The Federal Reserve's internal watchdog announced on Wednesday that an expansive building renovation project was broadly mismanaged, though no criminal violations were found. This contradicts allegations made by Trump administration prosecutors.
The Fed's inspector general stated that various missteps by its board of governors inflated the cost of the $2.4bn renovation. The board reportedly failed to secure a comprehensive cost estimate at the project's outset or establish a maximum overall cost, which could have compelled the contractor to absorb inflation impacts. Prices surged after construction began in 2022.
The report, spanning 120 pages, noted that the board "has not effectively managed and executed its … contract and repeatedly deviated from its cost-management provisions." Construction costs for two Fed buildings more than doubled, rising from an initial estimate of $921m in February 2020 to $2.018bn by December 2024. Construction is now anticipated to conclude in December 2027, significantly later than the original mid-2024 completion date.
The inspector general's report also indicated that a design change in 2023, shifting from an open workspace to mostly closed office space, caused a substantial delay in the project's design. This change also postponed the Fed's ability to seek a maximum cost ceiling for the project at that time. Aspects criticised by the Trump administration, such as water fountains and marble facades, were not identified as significant drivers of the excessive costs.