Construction of Indian Health Service Hospital in Chinle, Arizona

GAO summarized information provided in a congressional briefing on the reasons for a cost overrun on the new Indian Health Service (IHS) hospital project being built in Chinle, Arizona, and the policies and practices followed for designing and constructing the facility.

In developing the Chinle cost estimates, different Department of Health and Human Services (HHS) offices developed estimates that differed because no uniform cost estimating system existed at the time the estimates were prepared. Since the time the project was first funded, HHS has taken steps to improve estimates of IHS facility construction costs. The project was included in the President's budget request for the first time in fiscal year 1981. As of May 1981, Congress had appropriated a total of $24,008,000 for the project. Because the project was not included in the President's prior budget requests, IHS did not include detailed information about the project for the prior 3-years' budget submissions to Congress. A $15.7 million cost limit was placed on the project by Congress after the construction funds for the facility had been appropriated and after the design of the facility was underway. Since the project was first funded, HHS has improved its cost estimates of IHS health facilities by development of a construction manual which provides detailed forms, instructions, and other data necessary for preparing estimates. A new IHS health facility planning manual was developed, and this, in conjunction with new technical guidelines for classification of building areas, gives more specific criteria than existed before the project was designed. There is a new methodology for predicting inpatient health care bed needs, a generic list of fixed and movable equipment needs, and a priority system for IHS facility construction.