oversight

Overseas Presence: Systematic Processes Needed to Rightsize Posts and Guide Embassy Construction

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                       Testimony
                          Before the Subcommittee on National Security,
                          Emerging Threats, and International Relations,
                          Committee on Government Reform,
                          House of Representatives
For Release on Delivery
Expected at 1 p.m., EST
Monday, April 7, 2003     OVERSEAS PRESENCE
                          Systematic Processes
                          Needed to Rightsize Posts
                          and Guide Embassy
                          Construction
                          Statement of Jess T. Ford, Director
                          International Affairs and Trade




GAO-03-582T
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                                               April 7, 2003


                                               OVERSEAS PRESENCE

                                               Systematic Processes Needed to
Highlights of GAO-03-582T, testimony
before the Subcommittee on National            Rightsize Posts and Guide Embassy
Security, Emerging Threats, and
International Relations, House Committee
on Government Reform
                                               Construction


More than 60,000 Americans and                 In July 2002, GAO presented a rightsizing framework outlining a systematic
foreign nationals work at about 260            approach for assessing overseas workforce size that considers security,
diplomatic posts worldwide. Since              mission, and cost. GAO recommended that the Office of Management and
the mid-1990s, GAO has highlighted             Budget (OMB) use the framework as part of the administration’s rightsizing
the need for State and other federal           initiative, and OMB is now using it to review posts in Europe and Eurasia.
agencies to establish a systematic
process for determining their                  After initially applying the framework at the U.S. Embassy in Paris, GAO
overseas staffing levels,                      further tested it at other U.S. embassies in three developing countries in
particularly after the 1998                    West Africa to address concerns about whether the framework could be
bombings of two U.S. embassies in
                                               applied uniformly at all posts. GAO’s analysis indicates that the rightsizing
Africa. GAO was asked to discuss
three reports, including two being             framework can be applied at U.S. embassies in developing countries.
issued today, on rightsizingthat
is, realigning the number and                  GAO also found that U.S. agencies’ staffing projections for new embassy
location of staffat U.S. embassies            compounds are developed without a systematic approach or comprehensive
and consulates: (1) the rightsizing            rightsizing analyses. Moreover, State provides little formal guidance on
framework GAO developed last                   factors to consider when projecting staffing needs. Further, there is a lack
year, (2) follow-on work to further            of documentation on projection exercises and factors staff considered when
test the framework, and (3) the                developing projections. Finally, staffing projections are not consistently
processes to project staffing levels           vetted with all other agencies’ headquarters. These and other deficiencies
for new embassy construction and               could lead the government to build wrong-sized buildings.
the proposals to share construction
costs among U.S. agencies.
                                               OMB is leading an interagency committee to develop a cost-sharing
                                               mechanism that would provide more discipline when determining overseas
                                               staffing needs and encourage agencies to think more carefully before
                                               posting staff overseas. Numerous issues will need to be resolved for such a
GAO recommends that OMB                        program to be successful, including how to structure the program and how
expand the use of our rightsizing              payments will be made.
framework and that State adopt
additional measures to ensure that
                                               Assessing Overseas Workforce Size Using GAO’s Rightsizing Framework
U.S. agencies take a systematic
approach to assessing workforce
size that considers security,
mission, and cost factors. GAO
also recommends that State
develop guidance on a systematic
approach for developing and
vetting staffing projections for new
diplomatic compounds.

Both OMB and State agreed with
GAO’s recommendations.



www.gao.gov/cgi-bin/getrpt?GAO-03-582T.

To view the full report, including the scope
and methodology, click on the link above.
For more information, contact Jess Ford at
(202) 512-4128 or fordj@gao.gov.
          Mr. Chairman and Members of the Subcommittee:

          I am pleased to be here to discuss GAO’s work on rightsizing the U.S.
          overseas presence—that is, deciding the number and types of personnel
          that should be assigned to our embassies and consulates. The U.S.
          overseas presence is significant—more than 60,000 Americans and foreign
          nationals representing approximately 40 U.S. departments and agencies
          overseas work at about 260 diplomatic posts worldwide. Since the mid-
          1990s, we have highlighted the need for the Department of State and other
          federal agencies to establish a systematic process for determining their
          overseas staffing levels. The administration, through the President’s
          Management Agenda,1 has directed all agencies operating overseas to
          rightsize their presence. The administration’s initiative aims to put the
          right people in the right places overseasand to station the minimum
          number necessaryto meet U.S. foreign policy goals. Because of the
          security threats facing many of our embassies, which are heightened by
          the current war in Iraq, as well as changes in foreign policy missions and
          priorities and the high costs of maintaining our significant presence, this
          effort is vitally important.

          Today I will discuss the three reports we have issued on rightsizing issues
          since I testified before this subcommittee almost a year ago,2 two of which
          are being released today.3 These reports describe (1) the rightsizing
          framework we developed last year, (2) the results of applying the
          framework in developing countries, and (3) the processes used to project
          staffing levels for new embassy construction and proposals to share
          construction costs among U.S. agencies.


          Because the U.S. government does not have a sound process for
Summary   determining overseas staffing requirements, in July 2002 we presented a



          1
           Office of Management and Budget, The President’s Management Agenda, Fiscal Year
          2002 (Washington, D.C.: Aug. 2001).
          2
           U.S. General Accounting Office, Overseas Presence: Observations on a Rightsizing
          Framework, GAO-02-659T (Washington, D.C.: May 1, 2002).
          3
           U.S. General Accounting Office, Overseas Presence: Rightsizing Framework Can Be
          Applied at U.S. Diplomatic Posts in Developing Countries, GAO-03-396 (Washington,
          D.C.: Apr. 7, 2003), and U.S. General Accounting Office, Embassy Construction: Process
          for Determining Staffing Requirements Needs Improvement, GAO-03-411 (Washington,
          D.C.: Apr. 7, 2003).



          Page 1                                                  GAO-03-582T Overseas Presence
rightsizing framework4 that provides a systematic approach. The
framework is a set of questions designed to link staffing levels to three
critical elements of overseas diplomatic operations: (1) physical/technical
security of facilities and employees, (2) mission priorities and
requirements, and (3) cost of operations. This is the same framework that I
described in testimony before this subcommittee in May 2002. Our
framework provides guidance for assessing overseas workforce size and
identifying options for rightsizing by using a set of standard criteria to help
ensure greater accountability and transparency. Therefore, we
recommended that the Office of Management and Budget (OMB) use it as
a basis for assessing staffing levels as part of the administration’s
rightsizing initiative. OMB is using our framework in its ongoing review of
staffing at embassies and consulates in Europe and Eurasia. (See app. 1 for
our rightsizing framework.)

Following our July report and in response to your request, we examined
whether our framework could be applied at other U.S. embassies in
developing countries. We are issuing a report on this work today.5 Our
analysis of three embassies we visited in West Africa indicates that the
rightsizing framework can be applied at U.S. embassies in developing
countries. Officials in State’s Bureau of African Affairs and other
geographic bureaus agreed that broad application of the framework and
its corresponding questions would provide a logical and commonsense
approach to systematically considering rightsizing issues in both
developed and developing countries. We are recommending that the
Director of OMB, in coordination with the Secretary of State, expand the
use of our framework in assessing staffing levels at all U.S. embassies and
consulates. We are also recommending that the Secretary of State include
the framework as part of State’s mission performance planning process.6
In response to a draft of our report, State has agreed to incorporate
elements of the framework into its future planning processes.




4
 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).
5
GAO-03-396.
6
 Mission Performance Plans (MPP) are annual embassy plans that link performance goals
and objectives to staffing and budgetary resources needed to accomplish them in a given
fiscal year.



Page 2                                                  GAO-03-582T Overseas Presence
             Today we are also issuing a report that discusses how the lack of a
             systematic process for determining staffing requirements can have serious
             repercussions.7 State has embarked on a multiyear, multibillion-dollar
             facility replacement program. The size and cost of these facilities depend
             on the staffing projections developed by U.S. agencies. We found that
             staffing projections for new embassy compounds are developed without a
             consistent, systematic approach or comprehensive rightsizing analyses.
             Moreover, State headquarters provides little formal guidance to embassy
             teams—those who develop the projections—on factors to consider when
             projecting staffing needs, nor does it stress the importance of accurate
             projections. Further complicating the process is the frequent turnover of
             embassy personnel responsible for developing projections, combined with
             posts’ failure to document how projections were developed or the
             underlying support for staffing decisions. Finally, staffing projections are
             not consistently vetted with all other agencies’ headquarters. To help
             ensure that the U.S. government builds rightsized facilities, we are
             recommending adoption of a more disciplined and systematic process for
             projecting staffing requirements. In comments on a draft of our report,
             State agreed to implement our recommendations.

             The report also discusses the administration’s plan to require agencies to
             pay a greater share of the costs associated with their overseas presence,
             which could include the costs of embassy construction. Currently, most
             agencies are not required to pay for new embassy construction. The
             administration believes that implementing such a plan could encourage all
             agencies to weigh cost considerations more carefully before posting
             personnel overseas. OMB is leading an interagency effort aimed at creating
             a cost-sharing mechanism. It may be reasonable to expect agencies to
             share the costs of new embassy construction, but there are many factors
             and questions to consider before an effective and equitable cost-sharing
             program can be implemented.


             Following the 1998 terrorist bombings of two U.S. embassies in Africa that
Background   resulted in more than 220 deaths and 4,000 injuries, a series of high-level
             and independent studies called for the reassessment of staffing levels at




             7
             GAO-03-411.



             Page 3                                          GAO-03-582T Overseas Presence
U.S embassies and consulates.8 In August 2001, the President’s
Management Agenda directed all agencies to rightsize their overseas
presence to the minimum personnel necessary to meet U.S. policy goals.

In May 2002, we testified before this subcommittee on a rightsizing
framework we developed to guide decisions on the appropriate number of
staff to be assigned to a U.S. embassy.9 The framework includes questions
about (1) the security of embassy buildings, use of existing space, and
vulnerability of staff to terrorist attack; (2) justification of agency staffing
levels relative to embassy priorities and the extent to which it is necessary
for each agency to maintain or change its presence in a country; and (3)
development and consolidation of cost information from all agencies at a
particular embassy to fully document operational costs and permit cost-
based decision making. Our framework also includes questions that assess
the feasibility of rightsizing options, such as reassigning staff to the United
States or to regional centers and competitive sourcing.10

In addition to recommending that agencies rightsize their overseas
presence, one group of experts recommended major capital improvements
to U.S. overseas facilities. In response, State initiated a major building
program to provide new facilities at about 185 locations worldwide. This is
a large-scale program that will cost an estimated $16 billion to complete.
State received close to $2.6 billion for new embassy compound
construction in fiscal years 1999 through 2003 and has requested
approximately $760 million for projects in fiscal year 2004. Figure 1 shows
the locations where State plans to build new compounds with these funds.



8
 Former Secretary of State Madeleine Albright appointed 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). Secretary
Albright also established the Overseas Presence Advisory Panel 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.: Nov. 1999).
9
GAO-02-659T.
10
  With enactment of the Federal Activities Inventory Reform Act of 1998 (P.L. 105-270),
Congress mandated that U.S. government agencies identify activities within each office that
are not “inherently governmental,” that is, commercial activities. Competitive sourcing
involves using competition to determine whether a commercial activity should be
performed by government personnel or contractors. The President’s Management Agenda
states that competition historically has resulted in a 20-to 50-percent cost savings for the
government.



Page 4                                                   GAO-03-582T Overseas Presence
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 new compound projects for which State has requested funding in fiscal year 2004.




                                      Page 5                                                         GAO-03-582T Overseas Presence
                    As a follow-up to our testimony on developing a rightsizing framework, in
GAO’s Rightsizing   July 2002 we issued a report that presented the framework in more detail.11
Framework and Its   We recommended that OMB use the framework as a basis for assessing
                    staffing levels as part of the administration’s rightsizing initiative, starting
Use                 with its planned assessments of staffing levels and rightsizing options at
                    U.S. embassies in Europe and Eurasia. OMB adopted the basic elements of
                    our framework in its ongoing assessment of staffing at these posts. OMB
                    adapted the framework into a questionnaire, which it sent to all U.S.
                    agencies at all posts in this region. It expects to finish analyzing responses
                    to the questionnaire later this year. More recently, OMB has convened an
                    interagency rightsizing committee comprising agency staff from
                    throughout the federal government to 1) reach agreement on a common
                    set of criteria to be applied when assessing staffing at posts worldwide,
                    and 2) develop standard accounting procedures for assessing embassies’
                    operating costs.

                    In addition, Mr. Chairman, other agencies have taken rightsizing initiatives
                    that are consistent with our framework. For example, State’s Bureau of
                    European and Eurasian Affairs has urged chiefs of mission12 to review all
                    current and future staffing requests filed under National Security Decision
                    Directive number 38 (NSDD-38) “through the optic of rightsizing and
                    regionalization.”13 In addition, the Department of the Treasury now
                    requires that all proposals for adding staff positions overseas be
                    accompanied by an analysis of the costs associated with that position. For
                    the first time, the U.S. Agency for International Development is pursuing a
                    strategic human capital initiative, and has sought GAO’s advice on how to
                    use our framework to align its staffing overseas. We have also briefed
                    others on the framework at their request, including geographic bureaus at
                    State, the OMB-led interagency rightsizing task force, and congressional
                    staff. In addition, State’s Office of the Inspector General has incorporated
                    a standard set of rightsizing questions in its methodology for conducting


                    11
                     GAO-02-780.
                    12
                      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).
                    13
                     NSDD-38, “Staffing At Diplomatic Missions and Their Overseas Constituent Posts,” signed
                    June 2, 1982, requires all agencies with staffs operating under the authority of chiefs of
                    mission to seek the chief of mission’s approval on any proposed changes in size,
                    composition, or mandate of any staff elements at an overseas facility.



                    Page 6                                                     GAO-03-582T Overseas Presence
post inspections. These questions incorporate the basic elements of, and
include some of the same questions as, our rightsizing framework. Finally,
State recently purchased a former military hospital in Frankfurt, Germany,
in part as a rightsizing effort to provide a secure facility for personnel who
furnish diplomatic, programmatic, and administrative services to
embassies throughout Europe, the Middle East, and Africa. At your
request, we are currently reviewing State’s plans for this facility, which we
will report on later this year.

State has expressed concerns about the relative importance assigned to
security, mission, and cost in our framework. State believes the most
important question for decision makers is whether the United States has a
compelling reason to assign staff to a particular location, noting that it
may be necessary to station staff in certain locations despite security
concerns and high costs. We agree that in some circumstances, the
mission benefits of stationing staff in a certain location may carry more
weight than either security or cost considerations. However, there may be
other circumstances where security or cost carry more weight. For
example, in testimony last month before the Senate Foreign Relations
Committee, we reported that there are serious security concerns at many
embassy and consulate facilities around the world and that thousands of
employees may be at risk.14 At one post we visited, staff are assigned to a
building that does not meet all of State’s key security standards. This
building is very vulnerable to terrorists because it is bordered on three
sides by public streets and on one side by a public gas station (see fig. 2).
Decision makers need to carefully consider the security risks to staff
stationed in this building. Our framework encourages decision makers to
analyze security, mission, and cost collectively in deciding whether they
are willing to accept the risk and pay the cost of stationing personnel
overseas to meet mission requirements.




14
 U.S. General Accounting Office, Overseas Presence: Conditions of Overseas Diplomatic
Facilities, GAO-03-557T (Washington, D.C.: Mar. 20, 2003).



Page 7                                                GAO-03-582T Overseas Presence
                   Figure 2: Public Gas Station behind an Embassy Annex Building Poses Security
                   Concern




                   Our work at three embassies in West Africa illustrates that our framework
GAO Rightsizing    could be used to address the importance of facility security in making
Framework Can Be   decisions to change staffing levels. It could also be used to identify and
                   exercise rightsizing actions and options, such as adjusting staffing
Applied at Posts   requirements, competitively sourcing certain commercial goods and
Worldwide          services, and streamlining warehousing operations. For example, if the
                   U.S. embassy in Dakar, Senegal, used our framework to complete a full
                   and comprehensive analysis of the services it provides or could provide to
                   other embassies in the region, in conjunction with analyses of mission
                   priorities and requirements of other embassies in West Africa, then
                   staffing levels could be adjusted at some of the region’s posts. One
                   rightsizing option suggests assessing the feasibility of competitively
                   sourcing the work of painters, upholsterers, electricians, and others
                   currently employed by the embassy to yield cost savings and reduce staff
                   requirements. This could have a particularly significant impact at Embassy
                   Dakar, which employs more than 70 staff working in these types of




                   Page 8                                            GAO-03-582T Overseas Presence
                                       positions.15 Applying elements of the rightsizing framework and the
                                       corresponding questions collectively can lead decision makers to
                                       rightsizing actions and other options. Figure 3 illustrates the application of
                                       the framework at Embassy Dakar.

Figure 3: Applying Rightsizing Framework and Corresponding Questions at U.S. Embassy Dakar, Senegal




                                       In our report released today, we are recommending that OMB, in
                                       coordination with State, ensure that application of our framework be
                                       expanded as a basis for assessing staffing levels at embassies and
                                       consulates worldwide. In comments on a draft of our report, OMB agreed.
                                       In addition, in light of State’s predominant role in conducting foreign
                                       policy and the responsibilities of chiefs of missions at overseas posts, it is
                                       critical that State strengthen its management planning processes by



                                       15
                                         During our work at the embassy in Paris, we identified as many as 50 positions at the post
                                       that are commercial in nature and responsible for providing services or goods that have the
                                       potential to be competitively sourced to the private sector or performed at another
                                       location.



                                       Page 9                                                    GAO-03-582T Overseas Presence
                         systematically addressing rightsizing issues. Therefore we are
                         recommending that State adopt the framework as part of its mission
                         performance planning process. State generally agreed with our
                         recommendation.


                         Planning for the construction of new embassies illustrates the importance
Systematic Effort to     of having a systematic process for determining staffing levels. The size and
Project Staffing Needs   cost of new facilities are driven by the number of staff and the type of
                         work they do. Therefore, it is imperative that staffing levels be projected
for New Embassies Is     as accurately as possible. This is difficult because it requires managers to
Lacking                  project staffing needs 5 to 7 years in the future. State’s Bureau of Overseas
                         Buildings Operations (OBO) has designed a reasonable process for
                         developing staffing projections needed to design buildings that are the
                         right size, but we found this process was not adopted uniformly across all
                         of the posts and geographic bureaus that we studied.16 In addition, State is
                         not providing embassies with sufficient guidance on factors to consider in
                         developing staffing projections. Agencies at the posts we contacted lacked
                         a systematic approach, such as our framework, to conduct rightsizing
                         analyses. Moreover, none of the posts we contacted conducted a
                         rightsizing analysis of existing staffing levels prior to projecting future
                         requirements. Such an analysis would help identify options for adjusting
                         staffing levels for new embassies. We also found little evidence that
                         staffing projections were consistently vetted with all other agencies’
                         headquarters. Finally, the process was further complicated by the frequent
                         turnover of embassy personnel who did not maintain documentation on
                         the projection process, as well as breakdowns in communication among
                         multiple agencies.

                         Before I discuss our findings in more detail, let me explain the process
                         OBO designed to help ensure that new compounds are designed as
                         accurately as possible. Developing staffing projections is a key component
                         of the planning process for new embassy compounds. OBO’s projection
                         process encourages the active participation of embassy personnel,
                         officials in State’s geographic bureaus,17 and officials from all other


                         16
                          We visited seven posts in Europe and Eurasia and contacted seven additional embassies
                         worldwide, which represent about one-quarter of the new compounds OBO plans to fund
                         between fiscal years 2002 and 2005.
                         17
                           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.



                         Page 10                                                   GAO-03-582T Overseas Presence
relevant federal agencies (see fig. 4 for OBO’s staffing projection process).
It also calls on embassy management and geographic bureaus to review
and validate all projections before submitting them to OBO. Embassies
and geographic bureaus generally have the opportunity to submit staffing
projections several times before they are finalized. However, OBO will not
accept changes after the projections are final because this could result in
construction delays and additional costs.




Page 11                                         GAO-03-582T Overseas Presence
                              Figure 4: Components of OBO’s Staffing Projection Process




Efforts to Develop Staffing   Staffing projection exercises were not consistent across the posts we
Projections Vary              contacted, and indeed, State officials acknowledged that efforts to develop
Significantly across          and validate projections were informal and undisciplined. Some
                              management teams (the chiefs of mission, deputy chiefs of mission, and
Embassies and Geographic      administrative officers) were more engaged in the projection process than
Bureaus                       others. For instance, at several posts we contacted, chiefs of mission or
                              deputy chiefs of mission led interagency—or country team—meetings to


                              Page 12                                           GAO-03-582T Overseas Presence
                            discuss the post’s long-term priorities and the staffing implications.
                            However, management teams at other posts we contacted were less
                            engaged. At the U.S. embassy in Tbilisi, Georgia, management did not
                            document recent growth in staffing levels, which led to final projections
                            that were too low. Therefore, the new facility may be overcrowded upon
                            opening, according to embassy officials. If embassy and geographic bureau
                            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, have varied levels of
                            involvement in the projection process. For example, officials from the U.S.
                            embassy in Beijing, China, said that representatives from their geographic
                            bureau in Washington, D.C., were very involved in developing their
                            projections. Conversely, officials at Embassy Belgrade said State’s
                            geographic bureau did not request justifications for or provide input into
                            the final projections submitted to OBO. Based on our review, the more
                            these officials were involved in the process, the more confidence we had
                            that their projections were accurate.


Embassies Do Not Receive    Our analysis indicates that State is not providing embassies with sufficient
Consistent, Formal          formal guidance on important timelines in the projection process or
Guidance on Staffing        factors to consider when developing staffing projections for new embassy
                            compounds. Officials from each of the 14 posts we contacted said their
Projection Process and      headquarters bureaus had not provided specific, formal guidance on key
Importance of Rightsizing   factors to consider when developing staffing projections. Although OBO
                            informed the geographic bureaus that final projections for fiscal year 2004
                            funding were due in spring 2002, officials at some of the posts we
                            examined did not realize that additional requirements they might submit at
                            a later date would not result in a larger-sized building.

                            According to OBO, individual embassies should have conducted
                            rightsizing exercises before submitting the staffing projections used to
                            develop and update the Long-Range Overseas Buildings Plan, a planning
                            document that outlines the U.S. government’s overseas facilities
                            requirements and guides implementation of State’s expansive and




                            Page 13                                        GAO-03-582T Overseas Presence
                            unprecedented overseas construction program.18 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 embassy needs. However, OBO’s
                            mandate is to manage property, and it 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 the bureaus have incorporated rightsizing exercises into the
                            projection process.

                            We found that agencies at the posts we examined did not conduct
                            comprehensive rightsizing analyses when determining future staffing
                            requirements. Decision makers did not analyze existing positions before
                            projecting future requirements and did not consider rightsizing options,
                            such as competitive sourcing or relocating certain positions to the United
                            States or regional centers. In addition, we found that most agencies with
                            staff overseas did not consistently consider operational costs when
                            developing staffing projections. In general, for these posts, rightsizing
                            exercises were largely limited to predictions of future funding levels and
                            workloads.


Little Evidence of Long-    At each of the seven posts we visited, we found little or no documentation
term Staffing Assessments   that staff conducted comprehensive assessments of the number and types
                            of people they would need in the year that their new facility would open.
                            Officials from several of these posts told us they had considered factors
                            such as operating costs or the potential to streamline administrative
                            functionsyet they did not consistently document their analyses or the
                            rationales for their decisions. Moreover, we found little or no
                            documentation explaining how previous projections were developed or
                            the justifications for these decisions. As a result, future management
                            teams will not have accurate information on how or why previous
                            decisions were made when they update and finalize staffing projections.




                            18
                              The current version of the Long-Range Overseas Buildings Plan covers fiscal years 2002
                            through 2007. State plans to publish an updated version of the plan covering fiscal years
                            2003 through 2008 by late April 2003.



                            Page 14                                                  GAO-03-582T Overseas Presence
Geographic Bureaus Do   According to OBO, the relevant geographic bureaus are expected to
Not Consistently Vet    review and verify individual embassies’ staffing projections and confirm
Staffing Projections    these numbers with other agencies’ headquarters before they are
                        submitted to OBO. However, we found that the degree to which staffing
                        projections were reviewed varied. In addition, we found little evidence
                        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 required to conduct formal vetting exercises
                        once embassies submit their projections; (2) there is no formal vetting
                        process; and (3) geographic bureaus expect that officials in the field
                        consult with all relevant agencies and therefore the bureaus rarely contact
                        agency headquarters officials.


Additional Factors      We found additional factors that complicate the staffing projection
Complicate Staffing     process. First, frequent turnover of embassy personnel responsible for
Projection Process      developing staffing projections disrupts continuity in the projection
                        process. Embassy staff may be assigned to a location for only 2 years, and
                        at some locations, the assignment may be shorter. 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 projection process lacks continuity. Staff turnover combined
                        with little 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. Following the 1998 embassy bombings, a law was
                        passed requiring that all U.S. agencies working at posts slated for new
                        construction be located in the new compounds unless they are granted a
                        special co-location waiver.19 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, waiver
                        requests must be incorporated early in the staffing projection process so
                        that OBO is not designing and funding buildings that are too large or too



                        19
                          22 U.S.C. § 4865 requires the Secretary of State, in selecting a site for any new U.S.
                        diplomatic facilities abroad, to ensure that all U.S. personnel under chief of mission
                        authority be located on the site. However, this requirement may be waived 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 interest.



                        Page 15                                                  GAO-03-582T Overseas Presence
small. Post officials acknowledged that these decisions must be made
before the staffing projections are finalized. In Yerevan, for example, the
Department of Agriculture office projected the need for 26 desks in the
new chancery, yet Agriculture officials in Yerevan plan to use only 13 of
these desks and to locate the remaining personnel in their current office
space. However, Agriculture has not yet requested a co-location waiver for
these remaining 13 positions. 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.

Finally, separate funding requirements for USAID annexes could
complicate the projection process. In compounds where USAID is likely to
require desk space for more than 50 employees, USAID attempts to secure
funding in its own appropriations for an annex building on the
compound.20 However, officials from at least two of the posts we examined
had trouble determining where USAID would be located, which could
delay planning and disrupt OBO’s overall plan for concurrent construction
of the USAID annexes with the rest of the compounds. For example, at
Embassy Yerevan, confusion among USAID officials in Washington and
the field over whether USAID would fund a separate annex has caused
annex construction and funding to fall behind OBO’s schedule. Therefore,
USAID may be forced to remain at a less secure facilityat an additional
costuntil its annex is completed, unless alternative arrangements can be
made. In addition, chancery and USAID annex construction has not
proceeded on the same schedule in some countries because funding for
USAID’s annexes is behind schedule. According to USAID officials in
Washington, D.C., two-track construction could lead to security concerns,
work inefficiencies, and additional costs.

To ensure that U.S. agencies are conducting systematic staffing projection
exercises, we are recommending that the Secretary of State (1) provide
embassies with formal, standard, and comprehensive guidance on
developing staffing projections; (2) require chiefs of mission to maintain
documentation on the decision-making process including justifications for



20
  Pursuant to an informal agreement between OBO and USAID, USAID is required to pay
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 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.



Page 16                                                GAO-03-582T Overseas Presence
                         these staffing projections; and (3) require all chiefs of mission and
                         geographic bureaus to certify that the projections have been reviewed and
                         vetted before they are submitted to OBO. In comments on our draft report,
                         State agreed to implement our recommendations.


                         As part of the President’s Management Agenda, OMB is leading an effort
Efforts to Implement     to develop a cost-sharing mechanism that could require agencies that use
a Capital Cost-sharing   U.S. overseas facilities to pay a greater share of the costs associated with
                         their overseas presence. The administration believes that requiring
Mechanism                agencies to pay a greater portion of the costs associated with their
                         presence could give them an incentive to scrutinize long-term staffing
                         more thoroughly when assessing their overseas presence. OMB officials
                         also believe greater cost sharing could more clearly link the costs of new
                         facilities that result directly from agencies’ presence.

                         State historically has been responsible for funding the construction and
                         maintenance of U.S. embassies and consulates, while most other U.S.
                         government agencies traditionally have not been required to help fund
                         capital improvements to overseas facilities. In 1999, the Overseas Presence
                         Advisory Panel noted a lack of cost sharing among agencies that use
                         overseas facilities, particularly for capital improvements. As a result, the
                         panel proposed the development of cost-sharing arrangements to help
                         fund construction of new facilities. In summer 2000, an interagency body
                         formed to develop a capital cost-sharing mechanism recommended that
                         agencies be assessed a surcharge based on the space they actually use in
                         overseas facilities, but this plan was never implemented. Recently, State
                         proposed a cost-sharing program that would require agencies to fund an
                         annual share of the capital construction program based on their respective
                         proportions of total U.S. overseas staffing. State believes that, in addition
                         to generating funds for the construction program, linking the costs of
                         capital construction to agency staffing levels would provide incentive for
                         all agencies overseas to initiate rightsizing actions.

                         The administration is committed to implementing a new cost-sharing
                         program by fiscal year 2005 that would require agencies to pay a greater
                         portion of the total costs associated with their overseas presence, which
                         could include requiring agencies to help fund the cost of new embassy
                         construction. In January 2003, OMB developed a virtual budget for how
                         much each agency would be charged in fiscal year 2004 based on State’s




                         Page 17                                         GAO-03-582T Overseas Presence
                          capital cost-sharing proposal.21 During 2003, OMB is requiring agencies to
                          complete a census of the total overseas staffing. Also during 2003, OMB
                          will lead an interagency committee to develop a mechanism for capital
                          cost sharing.

                          Mr. Chairman, it may be reasonable to expect that agencies pay for all U.S.
                          government costs associated with their presence in overseas facilities.
                          Moreover, charging agencies a portion of the costs of new embassy
                          construction may encourage them to fully consider how their presence
                          affects the government’s overall costs for new embassies and consulates.
                          We agree with OMB, State, and the Overseas Presence Advisory Panel that
                          implementing a new cost-sharing arrangement may add greater discipline
                          to the staffing projection and rightsizing processes. However, in deciding
                          how costs will be shared, decision makers at affected agencies need to
                          develop consensus on the equity of a new arrangement, while designing a
                          system that is relatively easy to administer.


                          The concept of rightsizing is as important today as it was following the
Rightsizing is More       bombings of our embassies in Africa nearly 5 years ago. As figure 5
Relevant than Ever        illustrates, the key elements of our rightsizing framework—security,
                          mission, cost, and rightsizing options—need to be considered collectively
                          to determine embassy staffing, and decision makers need to be looking for
                          alternative ways of conducting business, such as transferring functions to
                          the United States or to regional centers, where appropriate. Recent events
                          illustrate the significance of maintaining a rightsized overseas presence:

                      •   Security concerns continue today and are probably much greater in view
                          of the September 11, 2001, terrorist attacks and the ongoing war in Iraq.
                          Security deficiencies at many of our facilities overseas place personnel at
                          risk. While State’s new embassy construction program will, over time, help
                          reduce the security risk, this program will take many years to complete. In
                          the meantime, thousands of employees will be assigned to embassies and
                          consulates that do not meet security standards, placing them at risk.
                      •   The changing needs of U.S. foreign policy will continue to affect
                          rightsizing initiatives. Ensuring that the U.S. government has the right
                          people in the right places to support U.S. goals and objectives may require
                          reallocation of staff among posts. Furthermore, creation of the
                          Department of Homeland Security, the war on terrorism, and post-war


                          21
                           Because the State proposal and OMB assessment were completed after the budget
                          submission deadline, OMB told agencies that they would not actually be charged in 2004.



                          Page 18                                                 GAO-03-582T Overseas Presence
    engagement with Iraq will affect foreign policy missions and priorities and
    may also require staffing adjustments.
•   Maintaining a large overseas presence is an enormous expense,
    particularly with current budget deficits. For example, State estimates that
    it costs roughly $300,000 annually to station an employee overseas.
    Moreover, plans for a multibillion-dollar, multiyear embassy construction
    program highlight the importance of linking staff size to the size and cost
    of new embassies and consulates.


    Figure 5: Assessing Overseas Workforce Size Using GAO’s Rightsizing Framework




    In conclusion, our work in the past year has further demonstrated the
    feasibility of achieving a systematic and comprehensive approach to
    rightsizing the U.S. overseas presence. Such an approach can have
    substantial payoffs if OMB, State, and other agencies operating overseas
    support it. I believe we all recognize that, to be successful, rightsizing will
    be a long-term effort requiring the commitment of all agencies operating
    overseas. I am encouraged that the momentum for developing a
    meaningful approach to rightsizing continues. Both State and OMB have


    Page 19                                           GAO-03-582T Overseas Presence
                  endorsed our rightsizing framework and are working together and with
                  other agencies to improve the process for determining overseas staffing
                  levels. However, to support this process, we are recommending in our
                  reports additional steps that agencies should take to adopt a systematic
                  approach that considers security, mission, and cost factors in assessing
                  overseas workforce size and to improve the staffing projection processes
                  for new embassies and consulates.

                  Mr. Chairman, this concludes my prepared statement. I will be happy to
                  respond to any questions you or other members may have.


                  For future contacts regarding this testimony, please call Jess Ford or John
Contacts and      Brummet at (202) 512-4128. Individuals making key contributions to this
Acknowledgments   testimony included David G. Bernet, Janey Cohen, Kathryn Hartsburg,
                  Lynn Moore, Ann Ulrich, and Joseph Zamoyta.




                  Page 20                                        GAO-03-582T Overseas Presence
Appendix I: Rightsizing Framework and
Corresponding Questions


Physical/technical security of facilities and employees
• What is the threat and security profile of the embassy?
• Has the ability to protect personnel been a factor in determining staffing levels at the embassy?
• To what extent are existing office buildings secure?
• Is existing space being optimally utilized?
• Have all practical options for improving the security of facilities been considered?
• Do issues involving facility security put the staff at an unacceptable level of risk or limit mission accomplishment?
• What is the capacity level of the host country police, military, and intelligence services?
• Do security vulnerabilities suggest the need to reduce or relocate staff?
• Do health conditions in the host country pose personal security concerns that limit the number of employees that should be
  assigned to the post?
Mission priorities and requirements
• What are the staffing levels and mission of each agency?
• How do agencies determine embassy staffing levels?
• Is there an adequate justification for the number of employees at each agency compared with the agency’s mission?
• Is there adequate justification for the number of direct hire personnel devoted to support and administrative operations?
                                            a
• What are the priorities of the embassy?
• Does each agency’s mission reinforce embassy priorities?
• To what extent are mission priorities not being sufficiently addressed due to staffing limitations or other impediments?
• To what extent are workload requirements validated and prioritized and is the embassy able to balance them with core functions?
• Do the activities of any agencies overlap?
• Given embassy priorities and the staffing profile, are increases in the number of existing staff or additional agency representation
  needed?
• To what extent is it necessary for each agency to maintain its current presence in country, given the scope of its responsibilities
  and its mission?
      - Could an agency’s mission be pursued in other ways?
      - Does an agency have regional responsibilities or is its mission entirely focused on the host country?
Cost of operations
• What is the embassy’s total annual operating cost?
• What are the operating costs for each agency at the embassy?
• To what extent are agencies considering the full cost of operations in making staffing decisions?
• To what extent are costs commensurate with overall embassy strategic importance, with agency programs, and with specific
  products and services?
Consideration of rightsizing options
• What are the security, mission, and cost implications of relocating certain functions to the United States, regional centers, or to
  other locations, such as commercial space or host country counterpart agencies?
• 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?
• Do new technologies and transportation links offer greater opportunities for operational support from other locations?
• Do the host country and regional environments suggest there are options for doing business differently, that is, are there adequate
  transportation and communications links and a vibrant private sector?
• To what extent is it practical to purchase embassy services from the private sector?
• Does the ratio of support staff to program staff at the embassy suggest opportunities for streamlining?
• Can functions be reengineered to provide greater efficiencies and reduce requirements for personnel?




                                            Page 21                                                  GAO-03-582T Overseas Presence
 •   Are there best practices of other bilateral embassies or private corporations that could be adapted by the U.S. embassy?
 •   To what extent are there U.S. or host country legal, policy, or procedural obstacles that may impact the feasibility of rightsizing
     options?
Source: GAO.
                                               a
                                                Embassy priorities are the U.S. government priorities in that country.




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                                               Page 22                                                          GAO-03-582T Overseas Presence