$2.4B Fed Renovation Project Plagued by Mismanagement, Not Crime

The Federal Reserve's internal watchdog has released a report on the $2.4 billion renovation of two Fed buildings, finding widespread mismanagement but no evidence of criminal wrongdoing.

The report by the Office of Inspector General (IG) found that the Fed did not secure a comprehensive cost estimate at the beginning of the project and failed to nail down a maximum overall cost, which could have forced the contractor to absorb inflation costs. As a result, prices spiked after construction began in 2022.

The IG report said that the construction costs more than doubled from an original estimate of $921 million in February 2020 to $2.018 billion by December 2024. The project is expected to last until December 2027, long past its originally slated completion date of mid-2024.

The report also found that a design change by the Fed in 2023 from an open workspace to one with mostly closed office space caused significant delays and increased costs. The IG said that these factors, combined with other unexpected expenses such as asbestos remediation, contributed to the cost overruns.