The Federal Reserve’s inspector general found “numerous deficiencies” in how the central bank managed the renovation of its Washington headquarters, and also found no reasonable grounds to believe a federal crime occurred. The report was released Wednesday, Sept. 30.
What the report says, in its own words
The 120-page evaluation of the renovation of the Eccles building and the building at 1951 Constitution Avenue comes from Inspector General Michael Horowitz’s office, which began it in July 2025 at the request of then-Chairman Jerome H. Powell.
On crime, the report states: “At no point during our evaluation did we find reasonable grounds to believe that a violation of federal criminal law had occurred requiring a referral to the U.S. Attorney General in accordance with the Inspector General Act.” It also says investigators “did not identify administrative misconduct.”
On management, its conclusion says the report “outlines numerous deficiencies in the management of the renovation project.” It did not measure how much those decisions added to the cost or judge whether the costs were reasonable.
How the budget grew
According to the report, the approved total budget rose from $1.317 billion in February 2020 to $2.381 billion in the latest revision, dated December 2024 and current as of August 2026. The construction portion rose from $921 million to $2.018 billion. In January 2026 the construction manager proposed a construction cost of $2.135 billion. Construction was supposed to end in the second quarter of 2024; it is now scheduled for December 2027.
The inspector general says the project’s quarterly dashboards “continually reported the overall status as ‘on track’ even as costs increased and the completion date was delayed.”
A guaranteed maximum price, or GMP, is a ceiling the contractor agrees not to exceed. The report says the project had none as of July 2026. The work was split into 84 price packages, 69 of them awarded by December 2025, without a price ceiling, which the report says made the contract resemble “a riskier cost-plus reimbursement” arrangement.
Four mechanical, electrical and plumbing packages came in nearly $500 million above the 2022 estimate, the report says; three of the four drew fewer than three bids.
Design features such as marble, water features and the garden terrace did not materially drive the cost increases, the report says. It lists inflation, limited subcontractor bidding, design changes and site conditions, and says more effective project management could have reduced the effect of some of them.
The same failures, again
The Board’s previous major project, the Martin building renovation, took 11 years, and its cost more than doubled, from $203 million in 2012 to $454 million in 2022. The inspector general closed all 11 recommendations from its earlier renovation reports.
Even so, the report names three recurrences. There was no working cost limit, a problem it flagged in 2014: an $857 million limit given to the architect in April 2020 was never updated. Status reports said “on track” without meaningful cost or schedule information, as the office had found in 2017. And the Board decided not to carry out governance measures from guidance it wrote in response to the office’s 2021 report.
What changes now
In a Sept. 29 letter included in the report, Chairman Kevin Warsh wrote: “Effective immediately, GSA will serve as the Project Executive, reporting to the Board of Governors and to me as its Chairman.” GSA is the General Services Administration.
Warsh also wrote that the Fed will “engage an independent auditor to verify the accuracy and compliance of all awarded costs to date,” will “promptly complete negotiations for a Guaranteed Maximum Price,” and, “as necessary,” will “seek reimbursement or project credits for any work paid for but not performed.”
Reactions
According to CNBC, President Donald Trump wrote on Truth Social that Powell should be “forced to resign, IMMEDIATELY!” and asked Attorney General Todd Blanche to “study” the report, and the office of U.S. Attorney Jeanine Pirro said it was reviewing it, after dropping its criminal investigation in April. White House spokesman Kush Desai said the report “reinforces the gross mismanagement that President Trump has repeatedly highlighted by the Federal Reserve’s prior leadership.” Sen. Tim Scott, R-S.C., said inflation “does not change the Fed’s responsibility to manage its resources prudently and be accountable to Congress,” and Sen. Elizabeth Warren, D-Mass., said Pirro and the Justice Department “have no basis to restart the President’s witch hunt against former Fed Chair Jerome Powell.” Powell finished his term as chair and remains on the Board of Governors, CNBC reported.