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The Federal Reserve’s renovation of its historic Eccles–1951 headquarters has finally been yanked into the daylight. An inspector general’s report laid bare sloppy governance and runaway costs. Chairman Kevin Warsh responded this week by handing executive oversight to the General Services Administration and ordering an independent audit. The question now is whether that will be enough to stop another taxpayer-funded train wreck.
Warsh moves to fix the Fed’s renovation mess
Chairman Kevin Warsh didn’t waste time after the Office of Inspector General released its evaluation. He directed the GSA to serve as Project Executive, ordered an independent audit of awarded costs, and told staff to finish negotiating a Guaranteed Maximum Price (GMP). That’s the kind of hard line the Fed should have taken before the price tag ballooned. If any arm of government should show vigilance in cost control, it’s the nation’s central bank—and Warsh said as much.
What the watchdog found
The OIG, led by Michael E. Horowitz, found major breakdowns in oversight. The project budget rose from roughly $1.317 billion to about $2.381 billion, and the construction portion jumped from about $921 million to roughly $2.018 billion. Even more damning: about $2.0 billion of $2.1 billion in awarded construction work—some 95 percent—fell outside the rules that would have forced senior review. Two mechanical, electrical and plumbing packages went from an A/E estimate of $178 million to awards totaling $539 million. Those spikes far outpaced normal construction inflation.
No criminal referral, but plenty of accountability owed
The OIG stopped short of accusing anyone of criminal conduct or administrative misconduct. That’s not the same as saying no one is to blame. The report shows a system where senior leaders either didn’t know what was happening or chose not to stop it. Jerome H. Powell, now a Board member, came under fire for earlier assurances that oversight was tight. Meanwhile, President Trump and Capitol Hill watchers smell blood and will keep pressing for answers. The crucial next steps are whether the GSA and independent audit find billings that should be clawed back and whether the Fed secures a real GMP to cap future exposure.
Here’s the blunt takeaway: this was not just about inflation. It was about process—or the lack of one. The OIG will check quarterly on progress, and taxpayers should watch closely. The Fed can no longer hide behind dashboards that always say “on track” while costs explode. Chairman Warsh’s moves are the right start. Now we need action, contract recoveries where warranted, and a permanent fix so the next big Fed project doesn’t become another poster child for bad governance and loose purse strings.
