Overseas Construction

Problems in Constructing Embassy Facilities in Cairo, Egypt Gao ID: NSIAD-86-101 April 18, 1986

In response to a congressional request, GAO examined the Department of State's Foreign Buildings Office (FBO) construction practices for the ambassador's residence and the chancery in Cairo, Egypt, specifically its procedures in contracting for and ensuring quality construction of those structures.

GAO found that FBO did not follow State policies and regulations in building the facilities, resulting in: (1) design problems and changes which caused delays and added costs; (2) contracts with builders without adequate evaluation of their financial and technical capabilities; (3) inadequate staff monitoring of the site project manager's activities; (4) the project manager's inadequate performance in monitoring construction, rejecting below standard materials and workmanship, and reporting problems; and (5) the reprogramming of nearly $1 million to cover cost overruns on the residence construction without notifying the appropriate congressional committees. FBO decided to: (1) abandon construction of the ambassador's residence after spending $3.5 million over a 7-year period because it would have cost $930,000 to repair the poor workmanship and complete the building; (2) sell the property to the Egyptian Government; (3) terminate the original contract for the chancery building because of lack of progress, after spending $16 million of the $27.6 million estimated total cost; and (4) award a new contract for completion of the chancery at an estimated new total cost of $45 million, due partly to new security requirements. FBO has no overall plan or strategy for its space requirements in Cairo and, as a result, it has changed its plans for an ambassador's residence, for acquiring office space, and for the number of floors in the chancery, several times during recent years.


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