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Testimony:



Before the Subcommittee on National Security, Emerging Threats, and 

International Relations, Committee on Government Reform, 

House of Representatives:



United States General Accounting Office:



GAO:



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:



GAO Highlights:



Highlights of GAO-03-582T, testimony before the Subcommittee on 

National Security, Emerging Threats, and International Relations, House 

Committee on Government Reform



Why GAO Did This Study:



More than 60,000 Americans and foreign nationals work at about 260 

diplomatic posts worldwide. Since the mid-1990s, GAO has highlighted 

the need for State and other federal agencies to establish a systematic 

process for determining their overseas staffing levels, particularly 

after the 1998 bombings of two U.S. embassies in Africa. GAO was asked 

to discuss three reports, including two being issued today, on 

rightsizing....that  is, realigning the number and  location of 
staff...

at U.S. embassies and consulates: (1) the rightsizing framework GAO 

developed last year, (2) follow-on work to further test the framework, 

and (3) the processes to project staffing levels for new embassy 

construction and the proposals to share  construction costs among U.S. 

agencies.



What GAO Found:



In July 2002, GAO presented a rightsizing framework outlining a 

systematic approach for assessing overseas workforce size that 

considers security, mission, and cost. GAO recommended that the Office 

of Management and Budget (OMB) use the framework as part of the 

administration’s rightsizing initiative, and OMB is now using it to 

review posts in Europe and Eurasia. 



After initially applying the framework at the U.S. Embassy in Paris, 

GAO further tested it at other U.S. embassies in three developing 

countries in West Africa to address concerns about whether the 

framework could be applied uniformly at all posts. GAO’s analysis 

indicates that the rightsizing framework can be applied at U.S. 

embassies in developing countries. 



GAO also found that U.S. agencies’ staffing projections for new embassy 

compounds are developed without a systematic approach or comprehensive 

rightsizing analyses. Moreover, State provides little formal guidance 

on factors to consider when projecting staffing needs. Further, there 

is a lack of documentation on projection exercises and factors staff 

considered when developing projections. Finally, staffing projections 

are not consistently vetted with all other agencies’ headquarters. 

These and other deficiencies could lead the government to build 

wrong-sized buildings. 



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 program to be successful, including how to structure the program 

and how payments will be made.



What GAO Recommends:



GAO recommends that OMB expand the use of our rightsizing framework and 

that State adopt additional measures to ensure that 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,[Footnote 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 overseasæand to station the minimum number necessaryæto 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,[Footnote 2] two of which are being released today.[Footnote 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.



Summary:



Because the U.S. government does not have a sound process for 

determining overseas staffing requirements, in July 2002 we presented a 

rightsizing framework[Footnote 4] 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.[Footnote 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.[Footnote 6] In response to a draft of our report, State has 

agreed to incorporate elements of the framework into its future 

planning processes.



Today we are also issuing a report that discusses how the lack of a 

systematic process for determining staffing requirements can have 

serious repercussions.[Footnote 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.



Background:



Following the 1998 terrorist bombings of two U.S. embassies in Africa 

that 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 U.S embassies and consulates.[Footnote 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.[Footnote 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.[Footnote 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.



Figure 1: Map of New Embassy Compound Construction Projects, Fiscal 

Years 1999 through 2004 Funding:



[See PDF for image]



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.



[End of figure]



GAO’s Rightsizing Framework and Its Use:



As a follow-up to our testimony on developing a rightsizing framework, 

in July 2002 we issued a report that presented the framework in more 

detail.[Footnote 11] We recommended that OMB use the framework as a 

basis for assessing staffing levels as part of the administration’s 

rightsizing initiative, starting 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 

mission[Footnote 12] 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.”[Footnote 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 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.[Footnote 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.



Figure 2: Public Gas Station behind an Embassy Annex Building Poses 

Security Concern:



[See PDF for image]



[End of figure]



GAO Rightsizing Framework Can Be Applied at Posts Worldwide:



Our work at three embassies in West Africa illustrates that our 

framework could be used to address the importance of facility security 

in making decisions to change staffing levels. It could also be used to 

identify and exercise rightsizing actions and options, such as 

adjusting staffing requirements, competitively sourcing certain 

commercial goods and 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 

positions.[Footnote 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:



[See PDF for image]



[End of figure]





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 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.



Systematic Effort to Project Staffing Needs for New Embassies Is 

Lacking:



Planning for the construction of new embassies illustrates the 

importance of having a systematic process for determining staffing 

levels. The size and 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 as accurately as possible. This is 

difficult because it requires managers to 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.[Footnote 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,[Footnote 17] and 

officials from all other 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.



Figure 4: Components of OBO’s Staffing Projection Process:



[See PDF for image]



[End of figure]



Efforts to Develop Staffing Projections Vary Significantly across 

Embassies and Geographic Bureaus:



Staffing projection exercises were not consistent across the posts we 

contacted, and indeed, State officials acknowledged that efforts to 

develop and validate projections were informal and undisciplined. Some 

management teams (the chiefs of mission, deputy chiefs of mission, and 

administrative officers) were more engaged in the projection process 

than others. For instance, at several posts we contacted, chiefs of 

mission or deputy chiefs of mission led interagency--or country team--

meetings to 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 Consistent, Formal Guidance on Staffing 

Projection Process and Importance of Rightsizing:



Our analysis indicates that State is not providing embassies with 

sufficient formal guidance on important timelines in the projection 

process or factors to consider when developing staffing projections for 

new embassy compounds. Officials from each of the 14 posts we contacted 

said their headquarters bureaus had not provided specific, formal 

guidance on key 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 unprecedented overseas construction program.[Footnote 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-term Staffing Assessments:



At each of the seven posts we visited, we found little or no 

documentation 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 functionsæyet 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.



Geographic Bureaus Do Not Consistently Vet Staffing Projections:



According to OBO, the relevant geographic bureaus are expected to 

review and verify individual embassies’ staffing projections and 

confirm 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 Complicate Staffing Projection Process:



We found additional factors that complicate the staffing projection 

process. First, frequent turnover of embassy personnel responsible for 

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.[Footnote 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 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.[Footnote 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 facilityæat an additional costæuntil 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 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.



Efforts to Implement a Capital Cost-sharing Mechanism:



As part of the President’s Management Agenda, OMB is leading an effort 

to develop a cost-sharing mechanism that could require agencies that 

use U.S. overseas facilities to pay a greater share of the costs 

associated with their overseas presence. The administration believes 

that requiring 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 capital cost-sharing proposal.[Footnote 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.



Rightsizing is More Relevant than Ever:



The concept of rightsizing is as important today as it was following 

the bombings of our embassies in Africa nearly 5 years ago. As figure 5 

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 

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:



[See PDF for image]



[End of figure]





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 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.



Contacts and Acknowledgments:



For future contacts regarding this testimony, please call Jess Ford or 

John Brummet at (202) 512-4128. Individuals making key contributions to 

this testimony included David G. Bernet, Janey Cohen, Kathryn 

Hartsburg, Lynn Moore, Ann Ulrich, and Joseph Zamoyta.



[End of section]



Appendix I: Rightsizing Framework and Corresponding Questions:



Table 1: :



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?.



* What are the priorities of the embassy?[A].



* 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?.



* 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.



[End of table]



FOOTNOTES



[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). 



[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.



[7] GAO-03-411.



[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.



[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.



[14] U.S. General Accounting Office, Overseas Presence: Conditions of 

Overseas Diplomatic Facilities, GAO-03-557T (Washington, D.C.: Mar. 20, 

2003).



[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. 



[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. 



[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.



[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.



[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.



[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.