United States General Accounting Office

GAO Report to Congressional Committees

October 1997 STATE DEPARTMENT

Using Best Practices to

Relocate Employees

Could Reduce Costs

and Improve Service

GAO/NSIAD-98-19

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-277431 

October 17, 1997

Congressional Committees

In the past few years, the Department of State has begun to examine the

applicability of “best practices” used in both the public and private sector

to key agency processes. Because the Department, like many private

sector and other government organizations, expends considerable

resources each year to relocate employees internationally, we examined

its process for transferring employees and their household effects to

identify best practices that State should consider adopting to reduce costs

and improve services.

This report discusses (1) State’s process for transferring employees and

their household effects overseas and (2) opportunities for State to apply

the best practices that private sector and other government organizations

use to complete overseas transfers. We plan to report separately on the

processes for providing housing and residential furniture to employees

posted overseas. The analysis in this report should be useful to the

working groups charged with planning for the reorganization of State, the

U.S. Agency for International Development (USAID), the United States

Information Agency (USIA), and the Arms Control and Disarmament

Agency (ACDA) to the extent that State is to assume responsibility for the

international transfer and transportation activities of those agencies.

Background Over 3,000 State employees, along with their household effects, are

transferred to new duty stations each year, of which about 1,000

employees are transferred from Washington, D.C., to foreign locations.

State’s direct costs associated with the employee transfer process have

typically exceeded $60 million annually in recent years. Indirect personnel

costs are difficult to quantify due in part to the numerous offices and staff

involved in the process. Other U.S. agencies operating overseas also

routinely transfer large numbers of employees to foreign locations. For

example, USAID and USIA alone transfer a total of approximately 1,000

employees annually. Many private sector firms also regularly transfer large

numbers of employees overseas.

Results in Brief Our comparison of State’s process for transferring employees and their

household goods overseas to the processes of other public and private

sector organizations suggests that State’s procedures are overly

Page 1 GAO/NSIAD-98-19 State Department
B-277431 

cumbersome and inefficient. State’s employee transfer process has

remained essentially unchanged for years and involves at least 12 agency

bureaus and offices, over 150 support staff, and numerous administrative

forms. State employees transferring overseas are confronted with a myriad

of steps and handoffs requiring individual transactions with multiple

offices. No single office within the Department is held accountable for

ensuring the timely and successful transfer of employees and their

families. Similarly, employees’ household shipments are typically

channeled through a maze of offices and contractors, resulting in

unnecessary costs.

The Department of State has an opportunity to significantly streamline its

employee transfer process, enabling it to provide better services to its

employees and to reduce costs. Leading U.S. companies and other

organizations have achieved these benefits by implementing a number of

“best practices,” such as

• providing one point of contact for assistance to the employee, a method

known as “one-stop shopping;”

• centralizing the administration of transfers under one organizational unit

and integrating various functions into that unit;

• developing an integrated information system for tracking and coordinating

transfers;

• contracting with one freight forwarder to ship an employee’s household

effects, rather than using multiple vendors for the various segments of the

same move; and

• outsourcing various parts of the transfer process.

Although we were unable to develop precise cost reduction estimates for

implementing these best practices, several organizations indicated that

they were able to achieve substantial cost savings by doing so. In addition,

our analyses of certain cost data and other information available at State,

including some of State’s own studies, indicate the potential for achieving

similar cost reductions for the Department. For these and other reasons,

we believe that the potential cost reductions could total millions of dollars

annually.

Page 2 GAO/NSIAD-98-19 State Department
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State’s Employee

Transfer Process Is

Inefficient,

Cumbersome, and

Costly

State’s process for transferring employees overseas is inefficient,

cumbersome, and costly. It requires employees to work with personnel in

at least 12 bureaus and offices and involves over 150 support staff. There is

no integrated data base containing all of the information needed to track

and coordinate the employee’s transfer, so some data are entered into

various systems repeatedly. Initially, an employee transferring abroad

must contact several officials in the Bureau of Personnel for guidance and

information. There are currently 38 counseling and assignments officers,

whose responsibilities entail preparing assignment notifications and

coordinating training for the employee being transferred. The counseling

and assignments officers maintain close liaisons with State’s other

Washington bureaus and the overseas posts. In the Assignment Support

Division, personnel technicians are assigned to prepare travel orders and

personnel actions, provide counseling, and give employees a checklist of

17 steps to complete in the transfer process. In addition, officials in the

Bureau of Personnel’s Executive Office often work with employees who

seek exceptions to departmental policy on matters such as entitlements

for shipping household effects. They also provide certain administrative

functions, such as adding accounting-related data to the employee’s travel

order. Figure 1 illustrates the employee contact points for relocating

overseas.

Page 3 GAO/NSIAD-98-19 State Department
B-277431 

Figure 1: Key Stops for State Department Employees Transferring Abroad From Washington, D.C.

Transportation

Division for

counseling, and

shipment/storage 

of household 

effects b/

Foreign Service

Lounge for 

counseling on the 

transfer process,

and to check out of 

the Departmentb

National Foreign 

Affairs Training

Center for training

Personnel

technician for 

travel authorization 

and counseling on the

transfer processa

Counseling and

Assignments Officer

for assignment 

and training

arrangementsa

Office of Medical

Services for medical

clearances and

inoculations

American Express

for travel

arrangements

Transportation

Division for

counseling, and

shipment/storage 

of household 

effectsb

Passport and

visa officesc

Employee 

discusses

transfer details 

with post 

Bureau of 

Diplomatic Security 

for overseas

security briefing

Payroll office for

pay advanced

Travel Service 

Center for 

travel advanced Employee

aBureau of Personnel.

bBureau of Administration.

Page 4 GAO/NSIAD-98-19 State Department
B-277431 

cBureau of Consular Affairs.

dBureau of Finance and Management Policy.

Source: Department of State.

In the Bureau of Administration, the employee being transferred has to

contact several additional officials for counseling, guidance, and

assistance. The employee is expected to (1) work with a counselor in the

Transportation Division to arrange for the storage and/or shipment of

household effects and (2) contact the Offices of Overseas Schools and

Allowances if questions or related issues arise. The employee may also

visit the Employee Service Center’s Foreign Service Lounge any time

during the process. The Center helps an employee obtain information

concerning the move, provides a checklist of 23 steps to complete, and

helps register the employee’s new location. Other bureaus/offices that an

employee typically deals with include the Bureau of Diplomatic Security

for security briefings, the Bureau of Finance and Management Policy for

pay advances and other payroll issues, the bureau/office/post that is

gaining or losing the employee, the Office of Medical Services, and the

American Express Travel Office. If in training at the Department’s Foreign

Service Institute in Arlington, Virginia, the employee also has the option of

working with transportation and travel representatives assigned to the

mini one-stop processing unit and with a nurse from Medical Services. In

addition, employees often work with personnel specialists in the regional

bureaus to address administrative matters associated with their transfer,

including changes in medical insurance coverage and addresses for

tax/benefits purposes.

State has known for years that its process for transferring employees and

their households overseas was cumbersome and inefficient. State’s most

recent attempt to examine the issue took place in 1994 and 1995 as part of

its agencywide Strategic Management Initiative.1

 State recognized that the

transfer process had numerous problems: it took over 100 steps to

complete a transfer, it lacked a single source fully familiar with the system,

and it did not have a comprehensive data base for tracking the entire

process. A working group recommended a complete overhaul of the

transfer system, with a goal of having a simple, one-stop,

customer-oriented program. The group’s recommendations included

(1) establishing customer representatives in State’s Bureau of

Administration to manage the transfer of employees from start

1

The Secretary of State established the initiative in 1994 to help set the Department’s future course and

eliminate unnecessary or marginal functions and internal duplication. Its first phase resulted in a series

of 1995 reports analyzing key issues, including reengineering of the Foreign Service’s transfer process.

Page 5 GAO/NSIAD-98-19 State Department
B-277431 

(assignment notification) to finish (arrival at post and resolution of

claims), (2) outsourcing certain processes, and (3) creating a new transfer

data base for all participants in the process.

According to Bureau of Personnel officials, these recommendations were

not implemented largely due to State’s (1) focus at that time on improving

its process for selecting/assigning employees to meet specific overseas

post requirements and (2) reluctance to make the substantial

organizational changes necessary for a successful reengineering of the

process. Although the process remains essentially the same, State’s

Bureau of Personnel took several steps to improve parts of the system

under its domain. These included simplifying some of the forms required

for a transfer, centralizing the location of its personnel technicians,2

 and

combining functions previously handled by separate assignments officers

and career development officers into one position. The Bureau also began

developing a new integrated personnel management system. In addition,

the Department established a “mini” travel and transportation assistance

unit for employees receiving training at its Foreign Service Institute.

We interviewed four employees that were in the final stages of transferring

from Washington, D.C., to an overseas post—the most onerous of all the

possible transfer situations, according to the Strategic Management

Initiative working group that examined the transfer process. The

employees had mixed views concerning the process’ efficiency, but

frequently described it as cumbersome and time consuming. Specific

descriptions of some of the problems with the current process included

the following:

• Too many people must be contacted to obtain the necessary forms and

complete all the steps. No one person is available to coordinate the

various requirements. It is not clear to whom family members

could/should turn for help in solving relocation problems if the employee

has already reported overseas or is not physically available to assist them.

• Progress through the system is seriously hampered if any delays are

encountered, particularly in the process for obtaining a medical clearance.

A clearance is required for a travel order, which is a prerequisite for

finalizing travel, transportation, and other actions.

• There is no automated tracking system or single data base containing all of

the information relevant to the employee’s transfer. The main tracking

2

Personnel technicians provide counseling, prepare travel orders, and execute other administrative

actions related to employee transfers.

Page 6 GAO/NSIAD-98-19 State Department
B-277431 

system is the employee’s personal working file, which is a manual set of

various forms, checklists, and contacts.

Appendix I shows in detail the typical steps and complexities involved in

State’s current transfer process.

Transporting Household

Effects

The single most costly element of the overall transfer process is

transporting employees’ household effects. Of the $62 million in direct

costs related to transferring employees in fiscal year 1996, State spent

about $36 million, or about 60 percent, on moving household effects.3

 The

indirect costs associated with the process are also high due to the

complexity of the process and the numerous personnel involved. For

example, State’s Transportation Division, which oversees shipments of

both household effects and official supplies, employs 69 permanent staff

and 38 contractor staff at its 6 locations (Washington, D.C.; 4 regional

despatch agencies; and the European Logistical Support Office).4

The process that State uses for managing the bulk of its household effects

shipments is very complicated, entailing multiple steps and handoffs. No

single contractor is responsible for the entire move. For most shipments,

State contracts separately for each segment of the move, including

packing and crating of the household effects at the employee’s residence,

trucking to the port, consolidating the effects with other shipments at the

port, transporting by ocean or air, separating consolidated shipments at

the destination port, trucking to a local contractor for delivery, and

unpacking at the destination residence. This multistep approach is known

as the “direct procurement method.” This method involves various

combinations of State’s Transportation Division in Washington, D.C.; its

four regional despatch agencies; and the European Logistical Support

Office, to contract for, coordinate, and monitor each move segment. An

additional disadvantage associated with the fragmented nature of this

method is that it makes it difficult to document the total actual costs and

to exercise accountability and control over the process. Figure 2 illustrates

the multiple handoffs required for direct procurement shipments.

3

Other key direct cost categories include travel, allowances, and temporary storage of household

effects.

4

The despatch agencies are located in Baltimore, Maryland; Miami, Florida; New York, New York; and

Seattle, Washington. The European Logistical Support Office is located in Antwerp, Belgium.

Page 7 GAO/NSIAD-98-19 State Department
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Figure 2: The State Department’s Direct Procurement Process

In some cases, State warehouses

household goods temporarily at the

despatch agencies and the European

Logistical Support Office

State contracts separately for each

segment of the move

Moving

Company

Baltimore

Despatch

Agency

New York

Despatch

Agency

Miami

Despatch

Agency

Seattle

Despatch

Agency

European

Logistical

Support Office

State Department

Source: Department of State.

State makes very limited use of “door-to-door” channels to contract with a

single freight forwarder for shipping an employee’s household effects—a

practice used throughout the private sector and seen as more

cost-effective than using multiple vendors for the various segments of the

same move. For example, in 1996, State used the door-to-door program for

only about 16 percent of the 1,065 shipments from the United States to 38

overseas locations where use of the door-to-door program was feasible.

Page 8 GAO/NSIAD-98-19 State Department
B-277431 

Application of Best

Practices by State

Could Significantly

Improve Its

Operations

Many private sector companies have recently reengineered their processes

for international relocation to control the growing costs associated with

their international operations and to provide better service to their

employees. If State applied industry best practices to its process for

transferring people, it could improve the quality of services to its

employees and their families, reduce the time required for employees to

complete the process, and possibly lower costs by reducing the number of

staff and other resources required to administer the program.

A 1995 study by a private consulting firm examined the overseas

management policies of 30 corporations and identified several “best

practices” that we believe should be considered for application to State’s

transfer process. These include (1) centralizing program administration

under the responsibility of one unit to have more specialized staff

dedicated to the function; (2) providing one-stop shopping to improve

employee satisfaction and accountability; (3) developing integrated

information systems to eliminate outdated and duplicate systems, track

costs, identify the status of key events, and reduce management burdens;

and (4) outsourcing. The companies surveyed ranged from small to large,

indicating that best practices are applicable regardless of the size of the

overseas population.

During our benchmarking exercise, we visited a number of companies that

demonstrated how one or more of these best practices has been applied to

improve the quality of services provided to their employees and/or to

reduce costs. In addition, all of the companies that we visited used the

door-to-door method of shipping household effects.

Ford Motor Company’s

International Service

Center

Ford currently supports a population of about 2,150 international service

employees in nearly 50 countries. In 1996, about 400 employees were

transferred from the United States to foreign locations, and about 400

were repatriated to the United States. In April 1996, the company began a

major reengineering of its international service employee relocation and

management function. The key feature of the reengineered process is

Ford’s new International Service Center, which completely centralized the

company’s process for transferring, managing, and returning international

service employees. Before establishing the center, Ford’s management of

the process was spread across divisional lines and, according to Ford

officials, “it simply did not work very well.” Ford officials believe that the

center has (1) significantly improved the quality of services provided to its

Page 9 GAO/NSIAD-98-19 State Department
B-277431 

international service employees and (2) enabled the company to better

support its substantial investments in overseas operations.

Critical to the operations of the International Service Center are the 17

international service associates (counselors) who are organized on a

geographical basis. The associates are responsible for coordinating and

ensuring that all aspects of an employee’s international transfer are

completed successfully, including the move out to post, the coordination

of activities during the assignment, and the repatriation of the employee.

An employee being transferred is assigned to one counselor as his/her

focal point for the entire duration of the international assignment. At any

one time, each counselor is responsible for supporting about 130

international assignees. Ford also relies heavily on private vendors to

execute key components of the process, including Orientation Services for

policy briefings and cross-cultural presentations; American Express for

travel, passports, and business visas; Coopers and Lybrand (an accounting

firm) for tax issues; John Hancock Company for health care orientations

and insurance inquiries; and Palmer Moving and Storage for moving and

transportation of household effects. Each of these vendors is located in

the International Service Center. The only part of the international transfer

process that is managed outside the center is the employee’s medical

clearance. Figure 3 shows the major parts of Ford’s process for

transferring an employee overseas.

Figure 3: Key Stops for Ford

Employees Transferring Overseas

Employee visits

Ford medical office

for medical exam

and clearance

(International service associate

coordinates all aspects of the 

transfer for the employee)

Employee

selected for

assignment

Employee

assisted by

International

Service Center

Employee

arrives at new

destination

Source: U.S. GAO.

Other Potential Corporate

Models

Texaco also clearly demonstrates the benefits of centralizing the

management of international transfers. Texaco currently supports about

Page 10 GAO/NSIAD-98-19 State Department
B-277431 

550 international assignment employees worldwide, and the number of its

transfers to and from the United States to foreign locations totaled about

230 in 1996. The majority of Texaco’s employees transferred are

professional mid-level positions, and the typical overseas assignment is for

3 years. Texaco reengineered both its domestic and international

relocation processes beginning in 1994. Texaco’s reengineering, which

included benchmarking with nine companies, identified several corporate

best practices in expatriate management. These included providing

centralized management, having geographic expertise among staff, using

state-of-the-art technology to support administration, and outsourcing

various services. Texaco’s reengineering resulted in a centralization of its

expatriate management activities into two key offices:

(1) In 1994, the company made a significant change in its operations by

outsourcing for the transportation of household effects and related

services and centralizing these services in the Texaco Relocation Center.

Initially, the vendor only handled domestic transfers but soon took over

international services. The vendor’s three counselors and two associates

had primary responsibility for 674 moves in 1996. Texaco officials said that

the quality of the services provided to its employees has substantially

improved and costs have been reduced by relying entirely on the vendor

for this component of the process. Cost savings were attributed to

reductions in corporate overhead and to the ability of the vendor to

negotiate lower rates for moving household effects.

(2) In 1995, many of the various internal expatriate support processes that

had been decentralized in the corporation’s three international divisions

were centralized in the Expatriate Service Center. The center, which

coordinates payroll, allowances, medical, visa, and related services for

persons transferred to and from foreign locations, is staffed with 12

corporate personnel (5 counselors, 2 tax specialists, 2 compensation

specialists, 2 secretaries, and 1 center manager). The counselors are

organized on a geographic basis, and they track/assist the employees for

the entire length of their overseas assignment, including repatriation. A

computerized information system was purchased from a consulting firm

and adapted to coordinate these various functions. The system is

integrated with Texaco’s main payroll systems and contains several

important data elements, including a checklist for key parts of the transfer

process and information on employees’ assignments, addresses,

emergency contacts, visas, and compensation.

Page 11 GAO/NSIAD-98-19 State Department
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According to Texaco officials, the benefits of centralizing services in the

center have included the following:

• Communication with employees and their families has improved.

• Employee downtime has been minimized throughout the process.

• Problems and complaints have diminished.

• Service has been cost-effective.

• Administrative support has focused on value-added work.

Another company that we visited and that asked for anonymity has for

years had one point of contact for its employees assigned internationally.

This company, which has an international employee assignment work

force of about 2,200, transferred about 400 employees to and from the

United States in 1996. Historically, most of its international transfers have

been in professional and mid- to upper-level management positions. The

typical period of assignment overseas has been for 3 years. This company

relies on a centralized international assignments unit to manage the

transfer of employees. Key to the process are regional counselors in the

unit, who provide one focal point for the employee for coordinating all

aspects of the transfer. These include a one-on-one discussion of

corporate relocation policy, referral to a moving company, and

arrangements for a homefinding visit to the next post. To facilitate the

process, the unit also purchased an off-the-shelf software system to handle

the process’ information requirements. According to company officials,

this eliminated older obsolete systems, reduced costs and time

requirements for administering the program, and created better interface

with other corporate systems. Similar to Texaco, the use of enhanced

information systems also improved the company’s budgeting,

accountability, and control over the relocation process.

Appendix II compares State’s practices to some of the best practices we

identified.

Adopting One-Stop

Shopping and Centralized

Program Administration

If State implemented one-stop shopping (one focal point for the employee)

and centralized program administration, it could achieve benefits such as

improved quality of services for employees and their families, reduced

time required for employees to complete the process, and possibly lower

costs resulting from fewer staff required to administer the program. If

State were to develop an integrated information system to support the

transfer process, it could significantly enhance counselors’ support

Page 12 GAO/NSIAD-98-19 State Department
B-277431 

capabilities and possibly enable them to efficiently handle a greater

number of transfers.

State officials in the Bureau of Personnel were very supportive of the

one-stop shopping concept and an integrated information management

system to support the process. Officials in State’s Bureau of

Administration endorsed the development of an integrated system for

tracking and coordinating the transfer process. They also endorsed

one-stop shopping wherever possible, although they expressed some

concern about whether one coordinator/counselor should be given

complete responsibility for both the transfer of the employee and the

shipment of his/her household effects. They believed that (1) certain

functions such as counseling, travel, passport, and visa requirements,

could clearly be consolidated into one customer service office and

(2) customer service coordinators could help coordinate other transfer

activities with designated transportation specialists and medical, security,

and assignments officers.

Based on the best practices we identified in the private sector and the

views of State officials, figure 4 shows a one-stop shopping process that

we believe State could effectively adopt.

Page 13 GAO/NSIAD-98-19 State Department
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Figure 4: Potential Model for One-Stop

Shopping at State Employee goes to

State's Overseas

Transfer Center

Employee

assigned to

overseas post

Employee 

arrives at

post

Updates employee locator, emergency, 

residence, and dependency information

Coordinates panel assignment decisions, 

training requirements, and reporting dates

Schedules medical clearances ( if not 

already updated) and inoculations

Counsels employee regarding travel 

and shipment needs

Initiates travel authorization

Helps employee make travel arrangements 

through contractor

Arranges for shipment and storage of 

household belongings with Transportation

Assists employee in applying for 

passports and visas

Arranges consultations required for 

specific assignments

Arranges for overseas security briefing from 

Bureau of Diplomatic Security

Assists employee in applying for pay 

and travel advances

Checks employee out of Department

Transfer coordinator

Source: U.S. GAO.

Page 14 GAO/NSIAD-98-19 State Department
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Expanding Door-to-Door

Shipments

If State applied industry practices to its process for transporting employee

household effects, it could further streamline the transfer process, reduce

overhead, and exercise better accountability and control. The direct

procurement method that State currently uses for transporting most of its

shipments was designed at a time when State was one of a few

organizations operating on a worldwide basis. Now that numerous private

and public organizations operate globally, a broad range of companies to

transport household effects internationally is available. Private industry,

many foreign governments, and other organizations generally use some

form of the less complicated and usually cheaper door-to-door approach

for shipping overseas, including transportation to developing countries.

None of the companies or governments that we visited used processes

similar to the one State uses for direct procurement shipments.

Unlike the multistep direct procurement approach, the door-to-door

method entails contracting with one commercial forwarder for all

transportation and related services required to move an employee’s

household effects from their origin to their final destination. The

forwarder acts as a broker, arranging and paying for each of the move

segments. The General Services Administration makes available to U.S.

executive branch civilian agencies international household goods tender

(offers) of service agreements for door-to-door shipments to and from

certain overseas locations. Figure 5 depicts the limited number of handoffs

that are required for door-to-door shipments. It is important to note that

many of the same activities that occur using the direct procurement

method are included in the door-to-door approach—the difference being

that when using door-to-door, the commercial forwarder, rather than the

State Department, is responsible for all steps.

Page 15 GAO/NSIAD-98-19 State Department
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Figure 5: The Door-to-Door Shipment Process

State Department New Home Freight 

Fowarder

Packing/crating

Trucking

Ocean/Air Transport

Receiving

Delivery/Unpacking

•

•

•

•

•

Source: Department of State.

We believe that State could also reduce the costs of shipping household

effects overseas by expanding its use of the door-to-door approach.

Because of the fragmented nature of State’s current transportation process

and deficiencies in State’s financial management system, we were not able

to document the direct cost reductions that State could achieve by

expanding its door-to-door program. However, in recent years, a number

of State Department Office of Inspector General reviews found that,

although using the direct procurement method could have lower costs in

some instances, the door-to-door method is usually less expensive and

could result in “significant” savings over time.5

Our work further shows that even if the direct costs associated with direct

procurement and door-to-door shipments are essentially the same, the

overall costs of using the direct procurement method are higher because

of substantially greater personnel and other indirect costs associated with

this system. Because of the multiple handoffs involving the Transportation

Division, the various despatch agencies, and the European Logistical

5

In 1992, the Inspector General first recommended that State use the door-to-door method. State

agreed to implement a program on a test basis beginning in 1992. In 1993, another Inspector General

review established that the door-to-door method was less costly and recommended that State expand

its use to include, wherever feasible, shipments from overseas posts back to the United States and

shipments from post to post. A follow-up review in 1995 found that State’s use of the door-to-door

method for 225 shipments between December 1992 and March 1994 to both developed and developing

countries had resulted in $376,687 in direct cost savings, or an average shipment savings of $1,674.

Page 16 GAO/NSIAD-98-19 State Department
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Support Office, these costs range from about $600 to about $1,600 per

shipment, based on estimates developed by State’s Logistics

Reengineering Project team.6

 In contrast, the indirect costs for

transportation management salaries, facilities expenses, and other charges

associated with the much simpler door-to-door method are only about

$400 per shipment and could be even lower if State were to expand its use.

In addition, as State further reengineers its process for obtaining goods

and services, the costs associated with direct procurement shipments are

likely to rise even higher. State’s logistics reengineering program involves,

among other initiatives, expanded use of local purchase and

direct-from-vendor delivery for supplies and equipment needed at

overseas posts. These changes mean that fewer supplies and other items

will flow through State’s transportation infrastructure and there will be

fewer opportunities to consolidate such shipments with household

effects—one of the primary benefits of the direct procurement approach.

Reduced consolidation equates to higher direct costs, but the increases do

not end there. As State comes to rely less on its own Transportation

Division resources such as the despatch agencies for moving supplies and

other items overseas, the per shipment indirect costs associated with the

direct procurement approach will increase accordingly.

Although the cost considerations are considerable, State has not

significantly expanded its use of the door-to-door program since

implementing it on a test basis in 1992. In 1996, State used the

door-to-door program for only about 16 percent of the 1,094 shipments to

locations where use of the door-to-door program was feasible and in only

2 percent of the shipments back to the United States. According to State

transportation officials, reasons for not expanding the program further

have included (1) concerns that door-to-door opportunities may be

limited, particularly in remote locations around the world; (2) lack of

Transportation Division authority over posts’ choice of shipping methods;

and (3) apprehension about possible opposition from the U.S. moving

industry because of concerns about some firms losing business as a result

of changes in State’s practices.

A recent increase in the number of overseas locations for which the

General Services Administration offers international tenders of service

could facilitate the expansion of State’s door-to-door program. Until

recently, the General Services Administration had made such agreements

6

This team, comprised of civil and Foreign Service logistics managers in the Department, recently

completed the design for an entirely new “reengineered” process for obtaining the goods and services

needed to support State’s worldwide mission.

Page 17 GAO/NSIAD-98-19 State Department
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available for shipments from the United States to 40 overseas locations. It

had also offered the tenders for shipments from these same 40 locations

back to the United States. In May 1997, the General Services

Administration increased the number of door-to-door routes to more than

150 cities worldwide. We believe that the expanded use of these routes by

State for its shipments from the United States will encourage the overseas

posts to adopt similar cost-saving practices. While changes in State’s

practices might affect the U.S. moving industry, the potential benefits to

the government are significant.

Expanding its door-to-door program would also enable State to consider

limiting the number of freight forwarders used for shipping household

effects, thereby maximizing its leverage with individual companies by

offering a greater volume of business for specific vendors. Most of the

private sector companies we visited, the World Bank, and the U.S.

Customs Service used this strategy, limiting to between one and three the

number of freight forwarders used for international household effects

shipments. In addition, we found that the British government contracts

with only one freight forwarder to ship diplomatic effects worldwide, and

the Canadian government relies on two freight forwarders. New Zealand

also uses a global contract with one freight forwarder and, according to a

1996 Australian Department of Foreign Affairs and Trade report on

options for streamlining its process for moving international household

effects, both Canada and New Zealand have reduced costs by using this

approach. The Director of the office responsible for relocations at

Customs said that limiting the number of freight forwarders has enabled

him to hold the vendors to a much higher standard of performance. Also,

Ford officials said that limiting the number of freight forwarders has

reduced costs and improved controls over shipments.

We believe that State could expand the use of the door-to-door method on

a route-specific basis, taking overall costs, accountability and control, and

quality of service into consideration. Overall cost comparisons would need

to consider both direct and indirect costs, including personnel and other

indirect costs in the Transportation Division, the regional despatch

agencies, and the European Logistical Support Office. Since State’s

Logistics Reengineering Project team has already developed much of the

necessary data on indirect costs, it would be a logical choice for making

such comparisons. Also, since the continued implementation of the

Logistics Reengineering Project has an impact on the indirect costs

associated with household effects shipments, the team would be well

positioned to factor such variables into the analysis.

Page 18 GAO/NSIAD-98-19 State Department
B-277431 

Outsourcing Options Another best practice that may have application in certain areas of State’s

transfer process is outsourcing. The private consulting firm that recently

surveyed the expatriate management practices of 30 companies identified

outsourcing as a “best practice.” The study noted that (1) some functions

are better candidates than others for outsourcing and (2) decisions

concerning outsourcing need not only to weigh its cost-effectiveness but

also to consider other factors such as the level of service available, the

extent certain skills can only be provided in-house, and the amount of

internal control required. During our benchmarking exercise, we also

found that private firms typically outsource parts of the transfer process.

For example, one company used vendors for compensation functions,

overseas destination services, tax services, immigration services, and

shipping. That company also examined the possibility of outsourcing its

entire relocation function but decided against it because of cost

considerations and uncertainty that the relocation service provider could

perform as well as the company’s own employees. Another company had

completely outsourced its domestic/international transportation function,

saving substantial sums based on reduced shipping/moving rates and

lower corporate staff requirements.

Historically, various State studies have also recognized outsourcing as an

option but little action has materialized. For example, in 1995 the Strategic

Management Initiative special study group reviewing the transfer process

recommended that the Department establish customer service

representatives using private contractors for the bulk of the work.

However, the study did not examine the cost-effectiveness of the option.

The Department did not endorse the group’s recommendation. Another

team examined operations of State’s medical office, which is a key step in

the transfer process.7

 That team concluded that as much as $1.5 million

could be saved in annual salary costs by outsourcing the Department’s

medical examination program with a private health contractor. The

Secretary of State at that time subsequently endorsed the use of private

firms or other agencies to handle such services, if justified by rigorous

cost analysis.

In response to the Secretary’s endorsement, the Office of Medical Services

assembled a working group in 1996 to study the issue further. The group

developed information that showed that (1) over 4,700 medical

examinations were conducted in the Department in fiscal year 1994,

(2) the average cost of an examination was $890 in the same year, and

7

To get a medical clearance, employees typically visit State’s medical office twice for initial tests and

followup. Additional tests in the unit or externally may be required. Overall, it may take 3-5 weeks to

complete the process.

Page 19 GAO/NSIAD-98-19 State Department
B-277431 

(3) costs became higher in subsequent years because the clinic was moved

to larger and more expensive space. Moreover, the analyses noted that the

Department’s average examination cost of $890 was substantially higher

than the rate of $450 per examination that State had negotiated with

George Washington University in Washington, D.C. Although this analyses

stated it was clear that medical exams could be obtained at a lower cost

elsewhere, no action was taken on the working group’s study.

Outsourcing all or portions of the transportation process for household

effects also offers potential benefits. An obvious advantage of outsourcing

is that it offers a “surge capability” during peak moving periods—in State’s

case, during the summer months—without having to devote unneeded

resources to the transportation function during nonpeak periods. Some

private companies operating internationally expect the contractors that

are providing the door-to-door transportation services also to provide

other services such as relocation policy counseling—a function that State

currently performs in-house using a combination of more than 20

permanent employees and contractor staff. Depending on the volume

involved, some of these contractors locate their counselors on-site. The

World Bank ships the household effects of its approximately 1,000

employees who relocate each year using an in-house transportation staff

comprised of only 2 permanent Bank employees. The three moving

companies that the Bank uses for international relocations have

counselors located on-site at the Bank. Contracts have been competitively

bid to get the best value.

We also found during our review that move management companies

provide an even wider range of services than do traditional moving

companies, such as claims management, voucher processing, destination

services, and accounting services. In one case, the relocation company

provided the extra services at no additional charge. In some cases, the

companies charged a per shipment fee. These fees should be factored into

cost comparisons involving various outsourcing options, along with any

related overhead savings.

Lump Sum Option Another option that some companies employ to streamline the transfer

process is to provide lump sum advances to employees to cover specific

categories or all of an employee’s relocation expenses. The advantage of

this approach is that it eliminates the requirement for employees to

itemize or document expenses and thus reduces overhead associated with

processing vouchers and other monitoring and compliance activities. An

Page 20 GAO/NSIAD-98-19 State Department
B-277431 

interagency working group addressing travel reengineering as part of the

Joint Financial Management Improvement Program recommended that

federal agencies have the option of using such an approach to provide

subsistence assistance for temporary quarters associated with relocations.

State is currently exploring a variation of this option. The Strategic

Management Initiative working group that examined State’s transfer

system mentioned the “radical” alternative of providing a lump sum for an

employee’s entire relocation, where the employee would then arrange for

moving his/her household effects and family members. Although the

working group said that this method would involve “significant FTE

(full-time equivalent) and dollar savings,” it also recognized that it would

work well for relocations only to some of the countries where State

operates.

Potential Cost Reductions Applying best practices to State’s transfer process could result in

significant cost reductions. The total that could be achieved is dependent

on a number of factors, including (1) the personnel and other resources

State chooses to redeploy as they are freed up in connection with a more

streamlined transfer process; (2) the number of routes where the

door-to-door method of shipping household effects is found to provide the

best combination of overall cost-effectiveness, accountability and control,

and quality of service; (3) the extent to which changes resulting from

State’s Logistics Reengineering Project affect household effect shipment

costs; and (4) the parts of the transfer process State decides to outsource.

Although these and other variables preclude making precise projections,

we believe that the potential cost reductions could total millions of dollars

annually, based on (1) our limited analysis of the indirect costs associated

with certain portions of State’s current process, (2) documented direct

cost savings resulting from use of the door-to-door method on a pilot

basis, (3) the experiences of companies and organizations that we visited

as part of our benchmarking exercise, and (4) State’s own studies. One

organization with which we benchmarked saved millions of dollars by

applying best practices to its transfer process—an operation smaller in

scope than State’s. Also, as noted earlier, State’s own analysis indicated

that as much as $1.5 million could be saved by outsourcing one element of

the transfer process alone.

Potential Benefits for

Other Agencies

A successful reengineering of State’s transfer process based on adoption

of best practices and other options could also have significant benefits for

Page 21 GAO/NSIAD-98-19 State Department
B-277431 

other foreign affairs agencies. For example, the Strategic Management

Initiative study group that examined State’s transfer process in 1994 noted

that both USAID and USIA had transfer processes that were similar to State’s.

Our more recent work at USAID as part of this review indicates that USAID’s

transfer system continues to be complex and cumbersome. A significantly

improved State process could serve as a model for agencies such as USAID.

On the other hand, an even more significant challenge and opportunity for

improvement will be afforded State based on current plans to consolidate

the operations of the Department and other foreign affairs agencies.

Specifically, the executive branch is developing plans to (1) consolidate

the operations of USIA and ACDA into the State Department and (2) integrate

certain administrative functions of USAID and State. When that occurs, a

streamlined transfer process could produce much greater benefits.

However, several issues will have to be addressed, including whether

(1) staff resources in each agency can/should be consolidated to support

one transfer process, (2) outsourcing would help manage a significantly

larger volume of transfer activity, and (3) any of the agencies’ in-place or

planned information systems can effectively meet process requirements.

Officials in State’s Bureau of Administration also noted that State, USIA,

and USAID have very similar transportation systems and integrating them

would be relatively painless. We believe that this possibility provides

substantial opportunities for even greater cost savings through a

consolidation of transportation functions and the broader application of

door-to-door shipments.

Conclusions In today’s budget environment, State can no longer afford to operate

costly and outdated systems. State’s complicated approach to transferring

its employees—developed when the agency was one of the few

organizations supporting worldwide operations—remains an

unnecessarily complicated maze of costly handoffs and mini-operations

without a lead person in charge or accountable for the entire process. Now

that many organizations have global operations based on reengineered and

modern processes, State has an opportunity to rethink its transfer process.

Several corporations have made significant changes in the way they do

business in order to remain competitive and to control the costs

associated with their international operations. By applying best practices

to their employee transfer processes, firms have reaped several benefits

including cost reductions, better accountability and control, consistent

application of corporate policy across division lines, and improved

services to their employees. Implementing best practices as a fundamental

Page 22 GAO/NSIAD-98-19 State Department
B-277431 

part of modernizing its transfer operations would enable State to do the

same. A modernized State transfer process would also enable State to

more efficiently integrate the operations of other foreign affairs agencies

and serve as a model to non-foreign-affairs agencies supporting significant

numbers of employees overseas.

Recommendations We recommend that the Secretary of State establish a special team under

the direction of the Under Secretary for Management to design an

implementation strategy for improving management of the Department’s

employee transfer process. The strategy should take into account the

transfer activities of ACDA, USAID, and USIA. The team should be composed

of staff from each of the key bureaus and offices currently involved in the

process. Its mandate should include the following:

• Identify the most appropriate organizational structure, location, and

staffing arrangements for centralizing management of the transfer

function, ensuring accountability and control over the entire process, and

providing one-stop shopping for the employee.

• Develop an integrated information management system to handle the

reengineered transfer process, based on off-the-shelf technologies or

information resource management initiatives already under way in the

Department, if possible.

• Develop a plan for outsourcing those parts of the transfer process where

analyses show that outsourcing would provide better, more cost-effective

service than performing the function in-house. Key parts of the process

that should be examined include medical and move management services.

• Develop cost, time, and quality performance measures for managing the

process and measuring the impact of reengineering efforts.

We also recommend that the Secretary of State direct the Transportation

Division to substantially expand the use of door-to-door shipments of

household effects.

Agency Comments

and Our Evaluation

In commenting on a draft of this report, State acknowledged that its

transfer process needs improvement, that “one-stop shopping” should be

the touchstone for such improvement, and that the use of door-to-door

shipments should be expanded. However, it did not agree to implement

any of our recommendations. State gave several reasons for not taking

action, including its (1) limited capacity to take on the issue given the

magnitude of agency consolidation, logistics and medical services

Page 23 GAO/NSIAD-98-19 State Department
B-277431 

reengineering, and information technology efforts already underway;

(2) concerns that the Department’s transfer requirements are different

from those of the private sector; (3) questions about whether Ford Motor

Company would be a good model; and (4) efforts to significantly expand

the number of door-to-door shipments since 1994.

We do not believe that State’s reasons for delaying action or for not

supporting our recommendations are persuasive. In our view,

reengineering the transfer process would improve services, reduce costs,

and represent a logical extension of the Department’s ongoing efforts to

reengineer its logistics system. Additionally, it is important that State’s

reengineering studies consider whether outsourcing is the best way to

provide certain services.

We also do not share State’s concerns that the best practices of the private

sector may not be applicable because of differing requirements. Employee

transfer requirements are much the same in the public and private sector,

essentially focusing on ensuring that employees and their families are

successfully transferred to their new overseas assignments. State’s

concerns are also inconsistent with the reengineering methodology

generally used in government and the private sector and adopted by its

own logistics reengineering team, which relied heavily on the best

practices of the private sector. State’s questions about whether Ford

Motor Company would be a good model appear to be based on the

Department’s misinterpretation of information in our draft report. State

believed that our draft report had implied that Ford’s international

relocation program costs hundreds of millions of dollars annually. That is

not the case—in fact, Ford officials believe that the company’s new

International Service Center, which has adopted one-stop shopping,

outsourcing, and other industry best practices, has significantly improved

the quality of services to its employees and enabled the company to more

efficiently support its entire investment in overseas operations.

State claimed that it had significantly increased its use of door-to-door

shipments. A closer examination of State’s shipping data indicates that the

Department has misinterpreted its own data. Despite its claims of

significantly greater use of door-to-door shipments, only about 10 percent

of the shipments in 1996 that were eligible for the door-to-door method

were actually channeled by the Department through that process.

In summary, we continue to urge State to act on our recommendations.

Page 24 GAO/NSIAD-98-19 State Department
B-277431 

State’s detailed comments, along with our analyses, are included in their

entirety in appendix III.

Matter for

Congressional

Consideration

Because the Department of State has not indicated support for our

recommendations intended to improve the quality and efficiency of its

transfer and shipping process, Congress may wish to direct State to

implement them.

Scope and

Methodology

Recognizing that pressure exists to reduce the budget for conducting

foreign affairs activities, we undertook to identify potential cost savings

for the Department of State. To review and map State’s current process for

transferring employees, we obtained prior studies, including the

Department’s 1995 Strategic Management Initiative reports and 1991-95

audits by its Inspector General. We also interviewed appropriate officials

at State’s headquarters in Washington, D.C. We developed flow charts of

generic transfer and shipping processes and developed related cost data to

the extent practical.

To identify best practices in the private sector and other organizations, we

researched literature and consulted with various experts in the area. The

Employee Relocation Council—a professional association of several

thousand corporations, government agencies, and other organizations

concerned with relocation issues—helped us pinpoint several companies

that had a large number of overseas employees and that were considered

leaders in the international relocation field and/or had recently

reengineered their international employee relocation processes.

To compare best practices in the private sector and State transfer

processes, we visited six companies identified during our review to

develop detailed information on these processes and their reengineering

efforts. We selected these companies based on the number of employees

transferred, typical time frames for an overseas assignment, and actions

taken to control costs of international operations. One of the companies

we visited was also a participant in a study of best practices in expatriate

personnel management in 30 private corporations, conducted by a private

consulting company in 1995. We also visited the embassies of the United

Kingdom and Canada in Washington, D.C., and met with representatives of

the Australian National Audit Office to obtain an understanding of how

other national governments transfer their employees to overseas locations.

In addition, we developed information on USAID’s and the World Bank’s

transfer processes. We did not independently verify any cost savings or

Page 25 GAO/NSIAD-98-19 State Department
B-277431 

performance benefits data provided by the companies and other

organizations we visited or those identified in other studies.

We conducted our review from August 1996 to July 1997 in accordance

with generally accepted government auditing standards. We performed our

work at government, public, and private organizations in Washington,

D.C.; New York; New Jersey; and Michigan.

We are sending copies of this report to the Administrator, USAID; the

Director, USIA; the Director, Office of Management and Budget; and

interested congressional committees. We will also make copies available

to others upon request.

Please contact me at (202) 512- 4128 if you or any of your staff have any

questions concerning this report. The major contributors to this report are

listed in appendix IV.

Benjamin F. Nelson, Director

International Relations and Trade Issues

Page 26 GAO/NSIAD-98-19 State Department
B-277431 

List of Congressional Committees

The Honorable Jesse A. Helms

Chairman

The Honorable Joseph R. Biden Jr.

Ranking Minority Member

Committee on Foreign Relations

United States Senate

The Honorable Judd Gregg

Chairman

The Honorable Robert C. Byrd

Ranking Minority Member

Subcommittee on Commerce, Justice, State,

 The Judiciary and Related Agencies

Committee on Appropriations

United States Senate

The Honorable Benjamin A. Gilman

Chairman

The Honorable Lee H. Hamilton

Ranking Minority Member

Committee on International Relations

House of Representatives

The Honorable Harold Rogers

Chairman

The Honorable Alan B. Mollohan

Ranking Minority Member

Subcommittee on Commerce, Justice, State,

 The Judiciary and Related Agencies

Committee on Appropriations

House of Representatives

Page 27 GAO/NSIAD-98-19 State Department
Contents

Letter 1

Appendix I 

The Department of

State’s Employee

Relocation Process

(Washington to Post

Only)

30

Appendix II 

Differences Between

the State Department

and Some

Organizations

Employing Best

Practices for

International

Transfers

33

Appendix III 

Comments From the

Department of State

34

Appendix IV 

Major Contributors to

This Report

40

Figures Figure 1: Key Stops for State Department Employees Transferring

Abroad From Washington, D.C.

4

Figure 2: The State Department’s Direct Procurement Process 8

Figure 3: Key Stops for Ford Employees Transferring Overseas 10

Figure 4: Potential Model for One-stop Shopping at State 14

Figure 5: The Door-to-Door Shipment Process 16

Page 28 GAO/NSIAD-98-19 State Department
Contents

Abbreviations

ACDA Arms Control and Disarmament Agency

USAID U.S. Agency for International Development

USIA United States Information Agency

Page 29 GAO/NSIAD-98-19 State Department
Appendix I 

The Department of State’s Employee

Relocation Process (Washington to Post

Only)

Personnel technician creates 

travel authorization document Employee and family get

inoculations any time 

before leaving

Employee forwards copy of 

prepared itinerary to personnel

technician, who sends arrival

notice to post

Counseling and

Assignments Officer (CAO)

determines training needs

CAO prepares

assignment notification

message for employee, 

gaining post, and losing office

Employee, gaining post, and

losing office agree on 

reporting and departing dates

Employee assigned to

overseas post

Personnel's Executive

Office adds fiscal data and

transmits travel

authorization to post and 

all interested units by cable

CAO generates request for

training and transmits 

electronically to 

National Foreign Affairs 

Training Center

CAO requests any training

agreed to by all parties

Employee develops travel

itinerary with American Express

for self and family

Employee gets required medical 

clearance for self and family

Personnel technician

sends travel authorization

to employee

Employee registers with 

Foreign Service Lounge, updates 

locator and emergency information, 

and receives counseling 

on the transfer process

Personnel technician counsels

employee, as needed, 

re: medical clearances, 

transportation, travel, letters, etc.

A A A A A A

Employee sends notification

of assignment letter to post

Employee receives 

assistance from bureau

personnel specialists on 

administrative questions

(e.g., health benefits)

Optional steps, which can be done in any order.

Page 30 GAO/NSIAD-98-19 State Department
Appendix I 

The Department of State’s Employee

Relocation Process (Washington to Post

Only)

Employee requests passport

services request form and

photo memo from

personnel technician

Employee (and spouse and

dependents, if desired) 

attends security seminar

Employee arranges to 

have household goods

shipped to post

Employee picks up

tickets from

American Express

Employee visits overseas 

briefing center at the National

Foreign Affairs Training Center

Employee checks with 

personnel technician to ensure

that residence and dependents

report form is properly filled out

Spouses/adult dependents

register in Family Liaison Office

skills bank, if applicable

Employee checks with 

allowances office to 

verify allowances

Employee takes photos

and application to

passport clerk

Employee submits passports

and visa applications to get

visas, if necessary

Employee returns to

picks up passports

Employee returns to passport

office to pick up

passports with visas

B B B B

A A A A A A

Employee takes memo to

photo clerk in passport office

and gets photos

Optional steps, which can be done in any order.

Employee can get travel 

advance through 

Travel Service Center

Employee picks up and turns

in application for advance of pay

to payroll office in Bureau of 

Finance and Management Policy

Page 31 GAO/NSIAD-98-19 State Department
Appendix I 

The Department of State’s Employee

Relocation Process (Washington to Post

Only)

Employee checks with Office

of Overseas Schools, 

if applicable

Employee departing from

State checks out of

Foreign Service Lounge

where he or she fills out a

leave plan

Employee arrives

at new post

Gaining post sends notice of

arrival, by cable, which is

routed to personnel and payroll

Personnel technician receives

notice and initiates a

Notification of Personnel Action

Payroll changes employees pay,

primarily locality pay, and 

transfers pay and leave record

to overseas payroll center

B B B B

Optional steps, which can be done in any order.

Page 32 GAO/NSIAD-98-19 State Department
Appendix II 

Differences Between the State Department

and Some Organizations Employing Best

Practices for International Transfers

Best practice State Ford Texaco

Centralized program

Administration

No—currently administered in

several bureaus and/or offices

Yes—International Service

Center

Yes—Expatriate Service Center

and Texaco Relocation Center

One point of contact for

transferring employee

No—numerous points of

contact in several bureaus and

offices required to complete the

transfer

Yes—one counselor in the

International Service Center

coordinates all aspects of the

transfer

Yes—one point of contact in

Expatriate Service Center

coordinates the transfer

Integrated information systems Partial—the Bureau of

Personnel’s new integrated

system will upgrade information

capability for parts of the

transfer process

Partial—data centralized but not

linked electronically

Yes—purchased an integrated

system from consultant and

linked with existing information

systems

Outsourcing 

• Travel

• Move management

• Household effects counseling 

• Tax consulting

• Home sales

• Orientation

• Medical

Yes

No

Partial, some contractors used

Not applicable

Not applicable

No

No

Yes

Yes

Yes

Yes

Yes

Yes

No

Yes

Yes

Yes

Yes

Yes

Yes

No

Page 33 GAO/NSIAD-98-19 State Department
Appendix III 

Comments From the Department of State

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

Page 34 GAO/NSIAD-98-19 State Department
Appendix III 

Comments From the Department of State

See comment 1.

See comment 2.

See comment 3.

Page 35 GAO/NSIAD-98-19 State Department
Appendix III 

Comments From the Department of State

See comment 4.

See comment 5.

See comment 6.

See comment 7.

Page 36 GAO/NSIAD-98-19 State Department
Appendix III 

Comments From the Department of State

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

dated August 29, 1997.

GAO Comments 1. Although State is taking actions to improve many of its systems, its

position of delaying action to improve its transfer process because of

other reengineering and consolidation initiatives contributes to

long-standing and costly inefficiencies in one of the Department’s key

operations. We believe that (1) the reengineering initiatives already

underway in the Department have helped create a climate of support for

new and more efficient ways of doing business, (2) the transfer process is

a logical extension of the systems being reengineered, and (3) the working

groups charged with reorganizing the foreign affairs agencies can and

should incorporate these and other best practices in their analyses.

Although State took some actions, it essentially failed to satisfactorily

address the transfer process problem in the mid-1990s as part of its

Strategic Management Initiative. Given the inefficiencies involved and the

cost savings that would follow, we believe State should not miss this

opportunity to take timely and meaningful action. A large number of

employees’ quality of life would be improved and numerous other benefits

could be derived from a reengineered process.

2. State’s concern that Ford Motor Company would not be a good model

for it to consider appears based on the Department’s misinterpretation of

information in our draft report. Our draft report did not state that Ford’s

relocation costs total hundreds of millions of dollars annually. It said that

Ford officials believed that the company’s new International Service

Center had enabled Ford to better manage its international assignment

process that costs hundreds of millions of dollars annually. Ford officials

had used the terminology “international assignment process” to describe

the total investment Ford has made in its overseas operations, including

employee relocation, salaries, equipment, infrastructure, and so forth. We

modified our report to reflect this point. We strongly believe that the best

practices of Ford, as well as those of the other companies described in our

report, provide a good basis for State to reengineer its relocation process

to reduce costs and improve services. Those best practices include

one-stop shopping for employees, centralization of the transfer

administration function, outsourcing, development of information systems

to track and coordinate transfers, and greater use of door-to-door

shipments for employees’ household effects.

Page 37 GAO/NSIAD-98-19 State Department
Appendix III 

Comments From the Department of State

3. We recommended that State develop an integrated information system

to manage its reengineered transfer process, adding that it should be done

either with off-the-shelf technologies or information resource initiatives

already underway in the Department. Some of the companies that we

benchmarked have used off-the-shelf systems from major vendors, and

State documents indicate that, as part of its modernization strategy, it

plans to identify commercial off-the-shelf products as options for

designing a comprehensive resource management system. The thrust of

our recommendation is that State should build on the numerous initiatives

underway in the Department to modernize systems and link agency

processes. The development of an information system to support a

reengineered transfer process would be a logical part and/or extension of

the overall modernization process.

4. We support the Department’s efforts to reengineer its medical clearance

processes and its consideration of several options for improving medical

services. Although State believed that outsourcing should not be

considered until the reengineering has been completed, our

recommendation is designed to encourage the Department to consider all

practical options for reengineering, including outsourcing. The

experiences of the private sector, as well as State’s own data, indicate that

outsourcing is a reengineering option that can produce greater efficiency

and better service for certain processes.

5. Although State agreed that door-to-door shipments should be increased,

the data it provided is misleading concerning the actual level of progress

made by the Department. Specifically, State provided data showing that

the number of door-to-door shipments have increased 37 percent in the

past 3 years. While this may appear progressive, it is misleading because

the total number of shipments sent door-to-door in 1996 represented only

about 10 percent of those that could have utilized this method. Clearly,

State has a lot of room to expand its use of door-to-door shipments and

reap the financial benefits.

6. We asked State to provide data supporting its claim that it cost an

average of $6,000 more using the door-to-door method for shipments to

Mexico. State could not substantiate this claim.

7. We believe that the greater use of door-to-door shipments by the

European Logistical Support Office further confirms our conclusion that

State can and should expand the use of such shipments. We believe that it

also demonstrates that door-to-door shipments are a viable alternative for

Page 38 GAO/NSIAD-98-19 State Department
Appendix III 

Comments From the Department of State

overseas posts, eliminating the need to incur the additional expenses

associated with channeling posts’ shipments through the European

Logistical Support Office in Antwerp, Belgium.

Page 39 GAO/NSIAD-98-19 State Department
Appendix IV 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Diana M. Glod

Michael J. Courts

Edward D. Kennedy

Jesus A. Martinez

Rona Mendelsohn

Lynn B. Moore

Jodi M. Prosser

La Verne G. Tharpes

Office of the General

Counsel

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