Testimony 

Before the Subcommittee on National Security, 

Emerging Threats, and International Relations, 

Committee on Government Reform, 

House of Representatives

United States General Accounting Office 

GAO

For Release on Delivery 

Expected at 1 p.m., EST 

Monday, April 7, 2003 OVERSEAS PRESENCE

Systematic Processes 

Needed to Rightsize Posts 

and Guide Embassy 

Construction 

Statement of Jess T. Ford, Director 

International Affairs and Trade 

GAO-03-582T 
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reproduce this material separately. 
In July 2002, GAO presented a rightsizing framework outlining a systematic 

approach for assessing overseas workforce size that considers security, 

mission, and cost. GAO recommended that the Office of Management and 

Budget (OMB) use the framework as part of the administration’s rightsizing 

initiative, and OMB is now using it to review posts in Europe and Eurasia. 

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

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

West Africa to address concerns about whether the framework could be 

applied uniformly at all posts. GAO’s analysis indicates that the rightsizing 

framework can be applied at U.S. embassies in developing countries. 

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

compounds are developed without a systematic approach or comprehensive 

rightsizing analyses. Moreover, State provides little formal guidance on 

factors to consider when projecting staffing needs. Further, there is a lack 

of documentation on projection exercises and factors staff considered when 

developing projections. Finally, staffing projections are not consistently 

vetted with all other agencies’ headquarters. These and other deficiencies 

could lead the government to build wrong-sized buildings. 

OMB is leading an interagency committee to develop a cost-sharing 

mechanism that would provide more discipline when determining overseas 

staffing needs and encourage agencies to think more carefully before 

posting staff overseas. Numerous issues will need to be resolved for such a 

program to be successful, including how to structure the program and how 

payments will be made. 

Assessing Overseas Workforce Size Using GAO’s Rightsizing Framework 

More than 60,000 Americans and 

foreign nationals work at about 260 

diplomatic posts worldwide. Since 

the mid-1990s, GAO has highlighted 

the need for State and other federal 

agencies to establish a systematic 

process for determining their 

overseas staffing levels, 

particularly after the 1998 

bombings of two U.S. embassies in 

Africa. GAO was asked to discuss 

three reports, including two being 

issued today, on rightsizingthat 

is, realigning the number and 

location of staffat U.S. embassies 

and consulates: (1) the rightsizing 

framework GAO developed last 

year, (2) follow-on work to further 

test the framework, and (3) the 

processes to project staffing levels 

for new embassy construction and 

the proposals to share construction 

costs among U.S. agencies. 

 

GAO recommends that OMB 

expand the use of our rightsizing 

framework and that State adopt 

additional measures to ensure that 

U.S. agencies take a systematic 

approach to assessing workforce 

size that considers security, 

mission, and cost factors. GAO 

also recommends that State 

develop guidance on a systematic 

approach for developing and 

vetting staffing projections for new 

diplomatic compounds. 

Both OMB and State agreed with 

GAO’s recommendations. 

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

To view the full report, including the scope 

and methodology, click on the link above. 

For more information, contact Jess Ford at 

(202) 512-4128 or fordj@gao.gov. 

Highlights of GAO-03-582T, testimony 

before the Subcommittee on National 

Security, Emerging Threats, and 

International Relations, House Committee 

on Government Reform 

April 7, 2003

OVERSEAS PRESENCE

Systematic Processes Needed to 

Rightsize Posts and Guide Embassy 

Construction 
Page 1 GAO-03-582T Overseas Presence 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here to discuss GAO’s work on rightsizing the U.S. 

overseas presence—that is, deciding the number and types of personnel 

that should be assigned to our embassies and consulates. The U.S. 

overseas presence is significant—more than 60,000 Americans and foreign 

nationals representing approximately 40 U.S. departments and agencies 

overseas work at about 260 diplomatic posts worldwide. Since the mid1990s, we have highlighted the need for the Department of State and other 

federal agencies to establish a systematic process for determining their 

overseas staffing levels. The administration, through the President’s 

Management Agenda,

1

 has directed all agencies operating overseas to 

rightsize their presence. The administration’s initiative aims to put the 

right people in the right places overseasand to station the minimum 

number necessaryto meet U.S. foreign policy goals. Because of the 

security threats facing many of our embassies, which are heightened by 

the current war in Iraq, as well as changes in foreign policy missions and 

priorities and the high costs of maintaining our significant presence, this 

effort is vitally important. 

Today I will discuss the three reports we have issued on rightsizing issues 

since I testified before this subcommittee almost a year ago,2

 two of which 

are being released today.3

 These reports describe (1) the rightsizing 

framework we developed last year, (2) the results of applying the 

framework in developing countries, and (3) the processes used to project 

staffing levels for new embassy construction and proposals to share 

construction costs among U.S. agencies. 

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

determining overseas staffing requirements, in July 2002 we presented a 

 1

Office of Management and Budget, The President’s Management Agenda, Fiscal Year 

2002 (Washington, D.C.: Aug. 2001). 

2

U.S. General Accounting Office, Overseas Presence: Observations on a Rightsizing 

Framework, GAO-02-659T (Washington, D.C.: May 1, 2002). 

3

U.S. General Accounting Office, Overseas Presence: Rightsizing Framework Can Be 

Applied at U.S. Diplomatic Posts in Developing Countries, GAO-03-396 (Washington, 

D.C.: Apr. 7, 2003), and U.S. General Accounting Office, Embassy Construction: Process 

for Determining Staffing Requirements Needs Improvement, GAO-03-411 (Washington, 

D.C.: Apr. 7, 2003). 

Summary 
Page 2 GAO-03-582T Overseas Presence 

rightsizing framework4 that provides a systematic approach. The 

framework is a set of questions designed to link staffing levels to three 

critical elements of overseas diplomatic operations: (1) physical/technical 

security of facilities and employees, (2) mission priorities and 

requirements, and (3) cost of operations. This is the same framework that I 

described in testimony before this subcommittee in May 2002. Our 

framework provides guidance for assessing overseas workforce size and 

identifying options for rightsizing by using a set of standard criteria to help 

ensure greater accountability and transparency. Therefore, we 

recommended that the Office of Management and Budget (OMB) use it as 

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

rightsizing initiative. OMB is using our framework in its ongoing review of 

staffing at embassies and consulates in Europe and Eurasia. (See app. 1 for 

our rightsizing framework.) 

Following our July report and in response to your request, we examined 

whether our framework could be applied at other U.S. embassies in 

developing countries. We are issuing a report on this work today.5

 Our 

analysis of three embassies we visited in West Africa indicates that the 

rightsizing framework can be applied at U.S. embassies in developing 

countries. Officials in State’s Bureau of African Affairs and other 

geographic bureaus agreed that broad application of the framework and 

its corresponding questions would provide a logical and commonsense 

approach to systematically considering rightsizing issues in both 

developed and developing countries. We are recommending that the 

Director of OMB, in coordination with the Secretary of State, expand the 

use of our framework in assessing staffing levels at all U.S. embassies and 

consulates. We are also recommending that the Secretary of State include 

the framework as part of State’s mission performance planning process.6

In response to a draft of our report, State has agreed to incorporate 

elements of the framework into its future planning processes. 

 4

U.S. General Accounting Office, Overseas Presence: Framework for Assessing Embassy 

Staff Levels Can Support Rightsizing Initiatives, GAO-02-780 (Washington, D.C.: July 26, 

2002). 

5

GAO-03-396. 

6

Mission Performance Plans (MPP) are annual embassy plans that link performance goals 

and objectives to staffing and budgetary resources needed to accomplish them in a given 

fiscal year. 
Page 3 GAO-03-582T Overseas Presence 

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

systematic process for determining staffing requirements can have serious 

repercussions.7

 State has embarked on a multiyear, multibillion-dollar 

facility replacement program. The size and cost of these facilities depend 

on the staffing projections developed by U.S. agencies. We found that 

staffing projections for new embassy compounds are developed without a 

consistent, systematic approach or comprehensive rightsizing analyses. 

Moreover, State headquarters provides little formal guidance to embassy 

teams—those who develop the projections—on factors to consider when 

projecting staffing needs, nor does it stress the importance of accurate 

projections. Further complicating the process is the frequent turnover of 

embassy personnel responsible for developing projections, combined with 

posts’ failure to document how projections were developed or the 

underlying support for staffing decisions. Finally, staffing projections are 

not consistently vetted with all other agencies’ headquarters. To help 

ensure that the U.S. government builds rightsized facilities, we are 

recommending adoption of a more disciplined and systematic process for 

projecting staffing requirements. In comments on a draft of our report, 

State agreed to implement our recommendations. 

The report also discusses the administration’s plan to require agencies to 

pay a greater share of the costs associated with their overseas presence, 

which could include the costs of embassy construction. Currently, most 

agencies are not required to pay for new embassy construction. The 

administration believes that implementing such a plan could encourage all 

agencies to weigh cost considerations more carefully before posting 

personnel overseas. OMB is leading an interagency effort aimed at creating 

a cost-sharing mechanism. It may be reasonable to expect agencies to 

share the costs of new embassy construction, but there are many factors 

and questions to consider before an effective and equitable cost-sharing 

program can be implemented. 

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

resulted in more than 220 deaths and 4,000 injuries, a series of high-level 

and independent studies called for the reassessment of staffing levels at 

 7

GAO-03-411. 

Background 
Page 4 GAO-03-582T Overseas Presence 

U.S embassies and consulates.8 In August 2001, the President’s 

Management Agenda directed all agencies to rightsize their overseas 

presence to the minimum personnel necessary to meet U.S. policy goals. 

In May 2002, we testified before this subcommittee on a rightsizing 

framework we developed to guide decisions on the appropriate number of 

staff to be assigned to a U.S. embassy.9

 The framework includes questions 

about (1) the security of embassy buildings, use of existing space, and 

vulnerability of staff to terrorist attack; (2) justification of agency staffing 

levels relative to embassy priorities and the extent to which it is necessary 

for each agency to maintain or change its presence in a country; and (3) 

development and consolidation of cost information from all agencies at a 

particular embassy to fully document operational costs and permit costbased decision making. Our framework also includes questions that assess 

the feasibility of rightsizing options, such as reassigning staff to the United 

States or to regional centers and competitive sourcing.10

In addition to recommending that agencies rightsize their overseas 

presence, one group of experts recommended major capital improvements 

to U.S. overseas facilities. In response, State initiated a major building 

program to provide new facilities at about 185 locations worldwide. This is 

a large-scale program that will cost an estimated $16 billion to complete. 

State received close to $2.6 billion for new embassy compound 

construction in fiscal years 1999 through 2003 and has requested 

approximately $760 million for projects in fiscal year 2004. Figure 1 shows 

the locations where State plans to build new compounds with these funds. 

 8

Former Secretary of State Madeleine Albright appointed Accountability Review Boards to 

investigate the facts and circumstances surrounding the 1998 embassy bombings. 

Department of State, Report of the Accountability Review Boards on the Embassy 

Bombings in Nairobi and Dar Es Salaam (Washington, D.C.: Jan. 1999). Secretary 

Albright also established the Overseas Presence Advisory Panel to consider the 

organization and condition of U.S. embassies. Department of State, America’s Overseas 

Presence in the 21st Century, The Report of the Overseas Presence Advisory Panel 

(Washington, D.C.: Nov. 1999). 

9

GAO-02-659T. 

10With enactment of the Federal Activities Inventory Reform Act of 1998 (P.L. 105-270), 

Congress mandated that U.S. government agencies identify activities within each office that 

are not “inherently governmental,” that is, commercial activities. Competitive sourcing 

involves using competition to determine whether a commercial activity should be 

performed by government personnel or contractors. The President’s Management Agenda 

states that competition historically has resulted in a 20-to 50-percent cost savings for the 

government. 
Page 5 GAO-03-582T Overseas Presence 

Figure 1: Map of New Embassy Compound Construction Projects, Fiscal Years 1999 through 2004 Funding 

Note: The facilities in Cape Town, Istanbul, and Surabaya are U.S. consulates. We did not include 

other projects, such as the construction of new annex buildings on existing compounds, for which 

State has received or requested funding during this period. 

a

Indicates new compound projects for which State has requested funding in fiscal year 2004. 
Page 6 GAO-03-582T Overseas Presence 

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

July 2002 we issued a report that presented the framework in more detail.11

We recommended that OMB use the framework as a basis for assessing 

staffing levels as part of the administration’s rightsizing initiative, starting 

with its planned assessments of staffing levels and rightsizing options at 

U.S. embassies in Europe and Eurasia. OMB adopted the basic elements of 

our framework in its ongoing assessment of staffing at these posts. OMB 

adapted the framework into a questionnaire, which it sent to all U.S. 

agencies at all posts in this region. It expects to finish analyzing responses 

to the questionnaire later this year. More recently, OMB has convened an 

interagency rightsizing committee comprising agency staff from 

throughout the federal government to 1) reach agreement on a common 

set of criteria to be applied when assessing staffing at posts worldwide, 

and 2) develop standard accounting procedures for assessing embassies’ 

operating costs. 

In addition, Mr. Chairman, other agencies have taken rightsizing initiatives 

that are consistent with our framework. For example, State’s Bureau of 

European and Eurasian Affairs has urged chiefs of mission12 to review all 

current and future staffing requests filed under National Security Decision 

Directive number 38 (NSDD-38) “through the optic of rightsizing and 

regionalization.”13 In addition, the Department of the Treasury now 

requires that all proposals for adding staff positions overseas be 

accompanied by an analysis of the costs associated with that position. For 

the first time, the U.S. Agency for International Development is pursuing a 

strategic human capital initiative, and has sought GAO’s advice on how to 

use our framework to align its staffing overseas. We have also briefed 

others on the framework at their request, including geographic bureaus at 

State, the OMB-led interagency rightsizing task force, and congressional 

staff. In addition, State’s Office of the Inspector General has incorporated 

a standard set of rightsizing questions in its methodology for conducting 

 11GAO-02-780. 

12According to the Foreign Service Act of 1980 (P.L. 96-465), as amended, “chiefs of 

mission” are principal officers in charge of diplomatic missions of the United States or of a 

U.S. office abroad, such as U.S. ambassadors, who are responsible for the direction, 

coordination, and supervision of all government executive branch employees in a given 

foreign country (except employees under a military commander). 

13NSDD-38, “Staffing At Diplomatic Missions and Their Overseas Constituent Posts,” signed 

June 2, 1982, requires all agencies with staffs operating under the authority of chiefs of 

mission to seek the chief of mission’s approval on any proposed changes in size, 

composition, or mandate of any staff elements at an overseas facility. 

GAO’s Rightsizing 

Framework and Its 

Use 
Page 7 GAO-03-582T Overseas Presence 

post inspections. These questions incorporate the basic elements of, and 

include some of the same questions as, our rightsizing framework. Finally, 

State recently purchased a former military hospital in Frankfurt, Germany, 

in part as a rightsizing effort to provide a secure facility for personnel who 

furnish diplomatic, programmatic, and administrative services to 

embassies throughout Europe, the Middle East, and Africa. At your 

request, we are currently reviewing State’s plans for this facility, which we 

will report on later this year. 

State has expressed concerns about the relative importance assigned to 

security, mission, and cost in our framework. State believes the most 

important question for decision makers is whether the United States has a 

compelling reason to assign staff to a particular location, noting that it 

may be necessary to station staff in certain locations despite security 

concerns and high costs. We agree that in some circumstances, the 

mission benefits of stationing staff in a certain location may carry more 

weight than either security or cost considerations. However, there may be 

other circumstances where security or cost carry more weight. For 

example, in testimony last month before the Senate Foreign Relations 

Committee, we reported that there are serious security concerns at many 

embassy and consulate facilities around the world and that thousands of 

employees may be at risk.14 At one post we visited, staff are assigned to a 

building that does not meet all of State’s key security standards. This 

building is very vulnerable to terrorists because it is bordered on three 

sides by public streets and on one side by a public gas station (see fig. 2). 

Decision makers need to carefully consider the security risks to staff 

stationed in this building. Our framework encourages decision makers to 

analyze security, mission, and cost collectively in deciding whether they 

are willing to accept the risk and pay the cost of stationing personnel 

overseas to meet mission requirements. 

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

Facilities, GAO-03-557T (Washington, D.C.: Mar. 20, 2003). 
Page 8 GAO-03-582T Overseas Presence 

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

Concern 

Our work at three embassies in West Africa illustrates that our framework 

could be used to address the importance of facility security in making 

decisions to change staffing levels. It could also be used to identify and 

exercise rightsizing actions and options, such as adjusting staffing 

requirements, competitively sourcing certain commercial goods and 

services, and streamlining warehousing operations. For example, if the 

U.S. embassy in Dakar, Senegal, used our framework to complete a full 

and comprehensive analysis of the services it provides or could provide to 

other embassies in the region, in conjunction with analyses of mission 

priorities and requirements of other embassies in West Africa, then 

staffing levels could be adjusted at some of the region’s posts. One 

rightsizing option suggests assessing the feasibility of competitively 

sourcing the work of painters, upholsterers, electricians, and others 

currently employed by the embassy to yield cost savings and reduce staff 

requirements. This could have a particularly significant impact at Embassy 

Dakar, which employs more than 70 staff working in these types of 

GAO Rightsizing 

Framework Can Be 

Applied at Posts 

Worldwide 
Page 9 GAO-03-582T Overseas Presence 

positions.15 Applying elements of the rightsizing framework and the 

corresponding questions collectively can lead decision makers to 

rightsizing actions and other options. Figure 3 illustrates the application of 

the framework at Embassy Dakar. 

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

In our report released today, we are recommending that OMB, in 

coordination with State, ensure that application of our framework be 

expanded as a basis for assessing staffing levels at embassies and 

consulates worldwide. In comments on a draft of our report, OMB agreed. 

In addition, in light of State’s predominant role in conducting foreign 

policy and the responsibilities of chiefs of missions at overseas posts, it is 

critical that State strengthen its management planning processes by 

 15During our work at the embassy in Paris, we identified as many as 50 positions at the post 

that are commercial in nature and responsible for providing services or goods that have the 

potential to be competitively sourced to the private sector or performed at another 

location. 
Page 10 GAO-03-582T Overseas Presence 

systematically addressing rightsizing issues. Therefore we are 

recommending that State adopt the framework as part of its mission 

performance planning process. State generally agreed with our 

recommendation. 

Planning for the construction of new embassies illustrates the importance 

of having a systematic process for determining staffing levels. The size and 

cost of new facilities are driven by the number of staff and the type of 

work they do. Therefore, it is imperative that staffing levels be projected 

as accurately as possible. This is difficult because it requires managers to 

project staffing needs 5 to 7 years in the future. State’s Bureau of Overseas 

Buildings Operations (OBO) has designed a reasonable process for 

developing staffing projections needed to design buildings that are the 

right size, but we found this process was not adopted uniformly across all 

of the posts and geographic bureaus that we studied.16 In addition, State is 

not providing embassies with sufficient guidance on factors to consider in 

developing staffing projections. Agencies at the posts we contacted lacked 

a systematic approach, such as our framework, to conduct rightsizing 

analyses. Moreover, none of the posts we contacted conducted a 

rightsizing analysis of existing staffing levels prior to projecting future 

requirements. Such an analysis would help identify options for adjusting 

staffing levels for new embassies. We also found little evidence that 

staffing projections were consistently vetted with all other agencies’ 

headquarters. Finally, the process was further complicated by the frequent 

turnover of embassy personnel who did not maintain documentation on 

the projection process, as well as breakdowns in communication among 

multiple agencies. 

Before I discuss our findings in more detail, let me explain the process 

OBO designed to help ensure that new compounds are designed as 

accurately as possible. Developing staffing projections is a key component 

of the planning process for new embassy compounds. OBO’s projection 

process encourages the active participation of embassy personnel, 

officials in State’s geographic bureaus,17 and officials from all other 

 16We visited seven posts in Europe and Eurasia and contacted seven additional embassies 

worldwide, which represent about one-quarter of the new compounds OBO plans to fund 

between fiscal years 2002 and 2005. 

17There are six geographically defined bureaus that report to the Undersecretary of State 

for Political Affairs—bureaus for Africa, East Asia and the Pacific, Europe and Eurasia, the 

Near East, South Asia, and the Western Hemisphere. 

Systematic Effort to 

Project Staffing Needs 

for New Embassies Is 

Lacking 
Page 11 GAO-03-582T Overseas Presence 

relevant federal agencies (see fig. 4 for OBO’s staffing projection process). 

It also calls on embassy management and geographic bureaus to review 

and validate all projections before submitting them to OBO. Embassies 

and geographic bureaus generally have the opportunity to submit staffing 

projections several times before they are finalized. However, OBO will not 

accept changes after the projections are final because this could result in 

construction delays and additional costs. 
Page 12 GAO-03-582T Overseas Presence 

Figure 4: Components of OBO’s Staffing Projection Process 

Staffing projection exercises were not consistent across the posts we 

contacted, and indeed, State officials acknowledged that efforts to develop 

and validate projections were informal and undisciplined. Some 

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

administrative officers) were more engaged in the projection process than 

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

deputy chiefs of mission led interagency—or country team—meetings to 

Efforts to Develop Staffing 

Projections Vary 

Significantly across 

Embassies and Geographic 

Bureaus 
Page 13 GAO-03-582T Overseas Presence 

discuss the post’s long-term priorities and the staffing implications. 

However, management teams at other posts we contacted were less 

engaged. At the U.S. embassy in Tbilisi, Georgia, management did not 

document recent growth in staffing levels, which led to final projections 

that were too low. Therefore, the new facility may be overcrowded upon 

opening, according to embassy officials. If embassy and geographic bureau 

officials communicated earlier to OBO the likelihood of large staffing 

increases by the time construction was completed, OBO might have been 

able to better accommodate these needs in its plans. 

In addition to inconsistencies in the field, we found that officials in the 

geographic bureaus in Washington, D.C., whose staff are responsible for 

working most closely with embassies and consulates, have varied levels of 

involvement in the projection process. For example, officials from the U.S. 

embassy in Beijing, China, said that representatives from their geographic 

bureau in Washington, D.C., were very involved in developing their 

projections. Conversely, officials at Embassy Belgrade said State’s 

geographic bureau did not request justifications for or provide input into 

the final projections submitted to OBO. Based on our review, the more 

these officials were involved in the process, the more confidence we had 

that their projections were accurate. 

Our analysis indicates that State is not providing embassies with sufficient 

formal guidance on important timelines in the projection process or 

factors to consider when developing staffing projections for new embassy 

compounds. Officials from each of the 14 posts we contacted said their 

headquarters bureaus had not provided specific, formal guidance on key 

factors to consider when developing staffing projections. Although OBO 

informed the geographic bureaus that final projections for fiscal year 2004 

funding were due in spring 2002, officials at some of the posts we 

examined did not realize that additional requirements they might submit at 

a later date would not result in a larger-sized building. 

According to OBO, individual embassies should have conducted 

rightsizing exercises before submitting the staffing projections used to 

develop and update the Long-Range Overseas Buildings Plan, a planning 

document that outlines the U.S. government’s overseas facilities 

requirements and guides implementation of State’s expansive and 

Embassies Do Not Receive 

Consistent, Formal 

Guidance on Staffing 

Projection Process and 

Importance of Rightsizing 
Page 14 GAO-03-582T Overseas Presence 

unprecedented overseas construction program.18 In addition, in January 

2002, OBO advised all geographic bureaus that staffing projections should 

incorporate formalized rightsizing initiatives early in the process so that 

building designs would accurately reflect embassy needs. However, OBO’s 

mandate is to manage property, and it is not in a position to know what 

processes the geographic bureaus use when developing staffing 

projections. Indeed, OBO officials stated that they cannot hold the 

geographic bureaus accountable for policy-related decisions and can only 

assume the bureaus have incorporated rightsizing exercises into the 

projection process. 

We found that agencies at the posts we examined did not conduct 

comprehensive rightsizing analyses when determining future staffing 

requirements. Decision makers did not analyze existing positions before 

projecting future requirements and did not consider rightsizing options, 

such as competitive sourcing or relocating certain positions to the United 

States or regional centers. In addition, we found that most agencies with 

staff overseas did not consistently consider operational costs when 

developing staffing projections. In general, for these posts, rightsizing 

exercises were largely limited to predictions of future funding levels and 

workloads. 

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

that staff conducted comprehensive assessments of the number and types 

of people they would need in the year that their new facility would open. 

Officials from several of these posts told us they had considered factors 

such as operating costs or the potential to streamline administrative 

functionsyet they did not consistently document their analyses or the 

rationales for their decisions. Moreover, we found little or no 

documentation explaining how previous projections were developed or 

the justifications for these decisions. As a result, future management 

teams will not have accurate information on how or why previous 

decisions were made when they update and finalize staffing projections. 

 18The current version of the Long-Range Overseas Buildings Plan covers fiscal years 2002 

through 2007. State plans to publish an updated version of the plan covering fiscal years 

2003 through 2008 by late April 2003. 

Little Evidence of Longterm Staffing Assessments 
Page 15 GAO-03-582T Overseas Presence 

According to OBO, the relevant geographic bureaus are expected to 

review and verify individual embassies’ staffing projections and confirm 

these numbers with other agencies’ headquarters before they are 

submitted to OBO. However, we found that the degree to which staffing 

projections were reviewed varied. In addition, we found little evidence 

that staffing projections were consistently vetted with all other agencies’ 

headquarters to ensure that the projections were as accurate as possible. 

Indeed, State officials acknowledged that (1) State and other agencies’ 

headquarters offices are not required to conduct formal vetting exercises 

once embassies submit their projections; (2) there is no formal vetting 

process; and (3) geographic bureaus expect that officials in the field 

consult with all relevant agencies and therefore the bureaus rarely contact 

agency headquarters officials. 

We found additional factors that complicate the staffing projection 

process. First, frequent turnover of embassy personnel responsible for 

developing staffing projections disrupts continuity in the projection 

process. Embassy staff may be assigned to a location for only 2 years, and 

at some locations, the assignment may be shorter. Given that personnel 

responsible for developing the projections could change from year to year 

and that posts may go through several updates before the numbers are 

finalized, the projection process lacks continuity. Staff turnover combined 

with little formal documentation may prevent subsequent embassy 

personnel from building upon the work of their predecessors. 

Second, we found that coordinating the projected needs of all agencies 

could be problematic. Following the 1998 embassy bombings, a law was 

passed requiring that all U.S. agencies working at posts slated for new 

construction be located in the new compounds unless they are granted a 

special co-location waiver.19 However, agencies are not required to submit 

these waiver requests prior to submitting their final staffing projections to 

OBO. To ensure that OBO has the most accurate projections, waiver 

requests must be incorporated early in the staffing projection process so 

that OBO is not designing and funding buildings that are too large or too 

 1922 U.S.C. § 4865 requires the Secretary of State, in selecting a site for any new U.S. 

diplomatic facilities abroad, to ensure that all U.S. personnel under chief of mission 

authority be located on the site. However, this requirement may be waived if the Secretary, 

together with the heads of those agencies with personnel who would be located off site, 

determines that security considerations permit off site location and that it is in the U.S. 

national interest. 

Geographic Bureaus Do 

Not Consistently Vet 

Staffing Projections 

Additional Factors 

Complicate Staffing 

Projection Process 
Page 16 GAO-03-582T Overseas Presence 

small. Post officials acknowledged that these decisions must be made 

before the staffing projections are finalized. In Yerevan, for example, the 

Department of Agriculture office projected the need for 26 desks in the 

new chancery, yet Agriculture officials in Yerevan plan to use only 13 of 

these desks and to locate the remaining personnel in their current office 

space. However, Agriculture has not yet requested a co-location waiver for 

these remaining 13 positions. If Agriculture receives a waiver and 

proceeds according to current plans, OBO will have designed space and 

requested funding for 13 extra desks for Agriculture staff. 

Finally, separate funding requirements for USAID annexes could 

complicate the projection process. In compounds where USAID is likely to 

require desk space for more than 50 employees, USAID attempts to secure 

funding in its own appropriations for an annex building on the 

compound.20 However, officials from at least two of the posts we examined 

had trouble determining where USAID would be located, which could 

delay planning and disrupt OBO’s overall plan for concurrent construction 

of the USAID annexes with the rest of the compounds. For example, at 

Embassy Yerevan, confusion among USAID officials in Washington and 

the field over whether USAID would fund a separate annex has caused 

annex construction and funding to fall behind OBO’s schedule. Therefore, 

USAID may be forced to remain at a less secure facilityat an additional 

costuntil its annex is completed, unless alternative arrangements can be 

made. In addition, chancery and USAID annex construction has not 

proceeded on the same schedule in some countries because funding for 

USAID’s annexes is behind schedule. According to USAID officials in 

Washington, D.C., two-track construction could lead to security concerns, 

work inefficiencies, and additional costs. 

To ensure that U.S. agencies are conducting systematic staffing projection 

exercises, we are recommending that the Secretary of State (1) provide 

embassies with formal, standard, and comprehensive guidance on 

developing staffing projections; (2) require chiefs of mission to maintain 

documentation on the decision-making process including justifications for 

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

for a separate annex in a compound when it requires desk space for 50 or more employees. 

However, if USAID projects it will need fewer than 50 desks, its offices will be in the 

chancery building in the compound, which State would fund, as it would for all U.S. 

government agencies in the chancery. According to OBO and USAID headquarters officials, 

there is some flexibility in the maximum number of USAID desk spaces allowed in a 

chancery, and this issue is handled on a case-by-case basis. 
Page 17 GAO-03-582T Overseas Presence 

these staffing projections; and (3) require all chiefs of mission and 

geographic bureaus to certify that the projections have been reviewed and 

vetted before they are submitted to OBO. In comments on our draft report, 

State agreed to implement our recommendations. 

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

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

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

their overseas presence. The administration believes that requiring 

agencies to pay a greater portion of the costs associated with their 

presence could give them an incentive to scrutinize long-term staffing 

more thoroughly when assessing their overseas presence. OMB officials 

also believe greater cost sharing could more clearly link the costs of new 

facilities that result directly from agencies’ presence. 

State historically has been responsible for funding the construction and 

maintenance of U.S. embassies and consulates, while most other U.S. 

government agencies traditionally have not been required to help fund 

capital improvements to overseas facilities. In 1999, the Overseas Presence 

Advisory Panel noted a lack of cost sharing among agencies that use 

overseas facilities, particularly for capital improvements. As a result, the 

panel proposed the development of cost-sharing arrangements to help 

fund construction of new facilities. In summer 2000, an interagency body 

formed to develop a capital cost-sharing mechanism recommended that 

agencies be assessed a surcharge based on the space they actually use in 

overseas facilities, but this plan was never implemented. Recently, State 

proposed a cost-sharing program that would require agencies to fund an 

annual share of the capital construction program based on their respective 

proportions of total U.S. overseas staffing. State believes that, in addition 

to generating funds for the construction program, linking the costs of 

capital construction to agency staffing levels would provide incentive for 

all agencies overseas to initiate rightsizing actions. 

The administration is committed to implementing a new cost-sharing 

program by fiscal year 2005 that would require agencies to pay a greater 

portion of the total costs associated with their overseas presence, which 

could include requiring agencies to help fund the cost of new embassy 

construction. In January 2003, OMB developed a virtual budget for how 

much each agency would be charged in fiscal year 2004 based on State’s 

Efforts to Implement 

a Capital Cost-sharing 

Mechanism 
Page 18 GAO-03-582T Overseas Presence 

capital cost-sharing proposal.21 During 2003, OMB is requiring agencies to 

complete a census of the total overseas staffing. Also during 2003, OMB 

will lead an interagency committee to develop a mechanism for capital 

cost sharing. 

Mr. Chairman, it may be reasonable to expect that agencies pay for all U.S. 

government costs associated with their presence in overseas facilities. 

Moreover, charging agencies a portion of the costs of new embassy 

construction may encourage them to fully consider how their presence 

affects the government’s overall costs for new embassies and consulates. 

We agree with OMB, State, and the Overseas Presence Advisory Panel that 

implementing a new cost-sharing arrangement may add greater discipline 

to the staffing projection and rightsizing processes. However, in deciding 

how costs will be shared, decision makers at affected agencies need to 

develop consensus on the equity of a new arrangement, while designing a 

system that is relatively easy to administer. 

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

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

illustrates, the key elements of our rightsizing framework—security, 

mission, cost, and rightsizing options—need to be considered collectively 

to determine embassy staffing, and decision makers need to be looking for 

alternative ways of conducting business, such as transferring functions to 

the United States or to regional centers, where appropriate. Recent events 

illustrate the significance of maintaining a rightsized overseas presence: 

• Security concerns continue today and are probably much greater in view 

of the September 11, 2001, terrorist attacks and the ongoing war in Iraq. 

Security deficiencies at many of our facilities overseas place personnel at 

risk. While State’s new embassy construction program will, over time, help 

reduce the security risk, this program will take many years to complete. In 

the meantime, thousands of employees will be assigned to embassies and 

consulates that do not meet security standards, placing them at risk. 

• The changing needs of U.S. foreign policy will continue to affect 

rightsizing initiatives. Ensuring that the U.S. government has the right 

people in the right places to support U.S. goals and objectives may require 

reallocation of staff among posts. Furthermore, creation of the 

Department of Homeland Security, the war on terrorism, and post-war 

 21Because the State proposal and OMB assessment were completed after the budget 

submission deadline, OMB told agencies that they would not actually be charged in 2004. 

Rightsizing is More 

Relevant than Ever 
Page 19 GAO-03-582T Overseas Presence 

engagement with Iraq will affect foreign policy missions and priorities and 

may also require staffing adjustments. 

• Maintaining a large overseas presence is an enormous expense, 

particularly with current budget deficits. For example, State estimates that 

it costs roughly $300,000 annually to station an employee overseas. 

Moreover, plans for a multibillion-dollar, multiyear embassy construction 

program highlight the importance of linking staff size to the size and cost 

of new embassies and consulates. 

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

In conclusion, our work in the past year has further demonstrated the 

feasibility of achieving a systematic and comprehensive approach to 

rightsizing the U.S. overseas presence. Such an approach can have 

substantial payoffs if OMB, State, and other agencies operating overseas 

support it. I believe we all recognize that, to be successful, rightsizing will 

be a long-term effort requiring the commitment of all agencies operating 

overseas. I am encouraged that the momentum for developing a 

meaningful approach to rightsizing continues. Both State and OMB have 
Page 20 GAO-03-582T Overseas Presence 

endorsed our rightsizing framework and are working together and with 

other agencies to improve the process for determining overseas staffing 

levels. However, to support this process, we are recommending in our 

reports additional steps that agencies should take to adopt a systematic 

approach that considers security, mission, and cost factors in assessing 

overseas workforce size and to improve the staffing projection processes 

for new embassies and consulates. 

Mr. Chairman, this concludes my prepared statement. I will be happy to 

respond to any questions you or other members may have. 

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

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

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

Lynn Moore, Ann Ulrich, and Joseph Zamoyta. 

Contacts and 

Acknowledgments 
Page 21 GAO-03-582T Overseas Presence 

Physical/technical security of facilities and employees 

• What is the threat and security profile of the embassy? 

• Has the ability to protect personnel been a factor in determining staffing levels at the embassy? 

• To what extent are existing office buildings secure? 

• Is existing space being optimally utilized? 

• Have all practical options for improving the security of facilities been considered? 

• Do issues involving facility security put the staff at an unacceptable level of risk or limit mission accomplishment? 

• What is the capacity level of the host country police, military, and intelligence services? 

• Do security vulnerabilities suggest the need to reduce or relocate staff? 

• Do health conditions in the host country pose personal security concerns that limit the number of employees that should be 

assigned to the post? 

Mission priorities and requirements 

• What are the staffing levels and mission of each agency? 

• How do agencies determine embassy staffing levels? 

• Is there an adequate justification for the number of employees at each agency compared with the agency’s mission? 

• Is there adequate justification for the number of direct hire personnel devoted to support and administrative operations? 

• What are the priorities of the embassy?a 

• Does each agency’s mission reinforce embassy priorities? 

• To what extent are mission priorities not being sufficiently addressed due to staffing limitations or other impediments? 

• To what extent are workload requirements validated and prioritized and is the embassy able to balance them with core functions?

• Do the activities of any agencies overlap? 

• Given embassy priorities and the staffing profile, are increases in the number of existing staff or additional agency representation 

needed? 

• To what extent is it necessary for each agency to maintain its current presence in country, given the scope of its responsibilities 

and its mission? 

- Could an agency’s mission be pursued in other ways? 

- Does an agency have regional responsibilities or is its mission entirely focused on the host country? 

Cost of operations 

• What is the embassy’s total annual operating cost? 

• What are the operating costs for each agency at the embassy? 

• To what extent are agencies considering the full cost of operations in making staffing decisions? 

• To what extent are costs commensurate with overall embassy strategic importance, with agency programs, and with specific 

products and services? 

Consideration of rightsizing options 

• What are the security, mission, and cost implications of relocating certain functions to the United States, regional centers, or to 

other locations, such as commercial space or host country counterpart agencies? 

• To what extent could agency program and/or routine administrative functions (procurement, logistics, and financial management 

functions) be handled from a regional center or other locations? 

• Do new technologies and transportation links offer greater opportunities for operational support from other locations? 

• Do the host country and regional environments suggest there are options for doing business differently, that is, are there adequate 

transportation and communications links and a vibrant private sector? 

• To what extent is it practical to purchase embassy services from the private sector? 

• Does the ratio of support staff to program staff at the embassy suggest opportunities for streamlining? 

• Can functions be reengineered to provide greater efficiencies and reduce requirements for personnel? 

Appendix I: Rightsizing Framework and 

Corresponding Questions 
Page 22 GAO-03-582T Overseas Presence 

• Are there best practices of other bilateral embassies or private corporations that could be adapted by the U.S. embassy? 

• To what extent are there U.S. or host country legal, policy, or procedural obstacles that may impact the feasibility of rightsizing 

options? 

Source: GAO. 

a

Embassy priorities are the U.S. government priorities in that country. 

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