Kennedy Center:

Stronger Oversight of Fire Safety Issues, Construction Projects, and Financial Management Needed

GAO-05-334: Published: Apr 22, 2005. Publicly Released: Apr 22, 2005.

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Since fiscal year 1995, the John F. Kennedy Center for the Performing Arts (Kennedy Center) has received nearly $203 million in federal funds to complete capital projects and intends to request an additional $43 million in appropriations through fiscal year 2008. The Kennedy Center's Comprehensive Building Plan identifies these capital projects as necessary to renovate the center and meet or exceed relevant life safety and disabled access regulations. GAO was asked to examine (1) the progress the center has made in completing key capital projects within estimated costs, and how it communicated this progress; (2) the current status of the center regarding fire and life safety and disabled access requirements; and (3) what best practices could help the center improve planning and management of capital projects.

Although the Kennedy Center has achieved its goal of renovating the Opera House, Concert Hall, and plaza-level public spaces, each of these projects exceeded budget estimates, some by substantial amounts. Project cost growth resulted from modifications made during the renovation process, due, in part, to the Kennedy Center's lack of knowledge of the building's site conditions. Modifications led to overtime charges paid to meet tight construction schedules. Also, the center may have paid higher costs than necessary by negotiating contract modification values after work was completed. A lack of comprehensive policies and procedures limited the Kennedy Center's ability to adequately safeguard federal funds. Furthermore, our review of communication documents showed that Kennedy Center management did not always timely or accurately convey project cost growth and delays to its Board of Trustees or Congress. The Kennedy Center has complied with disabled access requirements in renovated areas. However, GAO identified three areas where the center does not appear to meet fire safety code requirements: (1) the center has not taken steps to ensure that exit paths through the Grand Foyer, Hall of Nations, and Hall of States provide adequate protection from fire; (2) doors in critical areas do not provide adequate protection from fire; and (3) the Millennium Stages have exit deficiencies and lack sprinkler and smoke evacuation systems required by code. In addition, it does not appear that the center clearly informed the board or Congress of its decision not to install sprinklers or other fire suppression systems in the plaza-level public spaces. Given the ongoing project management issues GAO has identified, the Kennedy Center could benefit from considering best practices for project management. In February 2004, GAO identified components of a best practices framework that include (1) conducting comprehensive planning, (2) assessing risks, (3) comprehensively managing project finances, (4) establishing accountability for and oversight of federal resources, and (5) incorporating stakeholders' interests.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: On September 15, 2006, GAO-06-1025 was issued. This report is a follow up to all recommendations in GAO-05-334. When this report is issued, this recommendation will be closed.

    Recommendation: To better align the Kennedy Center's management of capital projects with best practices, the Chairman of the Board of Trustees should direct the President of the Kennedy Center to establish and enforce a documents retention policy that allows for accountability of the Kennedy Center's federal funds.

    Agency Affected: Smithsonian Institution: John F. Kennedy Center for the Performing Arts

  2. Status: Closed - Implemented

    Comments: On September 15, 2006, GAO-06-1025 was issued. This report was an audit of the Kennedy Center's progress in implementing our recommendations from GAO-05-334. In January 2006, the Kennedy Center designed and implemented contract, financial, and project management policies and procedures to guide various activities funded by federal appropriations. All policies and procedures were drawn from federal guidance. In addition, the financial management policies and procedures addressed our recommended specific areas. Therefore, this recommendation is implemented and closed.

    Recommendation: To better align the Kennedy Center's management of capital projects with best practices, the Chairman of the Board of Trustees should direct the President of the Kennedy Center to strengthen the Kennedy Center's financial management controls by designing and implementing comprehensive contract, financial, and project management policies and procedures in accordance with prescribed federal guidance--these policies and procedures should ensure that (1) the Project Management Office prepares inspection reports, or similar documents, when services are performed that include a description of the services performed and the date(s) or period of performance and use this information to verify the validity of contractors' invoices; (2) complete, up-to-date costs for construction and other services are recognized and used to prepare quarterly financial reports and manage project costs; (3) reasonable efforts are made to match invoices with inspection reports and previously paid invoices to prevent or detect duplicate payments; (4) contractors' invoices meet minimum requirements and contain sufficient detailed information to clearly support the accuracy and validity of invoices; and (5) for Economy Act transactions, payments to other federal agencies are for actual costs consistent with the Economy Act agreement.

    Agency Affected: Smithsonian Institution: John F. Kennedy Center for the Performing Arts

  3. Status: Closed - Implemented

    Comments: On September 15, 2006, GAO-06-1025 was issued. This report was an audit of the Kennedy Center's progress in implementing our recommendations from GAO-05-334. In February 2006, the Kennedy Center implemented a contract and project management policy that requires contract modification values to be negotiated before work is completed. Our limited assessment of the center's Family Theater contract modifications found that the Family Theater was completed on schedule and with limited cost growth. In particular, contractors did not proceed with additional work until it was approved by the contracting officer and overtime was not paid to accelerate the schedule. Therefore, this recommendation is implemented and closed.

    Recommendation: To better align the Kennedy Center's management of capital projects with best practices, the Chairman of the Board of Trustees should direct the President of the Kennedy Center to take steps to control cost growth and schedule changes in future capital projects by setting more flexible schedules and improving its management of contract modifications.

    Agency Affected: Smithsonian Institution: John F. Kennedy Center for the Performing Arts

  4. Status: Closed - Implemented

    Comments: On September 15, 2006, GAO-06-1025 was issued. This report is a follow up to all recommendations in GAO-05-334. When this report is issued, this recommendation will not be closed. It is unknown when the Kennedy Center will fully address this recommendation.

    Recommendation: To better align the Kennedy Center's management of capital projects with best practices, the Chairman of the Board of Trustees should direct the President of the Kennedy Center to provide more timely and accurate information about capital projects by detailing their budget, scope, cost, and schedule and providing to stakeholders an annual reconciliation of the status of all planned, delayed, eliminated, and actual projects.

    Agency Affected: Smithsonian Institution: John F. Kennedy Center for the Performing Arts

  5. Status: Closed - Implemented

    Comments: On September 15, 2006, GAO-06-1025 was issued. This report was an audit of the Kennedy Center's progress in implementing our recommendations from GAO-05-334. In July 2005, the Kennedy Center obtained two peer reviews of its fire-modeling study, one from GSA and another from a private contractor. As a result, the Kennedy Center updated its fire-modeling study, which was finalized in March 2006. Therefore, this recommendation is closed and implemented.

    Recommendation: To ensure the safety of the Kennedy Center, the Chairman of the Board of Trustees should direct the President of the Kennedy Center to promptly seek peer review by a knowledgeable third-party of the egress and fire-modeling study used as a substitute for prescriptive code solutions and implement any recommendations. Additionally, the president should consult with recognized experts, such as GSA, to determine whether the Kennedy Center is fully adhering to prevailing professional practices regarding fire life issues.

    Agency Affected: Smithsonian Institution: John F. Kennedy Center for the Performing Arts

  6. Status: Closed - Implemented

    Comments: This recommendation has three parts. On September 15, 2006, GAO-06-1025 was issued. This report is a follow up to all recommendations in GAO-05-334. This recommendation will remain open after the issuance of GAO-06-1025. The Kennedy Center plans to have this recommendation closed by the spring of 2007.

    Recommendation: To ensure the safety of the Kennedy Center, the Chairman of the Board of Trustees should direct the President of the Kennedy Center to take steps to better comply with the fire safety code. At a minimum, these steps should include fully implementing the conditions of the modeling study, ensuring that doors in key areas provide adequate separation from fire, and addressing the code deficiencies at the Millennium Stages.

    Agency Affected: Smithsonian Institution: John F. Kennedy Center for the Performing Arts

  7. Status: Closed - Implemented

    Comments: On September 15, 2006, GAO-06-1025 was issued. This report was an audit of the Kennedy Center's progress in implementing our recommendations from GAO-05-334. On July 25, 2006, the Kennedy Center finalized an MOU for the Smithsonian Inspector General to conduct two audits on aspects of the center's capital project management process. Therefore, this recommendation is closed and implemented.

    Recommendation: The Chairman of the Kennedy Center Board of Trustees should exercise greater oversight of the center's management through the board. The Kennedy Center should work with the Smithsonian Office of the Inspector General (OIG), or another independent federal government oversight organization, to provide strategic and annual audit plans for ongoing oversight of the center's use of federal funds based on an analysis of risk, safety, and vulnerability to internal control weaknesses. These plans should also specify the audits to be provided on a reimbursable basis by the Smithsonian OIG or another independent federal government oversight organization.

    Agency Affected: Smithsonian Institution: John F. Kennedy Center for the Performing Arts

  8. Status: Closed - Not Implemented

    Comments: On September 15, 2006, GAO-06-1025 was issued. This report is a follow up to all recommendations in GAO-05-334. When this report is issued, this recommendation will not be closed as not implemented.

    Recommendation: To better align the Kennedy Center's management of capital projects with best practices, the Chairman of the Board of Trustees should direct the President of the Kennedy Center to have relevant Kennedy Center offices develop as-built drawings and better track future changes to the center.

    Agency Affected: Smithsonian Institution: John F. Kennedy Center for the Performing Arts

 

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