Embassy Management: State Department and Other Agencies Should Further Explore Opportunities to Save Administrative Costs Overseas
Highlights
What GAO Found
Agencies continue to provide potentially duplicative administrative services overseas despite slight increases in their participation in ICASS since 2004. When agencies had a choice to opt out of ICASS and provide services independently, they did so about one-third of the time, on average, in 2011. The U.S. Agency for International Development (USAID), however, has reduced duplicative administrative operations by increasing its participation in ICASS markedly since 2005. Agencies have cited several factors for opting out of ICASS, principally concerns about cost, but they do not usually provide any formal rationale to ICASS management and often have not conducted any cost analysis to justify their decisions. Some agencies also indicated that they cannot meet their mission requirements within ICASS. GAO’s analysis of ICASS cost and workload data shows that significant economies of scale can be achieved through greater participation in ICASS. Thus, while agencies may opt out of ICASS because they believe they can obtain less costly services on their own, doing so may actually increase the overall cost to the U.S. government. ICASS management’s ability to convince agencies that participating will save them or the U.S. government money is hampered by the lack of comparative cost data to demonstrate potential savings. In 2004, GAO recommended that the ICASS Executive Board—the highest level policy-making body in the ICASS system composed of customer agency representatives—encourage greater ICASS participation. However, experience has shown that board members do not necessarily have the incentive to require their agencies to participate in ICASS, especially if they are unconvinced that it is in their agencies’ individual financial interest. In this context, Congressional action may be necessary to increase participation and achieve greater economies of scale. Separately, State has made limited progress improving the cost effectiveness of ICASS services in other ways, such as reducing the need for American staff overseas or using other qualified agencies, such as USAID, to provide some ICASS services.
Results from annual ICASS customer satisfaction surveys as well as GAO’s own survey show overall satisfaction with ICASS services. For example, data from the annual ICASS survey indicate that, on a scale from 1 to 5, the average overall score increased from 3.95 in 2005 to 4.03 in 2011. Data from GAO’s survey show that nearly 80 percent of agency representatives participating in ICASS indicated that the quality of services was “good” or better. Nonetheless, some dissatisfaction persists, potentially hampering participation. In some cases, performance problems and service limitations could affect agencies’ ability to achieve their missions efficiently and effectively. For example, USAID officials have cited the unavailability of ICASS motor pool vehicles for travel to distant project sites as a major impediment to achieving their mission. State’s service delivery data suggest that these concerns have merit, as ICASS service providers fulfilled about 70 percent of the requests for non-local transportation in 2011. State has implemented new monitoring tools to improve ICASS managers’ ability to evaluate performance, but they do not address some agencies’ concerns involving billing errors, inequity, and problems with certain critical services.
Why GAO Did This Study
The U.S. government employs more than 23,500 Americans overseas at more than 250 diplomatic and consular posts. These posts require a variety of support services, such as building maintenance and vehicle operations. Agencies may obtain these services, primarily from the Department of State (State), through the International Cooperative Administrative Support Services (ICASS), but participation in most services is voluntary. A 2004 GAO report found that ICASS had not eliminated duplication of support services and that customers generally approved of the quality of ICASS services, but that the level of satisfaction was difficult to quantify.
For this report, GAO assessed (1) how changes in ICASS participation have affected the duplication and cost of support services and (2) customer satisfaction with the quality of ICASS services. GAO surveyed ICASS customers, analyzed ICASS data, interviewed officials from State and seven other agencies, and conducted fieldwork in four countries.
Recommendations
Congress may wish to consider requiring agencies to participate in ICASS services unless they provide a business case to show that they can obtain these services outside of ICASS without increasing overall costs to the U.S. government or that their mission cannot be achieved within ICASS. GAO is also making recommendations regarding the reengineering of administrative processes, use of non-State ICASS service providers, and improvement of service standards. State and U.S. Agency for International Development generally concurred.
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| In order to contain costs and reduce duplication of administrative support services overseas, Congress may wish to consider requiring agencies to participate in ICASS services unless they provide a business case to show that they can obtain these services outside of ICASS without increasing overall costs to the U.S. government or that their mission cannot be achieved within ICASS. | As of March 2024, no legislative action has been identified. Congress has not required agencies to participate in ICASS absent a business case that shows that they can obtain services outside ICASS without additional cost to the U.S. government, as GAO suggested in January 2012. In January 2014, the joint explanatory statement regarding the Consolidated Appropriations Act, 2014, included a direction that the Secretary of State develop, in coordination with the ICASS Service Center and participating agencies, an efficient process by which an agency participating in the ICASS program provides a cost analysis and justification for the agency's decision to opt out of any ICASS services. However, this direction does not require agencies to participate in ICASS absent such a justification. Action on this matter is important because continued duplication of administrative services limits ICASS's ability to achieve economies of scale and deliver services more efficiently. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of State | The Secretary of State should increase the cost effectiveness of ICASS services by continuing to reengineer administrative processes and seek innovative managerial approaches, including those that would reduce the reliance on American officials overseas to provide these services. |
State partially concurred with GAO's recommendation. In response, State has taken several steps to increase the cost-effectiveness of ICASS services, such as the adoption of a common furniture pool policy in 2012. In addition, State has contained the number of American and locally employed service providers at the high-threat posts in Afghanistan, Iraq, and Pakistan -- where services are more expensive than at other posts within the region -- by expanding regional support models to provide administrative services from less expensive posts in the region or in the United States.
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| Department of State | Where agencies are able to demonstrate, through a compelling business case, that they can provide a service more efficiently than the existing State ICASS provider without adverse effects on the overall government budget, the Secretary of State should allow the creation of new ICASS service providers, in lieu of State, that could provide administrative services to the other agencies at individual posts. |
In response to GAO's recommendation, State and USAID released guidance in February 2012 providing direction to posts considering establishing alternate service provider for administrative services. According to this guidance, USAID may provide administrative services in place of State where the model can be demonstrated to achieve savings to the U.S. government and provide superior levels of customer satisfaction with services. Furthermore, in April 2012, State issued a cable to all posts endorsing the creation of alternate service providers where appropriate, consistent with GAO's recommendation.
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| U.S. Agency for International Development | Where agencies are able to demonstrate, through a compelling business case, that they can provide a service more efficiently than the existing State ICASS provider without adverse effects on the overall government budget, the Administrator of USAID should allow the creation of new ICASS service providers, in lieu of State, that could provide administrative services to the other agencies at individual posts. |
In response to GAO's recommendation, State and USAID released guidance in February 2012 providing direction to posts considering establishing alternate service provider for administrative services. According to this guidance, USAID may provide administrative services in place of State where the model can be demonstrated to achieve savings to the U.S. government and provide superior levels of customer satisfaction with services. Furthermore, in April 2012, State issued a cable to all posts endorsing the creation of alternate service providers where appropriate, consistent with GAO's recommendation.
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| Department of State | To help ensure that ICASS provides satisfactory and equitable administrative service, the Secretary of State, in close coordination with ICASS customer agencies, should develop additional uniform service standards and other performance measures that gauge ICASS service providers' progress in resolving major sources of customer dissatisfaction. |
The Department of State has taken several actions to address this recommendation. First, State has undertaken an effort to recalibrate uniform service standards for ICASS, evaluating whether the standard should be tightened or loosened and considering the relevance of what is being measured. As of August 2015, 23 standards have been recalibrated in the following areas: procurement, maintenance, supply requests, motor pool, human resources, property pick-up and delivery, printing, travel requests, information technology (IT) help desk, IT and telephone devices, and visitor access requests. Further, an interagency council has been established for motor pool services for two additional service standards. These services represented 85 percent of service requests in fiscal year 2013 and were prioritized based on the importance assigned to them by customers in the ICASS customer satisfaction survey. Also, additional governance councils that include customer agencies have been established to help identify other performance metrics or data elements that are helpful to managers and customers of ICASS services. Second, State has established a Quality Coordinator position to advocate for quality service provision and work to enhance a customer focused management strategy. State has developed and conducted training for Quality Coordinators, including a focus on customer service. At the end of each course, Quality Coordinators are expected to develop post-specific plans to address a customer service or process-related issued. Finally, State developed a new uniform service standard for visitor access requests.
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