$2.4B Fed Renovation Project Found to be Mismanaged by Central Bank

The Federal Reserve's internal watchdog has released a report on the $2.4 billion renovation project of two Fed buildings, finding that while there were no criminal violations, the central bank broadly mismanaged the project.

The Inspector General's report found that the Board of Governors and staff made several key mistakes that inflated the cost of the project, including failing to secure a comprehensive cost estimate at the beginning of the project and not setting a maximum overall cost.

Prices for construction rose significantly after work began in 2022, with costs more than doubling from an original estimate of $921 million in February 2020 to $2.018 billion by December 2024.

The report said that while factors such as inflation and unexpected expenses contributed to the cost overruns, these did not account for the impact of key project management decisions on the contract's cost-plus reimbursement structure.