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March 13, 2012

The Costly United Nations

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Behind schedule and over budget — and still the U.N.’s Capital Master Plan (CMP) is getting high grades. “The first major renovation of the 60-year-old headquarters has been slowed by extra security measures,” the Associated Press reports, noting that “The final cost will be nearly $2 billion — about 4 percent over the original budget.” Still, the article leaves the general impression that the CMP has done a heckuva job of cost containment.

Really?

That 4 percent overrun amounts to real money — more than $80 million. But that’s chump change compared to the real stakes in this story.

When the renovation was first proposed, more than ten years ago, the General Accounting Office (as the Government Accountability Office was then called) estimated it should cost from $875 million to $1.2 billion. But the project kept growing — winding up at roughly twice that size under the U.N.’s official, currently approved CMP budget of $1.9 billion.

But even that inflated baseline may be a gross underestimate. Last week, New York architect Michael Adlerstein, the executive director of the U.N. renovation and a U.N. assistant secretary general, informed the U.S. and other U.N. member states that the cost overrun will be not $80 million, but $265 million. And even that new estimate is subject to upward revision, because it does not include certain foreseeable costs.

Adlerstein’s announcement outraged Ambassador Joseph Torsella at the U.S. mission to the U.N. He promptly demanded that the CMP “determine how these additional costs occurred & take prompt measures to reduce them to complete the project w/o new assessments.”

“US support [is] not a blank check from American taxpayers,” Torsella added.

Outrage is exactly the correct response. The U.S. has every right to demand that the overruns be handled within the current budget and not result in additional charges to the member states — notably the U.S., which foots the largest share of the U.N.’s bills. Furthermore, what has happened with the headquarters renovation has implications for other U.N. projects.

Currently in the planning stages is a brand new U.N. building to be erected on the Robert Moses Playground, next to the current U.N. compound. Last fall, the U.N. quietly released a report acknowledging that the cost of constructing the new building would not be the $370 million to $475 million reported in the press. Instead, it will be between $1.97 billion and $2.42 billion. In other words, the new U.N. tower will cost about five to six times the initial estimate reported by the media. Guess which country’s taxpayers will be stuck with at least 22 percent of the bill?

But that is not all. The U.N. also plans to renovate its Geneva headquarters once the New York renovation is complete. A report by the secretary general titled “Strategic heritage plan of the United Nations Office at Geneva” estimates that that project will cost between $591 million and $654 million. Given recent history, what are the odds that this estimate is accurate?

“Fool me once . . .” The U.S. should say, “Enough is enough.” We must hold firm on Ambassador Torsella’s demand that the additional costs for the CMP be absorbed within the current U.N. budget. We should also state our opposition to the new U.N. building and demand much stronger vetting and oversight — including multiple, independent bids — for any other U.N. renovation project, in Geneva or elsewhere.

Brett D. Schaefer is the Jay Kingham Fellow in international regulatory affairs at the Heritage Foundation.

First appeared in National Review Online

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