The Office of Inspector General for the Fed and CFPB (OIG) has issued a report on the results of its audit of the construction costs for the CFPB’s Washington, D.C. headquarters renovation. The renovation costs have been the subject of criticism by some lawmakers.
The OIG found that the costs “appear reasonable based on comparisons to an independent cost estimate and the costs of two comparable building renovations identified by the U.S. General Services Administration.” The OIG also found that potential renovation costs are less than the amount previously budgeted and obligated for the renovation. While the OIG found that current controls for approving, managing and documenting renovation costs and project decisions are designed appropriately, it did not have the opportunity to test such controls because most construction cost-management control activities had not yet begun.
In June 2014, the OIG issued a letter reporting on the results of its evaluation of the CFPB’s renovation budget. The letter indicated that the CFPB’s approval processes require major investments to be reviewed by the CFPB’s Investment Review Board (IRB) and while IRB approval was not necessary for the CFPB to include a major investment in its budget, such approval was needed for budgeted funds to be available for expenditure. To obtain IRB approval, a CFPB program office must complete an IRB “business case” which, according to the CFPB’s internal guidance for making a “sound business case,” requires consideration of alternatives, including a comparison of the costs and benefits of alternatives and the rationale for the investment. It also requires a return on investment to be shown and stresses the importance of a quantitative analysis. The OIG found that that CFPB did not follow all of its internal guidance when completing the business case for the renovation.
In its audit report, the OIG indicated that the construction contract awarded in December 2014 includes two options that would result in additional costs to the CFPB if exercised. One option is for a facilities operations and maintenance services contract and the other is for the construction of a childcare center that would require the CFPB to incurs costs for a retail tenant buyout. The OIG recommended that the CFPB prepare and submit a complete business case to IRB for the optional investments before obligating funds and the CFPB has agreed to do so.