State Department:

Options for Reducing Overseas Housing and Furniture Costs

NSIAD-98-128: Published: Jul 31, 1998. Publicly Released: Jul 31, 1998.

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GAO reviewed the practices of the private sector and other foreign governments to determine whether those practices offer the potential to reduce overseas housing costs and provide quality services for Department of State and other agencies.

GAO noted that: (1) its examination of practices in the private sector suggests that several options may exist to reduce State's overseas residential housing and furniture costs, including: (a) using relocation companies and similar service providers to search for housing and negotiate leases to reduce in-house support costs, and shift some property preparation and related maintenance expenses to landlords; (b) providing employees with housing allowances to select their own homes rather than managing and maintaining a housing pool of government leases and preassigning residences; and (c) shipping employees' household effects and/or acquiring furniture overseas as an option to operating an extensive government-buying and inventory program; (2) GAO's analysis of State's processes shows that State has not based its current approach to providing overseas residential housing and furniture on a comparative cost analysis; (3) based on GAO's analysis of selected posts, State could potentially reduce its costs by adopting some or all of these practices; (4) GAO's analysis of practices in Brussels and London showed that State's internal housing support costs are several hundred thousand dollars greater than the costs that would be incurred if homefinding services were outsourced to a relocation company; (5) such practices are potentially applicable for a large number of annual relocations that State and other agencies conduct; (6) expanding housing allowance programs consistent with practices of the private sector could also result in recurring savings, primarily by minimizing in-house support requirements; (7) private-sector practices indicate that two options should be considered for reducing costs associated with residential furniture; (8) State could ship employees' household effects as its primary means of furnishing residences; (9) actual shipping data show that State often ships nearly the same amount of employees' household effects to posts offering government furniture as it does to its unfurnished posts; (10) thus, an expansion in the number of unfurnished posts could occur with relatively minor increases in shipping costs for household effects and avoid the often significant procurement, storage, and handling costs associated with the government furniture program; (11) the second option is to give overseas posts the alternative of acquiring furniture on the local market; and (12) cost savings would potentially result from lower furniture prices and reduced shipping, inland transportation, and inventory costs.

Recommendations for Executive Action

  1. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of State should direct the Under Secretary for Management to establish a pilot program for testing the practices GAO identified for leasing and furnishing of overseas residences. The pilot should be coordinated through the International Cooperative Administrative Support Services framework at the pilot posts, which provides a mechanism to fully document direct and indirect costs of alternatives and involve all key agencies operating at posts. Options that should be in the pilot include outsourcing homefinding, expanding the use of housing allowances, increasing the use of the employees' household effects, and procuring furniture locally.

    Agency Affected: Department of State

  2. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Under Secretary for Management should designate specific posts for the pilot. GAO believes that the pilot should initially focus on 6-8 posts. GAO believes that good candidates include Brussels, London, Paris, the Hague, Singapore, Bangkok, San Jose, Nassau and Mexico City.

    Agency Affected: Department of State: Office of the Undersecretary for Management

  3. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: If the pilot tests confirm the cost advantages of one or more of the practices, the Under Secretary should also establish an implementation plan for a larger roll-out of these practices.

    Agency Affected: Department of State: Office of the Undersecretary for Management

 

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