Pentagon's Largest Overseas Project Over Budget and Past Deadline

June 29, 2007 — -- The Kaiserslautern Military Community Center, also known as K-Town, was supposed to have been built by December 2005 and cost $150 million. Today, the project is still far from completion, pocked with vandalism and shoddy construction, and may end up costing well over $200 million.

K-Town was meant to house a giant mall, retail shops, slot machines, restaurants, and hundreds of housing rooms for military personnel on Ramstein U.S. Air Force Base in Germany.

It was to be the largest Pentagon overseas construction project, overseen by the Air Force but contracted out by semi-official German entities according to a previous agreement between Germany and the United States.

At a hearing Thursday investigating why the project was so delayed and over budget, members of congress on the House Oversight and Government Reform committee demanded accountability from the Air Force.

"The construction has been deficient, and U.S. oversight has been wholly inadequate," said Committee Chairman Henry Waxman, D-Calif. "How could this have happened? How could construction of a modern-day facility in a Western country on a U.S. military base resemble the shoddy and makeshift practices of a war zone?"

The heat came from both sides of the aisle. Ranking Member Tom Davis, R-Va., was equally concerned, but warned in a prepared statement, "The GAO audit findings being presented today are only preliminary. Criminal and administrative investigations of the project are underway. Without the final results of those efforts, we are not in a position to get the full story in this hearing. It might have been wiser to wait."

Air Force Brigadier General Danny Gardner defended the Air Force at the hearing and placed some of the blame on the German contracting firm.

"German federal construction law shields contractors from much of the risk routinely borne by U.S. construction firms," Gardner said. "Therefore, owners have less leverage and recourse than provided for under the federal acquisition regulations used in stateside construction."

According to Gardner's prepared testimony, because of the agreement between the U.S. and Germany, "The decision as to the method of contracting is clearly within the German government's rights, so the U.S. has little influence over acquisition strategies."

The German company that dispensed the contracts did not send a representative to testify at the hearing, although it was asked to do so.

A Government Accountability Office report released at the hearing found inadequate oversight from the military, a confusing payment structure, and an unnecessary accelerated construction pace that lent itself to sub par construction and fraud.

"It was a perfect storm," said Gregory Kutz, the GAO's managing director for forensic audits and special investigations.

Kutz said the project is so out of line that there is now no new estimated cost, though it is expected to exceed $200 million, and no estimated completion date. He testified that the Air Force tried to cut corners in order to get the job done quickly. As a result of the delay, the Air Force has had to pay $10,000 a day to house personnel in German hotels.

Brig. Gen. Gardner justified the accelerated construction schedule because the Ramstein base was receiving additional duties from another base in Germany.

This despite a 2004 memo circulated at the hearing from within the Air Force that stated the fast track schedule "is not permitting the time needed to adequately review and resolve critical design issues. This accelerated process has contributed to critical design process omissions, design coordination problems, and schedule complications. ... In light of the fact that Ramstein is no longer going to be the designated gateway for all military personnel entering Europe, there is no longer a driving urgency to complete this project in Dec '05."

Gardner said the memo had been taken under consideration, but it was decided to proceed with the fast-track construction.

An internal audit conducted by the Air Force's audit agency and submitted last Friday found that the Air Force "did not conduct thorough project planning or architectural design reviews ... did not establish policy to estimate and mitigate risk ... did not provide adequate oversight of the planning procedures ... [and] did not perform pre-design validation reviews."

The audit reported that "at least 173 change orders reviewed, totaling $6.1 million, were preventable."

Despite the oversight failures, Gardner told Ranking Member Davis that nobody in the Air Force had been either fired or demoted as a result of the project. Gardner did later admit, however, that more staff should have been dedicated to overseeing the project.

The Air Force general drew more fire from the committee when it was revealed that he only became aware that the project would be delayed in December 2005, the same month the project was due to be completed. Gardner said that the contractors had told him things were on schedule.

Rep Christopher Shays, R-Conn., told Gardner, "You should have known before."