United States General Accounting Office

GAO Report to the Secretary of State

May 1995 STATE DEPARTMENT

Additional Actions

Needed to Improve

Overseas Real Property

Management

GAO/NSIAD-95-128

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-260352 

May 15, 1995

The Honorable Warren M. Christopher

The Secretary of State

Dear Mr. Secretary:

In February 1995, we removed overseas real property management from

our list of federal programs most vulnerable to waste, fraud, abuse, and

mismanagement. We based that decision on a number of factors, including

the actions taken by the State Department and its Office of Foreign

Buildings Operations (FBO) to strengthen real property programs.

However, because some problems still exist, State’s management of

overseas real property still needs to be closely monitored.

This report (1) discusses the progress made and some of the problems still

facing the Department in real property management and (2) contains

recommendations to you to strengthen the Department’s management.

The report is based on our work at FBO headquarters and the embassies in

Nassau, the Bahamas; London, England; Vienna, Austria; Santo Domingo,

Dominican Republic; Port Moresby, Papua New Guinea; Kuala Lumpur,

Malaysia; and Singapore, Singapore.

Results in Brief Many of the actions taken by State to improve real property management

have focused on the maintenance of overseas facilities. In our past

reviews, we identified inadequate maintenance as one of the most serious

problems in the overseas real property program and beginning in 1990,

State identified it as a high-risk area in its Federal Managers’ Financial

Integrity Act reports. Actions taken to address maintenance problems have

included assigning skilled maintenance professionals to overseas posts,

conducting global maintenance surveys, establishing maintenance

assistance centers, and implementing a facilities evaluation and assistance

program. FBO also implemented a financial audit program in 1990,

improving its oversight of posts’ real property programs and resulting in

the return of nearly $4 million in unused funds. In addition, FBO has

implemented an information resource management system to strengthen

budgeting and planning and has continued upgrading its real estate

management system.

Nevertheless, some significant problems still exist that, if allowed to

continue, could impede long-term efforts to improve real property

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management. Specifically, we found questionable and/or inappropriate use

of routine maintenance funds at every overseas post included in our

review. We also found that some of the posts had failed to (1) conduct or

complete annual assessments of the condition of government-owned and

long-term leased facilities, (2) deobligate unneeded FBO funds, and

(3) properly use the real estate management system to manage routine and

preventive maintenance programs. In Nassau, we also found inadequate

planning for the sale or use of undeveloped properties that have been in

the Department’s property inventory for years.

Background FBO has responsibility for managing about 11,000 leased properties and

3,000 U.S.-owned properties valued about $12 billion. These properties, at

over 260 locations worldwide, include embassies and consulates, office

buildings, detached houses and multi-unit residential buildings,

warehouses and garages, and undeveloped land. FBO’s responsibilities

include (1) overseeing the acquisition, design, construction, sales,

operations, and maintenance of properties and (2) establishing policies

and procedures for overseas posts to follow in managing real property

programs.

Since the early 1960s, we have reported serious deficiencies in FBO’s

management of overseas real property. Beginning in 1990, as part of our

special effort to review and report on federal programs considered

high-risk, we identified the management of overseas real property as being

at substantial risk for waste, fraud, abuse, and mismanagement. Our

December 1992 report on overseas real property1

 identified the chronic

and long-standing management weaknesses that had affected overseas real

property programs, including insufficient maintenance, lax oversight of

overseas operations, inadequate information systems, and poor planning.

These weaknesses resulted in deteriorating facilities and a significant

backlog of maintenance and repair requirements. Management

weaknesses also directly contributed to construction delays and cost

overruns, oversized and unauthorized housing, poor decisions, and

questionable expenditures. In our 1992 report, we noted that the State

Department had recognized the significance and urgency of the problems

and had planned or initiated a number of engineering, staffing, and

management process actions designed to address past problems.

1

Management of Overseas Real Property (GAO/HR-93-15, Dec. 1992).

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Progress in

Maintenance

Programs

Progress has been made in addressing the long-standing problem of

inadequate maintenance and rehabilitation of overseas facilities. In early

1993, we sent a questionnaire to the State Department’s overseas

embassies addressing several management issues.2

 Almost all of the 

80 embassies responding to the questionnaire said that they had received

services or review visits from FBO and/or one of the regional maintenance

assistance centers, and the majority of the respondents were generally or

very satisfied with the services received. In September 1993, the State

Department’s Inspector General reported that FBO had made progress in

addressing weaknesses in its repair and maintenance of overseas

property.3

 Progress cited by the Inspector General included a new group of

skilled maintenance professionals in the State Department responsible for

overseeing post maintenance and repair operations, a systematic global

facility review program to assess the condition of U.S.-owned and

long-term leased facilities, a 5-year plan for major rehabilitations, a

comprehensive maintenance plan for newly constructed buildings, and

additional funding for maintenance programs. Other initiatives have

included the facilities evaluation and assistance program. This program

augments the global review program and typically consists of a

maintenance audit of post facilities using a standard evaluation checklist

and assistance in developing more effective maintenance programs.

In December 1993, the Office of Management and Budget (OMB)

determined that FBO had made sufficient headway in improving

maintenance management to warrant removing rehabilitation and

maintenance of overseas property from its list of areas at highest risk to

fraud, waste, and abuse. We agree with this decision since our work also

indicates substantial progress by FBO in the maintenance and rehabilitation

area. However, we have also identified continuing problems requiring

corrective action. These problems include the questionable and/or

inappropriate use of routine maintenance funds by overseas posts and the

failure of some posts to either conduct or complete annual surveys

documenting the condition of government-owned and long-term leased

facilities.

2

The questionnaire was sent to 104 embassies with authorized State Department staff levels of 10 or

more. The 80 embassies that completed and returned the questionnaire represented a response rate of

77 percent.

3

Maintenance and Repair of Buildings Overseas (3-PP-014, Sept. 1993).

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Questionable and/or

Inappropriate Uses of

Funds

As part of its overall management responsibilities, FBO provides funds to

each overseas post to pay for routine maintenance and repair of its real

property. In fiscal year 1994, approximately $27 million was provided to

the posts. Authorized uses of the funds include painting and other

services/materials of a recurring or minor nature, the purchase of bulk

supplies such as lumber and nails, and projects that would otherwise

qualify as special maintenance or minor improvement projects.4

 The

policies and procedures allowing the use of routine maintenance funds for

special and minor improvement projects were identified in an April 1993

cable to all posts, giving post management the latitude to execute small

special maintenance and improvement projects as required.5

 However, to

ensure that posts use most of these funds for routine maintenance, no

special maintenance or minor improvement project using routine

maintenance funds may exceed $10,000 and no more than a total of

5 percent of a post’s annual routine maintenance funds may be used for

special projects in a given year.

Although FBO has issued guidance to the posts on the proper uses of

routine maintenance funds, our review of posts’ financial records shows

that inappropriate and/or questionable uses of funds have occurred

frequently. These have included the use of routine maintenance funds for

(1) special and minor improvement projects costing more than $10,000 and

(2) special and minor improvement projects totaling more than 5 percent

of the post’s annual routine maintenance budget. In some cases, posts

used routine maintenance funds for nonmaintenance and repair purposes.

Reasons for the misuse of funds include the failure of posts to follow FBO

guidance, some ambiguities in the guidance and related State regulations,

and FBO’s failure to hold posts sufficiently accountable for improperly

using funds.

Examples of using routine maintenance funds for special projects costing

greater than $10,000 included

• the repair and resurfacing of a tennis court at the ambassador’s residence

in Santo Domingo;

4

Special maintenance and repair funds are authorized by FBO for one-time projects designed to restore

a building to a fully functioning condition (e.g., roof replacement). Minor improvement funds are for

one-time projects designed to enhance the value of a building or change its functional nature (e.g.,

adding a new kitchen). FBO planned to obligate about $55 million for special maintenance and minor

improvement projects in fiscal year 1994.

5

Prior to these procedures, all special maintenance and minor improvement projects required FBO

approval.

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• construction of storage lockers and hard covering over a swimming pool,

and new windows in London; and

• extension of a tubular mailing system, facade renovation, installation of a

suspended ceiling, and grounds preparation for a volleyball court in

Vienna.

Routine maintenance funds were used for nonmaintenance purposes to

purchase furniture for the posts in Santo Domingo and Nassau; to

purchase and install communications equipment, pay for security escort

services, purchase plants for the ambassador’s dining area in the chancery,

and purchase flag pole stands, mirrors, and a chandelier in London; to

purchase a new clock for the chancery in Vienna; and to purchase garden

lighting systems and track lighting in Kuala Lumpur. According to FBO

officials, such expenditures should have been charged to salaries and

expenses appropriations or to other FBO accounts, such as the furniture,

furnishings, and equipment program.6

The post in Kuala Lumpur obligated over $10,000 in routine maintenance

funds for renovating offices in the chancery 1 day before the end of fiscal

year 1994. That obligation (1) represented a potential misuse of routine

maintenance funds and (2) appeared to represent an effort to fully obligate

remaining funds (year-end buying) instead of returning them to FBO.

In some cases, expenditures were questionable because State and FBO

policy guidance is unclear. For example, routine maintenance funds have

been used for numerous gardening-related activities at the ambassador’s

residence and other properties in London, totaling over $10,000 in fiscal

year 1994. Items purchased included rose bushes, shrubs, seeds, compost,

and flower pots. We believe these uses are questionable because,

according to State’s Foreign Affairs Manual (FAM), grounds care for

residences occupied by the ambassador or chief of mission should be

charged to salaries and expenses appropriations. However, embassy

officials in London identified what they considered to be potentially

conflicting guidance in another part of the FAM, which defines routine

maintenance and repair as activities done for the continuing upkeep of

buildings and grounds. FBO officials said that State’s guidance concerning

which appropriations should be used for gardening expenses is unclear.

Our analysis and discussions with post officials indicates that State’s

guidance is also unclear in other areas, including the appropriateness of

6

The improper use of an appropriation to fund an item that should be funded by another appropriation

raises a question under section 1301 (a) of title 31, which provides that funds may be used only for the

purpose or the purposes for which they were appropriated.

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using routine maintenance funds for such things as the replacement of

carpets.

The misuse of routine maintenance funds is not a new problem. Beginning

in 1990, FBO’s financial audits determined that several overseas posts had

not used routine maintenance and repair funds for intended purposes.

Similarly, the September 1993 State Inspector General report on

maintenance and repair programs noted that all eight of the posts included

in that assessment had used routine maintenance funds for improper

and/or questionable purposes. According to the FBO and Inspector General

assessments, posts improperly used routine maintenance and repair funds

on projects that should have been funded as special projects or minor

improvements or from the salaries and expenses appropriation. The

Inspector General also found that posts used funds for questionable

activities in part due to inadequate State guidance.

Some Facility Condition

Surveys Not Conducted or

Not Complete

One of the key FBO requirements for a successful ongoing maintenance

program is the annual facility condition survey. According to FBO’s Facility

Maintenance Handbook, the overseas posts should survey all

government-owned and long-term leased facilities annually for structural,

electrical, and mechanical deficiencies. According to FBO, the surveys are

necessary for determining required maintenance and repair work at a post

and for allowing management decisions on budget priorities. The failure of

overseas posts to properly conduct annual surveys has historically been a

problem in the Department’s maintenance system. In our 1990 report on

maintenance management,7

 we reported that none of the 14 posts included

in that review had conducted annual property condition surveys. In our

1993 report on administrative issues affecting overseas embassies,8

 we

found improvements, but also noted that about 30 percent of the

embassies responding to our questionnaire acknowledged that they had

not conducted annual condition surveys.

Recently, we found that there are still some weaknesses in the system for

surveying the condition of overseas property. For example, the post in

Nassau examined the condition of its property to support the fiscal year

1994 budget. However, the survey did not cover all government-owned

properties or use an inspection checklist as recommended by FBO in its

7

State Department: Need to Improve Maintenance Management of Overseas Property

(GAO/NSIAD-90-216, Sept. 24, 1990).

8

State Department: Survey of Administrative Issues Affecting Embassies (GAO/NSIAD-93-218, July 12,

1993).

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Facility Maintenance Guide. Embassy officials in Vienna said that a survey

was not done to support the fiscal year 1995 budget because they were

unaware of the FBO requirement. However, at the time of our visit, we were

told that a survey was underway to support the fiscal year 1996 budget

process. We also found that the post in Port Moresby had not conducted

annual facility condition surveys or prepared annual inspection

summaries.

Improvements in

Monitoring and

Oversight

Effective oversight of overseas real property programs is critical to

ensuring that the State Department’s policies and procedures are followed

and funds are properly used. It also provides a basis for FBO to work

directly with the overseas posts to improve their maintenance capabilities

and strengthen other aspects of their real property programs. FBO has

made progress in strengthening its monitoring capability through its

financial audit program, but coverage has been limited. Some progress has

also been made in the area management program.

Financial Audits In 1990, FBO began conducting financial audits of the administration and

use of funds at overseas posts with significant FBO resources. One of the

major reasons for beginning the audit program was FBO’s concerns about

the difficulties it encountered in (1) using the State Department’s financial

management systems to track post expenditures and (2) identifying excess

funds that had been provided to the posts and getting the posts to return

such funds to FBO rather than use them for other purposes. At the end of

fiscal year 1994, audits had been conducted at 21 overseas posts. Some

posts were identified as having good financial controls over FBO accounts,

including Bonn, Jakarta, Tokyo, and Cairo. However, the FBO audits

identified significant financial management irregularities at other posts,

including the misuse of routine maintenance funds and inadequate

controls over the obligation/deobligation process. Posts identified by FBO

as having financial control weaknesses included Kinshasa, New Delhi, Tel

Aviv, Rome, Hong Kong, and Manila.

FBO’s financial audits have resulted, both directly and indirectly, in

improved oversight and administration of funds. Overall, FBO estimates

that its financial audit program has resulted in nearly $4 million in

uncommitted post funds being returned to FBO for use in other projects

and programs. For example, based on the results of a 1990 FBO audit, the

post in Mexico City (1) deobligated over $100,000 in unused funds for

fiscal years 1988-89 and returned them to FBO and (2) transferred charges

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of about $43,000 to the salaries and expenses account that had been

erroneously charged to the routine maintenance account.

Although results have been noteworthy, FBO’s financial audit coverage has

been limited to less than 10 percent of the foreign service posts. Without

greater FBO audit coverage of the overseas posts, FBO has inadequate

assurances that real property activities are consistent with State’s financial

policies and that posts promptly return unneeded FBO provided funds. For

example, in Nassau, we found over $60,000 in funds that FBO provided in

fiscal years 1989-93 that the post had accumulated without finite plans for

use. Records for the embassy in Santo Domingo showed over $200,000 in

fiscal years 1989-92 funds that should have been deobligated. According to

FBO officials, the post in Nassau subsequently deobligated all of the funds

we identified and returned them to FBO for other uses. The post in Santo

Domingo has deobligated only about $20,000. It has not yet taken any

actions on about $185,000 of funds because post officials said the

obligating documents identifying the purpose of the intended expenditures

could not be located.

Area Management FBO’s area managers have primary responsibility for monitoring overseas

post activities and ensuring that post actions are consistent with FBO’s

policies and procedures. In the past, area managers did not give their

monitoring responsibilities sufficient priority. Our analysis of recent trip

reports by FBO’s area managers indicates that their coverage was often

comprehensive, but the quality of monitoring varies significantly by

individual managers. In some cases, area managers (1) either did not

prepare or could not locate their trip reports documenting the status of

post controls or (2) had not completed FBO’s standard checklists.

FBO’s checklists also have some limitations. For example, they do not

require area managers to determine if posts conducted annual facilities

condition surveys or if the surveys were done consistent with FBO’s

guidance. In addition, the checklist only requires area managers to

spot-check obligation backup documents to ensure funds are properly

used. Moreover, in 1993, the State Department’s Inspector General found

that three of the posts it visited had used routine maintenance funds

improperly even though FBO’s area managers had recently spot-checked

the posts and had identified no problems.

FBO officials acknowledge that audits of posts’ use of maintenance funds

are important, but question expanding the role area managers have in

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helping to ensure compliance with financial procedures. FBO officials said

that (1) limited resources do not permit area managers to perform

anything but a check on post operations and (2) an audit function is not

appropriate for area managers. We agree that area managers should not

become auditors. However, our review indicates that there are

opportunities to make area manager’s spot-checks of financial activities

more beneficial. For example, prior to their visit, area managers could ask

the post to assemble purchase orders supporting its obligations of routine

maintenance funds for the most recently completed fiscal year. The area

managers could then quickly review the orders at the post to (1) determine

if the use of funds has been consistent with FBO’s procedures and (2) refer

any problems to post management for corrective action. This could help

underscore the importance of posts’ compliance with financial

requirements.

Facilities Planning Progress has been made in strengthening FBO’s planning capabilities. In

our December 1992 high-risk report, we noted that poor planning was one

of FBO’s fundamental management weaknesses, directly contributing to

project delays, cost increases, and questionable real estate decisions at

overseas posts. At that time, FBO’s approach to strengthening planning

called for (1) matching each post’s short- and long-term requirements with

existing assets and (2) outlining budgeting and staffing needs on a 5-year

basis. However, FBO had not established milestones for developing

facilities plans at key posts or included in the 5-year plan the potential

proceeds from sales of properties as potential offsets to costs in other

areas.

FBO has subsequently taken several actions to improve its capability to

plan for real property programs, including expanding the Planning and

Program Division from 6 to 17 staff members and conducting a formal

analysis of all overseas posts to determine each post’s candidacy for future

construction and/or major renovation projects. Facilities plans have been

prepared for 12 posts, and at the time of our review, facilities studies were

underway at 9 overseas posts. FBO also plans to revise its policy on

facilities planning. The planned revision calls for (1) at a minimum,

developing baseline planning data for each overseas post and

(2) developing in-depth facilities plans for posts having greater planning

requirements.

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Retention of Undeveloped

Land

Inadequate real estate planning at the post level continues to be a problem.

For example, we found that State has kept undeveloped properties in

Nassau without adequate justification or plans for their use. These

properties are:

• Saffron Hill, a 1.95-acre vacant lot adjacent to the ambassador’s residence,

used primarily as an overflow parking lot during official receptions at the

residence. The lot was acquired in 1959 at a cost of $32,000 and its current

value9

 is not identified in FBO’s real estate management system. According

to October 1993 post documents, its intended and potential use was

unknown.

• Another Saffron Hill property, a 0.6-acre vacant lot across the street from

the ambassador’s residence. The property was acquired in 1975 for $5,000

and has not been used for any official purposes. Its current value is not

identified in the real estate management system. According to

October 1993 post documents, its intended and future use was unknown.

• Office Building Chancery (OBC) site, 11.12 undeveloped acres obtained in

1975 as part of a tax settlement. Originally intended to be used for

construction of a new embassy, its future use is unknown because of

State’s decision to purchase the existing embassy, which had been part of

a long-term lease arrangement. Directly across the street from the OBC site

is another government-owned property. This ocean-front property is 0.71

acres and was also acquired as part of a tax settlement. Post officials could

not identify its intended or future use.

Although the need to dispose of the OBC site and the property across from

it was recognized in 1993, FBO and the post have failed to properly manage

the disposition process. Specifically, the post received two appraisals in

1993 for the OBC site and the ocean-front property near it, ranging between

$900,000 and $2.5 million. However, according to FBO officials, the

discrepancies in appraisal value and the lack of supporting documentation

and data in the appraisals prompted FBO to request additional information

from the post in February 1994. FBO officials said that no response was

received and a follow-up cable was sent in June 1994 and again in

November 1994. According to FBO, the market value of these properties

needs to be accurately determined before they can be sold.

Appraisals for the other two undeveloped properties near the

ambassador’s residence had not been conducted at the time of our

fieldwork. According to information provided by FBO in November 1994,

9

According to FBO, current values are only reflected in the real estate management system when

appraisals have been conducted for disposal or acquisition of property.

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the property adjacent to the ambassador’s residence was not considered

excess to government needs because it is used for overflow parking. FBO

also stated that the other parcel was held pending the identification of

“high return” purchases the post could enter into and fund with the

proceeds of sale of that property. However, in March 1995, FBO officials

said that neither of these two lots had been disposed of because the post

reported that both are required for overflow parking at the ambassador’s

residence during official functions. Parking may be an issue at the

ambassador’s residence when official receptions are held, but the post’s

stated reasons for the retention of two properties for overflow parking

should be based on a comparison to the properties’ potential disposal

value.

On a larger scale, State previously included in its annual budget requests

the potential proceeds from the sale of properties as an offset to other

funds being requested. However, FBO officials have now taken the position

that it is not practical because of the long time frame required for

development of budget estimates, the volatile nature of overseas real

estate markets, and the complexities of marketing high-value properties.

We are currently reviewing FBO’s policies and procedures for disposing of

overseas real property that does not meet U.S. government needs and for

using the proceeds from property sales.

Some Limitations in

Information Systems

Continue

FBO has taken actions to upgrade and expand its information systems. In

our 1992 high-risk report, we pointed out that FBO’s real estate

management system did not fully support management functions because

it did not provide historical cost information or maintenance and repair

information for each building overseas. As a result, FBO could not (1) track

costs for each building, (2) determine the total costs of operating

properties, (3) budget for future building costs, or (4) develop

performance measures for property management purposes. At the time of

our 1992 report, FBO had begun installing an enhanced version of the

automated real estate management system at the overseas posts. Since

then, the enhanced system has been installed at 71 posts, providing

automated data on approximately three-fourths of the real property

inventory. Current plans call for installing the system at most remaining

posts in the next few years. FBO has also developed an information

resource management system, which consists of several integrated

applications, including project management and budget planning and

allocation.

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Although these systems have helped to strengthen FBO and post

capabilities to report on and manage real property, some weaknesses

continue. As already noted, the real estate management system does not

contain complete and current information on the value of overseas

property. We found that although FBO has developed an automated work

order component of the system that can track maintenance costs for

individual buildings, some posts have not fully or correctly utilized it. For

example, the automated work order system at the post in London was not

fully operational and contained inaccurate inventories of equipment

requiring preventive maintenance. In Vienna, management oversight was

unnecessarily complicated because the work order process was split into

two separate automated systems—the real estate management system for

residential units and other properties outside the embassy compound and

a system developed by the post for managing maintenance at the embassy

and the consulate. In Nassau, we found that the PC-based system installed

by FBO to facilitate the use of a work order program was not used. In

Singapore, the post’s use of the work order system was limited to

monitoring landlord maintenance, and the equipment inventory had not

been updated for years.

The automated real estate management system also does not track or

report on compliance of overseas residences with the State Department’s

housing space standards. This reduces State’s ability to monitor the extent

individual posts are (1) effectively managing housing assignments and

(2) minimizing the number of housing units that exceed space standards.

About 88 percent of the embassies responding to our 1993 questionnaire

reported that some housing units at their embassy exceeded the State

Department’s residential housing space standards, and 61 percent reported

that 10 percent or more of the housing units exceeded standards.

Sixty-two percent estimated it would take 2 years or more to be in

compliance with the standards. We found that some problems are still

being experienced in meeting those standards. In Vienna, for example,

post officials estimated that nearly 25 percent of the residential units

exceed space standards.

FBO officials said that it may be accurate to state that certain residences in

Vienna exceed the standards for the current occupant, but noted that the

housing profile system used by FBO allows such assignments if the

properties are within the post’s approved profile.10 However, the

automated real estate management system did not identify the eight

10Housing profiles identify the mix of housing units authorized to meet the post’s position structure

and the projected family size of occupants.

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housing units that were outside the approved profile and the post had not

applied for or received FBO waivers for exceeding the standards. FBO

officials acknowledged that the system cannot currently identify

out-of-profile properties that do not have waivers. However, they said that

the system can now identify approved waivers and with further

instructions to the posts, waivers in relation to profiles can be tracked. FBO

officials added that the next step—the generation of compliance reports

and statistics related to profiles and waivers—would then be possible.

FBO also recognizes that overall weaknesses in accountability over real

property transactions continue. To upgrade its system capability, FBO is

examining the potential for integrating data maintained in the

Department’s new information financial management system and the FBO

real estate management system. FBO hopes to (1) define common data

requirements that can be shared between the two systems and

(2) ascertain where the existing systems meet or fail to meet requirements.

Complementing this effort is a planned audit by State’s Inspector General.

Planned objectives of the audit include determining whether FBO’s systems

contain adequate data to serve as subsidiary accounting records for real

property and whether FBO has sufficient internal controls.

Recommendations We recommend that the Secretary of State strengthen real property

management by taking the following actions:

• Revise and clarify State’s policies and procedures governing the use of

routine maintenance and repair funds, adding a checklist of appropriate

and nonappropriate charges to the routine maintenance and repair

allotment.

• Expand FBO’s financial audit program to ensure coverage of a greater

number of overseas posts and use FBO’s area manager program to have a

more comprehensive check of posts’ use of routine maintenance funds.

Area managers’ checklists should also be expanded to cover other key

problems, including the extent posts (1) conduct annual facility conditions

surveys and (2) use the automated real estate management system for

work order management.

• Use FBO’s automated real estate management system to report on and

monitor whether housing units at each post comply with existing space

standards, approved housing profiles, and space waiver requirements. FBO

should also be directed to use these reports to enforce compliance with

State’s space standards.

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• Develop a plan of action with associated time frames for selling unneeded

property in Nassau. The plan should (1) require updated appraisals of the

value of the former OBC site and the ocean-front property near it and

(2) include supporting analysis and justification for retaining two

properties for parking near the ambassador’s residence, compared to the

potential sales proceeds that could be realized from the sale of one of the

properties.

Scope and

Methodology

Our work was conducted at FBO headquarters and at seven overseas posts.

These posts were London, England; Vienna, Austria; Santo Domingo,

Dominican Republic; Nassau, the Bahamas; Singapore, Singapore; Kuala

Lumpur, Malaysia; and Port Moresby, Papua New Guinea. These posts

were selected because none of them had been subject to an FBO financial

audit and because the size of their allotments of routine maintenance

funds varied significantly.

We reviewed pertinent records and documents, including the FAM and FBO’s

guidance on use of funds; global maintenance surveys and facilities

evaluation and assistance program reports; FBO’s financial audit, real

estate management system, and area management trip reports; and posts’

status of obligation reports, purchase orders, and work order reports. We

also interviewed appropriate FBO and post personnel and visited several

post properties. We did not obtain State Department’s comments on this

report. However, informal comments on a draft of this report were

received from FBO officials and were incorporated in the report as

appropriate. We conducted our review from February 1994 to

February 1995 in accordance with generally accepted auditing standards.

As you know, the head of a federal agency is required under 31 U.S.C. 720

to submit a written statement on actions taken on our recommendations

to the Senate Committee on Governmental Affairs and the House

Committee on Government Reform and Oversight not later than 60 days

after the date of the report and to the Senate and House Committees on

Appropriations with the agency’s first request for appropriations made

more than 60 days after the date of the report.

Page 14 GAO/NSIAD-95-128 State Department
B-260352 

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

concerning this report. The major contributors to this report are listed in

appendix I.

Sincerely yours,

Joseph E. Kelley

Director-in-Charge

International Affairs Issues

Page 15 GAO/NSIAD-95-128 State Department
Appendix I 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

John Brummet

Lynn Moore

Jesus Martinez

Olivia Parker

European Office,

Frankfurt, Germany

Bettye Caton

Neyla Arnas

Far East Office,

Honolulu, Hawaii

Dennis Richards

Robert Sanchez

(711074) Page 16 GAO/NSIAD-95-128 State Department
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