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Since then we have conducted a thorough analysis of the project with GSA, the architects and their consultants, including interviews and discussions with each of the seven construction firms that bid the project. This process has allowed us to identify a number of elements which can be modified to reduce costs while retaining the integrity and effective function of the building. We also have learned that the contractors anticipated in their bids an annual inflation rate of 12 percent during the two-year construction period. The project was planned on the basis of a two-step inflationary increase of 8 percent and 10 percent.

Based on the low bid received for the three storage-bay facility and adjusted for inflation during the five-month period necessary to rebid the project, the shortfall of available funds is approximately $6.0 million. From information developed during the cost-reduction studies, we have identified approximately $3.5 million in modifications which can be made without significant adverse effects on Support Center operations or maintenance. These modifications can be made essentially by substituting more standardized building features for customized plans for the roof, interior and exterior finishes, and electrical systems and by eliminating certain desirable, but not critical, mechanical equipment. The planned changes will encourage stronger competition in bidding certain aspects of the project.

The remaining shortfall of $2.5 million will be made up with unrestricted trust funds authorized by the Smithsonian's Board of Regents in order to move this project forward without further delay and erosion from inflation. The unrestricted trust funds which are being applied to the Support Center construction are derived specifically from the anticipated sale of the Institution's Belmont Conference Center in Howard County, Maryland and the planned purchase of equipment for the Conservation Analytical Laboratory. As a result, the purchase of the specific items for which the funds had been designated, namely, acquisition of land at the Chesapeake Bay Center for Environmental Studies and Conservation Analytical Laboratory equipment will have to be deferred.

As a result of these actions, revisions are being made at this time in the existing drawings and specifications and we expect to be able to award a contract for the three-bay Support Center in late February 1981.