Adding Value to the Facility Acquisition Process: Best Practices for Reviewing Facility Designs (2000)

Together, architects and review boards can improve each other's mission. Many times, review boards have made improvements to our firm's projects. In almost every case, this was possible because thereviewers possessed sufficient professional knowledge to earn our respect as design professionals. George Hartman, Partner, Hartman-Cox Architects (Brown, 1995)

Federal facilities comprise a portfolio of significant, durable assets that have been acquired to support specific functions and missions and the general conduct of the government's business. As noted in Chapter 1, this portfolio contains more than 500,000 facilities and associated infrastructures worldwide. These facilities include military installations, nuclear plants, research and biomedical laboratories, office buildings, embassies, housing, museums, courthouses, prisons, hospitals, space centers, monuments, archives, libraries, and warehouses among others. Thus, in addition to being the nation's largest owner of buildings and facilities, the federal government is also responsible for the stewardship of the most diverse facilities portfolio in the United States.

It is estimated that the government spends approximately $20 billion per year for new facilities and major renovations of existing facilities. Even a relatively small agency such as the Indian Health Service is a major player, with over $265 million of construction activity in planning, design, or construction as of 1999. At the other end of the spectrum are the truly capital-intensive agencies such as the U.S. Department of the Navy, with a $2.5 billion annual construction budget. As missions, priorities, and situations change, agencies may experience wide fluctuations in the scope and budget for their facility acquisition programs. For example, a recent program to upgrade federal courthouses around the country has added billions of dollars to the General Services Administration's construction activity. The U.S. Department of State is facing a similar situation. Following the 1998 bombings of embassies in Africa, legislation requiring rapid and extensive upgrade of embassy security features worldwide was enacted which could require several billion dollars to execute. Given the size of the government's expenditures on facilities, it is important that federal agencies have effective design review processes that result in buildings that perform well throughout their service lives.

Like private sector corporations, federal agencies' facilities engineering staffs have been considerably downsized in the past 10–15 years. A 1987 report of the Federal Construction Council noted that “due to budget

cuts, agencies have had to reduce the number of project managers, design reviewers, inspectors, and field supervisors they employ” (FCC, 1987). Procurement specialists rained primarily in contract negotiation and review rather than design and construction have been playing increasingly greater roles in facilities development (NRC, 1994).

The federal downsizing trend accelerated after 1991 as a result of a changed global environment, a shift in focus toward smaller and more cost-effective government, and a number of legislative initiatives. In the nine federal agencies that responded to the questionnaire associated with this report, facilities engineering staffs have been reduced on the order of 20 to 65 percent, with the average at about 50 percent. As a consequence of the loss of technical staff, particularly architects and engineers, federal agencies are increasingly outsourcing design and construction-related functions.

The Federal Facilities Council's (FFC's) Standing Committee on Organizational Performance and Metrics developed a two-part questionnaire focused on design review processes and distributed it to FFC sponsor agencies. Part one was sent to senior facilities engineering program directors at the headquarters level and focused on agencywide policy issues. Part two was sent to randomly selected project managers at the field activity level and focused on individual project review issues. (Copies of the two questionnaires are included in Appendix C). A total of 44 questionnaires were returned (21 of part one; 23 of part two). The following nine federal agencies answered the questionnaires:

• Air National Guard

• U.S. Department of Energy

• U.S. Department of State

• General Services Administration

• Indian Health Service

• National Aeronautics and Space Administration

• National Institutes of Health

• Naval Facilities Engineering Command

• U.S. Department of Veterans Affairs

Following is a summary and analysis of questionnaires returned from each of the above-listed nine agencies. In those cases in which responses were received from multiple field activities associated with a single agency, the responding field activities have also been identified. Each analysis begins with a description of the agency's current environment and addresses four questions:

• What is the scope of the agency's facilities engineering activity?

• How is the agency's facilities engineering function organized to carry out its mission?

• What has been the impact of downsizing on the agency's facilities engineering organization?

• How has the agency's facilities engineering organization responded to mitigate the impact of downsizing?

The Air National Guard (ANG) physical plant consists of over 90 military bases located at 160 sites throughout the United States with an aggregate value of approximately $12 billion. The fiscal year (FY) 1999 annual construction and replacement budget is about $250 million.

The National Guard Bureau in Washington, D.C., provides overall guidance to states, territories, and the District of Columbia, which operate ANG units during peacetime. The National Guard Bureau provides design standards and special requirements and monitors the funding, scope, cost, and schedule of major projects. The design process (including design policy, standards, and guidelines) for ANG facilities is managed by the Engineer

ing Division of the Air National Guard Readiness Center (ANGRC/CEC), located at Andrews Air Force Base, Maryland. ANGRC/CEC is also responsible for management oversight and design approval for all major facility project designs. ANGRC/CEC receives technical assistance from one of its branches, the Civil Engineering Technical Services Center located at Minot, North Dakota.

For new projects, the local engineer at each military base develops the project statement of work based on information provided by the intended facility user or occupant. The base engineer and the facility user or occupant work directly with the design architect/engineering (A/E) firm to develop the project requirements, reviewing them at the 10, 30, and 60 percent milestones. All design work is contracted out to A/E firms. A federal contracting officer in each state contracts for A/E services, manages construction bidding, and awards construction contracts.

Design reviews are performed at the local level by a design working group comprised of the base engineer, representatives of the intended facility users, the base safety office, the base communications group, the base fire department, and the A/E firm. The local base engineer is required to present a project design to the ANGRC/CEC headquarters staff at the 35 and 95 percent milestones. The meetings with headquarters staff are limited to three to four hours in length. The ANG no longer conducts technical design reviews at the headquarters level due to the time involved and a lack of staff resources. ANG holds A/E firms responsible for the completeness and technical adequacy of their designs.

The ANG facility engineering staff has downsized approximately 10 percent since 1994. Additional downsizing is anticipated, thus prompting an ongoing review of current facilities engineering practices and processes. To date, the ANG facilities staff have responded to downsizing impacts through increased use of indefinite delivery type contracts for A/E services as well as increasing the scope of such contracts to reduce the total number of individual contracts requiring oversight. In conjunction with increased reliance on outsourced work, the ANG has emphasized teambuilding as a fundamental practice.

The U.S. Department of Energy's (DOE) total physical plant is located at various sites throughout the United States and is valued at approximately $23 billion. The FY 1999 annual construction budget is approximately $1 billion. Due to the Cold War legacy, a major part of the DOE budget is devoted to cleaning up hazardous wastes at individual DOE sites.

The DOE's Washington, D.C., headquarters office provides overall guidance to the field activities in life-cycle asset management. DOE is unique among federal agencies in that its facilities are almost 100 percent government owned and contractor operated. The federal employees basically maintain oversight of the contractors. The contractors, through a variety of contract mechanisms, design, build, and maintain the facilities for the department. The following DOE field offices, all contractor operated, participated in the study:

• Idaho Operations Office, Idaho Falls, Idaho;

• Oakland Operations Office, Oakland, California;

• Oak Ridge Operations Office, Oak Ridge, Tennessee;

• Richland Operations Office, Richland, Washington;

• Golden Field Office, Golden, Colorado;

• Pantex Plant, Amarillo, Texas; and

• Carlsbad Area Office, Carlsbad, New Mexico.

Many of DOE's facilities are world class and unique within the United States and possibly the world. They include atom smashers, test naval reactors, weapons component testing and manufacturing facilities, atomic laboratories, vitrification plants for radioactive high-level waste, and many other facilities for research and environmental cleanup. As stated above, DOE is cleaning up contamination of both land and facilities and is reducing its physical plant by closing sites and transferring some of them to local governments for industrial revitalization parks. Completion of the cleanup effort is not planned to be accomplished until well into the next century.

DOE has responded to staff downsizing by placing more reliance on site operating contractors to carry out the

day-to-day engineering management of various programs. DOE has continued to maintain oversight on a much more limited basis and is trying to concentrate its limited resources on critical activities and projects.

DOE's questionnaire responses indicate a great diversity in the level of construction activity between field offices. This would seem to explain a similar diversity in the level of in-house government oversight of design review processes from one field office to another. For example, field offices with relatively small ongoing construction programs reported that nearly 100 percent of design reviews were delegated to the base operations contractor, with very little if any participation by in-house government personnel. Conversely, those offices with large ongoing construction programs reported significant government participation in design review processes, even though the process was under overall management of the base operations contractor. Nearly all offices voiced concern that lack of participation by government personnel in the review of designs increased project risk.

Five out of seven reporting field offices indicated that their design reviews had changed between 1994 and 1999, but the reasons driving the change varied from one office to another. Downsizing, business process reengineering, review cost, time available for reviews, and change in agency philosophy regarding reviews were all cited as the primary reason for change by at least one office.

Opinions varied widely as to which design review functions added the most or least value. For example, two out of seven field offices reported that value engineering, review of shop drawings, and life-cycle costing coordination were of little overall value. The same number of offices reported that these specific functions added the most value.

One area of strong agreement was the impact of technology. All seven DOE field offices reported intensive and increasing use of technology tools to support design review processes. These included computer-aided design (CAD) software, Internet and Intranet systems, and computer-based data collection.

The General Services Administration (GSA) is one of three general management agencies within the federal government, the others being the Office of Management and Budget and the Office of Personnel Management. GSA's mission is to provide housing, supplies, transportation, and telecommunications for the executive and judicial branches of government. To deliver these products and services, GSA has been organized into three service organizations: the Federal Supply Service, the Federal Technology Service, and the Public Buildings Service. The Office of Governmentwide Policy has also been established within GSA to work with other federal agencies to develop, advocate, and evaluate policies and guidelines for acquiring, managing, and disposing of real estate and other items.

The Public Buildings Service (PBS) leases, constructs, renovates, operates, and manages GSA's real estate holdings. PBS is generally considered the largest civilian landlord in the nation, comprising an inventory of approximately 300 million square feet of owned and leased space, housing almost 1 million federal employees. The PBS space inventory is comprised of many building types, but is primarily associated with federal office buildings and federal courthouses. Although ongoing construction programs are focused on repair and alterations of existing facilities, there is an $8 billion construction program to deliver 160 new federal courthouses. This, the largest construction program in GSA's history, has been described as GSA's “legacy” construction program.

PBS is GSA's lead organization in delivering sustainable, safe, and productive work environments. PBS is also the source for GSA design criteria and standards and project delivery policies and practices. Associated with these design and construction activities are new initiatives, incorporated within “design excellence” and “construction excellence” programs. In essence, these new program areas address innovative approaches in procurement and in quality assurance practices that are intended to maintain the PBS role, to deliver superior facilities, on time, within budget. These programs also respond to changing conditions.

Over the past 20 years, GSA has implemented many tools and new ideas to improve the performance of its nationwide construction program. Considered innovative at the time, initiatives such as construction management, professional services, indefinite quantity contracting, design programming, value engineering, postoccupancy evaluations, design-build delivery, and partnering all responded to a desire to enhance facility acquisition prac-

tices. Although most of these initiatives addressed some form of quality assurance or quality control practice, most were predicated on streamlining, controlling costs, privarizing, and reducing government in-house staff.

With downsizing, the nature of GSA design and construction delivery has changed. In the 1980s, GSA construction engineers were allowed to rapidly decrease in numbers, with a corresponding increase in the use of contracted construction managers. Gradual reductions in GSA's professional services staff have likewise raised the need for additional outsourcing of services. By the late 1980s, virtually every aspect of facility acquisition was being contracted out, including design programming, project design, construction, construction management, and even postoccupancy evaluations. Only the functions that were considered “inherently governmental” remained for in-house staff, involving such activities as contract scope development, procurement, contract management, and funding obligation decisions.

By the mid-1990s, GSA had evolved to fully embrace project management as the basis of the organization's core competencies. Available professional services staff in most GSA regional offices have also been integrated into project management teams. Correspondingly, there have been even further reductions of available in-house professional resources as professional services staff assumed responsibilities of project management and other duties.

The project management team organizations in effect as of 1999 utilize available in-house technical and professional staff to perform strategic program planning and to scope and manage the various tasks to be executed by private sector designers, contractors, and consultants. Available technical and professional staffs are still expected to review and evaluate the performance of outside contractors and validate the successful completion of tasks for payment. However, based on existing staffing levels, it is now difficult to balance each team with a full complement of architectural and engineering disciplines. Specialized disciplines in such fields as geotechnical support, seismic safety, blast security, fire safety, building automation, elevator, and telecommunications often require supplemental resources. Effective review of designs has become increasingly problematic, forcing some regions to contract out for these services.

In 1997 the PBS responded to staff reductions by establishing Centers of Expertise to consolidate certain professional and program staffs from around the nation to serve as “talent pools,” available to all GSA regions and program offices. The centers are operationally intended to be available for consultation services during all facility acquisition phases. The centers are also intended to define and develop “best business practices,” national technical standards, and related policies for the nationwide programs. Although technology-based Centers of Expertise can provide some level of design review, outside contract support appears necessary for comprehensive quality assurance measures.

Six of GSA's 11 regions responded to the questionnaire:

• Region 4: Southwest,

• Region 6: the Heartland,

• Region 7: Greater Southwest,

• Region 8: Rocky Mountain,

• Region 10: Northwest/Arctic, and

• Region 11: National Capital.

The most striking feature of the responses involved the degree of variation among regions in such areas as

• Workload (quantity of projects as well as size of projects). Not only does workload vary from region to region, it also varies significantly within a single region when measured from one year to another.

• Staffing (assigned to design review activities). Regions reported that the number of staff assigned to design review activities ranged from zero to ten.

• Reliance on outsourced resources.

Of the six regions responding, three reported that in-house staff performed nearly the entire range of design review activities. The other three reported minimal participation (one limited in-house review solely to scope and budget compliance). Of the three with limited in-house participation, one relied heavily on outsourced engineering

services (the remaining two regions reported little participation in design review from either in-house or outsourced resources).

Responses to questions concerned with purposes for conducting design reviews as well as the most and least important elements of the design review process elicited the widest range of variation of any federal agency with a decentralized facility engineering program. There appear to be several contributors to this observation:

• difference in workload among regions,

• difference in impact of downsizing among regions, and

• difference in regional culture regarding in-house versus outsourced workloads.

One area of strong agreement is that, overall, project quality has increased in recent years with little to no change in the nature and number of change orders and claims. It is an interesting observation in light of the expanded use of outsourced resources as reported by the six regions participating in this study, indicative that outsourcing, per se, has not been a hindrance to performance.

PBS has completed a series of business process reviews in recent years. The 1995–1996 business process review included three highly instructive “roundtable workshops” where industry professionals met with PBS managers to discuss issues and solutions in the areas of code compliance, A/E services, and owner's needs and expectations.

PBS is implementing a series of resulting recommendations with significant potential:

• A Project Management Center of Expertise has been established. PBS 's most experienced project and program managers will mentor and otherwise provide advice and counsel to project managers throughout the field.

• An in-house formal training program is evolving into the PBS Learning Center.

• A formal postoccupancy evaluation program has been in place for several years. A business process review published by the PBS in September 1996 contained a strong customer endorsement for the process.

The Indian Health Service (IHS) programs, budgets, and executes construction projects for new and replacement health care facilities in support of 540 Indian tribes located throughout the United States. Funding levels fluctuate greatly from year to year, although construction funds in the “pipeline” smooth the workload variation. Although no new projects were approved for several years, project approvals have resumed in FYs 1998 and 1999. As of 1999, there is an estimated $235 million of construction in some stage of planning, design, or construction.

Work at the 540 Indian tribe locations is managed from 12 area offices. These area offices maintain direct contact with the tribal representatives for accomplishment of construction activities. Two area offices, Seattle and Dallas, have an engineering services capability with construction contracting and project management responsibility for all major construction projects; smaller projects are accomplished by local (tribal) and area staff. Headquarters staff, located in Rockville, Maryland, are involved in project approvals through the completion of the program of requirements document. Upon approval of the program of requirements, design and construction activities are handled by coordinated efforts of the assigned engineering service and area offices, with headquarters staff maintaining project status for reporting and budgeting purposes. Approval of maintenance and improvement projects (not involving addition of space) is accomplished at the area office level, with design and construction activity carried out either by the Seattle/Dallas engineering services offices or the area office, depending on the magnitude of the project.

Between 1996 and 1998, IHS headquarters facilities engineering staff were downsized by about 50 percent. In 1999, IHS reengineered its facilities organization by reducing the project management staff at the Seattle/Dallas engineering services offices, reallocating positions to the area offices (although continuing to maintain contracting services at the engineering services offices). This plan is driven by recent legislation favoring the principle of tribal self-determination and allows for greater local control and responsibility for facility planning and acquisition by the individual tribes.

The IHS questionnaire response indicates a facilities engineering management process in transition. Prior to 1995, there was a relatively centralized and structured process with intensive design reviews for all major projects, conducted by in-house engineering professionals. The downsizing from 1996 to 1998 and the recently implemented “Tribal Self-Determination” philosophy have resulted in a majority of the engineering review activities migrating to area and tribal offices where in-house engineering professionals are not available. As a result, tribes and area offices are relying on contract engineering services for design review functions to a much greater extent than previously. The IHS questionnaire notes no significant change in project claims, change orders, or delivery time as a result of these changes. The questionnaire does note, however, a higher reported level of quality and customer satisfaction.

The National Aeronautics and Space Administration's (NASA) physical plant is located at various dispersed sites, is valued at approximately $18 billion, and supports an additional $30 billion in installed equipment. The FY 1999 annual construction budget is approximately $170 million. NASA's Washington, D.C., headquarters office of Facility Engineering provides overall facility engineering program policy and guidance. Award and management of contracts associated with facilities design and construction is accomplished at the field level by NASA's 10 geographically dispersed centers and 3 additional operating facilities. In addition to the headquarters, 6 of NASA 's 13 centers and facilities participated in this study:

• Goddard Space Flight Center, Greenbelt, Maryland;

• NASA Jet Propulsion Laboratory, Pasadena, California;

• NASA Johnson Space Center, Houston, Texas;

• Langley Research Center, Hampton, Virginia;

• Lewis Research Center, Cleveland, Ohio; and

• Michoud Assembly Facility, New Orleans, Louisiana.

Two of the six centers are government owned and contractor operated, with the California Institute of Technology operating the Jet Propulsion Laboratory and Lockheed Martin Corporation operating the Michoud Assembly Facility.

Many of NASA's facilities are considered unique, especially in the areas of wind tunnels, rocket launch complexes, and spacecraft research and assembly laboratories. Maintaining in-house engineering core competencies in such areas as wind tunnel design and operation, high pressure and cryogenic gas storage and distribution, clean room design and operation, and space simulation laboratory design and operation is viewed as essential. This is due not only to the unique nature of the facilities and the limited engineering expertise of private industry in these areas, but also to the risks inherent in catastrophic failure of high-pressure vessels, facilities storing and handling explosives and propellants, and the risks of injury to mission personnel and damage to high-value payloads.

NASA has downsized its agencywide civil service staff on the order of 25 percent since beginning its staff reduction initiative in 1994. NASA headquarters and certain agencywide staff functions, including facility engineering, have been downsized even more. During this period, relatively few new facilities have been designed or built, with the facilities engineering program refocusing instead on repair and upgrade of existing infrastructure.

NASA has responded to this staff downsizing change in three ways:

• Greater use of outsourcing for A/E services, particularly through multiyear engineering support service contracts which allow flexible tasking in areas of engineering studies, preliminary or developmental engineering, and production of construction contract plans and specifications.

• Reengineering its facility engineering processes to improve their efficiency and effectiveness so that more work can be successfully accomplished by fewer staff.

• Terminating some activities where possible to do so without compromising mission success risk levels.

NASA center questionnaire responses indicate a relatively uniform approach to the design review process, with most centers following steps recommended in the NASA facility handbooks Facility Project Implementation Handbook and Facility Engineering Guide (NASA, 1993, 1986). Five out of seven questionnaire responses indicated that no currently practiced design review functions could be eliminated without risk to project outcome or quality (two respondents proposed eliminating agency and code compliance reviews). Conversely, there was great disagreement as to which design review functions were the most and least valuable, overall. There was also a great difference among the centers in how thoroughly data (i.e., metrics) related to the design review process were tracked to measure overall effectiveness of the various phases of the facility acquisition process.

Three aspects of NASA's facility engineering program are noteworthy for their positive impact on the design review process:

• NASA participates actively in the FFC and the Construction Industry Institute (CII) in both research and implementation efforts, and has begun several process reengineering initiatives based on research recommendations.

• NASA has instituted an effective in-house training program intended to train all facility professionals in state-of-the-art methods to implement such process improvements as partnering, constructability, value engineering, and enhanced preproject planning.

• The NASA Lewis Research Center has completed ISO-9000 registration for its facility design and construction activity. Although the registration was an arduous undertaking, the center notes that it has a far better grasp of its management processes as well as the level of quality resulting from the processes.

The National Institutes of Health (NIH) with its headquarters in Bethesda, Maryland, is one of the world's foremost biomedical research centers and the federal focal point for biomedical research within the United States. As an agency of the U.S. Department of Health and Human Services, NIH is comprised of 25 separate institutes and centers. From a budget of about $300 in 1887, the NIH budget has grown to more than $15.6 billion in FY 1999.

Capital assets for NIH include more than 1,300 acres of land located on seven campuses with more than 190 buildings comprising 11.5 million gross square feet of research and support facilities. The main campus of the NIH is located in Bethesda, Maryland, and comprises more than 75 buildings on more than 300 acres. In addition to the main campus, NIH has research and support facilities at

• the NIH Animal Center, Poolesville, Maryland;

• Frederick Cancer Research Development Center, Ft. Detrick, Frederick, Maryland;

• the Rocky Mountain Laboratory, Hamilton, Montana;

• National Institutes of Environmental Health Sciences, Research Triangle Park, North Carolina;

• Gerontology Research Center, Baltimore, Maryland; and

• New Iberia, Louisiana.

At the NIH, facility services such as planning, design, construction, operations, and maintenance are provided by the Division of Engineering Services (DES), Office of Research Services (http://facilities.nih.gov). The DES specifically provides planning, architectural, engineering, technical, and craft services for the operation, maintenance, alteration, repair, and construction of NIH facilities to ensure the existence and integrity of the physical environment necessary to support the NIH mission.

Since FY 1991, NIH has seen a significant increase in its construction budget. The focus of the construction program has been on rebuilding an aging infrastructure at the Bethesda campus and constructing several major research laboratory facilities to meet the ever-increasing demand for quality research space. This has resulted in a construction program valued at more than $950 million. During this same period of growth in capital funding, DES has been required to downsize because of limited operating budgets, from a staff of 666 in 1994 to a staff of 520 in 1999. To offset this reduction in staff, DES undertook a major reorganization in 1996 and consolidated its five branches into three with a focus on core functions of planning, design and construction, and facility operations.

The current emphasis of DES is to contract out most of its design, construction, and alterations program under the management of government project officers and to utilize other government employees for facilities management and craft-supported maintenance and operation.

Providing quality and timely customer service at a reasonable cost has been an important initiative of DES management. With an increased demand on DES to deliver new state-of-the-art research facilities quickly, and at the same time support the ongoing maintenance and operations of existing facilities, an innovative facilities engineering program has been developed to effectively manage the program with less resources. Several examples of these initiatives include the following:

• NIH Design Policy Guidelines were developed to ensure consistency among projects being constructed. The guidelines include best practices and experience gained from previous projects. The guidelines are published on the Internet (http://facilities.nih.gov/nihpol.htm) for easy access by all design professionals.

• Implementation of ISO 9000 in DES to identify and streamline processes to ensure the delivery of quality services.

• Expanded use of indefinite delivery/indefinite quantity (ID/IQ) contract mechanisms for design reviews including constructability. This reduces procurement times and oversight requirements by government project officers.

• Utilization of an innovative developer manager approach for major capital projects. This provides services (A/E, construction, inspection, etc.) to ensure successful accomplishment of the project. Under this approach, the developer manager holds all the contracts for the project, thereby outsourcing the traditional responsibilities of design, construction, and contract administration.

• Development of standard laboratory designs that have been preengineered and priced out to expedite the design-build process; this has reduced the level of design review that is required on individual projects.

• Reengineered processes to improve efficiency and effectiveness and to keep pace with customer demands. Benchmarking with best in class of other facilities organizations has resulted in identification of ways to streamline processes and improve quality with a reduced work force.

The DES response to the FFC questionnaire reflects a facilities engineering program that is in the process of delegating the review of generic details to both design A/Es and in-house third-party reviewers (i.e., fire and life safety, occupational safety). However, DES is retaining in-house the responsibility for review of programmatic and technical issues. Basic to the process reengineering currently underway is a desire to make the design review process more proactive than reactive. The questionnaire response also notes that changes to date have resulted in shorter project delivery times, lower costs, and fewer claims. Overall, the questionnaire response indicates a well-organized program, indicative of the fact that the DES has implemented a quality management system for its facility engineering process and is pursuing ISO 9000 certification.

The Naval Facilities Engineering Command (NAVFAC) provides facilities engineering services (including planning, project development, design, and construction) to all of the Navy and Marine Corps, to specific other Department of Defense (DoD) services and agencies as directed, and to federal agencies and others on a case-by-case basis when it makes good business sense. NAVFAC, headquartered in Washington, D.C., undertakes about $2.5 billion in construction each year. The work is accomplished through four engineering field divisions located in Norfolk, Virginia; Charleston, South Carolina; San Diego, California; and Pearl Harbor, Hawaii, and their subordinate local offices throughout the United States and many overseas locations. Each of the four engineering field divisions has a particular area of responsibility for a specific geographic area of the world. Each provides a full range of construction services including project management, contracting functions, and construction management.

For most construction projects, NAVFAC also manages the design phase. About 10–15 percent of the designs are accomplished with in-house staff. The remainder of the designs are awarded to A/E firms, some of which are selected on a case-by-case basis and some are awarded as a task order on an ID/IQ-type contract. In these cases,

NAVFAC manages the design contract, manages the interface between the A/E and the end user, and looks out for the Navy's overarching interests, including special criteria and codes.

Following the federal, DoD, and Navy budgets, NAVFAC has been steadily downsizing over the past five years to match workload declines and to take advantage of efficiencies that have been recently developed:

• ID/IQ multiyear A/E contracts (as noted above);

• task order contracts that greatly simplify the contracting process;

• extensive use of design-build contracts—particularly a two-phase method of selecting a few top-quality contractors based on merit and then selecting from among them based on proposals and price;

• PC-based productivity tools focused on one-time data entry and paperless acquisition;

• An up-front, intense design “charrette” to obtain agreement among all stakeholders at the beginning of the design process to effectively transition from planning to design.

Traditionally, the NAVFAC design process has included a lengthy A/E selection process, a formalized 35 percent design review process usually including a meeting of all stakeholders to adjudicate all the written comments, and often a 65 percent design review and a 100 percent design review before design release for procurement. This process is resource intensive, tends to increase the design cycle time, and actually encourages customer-generated changes. As noted above, the NAVFAC is developing and implementing much more efficient and effective tools and processes. The NAVFAC is currently in a state of transition.

In addition to the Washington, D.C., headquarters, six of NAVFAC's field offices completed the questionnaire:

• Southern Division: Charleston, South Carolina;

• Southwest Division: San Diego, California;

• Pacific Division: Honolulu, Hawaii;

• Engineering Field Activity, Chesapeake: Washington, D.C.;

• Engineering Field Activity, Northwest: Poulsbo, Washington; and

• Norfolk Public Works Center: Norfolk, Virginia.

NAVFAC questionnaire responses support the contention that the organization is in a state of transition. All seven respondents indicated that the design review process has changed significantly since 1994, driven primarily by reengineering of business practices mandated by staff downsizing initiatives. Respondents were split as to whether or not project quality, cost, and schedule have remained constant or deteriorated; none thought they had improved.

Further reinforcing the transitional nature of NAVFAC's design review process, questionnaire responses indicate a wide variation among field offices in such areas as use of independent A/Es for design review, process formality (how well the process is documented), and process uniformity (how standardized the process is for different projects). Follow-up conversations with both headquarters and field staff indicate that field activities are indeed becoming more diverse in management styles and philosophies because

• NAVFAC headquarters has pushed a significant amount of responsibility and authority to field offices, thus allowing them a greater degree of local autonomy;

• differences in both type and quantity of work underway at the various field offices has become increasingly variable over the past five years;

• NAVFAC headquarters has encouraged field offices to innovate and accept a greater degree of risk with regard to management practices; and

• the extensive transition discussed above has provided a unique opportunity for experimentation with a variety of business practices throughout the NAVFAC organization, both at headquarters and in the field.

NAVFAC, particularly since 1994, has been aggressively exploring new ways of doing business in all of its areas of responsibility, with four innovative results:

• A/E self-check: At least one field office holds the A/E fully responsible for the technical details of the design and does not review for mistakes. During the A/E selection process, competing A/E firms are asked to document their internal program for objectively reviewing designs to ensure quality, accuracy, and compliance; these procedures are given a heavy weighting relative to final A/E selection. During design, the NAVFAC office evaluates the A/E's compliance with its quality control program. If the program is in compliance, it is presumed that the design itself is compliant.

• NAVFAC has provided extensive technical, management, and leadership training for its military and civil service facilities engineering professionals for over 50 years at its naval school, Civil Engineer Corps Offices, located at Port Hueneme, California. This well-regarded institution conducts wide-ranging classes and seminars in facilities engineering and also develops management solutions and process improvements. Both its courses of instruction and its research output are available to all federal agencies (see the section “Interesting Initiatives” for contact information).

• All NAVFAC offices use the U.S. Army Corps of Engineers' “Architect/Engineer Contract Administration Support System” (ACASS). ACASS is a database containing historical evaluations of A/E performance on past projects. Evaluations can be entered into the database by any federal agency. Similarly, ACASS can be queried by any federal agency interested in evaluating a particular A/E' s past performance (see the section “Interesting Initiatives” for contact information).

• Most NAVFAC offices now use variations of design-build and other performance-based contracting models as the preferred mode of project acquisition. This shift away from the traditional design-bid-build model has occurred since 1994, in part because performance-based contracting methods generally require a reduced level of participation on the part of the owner in the design review process.

The Office of Foreign Buildings Operations (FBO), located in Arlington County, Virginia, is the U.S. Department of State (DOS) office responsible for design, construction, and management of diplomatic facilities worldwide. The total replacement value for FBO-managed facilities is more than $10 billion and consists of over 5.4 million gross square meters of government-owned and leased properties. The annual operations and construction budget has averaged less than $400 million over the past three years. However, due to the East Africa embassy bombings in Dar es Salaam and Nairobi in August 1998, there have been substantial increases in funding ($627 million for FY 1999) for security upgrades at existing diplomatic facilities, with additional increases projected for future embassy construction.

The FBO operates as a centralized office and has no other field operating offices other than a facility management officer located in most major diplomatic posts. To accomplish the FBO mission statement “to assure that U.S. Diplomatic Missions abroad are provided appropriate facilities which will assist them in achieving the foreign policy objectives of the United States,” FBO was staffed with more than 757 full-time positions in FY 1998 (25 percent were located overseas as facility management officers or construction managers). This reflected a reduction of 262 positions from the FY 1996 staffing level.

For FY 1999, staffing authorization has increased significantly due to the security supplemental funding and corresponding workload. FBO requested temporary staffing assistance from other agencies and currently has some Voice of America detailees (architects and engineers) working under a salary reimbursement arrangement to augment existing staff until new positions are filled.

To expedite the execution of projects in the security supplemental appropriations, FBO is pursuing several contract mechanisms that differ from the design-bid-build process that is traditionally used. There will be several design-build projects for new embassy buildings in which the contractor will be selected by the two-phase selection process legislated in 1997. There are also two recently selected “integration contractors” in which design-build work will be performed on small security upgrades for multiple posts worldwide.

The typical project design review is done by in-house staff. Typical design submittals of schematic 35, 60, and 100 percent milestones are reviewed over a period of 21 days each. There are follow-on review meetings with the contract A/E, most with a resolution of comments and a direction to proceed to the next phase. FBO will be

pursuing alternate and expedited review procedures for upcoming projects in the security supplemental packages. The primary method used for review will be “on-board” reviews in which an FBO project team will visit the A/E's office to review and discuss the design at hand. It is expected that this will result in time savings as well as better understanding of the basis of design due to the face-to-face interactions of the parties involved.

Questionnaire responses from the Department of State FBO differ from those of all other federal agencies in two respects:

• Design review process reengineering is not being driven by downsizing, but primarily by a motivation to improve the efficiency and effectiveness of the process.

• FBO is able to accomplish the design review process without significant use of outsourced resources. Generally, the only review functions outsourced are those relating to value engineering and shop drawings.

FBO questionnaire responses indicate a high degree of use of technology tools such as CAD software, Intranet and Internet applications, and computer-based data management systems.

Looking to the future, DOS anticipates a sharply increasing workload as a result of a 1998 requirement to enhance embassy security features worldwide. Such activity will likely exceed FBO in-house design review capability and require increased reliance on outsourced engineering support services. FBO's approach will be to focus in-house resources on the customer requirements review and outsource more elements of the technical review than previously.

The FBO reported two unique program initiatives:

• Technical design review comments are recorded in a software program “Automated Review Comment System” (ARCS), that collects and archives comments and also provides a method for communication and follow-up with the A/E.

• As a result of specific legislation dating back to the 1920s, DOS is able to contract for engineering support services with a great degree of flexibility. For example, they have been able to structure annually renewable individual self-employment contracts that allow personal service contractors to augment DOS staff as necessary to meet “peak and valley” requirements.

The U.S. Department of Veterans Affairs (VA) owns, leases, and operates a capital plant that includes more than 22,000 acres of land, 4,700 buildings, and over 140 million square feet of owned and leased space at 1,200 locations across the country. The replacement value of medical center buildings and other health care facilities in the Veterans Health Administration alone is estimated at approximately $35 billion. This infrastructure also supports the VA's 58 regional offices—the VA's Veterans Benefits Administration —and 114 national cemeteries.

The VA's Office of Facilities Management (OFM) is a component of the Veterans Health Administration, but it supports the entire department including the Veterans Benefits Administration, the National Cemetery Administration, and department staff offices. OFM delivers a wide range of services, including managing the VA's major construction program (projects of more than $4 million), lease and real property management, enhanced-use leasing, risk management and claims analysis, environmental programs, technical and engineering and architectural consultation to VA field facilities, and engineering design and construction policy and standards. The VA's health care system is highly decentralized; consequently, management of minor construction (projects of less than $4 million) and nonrecurring maintenance and repairs are accomplished locally by field facilities engineers. The VA's FY 1999 major construction budget is $152 million; the minor project budget is $175 million. There is approximately $1.3 billion of major projects in the pipeline pending completion.

The VA's health care is rapidly changing from an in-patient, hospital-based system to integrated networks with a focus on primary and ambulatory care. These changes are having a profound effect on the VA's building environment. The era of large bed facilities has passed and has been replaced with a new focus on smaller major

construction projects that include ambulatory care centers, renovations of existing facilities, safety and privacy improvements, seismic corrections, and new or expanded VA national cemeteries.

Many VA-constructed medical facilities are world class in terms of application of high technology and seismic design. VA facilities are not only designed to withstand earthquakes, but to remain in operation. The VA's use of seismic base isolation technology at the Long Beach, California, medical center is particularly noteworthy. In addition, OFM's design-build program has been highly successful in bringing projects to completion significantly faster than use of traditional methods without sacrificing quality or increasing cost. This program was a semifinalist in the 1998 “Innovations in American Government Awards” competition.

Since FY 1994, as a result of realignments, use of early-outs and buyouts, and reductions in force, OFM headquarters staff has been reduced nearly 65 percent from 314 employees to a current on-board strength of 107. Reductions have been particularly acute among staff in the engineering and architect specialties. Although the VA's major construction budget has declined during this time in total dollars, the number of projects requiring management and oversight has remained relatively constant.

OFM's construction management element has responded to requirements for downsizing in four ways:

• OFM is outsourcing a larger proportion of its design reviews to A/E firms and relying on these firms to monitor the professional quality of project design and construction. Indefinite quantity contracts are used to procure these services. This allows OFM to write individual delivery orders for a variety of tasks in different locations.

• OFM is in the process of delegating greater project management and contracting authority to its resident engineers in the field. The number of these on-site engineers has not been significantly reduced during the approximately five years of this transition.

• OFM has greatly expanded its use of alternative project delivery methods, including design-build, use of construction management firms, and purchase and hire techniques. The purchase and hire methodology is a procedure to accomplish construction, maintenance, and repair projects where a construction contract is impractical or in conflict with patient care activities.¹

• OFM has vigorously worked to reengineer all processes to improve timeliness, quality, and cost effectiveness. In addition, OFM has systematically evaluated selected risks in the design and construction process and eliminated steps that are unnecessary, redundant, or add minimum value to the final product.

The VA's questionnaire response indicates that the design review process changed dramatically between 1994 and 1999, driven primarily by downsizing, related business practice reengineering, motivation to reduce the cost and time of design reviews, and much greater reliance on design-build as a project delivery method. Remarkably (given the scope of staff reductions absorbed and process reengineering completed), OFM clients have not reported any loss in quality. There is a sense that the design review process itself is more expensive as a consequence of greater reliance on outsourced resources. However, total design and construction costs have not shown any increase.

During this same timeframe, OFM was able to reduce project delivery times. The questionnaire relates the ability to absorb the downsizing with minimal project impact to two primary drivers:

• the establishment of five ID/IQ contracts for engineering services, which is an effective mechanism for outsourcing much of the detailed technical review; and

• rapidly expanding use of design-build as a contracting method, which dramatically reduced project delivery times.

Questionnaire responses indicate that collection and documentation of design review comments is a relatively

informal process. Data relative to design performance (i.e., contract cost and schedule growth, change order rates, number of claims) are also collected.

In the area of noteworthy initiatives, the VA uses a system to document lessons learned from the entire facility acquisition process including the design phase. The system, called Proactive Claims Analysis and Tracking System (ProCATS), provides an excellent tool to identify patterns and trends in A/E errors, design omissions, and the types of changes that occur late in the construction process. ProCATS electronically announces lessons learned throughout the VA through “design alerts. ” These alerts are archived and remain available to the VA's design and construction professionals to minimize the chance of repeating problems. The VA's OFM also maintains a Technical Information Library (TIL) that can be accessed by anyone on the Internet (http://www.va.gov/facmgt/ standard/standard.htm).

The TIL includes A/E information, design guides, design manuals, master specifications, cost estimating design alerts, and related materials. The TIL is updated on a monthly basis and it ensures the quality and operational efficiencies of the original design produced by the Architect of Record. The TIL includes only the latest and proven information applicable to the VA in fulfilling its mission. This fact alone has significantly lessened the task of the design reviewer by knowing that the design under scrutiny includes this proven information and does not require the reviewer or the A/E to “reinvent the wheel.”

The following discussion compares and contrasts the responses contained in the 44 questionnaries that were returned by the nine federal agencies participating in the study.

How are agency facility engineering functions organized to carry out their missions?

There is no single organizational model for federal agency facilities engineering organizations. The DOE's facilities are government owned but contractor operated. Some agencies, like the VA, have moved to field-based design review and a mix of field-based and headquarters-based project management. Others, like NASA, have a centralized program policy and oversight office, with all program and project management functions conducted at the field activity level. The majority of the responding agencies maintain multiple regional project execution offices.

What has been the extent of downsizing on agency facility engineering organizations?

Seven of the nine responding agencies' facility engineering organizations experienced significant downsizing between 1994 and 1999, on the order of 20 to 50 percent reduction of in-house staff positions (the VA's reduction has been estimated at 65 percent). As of August, 1999, only the DOS and the ANG have been able to maintain a relatively stable situation with regard to staff size.

How are agency facilities engineering organizations responding to mitigate the impacts of downsizing?

During the early stages of downsizing, the responding agencies simply tried to do more with less. However, this adaptation became untenable at a certain point. Agencies then began to reengineer their facility engineering processes and practices. Intensity of this reengineering varies among the responding agencies, reflecting the fact that the speed and extent of downsizing has varied greatly from one agency to another. Impact-reducing strategies reported by various agencies include the following:

• Augmenting in-house staffing voids through personal service contracts. Personal service contracts allow agencies to add contractor staff to in-house staff on a temporary basis to fill voids in specific disciplines, or to address unusual peaks in workload. Procurement policies vary among agencies with regard to allowing use of personal service contracts.

• Outsourcing functions previously accomplished in-house. Nearly all facility acquisition functions except agency policy development and oversight have been considered for outsourcing by one agency or another.

• Reducing the intensity of oversight activities such as design review and construction inspection by either contracting such functions to third parties, or by including the functions within the scope of the design and/or construction primary contracts.

• Eliminating some activities entirely. One NAVFAC field office reported that they have eliminated formal design reviews on many smaller projects, holding A/Es responsible for instituting a self-review process. Similarly, a GSA region reported that they generally only require a single formal progress review during design.

• Using project delivery contracting schemes that shift more responsibility for design and construction oversight to the contractor, such as design-build, construction management, and program management. Indeed, NAVFAC reports that design-build is now the favored contracting strategy and the traditional design-bid-build strategy has become the least favored.

Why and how do federal agencies approach the practice of design review?

Risk management, compliance with user expectations, and reduction of change orders were cited as the primary reasons for conducting design reviews. The least cited reason was to maintain in-house core competencies.

All nine responding agencies reported participation in a design review process. Significant differences were noted, however, as follows:

• All responding agencies reported that they participate in design reviews although not at every field office (a few field offices of decentralized agency engineering organizations reported no or minimal design reviews—they rely on A/Es to self-review their work). Also, the degree to which agencies and their field activities varied the intensity of the design review process between simple and complex projects varied greatly from one agency to another.

• Design review functions identified as having the greatest value-added were scope and budget compliance, constructability, and compliance with client design guides. Functions identified as adding the least value were the discipline reviews—architectural, electrical, mechanical, and structural (although the responses did not support the idea that these functions could be dropped from the review process without risk.)

• Nearly all responding agencies reported conducting formal design reviews at the 30 and 90 percent project design milestones. Only two (NASA and GSA) reported conducting formal reviews routinely earlier than the 30 percent milestone.

• The primary criteria used to determine the intensity of design review are project value, complexity, and the project delivery method. Conversely, these criteria had little impact on the decision to review with in-house or outsourced resources. That decision rested primarily on in-house staff availability.

• When elements of design review are outsourced, all responding agencies still use in-house staff to review project scope and budget compliance. The most consistently outsourced elements included constructability, value engineering, and compliance with building codes.

• Nearly all responding agencies exploit technology tools to support their design review activities including CAD software, Internet and Intranet communication links, and computer software word processing and project management programs.

• Less than half of the agencies measure performance of their design review processes.

How have federal agencies changed their approaches to design review?

Eight of the nine responding agencies reported that they have changed their approach to design reviews since 1994. The primary reasons cited for change are staff downsizing, changes in contract methods, and business process reengineering. The most frequently reported changes included:

• consolidation of agency design guides and standards for simplification,

• increased outsourcing of either parts or all of the design review activity,

• exploitation of technology to assist the process, and

• reduced frequency of formal design reviews.

Several questions related to outsourcing of design review functions. Opinions and experience on this issue were varied, and no conclusions could be reached from the data provided. The following are typical comments:

• “Outsourcing results in a loss of core design capability. This in turn results in a lack of ability to be a Smart Buyer. At some point, we wouldn't even have enough expertise to hire a contractor to conduct design reviews.”

• “Otsourcing poses no risk, as long as the contractors are liable for performance.”

• “Outsourcing poses a very significant risk, particularly on renovation type work. And it is very difficult to have technically competent contractors in specialty areas.”

• “Outsourcing is our present way of doing business, and we have experienced little risk.”

Looking to the future, about one-third of the responding agencies reported that they are considering further outsourcing of design review functions.

During the course of interviews and an extensive literature search, a number of innovative practices were noted that may have broader implications. These practices are discussed below, with points of contact for further information:

• Partnering and teambuilding training. Although this practice is achieving widespread recognition, some programs have proven more effective than others. The Army Corps of Engineers and the CII have both been recognized for their particular programs, and both offer formal training. Contact: Robert H. Ryan, Associate Director, CII; phone: 512-471-6494.

• In-house training programs. Agencies have developed in-house training programs specializing in program and project management practices for federal agencies. Among the oldest are schools run by the U.S. Army Corps of Engineers (USACE) and the NAVFAC. More recently, NASA has developed two 1-week short courses of facility engineering management practices. Contacts: Lt. Commander Mark Van Vleck, Naval School Civil Engineer Corps Officers, NAVFAC; phone: 805-982-2888. William Stamper, Senior Facilities Engineer, NASA Headquarters; phone: 202-358-1133.

• Review comment documentation. The USACE's latest software program used for documenting, collecting, distributing, and archiving design review comments is called DR CHEKS. It runs on a desktop computer and uses the Internet for communication among design review participants. Perhaps most important, it has features to aid follow-up of actions taken in response to review comments, which is a particularly troublesome area. Contact: William East, Principal Researcher, Construction Engineering Research Laboratories, USACE; phone: 217-373-6710.

• Project Management Center of Expertise. The GSA recently established the GSA Project Management Center of Expertise. The center has been staffed by GSA's most senior and competent project managers to serve two functions:

  1. Actively manage all of GSA's uniquely large, complex, or high-visibility projects, regardless of location.

  2. Provide mentoring, counseling, and training services in the area of project management in support of all of GSA's regional offices. Contact: Myron H. Goldstein, Director, Heartland Region, GSA; phone: 816-926-7421; Internet: http://www.gsa.gov/pbs/centers.

• ISO 9000 certification. Some large A/E firms have secured ISO 9000 certification as a quality control activity. Among federal agencies, several of the USACE's district offices have received ISO 9000 certification for

their design and construction programs. Other agencies, including NASA and NIH are working toward ISO 9000 certification for their facility engineering activities. It should be noted that ISO-9000 does not guarantee a quality product. Rather, it guarantees that the process that produces the product (good or bad) has been carefully structured, documented, and measured. Organizations have found that the process of securing ISO 9000 registration has been a valuable experience in understanding just what they do and how they go about it. Contact: Joe Keith, Louisville District, USACE; phone: 502-582-5701. Calvin Williams, NIH; phone: 301-496-4865.

• Conceptual or advance planning. Most projects that fail to meet their planned objectives do so because of faulty or inadequate predesign development. The CII has recently developed a comprehensive preproject planning approach that allows organizations to measure whether they have adequately addressed all predesign requirements. CII also has developed a training module intended to assist organizations in adopting their recommended approach to preproject planning. Contact: Robert H. Ryan, Associate Director, CII; phone: 512-471-6494.

• Design review lessons learned. Problems identified in the design review process can become a powerful tool to improve performance. The VA uses a method of documenting and publicizing such lessons learned in an innovative program called ProCATS. Its purpose is to identify recurring problems that result in change orders, claims, and delays and then to take positive steps to avoid such problems in the future. The system is the first of its kind in the federal government and was a 1996 winner of the Vice President's Hammer Award. Contact: Satish Sehgal, OFM, VA; phone: 202-565-5032.

• A/E historical performance database. The USACE has, for many years, maintained a database containing historical evaluations of A/E performance on past projects. This database, the ACASS, can be queried by any federal agency interested in a particular A/E's past performance. Information about ACASS is also available at the website http://www.nwp.usace.army.mil/ct/i/. Contact: Ruth Abney, Portland District Contractor Appraisal Information Center, USACE; phone: 503-808-4594.

• NIH contractor performance system. The NIH has developed a multiple agency, shared file system that allows all authorized users to have access to the completed contractor performance evaluations of all subscribing agencies via the Internet. A separate module for each subscribing agency is developed with a unique URL, allowing each agency control of agency data and access authority. Planned future enhancements include automated construction and A/E forms; electronic storage of contractors' rebuttal and comments; electronic and encrypted, transmittal of evaluations to the contractor; and ad hoc reporting. Contact: Ms. Phyllis Donoghue, NIH; phone: 301-496-1783; e-mail: pd3n@nih.gov.