Fed Renovation Costs Soar as Watchdog Finds Weak Oversight
The Federal Reserve's $2.4 billion headquarters renovation has been at the center of controversy since its projected price rose from $1.9 billion. A recent report by the Fed's inspector general found no reasonable grounds to believe that federal criminal law had been violated, but identified significant deficiencies in project management.
The 121-page review examined concerns surrounding former Fed Chair Jerome Powell's congressional testimony about the construction project. The report rejected a central feature of the White House criticism: that expensive design choices were responsible for the dramatic increase in costs.
The sharper findings concerned project controls, with the inspector general saying the Fed did not obtain a construction cost estimate from its general contractor and failed to establish a guaranteed maximum price even after construction had been underway for years. The report attributed higher costs to rising construction prices, design changes, and unexpected problems, including asbestos and soil contamination.
New Fed Chair Kevin Warsh has shifted project oversight to the General Services Administration and ordered a comprehensive audit of construction spending. The review is intended to establish the value of services the Fed paid for but did not receive and pursue reimbursement or credits where appropriate.