The project is being led by a joint venture of Balfour Beatty and Gilbane Building Co. A representative for the joint venture declined to comment. 

The 276,000-sq-ft Eccles Building was originally completed in 1937 and has only undergone minor renovations since then. Fed staff say the building’s systems have reached the end of their usable life. Neighboring 1951 Constitution Ave., also known as Federal Reserve Board-East Building or FRB-East, was originally completed in 1933 for the U.S. Public Health Service. The Fed purchased the 126,388-sq-ft building in 2018 as it was starting procurement to renovate the Eccles Building, and modified its solicitation to include both buildings “to optimize coordination and gain efficiency benefits,” according to a 2021 audit report.

Both buildings are listed in the D.C. Inventory of Historic Sites, and FRB-East is also listed in the National Register of Historic Places.

“No one in office wants to do a major renovation of a historic building during their term—much preferring to leave that to successors, and this is a great example of why—let alone two historic buildings that needed a lot of work,” Fed Chair Jerome Powell told the Senate Committee on Banking, Housing, and Urban Affairs in June. “But we decided to take it on because, when I was the administrative governor before I became chair, I came to understand how badly the Eccles Building really needed a serious renovation. It was not really safe and it was not waterproof, so we took it on.”

Project Concerns

President Donald Trump has repeatedly called on Powell to lower interest rates and publicly mulled whether he could be fired, while the Fed chair has advocated a wait-and-see approach before adjusting rates because of concerns about inflation. Against that backdrop, Russell Vought, director of the White House Office of Management and Budget, sent a letter to Powell earlier this month raising concerns with the project cost and items included in the design such as “rooftop terrace gardens,” as well as “VIP dining rooms and elevators” and the use of marble.  

“The president is extremely troubled by your management of the Federal Reserve System,” Vought wrote. “Instead of attempting to right the Fed’s fiscal ship, you have plowed ahead with an ostentatious overhaul of your Washington, D.C., headquarters.”

Fed records show its budget for the project has increased from $1.9 billion before 2020 to $2.5 billion today. In budget documents predating the current controversy, Fed staff attributed the increased cost estimates to elevated bid prices for mechanical, electrical and plumbing work. 

On the Fed’s website, officials also pointed to increases in construction material and labor costs since estimates were originally made, unforeseen conditions such as more asbestos than expected, as well as design changes that resulted from “consultation with review agencies.”

Fed officials also addressed Vought’s design concerns, writing that the “garden terrace” in planning documents is actually the ground-level lawn on top of the underground parking structure. No VIP dining rooms or elevators are being added, they wrote, but conference rooms sometimes used for mealtime meetings are being renovated and original elevators are being rehabilitated. Proposed water features considered for the FRB-East property were eliminated from plans, but fountains original to the Eccles Building are being restored as part of the work. Marble from the original facades and stonework were preserved to be reinstalled, with limited new marble being needed only where original material was damaged. 

During Powell’s testimony before the Senate committee, he said none of those items “were really the cost drivers.”

“We do take seriously our responsibility as stewards of the public’s money,” he said.