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EXCLUSIVE: The Federal Reserve’s costly renovation project will have a new manager as Fed Chair Kevin Warsh has tasked the General Services Administration (GSA) with managing the completion of the project.
On Wednesday, the Fed’s Office of Inspector General released a report which found that while there was no administrative misconduct in the management of the more than $2 billion project, mistakes were made that have contributed to significant cost overruns and delays.
Inflation contributed to those cost increases, as well as unanticipated project needs, while lapses in project management and contracting practices exposed the central bank to the cost overruns in renovating the Federal Reserve headquarters.
The cost of the renovation of the Marriner S. Eccles and 1951 Constitution Avenue NW buildings as approved by the Fed’s board surged from $1.317 billion in February 2020 to $2.381 billion in December 2024. Meanwhile, the timeline for completing the project slipped from the original estimate of the second quarter of 2024 to the end of 2027.
GSA Administrator Edward Forst said in a statement provided exclusively to FOX Business that “GSA fully supports Chairman Kevin Warsh’s efforts to bring greater accountability, cost discipline, and effective project management to major renovation work across Federal Reserve facilities.”
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“As the federal government’s primary real estate and building management agency, GSA will work closely with the Chairman and bring its expertise in construction, project management, and federal real estate to get these projects back on track,” Forst said.
“Together, we will focus on delivering better value for taxpayers and ensuring the Federal Reserve’s facilities are positioned to better serve the American people,” the GSA administrator added.
Fed Chair Kevin Warsh said in a letter dated Sept. 29 which accompanied the IG report that shortly after he was sworn into his role as chairman he was “briefed on the renovations and learned of the ongoing challenges that have hindered their progress.”
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The chairman said that he sought the advice of Forst and the GSA in early August given their experience in managing large-scale construction and managing federal workspaces.
Warsh’s letter dated Sept. 29 said that, effective immediately, GSA will serve as the project executive for the renovation and report to the Fed, explaining that “we will ensure that the balance of the project is managed to the highest standards and is finished promptly.”
He added that the Fed will take a number of steps recommended by the IG in concert with GSA, such as setting a guaranteed maximum price for the project, setting fixed metrics for the budget and schedule, reviewing contracts for services not received and establishing internal controls for future projects.
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Warsh also noted that he has known Forst for some years and has confidence in his expertise, which also includes private sector experience in handling large-scale construction projects.
A senior administration official told FOX Business that GSA brings a “really talented team of people who have spent decades managing large scale construction projects and projects of this magnitude.”
The official added that key priorities going forward are for the Fed and GSA to work together to figure out how to get the project completed quickly without any further delays, as well as to determine ways in which they can save costs when possible to be good stewards of taxpayer funds.
Warsh’s letter didn’t address claims of misconduct that have been levied by critics of the project, including President Donald Trump, who on Wednesday threatened to sue former Fed Chair Jerome Powell and called for his resignation in the wake of the report.
Powell, who currently serves as a member of the Fed’s Board of Governors, served as chairman during the period in which the project began and encountered challenges.
