a

GAO

United States Government Accountability Office

Report to the Chairman, Subcommittee 

on National Security, Emerging Threats, 

and International Relations, Committee 

on Government Reform, House of 

Representatives

November 2004 EMBASSY 

CONSTRUCTION

Proposed CostSharing Program 

Could Speed 

Construction and 

Reduce Staff Levels, 

but Some Agencies 

Have Concerns

GAO-05-32
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-32.

To view the full product, 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-05-32, a report to the 

Chairman, Subcommittee on National 

Security, Emerging Threats, and 

International Relations; House Committee 

on Government Reform 

November 2004

EMBASSY CONSTRUCTION 

Proposed Cost-Sharing Program Could 

Speed Construction and Reduce Staff 

Levels, but Some Agencies Have 

Concerns 

The administration’s proposed Capital Security Cost-Sharing Program has 

been developed to accelerate the building of 150 new secure embassies and 

consulates around the world and to ensure that all agencies with overseas 

staff assign only the number of staff needed to accomplish their overseas 

missions. The Department of State’s Bureau of Overseas Buildings 

Operations (OBO), which would manage the program, examined several 

formulas before deciding that all agencies with an overseas presence would 

share costs, based on a per capita or “head-count” formula. If enacted, 

nearly 30 U.S. agencies would be assessed a total of $17.5 billion for 

constructing 150 new embassies by 2018, or 12 years sooner than the 

projected completion date of 2030. After a gradual phase-in period 

beginning in fiscal year 2005, the program would generate $1.4 billion 

annually from fiscal years 2009 through 2018, with State paying $920 million 

and non-State agencies paying $480 million. 

Accelerated Funding for Embassy Construction

Many non-State Department agencies have concerns about the proposed 

program. They would prefer a formula other than one based on head counts 

to assess fees, and they are concerned that cost-sharing fees could affect 

their ability to accomplish their overseas missions. In addition, they stated 

that it would be useful to establish new interagency mechanisms to discuss 

and resolve potential implementation issues. We did not assess the 

mechanisms to be used to implement the program and have taken no 

position on whether they would be needed. State is concerned that, without 

accelerated funding, U.S. government employees will remain at risk beyond 

the 2018 completion date. State is also concerned that, without cost sharing, 

OBO could overbuild office space due to agencies’ imprecise staffing 

projections. In our prior work, we have noted the importance of achieving 

interagency consensus and striving to achieve equity while minimizing 

management burden. Decision-makers need to continually focus on these 

factors to give the program every opportunity to succeed. If enacted, it is 

important that Congress and State monitor its implementation and make 

changes as needed. 

The Department of State is in the 

early stages of a proposed 

multibillion dollar program to build 

secure new embassies and 

consulates around the world. 

Under the proposed Capital 

Security Cost-Sharing Program, all 

agencies with staff assigned to 

overseas diplomatic missions 

would share in construction costs. 

This report describes (1) the 

rationale for and development of 

the program, (2) agency concerns 

about the program, and (3) the 

influence of the program on 

agencies’ overseas staff levels. 

What GAO Recommends

GAO is not making 

recommendations in this report. 

The proposed cost-sharing formula 

could result in funds to accelerate 

embassy construction, encourage 

agency rightsizing of overseas staff 

levels, and provide a disciplined 

approach to staffing projections for 

new embassies. 

We received comments on a draft 

of this report from nine 

government organizations. The 

Department of State agreed with 

the report. The other eight 

departments and agencies 

expressed concerns about some 

aspects of the program, including 

potential implementation issues. 
Page i GAO-05-32 Capital Security Cost Sharing

Contents

Letter 1

Results in Brief 2

Background 4

Rationale for and Development of the Capital Security Cost-Sharing 

Program 7

Several Agencies Have Concerns about the Program 12

Program Has Influenced Some Agencies’ Decisions to Reduce the 

Number of Overseas Staff 18

Conclusion 22

Agency Comments and Our Evaluation 23

Appendixes

Appendix I: Objectives, Scope, and Methodology 25

Appendix II: Comments from the Department of Agriculture 29

GAO Comments 31

Appendix III: Comments from the Department of Commerce 33

GAO Comments 37

Appendix IV: Comments from the Department of Health and Human 

Services 39

GAO Comment 42

Appendix V: Comments from the Department of Homeland Security 43

GAO Comments 45

Appendix VI: Comments from the Department of Justice 46

GAO Comments 48

Appendix VII: Comments from the Library of Congress 49

GAO Comments 52

Appendix VIII: Comments from the Department of State 54

GAO Comments 58

Appendix IX: Comments from the Department of the Treasury 59

Appendix X: Comments from the U.S. Agency for International 

Development 60

GAO Comments 62

Tables Table 1: Non-State Agencies’ Cost-Sharing Assessments, Fiscal 

Years 2005-2018 (Excluding 2008) 11
Contents

Page ii GAO-05-32 Capital Security Cost Sharing

Table 2: Four Formulas for Allocating Costs among Agencies with 

an Overseas Presence 13

Table 3: Selected Agencies’ Annual Cost-Sharing Fees Using 

Different Cost-Sharing Formulas 15

Table 4: Selected Agencies’ Staff Positions and Estimated Savings 

in Annual Cost-Sharing Fees for Fiscal Years 2005 and 

2006, as of July 1, 2004 20

Table 5: Estimated Percentage Increase Needed in International 

Program Budgets for Cost-Sharing Fees for Selected 

Agencies, Fiscal Years 2005, 2007, and 2009 22

Figures Figure 1: U.S. Agencies’ Overseas Staff Positions Used to 

Determine Annual Cost-Sharing Fees under Proposed 

Program, as of March 2004 7

Figure 2: Accelerated Funding for Embassy Construction with 

Cost Sharing, Fiscal Years 1999-2030 9

Abbreviations

GSA General Services Administration

IAP Industry Advisory Panel

ICASS International Cooperative Administrative Support Services

OBO Bureau of Overseas Buildings Operations

OMB Office of Management and Budget

OPAP Overseas Presence Advisory Panel

USAID U.S. Agency for International Development 

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Page 1 GAO-05-32 Capital Security Cost Sharing

United States Government Accountability Office

Washington, D.C. 20548

A

November 15, 2004 Letr

The Honorable Christopher Shays

Chairman

Subcommittee on National Security, Emerging

 Threats, and International Relations

Committee on Government Reform

House of Representatives

Dear Mr. Chairman:

The Department of State is in the early stages of a proposed 

multibillion-dollar program to accelerate the building of secure embassies 

and consulates around the world. To help finance construction, the 

administration has proposed the Capital Security Cost-Sharing Program, 

under which agencies with staff assigned to overseas diplomatic missions 

would pay a portion of the construction costs. A provision authorizing the 

program is included in legislation currently under consideration by the 

Congress.1

 If enacted, the program is scheduled to go into effect in fiscal 

year 2005 and would represent a major shift in how the U.S. government 

allocates funding for embassy construction, as State historically has paid 

for nearly the entire program.2

 The cost-sharing concept, under 

development since 1999, gained momentum in 2001 when the President, as 

part of his management agenda, directed that all agencies reduce overseas 

staff to the minimum levels necessary to meet U.S. foreign policy 

objectives.3

 Since then, the administration has stated that cost sharing 

would be an important part of the overall embassy “rightsizing” initiative as 

it would force each agency to consider the full costs of its overseas 

presence, including the costs of building safe facilities, in determining 

overseas staffing levels.

1

See H.R. 4754, Sec. 625, Departments of Commerce, Justice, and State, the Judiciary and 

Related Agencies Appropriations Act, 2005.

2

The U.S. Agency for International Development (USAID) has also funded the construction 

of some overseas facilities. For additional information, see GAO, Embassy Construction: 

Achieving Concurrent Construction Would Help Reduce Costs and Meet Security Goals, 

GAO-04-952 (Washington, D.C.: Sept. 28, 2004).

3

Office of Management and Budget, The President’s Management Agenda, Fiscal Year 2002 

(Washington, D.C.: Aug. 2001).
Page 2 GAO-05-32 Capital Security Cost Sharing

This report describes (1) the administration’s rationale for and 

development of the Capital Security Cost-Sharing Program, (2) agency 

concerns about the program, and (3) the influence of the proposed 

program on agencies’ decisions on overseas staff levels. To complete our 

work, we obtained documents and discussed the program in Washington, 

D.C., with State’s Bureau of Overseas Buildings Operations (OBO), which is 

responsible for the embassy construction program; the Office of 

Management and Budget (OMB); eight other executive branch departments 

and agencies; and the Library of Congress. We selected the executive 

branch departments and agencies because they have staff overseas and, 

under the current proposal, would have the largest annual cost-sharing 

charges. We selected the Library of Congress because it is the only 

nonexecutive branch agency that would pay cost-sharing fees. We 

conducted our work in accordance with generally accepted government 

auditing standards. Appendix I provides more information on our 

objectives, scope, and methodology.

Results in Brief The administration has proposed the Capital Security Cost-Sharing 

Program to fund the accelerated construction of 150 secure new embassies 

and consulates worldwide 12 years sooner than currently planned and to 

ensure that agencies “rightsize,” or assign only the number of staff needed 

to accomplish their overseas missions.4

 Under the proposed program, 

agencies would begin paying partial cost-sharing fees in fiscal year 2005. 

These fees would gradually increase until fiscal year 2009, when agencies 

would feel the full impact of the program on their budgets. In 2000, OBO 

began developing the cost-sharing program in consultation with a working 

group of interagency officials. In 2002, OBO announced that it proposed to 

charge each agency a portion of the overall construction costs based on a 

4

For our purposes, we define rightsizing as aligning the number and location of staff 

assigned overseas with foreign policy priorities, security, and other constraints. State agrees 

with this definition. Rightsizing may result in the addition or reduction of staff, a change in 

the mix of staff at a given embassy or consulate, or a change in embassy construction plans. 

The goal of rightsizing is consistent with our framework for determining overseas staffing 

levels, which encourages each agency to consider security, mission, and cost trade-offs in 

adjusting overseas staffing levels. For further information on overseas staffing issues, see 

GAO, Overseas Presence: Framework for Assessing Embassy Staff Levels Can Support 

Rightsizing Initiatives, GAO-02-780 (Washington, D.C.: July 26, 2002); 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 Embassy Construction: 

Process for Determining Staffing Requirements Needs Improvement, GAO-03-411

(Washington, D.C.: Apr. 7, 2003).
Page 3 GAO-05-32 Capital Security Cost Sharing

worldwide per-capita, or “head-count,” formula. OBO officials stated that 

they preferred the head-count formula, largely because it would best meet 

the primary goals of accelerating embassy construction and promoting 

rightsizing of U.S. agencies’ overseas staff, would be simple to implement, 

and would avoid agencies’ relocating overseas personnel to avoid or reduce 

cost-sharing charges.

Several agencies have concerns about the proposed program. Some 

non-State agencies are particularly concerned about the cost-sharing 

formula selected. These agencies believe that other formulas would more 

closely link the fees they pay to benefits they receive, such as the amount 

of office space occupied. Our analysis shows that, depending on the 

formula used, cost-sharing amounts would vary considerably, with some 

agencies benefiting at the expense of others. Some non-State officials are 

also concerned about how potential disputes would be resolved, such as 

deciding which agencies’ staff would be required to find office space 

outside the embassy compound if increased staff levels resulted in a 

shortage of office space within the compound. Several agencies also 

expressed concern that the cost-sharing fees could affect their ability to 

accomplish their overseas missions. In addition, State is concerned that, if 

the program is not implemented, OBO would be unable to accelerate 

construction and, if some agencies are exempted, overall support for the 

program would be seriously eroded.

The cost-sharing program has already influenced some agencies’ decisions 

to reduce their numbers of overseas staff. Some agencies, in consultation 

with OMB and their appropriations subcommittees, have been considering 

new ways of meeting their missions with fewer overseas staff. Several 

agency officials stated that they have closely scrutinized their staff levels to 

reduce their fees. We found that at least five agencies have reduced 

overseas positions or placed staff in less costly areas within the embassy 

compound, thereby reducing the amounts of their cost-sharing fees. 

Officials from two of these five agencies stated that the staff reductions 

were made specifically to reduce cost-sharing fees. The amount of pressure 

could increase on agencies to either further reduce their overseas staff or 

curtail other budgetary activities to cover the gradual increase in their 

cost-sharing fees.

We received written comments on a draft of this report from eight 

executive branch departments and agencies (Departments of Agriculture, 

Commerce, Health and Human Services, Homeland Security, Justice, State, 

the Treasury, and the U.S. Agency for International Development) and the 
Page 4 GAO-05-32 Capital Security Cost Sharing

Library of Congress. State said the report is a fair and accurate 

representation of the issues. Non-State agencies emphasized their concerns 

regarding several aspects of the program, including the program’s 

accountability and equity, as well as its impact on their ability to 

accomplish their overseas missions. Further, many non-State agencies said 

that adequate mechanisms are not in place to ensure smooth 

implementation. Several agencies recommended that new interagency 

mechanisms be established to resolve disputes, ensure accountability and 

equity, and consider improvements to the program. 

Our work focused on the rationale for and development of the cost-sharing 

program, agencies’ concerns about the program, and the program’s 

influence on agencies’ overseas staffing levels. We did not assess the 

mechanisms to be used to implement the program if Congress enacts it. 

Therefore, we have taken no position on whether alternative interagency 

mechanisms would be needed. In our previous work, we have pointed out 

the importance of striving for accountability and equity and achieving an 

interagency consensus on capital cost sharing.5

 In addition, we have noted 

the importance of minimizing management burden while carrying out such 

a program. We believe there is time to address these and other potential 

implementation issues during the initial phase-in period of the program and 

that decision-makers would need to continually focus on various 

implementation issues to give the program every opportunity to succeed. 

Further, if the proposed program is enacted, it is important that Congress 

and State monitor the program’s implementation and make changes as 

needed. 

Background Following the terrorist bombings of U.S. embassies in Kenya and Tanzania 

in 1998, the Secretary of State, with the support of the President and 

Congress, created an Overseas Presence Advisory Panel (OPAP) to 

examine the condition, organization, management, and other aspects of 

U.S. diplomatic representation overseas. In 1999, the panel declared that 

the U.S. overseas presence was near a state of crisis and that the condition 

of U.S. posts and missions abroad was unacceptable.6

 Specifically, the 

5

GAO, Overseas Presence: Framework For Assessing Embassy Staff Levels Can Support 

Rightsizing Initiatives, GAO-02-780 (Washington, D.C.: July 26, 2002).

6

U.S. Department of State, America’s Overseas Presence in the 21st Century, The Report of 

the Overseas Presence Advisory Panel (Washington, D.C.: Nov. 1999).
Page 5 GAO-05-32 Capital Security Cost Sharing

Panel recommended that major capital improvements be undertaken at 

U.S. facilities to strengthen security. The Panel reported that funds for new 

overseas facilities should be provided from a variety of sources, including 

payments by all the agencies that share space in the facilities.7

 In addition, 

the Panel concluded that, at U.S. facilities, linking the number of staff with 

mission priorities could achieve significant budget savings by reducing the 

size of overstaffed locations. Further, Congress passed legislation in 1999 

requiring all U.S. government staff working at posts slated for new 

construction to be located on the new embassy compounds unless they are 

granted a special colocation waiver.8

In 2002, the President’s Management Agenda emphasized the importance of 

configuring U.S. overseas staff to the minimum necessary to meet foreign 

policy goals. As part of the Agenda, OMB led an effort to develop a 

cost-sharing mechanism. OMB also emphasized the need to build 

embassies more quickly and recognized that, to do so, all agencies with 

overseas staff should be required to contribute their share to the costs. The 

administration also emphasized that, by requiring agencies to pay for 

overseas staff, agencies would be more likely to closely assess the need 

for each position before deciding to place a person overseas, thereby 

rightsizing overseas staffing levels at U.S. facilities. 

In 2003, we reported on the poor conditions of facilities at embassies and 

consulates. For example, we found that the primary office building at 232 

posts lacked sufficient security, potentially putting thousands of U.S. 

government employees at risk.9 We also reported, however, that OBO had 

begun to institute a number of organizational and management reforms, 

beginning in 2001, designed to cut costs, standardize designs and review 

processes, and reduce the construction period for new embassies and 

7

Recognizing the absence of cost sharing among agencies at overseas facilities, the OPAP 

recommended establishing a government corporation that would be authorized to collect 

rental revenue from agencies for current operating and maintenance costs. The 

recommendation was never implemented.

8

22 U.S.C. § 4865 requires the Secretary of State, in selecting sites for new U.S. diplomatic 

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

located onsite. However, the Secretary of State may waive this requirement if the Secretary, 

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

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

national interest.

9

GAO, Overseas Presence: Conditions of Overseas Diplomatic Facilities, GAO-03-557T

(Washington, D.C.: Mar. 20, 2003).
Page 6 GAO-05-32 Capital Security Cost Sharing

consulates. These reforms, along with other actions such as increasing 

staff training and expanding outreach to contractors, provided OBO with 

the capability to manage its overseas building program more effectively.10

The United States currently has a network of embassies and consulates at 

251 locations around the world.11 Nearly 30 agencies have more than 61,000 

staff at these locations. Under the proposed program, cost-sharing fees 

would be charged for every overseas position. Annual charges for 

approximately 25,000 State support staff that provide security, 

transportation, and other services to all overseas agencies would be shared 

proportionately among over 36,000 program staff from all agencies, 

including State.12 Figure 1 shows the numbers of U.S. agencies’ overseas 

staff positions that would pay annual cost-sharing fees under the proposed 

program.

10GAO, Embassy Construction: State Department Has Implemented Management 

Reforms, but Challenges Remain, GAO-04-100 (Washington, D.C.: Nov. 4, 2003).

11According to State, there are an additional 12 missions, American presence posts, and 

branch offices worldwide where there is no chief of mission.

12State support staff provide services under the International Cooperative Administrative 

Support Services (ICASS) program.
Page 7 GAO-05-32 Capital Security Cost Sharing

Figure 1: U.S. Agencies’ Overseas Staff Positions Used to Determine Annual 

Cost-Sharing Fees under Proposed Program, as of March 2004

Historically, State has borne the costs for constructing nearly all diplomatic 

facilities abroad. During the 6-year period from fiscal year 1999 through 

2004, OBO received appropriations totaling $3.1 billion for constructing 

these facilities. Annual funding amounts generally increased during the 

period from about $300 million in fiscal year 1999 to about $750 million in 

fiscal year 2004, an amount that is about half of the annual $1.4 billion that 

the proposed $17.5 billion program would provide for new embassy 

construction when fully implemented.

Rationale for and 

Development of the 

Capital Security 

Cost-Sharing Program

The Capital Security Cost-Sharing Program was developed so that State 

could obtain funds to accelerate the construction of new embassies and 

consulates around the world and so that agencies would pay the full costs 

associated with their overseas presence. The agencies’ share of embassy 

construction costs would be phased in over 5 years. When the proposed 

program is fully implemented, from fiscal years 2009 through 2018, it could 

result in funding of $1.4 billion annually from nearly 30 agencies, including 

State. OBO worked with OMB to develop the program based on a per-capita 

allocation of worldwide embassy construction costs for 150 facilities. OBO 

Defense (2,521)

State (23,131)

2%

Homeland Security (750)

Other departments and agencies (1,460)

Source: GAO analysis based on OBO data.

63%

18%

4%

7%

3%

Justice (1,083)

3%

Commerce (1,276)

USAID (6,429)
Page 8 GAO-05-32 Capital Security Cost Sharing

devised a fee-assessment plan that would spread the total embassy 

construction costs among all agencies with an overseas presence. After 

considering and rejecting several ways to charge agencies, OBO approved a 

cost-sharing formula based on a per-capita or “head-count” fee because, 

according to OBO, it was simple to implement, promoted agency 

rightsizing, and minimized agencies’ incentives to move staff to different 

locations to avoid cost-sharing charges.

Proposed Cost-Sharing 

Program Could Accelerate 

Embassy Construction

Funding through the proposed Capital Security Cost-Sharing Program 

could allow significant acceleration of the construction of U.S. diplomatic 

missions.13 Under the proposed program, the total funding amount would 

be $1.4 billion annually, a substantial increase over OBO’s historical 

funding levels. For example, during the 6-year period from fiscal years 1999 

through 2004, OBO’s actual appropriations for embassy construction 

totaled $3.1 billion, an average of roughly $522 million annually. Annual 

funding amounts generally increased from about $300 million in fiscal year 

1999 to about $750 million in fiscal year 2004.

According to OBO, funds from cost sharing would enable the construction 

of 150 new embassy and consulate compounds to be completed by 2018, 12 

years sooner than OBO’s initial plan, which included a planned completion 

date of 2030. After fees are phased in during fiscal years 2005 through 2008, 

non-State agencies would pay $480 million annually for a 10-year period 

through fiscal year 2018, while State’s annual payment would be $920 

million. Figure 2 shows OBO’s existing embassy construction projections 

through fiscal year 2030 and how funding generated by the proposed 

cost-sharing program could accelerate embassy construction through fiscal 

year 2018.

13Acceleration of construction depends on agencies’ either receiving increased 

appropriations or reallocating funds from other activities. 
Page 9 GAO-05-32 Capital Security Cost Sharing

Figure 2: Accelerated Funding for Embassy Construction with Cost Sharing, Fiscal 

Years 1999-2030

Proposed Cost Sharing Is 

Based on a Worldwide 

Head-Count Formula

In developing the proposed cost-sharing program, OBO, with OMB’s 

approval, selected a per-capita or head-count formula based on the number 

of agency staff at all overseas locations and the type of office space. To 

determine each agency’s cost share, agency officials were encouraged to 

scrutinize their overseas staff numbers and determine whether each 

position required office space with controlled access, space with 

noncontrolled access, or nonoffice space for staff such as custodians, 

gardeners, drivers, and others who do not require a specific desk or 

workstation. According to OBO officials, it can easily calculate and 

periodically revise agencies’ fees by performing a few simple calculations, 

without the need for a large number of staff to administer the program.

Amounts for Cost-Sharing 

Positions Would Be Adjusted 

Every 3 Years

OBO adopted a methodology in which agencies’ cost-sharing fees for the 

first 3 years of the program, fiscal years 2005 to 2007, would be based on 

the total number of overseas positions that OBO identified in a 2002 

worldwide survey. The positions were categorized by the four types of 

space. To determine agencies’ fees for the four types of positions, OBO 

estimated the construction costs for building each type of space at a typical 

new embassy. For example, the annual charge for a position located in a 

0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

Fiscal years 1999-2030

Dollars in billions

Embassies would be

built 12 years sooner

under the proposed

program

Actual annual 

funding FY 

1999 - 2004 Accelerated funding 

under the proposed

program for 

FY 2009 - 2018:

$1.4 billion annually Proposed

phase-in

period for 

FY 2005 - 

2008

Source: OBO.

1999

2004

2009

2018

2030
Page 10 GAO-05-32 Capital Security Cost Sharing

controlled access area would be $59,318.14 According to OBO, it plans to 

adjust these amounts every 3 years, beginning in fiscal year 2008, based on 

changes in the total number of overseas positions. In addition to the basic 

head-count fees, agencies’ annual charges would include amounts for their 

proportionate share of construction costs for support services’ personnel 

under the International Cooperative Administrative Support Services 

(ICASS) program. However, agencies’ fees would be reduced, or “offset,” 

by the amounts they are currently paying for office space outside embassy 

compounds.

Based on input from all participating agencies, OBO plans to update the 

head-count numbers for staff annually and adjust cost-sharing fees to 

reflect updated headcounts. If the proposed program begins in fiscal year 

2005, agencies would be charged for 61,413 positions, including 251 

positions in the chief-of-mission areas; 8,432 in controlled access areas; 

30,850 in noncontrolled access areas; and 21,880 in nonoffice space. These 

positions include direct-hire Americans, locally employed staff, 

contractors, continuing part-time staff, and temporary duty 

positions. Non-State agency participants and phased-in annual fees are 

shown in table 1.

14Under the proposed program, the cost-sharing fee for each type of position is as follows: 

(1) chief-of-mission area at $209,034 per position, (2) controlled access area at $59,318 per 

position, (3) noncontrolled access area at $28,144 per position, and (4) nonoffice area at 

$4,940 per position. 
Page 11 GAO-05-32 Capital Security Cost Sharing

Table 1: Non-State Agencies’ Cost-Sharing Assessments, Fiscal Years 2005-2018 (Excluding 2008)

Source: GAO analysis based on OBO data, as of March 2004. 

Note: Assessment data were not available for fiscal year 2008. Annual funding for fiscal year 

2009-2018 includes proportionate amounts for support services. Figures may not add to total due to 

rounding. 

OBO Considered and Rejected 

Alternative Cost-Sharing 

Formulas

OBO considered two other formulas before deciding on the head-count 

method of determining agencies’ shares of embassy construction costs.

One formula considered by OBO and an interagency working group would 

have assessed agencies’ charges based on the amount of space (square feet 

or meters) occupied in overseas facilities. There was agreement that the 

“space occupied” formula would more directly link costs paid to benefits 

received. However, OBO rejected the proposed formula because, according 

to OBO officials, administering and managing the fee assessments would 

require frequent collection and updates of data, which could be 

burdensome and labor intensive. 

OBO proposed a second formula based on comparable rental costs 

apportioned on a per-capita basis. The formula included factors such as 

commercial cost of rent by location, the net amount of space occupied, and 

other variables. According to OBO officials, this option was eventually 

rejected because it would not result in sufficient up-front funding needed 

for the construction and would also be labor intensive to compile and 

manage the data. The space occupied and rent formulas also lacked the

Dollars in millions

Non-State agencies

Number of 

staff 

positions

FY 2005 

(20%)

FY 2006 

(40%)

FY 2007 

(60%)

Annually

FY 2009-2018

(100%)

USAID 6,429 $20.3 $55.8 $91.3 $179.7

Defense 2,521 30.6 61.9 93.1 125.6

Justice 1,083 13.5 27.0 40.5 61.4

Commerce 1,276 4.5 13.6 22.8 40.2

Homeland Security 750 7.6 15.3 22.9 28.5

Agriculture 525 0.6 4.5 8.4 16.3

Library of Congress 202 1.2 2.4 3.6 6.4

Health and Human Services 219 1.0 2.6 4.3 5.1

Other departments and agencies (17) 514 4.4 9.3 14.4 16.9

Total non-state agencies 13,519 $83.7 $192.4 $301.3 $480.0
Page 12 GAO-05-32 Capital Security Cost Sharing

support of OBO’s Industry Advisory Panel (IAP),15 whose members stated 

that agency officials could dispute the amount of office space for which 

they were charged, complain about the quality of their space, assert that 

other agencies’ staff were using a disproportionate share of space, and 

raise other issues that could be difficult to manage.16

OBO and OMB worked to develop fee assessments based on a per-capita or 

head-count fee for the full costs of construction in early 2002. OBO officials 

stated that the formula would be the simplest to manage because fees are 

based on a flat rate for four different types of office space, regardless of 

where the position is located worldwide. Charges assessed to each agency 

would be generated on the basis of a consistent, standardized formula. 

Each agency can easily compute the cost of adding or removing an 

employee from overseas duty. In addition, OBO officials stated that a 

per-capita or head-count formula would not require intensive labor to 

administer and could readily provide a steady flow of up-front funding to 

expedite embassy construction. OBO also claimed that, because all 

agencies’ staff positions are included in the worldwide cost-sharing 

methodology, each agency would pay its share for occupied workspace. 

OBO’s initial proposal included charging for office space in controlled and 

noncontrolled access areas only. In response to other agencies’ requests, 

OBO established per-capita fee assessments for all four types of positions 

in its current proposed program.

Several Agencies Have 

Concerns about the 

Program

Officials from several agencies have concerns about the development and 

implementation of the proposed program. Some non-State agencies would 

prefer a formula other than the head-count formula to more closely link the 

fees paid to the services received. Non-State officials are also concerned 

about potential implementation issues, including concerns about the 

resolution of interagency differences and uncertainty about consistent 

congressional support for increasing budget requests that include cost 

shares, which could impact their international missions. State officials are 

concerned that, if the program is not funded, OBO will be unable to 

15According to OBO, the IAP is a chartered federal advisory committee consisting of a panel 

of experts who provide strategic industry insights to OBO on a variety of issues, including 

the latest innovations in the commercial world combining best practices, streamlined 

processes, and proven cost-effective methods.

16According to OBO officials, neither method resulted in the full $1.4 billion needed to 

achieve annual program goals through fiscal year 2018. 
Page 13 GAO-05-32 Capital Security Cost Sharing

accelerate construction and that if some agencies are exempted, overall 

support for the program would be seriously eroded. 

Some Non-State Agencies 

Prefer Formulas Other Than 

the Head-Count Formula

Officials from some non-State agencies are concerned that the program’s 

head-count formula may result in disproportionate costs to some agencies. 

They indicated that they would prefer a formula based on one of three 

options: (1) the amount of office space occupied worldwide, (2) the 

amount of office space occupied at a specific location, (3) a head count of 

staff at locations where new embassies would be built. They added that 

these formulas would more closely link the fees paid to the benefits 

received. We examined these alternative formulas and describe them, along 

with OBO’s current proposed head-count formula, in table 2. 

Table 2: Four Formulas for Allocating Costs among Agencies with an Overseas Presence

Source: GAO.

a

Agriculture disagreed with OBO’s assertion that full-time staff would be required to administer this 

formula.

(1)

Worldwide office space 

occupied

(2)

Site-specific rent 

comparable to local 

commercial space

(3)

Site-specific head 

count at locations 

where new embassies 

are built

OBO’s current proposed 

worldwide head-count 

formula

Basis of charge Space occupied as a 

percentage of construction 

cost 

Comparable cost of renting 

office space locally

Cost per position for 

constructing one 

embassy

Cost per position for 

constructing 150 

embassies 

Management and 

administrative 

requirements

According to OBO, a 

full-time staff is needed to 

manage this formula.a

 Staff 

would need to periodically 

update data on the amount 

of space occupied by 

agency staff.

According to OBO, a 

full-time staff is needed to 

manage this formula. Staff 

would need to periodically 

update data on the costs of 

local commercial space 

overseas and security 

upgrades.

According to OBO, few 

staff are needed to 

manage this formula. 

Staff would need data 

on construction costs 

and number and types 

of positions where 

embassies would be 

built.

According to OBO, few 

staff are needed to 

manage this formula. Staff 

would need data on the 

number of staff positions 

overseas and the types of 

space they occupy. 

Cost allocation 

methodology

Similar to standard U.S. 

government approach for 

capital construction.

Similar to standard U.S. 

government approach for 

rent.

Link between building 

costs at a specific site 

and staff who benefit.

OBO and agencies differ 

on the link between costs 

and benefits.b

Who pays more/less? Agencies occupying a 

larger percentage of space 

worldwide pay more; 

agencies occupying a 

smaller percentage of 

space pay less.

Agencies with large 

numbers of staff in 

high-cost locations pay 

more; small numbers of 

staff in high-cost locations 

pay less.

Staff in new embassies 

pay relatively large fees; 

staff not located in new 

embassies pay no fees. 

Agencies with larger 

numbers of staff worldwide 

pay more; agencies with 

smaller numbers of staff 

worldwide pay less.
Page 14 GAO-05-32 Capital Security Cost Sharing

b

OBO’s head-count formula assesses agencies for positions at all 251 overseas embassies and 

consulates, including positions at 101 locations where no major construction is planned through fiscal 

year 2018. OBO’s rationale is that staff at the 101 locations are already in secure facilities and thus 

benefit from prior construction. Some non-State agencies disagree with OBO, stating that they should 

not be required to pay for secure facilities already built by OBO.

Formulas Based on Space 

Occupied and Rent at Overseas 

Facilities

We found that the cost-sharing fees of seven selected agencies would vary 

under different scenarios. Specifically, we examined two formulas that 

OBO had developed during its initial planning phase of the program: one 

based on the amount of office space occupied worldwide and the other 

based on comparable cost for renting office space locally. We compared 

these two formulas with OBO’s current head-count formula. Using OBO 

data that we determined to be reliable, we computed the amount of space 

occupied by agencies worldwide and at each overseas location. We found 

that, because agencies use different amounts of office space, the 

Departments of Agriculture, Defense, Health and Human Services, and 

State would pay higher cost-sharing fees under the space-occupied 

formula; the Department of Commerce and USAID would pay less; and the 

Library of Congress’ fee would be similar to its fee under the head-count 

formula. 

Several agency officials stated that they would be in favor of a formula 

similar to the standard U.S. government approach for rent as used 

domestically by the General Services Administration (GSA), which 

manages many government buildings by renting space to other U.S. 

government agencies. GSA’s fees are based on numerous factors, including 

comparable costs for commercial space, number of square feet, and the 

location and condition of the building. We found that, under the formula 

based on comparable local rental costs, State, USAID, and Health and 

Human Services would pay less than under OBO’s current head-count 

charge because they have staff based in numerous locations where rental 

costs are inexpensive. In contrast, many Defense, Commerce, and 

Department of Agriculture staffs are based in cities with higher rents for 

commercial space. Thus, their rental fee would be higher than a fee based 

on head counts. Finally, fees for the Library of Congress using both the 

amount of office space occupied and comparable rental costs would be 

relatively similar to fees under the head-count formula, as shown in table 3.
Page 15 GAO-05-32 Capital Security Cost Sharing

Table 3: Selected Agencies’ Annual Cost-Sharing Fees Using Different Cost-Sharing 

Formulas

Source: GAO analysis based on OBO data.

a

Includes the Centers for Disease Control and Prevention (CDC).

Formula Based on Head Count of 

Staff Benefiting from New 

Embassy Construction

Several agency officials noted that the proposed head-count formula 

assesses blanket fees worldwide, not specifically where agencies’ staff are 

located or where new embassies would be built. As a result, some agencies 

would be assessed fees, although some of their staff may not benefit 

directly from new construction. For example, the Library of Congress (the 

Library) is one of several agencies opposed to the head-count formula. 

According to Library and OBO data, only 45 (22 percent) Library 

staff—located in three cities—are likely to benefit from new embassy 

construction scheduled from fiscal years 2004 through 2009. In addition, 

many of the Library’s positions are currently located in rented space 

outside embassy compounds, where the Library’s annual office-space costs 

are substantially less than it would pay under the cost-sharing program. For 

example, Library officials stated that they currently pay roughly $1,200 

each for several positions in Islamabad, an amount that is considerably less 

than the $28,144 per position that would be assessed under the cost-sharing 

program. According to OBO officials, the Library has numerous staff in 

several cities, including Islamabad and five other locations, where 

construction is planned during fiscal years 2010 through 2018. The officials 

added that the Library would receive rent credit offsets for the costs of 

renting office space outside embassy compounds and noted that current 

law requires the Secretary of State, in selecting sites for new U.S. 

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

mission authority be located on-site.

Dollars in millions

Department or agency

Worldwide 

space 

occupied

Site-specific rent 

comparable with 

commercial space

OBO’s proposed 

current worldwide 

head count

Agriculture $ 23.2 $21.6 $16.3

Commerce 31.8 49.1 40.2

Defense 135.3 205.3 125.6

Health and Human 

Servicesa 11.1 3.9 5.1

Library of Congress 5.2 5.5 6.4

State 1,002.7 790.6 920.0

USAID 79.0 100.3 179.7
Page 16 GAO-05-32 Capital Security Cost Sharing

We examined what agencies’ head-count fees could be under the formula 

requiring only agencies with a presence at the new location to pay. We 

selected a typical location where a new embassy, with 247 staff 

representing four agencies, is projected to be built in fiscal year 2006 at a 

cost of $92.2 million. Agencies with no positions at this location would not 

be required to pay any cost-sharing fees. Our analysis, based on comparing 

the costs for types of space occupied at this typical embassy, shows that 

one-time fees for all four agencies would be higher at this one location than 

the current proposed head-count fees for all positions under this formula. 

For example, the one-time fee for a position in the noncontrolled access 

area would be about $357,000 for each person, substantially higher than the 

$28,144 annual fee used to calculate the current head-count formula. 

However, the same agency’s overall fees would be higher due to its paying 

$28,144 annually, over a 14-year period. According to OBO officials, 

allowing agencies to pay cost-sharing fees only where their staffs are based 

would not support the goal of rightsizing because it would encourage 

agencies to avoid cost-sharing fees. Specifically, agencies could “game the 

system” by moving staff, even to potentially less secure locations, where no 

construction was planned. OBO acknowledged, however, that some 

non-State agencies’ would be unlikely to move staff due to country-specific 

missions and the costs involved with moving. 

Agencies Have Other 

Concerns about the 

Program

Some non-State agencies have other concerns about the proposed 

program, including how potential disputes would be resolved and how 

cost-sharing fees would affect their ability to accomplish their overseas 

missions. In addition, State is concerned that, if the program were not 

implemented, OBO would be unable to accelerate construction; and, if 

some agencies are exempted, overall support for the program could be 

seriously eroded.

Non-State agency officials indicated that the existing interagency working 

group may not be an effective mechanism for resolving disputes. Some 

non-State agencies are concerned that, when the program is implemented, 

the Interagency Facilities Committee, an interagency advisory group 

established by OBO to facilitate communication among agency officials, 

would not provide a credible forum for discussing program issues and 

resolving disputes. For example, some non-State agency officials said that 

they have no assurance that OBO would provide them with space in the 

embassy compound if conditions become crowded. According to one 

agency, all agencies should have participated in the formative stage 

discussions of the proposed program, such as the participatory and 
Page 17 GAO-05-32 Capital Security Cost Sharing

transparent discussions that were held during the development of the 

ICASS Program. In contrast, according to OBO officials, the Interagency 

Facilities Committee is a credible forum for discussing office space issues. 

OBO officials added that, in planning embassy size, a certain amount of 

contingency, or “spill-over” space, in anticipation of staff increases is 

incorporated into the plan.

Some non-State officials said that OBO has shown little flexibility in 

adopting agencies’ suggestions in Interagency Facilities Committee 

meetings. For example, OBO currently requires that the employing agency 

pay cost-sharing fees for staff temporarily assigned to another agency. In 

contrast, some agency officials would prefer that cost-sharing fees be paid 

by the agency to which the staff member is detailed, not by the permanent 

employer. According to one non-State official, OBO should not be 

concerned about which agency pays the fees and should allow the agencies 

to resolve this issue. OBO officials stated, however, that it would be 

complicated and burdensome to keep track of detailees to maintain an 

accurate account of overseas staff positions. OBO officials added that 

agencies could coordinate with other agencies to reimburse funding for 

detailees.

OBO officials stated that they have made adjustments to the program based 

on agency suggestions, including charging more for the chief-of-mission 

position based on larger office space, and providing rent offsets to agencies 

for staff working outside embassy compounds. OBO also created certain 

procedures that agencies can use to challenge decisions. According to OBO 

officials, these procedures establish OMB as the final arbiter for resolving 

interagency disputes. OBO officials stated that these procedures and 

standard OMB processes had already been used to resolve some disputes. 

One non-State agency stated, however, that when disputes arise, OMB is 

likely to favor OBO’s position because OBO has overall responsibility for 

implementing the proposed program.

If the proposed program is implemented, some agencies are also concerned 

that annual cost-sharing fees could affect their ability to accomplish their 

international missions. USAID officials expressed concern that, without 

adequate funding, they may have to downsize and with fewer staff would 

not be able to accomplish some of their overseas missions. Commerce and 

Agriculture had similar concerns. Officials from both agencies stated that, 

without additional funding, their agencies would have to cut their overseas 

staff and some ongoing activities at numerous locations. For example, 

Commerce has projected that it may have to close offices at as many as 51 
Page 18 GAO-05-32 Capital Security Cost Sharing

posts by fiscal year 2009, reducing staff levels by 498 persons, to reduce 

annual costs by roughly $27.4 million. A Commerce official stated that post 

closings and reductions in staff could affect overseas sales for some U.S. 

firms because Commerce would have fewer staff to represent U.S. 

businesses in foreign markets. Finally, the Library of Congress’ $6.4 million 

annual cost-sharing fee, set to take effect in fiscal year 2009, would 

represent over 70 percent of its total fiscal year 2004 international budget.

Library officials indicated that, if the Library were required to pay such a 

large amount without receiving additional funding, the mission of their 

international program would be seriously affected.

State is concerned that, if the program is not fully funded, OBO would be 

unable to accelerate construction and, if some agencies are exempted, 

overall support for the program could be seriously eroded. Congress is 

currently considering the proposed program but, until it is enacted, State 

will not be able to implement the accelerated building schedule. In 

addition, State is concerned about the potential impact of granting agencies 

exemptions from the program. Specifically, State noted that if one or more 

agencies were exempted, other agencies’ funding levels would have to be 

increased to generate the $1.4 billion needed annually for the construction 

program.

Program Has 

Influenced Some 

Agencies’ Decisions to 

Reduce the Number of 

Overseas Staff

Although it is too early to tell how the cost-sharing program, if 

implemented, could influence all agencies’ overseas staff levels, some 

agencies have already begun to rightsize staff in an effort to reduce their 

potential cost-share bill. Faced with expenditures they have not paid in the 

past, agencies have had additional incentives to closely review staffing 

levels and, in consultation with OMB and their appropriations committees, 

consider new ways of meeting their missions with fewer overseas staff. We 

found that, as of July 2004, at least five agencies had reduced their 

employee rosters by as many as 473 overseas positions. Two of these five 

agencies stated that the staff reductions were made specifically to reduce 

cost-sharing fees. OBO plans to use agencies’ adjusted staffing numbers to 

revise its embassy construction plans. However, the full effect of the 

cost-sharing program would not be felt until 2009, after the 5-year phase-in 

period ends, which would likely bring increased pressure for agencies to 

further reduce their overseas staff. 
Page 19 GAO-05-32 Capital Security Cost Sharing

Cost Sharing Has Promoted 

Greater Consideration of 

Costs in Staffing Decisions

In the 2001 President’s Management Agenda, the administration took the 

position that, if agencies are required to pay a greater share of the costs 

associated with their overseas presence, they would weigh cost 

considerations more carefully before posting personnel overseas. The 

administration’s position is that by minimizing the growth of overseas staff, 

the U.S. government will benefit by reducing the numbers of people 

exposed to security risks, terrorist attacks, kidnapping, and other risks that 

are inherent in the overseas presence, and by reducing the costs of 

constructing embassy compounds. With the added incentive to scrutinize 

staff numbers, agencies would be required to consider whether they could 

afford each staff member. This rightsizing effort is important to ensure that, 

governmentwide, the correct numbers of people are working at each 

embassy. OBO officials stated that growth in overseas positions has been 

generated by both State and non-State agencies and that, for the first time, 

the Capital Security Cost-Sharing Program would provide a mechanism for 

controlling growth. By reexamining staffing numbers and types of office 

space, some agencies have already reduced their future cost-sharing fees.

In preparing for the program, many agencies have already scrutinized the 

numbers of staff positions overseas and the types of office space they 

require. As a result, one agency eliminated numerous unfilled overseas 

positions, some of which had been unfilled for several years.17 One agency 

official stated that, prior to the cost-sharing program, many overseas 

positions had not been formally removed because retaining the positions 

allowed the agency the ability to quickly reassign staff as their missions and 

priorities changed.18 For example, beginning in fiscal year 2005, State, 

Commerce, the Treasury, and Homeland Security had already reduced 

overseas positions. State cut 263 positions and Commerce reduced its 

overseas staff by 191 positions, eliminating 168 unfilled positions and 

cutting 23 other positions. Finally, Treasury removed 17 positions, and 

Homeland Security removed 2 positions. 

Some agencies have reassessed the types of office space required for their 

employees stationed overseas. These agencies decided that some positions 

17In addition to reducing staff positions, one agency has also announced plans to completely 

withdraw all staff at some overseas locations.

18We previously reported that unfilled positions should be eliminated to improve the process 

of planning and constructing new embassies. See GAO, Embassy Construction: Process for 

Determining Staffing Requirements Needs Improvement, GAO-03-411 (Washington, D.C.: 

Apr. 7, 2003).
Page 20 GAO-05-32 Capital Security Cost Sharing

located in controlled access areas could be relocated to noncontrolled 

access areas, thereby reducing their cost-sharing fees. For example, the 

Foreign Broadcast Information Service reclassified six positions previously 

located in noncontrolled access areas to less costly nonoffice areas.

By scrutinizing their numbers of overseas positions and determining the 

types of space they require, State, Commerce, the Treasury, and Homeland 

Security, and the Foreign Broadcast Information Service significantly 

reduced their cost-sharing assessments for fiscal year 2006 and, at the same 

time, reduced the number of staff that would be exposed to terrorist 

attacks and other overseas security risks. For example, State reduced its 

projected fees by more than $15 million, and Commerce reduced its fees by 

nearly $6 million. Other agencies’ staff numbers have either increased, did 

not change, or were being finalized as of September 2004. Table 4 shows 

selected agencies’ estimated savings in annual cost-sharing fees (fiscal year 

2005 to 2006) after reducing their overseas positions and/or reassessing the 

types of space needed.

Table 4: Selected Agencies’ Staff Positions and Estimated Savings in Annual Cost-Sharing Fees for Fiscal Years 2005 and 2006, 

as of July 1, 2004

Source: GAO analysis of OBO data.

Note: Amounts shown for fiscal year 2005 and 2006 cost-sharing fees and estimated savings are full 

cost shares that do not reflect the phase-in period of the program. They do not include construction 

charges for ICASS positions and rent offsets, if applicable.

a

If agencies would “save” funds by reducing cost-sharing fees, OBO would receive less than $1.4 

billion annually. As a result, OBO would have to either construct fewer or less costly buildings annually 

or extend the proposed completion date beyond 2018.

b

According to Commerce, the fiscal year 2006 fee was still under negotiation with OBO, as of October 

12, 2004.

Dollars in millions

FY 2005 FY 2006

Agency or department Staff positions

Cost-sharing

fee Staff positions

Cost-sharing

fee

Estimated 

savingsa

Department of Commerce 1,276 $34.7 1,085 $28.9b $5.8

Foreign Broadcast Information Service 109 3.1 109 2.9 0.2

Department of Homeland Security 750 24.6 748 24.4 0.2

Department of State 23,131 663.1 22,868 647.7 15.4

Department of the Treasury 89 3.2 72 2.5 0.7

Total 25,355 $728.7 24,882 $706.4 $22.3
Page 21 GAO-05-32 Capital Security Cost Sharing

OBO officials stated that the fundamental building block for planning a new 

embassy compound is the projected numbers and types of positions that 

must be accommodated in the new facilities. Without these details, the U.S. 

government risks building new facilities that are designed for the wrong 

number of staff. To prepare for the initial implementation of the 

cost-sharing program, OBO asked agencies to submit updated information 

on overseas staff numbers. OBO has since revised the agencies’ data so that 

it can begin the program with the most current staffing levels. Because the 

size and cost of new embassy facilities are directly related to anticipated 

staffing requirements, OBO stated that it would continue to obtain 

periodically revised staff numbers and, when appropriate, change its 

embassy construction plans or adjust cost-sharing fees that agencies would 

be required to pay.

Gradual Phase-in of 

Program Would Likely Bring 

Increasing Pressure to 

Reduce Overseas Staff

For selected agencies, international program budgets would have to 

increase substantially to cover the gradual phase-in of annual cost-sharing 

fees. Therefore, agencies are likely to face increased pressure to scrutinize 

their overseas staff levels and ensure that only essential personnel are 

staffed at overseas posts. As agencies are required to pay more each year 

until the proposed program is fully implemented in fiscal year 2009, agency 

officials may decide to further reduce their overseas staff numbers to 

reduce their fees.

We selected four agencies and estimated how much their international 

program budgets would need to increase to meet cost-sharing fees. We 

found, for example, that Commerce’s Foreign and Commercial Service 

budget would have to increase by 11 percent from fiscal year 2005 to fiscal 

year 2007 and by as much as 18 percent from fiscal year 2005 to fiscal year 

2009 to cover cost-sharing fees. The estimated amount and percentage of 

budget increases needed to pay cost-sharing fees for fiscal years 2007 and 

2009 for sampled agencies—Agriculture, Commerce, USAID, and the 

Library of Congress—are shown in table 5.
Page 22 GAO-05-32 Capital Security Cost Sharing

Table 5: Estimated Percentage Increase Needed in International Program Budgets for Cost-Sharing Fees for Selected Agencies, 

Fiscal Years 2005, 2007, and 2009

Source: President’s Budget submission and GAO estimation. 

Note: Estimates for fiscal years 2007 and 2009 assume no other budget increases and are GAO 

estimations based on fiscal year 2005 data.

Conclusion The principle of cost sharing is consistent with the Overseas Presence 

Advisory Panel’s findings and recommendations that agencies share in the 

cost of constructing new secure embassies and that agencies’ staffing 

levels be linked with their overseas missions. If the proposed cost-sharing 

program is enacted and funded, it could result in expedited construction of 

new embassies and, at the same time, increased incentives for agencies to 

ensure that only essential staff are based overseas. Providing secure 

facilities for U.S. employees overseas is a high priority for the U.S. 

government, and the proposed Capital Security Cost-Sharing Program is 

one way to accelerate the construction of these facilities. Requiring 

agencies to pay a share of embassy construction costs would also 

encourage them to consider the full cost of their overseas presence and to 

determine the number of people they need to meet critical overseas 

missions.

Several non-State agencies have raised concerns about the proposed 

cost-sharing formula and implementation issues that could adversely affect 

their overseas missions. According to our analysis, agencies’ cost-sharing 

fees under other formulas would vary widely, with some agencies 

benefiting at the expense of others. While we take no position on which 

formula should be used, some type of cost-sharing mechanism could 

Dollars in millions

FY 2007 FY 2009

Department or agency 

(component/program)

FY 2005

International 

budget 

(requested)

International 

budget 

(estimated)

Percent 

increase 

from FY 

2005

International 

budget 

(estimated)

Percent 

increase 

from FY 

2005

Agriculture (Foreign Agriculture Service) $147.6 $156.0 6% $163.9 11%

Commerce (U.S. Foreign and Commercial 

Service) 211.9 234.7 11 252.1 19

Library of Congress (International) 8.9 12.5 40 15.3 72

USAID (Operating Expenses) 623.4 714.7 15 803.1 29
Page 23 GAO-05-32 Capital Security Cost Sharing

provide a disciplined approach to the staffing projection and rightsizing 

processes and accelerate the capital construction program.

Several agencies suggested that it would be useful to establish new 

interagency mechanisms to discuss and resolve potential disputes. We did 

not assess the mechanisms to be used to implement the program, if 

Congress enacts it. Therefore, we have taken no position on whether new 

interagency mechanisms would be needed. Nevertheless, in our prior work, 

we have noted the importance of achieving interagency consensus and 

striving to achieve equity, while minimizing management burden. 

Decision-makers need to continually focus on these factors in order to give 

the program every opportunity to succeed. There is time to address these 

and other potential implementation issues during the 5-year phase-in 

period of the program. If the proposed program is enacted, it is important 

that Congress and State monitor the program’s implementation and make 

changes as needed.

Agency Comments and 

Our Evaluation

We received written comments on a draft of this report from eight 

executive departments and agencies (Departments of Agriculture, 

Commerce, Health and Human Services, Homeland Security, Justice, State, 

the Treasury, and the U.S. Agency for International Development) and the 

Library of Congress. The Department of State said that the report is a fair 

and accurate representation of the issue. The other departments and 

agencies raised a number of concerns regarding accountability and equity 

issues if the program is implemented. Their comments, along with our 

responses to specific points, are reprinted in appendixes II-X. Several 

agencies also provided technical comments, which we have incorporated 

into the report where appropriate.

Several agencies stated that using a cost-sharing formula based on the 

number of personnel overseas was not equitable. We have taken no 

position on the formula to be used. Our report points out the advantages 

and disadvantages of potential formulas and that some agencies may 

benefit at the expense of others, depending on the formula used.

We are sending copies of this report to interested congressional 

committees. We are also providing copies of this report to the Secretaries 

of Agriculture, Commerce, Defense, Health and Human Services, 

Homeland Security, Justice, State, and the Treasury; the Administrator, U.S. 
Page 24 GAO-05-32 Capital Security Cost Sharing

Agency for International Development; the Director, Office of Management 

and Budget; and the Librarian of Congress. We will also make copies 

available to others upon request. In addition, this report will be available at 

no charge on the GAO Web site at http://www.gao.gov. 

If you or your staffs have any questions about this report, please contact 

me on (202) 512-4128. John Brummet, Lynn Cothern, Martin De Alteriis, 

Mary Moutsos, Julia A. Roberts, and George Taylor made key contributions 

to this report.

Sincerely yours,

Jess T. Ford

Director, International Affairs and Trade
Page 25 GAO-05-32 Capital Security Cost Sharing

Appendix I

Objectives, Scope, and Methodology ApApenednxidexiIs

Our objectives were to examine (1) the Department of State’s rationale for 

and development of the proposed Capital Security Cost-Sharing Program, 

(2) agency concerns about the program, and (3) the influence of the 

proposed program on agencies’ decisions on overseas staff levels. To 

complete our work, we analyzed data, reviewed documents, and discussed 

the program in Washington, D.C., with officials of State’s Bureau of 

Overseas Buildings Operations (OBO), which is responsible for the 

embassy construction program; the Office of Management and Budget 

(OMB); and eight other executive branch departments and agencies, 

including the Departments of Agriculture, Commerce, Defense, Health and 

Human Services, Homeland Security, Justice, and the Treasury, and the U.S. 

Agency for International Development (USAID). We also reviewed 

documents and held discussions in Washington, D.C., with officials of the 

Library of Congress, a legislative branch agency. We selected the executive 

branch departments and agencies because they have staff overseas and, 

under the current proposal, would have the largest annual cost-sharing 

charges. We selected the Library of Congress because it is the only 

nonexecutive branch agency that would pay cost-sharing fees. 

To describe the overall rationale for and development of the proposed 

program, we examined numerous reports and other documents, including 

those issued by OBO, the Overseas Presence Advisory Panel, and other 

working groups and committees. We reviewed historical information dating 

back to 1999, including the alternative formulas OBO considered before 

selecting the head-count formula to assess agencies’ fees for embassy 

construction. We reviewed documents and held discussions in Washington, 

D.C., with officials of nine executive branch agencies or departments with 

the largest cost-sharing fee assessments and with the Library of Congress. 

In addition, we met with OMB officials to discuss agencies’ concerns about 

some aspects of the proposed program and General Services 

Administration to discuss its management of U.S. government facilities 

domestically.

We conducted data analyses using data from the International Cooperative 

Administrative Support Services (ICASS) system Global Database, which 

was developed and maintained by the ICASS Service Center and contains 

information for each overseas post. We assessed the reliability of the ICASS 

data during a recent review of State’s Embassy Administrative Support
Appendix I

Objectives, Scope, and Methodology

Page 26 GAO-05-32 Capital Security Cost Sharing

System.1 The assessment included (1) performing electronic testing for 

errors in accuracy and completeness, (2) discussing data reliability issues 

with agency officials knowledgeable about the data, and (3) reviewing 

relevant reports from State’s Office of the Inspector General and GAO and 

financial audits of the ICASS system. We found that the data were also 

sufficiently reliable for the purpose of determining agencies’ space 

occupied worldwide that was compared with alternative formulas. Data 

showing estimates for future costs under the Capital Security Cost-Sharing 

Program were provided in a briefing by staff from OBO. We interviewed 

knowledgeable officials about the estimating methodology and reviewed 

some supporting documents, but we did not conduct a full review of the 

procedures OBO used for these estimations. 

To examine and compare alternative cost-sharing formulas, we selected 

seven agencies, four that have a larger number of staff worldwide (State, 

Defense, Commerce, and USAID) and three agencies with a smaller 

number of staff working overseas (Agriculture, Health and Human 

Services, and the Library of Congress). To determine alternative costsharing percentages for agencies with overseas staff, we allocated costs for 

ICASS personnel proportionately. We used OBO staffing data that excluded 

Peace Corps staff, Marine Security Guards, and various other positions 

permanently stationed in host government facilities or specialized research 

or technical facilities. We determined that the data were sufficiently 

reliable for determining cost-sharing percentages.

To determine the amount each agency would have to pay under two rent 

formulas, we used OBO data that we had determined to be sufficiently 

reliable for the purpose of this report and computed the percentage of 

space each agency occupies. OBO’s data were included in a database that 

listed the total worldwide space at each post and the total space occupied 

per agency at each post. To find out how much each agency would pay 

annually to raise $1.4 billion under this formula, we multiplied each 

agency’s percentage of space occupied worldwide by $1.4 billion. To 

determine how OBO would generate $1.4 billion annually using a rental 

formula, we used OBO’s 2002 data for fees that would have generated 

$575 million annually, which took into consideration the cost of 

commercial space per location, security and classified space for each post, 

1

GAO, Embassy Management: Actions Are Needed to Increase Efficiency and Improve 

Delivery of Administrative Support Services, GAO-04-511 (Washington, D.C.: Sept. 7, 

2004).
Appendix I

Objectives, Scope, and Methodology

Page 27 GAO-05-32 Capital Security Cost Sharing

and multiplied the fees by 2.4 to compare them with formulas that raise 

$1.4 billion annually. To determine the proportionate percentages and costsharing fees for each type of office space at one embassy, we selected a 

post scheduled for construction in 2006 and used the data that OBO 

provided, listing the number of agencies, staff and types of space occupied 

for each staff member. OBO’s estimated cost to build the facility would be 

$92.2 million as listed in OBO’s long-range overseas building plan. We used 

OBO’s estimate of the total square footage for the post and determined the 

amount and percentage of space needed for the chief of mission, controlled 

access, noncontrolled access, and nonoffice areas. We then divided the 

amounts for each area by the total area to determine the total costs to build 

the embassy for each type of space. We determined the data were 

sufficiently reliable to illustrate the effects of the number of staff on 

agencies’ costs. 

To describe the actions agencies have taken to reassess their overseas 

staffing levels, we collected documentation on each agency’s staffing 

numbers and types of space for chief of mission, controlled access area, 

noncontrolled access area, and nonoffice space that were used to calculate 

cost-sharing fees for fiscal year 2005 budget requests. To assess the 

reliability of these data, we verified the amount each agency requested by 

reviewing budget submission documents provided by several agencies and 

through discussions with knowledgeable agency officials. We determined 

that the data were sufficiently reliable for the purpose of this report. We 

then compared the fees to each agency’s revised staffing numbers and the 

space requirements used to calculate cost-sharing fees for fiscal year 2006 

budget requests. Revisions to the numbers of staff or the types of space 

resulted in savings for five agencies. We also discussed with OBO officials 

how agencies’ revised staff numbers and space requirements would affect 

future embassy construction plans. To determine the amount in 

international program budgets that selected agencies would need to cover 

cost-sharing fees in fiscal years 2005, 2007, and 2009, we obtained the 

figures on budget requests for fiscal year 2005. We then used OBO data 

showing projected cost-sharing fees for each agency in fiscal years 2007 

and 2009. To determine the amount and percentage that the international 

budget for each agency would have to grow to cover their cost-sharing fees, 

we added the amount they would need in fiscal years 2007 and 2009 to their 

international budget request for fiscal year 2005 and determined the 

difference. We determined that these data were sufficiently reliable for the 

purpose of providing a broad indication of the amounts the agencies would
Appendix I

Objectives, Scope, and Methodology

Page 28 GAO-05-32 Capital Security Cost Sharing

need to increase their budgets for the chosen years. We assumed that each 

agency’s program budget would not increase for any other reason than 

Capital Security Cost-Sharing Program fees. 
Page 29 GAO-05-32 Capital Security Cost Sharing

Appendix II

Comments from the Department of 

Agriculture ApendxiI

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.

See comment 1.

See comment 2.
Appendix II

Comments from the Department of 

Agriculture

Page 30 GAO-05-32 Capital Security Cost Sharing

See comment 3.

See comment 4.
Appendix II

Comments from the Department of 

Agriculture

Page 31 GAO-05-32 Capital Security Cost Sharing

The following are GAO’s comments on the Department of Agriculture’s 

letter dated October 12, 2004.

GAO Comments 1. We agree that mission goals are a critical factor in determining resource 

levels. However, we believe that security and cost factors also need to 

be fully considered along with mission goals in determining overseas 

staffing levels. In our prior reports, we presented a rightsizing 

framework to help decision-makers focus on security, mission, and cost 

trade-offs associated with staffing levels and rightsizing options. 1

 We 

believe that the proposed Capital Security Cost-Sharing Program will 

encourage agencies to more closely scrutinize overseas staffing levels 

by requiring agencies to pay a share of the embassy construction costs 

associated with their overseas presence.

2. OBO officials stated that it solicited and received substantive input 

from other agencies during the design of the proposed program. We 

acknowledge that Agriculture and some other agencies have concerns 

about issues concerning accountability, transparency, and other 

implementation mechanisms.

3. We agree that the proposed program would be large and could have a 

major impact on agencies, but we believe the program is consistent 

with the criteria for rightsizing we previously reported. These criteria 

include (1) security of facilities and employees, (2) mission priorities 

and requirements, and (3) cost of operations, all of which should be 

systematically evaluated. Agencies must provide a strong rationale to 

Congress for overseas programs, including all associated costs. 

4. We acknowledge that agencies have concerns about potential risks they 

may encounter if the program is enacted. However, we concluded that 

some type of cost-sharing program would achieve important goals, 

such as accelerating the construction of new secure facilities. In 

addition, requiring agencies to pay a share of embassy construction 

costs would also encourage them to consider the full cost of their 

1

GAO, Overseas Presence: Framework for Assessing Embassy Staff Levels Can Support 

Rightsizing Initiatives, GAO-02-780 (Washington, D.C.: July 26, 2002) and Overseas 

Presence: Rightsizing Framework Can Be Applied at U.S. Diplomatic Posts in Developing 

Countries, GAO-03-396 (Washington, D.C.: Apr. 7, 2003).
Appendix II

Comments from the Department of 

Agriculture

Page 32 GAO-05-32 Capital Security Cost Sharing

overseas presence and to determine the number of people they need to 

meet critical overseas missions.
Page 33 GAO-05-32 Capital Security Cost Sharing

Appendix III

Comments from the Department of 

Commerce ApendxiI

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.
Appendix III

Comments from the Department of 

Commerce

Page 34 GAO-05-32 Capital Security Cost Sharing

See comment 1.
Appendix III

Comments from the Department of 

Commerce

Page 35 GAO-05-32 Capital Security Cost Sharing

See comment 2.

See comment 3.

See comment 4.
Appendix III

Comments from the Department of 

Commerce

Page 36 GAO-05-32 Capital Security Cost Sharing

See comment 5.

See comment 6.

See comment 7.

See comment 8.

See comment 9.

See comment 9.

See comment 8.
Appendix III

Comments from the Department of 

Commerce

Page 37 GAO-05-32 Capital Security Cost Sharing

The following are GAO’s comments on the Department of Commerce’s 

letter dated October 14, 2004.

GAO Comments 1. We did not assess the need for improvements in business processes and 

management controls. If the program were to be enacted, there would 

be time during the phase-in period to monitor these issues and address 

other concerns that may arise.

2. We believe that agencies should request the appropriate funding in their 

budget submissions and be prepared to make adjustments if funds are 

not forthcoming. If funding is not provided, agencies may have to 

reconsider the size of their overseas presence and/or adjust their 

missions.

3. Our report discusses several cost-sharing formulas and some of their 

advantages and disadvantages. We discuss agency views on the 

formulas, and OBO stated that under some formulas agencies could 

“game the system” to reduce their cost share.

4. We did not assess the mechanisms, including the interagency advisory 

group, that could be used to implement the program, if Congress enacts 

it. Therefore, we have taken no position on whether alternative 

interagency mechanisms would be needed.

5. We did not include agencies’ annual charges for embassy construction 

attributable to ICASS support services in the table. However, under the 

program, agencies will be expected to pay a share of the embassy 

construction costs attributable to administrative support service 

received under ICASS.

6. As noted, fiscal year 2008 data were not available.

7. The OBO data included offsets.

8. We agree that, if some agencies pull out of the proposed program, the 

remaining agencies’ cost-sharing charges may increase. However, 

depending on the extent to which agencies consider the size of their 

overseas presence, OBO’s costs for constructing fewer and/or smaller 

facilities may decrease and result in decreased costs to agencies.
Appendix III

Comments from the Department of 

Commerce

Page 38 GAO-05-32 Capital Security Cost Sharing

9. We modified the text on page 15 and footnoted table 4 to reflect these 

comments and attributed the information to the Department of 

Commerce. 
Page 39 GAO-05-32 Capital Security Cost Sharing

Appendix IV

Comments from the Department of Health and 

Human Services ApendxiIV

Note: GAO comment 

supplementing those in 

the report text appear 

at the end of this 

appendix.
Appendix IV

Comments from the Department of Health 

and Human Services

Page 40 GAO-05-32 Capital Security Cost Sharing

See comment 1.

See comment 1.
Appendix IV

Comments from the Department of Health 

and Human Services

Page 41 GAO-05-32 Capital Security Cost Sharing
Appendix IV

Comments from the Department of Health 

and Human Services

Page 42 GAO-05-32 Capital Security Cost Sharing

The following is GAO’s comment on the Department of Health and Human 

Services’ letter dated October 12, 2004.

GAO Comment 1. We did not assess the mechanisms to be used to implement the 

program, if Congress enacts it. Therefore, we have taken no position on 

whether alternative interagency mechanisms would be needed.
Page 43 GAO-05-32 Capital Security Cost Sharing

Appendix V

Comments from the Department of Homeland 

Security ApendxiV

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.

See comment 1.
Appendix V

Comments from the Department of Homeland 

Security

Page 44 GAO-05-32 Capital Security Cost Sharing

See comment 2.
Appendix V

Comments from the Department of Homeland 

Security

Page 45 GAO-05-32 Capital Security Cost Sharing

The following are GAO’s comments on the Department of Homeland 

Security’s letter dated October 13, 2004.

GAO Comments 1. We agree that the proposed program could impact agencies’ missions if 

funding decisions result in reductions of overseas staff positions. 

However, as we discuss in the report, the concept of cost sharing 

encourages all agencies to seriously consider their overall program 

mission and the costs of having staff overseas. We believe that agencies 

should request the appropriate funding in their budget submissions and 

be prepared to make adjustments if funds are not forthcoming. If 

funding is not provided, agencies may have to reconsider the size of 

their overseas presence and/or adjust their missions.

2. Security issues associated with foreign housing and schools were not in 

the scope of our work. 
Page 46 GAO-05-32 Capital Security Cost Sharing

Appendix VI

Comments from the Department of Justice ApendxiVI

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.

See comment 1.

See comment 2.
Appendix VI

Comments from the Department of Justice

Page 47 GAO-05-32 Capital Security Cost Sharing

See comment 1.
Appendix VI

Comments from the Department of Justice

Page 48 GAO-05-32 Capital Security Cost Sharing

The following are GAO’s comments on the Department of Justice’s letter 

dated October 12, 2004.

GAO Comments 1. We did not assess the need for improvements in business processes and 

management controls, such as transparency and accountability of costs 

and spending controls. If the program were to be enacted, there would 

be time during the phase-in period to monitor these issues and address 

other concerns that may arise.

2. We agree that the proposed program could impact agencies’ missions if 

funding decisions result in reductions of overseas staff positions. 

However, as we discuss in the report, the concept of cost sharing 

encourages all agencies to seriously consider their overall program 

mission and the costs of having staff overseas. We believe that agencies 

should request the appropriate funding in their budget submissions and 

be prepared to make adjustments if funds are not forthcoming. If 

funding is not provided, agencies may have to reconsider the size of 

their overseas presence and/or adjust their missions. 
Page 49 GAO-05-32 Capital Security Cost Sharing

Appendix VII

Comments from the Library of Congress ApendxiVI

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.
Appendix VII

Comments from the Library of Congress

Page 50 GAO-05-32 Capital Security Cost Sharing

See comment 1.

See comment 2.

See comment 3.

See comment 4.
Appendix VII

Comments from the Library of Congress

Page 51 GAO-05-32 Capital Security Cost Sharing

See comment 5.

See comment 6.

See comment 7.
Appendix VII

Comments from the Library of Congress

Page 52 GAO-05-32 Capital Security Cost Sharing

The following are GAO’s comments on the Library of Congress letter dated 

October 12, 2004.

GAO Comments 1. We were not asked to express an opinion on whether the cost 

accounting standards of the federal government apply to the capital 

cost-sharing program. However, we did note that State and non-State 

agencies disagree on whether there is a link between the amounts to be 

paid and the benefits received.

2. The administration proposed the Capital Security Cost-Sharing 

Program to fund the accelerated construction of secure new embassies 

and consulates worldwide and to ensure that agencies rightsize the 

number of staff needed to accomplish their overseas missions. Our 

analysis shows that, depending on the formula used, cost-sharing 

amounts would vary considerably, with some agencies benefiting at the 

expense of others. While we take no position on which formula should 

be used, some type of cost-sharing mechanism could provide a 

disciplined approach to the staffing projection and rightsizing 

processes and accelerate the capital construction program

3. We have taken no position on which cost-sharing formula, including the 

“head-tax” approach (which we refer to as the head-count approach), 

should be used. We also did not assess the need for improvements in 

business processes and management controls, such as determining the 

number of staff required. We acknowledge that some agencies have 

concerns about potential risks if the program is enacted. However, we 

concluded that some type of cost-sharing program would achieve 

important goals, such as accelerating the construction of new secure 

facilities. In addition, requiring agencies to pay a share of embassy 

construction costs would also encourage them to consider the full cost 

of their overseas presence and to determine the number of people they 

need to meet critical overseas missions.

4. The administration proposed the Capital Security Cost-Sharing 

Program to fund the accelerated construction of secure new embassies 

and consulates worldwide and to ensure that agencies rightsize the 

number of staff needed to accomplish their overseas missions. 

5. We agree that, if some agencies pull out of the proposed program, the 

remaining agencies’ cost-sharing charges may increase. However, 

depending on the extent to which agencies consider the size of their 
Appendix VII

Comments from the Library of Congress

Page 53 GAO-05-32 Capital Security Cost Sharing

overseas presence, OBO’s costs for constructing fewer and/or smaller 

facilities may decrease and result in decreased costs to agencies. 

Congress will decide whether or not the Department of Defense will 

participate in the cost-sharing program.

6. The proposed program is intended to capture the full costs, not only 

support costs, to agencies for staff in overseas locations, including 

construction of new embassy compounds. While we recognize that the 

Library currently has staff located outside embassy compounds, with 

the 1999 enactment of the Secure Embassy and Counterterrorism Act, 

all staff are required to be colocated onsite at locations where new 

embassies are built.

7. We recognize that the Library has only seven Americans in six offices. 

Our report does not suggest that the Library is not rightsized. However, 

the Library and other agencies should request the appropriate funding 

in their budget submissions and be prepared to make adjustments if 

funds are not forthcoming. 
Page 54 GAO-05-32 Capital Security Cost Sharing

Appendix VIII

Comments from the Department of State ApendxiVI

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.
Appendix VIII

Comments from the Department of State

Page 55 GAO-05-32 Capital Security Cost Sharing

See comment 1.

See comment 2.
Appendix VIII

Comments from the Department of State

Page 56 GAO-05-32 Capital Security Cost Sharing

See comment 3.

See comment 4.

See comment 5.
Appendix VIII

Comments from the Department of State

Page 57 GAO-05-32 Capital Security Cost Sharing

See comment 6.

See comment 7.
Appendix VIII

Comments from the Department of State

Page 58 GAO-05-32 Capital Security Cost Sharing

The following are GAO’s comments on the Department of State’s letter 

dated October 7, 2004.

GAO Comments 1. We modified the text in the Highlights and cover letter to reflect these 

comments.

2. We organized the report as we did because the influence of the 

proposed program on agencies’ overseas staffing-level decisions is 

uncertain.

3. We modified the text in the Highlights to reflect this comment and 

attributed the additional comment to OBO. 

4. We modified the text in the Highlights and on pages 5 and 13 to reflect 

State’s phase-in period.

5. We modified the text on pages 10 and 11 to reflect these comments.

6. We added a footnote on page 4 to clarify the number of overseas 

locations.

7. We added a footnote on page 8 to explain the role of the OPAP.
Page 59 GAO-05-32 Capital Security Cost Sharing

Appendix IX

Comments from the Department of the 

Treasury ApendxiIX
Page 60 GAO-05-32 Capital Security Cost Sharing

Appendix X

Comments from the U.S. Agency for 

International Development ApendxiX

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.

See comment 1.
Appendix X

Comments from the U.S. Agency for 

International Development

Page 61 GAO-05-32 Capital Security Cost Sharing

See comment 2.

See comment 3.
Appendix X

Comments from the U.S. Agency for 

International Development

Page 62 GAO-05-32 Capital Security Cost Sharing

The following are GAO’s comments on the U.S. Agency for International 

Development’s letter dated October 8, 2004.

GAO Comments 1. Issues involving State’s planning for the size of new embassies were not 

in the scope of our review. Our recent reports on this issue include 

Embassy Construction: Process for Determining Staffing 

Requirements Needs Improvement, GAO-03-411 (Washington, D.C.: 

Apr. 7, 2003) and Embassy Construction: State Department Has 

Implemented Management Reforms, but Challenges Remain, GAO-04-

100 (Washington, D.C.: Nov. 4, 2003).

2. We did not include agencies’ annual charges for embassy construction 

attributable to ICASS support services in the table. However, under the 

program, agencies would be expected to pay a share of the embassy 

construction costs attributable to administrative support service 

received under ICASS.

3. State’s prioritization for building new embassy compounds was not 

included in the scope of our review. See Embassy Construction: State 

Department Has Implemented Management Reforms, but Challenges 

Remain, GAO-04-100 (Washington, D.C.: Nov. 4, 2003), for a discussion 

of these issues. 

(320257)
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