the parking facility were not fully operational. Because of
the unavailability of funding, construction of the car parking
levels was terminated by Interior on September 3, 1976, and
construction of the remainder of the project was terminated
in November 1976.

     The renovated portion of the facility is currently
operating and could be the focal point for visitors to
the Nation's Capital. It has, however, fallen short of
the architectural concepts originally presented to the Con-
gress. Conceived to contain four 500-seat theaters, a recep-
tion theater, visual exhibits, and a cafeteria/restaurant,
the design of the Center changed, first, to more quickly
process visitors and, later, because of funding limitations.
The Center now contains two 175-seat minitheaters, an exhibit
area, a hall of states, a bookstore, a slide presentation,
and a fast-food cafeteria.

     The bus parking level is completed, but the four levels
that are to accommodate about 1,300 cars are in various
stages of construction and lack connecting ramps. The floors
of levels one and two and half of level three are in place,
but only the supports are completed for level four. Under
the terms of the termination, certain parts of the project
were to be completed and the contractor was to remove all
equipment and shoring. Once this is done the bus parking
level will be usable by way of two completed ramps. At
January 19, 1977, we observed cleanup work only on the park-
ing facility.

     The replacement railroad passenger terminal located
under the bus parking area is functioning. However, con-
struction has not started on an extension to the replacement
terminal as agreed to y the owners, Amtrak, and Interior,
due to the termination ot tork on the southeast ramp which
will serve as the roof for the terminal extension.


     There was no specific completion date for the project
until after the construction contract was awarded. This

contract depended on the availability of financing at a rate
not to exceed 7 percen . The efforts to obtain suitable
financing were complicated by the bankruptcy of the Penn
Central Transportation Company, a parent company of one of
the owners. Financing was not obtained until April 1973.
As construction began, the bicentennial year became an in-
formal target completion date.
     Delays occurred because work was suspended to evaluate
high construction cost estimates; delays were also caused
by an Amtrak suit over the adequacy of the replacement rail-
road passenger terminal and various labor strikes. Cost
overruns and inadequate funding have caused a termination
of construction work.
     Interior and Transportation, whose interest in the
project is derived from the Amtrak Improvement Act of 1974,
are studying what should or could be done to complete the
project. A current Transportation proposal calls for (1)
Transportation taking over the entire area now being leased
by Interior, (2) reducing the visitor orientation area and
subleasing it to Interior, and (3) utilizing the remaining
portions of the station as rail and bus facilities.
     Although authorizing legislation estimated that the
Center and its parking facility would be acquired for no
more than lease costs of $87.5 million, the potential costs,
including lease costs, could exceed $180 million. Additional
costs could be incurred depending on how much of the approved
design is constructed. The owners of the station property
have limited their financial investment in the project to
approximately $16.4 million. Interior has assumed the major
financial responsibility and has already invested $28.4
million in renovation and construction costs.
     Estimating the cost of completing the unfinished
portions of the project is considered imprecise because a
full construction review of the station building has not
been completed as of December 31, 1976. The project manager
estimated that construction costs to complete existing fa-
cilities would range from $38.3 to $68.3 million.
Structural problemb may affect
tei soundness of the budi
      In December 1976, a team of architects, engineers,
 inspectors, and managers of the National Park Service

identified major structural, mechanical, and electrical
problems in the structure of the 70-year-old building, which
will require corrective action.  As construction progressed,
they determined that the steel supporting the north wall and
the train tunnel has deteriorated so that the structural
soundness of the building may be affected. Steel under the
south wall, in supports, and in various other areas will
also require repair and some replacement. The north wall
as well as a wall holding a pier which supports the southeast
ramp has cracked and settled. The project manager reported
that failure to correct these problems before continuing
with construction could result in a major structural col-
lapse. Other structural problems concerning the electrical,
mechanical, and water systems of the center will need to
be corrected.
     The electrical system is basically the same as before
the project began. At one time it was estimated that instal-
ling a new system would cost over $2 million; due to lack
of funds, major changes were not made. Now it is recommended
that the antiquated system be repaired or replaced, preferably
replaced, though the cost has not been determined.

     Steam for the existing heating system is supplied by the
railroads. This system within the station is old and
requires continuous maintenance. Moreover, the railroads
have said that they may not require steam for their
operations after 1980.

     Pipes for the water system are corroded so that the
water flow is restricted. The supply tank is also
     A summary of estimated Government costs for the Center
and a 1,274-car parking complex is on the following page.

     Additional costs will be incurred if the facilities
are expanded to include a 4,000-car parking facility and
an intermodal terminal. A study prepared for the Department
of Transportation in July 1976 estimated that it would cost
$77.7 million to build another 1,200-car parking facility
east of the present unfinished garage, an intermodal terminal
on air rights near the H Street overpass, and a bus parking
area in air rights above the through tracks.


     The project cost has reached the limit of currently
available funds. A termination notice was initiated in
September 1976 because of lack of funds, inability to secure

                                               Amount        Total           total
                                          ------------        (millions)-----------
Obligated costs including termination
as of December 21, 1975 (source: National
Visitor Center Financial Consultant):
    Renovated Union Station             a/$9.1
    Bus parking level
      and southwest ramp                  17.9
    Car parking (st
      three levels)                         9.9
    Car parking (4th level)                   .2
    Southeast ramp                          3.2
    Northwest ramp                          1.4
    Gallery                                   .5
    Soft cost (overhead, etc.)              2.6
    Less: contribution by owners                             -16.4
Estimated costs to complete existing
facilities (source:  project manager):
    Car parking (4 levels,
      1,274 cars)                              10.0
    Southeast ramp
      repair structural supports                6.6
      new consraction                           8.4
    Repair/replace steel in
      north wall and tunnel                     3.0
    Remodel Visitor Center to
      correct deficiencies and
      for full occupancy                   10 to 40
                                                         38.0 to 68.0    66.4 to     96.4
Estimated acquisition (lease or
purchase costs) (Source: owners'
legal counsel):
    Cost to exercise earliest
      purchase option:
      2 years lease coat                      $ 6.2
    Unamortized balance of
      owners' mortgages                        41.9

   Lease costs at
     $3,338,127 a year
     for 25 years                             83.5
   Estimated acquisition cost                            48.1 to 83.5   114.5 to 179.9
        Total estimated Fpderal
          Government cost                        b/$114.5 to 179.9
a/$1.06 million of this figure is for such things as displays but still is            a
  cost to the Government.

b/Income from parking and concession rntal fees will partially
  offset this amount.

an acceptable fi:ed price proposal from the contractor to
complete the project, and other related factors.
     The following table shows the source and availability
of funds as stated in legislation and contracts.
             Source of funds              Year    available

Owners                                    1973   $16,000,000

Interior (1970 and 1971
  appropriations)                         1970       800,000

Interior (Public Law 93-62)               1973     8,680,000

Interior (Public Law 93-478)              1974    12,900,000

Owners (letter agreement 10/31/74)        1974       425,000

Transportation grant (Urban Mass
  Transportation Administration capital
  assistance)                             1975     8,155,700

Cooperative agreement (concessionaires)   1976       223,000

D.C. government (Federal Highway Ad-
  ministration grant) (northwest
  raiip)                                  1975     1,411,130

         Total                                   $48,594,830


     Not obtaining financing at acceptable interest rates
delayed the start of construction of the Center for 4-1/2
years. During that time the cost of construction increased.
Estimated costs to complete and acquire the existing facility
range between $114.5 and $179.9 million. Additional costs
of about $77 million are estimated to provide parking for
another 1,200-car spaces and added bus parking.
Architect's comments

     The architect estimates that the parking structure is
more than 60 percent completed and, therefore, questions the
estimate for completing the four levels of car parking; our
estimates indicate that approximately 50 percent of the
funds have been expended. The $10 million estimate to
complete the parking garage was obtained from the project
manager; because of underestimating on this project and

 anticipated additional clean-up
                                  and start-up costs, it seemb
 necessary to use the mnager's
                                 higher estimate.
      The architect also said that
                                    our reference to serious
structural defects is an overstatement.
manager reported, based on                 However, the project
                            the December 1976 reports of
tional Park Service engineers,                            Na-
structural repairs is required that an enormous amount of
safe and operable. The architectbefore the Center will be
to the electrical, water, and       said that major changes
                               steam systems were never con-
templated. This may be true
manager, these repairs must but, according to the project
                             be made.

                         CHAPTER 3
                     PROJECT PLANNING
     A study of the project's history reveals that
there was an urgency within the Government to get the project
started even though all the necessary planning, cost
determinations, and other aspects had not been completed.
The problems the Center currently experiences can be
largely attributed to this lack of planning.
     On November 7, 1966, the Congress, by Public Law 89-790,
created the National Visitor Center Study Commission to make
a complete investigation of sites and plans for a visitor
center in the Nation's Capital. Specifically, the study com-
mission 1/ was to investigate and recommend a site for the
Center; provide preliminary planis, specifications, and
architectural drawings; and estimate the cost. In May 1967
a subcommittee of the commission, having negotiated a tenta-
tive lease for the station involving a $16 million contribu-
tion by the owners, recommended leasing of the station be-
     -- It would be convenient for visitors arriving
        by rail and rapid transit ano ould be
        accessible for those traveling by automobile
        and bus.
     -- It was a historic monument in danger of demolition;

     -- It was in close proximity to the Capitol;

1/The study commission, which was charred by the Secretary
  of the Interior, was composed of the Administrator
  of General Services, the Secretary of the Smithsoniarn
  Institution, the Chairman of the Council on the Arts
  and Humanities, the Chairman of the National Capital
  Planning Commission, the Chairman of the Commission
  of Fine Arts, six members of the Senate, six members
  of the House of Representatives, and three citizen

      -- It required no outlay of public funds
                                               to begin
         a visitor program.
      The leasing of the station was attractive
 commission and others because it did not requireto any
                                                     the study
 or immediate outlay of cash on the part
                                          of the Gover,:ment
 other than lease payments which would begin
 ties were available for public use. At       when the facili-
 the conflict in Vietnam was escalating,  the time, mid-1967,
 inflation were being felt and, because ofthe impacts of
                                            budgetary con-
 straints, it was unlikely that any large
 for construction would be approved.

      The study coniission, in its September
 recommended the station as a visitor center 15, 967, report
 that the Government lease the building and and suggested
 (to be constructed on air rights at tt,.    parking facility
 from the Washington Terminal Company. Therear  of the station)
would invest $5 million for renovating the   Terminal   Company
$11 million fr constructing the parking      station  and
necessary access ramps. The study also garage and
                                          recommended a
parking garage for 3,676 cars and 116 buses
that $11 million would only provide space      but noted
and 116 buses. The Government would be      for  3,036 cars
exhibit and program expenses, the annual  responsible for
and the cost of operating and maintaining lease costs,
                                            the Center
and its parking facility. The $16 mi.lion
for renovating the station and constructing specified
parking facility was stated in 1967 ollars, a four-level
lowance for inflation, and it was intended      with no al-
investment by the owners.                    to  be a maximum

      The act approved by the Congress on March
included the above recommendations              12, 968,
                                    but did not provide
for buses. In addition, the act created
Visitor Facilities Advisory Commission    a National
                                        to (1) conduct
a continuing review of the Center, (2) conduct
investigations and studies of sites and         continuing
additional facilities and services for   plans for providing
                                        visitors, and
(3) advise the Secretary of the Interior
                                          and the Administra-
tor of General Services about the planning,
acquisition, and operation of all visitor    construction,
The act also directed the Secretary to submit
a report to the Congress on the Center.        annually


     On July 19, 1968, the owners proposed
a-.eement that was satisfactory to Interior.a lease

it said that the owners would transfer title of the
station property to the National Park Foundation, a
nonprofit, charitable corporation newly created by the
Congress (Public Law 90-209), to acquire property that
might, ultimately, become part of the National Park
system. Specifically the agreement said the Foundation
     -- Obtain title to the station property, and the
        owners would make available to the Foundation
        a $16 million construction loan.
     -- Be responsible for altering and constructing the
        facilities required by the Government and for
        completing the necessary work within 3 years.
     -- Acquire the property by assuming the $16 million
        mortgage construction loan and a second mortgage,
        about $27 million, on the fair market value of
        the property.

     -- Lease the property to Interior 3t an annual rental
        of $3.5 million.

     Interior's attorneys concluded that all aspects of
the proposal were legally permissible under existing legisla-
tion. The Office of the Solicitor stated that the Foundation
could legally acquire the station, contract for and finance
its conversion into a visitor center, and then lease the
facilities to the United States. The Foundation approved
the proposal in principle.
     In November 1968 the House Subcommittee on Public Build-
ings and Grounds rejected the plan. The Committee, while
acknowledging that it was a good plan and was in the best
interests of the Government, stated that it would be inter-
preted as an outright purchase of the station, violating
the spirit of the project's legislative history which
was directed at leasing rather than buying.
     Subsequently the Secretary of the Interior directly
executed a lease agreement with the owners on December 18,
1968, in which adequate financing was made a prerequisite for
proceeding with the project. This lease agreement was
superseded as of March 1, 1972, primarily to raise the
interest ceiling constraint from 7 to 7.5 percent. Although
the agreement was consistent with the act, it lacked miles-
tones or performance parameters co measure and monitor

contractor performance. These are considered to be standard
provisions when the Government contracts for goods or

     The omission of these provisions prevented the Govern-
ment from insuring that legislation was carried out in an
efficient and effective manner.  Interior failed to protect
the Government's interests as a prospective lessee as po-
vided by section 102(b) of the act, which gave the Secretary
of the Interior authority to Include such terms and conditions
in the lease agreement as he deems necessary.

     Many of the project's currenct   alems stem from its
urgency to get underway what was widely acknowledged
as a longstanding public need. Because of this urgency,
adequate and detailed cost estimates were not prepared
and a $16 million construction cost as established by
the Congress using the inadequate lease arrangement
suggested by the study commission.
     The lease agreement that was negotiated between
Interior and the owners was consistent with the act, but
Interior did not take advantage o its authority to include
such terms and conditions in the lease agreement as may
be deemed necessary. The arrangement lacked milestones
or performance parameters to measure and monitor contractor
performance, and, to this extent, Interior failed to pro-
tect the Government's interest.
     The Terminal Realty Baltimore Company believes our
report suggests thaL the owners had no incentive to perform
the work in an "efficient and effective" manner and pointed
out that the owners' were at risk for up to $16 million
of their own money if the facilities were not completed;
also, rental payments would not start until the facilities
were nearly completed.

                          CHAPTER 4

               CONCEPT:   ITS IMPACT ON THE
     The intermodal concept, which was not part of the
project originally approved by the Congress, involved
constructing within the parking facility a common terminal
for rail and bus transportation (inter- and intra-city).

     Although the idea of a transportation center had great
appeal for most of the prospective participants, this
was short-lived when they discussed the project's nvestment
costs. Nevertheless the intermodal concept became part of
the design consideration of the project plan and which
created an array of design and funding problems.
      The intermodal transportation concept is derived from
the proposed 1967 Comprehensive Plan for the National
Capital. About the time the National Visitor Center
project was being considered, the National Capital Planning
Commission (NCPC) 1/ began a transportation study of the
station vicinity. The focus of the study, which was started
in April 1968, was on examining the feasibility of a central
facility serving as a terminal for intercity and intr&city
bus transportation and intercity rail transportation. In
April 1969 NCPC proposed such a terminal a short distance
north of the station. Neither the railroads nor the bus
companies were interested in a terminal at the site proposed
by NCPC but supported an intermodal terminal at the Center

     The National Visitor Center project already provided
that the owners of the station build a new railroad passenger
terminal within that complex at their own espense.

 National Capital Planning Commission is responsible
 for urban planning for the District of Columbia.

     NCPC held a series of meetings beginning in 1969
designed, according to NCPC officials, to promote interest
in the intermodal concept. The participants in those meet-
ings included representatives from the National Park Serv-
ice, the railroad companies, two major bus companies, and
the project architect. As a result, the owners of the sta-
tion, acting at the request of the National Park Service,
instructed the architect to begin designing the Center's
parking facility using the intermodal transportation concept.

     The owners, on the recommendation of Interior,
engaged the firm of Walton, Maddon, Cooper, and Auerbach
as the project architect on June 30, 1969. The contract
stipulated that while design development drawings
were to be prepared for the entire intermodal project,
working drawings and specifications, like those
needed for actual construction, would be prepared for
only that portion of the project that could be built
within the limits set forth in the authorizing legislation.
     In a November 14, 1969, presentation to the National
visitor Facilities Advisory Commission, the architect stated
chat only about half of the parking facility could be built
within the $11 million limitation established by the Congress.
Nevertheless, the intermodal concept was presented to the
National Capital Planning Commission, and the concept was
endorsed on March 5, 1970.

       By November 1970, the architect had fully com-
pleted schematic designs and estimated the probable
costs. The $35.6 million estimate for the project
included only direct construction costs. The parking
faclitvy   was estimated to cost $25.3 million and the
intermodal terminal, $10.3 million. Since the $11.0 million
budgeted construction cost of the parking facility included
$2.5 million for indirect costs and contingencies, only
$8.5 million was available for direct construction.
This was only slightly more than one-third of the $25.3
million needed for the parking facility.
     In early 1971, this first schematic design for the
parking structure was dropped. The reasons, other than
cost, given for this action were:

     -- The right-of-way btained by the Washington
        Metropolitan Area Transit Authority for building
        a subway precluded constructing certain founda-
        tion columns contained in the design.

      -- The Commission of Fine Arts 1/ objected to
         combining concrete columns and a steel parking
      -- The Commission of Fine Arts felt the er.trance
         and exit facilities were inadequate to andle
         the traffic.

      -- The National Park Service objected to the traffic
         circulation because, as designed, the transporta-
         tion traffic would be intermingled with the
         visitor traffic.

Consequently, the architect was instructed -:o completely
redesign the parking facility.

     By the end of February 1971, the architect had
completed new schematic drawings based on a complete
redesign of the intermodal terminal (app. II). At the
time, the cost of constructing the redesigned facility
had not been estimated.
     In September 1971, the design development drawings
and a statement of probable cost for the redesigned
parking facility and intermodal terminal were completed.
The National Park Service estimated, in October 1971,
that the total cost of the redesigned project--the
Center, the 4,000-car parking facility, and the intermodal
terminal--would exceed $54 million.
                        Construction      Indirect           Total
                            cost            costs            cost

Conversion of Union
  Station               $10,470,300     $1,647,030        $12,117,330

Parking garage            24,923,000     3,592,300         28,515,300

Intermodal terminal      12,249,000      1,224,900         13,473,900

     Total               $47,642,300    $6,464,230        $54,106,530

     The Commission of Fine Arts advises on plans for public
     buildings in the District of Columbia.

     The design was approved by the National Park Service,
the Commission of Fine Arts, and NCPC between September
and October 1971.

     The redesigned facility had important cost implications.
Not only did Interior have to find a way to fund the parking
facility, it had to find a way to fund the intermodal

     Interior, although confronted with a project that
would cost about 3.5 times more than originally believed,
at first thought that the funding arrangements could
be accomplished. By September 1972 the sources of
the needed funds had tentatively been identified and a
funding plan established. Under this plan the funding
would have been derived as follows:

                                              (mill ions)
Estimated cost of the project                    $54.1
Funding sources for Visitor Center
  and parking facility:

     Investment of owners                         16.0
     Department of Interior
       (included in 1974 budget request)          24.6
          Total                                   40.6
Funding sources for the Intermodal
  Transportation Center:

    Amtrak and Washington Terminal Company
      (the primary user and the operator
      of the rail passenger station)               6.3
    Major bus companies, District of
      Columbia government, and Metro
       System (for intracity bus and rail
      transportation and intercity
      bus transportation)                          7.2
          Total                                   13.5
          ·'otal of both facilities              $54.1

     The plan was based on the assumption that the pros-
pective beneficiaries--the major bus companies and Amtrak
as the primary users of the rail passenger terminal--would
be willing to invest their fair share. Although these
groups did have interests in the terminal concept, they
had not made any binding or legal agreement committing
them to provide funds. For a variety of reasons, the
funding that Interior expected from the other parties
did not materialize.
     While Interior was attempting to fund the $54 million
facility, the architect was trying to determine what por-
tion of the facility could be built within the $16 million
statutory limitation. In January 1972 the architect
developed a plan providing for a 2,271-car parking facility
and a minimally operable visitor center. This plan, in
essence, cut the designed parking facility in half by eli-
minating the east side of both the parking facility and the
intermodal terminal. The west side was chosen because (1)
it was less expensive to build than the east side which was
to be built over the lower tracks and had an additional level
for bus docking purposes and (2) the railroad terminal as
designed was on the west side. However, available funds
were not even sufficient for this size facility.
     A second change further reduced the capacity of
the parking facility to 2,015 cars. The estimated cost
of this design was $8,998,000, an amount within the
architect's $9 million construction budget. Accordingly,
the architect prepared working drawings and specifications
to secure the $16 million construction financing. The
George Hyman Cons' ruction Company, however, estimated,
on May 4, 1973, that it would cost $17.9 million to
construct just the 2,015-car parking garage.
     In February 1973, Interior requested, for the first
time, Federal funds of $8.68 million to be used to
construct the southeast ramp and to complete the work
in the station building. The request, when approved
in July 1973 (Public Law 93-62), resulted in a total
of about $24.68 million--$16 million of owner funds and
$8.68 million of Federal funds. However, the conversion
of the Center to the intermodal transportation concept
was not discussed.

      It was not until November 1973 that the Subcommittee
on Buildings and Grounds, Senate Committee on Public Works
held hearings to consider Interior's proposal authorizing
the inclusion of an intercity bus terminal within the Center
facility. Interior officials testified that cost escalations
due to the delay of the project severely limited the amount
of construction that could be undertaken. They also said
that while an intermodal transportation terminal had not
been included in the original legislation, it had been
pursued as a worthwhile addition to the project. Interior
officials admitted, however, that.they had been unable to put
together a firm design and financial package for the transpor-
tation terminal. They proposed that, rather than further de-
laying construction of the Center, they proceed with altering
the station and limit parking to between 250 to 800 cars and
a staging area for buses.
     The record shows congressional concern at he prospect
of having a Center that did not even provide minimal parking
for visitors. Accordingly, on November 15, 1973, the House
Subcommittee on Buildings and Grounds and Interior officials
agreed that $22.5 million of the available funds should be
programed to construct a 1,200-car parking garage, and that
additional funds should be authorized to complete the conver-
sion of the station. In accordance with this agreement,
legislation was introduced in December 1973 requesting an
additional authorization of $12.9 million; thir was approved
in October 1974 (Public Law 93-478).


     The attempt to include the intermodal transportation
concept in the already authorized Visitor Center at the
station added to the project cost because:

    -- There were changes to the project to provide access
       and circulation for intercity buses.
    -- It was incorporated into the Center's design even
       though it was recognized that costs would exceed
       authorized funds.

                        CHAPTER 5
     The National Visitor Center project has evolved from
a simple, straightforward arrangement in which the
Government was a lessee to a complex financial and manage-
ment arrangement.  Interior, during the first 6 years
of the project, adopted the role of a prospective tenant
of a privately owned facility and did not get involved
in the management and direction of the project. This
approach contributed to later management and construc-
tion problems.
     Subsequent to the National Visitor Center Facilities
Act, the Washington Terminal Company, owned by the Penn
Central and the Baltimore and Ohio railroads, conveyed title
of the station to two realty companies--Terminal Realty
Penn Company and Terminal Realty Baltimore Company,
also subsidiaries of the railroads. The reason for this
conveyance was to separate the property for purposes of
financing, to insure that all profits from the prospective
lease agreement would flow directly to the railroads, and
for tax purposes. The two realty companies thus became the
owners of the station.
     Under the terms of the lease agreement, signed December
1968 and superseded in March 1972, the owners had respon-
sibility for renovating the station and constructing the
parking facility; Interior would lease the completed facil-
ities with an option to purchase it upon payment of the
unamortized mortgages on the property.
      In September 1969, the owners solicited bids for
a contractor-agent from 12 companies and received nine
proposals. Three firms, one of which was the George Hyman
Construction Company, were eliminated from further
consideration because they proposed doing part of the
construction work themselves; the owners' ecords show
this was unacceptable because it would raise questions
on conflict of interest. Negotiations were conducted
with the remaining six firms, and the firm of Kuljian
Engineers and Constructors was selected because of its
acceptable price and the added advantage of having a
permanent staff of architects and engineers with worldwide

     Although the contractor-agent had been selected in
September 1969, it was not until June 1972 that a contract
was signed. Shortly thereafter, the contract was canceled
and the owners indicated that the time lapse and recent events
had greatly changed the way the project must proceed.
The owners said that a local firm would be in a better
position to provide service at the lowest cost. Accordingly
oral bids were secured from three construction companies,
and Hyman was selected. The owners told us that Interior
supported the substitution of Hyman for Kuljian. We
were unable to obtain any further explanations from the
owners for this series of events.

     The George Hyman Construction Company and the owners
entered into an agreement for contractor-agent services
on February 27, 1973. In addition to assisting and
advising the owners and the architect on construction
matters, the contract authorized the contractor-agent
to perform any construction work which it felt to be in
the owner   best interests.

      Interior officials informed us that the subcontracts
with Hyman for construction work were awarded by the.owners
with the concurrence of Interior. The owners gave several
reasons why it made sense to permit Hyman to act as a sub-
contractor. (1) Hyman has an excellent reputation for
concrete work. (2) Considering the urgency to complete the
 orOject, Hyman, being on the site, could coordinate its work
Eith other subcontractors. (3) There was no indication at
the time that anyone could perform the work at a lower cost.
     Construction began in March 1973. Hyman did, in fact,
become the major subcontractor for the project and performed
most of the pile, cap, steel, and concrete work, representing
$11.8 million of the project costs through June 1976. We
consider this arrangement to be imprudent because it would
reduce the opportunity for competitive bidding on subcon-
tracts, and because it would allow the contractor to inspect
and accept its own work.

      Under the contract, the contractor-agent's fee was
1.22 percent of costs. This was a cost-plus-percentage-of-
cost fee arrangement but was not illegal because the con-
tract was a private agreement between the owners and the
contractor-agent and not subject to Federal procurement laws
and regulations. Later agreements, when Interior became
actively involved, established fixed fees based on target
costs fr   ,Lhob~   portions of the project funded by Interior,

the Center, and the auto parking levels, but the agreements
retained the fee of 1.22 percent of cost on the bus parking
level which was mostly financed by the owners' $16 million.
Interior agreed to share any excess costs up to $850,000
over the $16 million and to assume any costs over that
$850,000. To the extent Interior contributed funds to the
bus parking level over and above the owners' contribution,
Interior was technically involved in a cost-plus-percentage-
of-cost fee arrangement. The amount of this fee paid
by Interior, however, was only about $18,000.

      Interior disagrees with our opinion on the cost-plus-
percentage-of-cost fee of $18,000 on the ground that this
portion of the contractual arrangement between Hyman and
the owners retained its private nature, and because the
funds paid by Interior for construction work were paid under
the lease agreement between Interior and the owners. We
disagree with thie position because we think it is clear that
Interior became a party to the construction contract between
the owners and Hyman when it agreed to fund portions of the
work; therefore, Federal Procurement rules applied to the
extent Federal funds were involved.

     As of January 31, 1977, Interior auditors were
examining the records of the Hyman Construction Company
concerning the project to ascertain costs Hyman claimed
and his fees as contractor-agent and as subcontractor.
Previous Interior audit reports, in July and November
1975 and March and July 1976, reviewed costs claimed,
the need for updated detailed cost estimates, lack of in-
dependent inspection, and other contract matters.


     The National Visitor Center Facilities Act was
amended in July 1973 (Public Law 93-62), and Interior
was authorized to contract with the owners and certain
other parties for necessary alterations to supplement
the owners' renovation of the station. The Congress
appropriated $8.68 million for this purpose, and Interior
exercised its contract authority in December 1973.

First letter agreement

     On December 21, 1973, Interior, the owners, and the
contrLctor-agent entered into a new agreement providing
for a complete restructuring of the financial and manage-
ment aspects of the project. This agreement provided
that the owners (1) would be elieved of further financial
responsibility for the renovation o the station,
(2) would use their entire $16 million investment to
finance structural supports for the parking facility,

bus parking level, and the mezzanine ramp to the first
car parking level, and (3) would be responsible for
any cost overruns on their portions of the project.
Interior assumed full responsibility for renovating
the station and the auto parking levels, and the owners
retained responsibility for constructing the new
railroad passenger station.  Interior also assumed
major management responsibility for the project.
     The National Visitor Center was, for financial
management purposes, divided into three distinct projects.

         Deacription                 Responsible agent
Renovation of Union Stati r      Department of the Interior
Bus level parking and           Owners
  access ramp
Three levels of auto parking     Depart!.,ent of the Interior
     The December 21, 1973, letter agreement represents the
most favorable position Interior held throughout the program's
existence. For the first time the owners and Interior shared
project responsibility. Management procedures were estab-
lished for (1) developing schedule and cost data, (2) pro-
curing goods and services, (3) subcontracting, (4) instituting
change orders and contract amendments, and (5) reporting.
Changes due to Amtrak suit

     A revised design had placed the railroad passenger
terminal under the parking garage. On June 28, 1974,
Amtrak filed suit against the owners alleging that
they were not fulfilling their responsibilities to
provide an adequate passenger station. Following this
action, the Chemical Bank and the Emigrant Savings Bank
both withdrew commitments to finance the project.
     On August 27, 1974, the owners informed Interior
that without the banks' commitments for financing, they
would incur no expenditures on the project after midnight,
August 31, 1974. Furthermore they gave notice of their
intent to formally terminate all contracts on October 1,
1974, unless Interior accomplished the following.
     -- Advance whatever funds are needed after August 31,
        1974, to have the project work continued by the
     -- Amend the National Visitor Center Facilities Act of
        1968 by deleting the reference to parking for 4,000
     -- Provide an unconditional guarantee of construction
        financing and permanent financing.

     -- Execute and deliver a mutually satisfactory written
        agreement providing for location and general conficura-
        tion of the new Amtrak railroad passenger station in
        the east wing of the station.
     -- Suspend any further work at the station until the
        above requirements are accomplished.
     Interior funded the project on a temporary basis, from
September 1 to 26, 1974. During this period Interior first
attempted by court order to force the owners to resume fund-
ing the project, but the court ruled in favor of the owners
because of loss of financing. After this, Interior acknowl-
edged that it must settle 'rmtrak's lawsuit, amend the legis-
lation, and obtain an additional $12.9 million or abort the
project, a step which would cost the Government about $8 to
$20 million.
     The National Visitor Center Facilities Act of 1968 was
amended again by Public Law 93-478, in October 1974, to
delete references to parking for 4,000 cars and increase the
authorization ceiling by $12.9 million.
Second letter agreement

     The owners, contractor-agent, and Interior entered
into a second letter agreement on October 31, 1974.
They agreed that the owners would provide a replacement
passenger station, the primary basis of Amtrak's lawsuit.
They also agreed that the owners and Interior would
equally share the projected $850,000 cost overrun on
the owners' portion of the project, and that Interior
would bear all costs in excess of that amount.

     In summary, Interior assumed almost the entire
burden of financial risk for the project and agreed to
build the northwest and southeast ramps, which increased
the scope of the project.

     Financing was reinstated by the banks in November
1974, Amtrak withdrew its lawsuit on December 18, 1974,
and the suspension of work was lifted on December 20th.
Problems in resuming work

     Suspending work created two situations which delayed
construction and increased costs. During the suspension,
subway construction work began which blocked access

to the site and caused the need for an access ramp over the
construction area, which was not completed until January 30,
1975. Also, as a result of the suspension, the contractor-
agent lost its delivery position with the structural steel
manufacturer, and steel did not become available on the site
until the beginning of September 1975.
      Interior, in trying to have the facilities ready for
the bicentennial celebration, ordered the work accelerated
on January 15, 1976. Construction of the parking facility
progressed until the contractor-agent notified the owners on
May 11, 1976, that available funds were inadequate to com-
plete the parking facility. The notification identified
cost overruns of $4.9 million ard stated that if funds were
not provided, the contractor-agent would stop all ork and
terminate the subcontracts on the parking facility.

     Interior suspended work on the parking garage and tried
to find additional financing and to evaluate the contractor-
agent's estimated cost overrun. Work on renovating the sta-
tion continued, however, and the Center was officially opened
on July 4, 1976, although the two ends of the concourse were
not completed.
Project termination

     Interior went back to the Congress in August 1976 co
obtain $3.5 million which was authorized by Public Law
93-478 but had not been appropriated. This funding was
needed to complete the Center and the Southeast ramp and
to carry out the work required under a partial termination
notice issued by Interior n September 3, 1976. This notice
directed that
     -- all contracts on the auto parking levels be termi-
     -- the bus parking evel be completed except for the
        mezzanine ramp, and

     -- all equipment and shoring be removed.
     While construction under the termination notice was
in progress, Interior sought sources of financing to
complete three of the four auto parking levels. A final
termination notice in November 1976 directed completion
of the east wall of the Center nd termination of

construction on the southeast ramp. Interior would like
to finish the auto parking levels and mezzanine ramp to
those levels under a new contract to be formally ad-
vertised. It believes construction of the parking levels
could be completed about 4 months after award of this con-
tract, and construction of the southeast ramp could be
completed in about 11 months after the award.

     Transportation has, over the last several months,
expressed interest in assuming the lease and ultimately
acquiring ownership of the station. It appears clear that
Transportation views the primary use and function of the
property as a passenger terminal, although it would
retain part of the facility as a visitor orientation center.
There has been no agreement, however, between Transportation
and Interior since they have been unable to decide how
much space would be allocated for visitor orientation
     Specifically, Transportation appears willing to
assume total management responsibility for the project
and to finish the uncompleted parking garage. A Trans-
portation official has stated that, for the present, there
is no intent to build the 4,000-car facility. In hearings
before the House Appropriations Subcommittee on Interior,
held on September 28, 1976, Transportation outlined
the following proposals.

    -- The Visitor Center would be retained in its
       present configuration through 1977.

    -- Through an amendment to the National Visitor
       Center Act of 1968, Transportation would assume
       the long-term lease of the station and the
       parking structure as soon as there is a full
       agreement between the Departments to permit
       control of the project to pass to Transporta-
       tion as the dominant user.
    -- With available reprogramed Park Service funds
       of $3.2 million, Interior would complete all
       ongoing Visitor Center projects with the
       exception of the parking garage. Interior would
       also complete the southeast access ramp and bus
       staging areas as part of the urban mass trans-
       portation facility, for which a Transportation
       grant of $8.16 million has been committed.

    -- The owners would complete the replacement station
       north of Union Station.

     -- Transportation would be committed to resolving
        the parking problem in a reasonable and economical
     --Rail passenger handling facilities would occupy
       one-third of the old building, but the National
       Visitor Center would still occupy about two-
       thirds of the old building.
     A Transportation official has stated that the proposed
restructuring of the station would greatly benefit users of
public transportation, tourists, and taxpayers. More im-
portant, however, under the Transportation plan, the station
would be restored to its proper function as a transportation

     The project architect has pointed out that Transporta-
tion's proposal anticipates using the station for both
railroad and intercity bus facilities. He stated that the
additional local traffic created by the extra bus facilities
could not be handled by the traffic circle in front of the
building and, further, that such traffic should use the
overpass behind the building.

     If construction of the project is resumed, the General
Services Administration or the U.S. Army Corps of Engineers,
which are experienced in managing similar Federal construction
projects, would be good choices to oversee the construction.
After the project is completed, it could be turned over to
either Transportation or Interior for operation.

     Legislation will be required to complete the part of the
Center facilities which were left unfinished after the
termination notice whether Interior or Transportation con-
trols the project.   If Interior is to complete the project,
it must have an additional appropriation from the Congress.
Estimated costs to complete the existing facility range from
$38 to $68 million. If Transportation is to complete the
project, legislation is required to transfer the leasehold
of the station and the relevant air rights from Interior to
Transportation. Senators Stafford and Morgan proposed a bill,
S-492, on January 28, 1977, which would transfer responsibil-
ity for the project from Interior to Transportation.
     The area being leased by Interior at an annual
rental cost of $3,338,000 includes the station building
and certain air space over the railroad tracks. In
addition to about 60 percent of unused air space, we
observed an enormous amount of space within the station
building not being used, and we could not find
a plan for the unused space.

Reporting of   roject problems
     On December 29, 1976, we issued a report to the
Congress on the need for improved reporting on selected
major civil projects. We pointed out the need for civil
agencies to periodically report to the Congress on the
status of major projects which allocate relatively large
resources and which warrant special management attention.
This should be similar to the Department of Defense which
quarterly provides such data to the Congress in its
Selected Acquisition Report3 on major weapon systems.

     In vi, v of the many problems encountered, we believe
frequent ,.porting of cost, schedule, and performance
status is necessary for this troubled major project.

     When Interior became a party to the contract between
Hyman and the owners by agreeing to the insertion of Federal
funds, we believe that Federal procurement rules were appli-
cable to the extent Federal funds were being expended. When
Interior negotiated the second letter agreement, it did not
prevent a cost-plus-percentage-of-cost fee arrangement for the
contractor-agent under which Interior has paid about $18,000
in fees.

     The termination of work on the project has presented
an opportunity for the Congress to resolve whether the
project should be oriented toward visitors or rail passen-
gers; and whether the Center will be managed, over the term
of the lease, by Interior or Transportation.
     If Interior is to complete the project, legislation
is required for appropriations, and if Transportation is to
complete the project, legislation is needed to transfer the
leasehold. Whichever agency the Congress selects to complete
the project, that agency will have the opportunity to estab-
lish better construction contracts.

     We believe Interior should determine its requirements
for all space, including air space for the project,
and prepare basic layouts showing planned utilization.

     We also believe that the cognizant Bouse and Senate
Committees should be provided with periodic status reports
on the Center project until completed so that the congres-
sional committees can be fully informed on the status of the

     Another issue concerns whether it is desirable to finish
only the incomplete structure or to'build the entire project

to conform with the approved design. Before authorizing any
additional construction, there should be a clear agreement
between the Congress and the Departments of Transportation
and the Interior on the final protect design and cost limits
as well as which agency should be assigned responsibility
for completing th2 project.

     Interior questioned this report's implication that it
does not have the expertise to handle a major construction
project. It supports this by pointing out that the bureaus
and offices of Interior have successfully handled many
multimillion dollar construction projects. Interior sug-
gests that in the future it should insure that an adequate
level of resources and construction management expertise
are applied to construction projects.

     Transportation believes it is inappropriate to con-
sider another Government agency for completing the present
plan and implemen ing projects necessary foL increased
transportation use. It further believes it has the neces-
sary mechanisms for undertaking design and construction
management services independently.

     While we acknowledge the many special problems of this
project, we believe that Interior's performance on the
project's construction was unsatisfactory. But we think
an agency more experienced in the construction of this type
of project should do better than either Interior or Trans-

     Transportation believes that any reduction in the lease
payment for nonuse of air rights would be minimal, and that
it is preferable to hold open the Government's options re-
garding these air rights. We believe that the Government
should not lease air space it does not need.

     We recommend that the Congress require the agency
designated for managing the Center to:

     -- Determine whether any other public use is intended
        for the unused leased air rights so that it may
        seek to renegotiate the lease for the value of the
        air rights being used for the project.

    -- Develop a utilization plan for the upper and lower
       level of the station.

If a decision is made to continue construction, we recommend
that the Congress assign responsibility for construction to
a Government agency familiar with construction of
similar projects, such as the General Services Administration
or the Army Corps of Engineers. We also recommend that the
Congress require the agency responsible for construction to:

     -- Submit to the Congress periodic status reports on
        this project similar to the Selected Acquisition Re-
        ports submitted by the Department of Defense on major
        weapon systems.

     -- Use fixed price contracts to avoid further cost over-
        runs and to establish better control of construction.

APPENDIX I                                                                                          APPENDIX I
                 _am_            *_.       m                   Ian
      IN.    I                                 uml..
 m    a. i        m UL   -       ,EL .in           .       .
- m rl
    a.--.        tmm         S         dm Um       mIOW                         Sai.
     -      m___

                   mm o.                               .

                                                                           Jme 10, 1976
            Honorable Elzur B. Stats
            Comptroller General
            Grml Accoumtg Office
            Whin#gt,              D.C.
            Dear ir. Staats:
                 A June 4 article in the Washingtoa                 atteatin,  Post has ce   to
            that states work has been .tppd an the Ntianal Visitor Cater
            parking parae becae of a $4.9 milliam cost deficit.
                 uring my incmcy as Qaizm of this Seic ttee I have d
            the impression,util  now, that rk tere w progrssing
          torily. Althouh the initial uthorization ad subsequat satisfc-
          involving the Center preceded my wrival, o files indicatetrasactis
                                                                         that the
          Senate Public Works rittee     played a vital role t the out
          getting the project tuderway d helpit secur                        in
                                                           additional fis
          needed. No requests have been de for the past several nonths, Ihm
          Tsuleting m the apprently iancrect auqtian                          hwsr,
          going well. At no tie bas Interior                   a pat that all was
                                                  parnt indicated robl_ of
          of the nature describd in the Pt artic .
               In order that C'oittee       rs my knw what transpired,
         event th.y nt again take action, request review by 7 rmin the
         of all circumstances contributing to      preset situtio,
         sunittal of an in-depth report at the arliest                    ad
                                                           practicable tim.
               I wnt the report to include detaeld narrative of al dsip
         and construction contract notiatios, project      revisions, dcmoe order
         effected, and reference to my that y be proposed. It shauld
         include corehensive cost breakdos                                   &alo
                                                  d identify fuding sourc in
         oh inrustnce. Fther, I wuld lilke it to focus upon speviory
         of the project, and allocation of respmsibilit) in this respect. aspects
               Your prompt causidraton will be gtuiely precia d.

                                                                          bi       s mad          Vade

                              IN FEBRUARY 1971

                           I lii 81J               UmL1


                           ttg#;|s~                     ~   ~~~Ii                     .

     ..   d:Or          ~~s~t"                 0

                               Is;~      I~~~~~I

          :,\\   I -_    III          te I                                0£

          o \\Il II10                                               l      I    °

APPENDIX III                                                            APPENDIX III

                     United States Department of the Interior
                                  OFFICE OF THE SECRETARy
                                   WASIINTON, D.C. 2e40

           Mr. Henry Eschwege, Director
           Comunity and Economic Development Division
           U.S. General Accounting Office
           Washington, D. C. 20548

           Dear   r. Eschwege:

            The GAO draft report, '"The National Visitor Center--its Problems and
           Alternatives," delivered on February 11, 1977 contains a number of
            factual errors and, in some instances, presents a distorted picture
           of the facts by incorrect use of noncomparable cost data.     oreover
           we think that the digest, as written, does not fairly present some of
           the information set forth in the body of the draft report. Further,
           the report is almost completely silent on the circumstances which had
           a significant impact on the complexity of the project such a the lack
           of access to the construction site due to railroad restrictions, work
           stoppages (including strikes), and the inflationary spiral (estimated
           at two to four ercent per quarter that occurred between 1968 and 1976).
           These three factors and 1i others are identified in a report (provided
           by the Department to GAO) in which a Departmental contractor (KCE Structural
           Engineers), identified the major factors which contributed to the cost

           Since we were only given five working days to review and respond
                                                                              to the
           report, we obviously have not had an opportunity to identify or thoroughly
           study all the problems. This letter will present a discussion
           have identified to be the most significant problems of the draftof report
                                                                               what we
           in the limited time available. The first attachment to the leter will
           comment upon areas of lesser importance.

             Problems Relating to GAO's Use of Coat Data and Cost Projections

       The following major points are made relative to this subject:

                           [See GAO note        p.   34.]

 "?6 ,16
APPENDIX III                                                       APPENDIX III

                     [See GAO note.             .   34.1

3. Fee irreneeat. On pages 25, 33 and 34, GAO indicates that
   Interior was "technically involved" in a cost-p1us-percentage-
   of-cost fee rrangement on Project 2A, the     ount of fee paid
   by Interior being $18,000.
   Solicitor's mmsorand    of December 27, 1976 to the Secretary (a
   copy of which was previously provided to your office) dscusses
   in depth the question of an alleged improper cost-plus-percentage-
   of-cost contract. Our Solicitor a office concluded that an im-
   proper arrangement was not involved in the project    CAO, on
   page 25 of its report, indicates the fee arrangement was not
   illegal because the contract was a private agreement between the
   Owner and the contractor-agent and was not subject to the Federal
   procurcment laws and agulations.

                     [See GAO note         p.       34.]

               GAO's Construction   anaeement Recomnendations

The report implies that Interior oes not have the expertise to handle
a major construction project, and that GSA or the Army Corps of Ens- .eers
should manage further construction o the project. A myraid of problems,
some of which are enumerated in the introduction to this letter, contri-
buted to the less than satisfactory results in this one project. We
feel that the Department's overall competence to handle major construc-
tion projects should not be so generally questioned. The bureaus and
offices of the Department have successfully handled many multimillion
dollar construction projects. Examples include Reclamation's dam and
irrigation projects, Bonneville's transmission line and substation pro-
jects ano BA's road and school construction projects. The Park Service
has also successfully completed many such projects, i.e., Gateway Arch
in St. Louis, Independence National Park in Philadelphia, and the Filene

 APPENDIX III                                                        APPENDIX III

      Center at the Wolf Trap Farm Park. It is also interesting to note
      that early legislative proposals called for the direct invoirvaent
      of GSA. It should be noted that the original lease was negotiated
      in consultation with the Administrator of CSA as required by the
      original Act (P.L. 90-264). Hence, the more appropriate recc enda-
      tion might be to have the Department insure that an adequate evel of
      resources and construction management expertise are arplied to all
      future construction projects.

     We would be pleased to assist in answering any other questions you
     night have.


                                      Richard R. Rite
                                     Acting Assistant Secretary -
                                     Administration and Hanagement

GAO notes:    1.   Deleted comments refer to material not in-
                   cluded in this final report.

              2.   Page references in this appendix refer to our
                   draft report and may not correspond to the
                   pages of this final report.

APPENDIX IV                                                      APPENDIX IV

                   NATIONAL CAPITAL PLANNING COMr4,I     ~JON
           Bt~IIB~}~1325            0 8Street, N.W.
                             Wibington, D.C. 10576
                             W                                          ,;e'

In Reply Refer To:
NCPC File No. 0281                                     Feb.     18,   1977

Mr. Henry Eschwege, Director
United States General Accounting Office
Washington, D.C.     20548
Dear Mr. Eschwege;

We have reviewed the draft report on the National Visitor Center and
offer the following comments:
The report accurately attributes to the National Capital Planning
Commission the concept of an intermodal transportation terminal which
was embraced by the parties involved and incorporated into the designs.
It should be noted, however, that the concept derives from the 1967
proposed Comprehensive Plan for the National Capital and not from the
Coumission's transportation study started in April 1968 as stated on
page 13 of the draft report. The intermodal terminal concept was
embraced by and incorporated in the National Visitor Center Facilities
Act of 1968, which directed that a heliport be developed as a part of
the parking garage and relocated railroad passenger station. The com-
bination of a heliport and railroad, rapid transit, local bus, and auto-
mobile facilities made the project an intermodal terminal.
The Commission recommended in March 1970 the inclusion of terminal
facilities for intercity buses in the project at the concept stage.
In accordance with this concept, the Commission approved preliminary
site and building plans in June 1970 pursuant to its "in-lieu-of-zoning"
authority over Federal building construction in the District of Columbia
(D.C. Code, sec. 5-428). Since, under the terms of the lease between
the railroads and the Department of the Interior, the building eventually
would be owned by the Federal government, the Commission's General Counsel
advised the Commission that the facility was a "Federal public building"
for purposes of plan review. At the time of the preliminary plan review,
the Commission was aware that there was no funding available for the bus
terminal and expected that the cost of constructing the railroad passenger
terminal would be borne by the railroad companies as required by the
National Visitor Center Facilities Act of 1968.

The final design for the prking structure and its passenger terminal
facilities was approved by the Commission on October 7, 1971. The final
plan contained essentially the same amount of terminal building space
as in the preliminary plan, but rearranged so as to alleviate some

APPENDIX IV                                                 APPENDIX IV
circulation problems inherent in the original scheme. The only additional
features which may be attributed to the "intermodal" part of the project
at that time was a bus loading floor and some additional bus passenger
handling areas adjacent to the railroad terminal on the main floor. It
was the Commission's understanding that, while there was provision in
the plan for the bus facilities, they would not be built unless a separate
private source of funding could be found.
With respect to the provisions in the plans for the railroad passenger
terminal, it should be remembered that there was a change in status and
responsibility while this project was being developed. At its inception,
the responsibility for acconmodations of rail passengers lay 'rith the
railroad operating companies who also owned the building. Under the
terms of the authorizing legislation they were responsible for the re-
placement, under or adjacent to the parking garage, of passenger facilities
which were to be relocated out of Union Station to make room for the
Visitor Center. During the execution of the project the responsibility
for rail passenger service passed to Amtrak, a quasi-governmental organi-
zation. Amtrak was dissatisfied with the provisions for temporary rail-
road passenger facilities inherited from its predecessors, especially
since funding for the parking structure would not allow adequate passenger
terminal space to be built, as called for n the overall plan.

Alterations of plans which have occurred since the Commission's last review
in 1971 have not been submitted to the Commission for "in-lieu-of-zoning"
approval as required by law: The result has been that the facilities
that have been built to date bear little resemblance to the plan approved
by the Commission, particularly with respect to the replacement railroad
station. While such plans for Federally constructed buildings are required
to have Commission approval, the Commission has no enforcement or inspec-
tion capability and must rely on the sponsoring agencies to see that
approved plans are properly carried out.
It is speculative whether additional Comie -'on reviews of the plans
would have lessened the complexity of the proDlems that burdened this
project. However, additional Commission reviews of modified plans could
have provided opportunities for the Congress and the public to become
aware of the actual situation as it was developing.
It is hoped that these staff comments are helpful to you.

                                   Sincerely your

                           (9 >ZjCharle, H. Conrad
                              s   Executive Director
GAO notes:     Page references in this appendix refer to our
               draft report and may not correspond to the
               pages of this final report.

   APPENDIX V                                                                            APPENDIX V
Tat OFFICS OF   eM   M WIn      FAJA ACHITECTS/rPLAeAES   2021 K SREET. N.W. WASHINGTON. DC 20006 (202) 833-3141

                                                                       Feb.     23, 1977

            Mr. R. W. Gutmann, Director
            Procurement and Systems
               Acquisition Division
            U.S. General Accounting Office
            6th and E Streets, N.W.
            Washington, D.C. 20548

                                                           re: National Visitor Center
                                                               GAO Draft Report, February, 1977
            Dear Hr. Gutmann:

                      This responds to your request for review and comments on
            the above referenced report. Because of the short period of time you
            allowed for this review and in view of the importance of its accuracy,
            appreciate your willingness to extend the time for my response from
            February 16 to February 22.

                       In order to accomplish this review in even the extended time
            made available, I have followed a format of annotating a copy of your
            Draft Report with a marginal reference number which coordinates with the
            numbered comments in this letter. Unavoidably, this has produced some
            repetition. I expect to further review the Draft Report and may see fit
            to give further comment.

                      The tone of the Report, particularly the opening sections,
            tends to be more spectacular than objective. The Report gives the reader
            a view of this troubled project which is not totally correct or clear.
            Rising above all other erroneous impressions given by the Draft are
            the following:

                                   [See GAO note p.             44.]

APPENDIX V                                                            APPENDIX V

                             [See GAO note p.      44.]

            D.   That the project has serious structural defects and could
                 resvlt in a ajor structural collapse. This statement is
                 so spectacular as to possibly incite panic. Based on the facts
                 as I have been told them, there are conditions which need
                 repair, but none which are "major defects" when kept in
                 perspective with the existing building and its age. Only the
                 wildest speculations could lead anyone to suggest the imfinene
                 of collapse. This intemperate statement must be tempered
                 to reality.
                            *      *         *     *       *

            The following comments are keyed by number to the attached
  copy of the GAO Draft Report:


                         [See   GAO note p.      44.1

                      The   cost to complete the 4 decks of parking of the
 "existing" facilities is   stated as being $10.3 million, yet the expen-
 ditures to date on those   same decks, more than 60% complete, is stated
 as being $10.1 million.    These two figures do not appear consistent.

                         [See GAO note p.        44.]

 APPENDIX V                                                            APPENDIX V

                            [See GAO note p.       44.]

          Furthermore, and more importantly, the cost estimates contained
in the N.V.C. Study Comeission Report reflect the uncontestable fact that
the $16 million direct construction cost was already agreed to by that
time. The cost estimates in the Study Commission Report essentially state
what could be accomplished for that amount of money, in direct construction
costs, at the then current cost of construction. The predetermination of
this budget was by agreement between the Owners, representatives of the
Interior Department and at least one member of Congress. This early
agreement was announced by Congressman Gray in a press release dated May,
1967, 2 months prior to the time the Study Commission retained its pro-
fessional consultants and 4 months before the N.V.C. Study Commission
Report was published on September 15, 1967.

          4. Revresentatives of the Department of Interior, Department
of Transportatioa, the Terminal Cos, Greyhound and Trailways Bus Companies
and Amtrack, along with their several consultants did in fact give verbal
approval to an ultimate design for the National Visitor Center-Intermodal
Terminal on January 17, 1974. This design work was funded by Greyhound
Bus Lines and Amtrack.

          This design is what the GAO Draft Report refers to as the
Intermodal Concept. Its design responds to the requirements of Amtrack as
stated by them in June 1973 in "Washington, D.C. Intermodal Transportation
Center Guidelines and Requirements for Rail Passenger Facility." This
program of Amtrack requirements is based on their forcast of need
"through the 1990's".

          5. The allegation of "serious structural defects" is an apparent
overstatement. Our office has been informed that certain beams at the
Concourse floor were found to be rusted to the extent that they could
not support a masonry wall designed by the NPS's architect. In fact, those
beams could never have supported the weight of a masonry wall. For that
reason, and others, our design contemplated a light glass wall.

          The NPS field engineer, Mr. Dean, has informed me of a crack
in the old granite wall which "should have been fixed prior to SE Ramp
construction." He informed me that it's a relatively minor matter. Apparently
the parties .ing responsibility for field inspection did not observe
and order its repair at the proper time.

APPENDIX V                                                         APPENDIX V

                                 Chapter 1

                        [See GAO note p. 44.1

                                 Chapter 2
                           Status, Schedule and Cost

                         [See GAO note p. 44.1

                10. The Department of Transportation proposals which are
      apparently based on studies made for them by outside consultants antici-
      pate the use of the Old Terminal for both Railroad and Inter-City bus
      facilities. To include the bus facilities in the Union Terminal
      Building would run contrary to constraints imposed on the project by
      NCPC and the DC Highway Department. Under these constraints, borne
      out by other independent traffic analysis, the additional local traffic
      generated by the addition of the bus facilities could not be carried
      on Columbia Plaza. The H Street Overpass was found to be about the only
      way to reasonably get this added traffic into the desired Intermodal
      Terminal. The GAO Draft Report should make a point of this as it is
      critical to a proper understanding f the desires and intentions of
      Amtrack and DOT.

                 The H Street Overpass was apparently constructed with Federal
      Highway funds in the magnitude of $20 million for the specific purpose of
      gaining traffic address to the proposed Intermodal Terminal.   Should the
      Intermodal Terminal be located in the Old Union Station then this vast
      expenditure would have been for naught. GAO should examine this matter
      with particular regards to the DOT proposal.

APPENDIX V                                                             APPENDIX V

                          [See GAO note p.       44.]

            12. GAO's reference to the structural deterioration
  frighteningly alarmist. These deficiencies have been              is
  the Owners and the Construction Manager               known to    the NPS,
  of this paper). GAO should present the for  a long time.   (See
                                          fact of these problems
                                                                    Item #5
  perspective.                                                      in proper

            13. Not only were major changes to the electrical,
  and steam systems not made, they were never contemplated      water
  limitation of funding by the Congress. (See N.V.C.       because of the
  Report, page 41, paragraph 2).                      Study Commission

            The matter of the termination of Railroad
  to the NPS as early as 1970 or before. Studies were steam supply was known
  with the Architect of the Capitol were initiated     made and negotiations
  Capitol Power Plaut. The NPS was never capable ofto use steam from the
                                                     consummating an agree-
  ment to connect to the Capitol steam system. Instead
                                                        a very long new steam
  pipeline from the Railroad Steam Plant at their Eckington
                                                            yard was built
  at a rather large cost.

                         [See GAO note p. 44.]

APPENDIX V                                                           APPENDIX V

                                  Chapter 3
                              Project Planning

                         [See GAO note p.        44.]

                                   Chapter 4
                          The Intermodal Transportation
                       Concept: Its Upact on the VC Project

                18. In no way did the Intermodal Concept become the "primary
     design consideration."  The N.V.C. project, from the time the principle
     of the Intermodal Terminal was introduced,  as designed so that it could
     be built without the Inter.odal Terminal.

                19. The NCPC did not propose the combining of the bus terminal
     with the rail terminal in the N.V.C. Garage. Quite to the contrary,
     NCPC and their consultants proposed an Intermodal Terminal at Florida
     New York Avenues, N.E.   At the meetings called by NCPC on the matter
     their proposals drew considerable objection from the rail and bus
     interests. The Greyhound and Trailways Bus Companies commissioned
     N.V.C. Ar hitect to study the feasibility of an Intermodal Terminal.
     The NPS and the Railroad Owners were cooperative. Eventually, he
     was convinced of the merit f the Intermodal Concept at the N.V.C.,
     embraced this plan and ordered their consultants to adjust their

                         [See GAO note p.        44.1

APPENDIX V                                                           APPENDIX V

                           [See GAO note p.        44.]

            22. The Commission of Fine Arts expressed its displeasure
  at the H.V.C. presentation because it was stressed that the H Street
  Overpass might not be built, and without it, the Intermodal Terminal
  could not be included in the project. They suggested that a presentation
  he made to then when the entrance and exit facilities were finally

                           [See GAO note p.       44.]

            24. The design effort, contrary to the statement that it was
  "essentially directed at a new intermodal concept", was directed towards
  a parking facility which could be built with or without the Intermodal
  Terminal. The Parking Facility could be built and could function whether
  or not H Street was constructed and it could be cut back to meet an ever
  tightening budget because of inflation. To suggest that the design was
  contrary to the intent of the project is absolutely inaccurate and portends
  a very damaging misunderstanding on the part of readers of he GAO Draft

                          [See GAO note p.        44.1

            26. It is my understanding that the NPS had to agree to permit
  Intracity Buses (Metrobus) to us~e the Maln Deck of the Parking Facility
  as a staging area in order to cv.'re promised funding from U.M.T.A.
  This had no design impact at &1J.i, but did have the effect of eliminating
  about 190 parking intercity buses.

                         [See GAO note p. 44.]

APPENDIX V                                                                    APPENDIXX V

                                   Chapter 5

                          [See GAO note p.         44.1

                      *       *       *        *            *

                I am certain GAO, being a responsible Government agency
      with an obligation to truthfulness, will make all the necessary
      corrections to this Report before it is issued. Though it has been
      stressed to me that GAO is under a severe deadline for this Report, I
      can imagine no pressure of time which would provide excuse for not making
      major corrections to the Draft.

                If you wish further assistance please feel free to call.
                                                Ve'       truli, yours,   /      /

                                                            rAuerbach,    FAIA

GAO note:    Deleted comme:its refer to material not included in
             this final report.

APPENDIX VI                                                      APPENDIX VI

               ThE GEORGE HYMAN CONSmUCION Co.
                         E    >_MMU AND CONTACTORS
                               43W DU RAY AIUWN
                             MIm1.      MAYLAND 20014

                                "1Ma.    (PI1) 5s"1os        Vime Dimt   DWL Nwnb

                              Febuary 16, 1977986826

Mr. R. W. Gutmann, Director
Procrement and Systems
 Acquisition Division
U. S. General Accounting Office
Washington, D. C. 0548
Dear Mr. Outmann:
                        The George Hyman Construction Company appreciates the
opportnity to comment on the draft report to the Congress of the United Stats
entitled 'he Nati       Visitor Center -- Its Problems and Alternatives". W~-
would appreciate it if this letter is included in your final report.
                      The bulk of the matters discussed in the draft report do
not K ectly involve The George Hyman Construction Company, and we will not
comment aon such matters.
                       The draft report indicates that The George Hyman Construction
Company awarded subcontracts to itself. This is factiall- incorrect. All sub-
contracts to perform construction work which were awarded to The George Hyman
Construction Company were awarded by Terminal Realty Baltimore Company with
the concurrence of the National Park Service. The estimated cost and fee of each
subcontract was negotiated on an arms length basis based on estimates submitted
by The George Hyman Construction Company and by the Park Service's consultant,
Monk Dunstone Associates. Detailed negotiations were conducted before agree-
meit was reached and the results of the negotiations were recorded by the National
Park Service. Author-iations to proceed referencing these agreements were then
written up by The George Hyman Construction Company and signed oy the represent-
atives of the National Park Service and Terminal Realty Baltimore Company.
                      In the case of most work in the terminal building (Project 1),
contracts were entered into pursuant to the Basic Ordering Agreement on Depart-
ment of Interior forms.


  APPENDIX VI                                                      APPENDIX VI

                        The above deweribed procedures were adopted by the
National Park Service because L,as and specificatons were gerally ncomplete
when constraction had to procee J the BIcentennal opening was to be achieved.
Only cost-type work was possible under thse circumstances. Conducting com-
petitions for cost-type cotractors would have resulted in substantial delays
without any countervailing benefits. The procedures adopted by the Park Service,
(i. e. the negotiation of subcontracts boetwee Terminal Realty Baltimore Company
and the National Park Service as the buyer ad The George Hyman Construct
Company as the seller), saved substantial time while at the same time protecting
the interests of Terminal Realty Baltimore Company and the NatlonaI Park Servcle.

                       As the report notes, early cost estimates delt with numerous
designs which were not built. The first estimate on the design concept actually
adopted for the parking garage was incorporated in the December 21, 1973 tri-
partite agreement and estimated Project 2A at $16, 000, 000 and Project 2B at
$7, 000,000. The actual cost including the estimate to complete (before termina-
tion) for Project 2A was $17, 775,000 and for Project 2B was $10,443,000. The
increases were due to numerous causes beyond the control of The George Hyman
Coantruction Company. First, at the time the estimate was made, design was
incomplete and the ultimate design was more costly tan originally contemplated.
Second, numerous changes were introduced during construction. Third, work
was suspended by the National Park Service on September 26, 1974. In October,
The George Hyman Construction Company estimated that, for Project A alone,
the suspension cost would be $850, 000, assuming that the suspenion was lifted
oan November 17, 1974. In fact, the suspension was not lifted until December 20,
 1974, and by that time, site access had been blocked by subway construction.
Site access was not thereafter obtained until January 25, 1975, when a ramp
giving site access was completed. Fourth, work was delayed and costs increased
because subway work, which was scheduled to be completed in late 1974 was
delayed almost two years. Construction of the parking garage bad to be reseWenced
and performed in a more costly manner to avoid working over excavations for
 subway construction. Fifth, there were numerous strikes, particularly in 1975,
which delayed construction subetantialy. Sixth, in        ndeavor to overcome the
above referenced delays, the Park Service ordered an acceleration nvolving sub-
 stantial overtime so that the National Visitor Center could be ready for Bicentemialn
use, albeit on a limited basis.

                                                                    Continued ...

 APPENDIX VI                                                     APPENDIX VI

                     Project 1 (ecludng the Southeast Ramp and Fourth
Parking Level, both of which were terminated), was underrun by approximately
$155,000 below the aggregte estimated cost in work orders. The George Hyman
Construction Company is proud of its accomplishment,            diag design
cbhanges, _suspnsion, resequencing, striles and acceleration, holding costs
within 15% of contractual targets.
                                  Very truly yours,
                                  THE GEORGE HYMAN CONSTRUCTION CO.

                                  C. A. Merica, Vice President

APPENDIX VII                                            APPENDIX VII

                     2 North Charles Street
                   Baltimore, Maryland 21201

                                                February 18, 1977

    Mr. R. W. Gutmann, Director
    Procurement and Systems
      Acquisition Division
    U. S. General Accounting Office
    6th and E Streets, N. W,
    Washington, D. C. 20548
    Dear Mr. Gutmann:

              This is in response to your letter
    11, 1977, in which you requested comments on of  February
                                                  GAO's draft
    report on the National Visitor Center. Comments were
    requested six days from the date of your letter. In
    of the large number of matters covered by your report,view
    ten-year history involved, and the need to transmit the
    reports to various people in Cleveland, Philadeiplhia,
    Baltimore and Washington, give them time to study their
    files, consolidate their comments and prepare a response,
    we requested an extension of the six-day limit. This was
    denied. Accordingly, we have done our best to comply with
    your mandate in the brief time available to us. We are,
    however, still searching our files and may discover infor-
    mation requiring additional comment.

              These comments, which are ordered according to
    the draft, are submitted on behalf of Terminal Realty
    Baltimore Co., Terminal Realty Penn Co., and The Washington
    Terminal Company.

                        [See GAO note p. 49.1

 APPENDIX VII                                            APPENDIX VII

                       [See GAO note p. 49.J

 quoted passage suggests that the owners had no incentive the
 perform the work "in an efficient and effective manner."
 This is not so, as (a) the owners were at risk for up to
 $16 million of their own money if the facilities were not
 completed, and (b) rental payments would not flow until
 the facilities were substantially complete.

                      [See GAO note p. 49.]

          The foregoing summarizes our comments on your
draft at this time, though as I indicated above, we are
stili i   the process of goini   hrough our files.   If you
would like any further information, or wish to discuss any
of our comments, please let me know.


                                    T. Collinson
                                 Executive Vice-President
                                 Terminal Realty Baltimore Co.

GAO note: Deleted comments refer to materials not
          in this final report.

APPENDIX VIII                                           APPENDIX VIII

                           GAO DRAFT REPORT
                      THE NATIONAL VISITOR CENTER--

 GAO's findings in this report deal with the management of the National
 Visitcr Center Project. The original estimate for the project was $16
 million. Ithas now evolved to the point where estimates for completing
 the project, in ding acquisition, well exceed the original $16 million
 estimate. GAO round that the Department of the Interior entered into an
 agreement that did not adequately pro.ect the Government; Congress was
 not informed of costly changes in a timely manner; the owners of Union
 Station entered into a questionable contract with the construction
 company, and that there isno agreement on the final design of the
 GAO recommends that: (1)before authorizing any construction, there should
 be clear agreement between Congress and the Departments of Interior and
 Transportation on final project design and cost limits; (2)the Government
 should use fixed price contracts for future construction to complete the
 project; (3)consideration should be given to having an agency with con-
 struction experience (GSA or Army Corps of Engineers) to manage the project;
 and (4)that the Secretary of Interior determine ifany public use is
 intended for the leased air rights.
 We believe that it ould have been helpful if the GAO Report on the National
 Visitor Center--Its Problems and Alternatives, had addressed the critical
 issue of the long-term role of the facility in regard to both Visitor
 Center and intercity transportation requirements even though such a require-
 ment was not intended to be included in this study.
 The Department of Transportation has had a study underway since the fall of
 1975 analyzing alternative concepts for incorporating the requisite
 transportation facilities at Union Station without involving excessive
 investment induplicative facilities. This study has been completed
 recommending shared use of the Union Station facilities on behalf of the

APPENDIX VIII                                             APPENDIX VIII

 Visitor Center and transportation interests. In order to implement the
 shared use of Union Station, the Department has recommended the transfer
 of control of the property from DOI to DOT, since future investments will
 be transportation-related, and that it is therefore essential that
 transportation have the dominant role inundertaking completion of such
DOT Comments on GAO Recommendations
Recommendation #1
     Before authorizing any additional construction, there should be
     clear agreement between the Congress and the Deprtments of the
     Interior and Transportation on the final project design and cost
 The Department has recently completed an alternative concepts study under-
 taken by the architectural and planning firm of Skidmore Owings and Merrill
 (SOM), which wds to identify alternative planning concepts
 a specific development program including associated capital and recommend
                                                              costs for
 implementing a model terminal at Union Stati.- n a phased basis in   con-
junction with the National Visitor Center and the replacement railroad
 station. The parties involved, the Departrent of the
of Transportation and Amtrak were ingeneral agreement Interior,   Department
                                                        as to the specific
space utilizations proposed inAlternative B-1 of the SOM study (Attachment
A). Testimony of two Assistant Secretaries of the Interior    before the House
Appropriations Subcommittee on September 29, 1976, on behalf of Interior's
request for reprogrammin funds to ctinue construction of projects at the
Visitor Center, fully describe the agreern: to scale down the Visitor
Center and provide DOT with control f the facility.
Inregard to the question of establishing cost limits, until such time that
complete drawings and specification, are available for all projects-to   be
undertaken at Union Station, it is virtually impossible to guarantee final
cost limits on the entire project. It isthe Department's intention to
prepare the necessary additional plans and specifications for these projects
so that fixed price competitive bids could be procured prior to undertaking
any further construction on the site.
Recommendations #2 and 3
     Ifthe Congress sees fit to provide legislation to comlete
    parti ally constructe faciittes te Government should use the fixed
    price contracts to avoid cost overruns and to establish better
    control of construction. Before construction is resumed, considera-
    tion should be given to having an exper.ienced constructior manager
    such as the General Services Administration or the U.S. Army Corps
    of Engineers, manage the project.

                                                               APPENDIX VIII
  The Department believes itessential that there be a
                                                         single, unified point
  of control for undertaking design as well as construction
 works projects. In light of the fact that Union Station of major public.
  fully operational facility                                  isalready a
 ments should be undertaken and  since in DOT's view any additional improve-
                             on behalf
 conjunction with or as a part of the of  transportation users and in
                                       Northeast Corridor Improvement
 Project (NECIP), itdoes not seem appropriate
 ment agency for completing the present plan andto implementing
                                                    consider another govern-
 necessary for increased transportation use, Furthermore,         projects
 has the necessary mechanisms for undertaking design          the  DOT already
 management services independently and as a part of theand  construction
 Project.                                                  SEC Iinprovement
 The design and development of a southern terminus for
 operations along the Northeast Corridor is a necessary rail passen-'
 NECIP. Any construction at the Union Station site       part of th ',,all
 coordinated with the Northeast Corridor proJect's designs therefo.
 inlight of this necessary involvement by the Department and sched s.
 sell as its oversight responsibility for Amtrak, it is in the NECIP as
 inour view that all aspects of the Union Station projectclearly necessary
 a whole.                                                   be treated as

 Recommendation #4
      GAO further recommends that the Secretary of the Interior
      whether an oher ublic use is ntended for                  determine
                                                  theleased  ar
      that are not eing used so that the Secretary can renegotiater ts
      lease.                                                        the
  While the GAO report does not specifically express its
                                                            concerns regarding
  this recommendation, DOT believes that there isno practical
  ascertain what portion of the lease payments would be             way to
  rights which are currently not being utilized by DOI    applicable     to air
  project. Our assessment is that any reduction in DOI's on behalf of the NVC
  behalf of the railroads for the government's non-use       lease payments on
 be minimal. Furthermore, ifGAO is suggesting that the   of  these   rights would
 available the remaining air rights to private sector        government make
 appropriate financial payments, any consideration of interests for
                                                         the government's
 further development of the properties on behalf of transportation
 be precluded. The SOM study recommendations proposed                     could
 over the through tracks would be necessary if the intercity     the  air   rights
 were to be included at Union Station. Further, the               bus facilities
 that the Secretary of the Interior transfer these air 1974   Amtrak   Act provides
                                                          rights   to
this purpose. In the near term, holding open the government's DOT for
with regard to these air rights is preferable to attempting           options
a lease which does not define the cost of air rights              to  negotiate
development of these rights to take place without adequate  to  allowing     other
their compatible use.                                           control    over

APPENDIX VIII                                          APPENDIX VIII

DOT Comment
Without passing judgment as to whether the original concept of the NVC has
met its design expectations, it is clear that transportation needs at that
Station are not now being met in terms of adequate space and services.
DOT believes that the transportation aspects of the project should be
recognized and dealt with in a realistic way by Congress .nd the Federal
agencies involved. Joint use of the facilities at Union Station with
transportation in control as the dominant user we believe is the
appropriate disposition of Union Station. In light of his, we are in
the process of reviewing earlier proposed legislation on the use and
control of the facilities at the station and will develop with the Congress
a new proposal for the project.

                                                   .   /_.

                                  Bruce M. Flohr
                                  Deputy Federal Railroad Administrator

February 25, 1977

                                                           APPENDIX VIII

                          ~     WASHINGTON., D.C. 20590


                                                 March 9, 1977

      Mr. Henry Eschwege
      Community and Economic Development Division
      U. S. General Accounting Office
      Washington, D. C. 20548
      Dear Mr. Eschwege:
     This is in response to your letter
     comments on the General Accounting of February 11, 1977, requesting
                                        Office draft report entitled,
     "The National Visitor Center--Its Problems and Alternatives."
     have reviewed the report indetail and prepared a Department uf We
     Transportation reply.
     Two copies of the reply are enclosed.


                                         William S. HeffelfingeF

APPENDIX IX                                          APPENDIX IX


                                            Tenure of office
                                            From          To
    Cecil D. Andrus                  Jan.    1977    Present
    Thomas S. I(leppe                Oct.    1975    Jan. 1977
    Kent Frizzell (acting)           July    1975    Oct. 1975
    Stanley K. Hathaway              June    1975    July 1975
    Kent Frizzell (acting)           May     1975    June 1975
    Rogers C. 13. Morton             Jan.    1971    May   1975
    Fred J. Russell (acting)         Nov.    1970    Jan. 1_1
    Walter J. Hickel                 Jan.    1969    Nov. 1970
    Stewart L. Udall                 Jan.    1961    Jan. 19G9
    Vacant                           Jan.    1977    Present
    Nathaniel P. Reed                May     1977    Jan. 1917
    Cleo F. Layton (acting)          Nov.    1970    May. 1971
    Leslie L. Glasgow                Mar.    1969    Nov. 1970
    Cleo F. Layton (acting)          Feb.    1969    Mar. 1969
    Clarence F. Pautzke              Oct.    1968    Feb. 1969
    Clarence F. Pautzke (acting)     Aug.    1968    Oct. 1968
    Stanley Cain                     May     1965    Aug. 1968
    Gary Everhart                    Jan.    1975    Present
    Ronald Walker                    Jan.    1973   Jan.   1975
    George Hartzog                           1968   Jan.   1973
    Brock Adams                      Jan.    1977    Present
    William T. Coleman, Jr.          Mar.    1975    Jan. 1977
    John W. Barnum (acting)          Feb.    1975    Mar. 1975
    Claude S. Brinegar               Feb.    1973    Feb. 1975
    John A. Volpe                    Jan.    1969    Feb. 1973
    Alan S. Boyd                     Jan.    1967    Jan. 1969
    Charles H. Conrad                        1965   Present