oversight

Embassy Construction: Process for Determining Staffing Requirements Needs Improvement

Published by the Government Accountability Office on 2003-04-07.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States General Accounting Office

GAO          Report to the Chairman, Subcommittee
             on National Security, Emerging
             Threats, and International Relations,
             Committee on Government Reform,
             House of Representatives
April 2003
             EMBASSY
             CONSTRUCTION
             Process for
             Determining Staffing
             Requirements Needs
             Improvement




GAO-03-411
                                                April 2003


                                                EMBASSY CONSTRUCTION

                                                Process for Determining Staffing
Highlights of GAO-03-411, a report to the       Requirements Needs Improvement
Chairman, Subcommittee on National
Security, Emerging Threats, and
International Relations, House Committee
on Government Reform




The 1998 terrorist attacks on two               U.S. agencies’ staffing projections for new embassy compounds are
U.S. embassies in Africa                        developed without a systematic approach or comprehensive rightsizing
highlighted security deficiencies in            analyses. State’s headquarters gave embassies little guidance on factors to
diplomatic facilities, leading the              consider in developing projections, and thus U.S. agencies did not take a
Department of State to embark on                consistent or systematic approach to determining long-term staffing needs.
an estimated $16 billion embassy
construction program. The
                                                Officials from each of the 14 posts GAO contacted reported that their
program’s key objective is to                   headquarters bureaus had not provided specific, formal guidance on
provide safe, secure, and cost-                 important factors to consider when developing staffing projections. The
effective buildings for employees               process was further complicated by the frequent turnover of embassy
overseas. Given that the size and               personnel who did not maintain documentation on projection exercises.
cost of new facilities are directly             Finally, staffing projections were not consistently vetted with all other
related to agencies’ anticipated                agencies’ headquarters. Because of these deficiencies, the government could
staffing needs, it is imperative that           construct wrong-sized buildings. In fact, officials at two embassies GAO
future requirements be projected as             visited said that due to poor projections, their sites may be inadequate
accurately as possible.                         almost immediately after staff move onto the new compound.
GAO was asked to (1) assess
whether State and other federal
                                                State has proposed a cost-sharing plan that would require federal agencies to
agencies have adopted a                         help fund new embassy construction. The Office of Management and Budget
disciplined process for determining             (OMB) is leading an interagency committee to develop a cost-sharing
future staffing requirements and (2)            mechanism that would provide more discipline when determining overseas
review cost-sharing proposals for               staffing needs and encourage agencies to think more carefully before posting
agencies with overseas staff.                   personnel overseas. Numerous issues will need to be resolved for such a
                                                program to be successful, including how to structure the program and how
                                                payments will be made.
GAO recommends that the
                                                Map of New Embassy Compound Construction Projects, Fiscal Years 1999 through 2004
Department of State (1) develop                 Funding
standard and comprehensive
guidance for projecting staffing
requirements, (2) require the
retention of documentation on how
embassies determined these
requirements, and (3) ensure that
all staffing projections have been
validated.

We received comments from State,
OMB, and the U.S. Agency for
International Development, all of
which generally agreed with our
conclusions and recommendations.



www.gao.gov/cgi-bin/getrpt?GAO-03-411.

To view the full report, including the scope    a
                                                Indicates projects for which State has requested funding in fiscal year 2004.
and methodology, click on the link above.
For more information, contact Jess T. Ford at
(202) 512-4128 or fordj@gao.gov.
Contents


Letter                                                                                         1
               Results in Brief                                                                2
               Background                                                                      4
               Systematic Effort to Project Staffing Needs for New Embassies Is
                 Lacking                                                                     12
               Government Aims to Distribute Costs of Overseas Facilities among
                 Users                                                                       20
               Conclusions                                                                   25
               Recommendations for Executive Action                                          25
               Agency Comments and Our Evaluation                                            26
               Scope and Methodology                                                         27

Appendix I     Standard Embassy Compound Design                                              30



Appendix II    Comments from the Department of State                                         31



Appendix III   Comments from the U.S. Agency for International
               Development                                                                   34



Appendix IV    GAO Contact and Staff Acknowledgments                                         37
               GAO Contact                                                                   37
               Staff Acknowledgments                                                         37


Table
               Table 1: Notional Distribution of Costs under State’s Capital
                        Security Cost-sharing Proposal Based on a May 2001
                        Overseas Personnel Survey                                            22


Figures
               Figure 1: Map of New Embassy Compound Construction Projects,
                        Fiscal Years 1999 through 2004 Funding                                 6
               Figure 2: Major Milestones in Planning for a New Embassy
                        Compound Scheduled for Fiscal Year 2007 Funding                        9


               Page i                  GAO-03-411 Linking Staffing Needs to Embassy Construction
Figure 3: Components of OBO’s Staffing Projection Process                                 11
Figure 4: Standard Design for New Embassy Compounds                                       30




Abbreviations

ICASS             International Cooperative Administrative Support Services
OBO               Bureau of Overseas Buildings Operations
OMB               Office of Management and Budget
OPAP              Overseas Presence Advisory Panel
USAID             U.S. Agency for International Development




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Page ii                      GAO-03-411 Linking Staffing Needs to Embassy Construction
United States General Accounting Office
Washington, DC 20548




                                   April 7, 2003

                                   The Honorable Christopher Shays
                                   Chairman, Subcommittee on National Security,
                                    Emerging Threats, and International Relations
                                   Committee on Government Reform
                                   House of Representatives

                                   Dear Mr. Chairman:

                                   As a result of the 1998 terrorist attacks on two U.S. embassies in Africa,
                                   which highlighted the security deficiencies in U.S. diplomatic facilities, the
                                   Department of State has embarked on an estimated $16 billion embassy
                                   construction program, the largest program of its kind in the department’s
                                   history. The program’s key objective is to provide safe, secure, and cost-
                                   effective buildings for employees working overseas. Given that the size
                                   and cost of new facilities are directly related to anticipated staffing
                                   requirements for these posts, it is imperative that future staffing needs be
                                   projected as accurately as possible.

                                   In August 2001, the President identified rightsizing1 of embassies and
                                   consulates as one of his management priorities.2 One of the goals of this
                                   initiative is to develop accurate staffing projections for new overseas
                                   construction. In July 2002, we developed a framework for assessing
                                   embassy staff levels to help support rightsizing initiatives for existing
                                   facilities.3 However, developing staffing requirements for a new embassy is
                                   much more difficult than for an existing facility because it requires
                                   managers to project staffing needs 5 to 7 years in the future.

                                   In response to your concerns, we assessed whether State and other federal
                                   agencies have adopted a disciplined process for determining staffing



                                   1
                                    We define rightsizing as aligning the number and location of staff at U.S. embassies and
                                   consulates with foreign policy goals. See U.S. General Accounting Office, Overseas
                                   Presence: Framework for Assessing Embassy Staff Levels Can Support Rightsizing
                                   Initiatives, GAO-02-780 (Washington, D.C.: July 26, 2002).
                                   2
                                    Office of Management and Budget, The President’s Management Agenda, Fiscal Year
                                   2002 (Washington, D.C.: August 2001).
                                   3
                                    GAO-02-780.



                                   Page 1                       GAO-03-411 Linking Staffing Needs to Embassy Construction
                   requirements for new embassies and consulates. We also reviewed cost-
                   sharing proposals for agencies with overseas staff. To meet these
                   objectives, we collected documentation from and conducted interviews
                   with executive branch agencies in Washington, D.C., including the
                   Departments of State, Defense, Justice, and others, regarding future
                   staffing requirements, the projection process, and the extent to which cost
                   considerations were factored into the decision-making process. To assess
                   agencies’ actions in developing staffing requirements, we visited seven
                   U.S. posts and contacted seven additional embassies in a range of
                   geographic regions, all of which are slated for new compounds. These
                   posts represent about 16 percent of the new embassy compound projects
                   in State’s construction plan for fiscal years 2002 through 2007, and 23
                   percent of these projects are expected to be funded by fiscal year 2005.


                   U.S. agencies’ staffing projections for new embassy compounds are
Results in Brief   developed without a systematic approach or comprehensive rightsizing
                   analyses. Officials at the embassies we visited approached the process in
                   different ways. For example, some embassies solicited input from all
                   agencies and held several meetings to discuss future needs, while others
                   developed requirements without serious effort or review. Although
                   embassies play a key role in the projection process, State Department
                   headquarters officials provide chiefs of mission4 with little formal guidance
                   on factors to consider when setting requirements, nor do they stress the
                   importance of accurate projections. Moreover, at each of the seven posts
                   we visited, we found little or no documentation to show that staff had
                   completed a comprehensive assessment of the number and types of people
                   they would need in the year that their embassy would be completed. In
                   fact, a failure to account for recent growth in current staffing levels at one
                   embassy we visited led to final projections that were too low and may
                   result in significant overcrowding in the new facility. In addition, State’s




                   4
                    According to the Foreign Service Act of 1980 (P.L. 96-465), as amended, “chiefs of mission”
                   are principal officers in charge of diplomatic missions of the United States or of a U.S.
                   office abroad, such as U.S. ambassadors, who are responsible for the direction,
                   coordination, and supervision of all government executive branch employees in a given
                   foreign country (except employees under a military commander).




                   Page 2                       GAO-03-411 Linking Staffing Needs to Embassy Construction
geographic bureaus5 are not consistently reviewing and validating
projections to ensure that they accurately reflect future requirements.
Finally, additional factors complicate the projection process, including the
frequent turnover of embassy personnel and other breakdowns in
communication among multiple agencies with differing requirements on
new embassy compounds. Building secure and modern facilities for U.S.
government employees working overseas is extremely important and will
require a significant investment. However, without a systematic process,
the U.S. government risks building wrong-sized facilities, which could lead
to security concerns, additional costs, and other work inefficiencies.

The State Department has proposed the Capital Security Cost-sharing Plan
that would require federal agencies to help fund its embassy construction
program. Currently, other U.S. agencies are not required to fund capital
improvements to overseas facilities. The Office of Management and
Budget (OMB) is working with State and other agencies through an
interagency committee to develop a cost-sharing mechanism that would
provide more discipline when determining U.S. government overseas
staffing needs. The administration has committed to implementing greater
cost sharing among agencies that use overseas facilities because it
believes that if agencies are required to pay a greater share of the costs
associated with their overseas presence, they will weigh cost
considerations more carefully before posting personnel overseas. The
interagency committee will consider State’s and others’ proposals when
developing a new cost-sharing mechanism. There are numerous issues that
will need to be resolved for a cost-sharing program to be successful, such
as how best to structure the program, how charges will be determined,
and how payments will be made.

This report contains recommendations to the Secretary of State that the
department (1) develop standard and comprehensive guidance for
projecting staffing requirements for new embassy compounds, (2) require
the retention of documentation on how agencies and embassies
determined these requirements and the rationales for the decisions, and


5
 There are six geographically defined bureaus that report to the Undersecretary of State for
Political Affairs—bureaus for Africa, East Asia and the Pacific, Europe and Eurasia, the
Near East, South Asia, and the Western Hemisphere. The Assistant Secretaries of the
geographic bureaus advise the Undersecretary and guide the operation of the U.S.
diplomatic missions within their regional jurisdiction. They are assisted by Deputy
Assistant Secretaries, office directors, post management officers, and country desk
officers. These officials work closely with U.S. embassies and consulates and with foreign
embassies in Washington, D.C.




Page 3                       GAO-03-411 Linking Staffing Needs to Embassy Construction
             (3) ensure chiefs of mission and State’s geographic bureaus certify that the
             projections have been reviewed and vetted before they are submitted to
             State’s Bureau of Overseas Buildings Operations (OBO).

             We received written comments from State and the U.S. Agency for
             International Development (USAID), which we have reprinted in
             appendixes II and III. We also received oral comments from OMB, which
             we have summarized at the end of this report. All three agencies agreed
             with our findings, conclusions, and recommendations.


             The 1998 terrorist bombings of the U.S. embassies in Kenya and Tanzania
Background   highlighted the compelling need for safe and secure overseas facilities.
             Following the bombings, two high-level independent groups cited
             problems at U.S. overseas facilities. In January 1999, the chairman of the
             Accountability Review Boards,6 formed to investigate the bombings,
             reported that unless security vulnerabilities associated with U.S. overseas
             facilities were addressed, “U.S. Government employees and the public in
             many of our facilities abroad” would be at continued risk from further
             terrorist bombings.7 Later that year, the Overseas Presence Advisory Panel
             (OPAP)8 concluded that many U.S. overseas facilities are unsafe,
             overcrowded, deteriorating, and “shockingly shabby” and recommended
             major capital improvements and more accountability for security. In
             addition, the panel recommended that the United States consider
             rightsizing its overseas presence to reduce security vulnerabilities. In
             January 2001, we recommended that State develop a long-term capital
             construction plan to guide the multibillion dollar program to build new
             secure facilities.9 We also reported in July 2002 on a rightsizing framework


             6
              Secretary of State Madeline Albright appointed the Accountability Review Boards to
             investigate the facts and circumstances surrounding the 1998 embassy bombings.
             Department of State, Report of the Accountability Review Boards on the Embassy
             Bombings in Nairobi and Dar Es Salaam (Washington, D.C.: Jan. 1999).
             7
              Admiral William J. Crowe, Press Briefing on the Report of the Accountability Review
             Boards on the Embassy Bombings in Nairobi and Dar Es Salaam (Washington, D.C.: Jan.
             8, 1999).
             8
              Secretary of State Albright established the Overseas Presence Advisory Panel following
             the 1998 embassy bombings in Africa to consider the organization and condition of U.S.
             embassies. Department of State, America’s Overseas Presence in the 21st Century, The
             Report of the Overseas Presence Advisory Panel (Washington, D.C.: November 1999).
             9
             U.S. General Accounting Office, Embassy Construction: Long-Term Planning Will
             Enhance Program Decision-making, GAO-01-11 (Washington, D.C.: Jan. 22, 2001).




             Page 4                       GAO-03-411 Linking Staffing Needs to Embassy Construction
we developed to facilitate the use of a common set of criteria for making
staff assessments and adjustments at overseas posts, which included
consideration of security, mission priorities and requirements, and costs.
We recommended that OMB use the framework as a basis for assessing
staffing levels at existing overseas posts.10

Figure 1 illustrates the locations worldwide for which State has received
funding for new embassy compound construction in fiscal years 1999
through 2003 and for which it has requested funding for projects in fiscal
year 2004.




10
 GAO-02-780.




Page 5                  GAO-03-411 Linking Staffing Needs to Embassy Construction
Figure 1: Map of New Embassy Compound Construction Projects, Fiscal Years 1999 through 2004 Funding




                                      Note: The facilities in Cape Town, Istanbul, and Surabaya are U.S. consulates. We did not include
                                      other projects, such as the construction of new annex buildings on existing compounds, for which
                                      State has received or requested funding during this period.
                                      a
                                       Indicates projects for which State has requested funding in fiscal year 2004.




                                      Page 6                           GAO-03-411 Linking Staffing Needs to Embassy Construction
In July 2001, State published its first Long-Range Overseas Building Plan, a
planning document that outlines the U.S. government’s overseas facilities
requirements and guides implementation of State’s expansive and
unprecedented overseas construction program. This program aims to
provide safe, secure, and cost-effective buildings for the thousands of U.S.
employees working overseas. State identified the projects with the most
compelling case for replacement and ranked them in the plan, which OBO
plans to update annually as compounds are completed and new projects
are added to the priority list.11 The current long-range plan describes
building new embassy compounds at more than 70 locations during fiscal
years 2002 through 2007.12 State estimates this will cost more than $6.2
billion.13 Additional funding will be needed after this time to continue the
program.

State’s construction program of the late 1980s encountered lengthy delays
and cost overruns in part because of a lack of coordinated planning of post
requirements prior to approval and budgeting for construction projects. As
we reported in 1991, meaningful planning began only after project budgets
had been authorized and funded. As real needs were determined, changes
in scope and increases in costs followed.14 OBO now requires that all
staffing projections for new embassy compounds be finalized prior to
submitting funding requests, which are sent to the Congress as part of
State’s annual budget request each February. To accomplish this task,
OBO requires that final staffing projections be submitted the previous
spring. Figure 2 outlines the major milestones and highlights key dates in
the planning and construction process for a new embassy compound
scheduled for 2007 funding. As Figure 2 depicts, OBO will receive final
staffing projections for fiscal year 2007 projects in spring 2005. Between
spring 2005 and February 2006, OBO will develop more firm cost estimates



11
 Pursuant to the Secure Embassy Construction and Counterterrorism Act of 1999 (P.L.
106-113), the State Department is required to identify embassies for replacement or major
security enhancements. The first report was due to the Congress by February 1, 2000, as is
each subsequent update through 2004.
12
  According to State officials, OBO expects to issue an updated building plan for fiscal
years 2003 through 2008 in late April 2003.
13
  In total, there are about 260 diplomatic posts worldwide, including embassies, consulates,
and other special missions and offices, such as the U.S. Mission to the European Union and
the U.S. Office of the High Commissioner in Bosnia-Herzegovina.
14
 U.S. General Accounting Office, State Department: Management Weaknesses in the
Security Construction Program, GAO/NSIAD-92-2 (Washington, D.C.: Nov. 29, 1991).




Page 7                        GAO-03-411 Linking Staffing Needs to Embassy Construction
for the project, vet the resulting funding requirements through OMB, and
submit the funding request to the Congress. Appropriations for these fiscal
year 2007 projects will not be secured until at least October 2006—18
months after final projections are submitted—and construction may not
begin for another 6 months. In total, OBO estimates that, in some cases, it
could take 2 to 3 years from the time projections are finalized to actually
begin construction of a new compound, which could take another 2 to 3
years to complete.




Page 8                  GAO-03-411 Linking Staffing Needs to Embassy Construction
Figure 2: Major Milestones in Planning for a New Embassy Compound Scheduled
for Fiscal Year 2007 Funding




To ensure that projects in the long-range plan proceed on schedule and at
cost, OBO will not request additional funding to accommodate changes
made after funding requests are submitted to the Congress. Once OBO
receives appropriations for construction projects, it moves immediately to
complete the design of a new compound and secure a contracting firm for
the project. Changes to staffing projections after this point may result in


Page 9                   GAO-03-411 Linking Staffing Needs to Embassy Construction
redesign and could lead to lengthy delays and additional costs, according
to an OBO official. For example, large changes generally require that
materials already purchased for the project be replaced with new
materials. According to OBO, there is little room for flexibility after the
budget is submitted given budgetary and construction time frames.
However, OBO does include a margin of error in the designs for all new
embassy compounds, which typically allows for a 5-10 percent increase in
building size to accommodate some additional growth.

A key component of the planning process outlined in figure 2 is the
development of staffing projections for new embassy compounds. Staffing
projections present the number of staff likely to work in the facility and
the type of work they will perform. These are the two primary drivers of
the size and cost of new facilities. Individual embassies and consulates, in
consultation with headquarters bureaus and offices, are responsible for
developing the staffing projections, which OBO then uses to design the
new compounds and prepare funding requests. As the government’s
overseas real property manager, OBO must rely on the other bureaus in
the State Department and other U.S. agencies for policy and staffing
decisions. OBO is not in a position to independently validate the
projections once the geographic bureaus have given their approval.

To help ensure that new compounds are designed as accurately as
possible, OBO designed a system for collecting future staffing
requirements, as shown in figure 3, that encourages the active
participation of embassy personnel, officials in State’s geographic bureaus,
and officials from all other relevant federal agencies.15 This process also
calls upon embassy management and geographic bureaus to review and
validate all projections before submitting them to OBO. OBO generally
gives embassies and geographic bureaus the opportunity to submit staffing
projections several times before they are finalized.




15
 As the Overseas Presence Advisory Panel (OPAP) reported in 1999, there are more than
30 federal departments or agencies operating overseas, including the Departments of State
and Defense, as well as agencies such as the Federal Bureau of Investigation, the U.S.
Commercial Service, and the Foreign Agricultural Service.




Page 10                      GAO-03-411 Linking Staffing Needs to Embassy Construction
Figure 3: Components of OBO’s Staffing Projection Process




Finally, it should be noted that while OBO takes the lead in designing and
constructing all buildings on new embassy compounds, OBO is not always
responsible for securing funding for all compound buildings. Pursuant to
an informal agreement between OBO and USAID, USAID will secure
funding for a separate annex in a compound when it requires desk space
for 50 or more employees. However, if USAID projects it will need fewer
than 50 desks, its offices will be in the chancery building in the compound,
which State would fund, as it would for all U.S. government agencies in



Page 11                  GAO-03-411 Linking Staffing Needs to Embassy Construction
                              the chancery. According to OBO and USAID headquarters officials, there is
                              some flexibility in the maximum number of USAID desk spaces allowed in
                              a chancery, and this issue is handled on a case-by-case basis.


                              Although OBO has designed a reasonable approach to developing staffing
Systematic Effort to          projections, we found that it was not adopted uniformly across all of the
Project Staffing Needs        embassies and geographic bureaus that we studied. While some of the
                              embassies we examined have conducted relatively thorough analyses of
for New Embassies Is          their future needs, in other cases the process has been managed poorly,
Lacking                       both in the field and at headquarters offices, thus raising concerns about
                              the validity of the projected requirements. For example, with few
                              exceptions, officials at the posts we visited did not appreciate the
                              seriousness of the staffing projection process as it relates to the size and
                              cost of new diplomatic facilities. Moreover, none of the embassies we
                              contacted received formal, detailed guidance on how to develop
                              projections. In addition, they had no systematic approach, such as the one
                              presented in our framework, to conducting rightsizing analyses that would
                              ensure that projected needs are the minimum necessary to support U.S.
                              national security interests. In general, for the embassies we contacted,
                              rightsizing exercises were largely limited to predictions of future
                              workload, priorities, and funding levels, and did not include analyses of
                              other factors, such as operational costs. Moreover, none of the embassies
                              we contacted conducted a rightsizing analysis of existing staffing levels
                              prior to projecting future requirements. We also found that posts did not
                              maintain documentation of the assessments they conducted when
                              completing staffing projections, and that State’s geographic bureaus did
                              not consistently vet posts’ projections prior to submitting them to OBO.
                              Finally, the process was further complicated by other factors, such as
                              frequent personnel turnover and breakdowns in communication among
                              multiple agencies.


Efforts to Develop Staffing   We found that staffing projection exercises were not consistent across all
Projections Vary              of the embassies we contacted, and, indeed, State officials acknowledged
Significantly across          that efforts to develop and validate projections were informal and
                              undisciplined. Some embassy management teams were more engaged in
Embassies and Geographic      the projection process than others. For instance, at several of the U.S.
Bureaus                       embassies we contacted, chiefs of mission or deputy chiefs of mission led
                              interagency, or country team, meetings to discuss the embassy’s long-term
                              priorities and the staffing implications. In addition, management followed
                              up with agency representatives in one-on-one meetings to discuss each
                              agency’s projected requirements. However, management teams at other


                              Page 12                 GAO-03-411 Linking Staffing Needs to Embassy Construction
embassies we contacted, such as the U.S. embassies in Belgrade, Serbia
and Montenegro, and Tbilisi, Georgia, were less engaged and had relied
mainly on administrative officers to collect information from each agency
informally. In Belgrade, officials acknowledged that the projection
exercise was not taken seriously and that projections were not developed
using a disciplined approach. In Tbilisi, a failure to document recent
growth in current staffing levels led to final projections that were too low.
OBO has had to meet immediate additional requirements by using all of
the growth space it built into the original compound design and reducing
the amount of common space, such as conference rooms, to accommodate
additional offices. Therefore, the new facility may be overcrowded upon
opening, embassy officials said. If embassy or headquarters officials
communicated earlier to OBO the likelihood of large staffing increases by
the time construction was completed, OBO might have been able to better
accommodate these needs in its plans.

In addition to inconsistencies in the field, we found that officials in the
geographic bureaus in Washington, D.C., whose staff are responsible for
working most closely with embassies and consulates, also have varied
levels of involvement in the projection process. Officials with whom we
spoke in State’s geographic bureaus acknowledged that there is no
mechanism to ensure the full participation of all relevant parties. When
these officials were more involved, we have more confidence in the
accuracy of the projections submitted to OBO. For example, officials from
the U.S. Embassy in Beijing, China, said that representatives from their
geographic bureau in Washington, D.C., have been very involved in
developing their projections. They reported that the geographic bureau
contacted all federal agencies that might be tenants at the new embassy—
even agencies that currently have no staff in the country—to determine
their projected staffing needs. Conversely, officials at Embassy Belgrade
said State’s geographic bureau did not request any justifications for or
provide any input into the final projections submitted to OBO. Officials in
the geographic bureau acknowledged that the bureau does not require
formal justification for embassies’ projected staffing requirements for new
compounds. Given the weaknesses in how staffing projections were
developed in Embassy Belgrade, State has little assurance that the planned
compound will be the right size.




Page 13                 GAO-03-411 Linking Staffing Needs to Embassy Construction
Embassies Do Not Receive    Our analysis indicates that the State Department is not providing
Consistent, Formal          embassies with sufficient formal guidance on important time lines in the
Guidance on Staffing        projection process or factors to consider when developing staffing
                            projections for new embassy compounds. Officials from each of the 14
Projection Process and      posts we contacted reported that their headquarters bureaus had not
Importance of Rightsizing   provided specific, formal guidance on important factors to consider when
                            developing staffing projections. One geographic bureau provided its
                            embassies with a brief primer on the process by which State determines
                            priorities for new embassy compounds that broadly described the
                            projection process and OBO’s long-range plan. However, we found that
                            State generally did not advise embassies to consider factors such as (1)
                            anticipated changes in funding levels, (2) the likelihood that policy
                            changes could result in additional or fewer work requirements, (3)
                            linkages between agencies’ annual operating costs and the achievement of
                            embassy goals, (4) costs associated with their presence in a new facility,
                            or (5) alternative ways to consolidate certain positions among neighboring
                            embassies, among others. Absent such guidance from Washington, D.C.,
                            we found that factors that embassy officials considered when developing
                            projections varied on a case-by-case basis. Officials at Embassy Sarajevo,
                            for example, conducted a relatively thorough analysis of their future
                            needs, including consulting World Bank indicators for Bosnia-Herzegovina
                            to determine the likelihood of increased U.S. investment in the region and
                            link future staffing needs accordingly. In addition, a consular affairs
                            officer analyzed the likelihood that new security requirements for consular
                            sections, which may allow only American consular officers to screen visa
                            applicants, would boost that section’s staffing requirements.

                            Other embassies we contacted conducted less thorough analyses of future
                            needs. For example, officials from several of the other embassies we
                            contacted reported that they largely relied on information from annual
                            Mission Performance Plans16 to justify future staffing needs in a new
                            compound. Although the performance plan links staffing to budgets and
                            performance, and may include goals related to improving diplomatic
                            facilities, it is a near-term tool. For example, performance plans for fiscal
                            year 2004 identify goals and strategies only for that fiscal year. For a
                            project scheduled for 2004 funding, an embassy may go through two or
                            three additional performance planning cycles before embassy staff move



                            16
                              Mission Performance Plans are annual embassy plans that link performance goals and
                            objectives to staffing and budgetary resources needed to accomplish them in the given
                            fiscal year.




                            Page 14                     GAO-03-411 Linking Staffing Needs to Embassy Construction
                               onto a new compound. The performance plan, while a reasonable starting
                               point, is not directly linked to long-term staffing requirements and by itself
                               is not sufficient to justify staffing decisions for new compounds.

                               Indeed, an official from one geographic bureau said that while the bureau
                               works with the embassies in developing staffing projections, it generally
                               does not send out additional or separate formal guidance to all relevant
                               embassies. Although OBO informed the geographic bureaus that final
                               projections for fiscal year 2004 funding would be due in spring 2002,
                               officials at some of the embassies we examined were unaware of this
                               deadline. For example, officials at the U.S. Embassy in Harare, Zimbabwe,
                               said they lacked information on the major time frames in the funding
                               process for their new compound. Officials at the Embassy Belgrade said
                               they were unaware that the projections they submitted to OBO in spring
                               2002 would be their final chance to project future staffing needs, and that
                               the results would be used as the basis for the new compound’s design. In
                               other words, they did not know that additional requirements they might
                               submit would not result in a larger-sized building.

Use of Rightsizing Exercises   According to OBO, individual embassies should have conducted
                               rightsizing exercises before submitting the staffing projections used to
                               develop the July 2001 version of the long-range plan. In addition, in
                               January 2002, OBO advised all geographic bureaus that staffing projections
                               should incorporate formalized rightsizing initiatives early in the process so
                               that building designs would accurately reflect the embassies’ needs.
                               However, OBO is not in a position to know what processes the geographic
                               bureaus use when developing staffing projections. Indeed, OBO officials
                               stated that they cannot hold the geographic bureaus accountable for
                               policy-related decisions and can only assume that rightsizing exercises
                               have been incorporated into the projection process.

                               The degree to which each geographic bureau stressed the importance of
                               rightsizing staffing projections differed across the embassies we studied.
                               We found that agencies at the posts we examined were not consistently
                               considering the three critical elements of diplomatic operations outlined in
                               our rightsizing frameworkphysical security of facilities, mission
                               priorities and responsibilities, and operational costs—when determining
                               future staffing requirements. In general, for these posts, rightsizing
                               exercises were largely limited to predictions of future funding levels and
                               likely workloads. For example, officials at each of the seven posts we
                               visited reported that staffing projections were, in large part, linked to
                               anticipated funding levels. In Skopje, for example, USAID officials
                               estimated that funding levels for some programs, such as the democracy


                               Page 15                  GAO-03-411 Linking Staffing Needs to Embassy Construction
                               and governance program, could decline significantly over the next 5 years
                               and could result in a reduction in staff assigned to these areas.

                               Although these embassies had considered mission requirements as part of
                               the projection process, they did not consistently consider other factors
                               that are mentioned above, such as options for relocating certain positions
                               to regional centers or consolidating other positions among neighboring
                               embassies. Moreover, decision makers at these embassies used current
                               staffing levels as the basis for projecting future requirements. None of the
                               posts we contacted conducted a rightsizing analysis of existing staffing
                               levels prior to projecting future requirements. In addition, we found that
                               most agencies with staff overseas are not consistently considering
                               operational costs when developing their staffing projections. The
                               President’s rightsizing initiative has emphasized cost as a critical factor in
                               determining overseas staffing levels. However, during our fieldwork, only
                               USAID officials consistently reported that they considered the
                               implications of anticipated program funding on staffing levels and the
                               resulting operational costs. Furthermore, we found only one instance
                               where an agency, the U.S. Commercial Service, reported that as part of its
                               overseas staffing process, it compares operating costs of field offices with
                               the performance of those offices.


Little Documentation of        At each of the seven posts we visited, we found little or no documentation
Comprehensive                  to show that staff had completed a comprehensive assessment of the
Assessments of Long-term       number and types of people they would need in the year that their new
                               embassy would be completed. As part of our prior work on rightsizing, we
Staffing Needs                 developed examples of key questions that may be useful for embassy
                               managers in making staffing decisions. These include, but are not limited
                               to the following questions:

                           •   Is there adequate justification for the number of employees from each
                               agency compared to the agency’s mission?
                           •   What are the operating costs for each agency at the embassy?
                           •   To what extent could agency program and/or routine administrative
                               functions (procurement, logistics, and financial management functions) be
                               handled from a regional center or other locations?

                               However, we did not find evidence of these types of analyses at the posts
                               we visited. Officials from several embassies told us they had considered
                               these factors; yet, they did not consistently document their analyses or the
                               rationales for their decisions. Although officials at the embassies we
                               visited said that these types of considerations are included as part of their



                               Page 16                  GAO-03-411 Linking Staffing Needs to Embassy Construction
                             annual Mission Performance Plan process, there was little evidence of
                             analyses of long-term needs. Moreover, we found little or no
                             documentation explaining how previous projections were developed or
                             the justifications for these decisions. For example, by the time the new
                             embassy compound is completed in Yerevan, Armenia, the embassy will be
                             four administrative officers removed from the person who developed the
                             original staffing requirements, and current embassy officials had no
                             documentation on previous projection exercises or the decision-making
                             processes. Thus, there was generally no institutional memory of and
                             accountability for previous iterations of staffing projections. As a result,
                             future management teams will not have accurate information on how or
                             why previous decisions were made when they embark on efforts to update
                             and finalize staffing projections.


Staffing Projections Are     According to OBO, the relevant geographic bureaus are expected to
Not Vetted Consistently by   review and verify the staffing projections developed by individual
Geographic Bureaus           embassies and confirm these numbers with other agencies’ headquarters
                             before they are submitted to OBO. However, we found that the degree to
                             which the staffing projections were reviewed varied. For example, officials
                             at Embassy Belgrade reported that their geographic bureau was not an
                             active participant in projection exercises. But officials at Embassy
                             Sarajevo reported that officials from the same geographic bureau were
                             involved in the projection process and often requested justifications for
                             some decisions. In addition, we found little evidence to show that staffing
                             projections were consistently vetted with all other agencies’ headquarters
                             to ensure that the projections were as accurate as possible. Indeed, State
                             officials acknowledged that (1) State and other agencies’ headquarters
                             offices are not held accountable for conducting formal vetting exercises
                             once projections are received from the embassies; (2) there is no formal
                             vetting process; and, (3) the geographic bureaus expect that officials in the
                             field consult with all relevant agencies; therefore, the bureaus rarely
                             contact agency headquarters officials.


Additional Factors           We found additional factors that further complicate the staffing projection
Complicate Staffing          process. First, frequent turnover of embassy personnel responsible for
Projection Process           developing staffing projections results in a lack of continuity in the
                             projection process. This turnover and the lack of formal documentation
                             may prevent subsequent embassy personnel from building upon the work
                             of their predecessors. Second, we found that coordinating the projected
                             needs of all agencies could be problematic. For example, some agencies
                             may decide not to be located in the new compound, while others, such as


                             Page 17                 GAO-03-411 Linking Staffing Needs to Embassy Construction
                              USAID, may have different requirements in the new compound. However,
                              we found that these issues were not always communicated to embassy
                              management in a timely fashion, early in the projection process.

Lack of Continuity in         Frequent turnover in embassy personnel can contribute to problems
Projection Process            obtaining accurate staffing projections. Embassy staff may be assigned to
                              a location for only 2 years, and at some locations, the assignment may be
                              shorter. For instance, the U.S. Office in Pristina, Kosovo, and the U.S.
                              Embassy in Beirut, Lebanon, have only a 1-year assignment requirement.
                              Given that personnel responsible for developing the projections could
                              change from year to year, and that posts may go through several updates
                              before the numbers are finalized, the continuity of the projection process
                              is disrupted each year as knowledgeable staff are transferred to new
                              assignments. Officials in Kosovo reported that the frequent turnover of
                              administrative personnel has forced incoming staff to rebuild institutional
                              knowledge of the projection process each year.

Breakdowns in Communication   Part of the complexity of the projection process is the difficulty in
among Multiple Agencies       coordinating staffing requirements for multiple agencies in a given
                              location. Agencies’ space needs in the main office building may differfor
                              instance, some may require classified space, which is more expensive to
                              construct and thus has different implications for the design and cost of a
                              new building than unclassified space. However, agencies requesting office
                              space may not currently be situated in the country in question and, thus,
                              communication between them and embassy managers is difficult. For
                              example, embassy management in Yerevan, Armenia, stated that one
                              agency without personnel currently in Armenia did not notify the
                              ambassador that it planned to request controlled access space in the new
                              embassy. Embassy officials stated they learned of this only when floor
                              plans for the new chancery were first delivered. These kinds of issues
                              should be communicated to embassy managers in the early stages of the
                              projection process so that the final projections are based on the most
                              accurate information available. Embassy officials in Rangoon, Burma, for
                              example, reported that close interaction among agencies at post and OBO
                              during the staff projection process, under the leadership of the deputy
                              chief of mission and the administrative officer, kept OBO apprised of
                              changes to requirements early enough in the process that it was before the
                              budget proposal was submitted to the Congress and the projections were
                              locked.

Failure to Provide Timely     Following the 1998 embassy bombings, a law was passed requiring that all
Requests for Co-location      U.S. agencies working at posts slated for new construction be located on
Waivers                       the new embassy compounds unless they are granted a special co-location


                              Page 18                 GAO-03-411 Linking Staffing Needs to Embassy Construction
                               waiver.17 However, agencies are not required to submit these waiver
                               requests prior to submitting their final staffing projections to OBO. To
                               ensure that OBO has the most accurate projections, it is imperative that
                               waiver requests be incorporated early in the staffing projection process so
                               that OBO is not designing and funding buildings that are too large or too
                               small. In Yerevan, for example, the Department of Agriculture office
                               projected the need for 26 desks in the new chancery, yet officials in
                               Yerevan plan to use only 13 of these desks and to house the remaining
                               personnel in their current office space. However, Agriculture has not yet
                               requested a waiver. If Agriculture receives a waiver and proceeds
                               according to current plans, OBO will have designed space and requested
                               funding for 13 extra desks for Agriculture staff. We found other instances
                               where agencies had not requested a waiver before submitting final
                               projections. In Sarajevo, for example, the Departments of the Defense,
                               Treasury, and Justice have staff in host country ministries they advise.
                               However, officials at Embassy Sarajevo, including the regional security
                               officer, were uncertain about which agencies would be requesting a waiver
                               for the new compound. Embassy officials acknowledged that these
                               decisions must be made before the staffing projections are finalized.

Separate Funding for USAID     In compounds where USAID is likely to require desk space for more than
Annexes Could Complicate the   50 employees, it is required to secure funding in its own appropriations for
Projection Process             an annex building on the compound. However, officials from at least two
                               of the embassies we examined had trouble determining where USAID
                               would be located, and this kind of problem could delay planning and
                               disrupt OBO’s overall plan for concurrent construction of the USAID
                               annex with the rest of the compound. For example, at Embassy Yerevan,
                               confusion among USAID officials in Washington and the field over
                               whether USAID would fund a separate annex has caused construction and
                               funding on the annex to fall behind schedule. Therefore, USAID staff will
                               not move to the new site concurrent with the rest of the embassy’s staff.
                               Rather, USAID may be forced to remain at the current, insecure
                               facilityat an additional costuntil completion of its annex, unless
                               alternative arrangements can be made.




                               17
                                 22 U.S.C. § 4865 requires the Secretary of State, in selecting sites for new U.S. diplomatic
                               facilities abroad, to ensure that all U.S. personnel under chief of mission authority be
                               located on the site. However, the Secretary of State may waive this requirement if the
                               Secretary, together with the heads of those agencies with personnel who would be located
                               off site, determines that security considerations permit off site location and that it is in the
                               U.S. national interests.




                               Page 19                        GAO-03-411 Linking Staffing Needs to Embassy Construction
                      We also found a related problem in Sarajevo, Bosnia-Herzegovina, where
                      USAID officials were concerned about having to build a separate annex.
                      Current staffing levels and projections exceed the 50-desk level, which will
                      require USAID to fund the construction of an annex on the compound.
                      However, the assistance program may be declining significantly soon after
                      the completion of the new compound and, as a result, the office may need
                      far fewer staff. Thus, USAID may be constructing an annex that is
                      oversized or unnecessary by the time construction is completed or soon
                      after. USAID officials in Sarajevo acknowledged they would need to
                      coordinate with embassy management and their headquarters offices
                      regarding the decision to build a separate annex so that OBO has the most
                      accurate projections possible.

                      The issue of USAID annex construction is further complicated by difficulty
                      coordinating funding schedules. One of the key assumptions of the long-
                      range plan is that where USAID requires a separate annex, construction
                      will coincide with the State-funded construction projects. However,
                      annual funding levels for USAID construction have been insufficient to
                      keep chancery and USAID annex construction on the same track in some
                      countries. In Tbilisi, Georgia, for example, funding for the USAID annex
                      has fallen behind State Department funding by 2 to 3 fiscal years.
                      According to USAID officials in Washington, D.C., two-track construction
                      could lead to security concerns, work inefficiencies, and additional costs.
                      Because USAID is required to secure funding for its annexes separate from
                      State’s funding for new compounds, it is imperative that decisions
                      regarding the future location of USAID personnel be made early in the
                      staffing projection process to avoid additional security or financial risks.


                      The State Department, which historically has been responsible for funding
Government Aims to    the construction and maintenance of U.S. embassies and consulates,
Distribute Costs of   recently proposed a capital security cost-sharing plan that would require
                      federal agencies to help fund its embassy construction program.
Overseas Facilities   Traditionally, U.S. government agencies other than State have not been
among Users           required to help fund capital improvements of U.S. embassies and
                      consulates. OMB is examining State’s and other cost-sharing proposals
                      designed to create more discipline in the process for determining overseas
                      staffing requirements. The administration believes that if agencies were
                      required to pay a greater portion of the total costs associated with
                      operating overseas facilities, they would think more carefully before
                      posting personnel overseas. In spring 2003, OMB will lead an interagency
                      committee to develop a cost-sharing mechanism that would be
                      implemented in fiscal year 2005. This new mechanism could require


                      Page 20                 GAO-03-411 Linking Staffing Needs to Embassy Construction
                             agencies to help fund the construction of new embassies and consulates.
                             While it may be reasonable to expect that agencies should pay full costs
                             associated with their overseas presence, many factors and questions must
                             be addressed prior to implementing an effective and equitable cost-sharing
                             mechanism.


State’s Proposed Capital     The State Department has presented a capital security cost-sharing plan to
Security Cost-sharing Plan   OMB that would require agencies to help fund State’s capital construction
                             program. State’s proposal calls for each agency to pay a proportion of the
                             total construction program costs based on its total overseas staffing
                             levels.18 Agencies would be charged different costs based on whether their
                             staff are located in classified or nonclassified access areas.19 Agencies
                             would be assessed a fee each year, which would be updated annually, until
                             the building program is completed. An added benefit of such a program,
                             State believes, is it would provide incentive for agencies to place greater
                             consideration of the total costs associated with their presence abroad,
                             which in turn, would lead to greater efforts to rightsize overseas presence.
                             Table 1 shows an estimated distribution of costs for each agency once the
                             program is fully implemented, based on State’s May 2001 survey data.




                             18
                              Each agency’s proportion was based on a May 2001 State Department survey of U.S.
                             government employees working overseas under the authority of chiefs of mission.
                             19
                              Based on data from State’s May 2001 survey, the total construction costs for controlled
                             access, or classified, areas are about 40 percent per desk more than the total costs for
                             construction of noncontrolled access, or unclassified, areas.




                             Page 21                      GAO-03-411 Linking Staffing Needs to Embassy Construction
                            Table 1: Notional Distribution of Costs under State’s Capital Security Cost-sharing
                            Proposal Based on a May 2001 Overseas Personnel Survey

                                                                                                                Percentage
                                                                                                                          a
                                Agency                                                      Annual cost            of cost
                                Department of State                                        $775,324,345              55.38
                                United States Agency for International Development          187,627,814              13.40
                                Department of Defense                                       183,889,473              13.13
                                Department of Justice                                        77,458,156                5.53
                                Department of Commerce                                       48,000,356                3.43
                                Department of the Treasury                                   26,956,128                1.93
                                Department of Agriculture                                    24,016,819                1.72
                                International Broadcasting Bureau                            19,156,184                1.37
                                Department of Health and Human Services                      13,383,305                0.96
                                Foreign Broadcast Information Service                         8,914,998                0.64
                                Library of Congress                                           8,008,619                0.57
                                North Atlantic Treaty Organization                            7,274,495                0.52
                                Department of Veterans Affairs                                5,973,095                0.43
                                Department of Transportation                                  5,579,943                0.40
                                American Battle Monuments Commission                          4,004,309                0.29
                                National Aeronautics and Space Administration                 1,148,350                0.08
                                United States Trade Representative                            1,023,823                0.07
                                Department of Energy                                            795,083                0.06
                                Department of the Interior                                      667,385                0.05
                                National Science Foundation                                     241,601                0.02
                                Environmental Protection Agency                                 166,846                0.01
                                Federal Emergency Management Agency                             141,493                0.01
                                General Services Administration                                 100,108                0.01
                                Department of Labor                                              80,534                0.01
                                Department of Housing and Urban Development                      66,738                0.00
                                Total                                                    $1,400,000,000             100.00
                            Source: Department of State.
                            a
                             The percentage of cost reflects the proportion of all overseas employees from a particular agency
                            and the type of space occupied by its staff. Space for State Department personnel associated with
                            the International Cooperative Administrative Support Services (ICASS) system and for Marine
                            Security Guards would not be charged to State or to the Marine Corps. Rather, these costs would be
                            distributed among all agencies at post because all agencies benefit from the services provided by
                            ICASS and the Marines.




Efforts by OMB to Develop   As part of the President’s Management Agenda, OMB is leading an effort
a Cost-sharing Mechanism    to develop a cost-sharing mechanism that would require users of U.S.
                            overseas facilities to share the costs associated with those facilities to a




                            Page 22                        GAO-03-411 Linking Staffing Needs to Embassy Construction
greater extent than currently required.20 OMB and the administration
believe that such a requirement would provide agencies with an incentive
to scrutinize long-term staffing more thoroughly when assessing their
overseas presence. OMB officials also believe greater cost sharing could
provide a clear linkage between the costs of new facilities that result
directly from agencies’ presence.

In its November 1999 report, the Overseas Presence Advisory Panel
(OPAP) noted a lack of cost sharing among agencies that use overseas
facilities, particularly as it related to capital improvements and
maintenance of sites. As a result, OPAP recommended that agencies be
required to pay rent in government-owned buildings in foreign countries to
cover current operating and maintenance costs. In effect, agencies would
pay for space in overseas facilities just as they would for domestic office
space operated by the General Services Administration. In response to the
OPAP recommendation, a working group consisting of staff from the
Departments of Commerce, Defense, Justice, State, and Transportation;
the Central Intelligence Agency; OMB; and USAID was created to develop
a mechanism by which agencies would be charged for the use of overseas
facilities. In summer 2000, the working group recommended to the
Interagency Subcommittee on Overseas Facilities that agencies be
assessed a surcharge based on the space they actually use in overseas
facilities.21 Like State’s more recent proposal, the working group’s plan
was designed to help fund construction of new embassy compounds, but
the plan was not implemented.

In January 2003, OMB notified each federal agency with overseas staff how
State’s capital cost-sharing proposal would affect the agencies’ respective
budgets in fiscal year 2004. Because the State proposal and OMB
assessment were completed after the budget submission deadline, OMB
told agencies that they would not be charged in 2004; however, OMB did
say that a capital construction surcharge would be phased in over 5 years
beginning in 2005. In addition, agencies were invited to participate in an
interagency working group charged with developing an equitable cost-
sharing program this year. Also during 2003, OMB is requiring that



20
  Agencies contribute funding to support the ICASS system, which funds common
administrative support functions, such as travel, mail and messenger, vouchering, and
telephone services, that all agencies at a post may use.
21
  This subcommittee was part of the Interagency Overseas Presence Board, which was
formed to implement OPAP’s recommendations.




Page 23                      GAO-03-411 Linking Staffing Needs to Embassy Construction
                                 agencies complete a census of all current overseas positions and an
                                 assessment of agencies’ future staffing plans as part of their budget
                                 requests for 2005. The results of this census will become the baseline for
                                 how future cost-sharing charges are determined.


Factors to Consider When         The impact of agencies’ staffing levels on the costs associated with
Developing a Capital Cost-       maintaining and improving the physical infrastructure of overseas facilities
sharing Mechanism                is an important factor agencies should consider when placing staff
                                 overseas. However, agency personnel in Washington and in the field, and
                                 embassy management teams with whom we spoke, expressed concerns
                                 over many factors involved in implementing a new cost-sharing
                                 arrangement. Therefore, as OMB and the interagency committee work to
                                 develop a new cost-sharing mechanism, they also need to develop
                                 consensus on many issues, including

                             •   how the cost-sharing mechanism would be structured—for example, as
                                 capital reimbursement for new embassy compounds, or as a rent
                                 surcharge applied to all embassy occupants worldwide or just those at
                                 new embassy compounds;
                             •   the basis for fees—such as full reimbursement of capital costs in a year or
                                 amortized over time, or rent based on local market rates, an average of
                                 market rates within a region, or one flat rate applied worldwide;
                             •   how charges would be assessed—based on the amount of space an agency
                                 uses or on its per capita presence—and whether charges would be applied
                                 on a worldwide level, at the post level, or just for posts receiving new
                                 facilities;
                             •   whether different rates would be applied to staff requiring controlled
                                 access rather than noncontrolled access space;
                             •   whether agencies would be charged for staff not located within facilities
                                 operated by the State Department—for example, USAID staff working in
                                 USAID-owned facilities outside an embassy compound or staff who work
                                 in office space at host country ministries and departments;
                             •   if and how costs associated with staff providing shared services would be
                                 offset, and whether costs associated with Marine and other security
                                 services would be covered;
                             •   how fees would be paid and who would collect the payments—whether
                                 through an interagency transfer of funds or through an existing structure
                                 such as ICASS; and
                             •   whether potential legal barriers exist and, if so, what legislation would be
                                 necessary to eliminate them.

                                 In addition, the interagency committee must develop consensus on the
                                 underlying purpose of capital cost sharing, demonstrate how such a


                                 Page 24                 GAO-03-411 Linking Staffing Needs to Embassy Construction
                      mechanism would benefit users of overseas facilities, and determine how
                      the mechanism can be implemented with the greatest fairness and equity.
                      Finally, the committee must figure out how to minimize the management
                      burden of whatever mechanism it develops.


                      The State Department has embarked on an expansive capital construction
Conclusions           program designed to provide safe, secure, and cost-effective buildings for
                      employees working overseas. This program will require a substantial
                      investment of resources. Given that the size and cost of new facilities are
                      directly related to anticipated staffing requirements for these posts, it is
                      imperative that future staffing needs be projected as accurately as
                      possible. Developing staffing projections is a difficult exercise that
                      requires a serious effort by all U.S. agencies to determine their
                      requirements 5 to 7 years in the future. However, we found that efforts to
                      develop these projections at the embassies we studied were undisciplined
                      and did not follow a systematic approach. Therefore, the U.S. government
                      risks building new facilities that are designed for the wrong number of
                      staff. We believe that additional, formal guidance and the consistent
                      involvement of the geographic bureaus would help mitigate the cost and
                      security risks associated with wrong-sized embassies. Although any
                      staffing requirements could be affected by changing world events and
                      circumstances, we believe a systematic process would help ensure that the
                      construction of new embassies is based on the best projections possible
                      and most accurate information.

                      Costs associated with the physical infrastructure of facilities are important
                      factors that agencies need to consider when deciding whether to assign
                      staff to overseas locations. Recent proposals to implement a new cost-
                      sharing mechanism may help add greater discipline to the staffing
                      projection and rightsizing processes. However, in deciding how costs will
                      be shared, decision makers will need to address issues such as fairness
                      and equity, while designing a system that is relatively easy to administer.


                      To ensure that U.S. agencies are conducting systematic staffing projection
Recommendations for   exercises, we recommend that the Secretary of State provide embassies
Executive Action      with formal, standard, and comprehensive guidance on developing staffing
                      projections for new embassy compounds. This guidance should address
                      factors to consider when developing projections, encourage embassywide
                      discussions, present potential options for rightsizing, and identify
                      important deadlines in the projection process, including planning, funding,
                      and construction time lines. To ensure continuity in the process, we also


                      Page 25                 GAO-03-411 Linking Staffing Needs to Embassy Construction
                     recommend that the Secretary of State require that chiefs of mission
                     maintain documentation on the decision-making process including
                     justifications for these staffing projections. Finally, we recommend that
                     the Secretary require all chiefs of mission and geographic bureaus to
                     certify that the projections have been reviewed and vetted before they are
                     submitted to OBO.


                     State and USAID provided written comments on a draft of this report (see
Agency Comments      apps. II and III). OMB provided oral comments. State agreed with our
and Our Evaluation   conclusion that it is essential that staffing projections for new embassy
                     compounds be as accurate as possible. State also said it plans to
                     implement our recommendations fully by creating a standard and
                     comprehensive guide for developing staffing projections, which it
                     anticipates completing by late April 2003. State said this guide would
                     provide posts and geographic bureaus with a complete set of required
                     steps, the timelines involved, and the factors to consider when developing
                     staffing projections. Moreover, State agreed with our recommendations
                     that posts should retain documentation on the processes they used to
                     develop staffing projections, and that chiefs of mission and geographic
                     bureaus should certify staffing projections. State provided technical
                     comments related to our cost-sharing discussion, which were incorporated
                     into the text, where appropriate.

                     USAID also agreed that U.S. agencies do not take a consistent approach to
                     determining long-term staffing needs for new embassy compounds.
                     Specifically, USAID supported the recommendation calling for standard
                     and comprehensive guidance to assist posts when developing staffing
                     projections. USAID also expressed deep concerns about the security and
                     cost implications that result from delayed funding for their facilities on
                     new embassy compounds. Indeed, USAID acknowledged that its
                     employees will continue to work in facilities at two overseas locations that
                     do not meet minimal physical security standards even though other
                     agencies have been moved to new embassy compounds. USAID said that
                     the lack of funding has prevented USAID and State from coordinating the
                     construction of new facilities.

                     In oral comments, OMB said it agrees with our conclusions regarding both
                     the staffing projection process and cost sharing, and with our three
                     recommendations to the Secretary of State. In addition, OMB suggested it
                     would be useful to have an independent body review the vetted staffing
                     projections prior to their submission to OBO, to augment the guidance
                     developed by State, and ensure that agencies and embassy management


                     Page 26                 GAO-03-411 Linking Staffing Needs to Embassy Construction
              examine rightsizing options. OMB intends to address this issue with the
              interagency cost-sharing committee. OMB also stated it is concerned
              about the security and cost implications that can result from funding
              delays for USAID annexes, and it is studying ways to overcome this
              problem. OMB also provided technical comments, which we addressed in
              the text, as appropriate.


              To determine how U.S. agencies are developing staffing projections for
Scope and     new embassy compounds, we analyzed the State Department’s Long-
Methodology   Range Overseas Buildings Plan and interviewed State Department officials
              from OBO, the Office of Management Policy, and the six geographic
              bureaus. We also interviewed headquarters officials from agencies with
              overseas personnel, including officials from the Departments of
              Agriculture, Commerce, Defense, Justice, and the Treasury, and officials
              from USAID and the Peace Corps. In addition, we reviewed reports on
              embassy security and overseas staffing issues, including those of the
              Accountability Review Boards and OPAP, and we met with officials from
              OMB to discuss how they are implementing the overseas presence
              initiatives in the President’s Management Agenda.

              To further assess agencies’ efforts to develop long-term staffing
              projections and the extent to which agencies were conducting rightsizing
              exercises as part of the projection process, we visited seven posts in
              State’s Bureau of European and Eurasian Affairs—Yerevan, Armenia;
              Baku, Azerbaijan; Sarajevo, Bosnia-Herzegovina; Tbilisi, Georgia; Pristina,
              Kosovo; Skopje, Macedonia; and Belgrade, Serbia and Montenegro—where
              State is planning to construct new compounds from fiscal years 2002
              through 2007. We selected these two groups of neighboring posts—the
              Balkans and Caucasus posts—because State is planning to complete a
              significant number of construction projects in these subregions. By
              focusing on these subregions within Europe and Eurasia, we were able to
              assess the extent to which these posts considered combining services or
              positions when developing staffing projections for their new compounds.
              At each post, we interviewed management teams (ambassadors/chiefs of
              mission, deputy chiefs of mission, and administrative officers),
              representatives of U.S. agencies, and other personnel who participated in
              the staffing projection process. To examine the staffing projection process
              at embassies in other geographic bureaus, we also conducted structured
              telephone interviews with administrative officers or deputy chiefs of
              mission from seven other embassies slated for new compounds—
              Rangoon, Burma; Beijing, China; Quito, Ecuador; Accra, Ghana; Beirut,
              Lebanon; Panama City, Panama; and Harare, Zimbabwe. These embassies


              Page 27                 GAO-03-411 Linking Staffing Needs to Embassy Construction
would have just recently completed or were about to complete their
staffing projection process. In all, the posts we contacted represent about
16 percent of the new embassy compound construction projects in OBO’s
Long-Range Overseas Buildings Plan for 2002 through 2007, and 23 percent
of those construction projects in the plan expected to be funded by fiscal
year 2005.22 We also reviewed planning documents, staffing patterns,
staffing projections for the new building, and other documentation
provided by the posts.

To examine the issue of capital cost sharing for construction of new
diplomatic facilities, we solicited the views of agency headquarters staff
and the management teams of our case study posts to determine the
extent to which cost considerations were factored into the decision-
making process. We also solicited the views of agency headquarters staff
and the management teams of our case study posts to determine the
potential advantages and disadvantages of different capital cost-sharing
programs. In particular, we interviewed OBO officials and reviewed
documentation supporting its capital security cost-sharing proposal. We
also held discussions with OMB officials on their plans for developing and
implementing an equitable cost-sharing program and on potential issues
for the planned interagency working group. Finally, we attended meetings
of OBO’s Industry Advisory Panel where cost sharing was discussed by
private sector and industry professionals. We also interviewed staff from
the International Facility Management Association on how cost sharing is
implemented within the private sector.

We conducted our work between May 2002 and February 2003 in
accordance with generally accepted government auditing standards.


We are sending copies of this report to other interested Members of
Congress. We are also providing copies of this report to the Secretary of
State and the Director of the Office of Management and Budget. We will
also make copies available to others upon request. In addition, this report
will be available at no charge on the GAO Web site at http://www.gao.gov.



22
  Includes new embassy compounds in the security capital and regular capital programs
outlined in the long-range buildings plan and excludes construction of annexes on existing
compounds. The U.S. embassies in Yerevan, Armenia, and Accra, Ghana, are also excluded.
Embassy Yerevan was funded in fiscal year 2001 and, thus, was not in the long-range plan
for 2002 through 2007. Embassy Accra was not initially in the long-range plan, but was
subsequently added.




Page 28                      GAO-03-411 Linking Staffing Needs to Embassy Construction
If you or your staff have any questions about this report, please contact me
on (202) 512-4128. Another GAO contact and staff acknowledgments are
listed in appendix IV.

Sincerely yours,




Jess T. Ford
Director, International Affairs and Trade




Page 29                 GAO-03-411 Linking Staffing Needs to Embassy Construction
                                     Appendix I: Standard Embassy Compound
Appendix I: Standard Embassy CompoundDesign



Design

                                     Figure 4 depicts the elements of a new embassy compound. State’s Bureau
                                     of Overseas Buildings Operations is purchasing parcels of land large
                                     enough to accommodate these elements and the department’s security
                                     standards, which include the placement of all buildings at least 30 meters
                                     from a perimeter wall.

Figure 4: Standard Design for New Embassy Compounds




                                     Page 30                   GAO-03-411 Linking Staffing Needs to Embassy Construction
             Appendix II: Comments from the Department
Appendix II: Comments from the Department
             of State



of State




             Page 31                    GAO-03-411 Linking Staffing Needs to Embassy Construction
Appendix II: Comments from the Department
of State




Page 32                    GAO-03-411 Linking Staffing Needs to Embassy Construction
Appendix II: Comments from the Department
of State




Page 33                    GAO-03-411 Linking Staffing Needs to Embassy Construction
              Appendix III: Comments from the U.S. Agency for International Development
Appendix III: Comments from the U.S.
Agency for International Development




              Page 34                     GAO-03-411 Linking Staffing Needs to Embassy Construction
Appendix III: Comments from the U.S. Agency for International Development




Page 35                     GAO-03-411 Linking Staffing Needs to Embassy Construction
Appendix III: Comments from the U.S. Agency for International Development




Page 36                     GAO-03-411 Linking Staffing Needs to Embassy Construction
                  Appendix IV: GAO Contact and Staff
Appendix IV: GAO Contact and Staff
                  Acknowledgments



Acknowledgments

                  John Brummet (202) 512-5260
GAO Contact
                  In addition to the individual named above, David G. Bernet, Janey Cohen,
Staff             Martin de Alteriis, David Dornisch, Kathryn Hartsburg, Edward Kennedy,
Acknowledgments   and James Strus made key contributions to this report.




(320124)
                  Page 37                     GAO-03-411 Linking Staffing Needs to Embassy Construction
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