Defense’s largest construction project still behind schedule, over budget

The project to develop and construct an 840,000-square-foot mall at the Ramestein Air Base in Germany continues to be massively over budget and behind schedule, officials told lawmakers on Wednesday.

The Kaiserslautern Military Community Center, under construction since late 2003, is designed to have an eight-story, 350-room hotel, a movie theater with stadium seating, and large shopping and restaurant areas. The project, also known as K-town, was scheduled to open by 2006, but the Government Accountability Office reported Wednesday that will not likely happen until 2009. GAO also estimated the project will cost well over $200 million, more than $80 million over budget.

Even then, the GAO report stated, "it will likely take years before all issues related to this project, including litigation and potential construction quality problems, are resolved."

A year ago, GAO and Air Force officials testified before the committee that the project -- the Defense Department's single largest building project -- was struggling because of poor construction and contract mismanagement. GAO identified problems with the roof and kitchen exhaust ducts, which were deemed potentially dangerous. This year, GAO also detected long cracks in the building's concrete foundation.

Maj. Gen. Mark Rogers, vice commander of the Air Force in Europe, told the committee that the service had ramped up its oversight of the project, partly through the creation of a resident director's office to centralize KMCC management. The office had 29 employees, a significant increase from the eight oversight personnel initially assigned to the project. While noting these improvements, Rogers also conceded that the facility remained incomplete and the project further delayed.

The Air Force "concluded that that regardless of our oversight, the project could not progress without significant changes in LBB-KL's performance." Landesbetrieb Liegenschafts-und Baubetreuung -- Kaiserslautern is the German state entity responsible for managing and executing KMCC construction under a U.S.-German agreement.

Lawmakers did say, however, that the Air Force must do a better, more transparent job of estimating the costs of the project. GAO reported that the service did not track tens of millions of dollars in costs related to KMCC, including design, personnel, furniture and equipment expenses, and foreign currency fluctuation.

The cost of repairing shoddy construction also was not included in Air Force estimates, the report showed.

While construction and development costs have been significant on their own, project delays have cost the government a large amount of money. For example, the Army and Air Force Exchange Service estimated that it was losing $500,000 in profit each month KMCC's exchange facility was not open. The Air Force estimated that the government was paying an additional $90,000 in personnel travel for each month the hotel portion of the complex was still under construction.

Rep. Henry Waxman, D-Calif., and chairman of the House Oversight and Government Reform Committee, said the similarity between the 2007 and 2008 hearings made the testimony "sound like the movie Groundhog Day," calling it evidence of "pervasive dysfunction in federal contracting."