You are given two reports by the government agency.  

Report 1:
State is the lead agency involved in implementing American foreign policy and representing the United States abroad. According to State and USAID’s joint strategic plan for fiscal years 2018 through 2022, State’s goals are to (1) protect America’s security at home and abroad, (2) renew America’s competitive advantage for sustained economic growth and job creation, (3) promote American leadership through balanced engagement, and (4) ensure effectiveness and accountability to the American taxpayer. State’s Foreign Service employees serve in a variety of functions at overseas posts as either generalists or specialists. Foreign Service generalists help formulate and implement U.S. foreign policy and are assigned to work in one of five career tracks: consular, economic, management, political, or public diplomacy. Generalists at overseas posts collect information and engage with foreign governments and citizens of foreign countries and report the results of these interactions back to State headquarters in Washington, D.C., among other functions. Foreign Service specialists abroad support and maintain the functioning of overseas posts and serve in one of 25 different skill groups, in positions such as security officer or information management. Specialists at overseas posts play a critical role in ensuring the security and maintenance of the posts’ facilities, computer networks, and supplies as well as the protection of post staff, their family members, and local staff, among other functions. State may require Foreign Service employees to be available for service anywhere in the world, as needed, and State has the authority to direct Foreign Service employees to any of its posts overseas or to its headquarters in Washington, D.C. However, as noted in our 2012 report, State generally does not use this authority, preferring other means of filling high-priority positions, according to State officials. The process of assigning Foreign Service employees to their positions typically begins when they receive a list of upcoming vacancies for which they may compete. Foreign Service employees then submit a list of positions for which they would like to be considered, known as bids, to the Office of Career Development and Assignments and consult with their career development officer. The process varies depending on an officer’s grade and functional specialty, and State uses a variety of incentives to encourage Foreign Service employees to bid on difficult-to-fill posts. State groups countries of the world—and corresponding U.S. overseas posts in these countries—into areas of responsibility under six geographic regional bureaus: Bureau of African Affairs Bureau of East Asian and Pacific Affairs Bureau of European and Eurasian Affairs Bureau of Near Eastern Affairs Bureau of South and Central Asian Affairs Bureau of Western Hemisphere Affairs Overseas posts report to State headquarters through their respective regional bureaus. For example, because the Bureau of African Affairs has responsibility for developing and managing U.S. policy concerning parts of the African continent, U.S. overseas posts in Nigeria report through the bureau to State headquarters. According to State officials, State maintains personnel data on State employees in its GEMS database. GEMS includes information on Foreign Service and Civil Service positions; in particular, it shows the total number of authorized Foreign Service positions at State and whether each position is currently filled or vacant. As displayed in figure 1, the GEMS data show that the majority of Foreign Service employees (73 percent) work in positions at overseas posts. However, some Foreign Service staff (27 percent) are assigned to positions in the United States, where they may complete required language or other training, serve as desk officers for the regional bureaus, or work in other functions at State headquarters. According to State data, the number of both staffed and vacant overseas Foreign Service positions increased between 2008 and 2018. As shown in figure 2, the number of positions staffed grew from 6,979 in 2008 to 8,574 in 2018—a more than 20 percent increase. Despite the increase in the number of positions staffed, our analysis found that as of March 31, 2018, overall, 13 percent of State’s overseas Foreign Service positions were vacant. This vacancy percentage is similar to the percentages of vacancies in overseas Foreign Service positions that we reported in 2012 and 2008. In 2012, we reported that 14 percent of State’s overseas Foreign Service positions were vacant as of October 31, 2011, and we reported that the same percentage of overseas Foreign Service positions—14 percent—were vacant as of September 30, 2008. According to State officials, State’s ability to hire Foreign Service employees to fill persistent vacancies has been affected by factors such as reduced appropriations. For instance, according to State officials and State’s Five Year Workforce Plan, because of funding cuts enacted in fiscal year 2013, State could only hire one employee for every two leaving the Foreign Service. From fiscal years 2014 to 2016, funding for State’s annual appropriations supported hiring to replace Foreign Service employees projected to leave the agency, according to State officials. These officials indicated, however, that Foreign Service hiring was again impacted from January 2017 through May 2018 by a hiring freeze. As a result, State hired below levels required to replace full projected attrition of Foreign Service employees. While State’s data show persistent vacancies in both generalist and specialist positions at overseas posts, specialist positions remain vacant at a higher rate. State’s data show that 12 percent (680 of 5,660) of overseas Foreign Service generalist positions were vacant as of March 31, 2018, a slight decrease from the 14 percent of overseas Foreign Service generalist positions that we reported vacant in 2012. State’s data also show that 14.2 percent (594 of 4,188) of all overseas Foreign Service specialist positions were vacant, close to the 14.8 percent vacancy rate that we reported in 2012. State’s data show persistent vacancies in Foreign Service generalist positions responsible for analysis, engagement, and reporting at overseas posts. As shown in table 1, among Foreign Service generalist career tracks, the political, economic, and “other” tracks had the largest percentage of vacant positions, with, respectively, 20 percent, 16 percent, and 14 percent of positions vacant as of March 31, 2018. Our 2012 report noted vacancies in the same three career tracks. Political officers at overseas posts are responsible for collecting and analyzing information on political events, engaging with foreign governments, and reporting back to State headquarters. Economic officers at overseas posts work with foreign governments and other U.S. agencies on technology, science, economic, trade, and environmental issues. The “other” generalist career track includes positions designated as “Executive” or “International Relations,” which, according to State officials, may be filled by generalists from any of State’s five career tracks. State’s data show persistent vacancies in Foreign Service specialist positions that support and maintain the functioning of overseas posts. Among the 10 largest Foreign Service specialist skill groups, security officer, office management specialist, and information management had the largest percentages of vacant positions. As shown in figure 3, in these three groups, respectively, 16 percent, 16 percent, and 14 percent of positions were vacant. The vacancies in these three specialist skill groups are persistent; in 2012, we reported that the same three groups had the largest numbers of vacant positions. Security officers are typically responsible for responding to various threats to the physical security of overseas posts and for ensuring the protection of post staff, their family members, and local staff. Office management specialists provide professional management and administrative support. Information management staff are typically responsible for maintaining and ensuring the security of State’s computer networks and communications systems at overseas posts. State officials said that State has had difficulty in recruiting and hiring Foreign Service employees to fill specialist positions in some skill groups at overseas posts. According to State officials and staff at overseas posts, some vacant specialist positions are more difficult to fill than others because candidates for these positions must often possess skills in fields such as medicine or information technology that tend to be highly sought after in the private sector. According to staff at overseas posts, it is not uncommon for specialist candidates in these fields to choose higher- paying jobs in the private sector rather than specialist positions in the Foreign Service. Additionally, in some circumstances, State must compete with other federal agencies to recruit specialists from the same limited pool of talent. Consequently, according to State officials, State has been unable to attract and retain personnel with the skills necessary to fill some Foreign Service specialist positions, which has led to persistent vacancies in specialist positions. Vacancies in Foreign Service specialist positions at overseas posts present additional challenges because specialized skills and competencies are often required to perform the work of these positions. According to State officials, because Foreign Service generalists may be assigned to work outside of their career tracks, in some circumstances, State has more flexibility in filling a generalist vacancy than a specialist vacancy. For example, generalists outside the consular career track can serve as a consular officer for one or more tours of duty. However, specialist positions often require specialized skills or experience that generalists may not possess. In addition, according to staff at overseas posts, it is generally not possible for a Foreign Service specialist from one skill group to perform the work of a Foreign Service specialist from a different skill group. For instance, a Foreign Service specialist assigned to the medical section at a post will not be able to help address the workload of a vacant position in the information management section. Thus, according to staff at overseas posts, vacancies in specialist positions at the posts may create greater challenges than vacancies in generalist positions. According to State’s data, as of March 31, 2018, overseas posts with State’s highest foreign policy priorities had the highest percentages of vacant Foreign Service positions. Using its Overseas Staffing Model process, State assigns each embassy to one of seven categories based primarily on the level and type of work required to pursue the U.S. government’s diplomatic relations with the host country at post. As we previously reported, the rankings are closely associated with the department’s foreign policy priorities; the higher the category, the greater the resources needed to conduct the work of the overseas post and the higher the post’s foreign policy priority. For example, the highest-level category, level 5+, includes the largest, most comprehensive full-service posts, where the host country’s regional and global role requires extensive U.S. personnel resources. The lowest-level category includes small embassies with limited requirements for advocacy, liaison, and coordination in the host country’s government. As shown in table 2, according to State’s data, as of March 31, 2018, overseas posts in the “Embassy 5+” category had the highest percentage of vacant positions. The results of this analysis were similar to those we reported in 2012. While State has Foreign Service vacancies worldwide, as of March 31, 2018, the highest percentages of vacancies were in the South and Central Asian Affairs Bureau (SCA) and Near Eastern Affairs Bureau (NEA)—bureaus representing regions with heightened security risks that could threaten U.S. foreign policy interests, according to State. SCA, which includes countries such as Afghanistan, Pakistan, and India, faces a host of security and stability challenges that could threaten U.S. interests, according to a February 2018 report from State’s Office of Inspector General. NEA includes countries, such as Egypt, Iraq, and Saudi Arabia, which have faced numerous security threats in recent years that could also threaten U.S. interests overseas. As shown in figure 4, among State’s regional bureaus, as of March 31, 2018, SCA and NEA had the highest percentages of overseas Foreign Service vacancies at 21 percent (238 of 1,115 positions) and 18 percent (234 of 1,279 positions), respectively. In 2012, we reported that these two bureaus also had the highest percentages of overseas Foreign Service vacancies among regional bureaus. Vacancies in Foreign Service positions at overseas posts increase workloads and adversely affect the morale of Foreign Service employees. According to State officials in headquarters and staff at overseas posts, when a Foreign Service position at an overseas post is vacant, Foreign Service employees at that post are generally responsible for covering the workload of the vacant position. Further, Foreign Service employees at some posts—particularly posts with fewer Foreign Service staff—may be responsible for covering the workload of multiple vacant positions. For example, at two African posts we heard examples of Foreign Service employees covering the workload of multiple vacant Foreign Service positions. As a result of increased workloads, Foreign Service employees are also more likely to have less time available to perform some important functions, according to staff at overseas posts. According to staff at overseas posts, such functions include training and supervising entry- level Foreign Service employees, local staff, and eligible family members (EFM); reducing the risk of fraud, waste, and abuse; improving and innovating processes at post that could reduce inefficiencies; initiating and implementing projects that could enhance various diplomatic efforts; and conducting maintenance of systems. In addition, according to staff at overseas posts, vacancies adversely affect staff morale. Staff at multiple posts said that vacancies and the resulting increased workloads had created substantial stress and increased “burnout” of Foreign Service employees at the posts. They noted that these levels of stress and burnout had contributed to Foreign Service employees’ ending their overseas assignments early for medical or personal reasons. These curtailments, in turn, had increased the overall vacancies and their effects at overseas posts. According to staff at overseas posts, vacancies in Foreign Service generalist positions at overseas posts adversely affect State’s diplomatic readiness. Among Foreign Service generalist career tracks, the political and economic career tracks had the two largest percentages of vacant positions—20 percent and 16 percent, respectively—as of March 31, 2018. According to staff at overseas posts, vacancies in political and economic positions at overseas posts—particularly posts with fewer Foreign Service employees—limit the amount of reporting on political and economic developments that posts are able to submit back to State headquarters. For example, Foreign Service employees from three posts in Africa told us that persistent, long-term vacancies in those posts’ political and economic positions had constrained their abilities to provide full reporting on political and economic developments in their host countries. According to staff at overseas posts, reporting on political and economic developments in other countries—submitted by overseas posts back to State headquarters—is essential for State to make informed foreign policy decisions. Foreign Service employees from two posts in large countries in East and South Asia also told us that vacancies in these sections had limited their capacity to engage with host government officials on important, strategic issues for the United States, such as reducing nuclear proliferation or enhancing trade and investment relationships with the United States. Vacancies in the political and economic career tracks at overseas posts could adversely affect State’s ability to achieve two of the goals in State and USAID’s joint strategic plan for fiscal years 2018 through 2022—(1) renew America’s competitive advantage for sustained economic growth and job creation and (2) promote American leadership through balanced engagement. According to staff at overseas posts, vacancies in Foreign Service specialist positions at overseas posts may heighten the level of security risk at the posts and disrupt post operations. Among Foreign Service specialist skill groups with the highest number of vacant positions, security officer, office management specialist, and information management had the largest percentages of vacant positions—16 percent, 16 percent, and 14 percent, respectively—as of March 31, 2018. According to staff at overseas posts, vacancies in security officer positions at overseas posts reduce the amount of time that security staff can spend identifying, investigating, and responding to potential security threats to the post. Security officers are also responsible for identifying and analyzing host-country intelligence-gathering efforts at their respective overseas posts—and post staff told us that, because of vacancies in these positions, some security officers had been unable to complete this work for their posts, potentially increasing the risk of foreign government officials gaining access to sensitive information. Also, post staff told us that security officer vacancies limit the amount of time that security officers present at posts can devote to important security oversight activities, including regular training, drilling, and supervising of local guard forces and security contractors. Post staff noted, for example, that security officers at overseas posts should conduct regular training and drilling exercises to evaluate their local guard force’s effectiveness in searching a vehicle entering the post compound for explosive devices. According to post staff, when these important security oversight activities are not properly and regularly conducted, the level of security risk at these overseas posts may increase. According to State officials in headquarters and staff at overseas posts, as well as reporting by State’s OIG, vacancies in information management positions at overseas posts have increased the vulnerability of posts’ computer networks to potential cybersecurity attacks and other malicious threats. State officials told us that the Foreign Service had faced chronic shortages of information management staff available to fill these positions worldwide. According to State officials, because of ongoing information management vacancies, some required tasks—such as conducting planned network maintenance—were performed infrequently or not at all. In another example, staff at overseas posts said that because of vacancies, information management staff had been unable to regularly check their computer system logs to ensure that security breaches had not taken place. Post staff added that, if a breach did occur, vacancies could increase the amount of time needed to identify an attack and deploy countermeasures, further increasing the risks to posts’ computer networks. Inspections conducted by State’s OIG from fall 2014 to spring 2016 found that information management staff at 33 percent of overseas posts had not performed various required information management duties. According to State’s OIG, neglect of these duties may leave the department vulnerable to increased cybersecurity attacks. According to staff at overseas posts, the office management specialist position at overseas posts has evolved considerably over time; these specialists increasingly play a critical role in ensuring that the work of overseas posts is effectively completed. Post staff said that office management specialists provide administrative and other support services to other Foreign Service employees and are assigned to various sections of post. For example, staff at one post noted that office management specialists assigned to the Security Officer sections at overseas posts reduce the workload of security officers by completing more routine security tasks and allowing the security officers to focus on more challenging or involved tasks necessary to secure overseas posts. Post staff told us that vacancies in office management specialist positions reduce the amount of work that can be completed by other Foreign Service employees at overseas posts. For example, when office management specialist positions assigned to the Security Officer or Information Management sections of posts are vacant, these vacancies further exacerbate the higher number of vacancies that already exist in these sections. According to staff at overseas posts, higher numbers of office management specialist vacancies require other Foreign Service employees to spend a significant amount of time on administrative tasks, reducing the amount of time these staff can spend on mission-critical activities. Officials in headquarters and at overseas posts described various State efforts to help address overseas Foreign Service vacancies. According to State officials, Foreign Service vacancies at overseas posts are a complex problem that multiple offices within State address on an individual basis. State’s various efforts to address overseas Foreign Service vacancies are not guided by an integrated action plan to reduce persistent vacancies. Our 2017 High-Risk Series report calls for agencies to, among other things, design and implement action plan strategies for closing skills gaps. The action plan should (1) define the root cause of all skills gaps within an agency and (2) provide suggested corrective measures, including steps necessary to implement solutions. This report also emphasizes the high risk that mission-critical skills gaps in the federal workforce pose to the nation. While various State offices have implemented the efforts we identified, State lacks an action plan that is integrated—or consolidated—across its relevant offices to guide its efforts to address persistent overseas Foreign Service vacancies. Moreover, some staff at overseas posts acknowledged that the efforts State has taken to help address vacancies have not reduced persistent Foreign Service vacancies, notably in specialist positions. In response to our inquiry about an action plan, State officials said that the agency does not have a single document that addresses Foreign Service staffing gaps at overseas posts. Instead, State officials directed us to State’s Five Year Workforce Plan: Fiscal Years 2016-2020, stating that it was the most comprehensive document that outlines State’s efforts to address Foreign Service vacancies at overseas posts. The workforce plan notes that it provides a framework to address State’s human capital requirements and highlights State’s challenges and achievements in recruiting, hiring, staffing, and training Foreign Service staff. However, in reviewing the portions of the workforce plan that State indicated were most relevant, we found that the workforce plan does not include an integrated action plan that defines the root causes of the persistent overseas Foreign Service vacancies we identified or suggest corrective measures to reduce vacancies in these positions, including steps necessary to implement solutions. State officials also noted that they frequently meet to discuss and address workforce issues. For example, they said they convene a multi-bureau planning group that meets biweekly to discuss strategic workforce issues such as hiring needs based on attrition and other issues. However, according to State officials, this group has not developed an action plan to reduce persistent Foreign Service vacancies at overseas posts. State lacks an integrated action plan to guide its efforts to address persistent Foreign Service vacancies that includes corrective measures to address the root causes of the vacancies. Without defining the root causes of persistent Foreign Service vacancies at overseas posts and identifying appropriate corrective measures, overseas vacancies may persist and continue to adversely affect State’s ability to achieve U.S. foreign policy goals. Foreign Service generalists and specialists at overseas posts are critical to advancing U.S. foreign policy and economic interests abroad. However, for at least a decade, the Foreign Service has had persistent vacancies in both generalist and specialist positions at overseas posts. In particular, large numbers of vacant positions have persisted over time in certain overseas Foreign Service positions, such as information management and security officer positions. These vacancies in critical positions at overseas posts have adversely affected State’s ability to carry out its mission effectively and threaten State’s ability to ensure the security and safety of its employees, their families, and post facilities. While State has made some efforts to address Foreign Service vacancies, addressing chronic vacancies in critical positions at overseas posts requires a thoughtful, coherent, and integrated action plan that defines the root causes of persistent Foreign Service vacancies at overseas posts along with suggested corrective measures to reduce such vacancies, following what was called for in our 2017 High-Risk Series report. Developing such an action plan would help State address its persistent staffing gaps, improve its ability to achieve U.S. foreign policy goals, and help ensure secure and efficient operations. The Secretary of State should develop an integrated action plan that defines the root causes of persistent Foreign Service vacancies at overseas posts and provides suggested corrective measures to reduce such vacancies, including steps necessary to implement solutions. (Recommendation 1) We provided a draft of this report to State for review and comment. In its comments, reproduced in appendix III, State concurred with our recommendation. State also noted that it has taken actions and identified some causes of vacancies, but acknowledged that it lacks an integrated action plan and will take steps to develop such a plan. State also provided technical comments, which we incorporated as appropriate. We are sending copies of this report to the appropriate congressional committees, the Secretary of State, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-6881 or bairj@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV. This report examines (1) vacancies in the Department of State’s (State) Foreign Service staffing at overseas posts, (2) reported effects of Foreign Service vacancies on diplomatic readiness, and (3) State’s efforts to address Foreign Service vacancies. To address these three objectives, we interviewed State officials from the department’s Bureau of Human Resources and Bureau of Consular Affairs as well as State officials representing the Offices of the Executive Director for State’s six regional bureaus. We also interviewed staff at 10 overseas posts. We conducted in-person interviews with staff at 3 of these posts—the U.S. Embassy in Beijing and the U.S. Consulate in Shanghai, China, and the U.S. Embassy in New Delhi, India. We conducted telephone interviews with staff at the other 7 posts—the U.S. Embassies in Abuja, Nigeria; Bogota, Colombia; Kinshasa, Democratic Republic of the Congo; Kabul, Afghanistan; Mexico City, Mexico; and N’Djamena, Chad; and the U.S. Consulate in Frankfurt, Germany. We used the following criteria to select overseas posts for interviews: (1) posts with larger numbers of Foreign Service vacancies; (2) posts with diversity in the types of Foreign Service positions that were vacant; (3) posts with higher relative importance to U.S. economic, national security, and other foreign policy interests; and (4) posts in a range of geographic locations by State region. To examine vacancies in State’s Foreign Service staffing at overseas posts, we analyzed State’s personnel data on Foreign Service staffing at overseas posts from the department’s Global Employment Management System (GEMS), as of March 2018. Our analysis of the GEMS data includes Foreign Service positions filled by permanent Foreign Service employees as well as positions filled by nonpermanent Foreign Service employees, such as Consular Fellows. This analysis does not include the number of staffed and vacant positions at overseas posts in Libya, Syria, and Yemen, which, at the time of our review, were in suspended operations status, as well as U.S. Mission Somalia, which was operating under special circumstances at a different location. To calculate vacancy rates, we divided the total number of positions by the number of positions listed as vacant in GEMS. For example, a post with 10 positions and 2 vacancies would have a vacancy rate of 20 percent. We calculated vacancy rates for each of the following categories: type (i.e., generalist or specialist), function (e.g., consular or information management), regional bureau (i.e., Bureau of African Affairs or Bureau of Western Hemisphere Affairs), and embassy and nonembassy rankings from State’s Overseas Staffing Model (i.e., Embassy 3+ or 5). According to State officials, the data in GEMS have a number of limitations: The number of vacant positions at overseas posts listed in GEMS may be overstated, because State has not yet decided to remove some of these positions from its database. Some of the vacancies in GEMS are short-term or temporary. Foreign Service employees periodically rotate out of their positions at their overseas posts, sometimes creating temporary vacancies until the positions are filled by incoming Foreign Service employees. The GEMS data show larger numbers of vacant Foreign Service positions at posts in Afghanistan, Iraq, and Pakistan than actually were unstaffed at these posts. According to State officials, this discrepancy results from State’s relying heavily on shorter-term assignments to fill Foreign Service positions at these locations. These shorter-term assignments are not reflected in GEMS, and the positions therefore appear vacant. The GEMS data may not reflect Foreign Service employees who have been temporarily reassigned from one overseas post to another. The GEMS data may show positions as filled although the Foreign Service employee filling the position has not yet arrived at post. To assess the reliability of the GEMS database, we asked State officials whether State had made any major changes to the database since our 2012 report, when we assessed the GEMS data to be sufficiently reliable. State officials indicated that no major changes had been made. We also tested the data for completeness, confirmed the general accuracy of the data with officials at selected overseas posts, and interviewed knowledgeable officials from State’s Office of Resource Management and Organizational Analysis concerning the data’s reliability. We found the GEMS data to be reliable for the purpose of determining the numbers and percentages of vacant Foreign Service positions at overseas posts. We did not validate whether the total number of authorized overseas Foreign Service positions was appropriate or met State’s needs. We also reviewed State workforce planning documents and budget documents, such as State’s Five Year Workforce and Leadership Succession Plan: Fiscal Years 2016-2020 and Quadrennial Diplomacy and Development Review. In addition, we reviewed State Office of Inspector General reports as well as our previous reports on human capital challenges at State and effective strategic human capital management across the federal government. In particular, our report High-Risk Series: Progress on Many High-Risk Areas, While Substantial Efforts Needed on Others notes that strategic human capital management is a high-risk issue across the federal government and lists five key elements as a road map for agency efforts to improve and ultimately address such issues. For our third objective, we assessed whether State’s efforts to address vacancies were guided by a corrective action plan that identifies the root causes of persistent Foreign Service vacancies at overseas posts and suggests corrective measures to reduce such vacancies, including steps necessary to implement solutions. We conducted this performance audit from August 2017 to March 2019 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. The “Economic” generalist career track includes positions from the “Science Officer” staffing skill group in the GEMS data. 170 Foreign Service employees were not staffed to one of the six regional bureaus. In addition to the contact named above, Godwin Agbara (Assistant Director), Ian Ferguson (Analyst-in-Charge), Anthony Costulas, Natalia Pena, Debbie Chung, Chris Keblitis, Reid Lowe, Justin Fisher, and Alexander Welsh made key contributions to this report.

 

 Report 2:
Oil and petroleum products markets have changed substantially in the years since the establishment of the SPR. Specifically, U.S. domestic crude oil production has generally been increasing, consumption has been relatively stable, and crude oil and petroleum products markets have become increasingly global. Additionally, U.S. crude oil production is projected to rise further in the future, according to EIA and IEA projections, further reversing a decades-long decline. Recent technological improvements have made onshore production from shale formations economically viable, and domestic crude oil production began to rise in about 2008. The combination of increasing production and relatively stable consumption has resulted in declining net crude oil and petroleum products imports, from a high of about 12 million barrels per day in 2005 to fewer than 4 million barrels per day in 2017. Since these trends are expected to continue, the IEA and EIA both project net U.S. crude oil and petroleum products imports will decline to zero sometime in the late 2020s and the United States will become a net exporter shortly thereafter. Since the IEA 90-day reserve obligation is based on a country’s net imports, there is no such obligation for net exporters; therefore, the United States would have no 90-day reserve obligation as long as it is a net exporter, though it would still be obligated to release reserves in response to supply disruptions. Over the longer term, EIA’s projections show U.S. net exports peaking in 2037 and the United States again becoming a net importer between 2040 and 2050. At the time of the Arab oil embargo, price controls in the United States prevented the prices of oil and petroleum products from increasing as much as they otherwise might have, contributing to a physical oil shortage that caused long lines at gasoline stations throughout the United States. In addition, in the 1970s, oil prices were often set in long-term contracts, which meant that prices would not automatically rise in the face of greater scarcity. This generally reduced incentives for producers to expand production and sales as well as for consumers to reduce consumption in the face of greater scarcity caused by a supply disruption. Now that crude oil and petroleum product markets are global, the prices of these commodities are determined in the world market, primarily on the basis of supply and demand. In the absence of long-term contracted prices or price controls, scarcity from a supply disruption is generally expressed in the form of higher prices, as purchasers are free to bid as high as they are willing to pay to secure oil supply. In a global market, a large enough supply disruption anywhere in the world raises prices everywhere. This creates incentives for producers unaffected by the disruption to increase their production and release existing inventories and for consumers everywhere to reduce consumption in the ways they find most efficient and least disruptive. While it can take time for some of these actions to affect crude oil and petroleum product markets—according to DOE officials, it can take approximately 6 months from when a producer drills an oil well until oil production comes on line—all these actions tend to mitigate the effects of supply disruptions. The Energy Policy and Conservation Act of 1975 authorized the creation of the SPR, partly in response to the Arab oil embargo of 1973-1974 that caused a shortfall in the international oil market. The purposes of the SPR are, among other things, to reduce the impact of disruptions in supplies of petroleum products and to carry out obligations of the United States under the international energy program. Specifically, the 1974 International Energy Program Agreement, a joint strategy and treaty, established the IEA to address oil security issues on an international scale. The SPR is owned by the federal government, managed by DOE’s Office of Petroleum Reserves, and maintained by Fluor Federal Petroleum Operations LLC. The SPR stores crude oil in underground salt caverns along the Gulf Coast in Louisiana and Texas. The SPR currently maintains four storage sites—Bayou Choctaw, Big Hill, Bryan Mound, and West Hackberry—with a design capacity of 713.5 million barrels. Under conditions prescribed by the Energy Policy and Conservation Act, as amended, the President has discretion to authorize the release of petroleum products from the SPR to minimize significant supply disruptions. When oil is released from the SPR, it is distributed through commercial pipelines or on waterborne vessels to refineries, where it is converted into gasoline and other petroleum products, and then transported to distribution centers for sale to the public. According to DOE documents, well-functioning infrastructure is fundamental to the SPR’s ability to maintain operational readiness and meet mission requirements. However, most of the critical infrastructure for moving SPR oil has exceeded its serviceable life, which has led to increasing maintenance costs and decreasing system reliability. Specifically, the reserve relies on a complex system of salt caverns, pipelines, wells, and pumps, with other infrastructure and equipment. Any failures, such as ruptured pipelines, could affect the readiness of a site for an oil release. According to DOE officials, a growing backlog of major maintenance needs raises concerns about the ability of the system to operate as designed. In addition, there have been equipment failures that have rendered parts of the system temporarily inoperable. For example, the SPR has experienced at least five major equipment failures since fiscal year 2013, including the Big Hill site pipe failure shown in figure 1. The United States has two regional petroleum product reserves—the Northeast Home Heating Oil Reserve and the Northeast Gasoline Supply Reserve. The Northeast Home Heating Oil Reserve, which is not part of the SPR, holds 1 million barrels of ultra low sulfur distillate, a petroleum product essentially equivalent to diesel fuel but that is also used for heating oil. The Northeast United States is heavily dependent on the use of heating oil in winter months. The distillate is stored in leased commercial tank storage in terminals in Connecticut, Massachusetts, and New Jersey. In 2000, the President directed the creation of the reserve to hold approximately 10 days of inventory, the time required for ships to carry additional heating oil from the Gulf of Mexico to New York Harbor. The Northeast Gasoline Supply Reserve, a part of the SPR, holds 1 million barrels of gasoline for consumers in the northeastern United States. According to DOE’s website, this region is particularly vulnerable to gasoline disruptions as a result of hurricanes and other natural events. For example, Hurricane Sandy caused widespread gasoline shortages in the region in 2012. DOE conducted a test sale of the SPR in 2014 and used a portion of the proceeds from the sale to create the reserve. The gasoline is stored in leased commercial tank storage in terminals in Maine, Massachusetts, and New Jersey. The SPR helps the United States meet its IEA obligation to hold the equivalent of 90 days of net imports of crude oil and petroleum products. In order to meet the IEA 90-day reserve obligation, countries, including the United States, can count existing private reserves of crude oil and petroleum products in addition to public reserves (in the United States, the SPR). In most years, the United States has met its 90-day reserve obligation with a combination of SPR and private reserves. The days of import protection may vary based on actual net U.S. crude oil and petroleum products imports as well as the inventory levels of the SPR and private reserves. As discussed previously, because the IEA 90-day reserve obligation is based on a country’s net imports, there is no such reserve obligation for countries that are net exporters of crude oil and petroleum products. The United States also relies on the SPR to meet its IEA obligation to release reserves in the event of a collective action to respond to a supply disruption. Countries contribute to an IEA collective action based on their share of IEA oil consumption, and they can meet their obligation by whatever measure they choose, including release of public or private reserves, or demand restraint. IEA collective actions are designed to mitigate the negative effects of sudden supply shortages by making additional crude oil and petroleum products available to the global market through a combination of emergency response measures, which include increasing supply and reducing demand. In the event of a global market disruption, IEA member countries can call for a collective action after reaching consensus on whether a response is needed. DOE stated that the collective action IEA obligation is more relevant to the SPR’s mission of protecting the U.S. economy from severe petroleum supply interruptions than the 90-day reserve obligation. The United States has participated in each of the three IEA collective actions. In 1991, with the commencement of Operation Desert Storm, DOE released 17.3 million barrels of SPR crude oil. After Hurricane Katrina in 2005, DOE released 11 million barrels of SPR crude oil. Most recently, in June 2011, in response to crude oil supply disruptions driven by hostilities in Libya, DOE released 30.6 million barrels of crude oil from the SPR. The Libya collective action is an example of how, in practice, member countries participate according to national circumstances. After consultations with IEA member countries, all IEA member countries agreed to the Libya collective action, under which 12 of the 28 members at that time contributed to the action. In addition to the three IEA collective actions, the SPR has been used 10 times in response to U.S. domestic supply disturbances that were not IEA collective actions, most notably in response to severe weather events. In terms of how they meet their IEA obligations, most other IEA members differ from the United States in two basic ways. Specifically, as of December 2017, most IEA members rely at least in part on private rather than public reserves to meet their obligations, and most hold significant proportions of these reserves as petroleum products rather than as crude oil. In December 2017, before Mexico joined the IEA in early 2018, there were 29 member countries. Of these 29 countries, 25 IEA members had two common attributes: (1) as net importers, they had a 90-day reserve obligation and met that obligation, and (2) they had formal processes for holding and releasing these reserves. As of December 2017, 18 of these 25 members relied entirely or in part on private reserves to meet their reserve obligations. Specifically, based on IEA data as of December 2017, these 18 countries met their 90-day reserve obligation through private reserves and either had no public reserves or had public reserves of less than 90 days. According to a 2014 IEA report, some of these countries require industry to hold reserves and, when needed, release them. For example, according to a 2014 IEA report and documentation provided by government officials, the United Kingdom meets its entire obligation by requiring private industry to hold reserves. In contrast, New Zealand had publicly held reserves amounting to 26 days of net imports, according to IEA data as of December 2017. According to a 2014 IEA report, New Zealand relied on industry reserves held for commercial purposes to meet the rest of its 90-day reserve obligation, although New Zealand does not formally require industry to hold reserves specifically for this purpose. Unlike the 18 countries that rely at least in part on private reserves, as of December 2017, the United States and 6 other IEA members met the 90- day reserve obligation exclusively through public reserves. Specifically, according to IEA data on member reserves, Estonia, Finland, Germany, Hungary, Ireland, Japan, and the United States held public reserves equal to 90 days or more of net imports. Although the United States currently meets its IEA 90-day reserve obligation solely with public reserves, for most of the SPR’s existence, public reserves were insufficient to meet this obligation, so the United States also had to rely on private reserves. Specifically, according to EIA data, the United States has relied, at least in part, on private reserves together with the SPR to meet the 90-day reserve obligation with the exception of two time periods (1984-1987 and 2012-present), when the United States has relied solely on the SPR. The United States does not require industry to hold reserves for the purposes of meeting IEA obligations. Figure 2 compares the United States’ reserves in days of net imports to the IEA’s 90-day reserve obligation. According to a 2014 IEA report, most IEA members hold at least a third of their reserves as petroleum products, such as gasoline and diesel fuel, rather than as crude oil. Holding petroleum products can be advantageous during certain disruptions because such reserves can be directly distributed to consumers, whereas crude oil must first be refined and turned into products, adding response time. According to the IEA’s 2014 report, Germany’s stockholding agency holds 55 percent of its reserve as petroleum products. Similarly, France holds only petroleum products that are distributed geographically across the country so that the reserves can be used quickly in the event of a supply disruption. In contrast, more than 99 percent of the SPR (665.5 million barrels as of March 2018) is held as crude oil, all of which is stored at the four storage sites in Louisiana and Texas. The exception is the Northeast Gasoline Supply Reserve, which, as mentioned previously, is a 1 million barrel gasoline reserve in terminals in Maine, Massachusetts, and New Jersey that was established in 2014 after Hurricane Sandy and that is considered part of the SPR. According to DOE officials, there are several reasons the SPR holds predominantly crude oil, including that it is more costly to store petroleum products than crude oil and that the United States has the largest refining capacity of any IEA member country. Because of the large U.S. refining sector, crude oil from the SPR can be domestically refined into petroleum products to meet demand. Some IEA member countries store some of their reserves abroad, though the United States does not. According to a 2014 IEA report, some IEA member countries allow part of their reserves to be stored abroad to leverage spare storage capacity or more cost-effective storage by utilizing available storage space or excess private reserves in other countries. For example, approximately 30 percent of Ireland’s reserves are held in other European Union countries. In some of these cases, countries use short-term contracts, also known as tickets, instead of directly acquiring and storing oil and petroleum products. For example, according to documents provided by government officials, since 1995 the United Kingdom has increased its reserves held under ticket agreements outside of the country from around 10 percent of its total reserves to more than 25 percent. In addition, unlike the United States, some IEA countries specify the size of their public or private reserves in terms of net imports or consumption, rather than a specific volume. In the United States, the total volume of crude oil and petroleum products held in the SPR is the result of amounts historically purchased to fill the reserve and subsequent sales as mandated by Congress or released in response to a supply disruption. According to DOE, it cannot otherwise reduce or increase volumes held in reserve without congressional action—either through requirements to purchase additional oil or laws authorizing or mandating sales. On the other hand, some IEA countries have tied their reserves’ volumes of crude oil and petroleum products to a metric such as days of net imports or a percent of consumption. For example, according to documentation provided by government officials, in 2015 Japan changed how it specifies its target reserves from a specified amount to days of net imports. In specifying the size of reserves in this way, the amount held is adjusted as market conditions change—for example, if net imports change and require more or fewer reserves to meet the IEA 90-day reserve obligation, or when other underlying factors affecting a nation’s energy security needs change. While DOE has examined a range of sizes for the SPR, it has not identified the optimal size for the SPR to meet U.S. energy security needs and IEA obligations, and DOE’s analysis of SPR sizes was limited in three ways. DOE also has not identified whether additional regional petroleum product reserves should be part of the SPR in U.S. regions identified as vulnerable to fuel supply disruptions. DOE has not identified the optimal size for the SPR and though the agency examined a range of SPR sizes, its analysis was limited in at least three ways. In response to direction from Congress and recommendations from GAO and the DOE Inspector General, DOE developed and published a long-term strategic review of the SPR in August 2016. In DOE’s 2016 review, the agency examined the expected economic benefits of SPR sizes ranging from 430 million to 695 million barrels of oil over a 25-year time horizon (2016 through 2040), but it did not recommend an optimal size for the reserve. DOE’s review did not identify the optimal size for the SPR because of three limitations: DOE did not fully evaluate implications of market fluctuations and estimate needs. DOE did not fully evaluate the implications of falling net imports of crude oil and petroleum products with respect to meeting IEA obligations to hold the equivalent of 90 days of net imports and to respond to collective actions. As mentioned previously, the United States is expected to become a net exporter of crude oil and petroleum products by the late 2020s. Since the IEA 90-day reserve obligation is based on a country’s net imports, this means that at that point the United States would not have a 90-day reserve obligation. However, even as a net exporter, the United States would still have to meet the IEA obligation to respond to a collective action. Yet, DOE’s analysis did not evaluate the SPR’s configuration as it relates to projected fluctuations in net imports or estimate the minimal amount of reserves needed to meet potential future collective actions. Without considering projected fluctuations in net imports or providing an analysis of how much oil is estimated to be needed to meet IEA collective actions, DOE cannot fully advise Congress on the optimal size of the SPR. DOE did not consider private-sector response. DOE’s analyses in its 2016 review focused on the publicly held reserves in the SPR as the only means to respond to oil supply disruptions and did not consider a response from the private sector or through consumers reducing demand. According to DOE’s 2016 review, the underlying analysis for the benefits of the SPR did not consider a response from the private sector for three reasons: (1) while U.S. commercial stocks could conceivably address part of a supply disruption, private industry could also hold oil inventories in a crisis instead of releasing them; (2) unlike most other IEA member countries, the United States does not require private-sector response; and (3) research on the exact nature of private-sector response during a disruption is needed. DOE officials told us the agency has not studied the extent to which SPR releases of crude oil displace what would otherwise have been private releases of inventories. As we reported in September 2014, changing market conditions— most importantly the significant increase in domestic production of oil—have implications for the SPR’s size because increased production has led to increasing private reserves. According to IEA data as of December 2017, U.S. private reserves held the equivalent of 194 days of net import protection coverage, up from about 59 days in 2006. Further, private reserves in the United States consist of both crude oil and petroleum products with more than half in the latter category. For example, as of January 2018, total private reserves of crude oil and petroleum products were about 1.215 billion barrels, of which about 420 million barrels were in the form of crude oil and 795 million barrels were petroleum products, according to the EIA. As of 2013, these private reserves were distributed across the entire country in more than 1,400 terminals, according to the EIA. As we reported in December 2007, international trade in oil and petroleum products has expanded significantly over the past 2 decades, making markets for gasoline and other petroleum products increasingly global in nature. In such a global oil market, higher levels of private reserves can benefit the United States and the rest of the world by helping mitigate a supply disruption. Most experts and stakeholders we interviewed generally agreed that the private sector is in a better position to respond to supply disruptions than they were when the SPR was created. With regard to demand response, DOE officials told us they do not consider this because there is no mechanism to require industry to respond to supply disruptions or consumers to reduce demand in response to a supply disruption. However, DOE has not studied how voluntary response to changes in petroleum product prices affects the need for or efficacy of strategic releases. Without conducting an analysis of how private parties respond to supply disruptions, DOE cannot advise Congress on the optimal size of the SPR because it cannot know how effective such private responses could be in mitigating supply disruptions. DOE did not fully examine costs of differently sized reserves. DOE’s review of the expected economic benefits of differently sized reserves did not fully examine the corresponding costs of those sizes. According to DOE officials, there was no requirement or need to conduct a formal cost benefit analysis of the SPR because the SPR’s oil acquisition and initial capital costs to create the reserve are sunk costs and the ongoing operational costs to maintain the reserve are minimal in comparison. However, this does not take into account the opportunity cost to the government that holding reserves represents; as Congress has mandated several times recently, crude oil from the reserve can be sold to fund other federal priorities. Without additional analysis, such as of the costs and benefits of SPR’s size, DOE cannot fully advise Congress on the optimal size of the SPR. When we reviewed the SPR in 2006 and 2014, we found that DOE had not periodically re-examined the strategic reserves. In 2006, we recommended that the Secretary of Energy reexamine the appropriate size of the SPR. In its response to our recommendation, DOE stated that its reexamination had taken the form of more “actionable items,” including not requesting expansion funding in its 2011 budget and canceling and redirecting the prior year’s expansion funding to general operations of the SPR, based on the Administration’s decision that the SPR’s current size at the time was adequate. Similarly, as previously mentioned, in 2014 we found that changing market conditions have implications for the size, location, and composition of the SPR, but DOE had not reexamined the SPR’s size since 2005. Accordingly, we recommended that the Secretary of Energy undertake a comprehensive reexamination of the appropriate size of the SPR. In response to our recommendation, the 2014 DOE Inspector General recommendation mentioned previously, and the Bipartisan Budget Act of 2015, DOE published its 2016 review. As previously mentioned and reported, crude oil and petroleum markets are constantly changing, but DOE conducted its full evaluations of the SPR more than a decade apart. According to DOE officials, there is no formal policy to periodically reevaluate the SPR. We previously found that federal programs should be reexamined if there have been significant changes in the country or the world that relate to the reason for initiating the program. In that report, we found that many federal programs and policies were designed decades ago to respond to trends and challenges that existed at the time of their creation. Moreover, the Office of Management and Budget Circular A-94 for benefit-cost analysis of federal programs includes guidelines that apply to any analysis used to support government decisions to initiate, renew, or expand programs or projects that would result in a series of measurable benefits or costs extending for 3 or more years into the future. Given changing market conditions and future projections, without conducting additional analysis to supplement its 2016 review and thereafter periodically reexamining the SPR to take into account changes in market conditions and include a thorough consideration of the costs and benefits of a wide range of SPR sizes, DOE cannot provide information to Congress to inform decisions about the appropriate size of the SPR and risks holding too much or too little in the SPR to meet the United States’ evolving energy security needs and IEA obligations. DOE has also not fully identified whether additional regional petroleum product reserves should be part of the SPR. Because the SPR stores oil nearly exclusively along the Gulf Coast, the SPR is configured primarily to respond to global oil supply disruptions. However, as we reported in November 2017, the SPR has primarily been used in response to domestic disruptions. The SPR is limited in its ability to respond to domestic disruptions because reserves are almost entirely composed of crude oil and not refined petroleum products, which may not be effective in responding to disruptions that affect the refining sector. For example, as we reported in November 2017, Hurricanes Harvey, Irma, and Maria damaged infrastructure and property, caused the loss of life, and disrupted the operations of refineries representing at least 15 percent of the nation’s refining capacity. DOE has identified regions subject to product supply vulnerabilities as shown in Figure 3. The Quadrennial Energy Review of 2015 recommended that the agency analyze the need for additional or expanded regional product reserves by undertaking updated cost-benefit analyses for all of the regions of the United States that have been identified as vulnerable to fuel supply disruptions. In response to this recommendation, DOE studied the costs and benefits of regional petroleum product reserves in the West Coast and Southeast Coast. According to DOE officials, weather events in the Southeast Coast are of higher probability but lower consequence, and events in the West Coast are of lower probability but higher consequence. DOE did not finalize its 2015 studies on regional petroleum product reserves and make them publicly available. However, the draft 2015 studies concluded that a product reserve in the Southeast would provide significant net economic benefits to the region and the United States, particularly in the event of a major hurricane, while further analyses are needed to determine the potential benefits of a reserve on the West Coast. A prior DOE study also suggests that petroleum product reserves merit consideration—in 2011, DOE carried out a cost-benefit study of the establishment of a refined product reserve in the Southeast and estimated that such a reserve would reduce the average gasoline price rise by 50 percent to 70 percent in the weeks immediately after a hurricane landfall, resulting in consumer cost savings, according to the Quadrennial Energy Review of 2015. According to DOE officials, the agency has no plans to conduct additional studies. DOE’s 2016 review of the SPR did not fully assess whether there is a need for additional regional product reserves in other U.S. regions identified as vulnerable to fuel supply disruptions, as recommended by DOE’s studies and the 2015 Quadrennial Energy Review. Without completing studies on the costs and benefits of regional petroleum product reserves for all the vulnerable U.S. regions and publicly releasing the results, DOE cannot ensure that it and Congress have the information they need to make decisions about whether additional regional product reserves are needed. DOE has taken steps to take into account the effects of congressionally mandated oil sales in its plans for modernizing the SPR, though DOE’s current plans are based on information largely developed prior to the most recent congressionally mandated oil sales. According to DOE, the SPR modernization program is focused on a life extension project to modernize aging infrastructure to ensure the SPR will be able to meet its mission requirements for the next several decades. The project’s scope of work has undergone several revisions since its inception in response to changing conditions and requirements, according to the agency. DOE has estimated the total cost for the SPR’s modernization at up to $1.4 billion. DOE raised about $323 million for modernization through the sale of SPR oil in fiscal year 2017, and the Consolidated Appropriations Act of 2018 provided that DOE is to draw down and sell an amount of crude oil not to exceed $350 million for modernization in fiscal year 2018. As of the end of February 2018, DOE has spent $22 million on modernization efforts and the additional funds will allow DOE to continue moving forward with the project, according to agency officials. According to DOE’s modernization plans, the first major construction is scheduled for fiscal year 2019. However, these plans are largely based on information DOE analyzed before recent congressionally mandated sales of an additional 117 million barrels of oil. Since the most recent mandated sales, DOE has taken steps to update its modernization plans and has changed its assumptions for SPR’s modernization. For example, DOE now assumes that the reserve will hold about 405 million barrels of oil and that one of the four SPR sites may close after congressionally mandated sales are completed at the end of fiscal year 2027, according to agency officials. However, DOE has not fully updated the SPR’s modernization plans based on these assumptions. According to DOE officials, in March 2018, DOE commenced a study—the SPR post-sale configuration study—to examine potential future reserve configurations. This study is to take into account the effects of congressionally mandated sales on the reserve and its modernization, and is targeted for completion in October 2018, according to agency officials. Information from the study will inform DOE’s updates to the SPR’s modernization plans, according to DOE officials. As part of its post-sale configuration study, DOE plans to examine how the agency may handle the potentially excess SPR facilities created by the mandated sales. In January 2017, the SPR had a design capacity to hold 713.5 million barrels of oil and actually held 695 million barrels. As shown in figure 4, without action by DOE to reduce the SPR’s design capacity or otherwise use SPR facilities, congressionally mandated sales will cause excess storage capacity to grow to 308 million barrels or more by the end of fiscal year 2027—meaning that about 43 percent of the SPR’s total design capacity to store oil would be unused. DOE plans to explore some options to use these potentially excess SPR assets in its ongoing post-sale configuration study. In withdrawing oil to meet congressionally mandated oil sales currently in place (290 million barrels through fiscal year 2027), DOE could close at least one SPR site based on our analysis of projected excess storage capacity. For example, if DOE were to close the smallest SPR site, Bayou Choctaw, the agency could also explore selling the connected pipeline and marine terminal, which are currently being leased to a private company. DOE could also consider leasing excess storage capacity to other countries so that they could store oil at the SPR. DOE has not entered into any such leases with other countries and has not considered such leases because, according to DOE, the SPR has historically lacked capacity to store additional oil. DOE has not proposed any of these options or explored the revenue the agency could generate by selling or leasing these assets. According to DOE officials, the agency will examine the feasibility of such options in the ongoing SPR post-sale configuration study. As DOE takes steps to plan for the SPR’s modernization, ongoing uncertainty regarding the SPR’s long-term size and configuration have complicated DOE’s efforts. According to DOE officials, this uncertainty makes it extremely difficult to effectively perform any mid-to long-range planning efforts for the SPR’s modernization project, including the execution of major maintenance projects. Congress has generally set the SPR’s size by mandating purchases or sales of oil, and has established and amended the minimum size of the SPR as it pertains to the release of oil for emergency protection. Since 2015, Congress has, across six pieces of legislation, mandated 290 million barrels in additional oil sales. However, DOE developed its modernization plans in 2016. DOE officials told us they do not know whether additional sales will be mandated over the next 10 years or whether other changes may be required to the configuration of the reserve. Any additional congressionally mandated sales or direction to pursue additional petroleum product reserves would require DOE to again revisit its modernization plans and assessments of the potential uses of any excess SPR assets. Oil market projections also have implications for the future of the SPR. Under current projections, the United States may fluctuate between being a net importer and net exporter over the next several decades. Specifically, the United States is projected to become a net exporter by the late 2020s and would then no longer have a 90-day reserve obligation, but it is projected to return to being a net importer between 2040 and 2050. These projected fluctuations could affect the desired size of the SPR in the future. This uncertainty creates risks for DOE’s modernization plans, as DOE may end up spending funds on facilities that later turn out to be unnecessary should Congress ultimately decide on a larger- or smaller-sized SPR than DOE anticipates. Having a long-term target for the size and configuration of reserves helps other IEA member countries manage their reserves. For example, as previously discussed, unlike the United States, some other IEA members have specified in dynamic terms the amount of reserves to be held, such as days of net import protection or days of consumption, rather than specifying a specific static volume amount. Under such approaches, the amount held varies over time as entities managing the reserve acquire or sell reserves in order to meet the target. Setting a long-term target for the size and configuration of the SPR—taking into account projections for oil production, consumption, and IEA obligations—could better position DOE to ensure that funds spent on the SPR’s modernization do not modernize a system that is no longer needed and that DOE is able to adequately plan for potentially excess SPR assets. In the course of our work, we also identified other options for handling potentially excess SPR assets that DOE is not planning on examining, largely because DOE does not currently have the authority to pursue them, according to agency officials. First, DOE could explore leasing storage capacity to private industry. U.S. oil production has generally increased over the last decade. As a result, the private sector may want to lease excess SPR capacity, which may be cheaper than above-ground storage, according to a representative of a private company we spoke with. Fees for doing so could help defray public reserve storage costs. However, officials told us that the Energy Policy and Conservation Act gives DOE authority to lease underutilized storage to other countries, but not to the private sector. Second, if Congress determines that the SPR holds oil in excess of that needed domestically, DOE could explore selling contracts or tickets for the excess oil rather than selling the oil outright. Australian and New Zealand officials told us that if DOE were to sell tickets for SPR oil, tickets would help these countries meet their IEA 90- day reserve obligations. Australian officials told us they have discussed this option with DOE. Currently the United States and Australia have agreed, through an arrangement, to allow Australia to contract for petroleum stocks located in the United States and controlled by commercial entities. According to DOE officials, the arrangement would permit Australia to receive credit from the IEA for tickets it purchases from the U.S. private sector. While the arrangement does not cover government-owned oil in the SPR, if it did, based on our analysis, DOE could generate up to approximately $15 million annually if Australia purchased the maximum allowable amount of oil specified in an arrangement through tickets for excess SPR oil. However, although the Energy Policy and Conservation Act allows DOE to lease underutilized storage to other countries, DOE lacks the authority to sell tickets and does not plan to seek this authority, according to DOE officials. DOE officials told us that they do not plan to examine these options. According to DOE’s real property asset management order, the agency is to identify real property assets that are no longer needed to meet the program’s mission needs and that may be candidates for reuse or disposal. Once identified, the agency is to undertake certain actions, including determining whether to dispose of these assets by sale or lease. As part of its SPR post-sale configuration study, DOE plans to determine whether it is appropriate to close SPR facilities, and the relative benefit of any closures would be informed by potential lease revenues from maintaining sites so they could be leased, according to officials. However, without examining a full range of options in the post-sale configuration study, DOE risks missing beneficial ways to modernize the SPR while saving taxpayer resources. Given changing crude oil and petroleum product market conditions and the constrained budget environment, it is important that DOE ensures the SPR is effective at meeting U.S. energy security needs and IEA obligations while being managed and maintained in an efficient manner. In response to congressional direction and recommendations from GAO and DOE Inspector General, DOE conducted a long-term strategic review of the SPR in 2016 after its last comprehensive examination in 2005. In its review, DOE did not determine an optimal size for the SPR, and its analysis was limited in several ways. In particular, DOE did not fully consider recent and expected future changes in crude oil and petroleum market conditions such as the implications of projected fluctuations in U.S. net imports or the role that increased levels of private reserves could play in responding to supply disruptions. DOE also did not perform a full cost-benefit analysis of holding different volumes of reserves. Without supplementing its 2016 strategic review by conducting additional analysis, and periodically conducting such analyses going forward, DOE cannot provide information to Congress to inform decisions about the appropriate amounts of crude oil and petroleum products to hold in the SPR and risks holding too much or too little in the SPR to meet the United States’ energy security needs and international obligations. Such information is needed on a timely basis, to reflect the pace of change in oil and petroleum markets and other relevant factors that affect the optimal size of the SPR. Though the SPR has primarily been used in response to domestic supply disruptions, such as hurricanes, the reserve is limited in this role because it is almost entirely composed of crude oil, and not petroleum products. In this regard, the Quadrennial Energy Review of 2015 recommended that DOE analyze the need for additional regional product reserves for U.S. regions that have been identified as vulnerable to fuel supply disruptions. DOE has not identified whether additional regional product reserves should be part of the SPR or completed studies of all vulnerable U.S. regions, and it has no plans to do so, according to DOE officials. Without conducting or completing studies for all the vulnerable U.S. regions and releasing the results, DOE cannot ensure it and Congress have the information they need to make decisions about potential additional regional product reserves. In the face of declining net U.S. imports, Congress has taken repeated steps to reduce the size of the reserve. Given that net imports are projected to continue to decline through the late 2020s and fluctuate in the future, there may be additional congressionally mandated SPR oil sales. This has created long-term uncertainty regarding the future size and configuration of the SPR. Congress could address this uncertainty by identifying a long-term target for the size of the SPR—either by volume or in terms tied to factors, such as consumption or net import protection, that affect the country’s energy security needs and IEA obligations. Setting such a long-term target could better position DOE to ensure the efficiency and efficacy of federal funds spent on the reserve. DOE has recently begun to study the potential effects of congressionally mandated sales on its modernization plans. As part of its SPR post-sale configuration study, DOE plans to determine whether it is appropriate to close SPR facilities, and the relative benefit of any closures would be informed by potential lease revenues from maintaining sites so they could be leased, according to officials. However, we identified other options for handling potentially excess SPR assets that DOE is not planning to examine in its study, inconsistent with the agency’s order on real property asset management. Although DOE does not currently have the authority to implement these options, according to officials, examining their potential use, including possible revenue enhancement, could inform Congress as it examines whether it should grant such authority. Without examining a full range of options in the post-sale configuration study for handling potentially excess SPR assets, DOE risks missing beneficial ways to modernize the SPR while saving taxpayer resources. We are making the following matter for congressional consideration: Congress may wish to consider setting a long-range target for the size and configuration of the SPR that takes into account projections for future oil production, oil consumption, the efficacy of the existing SPR to respond to domestic supply disruptions, and U.S. IEA obligations. (Matter 1) We are making four recommendations to DOE: The Secretary of Energy should supplement the agency’s 2016 long-term strategic review by conducting an additional analysis that takes into account private-sector response, oil market projections, and costs and benefits of a wide range of different SPR sizes. (Recommendation 1) The Secretary of Energy should take actions to ensure that the agency periodically conducts and provides to Congress a strategic review of the SPR that, among other things, takes into account changes in crude oil and petroleum product market conditions and contains additional analysis, such as the costs and benefits of a wide range of different SPR sizes. (Recommendation 2) The Secretary of Energy should conduct or complete studies on the costs and benefits of regional petroleum product reserves for all U.S. regions that have been identified as vulnerable to fuel supply disruptions, and the Secretary should report the results to Congress. (Recommendation 3) The Secretary of Energy, in completing DOE’s ongoing study on the effects of congressionally mandated sales, should consider a full range of options for handling potentially excess assets and, if needed, request congressional authority for the disposition of these assets. (Recommendation 4) We provided a draft of this report to DOE for review and comment. DOE provided written comments, which are reproduced in appendix I. Of the four recommendations, DOE agreed with two, partially agreed with one, and disagreed with one. Regarding our recommendation that DOE supplement its 2016 long- term strategic review with an additional analysis that takes into account private sector response, oil market projections, and costs and benefits of a wide range of different SPR sizes, the agency partially agreed with the recommendation. DOE agreed to conduct an additional analysis to assess the purpose, goals, and objectives of the SPR, taking into account private sector response, oil market projections, and any other relevant factors, that will lead to an evaluation of possible optimal sizes of the SPR in the future. In response to taking into account the costs and benefits of a wide range of different SPR sizes, DOE stated that the agency determined the projected benefits of a wide range of different SPR sizes ranging from 430 million barrels of oil to 695 million barrels of oil in its 2016 review. However, the minimum SPR size considered by DOE is greater than the projected SPR size after congressionally mandated sales have occurred. Further, the SPR size after congressionally mandated sales is projected to be far in excess of the IEA obligation to hold a minimum of 90 days of net imports. DOE must also consider the minimum size needed to meet its IEA obligations in the event of a collective action. In conducting additional analysis, DOE should consider a smaller lower bound, in line with congressionally mandated sales, for the size of the SPR, and more fully consider the size needed to meet the IEA 90-day net import and collective action obligations. Regarding our recommendation that DOE conduct periodic reviews of the SPR, the agency agreed with the recommendation. DOE stated that a 5-year time interval between reviews would strike an appropriate balance between the need to periodically conduct a strategic assessment and evaluation of the SPR and the limitations on resources to plan and conduct such a review. Regarding our recommendation that DOE conduct or complete studies on the costs and benefits of regional petroleum product reserves, the agency disagreed. DOE stated that it is the agency's position that government owned and operated regional petroleum product reserves are an inefficient and expensive solution to respond to regional fuel supply disruptions. DOE further stated, based on studies done in 2015 that DOE officials told us were pre-decisional and therefore could not be reported, that there are additional concerns associated with government-owned and operated regional refined petroleum product reserves, including little to no storage capacity for lease in commercial terminals and high costs for government owned and operated regional product reserves. However, these same studies took these concerns into account, and concluded that a product reserve in the Southeast would provide significant net economic benefits (benefits minus costs) to the region and the United States in the event of a major hurricane. These studies also concluded that additional analyses are required to inform decisions regarding the potential benefits of a similar reserve on the West Coast. Further, the Quadrennial Energy Review of 2015 recommended that similar analyses be completed for other areas deemed by DOE to be vulnerable to fuel supply disruptions. Therefore, we continue to believe that conducting these analyses, as recommended in the Quadrennial Energy Review of 2015, will provide Congress with information needed to make decisions about regional product reserves. Regarding our recommendation that DOE consider a full range of options for handling potentially excess assets, DOE agreed with the recommendation. DOE stated that in its ongoing study, the agency will include an assessment of disposition options for any potential excess or underutilized SPR assets, to include the need for new legislative authority, as necessary, for the disposition of assets. DOE expects this study to be completed in October 2018. DOE also provided technical comments, which we incorporated, as appropriate. As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the appropriate congressional committees, the Secretary of Energy, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov. If you or your staff members have any questions about this report, please contact me at (202) 512-3841 or ruscof@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II. In addition to the individual named above, Quindi Franco (Assistant Director), Nkenge Gibson (Analyst-in-Charge), Philip Farah, Ellen Fried, Cindy Gilbert, Greg Marchand, Celia Mendive, Patricia Moye, Camille Pease, Oliver Richard, Dan Royer, Rachel Stoiko, and Marie Suding made key contributions to this report.

Question: Write a one-page summary of the report 1.

Answer: State staffs Foreign Service employees to more than 270 embassies and consulates worldwide to advance U.S. foreign policy and economic interests. In 2009 and 2012, GAO identified ongoing Foreign Service staffing gaps. GAO was asked to review State's Foreign Service staffing. This report examines (1) vacancies in State's Foreign Service staffing at overseas posts, (2) reported effects of Foreign Service vacancies on diplomatic readiness, and (3) State's efforts to address Foreign Service vacancies. To address these objectives, GAO analyzed State's Global Employment Management System data as of March 2018. The system includes information on Foreign Service and Civil Service positions, including the total number of authorized Foreign Service positions and whether each position is filled or vacant. GAO also reviewed its relevant prior reports and State workforce planning documents. In addition, GAO interviewed State staff at 10 overseas posts, selected on the basis of large numbers of Foreign Service vacancies and diversity in the types of Foreign Service positions that were vacant at these posts, among other factors. The Department of State's (State) data show persistent Foreign Service vacancies at overseas posts since 2008. According to the data, 13 percent of overseas Foreign Service positions were vacant as of March 2018. This percentage is similar to the percentages GAO reported for 2008 and 2012, when 14 percent of these positions were vacant. In addition, State's data show persistent vacancies at overseas posts in generalist positions that help formulate and implement U.S. foreign policy and in specialist positions that support and maintain the functioning of overseas posts. State's data also show persistent Foreign Service vacancies at overseas posts with State's highest foreign policy priorities and in regions with security risks that could threaten U.S. foreign policy interests. According to staff at overseas posts, Foreign Service vacancies adversely affect State's ability to carry out U.S. foreign policy. Staff at overseas posts told us that vacancies increase workloads, contributing to low morale and higher stress for Foreign Service staff and that vacancies in Political and Economic positions—20 percent and 16 percent, respectively—limit the reporting on political and economic issues that posts are able to provide to State headquarters. Notably, officials also stated that vacancies in specialist positions may heighten security risks at overseas posts and disrupt post operations. For instance, some overseas post staff said that vacancies in Information Management positions had increased the vulnerability of posts' computer networks to potential cybersecurity attacks and other malicious threats. State described various efforts—implemented by multiple offices in the department —to help address overseas Foreign Service vacancies, but these efforts are not guided by an integrated action plan to reduce persistent vacancies. An example of State's efforts is the “Hard-to-Fill” program, which allows Civil Service staff an opportunity to fill a Foreign Service vacancy on a single overseas tour. According to GAO's 2017 High-Risk Series report, an agency should design and implement an action plan—integrated across its relevant offices—that defines the root causes of all skills gaps and suggests corrective measures. However, State has not developed such an action plan for reducing persistent overseas Foreign Service vacancies. Without developing an integrated action plan, overseas Foreign Service vacancies may persist. As a result, State's ability to achieve U.S. foreign policy goals and help ensure secure and efficient operations could be adversely impacted. GAO recommends that State develop an integrated action plan that defines the root causes of persistent Foreign Service vacancies at overseas posts and suggests corrective measures to reduce such vacancies. State concurred with our recommendation and noted that it will take steps to develop an integrated action plan.