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RIGHT SIZING THE U.S. PRESENCE ABROAD

HEARING

BEFORE THE

SUBCOMMITTEE ON NATIONAL SECURITY,

VETERANS AFFAIRS AND INTERNATIONAL

RELATIONS

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

MAY 1, 2002

Serial No. 107–189

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

BOB BARR, Georgia

DAN MILLER, Florida

DOUG OSE, California

RON LEWIS, Kentucky

JO ANN DAVIS, Virginia

TODD RUSSELL PLATTS, Pennsylvania

DAVE WELDON, Florida

CHRIS CANNON, Utah

ADAM H. PUTNAM, Florida

C.L. ‘‘BUTCH’’ OTTER, Idaho

EDWARD L. SCHROCK, Virginia

JOHN J. DUNCAN, JR., Tennessee

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

JANICE D. SCHAKOWSKY, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

JAMES C. WILSON, Chief Counsel

ROBERT A. BRIGGS, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON NATIONAL SECURITY, VETERANS AFFAIRS AND INTERNATIONAL

RELATIONS

CHRISTOPHER SHAYS, Connecticut, Chairman

ADAM H. PUTNAM, Florida

BENJAMIN A. GILMAN, New York

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEVEN C. LATOURETTE, Ohio

RON LEWIS, Kentucky

TODD RUSSELL PLATTS, Pennsylvania

DAVE WELDON, Florida

C.L. ‘‘BUTCH’’ OTTER, Idaho

EDWARD L. SCHROCK, Virginia

DENNIS J. KUCINICH, Ohio

BERNARD SANDERS, Vermont

THOMAS H. ALLEN, Maine

TOM LANTOS, California

JOHN F. TIERNEY, Massachusetts

JANICE D. SCHAKOWSKY, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

LAWRENCE J. HALLORAN, Staff Director and Counsel

THOMAS COSTA, Professional Staff Member

JASON CHUNG, Clerk

DAVID RAPALLO, Minority Counsel

(III)

C O N T E N T S

Page

Hearing held on May 1, 2002 ................................................................................. 1

Statement of:

Ford, Jess T., Director, International Affairs and Trade Division, U.S.

General Accounting Office; and Lewis B. Kaden, Davis Polk &

Wardwell, New York, NY, former chairman, Overseas Presence Advisory Panel ...................................................................................................... 52

Green, Grant S., Jr., Under Secretary for Management, U.S. Department

of State; and Nancy P. Dorn, Deputy Director, Office of Management

and Budget .................................................................................................... 6

Lawson, Ken, Assistant Secretary for Enforcement, Department of the

Treasury; Andrew Hoehn, Deputy Assistant Secretary of Defense for

Strategy, Department of Defense; and Robert Diegelman, Acting Attorney General for Administration, Justice Management Division, Department of Justice .............................................................................................. 86

Letters, statements, etc., submitted for the record by:

Diegelman, Robert, Acting Attorney General for Administration, Justice

Management Division, Department of Justice, prepared statement of .... 120

Dorn, Nancy P., Deputy Director, Office of Management and Budget,

prepared statement of ................................................................................... 35

Ford, Jess T., Director, International Affairs and Trade Division, U.S.

General Accounting Office, prepared statement of .................................... 56

Green, Grant S., Jr., Under Secretary for Management, U.S. Department

of State, prepared statement of ................................................................... 9

Hoehn, Andrew, Deputy Assistant Secretary of Defense for Strategy,

Department of Defense, prepared statement of ......................................... 109

Kaden, Lewis B., Davis Polk & Wardwell, New York, NY, former chairman, Overseas Presence Advisory Panel, prepared statement of ............. 77

Lawson, Ken, Assistant Secretary for Enforcement, Department of the

Treasury, prepared statement of ................................................................. 89

Shays, Hon. Christopher, a Representative in Congress from the State

of Connecticut, prepared statement of ........................................................ 3

(1)

RIGHT SIZING THE U.S. PRESENCE ABROAD

WEDNESDAY, MAY 1, 2002

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON NATIONAL SECURITY, VETERANS

AFFAIRS AND INTERNATIONAL RELATIONS,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 10:06 a.m., in room

2154, Rayburn House Office Building, Hon. Christopher Shays

(chairman of the subcommittee) presiding.

Present: Representatives Shays, Kucinich, Lewis, Watson, Putnam, Tierney, and Gilman.

Staff present: Lawrence J. Halloran, staff director and counsel;

Thomas Costa, professional staff member; Jason M. Chung, clerk;

David Rapallo, minority counsel; and Earley Green, minority assistant clerk.

Mr. SHAYS. Good morning. Welcome to our hearing entitled

Right-Sizing the U.S. Presence Abroad.

Last year the Office of Management and Budget, OMB, concluded, ‘‘The U.S. overseas presence is costly, increasingly complex,

and a growing security concern’’ with no mechanism to assess the

overall rationale and effectiveness of where and how U.S. employees are deployed.

The President called for reforms to ensure U.S. national security

and foreign policy interests are advanced by the right number of

people with the right expertise at the right foreign posts. That was

by no means the first call to right-size the U.S. Government presence abroad.

In the wake of the 1998 embassy bombings in Africa, the State

Department undertook a costly program to harden U.S. diplomatic

posts and reassess the need for large, multi-agency delegations in

so many embassies.

In November 1999, the State Department’s Overseas Presence

Advisory Panel recommended creation of a formal inter-agency

process to rationalize the size and scope of U.S. Government activities abroad, aligning resources with overall policy goals and security requirements, yet today, 4 years after terrorists successfully

targeted our embassies, no one can determine with any precision

the total number of executive branch employees working in foreign

posts.

Nearly a decade after the end of the cold war there is no systematic way to shape the U.S. foreign presence to meet new U.S. goals

in a more dynamic, far more dangerous world. Federal agencies

often set overseas staffing levels and pursue missions that may not

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coincide with State Department goals. Duplicative administrative

systems waste resources.

Security can be compromised when too many people occupy already-crowded facilities to conduct activities effectively accomplished here at home, regionally abroad, or over the Internet. Presiding over this dysfunctional diplomatic family is the U.S. Ambassador, personally charged by the President with ‘‘full responsibility

for the direction, coordination, and supervision of all U.S. Government executive branch employees.’’ In fact, at most posts the U.S.

Ambassador is little more than the titular leader of two-thirds of

the U.S. citizens assigned there. That gap between responsibility

and authority undermines the cohesion and effectiveness of our Nation’s mission and message abroad.

Last year in London, then-U.S. Ambassador to the United Kingdom Phillip Lader described the illusory aspects of Ambassadorial

power this way. He said—I smile every time I read it—‘‘Running

an embassy was like being given command of a great ocean liner,

only to learn the wheel you’re turning to steer the ship of statecraft

is not even attached to the rudder.’’

In preparation for today’s hearing, we were briefed by three Ambassadors who echoed the need to better target all U.S. Government resources, not just State Department personnel and assets

abroad.

We also received a written statement from former Ambassador

Felix Rohatyn, who, while in Paris, led efforts to right-size embassy

operations with an entrepreneur’s disdain for hide-bound customs

and a zest for innovation.

They persuasively stress the need for a united, efficient, and effective voice for U.S. policy and priorities, particularly in regions of

the world seething with hate and resentment of our strengths and

values.

Our witnesses today bring experience, depth of insight, and

breadth of knowledge to our discussion of right-sizing U.S. presence

abroad to meet our mission as a beacon of freedom and economic

advancement to the world. We appreciate their being here today

and we look forward to their testimony.

[The prepared statement of Hon. Christopher Shays follows:]

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Mr. SHAYS. At this time the Chair would recognize Mr. Kucinich.

Mr. KUCINICH. I want to thank the Chair for this opportunity to

make a statement and to advise you that I have to momentarily

go to a markup, and I appreciate the chance to be here and join

you.

Mr. SHAYS. I understand.

Mr. KUCINICH. I want to thank our witnesses for appearing here

today and to thank all of those who serve our country abroad

through the State Department for the wonderful work that they do.

Today we gather to discuss right-sizing the U.S. presence, particularly the State Department presence, abroad. While I am confident that our distinguished chairman retains an open mind as to

what the right size of this presence really should be, I’m concerned

that for some right-sizing means down-sizing.

Our corps of State Department personnel overseas plays a critical role in our Nation’s foreign policy. These men and women are

the public face of the U.S. Government abroad. In countries with

which the United States has a particularly important economic or

strategic relationship or particularly volatile one, the individuals in

the State Department are instrumental in advancing American interests. They are often instrumental in helping to defuse conflicts

that might otherwise require military action. But the conditions in

which these men and women work belie their importance in our

foreign policy apparatus.

The findings of the Overseas Presence Advisory Panel created by

Secretary Albright after the 1998 embassy bombings in Africa are

instructive. The panel’s conclusion is stark and alarming. ‘‘The condition of U.S. posts and missions abroad is unacceptable,’’ going on

to say, ‘‘The panel fears that our overseas presence is perilously

close to the point of system failure.’’

Specifically, the panel cited a lack of adequate security, a lack of

common Internet and e-mail communications network; ‘‘shocking

shabby and antiquated building conditions’’; ‘‘worn, overcrowded,

and inefficient facilities’’; and staffing shortages that lead to substandard consular services. Unsurprisingly, the panel also noted

that, ‘‘morale has suffered.’’

I think it is important for us to note the panel’s approach to

these problems. The panel also said that new resources will be

needed for security technology and training and to upgrade facilities, and went on to say that in some countries where the bilateral

relationship has become more important, additional posts may be

needed to enhance the American presence or to meet new challenges.

Now, in August the administration announced its intention to

implement the panel’s recommendations, but the administration’s

budget allocations cast doubt on its commitment to implementing

these recommendations. International affairs functions will be allocated $25 billion next year. That’s less than fiscal year 2002. Yet,

I might add that Defense spending will be near $400 billion. Missile defense, alone, will receive $8 billion next year, about as much

as the State Department’s entire budget.

In addition, the number of direct hire positions abroad stands at

only 18,000, 4.5 percent less than in 1995 and nearly 60 percent

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less than in 1966. These individuals are being forced to make do

in substandard conditions.

In today’s complex world, U.S. personnel overseas play as important a role as ever. Mr. Chairman, our overseas personnel and our

foreign policy which they are called upon to execute certainly deserve better attention, and I want to thank the Chair for providing

this opportunity to see that happen, so thank you.

Mr. SHAYS. I thank the gentleman.

I recognize he has other activities he needs to get to.

At this time the Chair would recognize Diane Watson. Any statement you would like to make?

Ms. WATSON. Not at this time, Mr. Chairman.

Mr. SHAYS. Nice to have you here. Thank you.

And then the vice chairman of the committee, Adam Putnam.

Mr. PUTNAM. No statement, Mr. Chairman.

Mr. SHAYS. Well, that enables me to get right to our witnesses.

It enables the committee to get right to our witnesses.

First, before swearing in, let me get rid of the business of the

committee, just the requirement. I ask unanimous consent that all

members of the subcommittee be permitted to place an opening

statement in the record and the record remain open for 3 days for

that purpose. Without objection, so ordered.

I ask further unanimous consent that all witnesses be permitted

to include their written statement in the record. Without objection,

so ordered.

We have three panels today. Our first panel is the Honorable

Grant S. Green, Jr., Under Secretary for Management, U.S. Department of State; and the Honorable Nancy Dorn, Deputy Director, Office of Management and Budget.

We’re delighted both of you are here. We will ask you, as we ask

everyone, to stand and we’ll swear you in.

I’d just put for the record the only one who has never been sworn

in is Senator Byrd. I chickened out.

[Witnesses sworn.]

Mr. SHAYS. Note for the record our witnesses have responded in

the affirmative. Actually, I think being sworn in is an honor, frankly. We take your testimony very seriously and we are very grateful

you are here.

We will start with you, Mr. Green.

STATEMENTS OF GRANT S. GREEN, JR., UNDER SECRETARY

FOR MANAGEMENT, U.S. DEPARTMENT OF STATE; AND

NANCY P. DORN, DEPUTY DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET

Mr. GREEN. Thank you, sir. Mr. Chairman and members of the

subcommittee, I am pleased to be here this morning to testify on

the importance of ensuring that the United States has the right

people in the right places with the right resources to advance

America’s foreign policy interests. Contrary to some folklore and, as

Mr. Kucinich mentioned, right-sizing does not necessarily mean

staffing reductions. In some locations, right-sizing can, in fact, lead

to a reduction in staff, but true right-sizing, however, may require

new staffing and new resources at posts that currently lack both.

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As was mentioned, the number of U.S. direct hire positions under

the authority of the chiefs of missions now stands at 18,000. The

current level is essentially at the same as in 1990 and reflects a

4.5 decline since 1995 and is certainly smaller now than in 1959,

when it stood at 24,000 direct hire, and at its peak in 1996 at

42,000. Since at least the 1950’s, the State Department representations is a third or less of all overseas staffing.

Rationalization of the U.S. Government’s overseas presence is no

easy task. Past efforts to develop an interagency staffing methodology have not succeeded. The Overseas Presence Advisory Panel, for

example, did not develop a methodology, even though doing so was

part of its original charter. And the followup interagency rightsizing effort in 2000 also could not reach agreement on a methodology. But past difficulties are no reason not to try. Rationalization

of our overseas presence is one of the President’s management

agenda initiatives. As a first step, President Bush, in his May

2001, letter to chiefs of missions instructed them to review closely

staffing at their individual posts to ensure that their staffing levels

were neither excessive nor inadequate to meet mission goals.

We are working very closely with OMB on a number of rightsizing issues, including data collection, establishment of a regional

center in Frankfurt, and examination of the European and Eurasian Bureau overseas posts and development of an embassy construction financing mechanism that will include cost sharing with

other agencies.

In addition, OMB has been working with us on right-sizing

issues we have been addressing, including revising the mission performance plan process.

In addition, the General Accounting Office has kept us informed

of its Paris staffing review and has briefed us on the conceptual

framework it is developing. The Department of State is committed

to working with OMB and the GAO in the development and implementation of a successful right-sizing initiative.

In a related area, let me say that we believe there is still no substitute for face-to-face interaction with host governments and

publics. State continues to support the principle of universality

under which the U.S. Government maintains an on-the-ground

presence in virtually all nations where we have diplomatic relations.

We agree with OPAP’s conclusion that today a universal, on-theground overseas presence is more critical than ever to the Nation’s

well-being.

While we believe strongly in the need to maintain an on-theground presence in virtually all nations with which we have diplomatic relations, the Department of State pursues regionalization

initiatives where appropriate. We rely heavily on centralizing a variety of administrative, consular, and some policy functions such as

labor attaches and science and technology officers, either overseas

or in the United States.

We currently have four U.S. regional centers: the Ft. Lauderdale

regional center, which provides support services to our posts

throughout the Western Hemisphere; the National Visa Center in

Portsmouth, New Hampshire; and the Kentucky Consular Center

in Williamsburg, Kentucky, which performs a variety of consular

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tasks traditionally carried out at individual posts overseas. We also

have the Charleston Financial Services Center in Charleston,

South Carolina, which already provides support for our Western

Hemisphere post and is in the process of assuming financial functions for our European and African posts which were formerly carried out at Embassy Paris.

In addition, the Department has also begun to shift routine passport production from overseas posts to U.S. domestic passport

agencies in order to take advantage of the high security photodigitization process installed here in the United States.

When relocating to the United States is not feasible, U.S. Government agencies, including State, may use embassies and consulates such as Frankfurt and Hong Kong as regional platforms for

their activities. A major regionalization effort currently underway

is the 23-acre Creek Bed site in Frankfurt, Germany, which formerly housed the Department of Defense’s 469th Hospital. Creek

Bed will not only become the new site for consulate Frankfurt, but

also be the location for a regional support center and home to numerous personnel from other agencies with regional responsibilities

in Europe, Eurasia, Africa, and portions of the Middle East.

Another initiative which you no doubt have heard about are the

American presence posts. These are creative and cost-effective ways

to give the United States more visibility in places we would otherwise not be represented. Under former Ambassador Felix Rohatyn’s

leadership, five APPs were opened in France. The experience of

those APPs shows what can be accomplished with a determined

chief of mission and a committed staff using a creative and modern

approach to doing business and mission resources. Obviously, such

posts pose security concerns, but we will continue to consider proposals from chiefs of mission for additional APPs as they arise.

In conclusion, let me say that we are working very closely with

the Office of Management and Budget on its right-sizing effort as

part of the President’s management agenda. We believe that is the

appropriate mechanism for further study and resolution of this

issue.

Mr. Chairman, I would be happy to answer any questions you or

other members of the subcommittee may have at this point.

Mr. SHAYS. Thank you, Mr. Green.

[The prepared statement of Mr. Green follows:]

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Mr. SHAYS. Could you just clarify one point? You talked about

the service western facilities, and then you said they will also serve

European facilities. Are western and European the same?

Mr. GREEN. No. Eurasian—in Frankfurt, sir?

Mr. SHAYS. No. You had just made the mention—it’s not a big

deal, but I want to just clarify it. You made reference to one of the

facilities in the United States that was presently servicing western

facilities.

Mr. GREEN. Western Hemisphere facilities, Charleston. The Financial Service Center in Charleston is presently serving Western

Hemisphere posts.

Mr. SHAYS. OK. And will add?

Mr. GREEN. And will add additional European posts as we move

the Paris personnel.

Mr. SHAYS. Right. I understand. Thank you.

Ms. Dorn, thank you for being here. It is nice to have you working for the administration in such an important role. As a former

House employee, it is good to see you here.

Ms. DORN. Thank you, Mr. Chairman. It is a pleasure to be here.

I look forward to our discussion this morning, as this is a matter

of great interest to the President and to the Office of Management

and Budget. We welcome to opportunity to testify on the important

topic of right-sizing the U.S. Government’s presence overseas.

I want to commend the State Department and the other U.S.

Government agencies who are appearing before the committee

today for their serious efforts to undertake this topic and to address this problem, as well as the work of the General Accounting

Office.

The U.S. Government’s presence overseas is indispensable in projecting our policies and values and in promoting and protecting our

interests overseas. Having said that, I would also state that our

presence overseas is costly, both in terms of dollars and in terms

of risks.

As you’ve pointed out, we currently have more than 60,000 U.S.

Government employees at 260 posts overseas. This includes not

only the State Department presence, but other U.S. Government

agencies, as well as Foreign Service hires. More than 50 U.S. Government agencies and entities are represented in overseas posts.

Costs are high. The average cost of having one full-time direct hire

American family overseas in a U.S. embassy is about $339,000.

There’s a wide disparity of cost among agencies who have overseas

employees, ranging from a low of about $129,000 to a high of about

$665,000. Currently, OMB is surveying what authority is being

used to justify overseas presence, as well as numbers and costs.

And in many places our embassies are not sufficiently secure.

These considerations put a premium on getting the right number

of people doing the right jobs at the right places, as Mr. Green has

noted.

The administration is committed to improvement in this area.

Last August, the President’s management agenda, including rightsizing America’s presence abroad, is one of its key initiatives. This

will require a long-term effort, cooperation and coordination with

multiple agencies, and I would add we welcome the work of the

GAO and look forward to their continued contributions to our

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knowledge of this area. It also will require that we work with Congress to address our needs and any outstanding requirements that

we may have.

OMB is engaged in this effort, and I’d like to outline just a few

of the steps that we are undertaking.

For the first time, starting in October of last year, OMB is gathering comprehensive data on the number and functions of staff

working abroad. Beyond the State Department who people think of

as our presence overseas, we have, as I said, over 50 agencies who

have employees overseas.

In conjunction with State, we are working to establish the regional presence in Frankfurt, Germany, which the Under Secretary

mentioned. I believe that this can serve as a model for right-sizing

in Europe and it can serve as a model for handling regional functions in other parts of the world, as well.

We are undertaking a pilot right-sizing project in the EUR Bureau, which is the largest region in terms of embassy presence and

employees. We are also developing a proposal to establish a mechanism to equitably share costs among agencies in construction of

new embassies.

Putting more emphasis on the mission planning process—in fact,

I think the first of the 2004 rounds of that occurred just yesterday

in terms of sitting down with multiple agencies, looking at a single

post—in this case I think it was Korea. We’re looking at workload

requirements by priority. We’ve reduced the number of priorities

that an embassy can have from fifteen to five so that we can actually get down to a serious discussion of what their priorities are

and judge what resources are being put against those priorities.

And we are also asking for the Ambassador to certify the work of

this mission planning process to ensure that the Ambassadors are,

indeed, an active part of this.

We are also encouraging agencies to consider the full cost of

sending people overseas. Using the A–11 process, OMB is instructing agencies to articulate specifically what the cost and the number

of their employees overseas are as we run up to the 2004 budget

process.

Mr. Chairman, I can say that the Office of Management and

Budget is interested in this project more for the management side

than for the budget side. We have requested more than $1 billion

in fiscal year 2002 for embassy construction and security improvements. There is no question that we will spend the money, and a

substantial sum of it, to secure our embassies and to ensure that

the U.S. presence abroad is sufficient. The question is: will the

money we spend delivery a U.S. Government presence that is rightsized and secure? I certainly think we can accomplish this.

I look forward to the discussion this morning and to answering

any questions that you may have.

Mr. SHAYS. Thank you.

[The prepared statement of Ms. Dorn follows:]

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Mr. SHAYS. The Chair would like to note that Mr. Gilman came

in after I asked for any statements. He usually has a statement.

I’d welcome him having a statement if he’d like to read it.

Mr. GILMAN. Thank you, Mr. Chairman. I just would like to first

of all thank you for calling this important hearing. The International Relations Committee has also taken an active interest in

this topic. It’s regrettable Department of State seems to have set

aside its right-sizing exercise in the light of increased resources for

the Government more generally and for foreign affairs, in particular. Hopefully, this hearing will keep the Department focused on

this subject.

I’d also note that the security imperative to reduce the footprint

of the United States abroad is another reason to continue a rightsizing initiative. Also, Ambassadors must be able to exercise their

alleged full authority in their respective posts. We have in the Department of State a Foreign Service with as many senior Foreign

Service officers—in other words, flag and general office rank

equivalents—as the Department of Defense requires to run a military establishment of our Nation. Something is clearly lacking

here.

The Department must not confuse our interest in an active, vigorous, prepared State Department with one that is poorly managed

and inappropriately deployed.

Thank you, Mr. Chairman.

Mr. SHAYS. Mr. Gilman, would you like to start with questions,

or shall I?

Mr. GILMAN. I will be please to follow your questions.

Mr. SHAYS. Thank you.

Let me just say I get the sense that almost everyone agrees that

we have a right-sizing problem. Would you agree with that, Mr.

Green and Ms. Dorn?

Mr. GREEN. Yes. Yes, sir, I would.

Ms. DORN. Yes, sir, I do.

Mr. SHAYS. OK. And I think most people agree that it doesn’t

necessarily mean that we would reduce the number of employees.

It means that we want the right size, not just in terms of the overall, but in terms of each responsibility and function. There may be

a need to have more in a certain area and a need to have less in

other areas. But ultimately we realize that we’ve got a problem.

Mr. Green, do you hear complaints from our Ambassadors or

chiefs of station that they do not have a handle on all the different

Government agencies that use their resources? That’s a pretty common concern.

Mr. GREEN. Yes, sir, we do. I travel quite extensively in all areas,

regional areas, and I have consistently heard from chiefs of mission

in essence the difficulty that they have in really getting a handle

on not necessarily the people they have, because they can count

noses, but they have very little insight into the other agencies’

budgets for their particular posts and have, to some degree, little

control over—while, as Mr. Gilman says, de jure they have great

authority. De facto they have considerably less authority. There is

a process by which agencies request to send additional people to

post. That is the Ambassador’s decision. It is appealable if it

doesn’t comport with what a particular agency wants. But you can

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imagine the difficulty that a chief of mission would have in turning

down a request because he doesn’t always know or hasn’t always

had a good sense for what those other agencies’ priorities may be

at a particular post.

I think the new mission performance plan process that was put

into place this year and is much tighter will give a chief of mission

a much greater sense of not only what his priorities are, but what

are the priorities for the other agencies at his post and what his

people are spending their time doing. It’s a much more objective report than flows into our budget process.

Mr. SHAYS. In many cases the number of employees working in

an embassy, the vast majority, two-thirds to three-quarters of all

employees tend to be nationals, not American citizens. They tend

to have tenure that goes well beyond 3 years. They may be there

20 or 30 years, frankly.

Mr. GREEN. Yes, sir.

Mr. SHAYS. So they have tremendous institutional knowledge. Of

the one-third or 25 percent that are left, the American employees,

they are rotated. Of that one-third or one-quarter that’s left, about

two-thirds of them are not Foreign Service employees. They are

agency employees.

So you have a circumstance where an ambassador comes in or

a chief of mission comes in and they are basically in charge of an

organization in which they, on paper, appear to have very little

control. Obviously, they have a lot of control over the nationals, but

they don’t have the institutional knowledge of the nationals.

This has been an issue that our committee has been looking at

for a number of years. Members of the committee have gone to various embassies. It just stares you in the face. What stares me in

the face is that we really haven’t done anything about it for literally decades. This has been a problem that has been festering.

I’m sorry for such a long introduction, Ms. Dorn, but I’m struck

with the fact that the only one who can truly bring some closure

to this effort or begin to have real impact is OMB. And I’m interested to know what type of political capital the director and you

and others are willing to use to move this forward.

Ms. DORN. Well, Mr. Chairman, we take it very seriously. The

President has articulated this as one of his goals in the management agenda, which we are pursuing with vigor. The first step in

correcting the ongoing problem—and I think you’ve outlined it pretty well—is to see what the landscape really looks like, how many

agencies we have and how many places all over the world, what

the underlying costs are, and how those costs are accounted for.

We are in the process of doing that. We started in October, and

I think we—I’d say we are probably 95 percent of the way to at

least having an idea of what the ground truth is.

The other issue that you touched upon, which is the policy of the

U.S. Government, the priorities for the agencies do cross various

agency jurisdictions. I mean, in terms of coordinating the policy

priorities for the administration, it involves the State Department,

the Treasury Department, the Defense Department, and a whole

host of others. OMB does sort of sit at a central role in both the

policy and budget, and I think that we can at least help devise a

42

system by which these considerations are put on the table and decisions can be made by the principals.

One of the things that has struck us in our assessment of the

ground truth is that in many cases agencies have established presence overseas without, I’d say, full visibility of the Cabinet official.

In many cases, they established a presence overseas some years

age and that has been continued, you know, as administrations

change and as Ambassadors change. It becomes a status quo thing.

Well, ‘‘We have X number of employees from the Treasury department because that’s what we had last year.’’ You know, that’s not

really the right answer to this question.

So I would say that we are very serious about getting a full accounting of this, both from a budgetary, a management, and a policy sort of level, and we have actually had a good deal of cooperation from the other agencies, as well as from the State Department.

I’m optimistic that in the 2004 budget process that we’re going to

be able to shed some light on this and make some progress.

Mr. SHAYS. Thank you. What I’ve done is I’ve rolled over the

time for the Members for 10 minutes for each question. I will be

going to Diana Watson for 10 minutes in just a second, and then

I will be going to—I guess, Ben, I’m going to go to you after Ms.

Watson, and then Ron, and then, Adam, we’ll go to you.

Let me ask you, Mr. Green, given all the things on the agenda

at the State Department, as important as this may appear to many

of us, it can’t really rank up all that high in the list of interest.

I mean, there’s a lot of political capital that would probably have

to be used in the dialog with, frankly, a number of different Secretaries who somehow, for some reason, demand that they have the

same numbers. Can you give us a sense of where this stands?

Mr. GREEN. Yes, sir. As Ms. Dorn said, this is one of the items

among very few, frankly, on the President’s management agenda.

I think the fact that it is one of a few—and I sit on the President’s

Management Council. I know the importance that the administration places on those agenda items. We take right-sizing very seriously. We talk about it almost daily. We know it is something that

people have tried to fix in the past. It’s something that hasn’t been

fixed. It’s something where we need to develop a methodology that

we all can agree to. That is one of the reasons that we solicited the

support of OMB, because you’re very right, the political equities

here in town when you start banging heads with another agency,

we need an honest broker who can help us do that.

You know, we have oversight committees that look at the State

Department and say, ‘‘Why haven’t you right-sized?’’ The same is

not always true for those committees who look at other agencies.

There’s no pressure or hasn’t been pressure for them to do the

same thing. So we need the help from OMB. And, as Ms. Dorn

said, we are in the final processes now of defining the world and

identifying what we have out there, and then, through the new

MPP process, defining what are our goals. And, Mr. Ambassador,

what are your post priorities? And then all of that is rolled up by

the bureaus, who establish their own internal priorities, and ultimately flows into how many bucks you get at the end of the day

for people or buildings or security or whatever.

43

Mr. SHAYS. I don’t have another question, but I just would point

out to the Members that the first panel is basically giving us a

Government-wide policy position. I think the policy of the Government is pretty clear, but we’ll want to delve into it a bit more. And

then the second panel is giving us an outside view from the GAO

and also from the Overseas presence Advisory panel, which has

been referred to. And then we are going to hear from embassy tenants abroad. Particularly, a major use is Treasury, Defense, and

Justice.

Given that I seem to be putting the focus on right-sizing and tenants as if somehow they don’t provide a valuable function, I just

want to state for the record that I think their presence is absolutely essential. I believe that they provide a creativity that you

wouldn’t necessarily get in the State Department. The State Department has its mission and does it extraordinarily well, but

sometimes State can talk in tongues and sometimes you need people who have particular expertise to maybe be a little more direct.

I think the synergy between State and these outside tenants, so

to speak, can be quite helpful, but we do want that right-sizing.

Sorry for the long explanations I’m making.

At this time I’d recognize the gentlelady from California, Ms.

Watson, for 10 minutes.

Ms. WATSON. Thank you so much, Mr. Chairman, for holding this

most essential hearing. I want to thank Ambassador Green and

The Honorable Nancy Dorn for coming here and sharing with us

your critical thinking on right-sizing.

I don’t think the APP approach ought to be based on the Paris

model because it is unique. Maybe Paris, Rome, and London are

unique among our missions throughout the world.

I must applaud your statement, you written testimony, Ambassador Green, and just emphasize it again and again. We need to

look at all of our missions abroad and, rather than putting them

on a list—and I served out in Micronesia, and when I went back

to give them a proposal in the State Department on the needs at

my mission I was pretty much laughed at because they said, ‘‘We

have 80 on the list ahead of you.’’

So I simply said, ‘‘Is a life in Paris, Rome, London more valuable

than a life in Micronesia at the embassy? Put me on the list as No.

81, record me. Let them know I was here. Here’s my package and

my proposal.’’

That all boils down to this: what we have to do is look at our

missions. And what is that mission abroad? It’s right in here. I

read your presentation. We must represent the United States. If we

close off our embassy because it is inadequate, it is too small, we

have nowhere to entertain, we do not interact with the people in

the country that we serve in and those people that come to it in

a way that is representative of the United States.

There is so much that needs to be done in terms of our relationship with our host nation that I hope you are looking at, because

what I found in my experience is that the embassy was closed off

away from the people. I opened my residence for an all-day

Thanksgiving. I was told there was no money for that. I said, ‘‘Did

I ask for money.’’ I did it out of my own pocket because what I was

trying to establish is a better relationship with the host country.

44

Why were we there way hidden down in Micronesia? We were

there because we had the exclusive denial to use those waters if

there should be trouble popping up again in that area. Second

World War—all of you know Saipan, Peleliu. Same area. So we

need the mission, but at the time we established it it was very useful, then it became usable, and I think now it is useless. That’s the

feeling I got when I’d go to Washington. They would say to me,

‘‘Well, no one can find that embassy.’’ And I would say to them,

‘‘The terrorist mentality is that you strike where you have the

weakest link.’’ ‘‘Well, they’ll get caught in customs.’’ I said, ‘‘Do you

think that they will come through waving, ‘I’m here’?’’ No, they’re

going to come through the mangrove on a little ship like the rest

of the fishermen.

Here’s the bottom line, and I’d like some comment. Are we looking at our missions in terms of the relationship between the United

States, the country and the region—and I saw the regionalization

approach here in your statement. I want to thank you for that. Do

we find them useful, or are they useless to us in this current time?

If we are fighting terrorism—the terrorists aren’t only in Afghanistan. They’re all over the globe—should we not look at all of—and

you can comment on this. I know it is a financial issue. But

shouldn’t we look at all of our missions and our presence wherever

we are, wherever we send American personnel and hire locally and

as to how useful they can be in expressing American values and

principles? I think they are our front line in communicating what

we believe in. In some way we fail that because I couldn’t get additional employees. There are 607 islands, four in the federation, and

one person in my embassy to go out and monitor and oversee all

the moneys that we shun into there.

So my question to both of you is: are we also, as we look at rightsizing, looking at the role our missions can play, wherever we are,

in spreading and inter-relating with the people, regardless of the

cost?

You know, I was turned off so many times because there was a

cost. They’d just simply say no. I’m trying to pass on to them what

the needs really are in terms to improve our relationship.

So I know we are governed by the budget, but are we reevaluating the missions to see how they rank on a scale in terms of their

usefulness?

Mr. GREEN. Let me try to answer that. It has——

Ms. WATSON. I know it is rough.

Mr. GREEN [continuing]. A number of different facets to it. But

let me assure you that all of our missions are important. Yes, we

are budget constrained, but all of our posts overseas are regularly

reassessed, and we try to redeploy resources as situations emerge

and as new requirements are identified.

Let me just give you one example. In the 1990’s, the direct hire

positions in the former Soviet block more than doubled from 760

to over 1,700 because of the change in that situation. I mentioned

before the MPP process, the mission performance plan process,

where Ambassadors highlight their requirements.

Since you were there, we’ve modified that considerably. It’s not

nearly as painful an experience as you probably went through. It

is much more objective.

45

Our purpose—and that, of course, from all countries within a

particular bureau, that feeds into the bureau, and then they assess

the overall bureau needs within the resources we have. But that,

again, is a much more direct link to the resources that you might

need in Micronesia or anywhere else.

We are very sensitive, very sensitive to the impact of one or two

people in a small post as opposed to one or people in a large post.

A couple of people in Paris doesn’t make a bit of difference to the

functioning of that embassy, but one or two people in a small post

where you’ve got a half a dozen Americans makes a tremendous

difference.

Part of our success, I hope, in resolving some of those problems,

certainly on the personnel side, is the tremendous success that we

have had in recruiting since Secretary Powell assumed command

of the State Department. We have had greater success than any

time since the early 1980’s in attracting new Foreign Service officers into the Department. That ability to fill some of those vacancies that exist overseas will partially help solve some of the problem that you mentioned—shortage of people. But also, within the

MPP process and the bureau performance plan process, the Deputy

Secretary and I—he chairs and I participate every year, and we

will be doing it again in July, a review of every bureau’s requirements, not only the regional bureaus but also the functional bureaus. The assistant secretary comes before us and justifies their

need in both personnel and resources.

Those are for the first time in people’s memory—and I have to

defer to the people who have been around the State Department for

a lot longer than I have—it’s the first time that we have had a rigorous process. It’s not perfect, and it will get better this year than

it was last year, but it is the first time we have had a rigorous

process to really challenge and insert into the dialog some of the

requirements that you mentioned—small posts, posts where there

may be an emerging terrorist threat, posts that have other difficult

problems, whether it be HIV/AIDS or drugs or terrorists or what

have you. That’s where that emphasis will go, and those decisions

are made at the Deputy and the Secretary’s level.

Ms. WATSON. I know that there are organizations where the Ambassadors belong and talk among themselves, but what might be

a really important function in your department is to call recent

Ambassadors who are no longer serving together and talk about

our mission in light of September 11th. I think you would get some

very helpful insights on what we could do, because yes, we did

those plans. We put those goals that we had into writing, sent

them back to the State Department, but we were not able to get

responses to our request. There was always a budget cap, and so

we were always short-handed.

But I think it might be helpful to you to gather a group of us

together for a day and let us give you the results of our experience

and what we think can be done to strengthen our position abroad.

I started a newspaper while I was there because we had a big

cholera outbreak. There was no way to communicate to the people

in the rain forest, so we got this little piece together and took it

out to their little shanties that they had in front of their homes.

There were ways that we could communicate some of the—not

46

democratic principles, but some of the health care issues to the people that have no radios, televisions, no way to know.

So we could be maybe helpful to our government, to the State

Department in terms of building up a stronger and more relevant

presence in our missions that I think will go a long way to counter

what is going out from the Middle East around the globe. And it

is very, very frightening, the feedback we’re getting.

In my District and among the various groups there, it is frightening what we’re hearing.

I think we could be helpful to you——

Mr. GREEN. Thank you.

Ms. WATSON [continuing]. In giving you kind of a conclusion and

summary of what we experienced.

Mr. GREEN. We need all the help we can get.

Ms. WATSON. OK. Thank you.

Mr. GREEN. Thank you.

Ms. WATSON. Thank you, Mr. Chairman.

Mr. SHAYS. Thank you, Ambassador. I bet you were very effective.

Ms. WATSON. We worked at it.

Mr. SHAYS. It’s a great opportunity.

Ms. WATSON. Yes.

Mr. SHAYS. Mr. Gilman.

Mr. GILMAN. Thank you, Mr. Chairman.

I note that the GAO’s report suggested in their summary that we

might consider establishing a Washington-based inter-agency body

to oversee the right-sizing process and ensure coordination. What’s

your comment with regard to that?

Ms. DORN. Well, Mr. Chairman, I think the President has made

this a priority and he has put his Office of Management and Budget on the case. We are engaged, as Under Secretary Green said, because we have both a budgetary and a policy and an inter-agency

sort of overview, or that’s sort of our perspective on this problem,

so we have—we are comfortable with proceeding in that manner

right now, and I think we will have some results to show probably

later this year.

Mr. GILMAN. And, Ms. Dorn, let me ask you, How successful has

OMB been in obtaining useful and complete staffing and cost data

from agency’s operating overseas?

Ms. DORN. I would say, Mr. Gilman, that we started in October

with a data call to all the agencies. We have had to go back to

some of them a number of times the clarify the data that they provided. Frankly, a number of the Cabinet-level officials were not

fully aware of how many folks that they had in how many places

and what duties they were performing. I’d say we’re about 95 percent of the way there. We are still working with a couple of the law

enforcement agencies and with the Defense Department to further

clarify the data they’ve provided, but I think we are just about

there.

Mr. GILMAN. How successful have you been in establishing a

Government-wide system to review post staffing?

Ms. DORN. On that one I think we are still working with the

State Department, and we are using the data provided by GAO on

a mechanism to assess those kinds of questions. Until we get to

47

that, I wouldn’t say that we’re going to have much success in this

project, but I think we will have some progress to report to you

probably later this year.

Mr. GILMAN. When do you anticipate you will be in a position to

establish that kind of a system?

Ms. DORN. I think we will have the beginnings of that later this

year.

Mr. GILMAN. Do any of the Departments fully recognize a budget

for the cost of putting individuals abroad?

Ms. DORN. Agencies have varying degrees of data on how much

it costs. Part of the problem here, though, is that if the Treasury

Department or the Justice Department sends one of their officials

to an embassy in Europe, they pay for certain costs, but other costs

are borne by the State Department in terms of security, in terms

of sort of the base platform.

One of the things that we are looking to do in the next budget

is to provide a method to assess these agencies more fully for the

cost of having employees from other agencies at the State Department, probably perspectively in terms of new embassy construction.

We are in the process of building new embassies in about—

Grant, how many would you say? About 10?

Mr. GREEN. About 10 a year, 9 or 10 a year.

Ms. DORN. About 9 or 10 a year. As we construct new embassies,

I think we will have kind of a clean slate to build from so that we

can assess, you know, what agencies other than the State Department should be there, what their relative needs are, what their

costs are, and have a more transparent and more accurate way to

account for the costs that currently—some of which are now being

borne, I think, entirely by the State Department.

Mr. GILMAN. Well, Secretary Green, when they have new agency

assignments to the State Department and there are extra costs,

how do you pick those up in a budget?

Mr. GREEN. Sir, we have a system currently at post called

‘‘ICASS.’’ It’s a sharing of administrative costs, for example. Let’s

say that the State Department is in the best position to do all travel arrangements. Well, people will pay a certain amount, or administrative arrangements. Other agencies will pay a share of that.

Very frankly, State Department ends up budgeting about 70 percent of it. The rest is shared among the agencies.

What Ms. Dorn was referring to and which we think will be a

great incentive, and it goes back to, very frankly, many agencies

not having a very good handle on what it costs, how many people

they’ve got overseas, and what they’re doing, but certainly how

much it costs is the cost sharing, so that when we build a new embassy and a particular agency says, ‘‘I need 15 desks, and they

need to be in classified space,’’ which is quite expensive, that agency is going to have to evaluate whether they can support within

their budget the cost of those 15 people and the cost of that construction, because our intent is to charge them for that.

Mr. GILMAN. But on occasion you have to pick up additional—the

State Department has to pick up the additional cost from those

agencies; is that correct?

Mr. GREEN. We do now, but, as best we can, we spread the administrative general support costs across agencies. But what we’re

48

talking about with the new construction, which we have never done

before, is actually charging an agency or department for their share

of how much space they are going to occupy. We feel that will be—

I don’t want to say a disincentive, but it at least will make them

think very hard about how many people they are going to put at

that post, because we are not talking about a few thousand bucks

for administrative costs or use of the motor pool or support for

travel services, but we’re talking about major construction costs.

Mr. GILMAN. So these would be some incentive to put staff in less

expensive rather than in expensive locations?

Mr. GREEN. Well, not that as much as look at the number of staff

that you were going to put in a location. We have certain criteria

in all of our new embassy construction which says it has to meet

certain blast restrictions and setback restrictions and so on, and

then, when you get into classified space, there are other requirements that we have to adhere to, and that’s—so if you pay $100

a square foot in unclassified space, classified space may cost you

$200 a square foot, and you need ‘‘X’’ number for the number of

folks you want to put there, and so we feel that will——

Mr. GILMAN. Just one last question, Mr. Chairman.

Embassies tend to have small working groups and sometimes too

many managers. Does OMB have any thoughts about the proper

ratio of managers to non-managers—in other words, span of control

in embassies?

Ms. DORN. Mr. Chairman, I don’t think we have fully evaluated

that yet. We are still in the process of figuring out how many people we have and what they’re doing in these embassies. And I

think there is an issue here, however, and that is: in a specific embassy you have, you know, 25 State Department employees and you

have 15 Treasury employees and you have, you know, four Justice

Department employees. You know, we’ve got to both assess how

those missions fit into the overall plan, but we’ve also got to figure

out a management structure that actually works.

I think in the past this has not been identified as a major priority. One of the things that OMB has suggested strongly is that the

Ambassador, himself, be involved in approving an embassy structure and plan and be—that the cost of these things be more visible.

Instead of the Treasury Department paying sort of the direct personnel costs but none of the infrastructure costs, we are trying to

again elevate that so that it is visible and it is also more relevant

to the embassies of today. We don’t have embassies any more

where the State Department is the only employee, nor should it be

that way. We have embassies, as you pointed out, Mr. Chairman,

that these other agencies have a vital role to play. It’s just a question of the proportion and the mission and the currency of that, because, as priorities change and policies and as the world moves forward, you know, this has got to be reviewed on a regular basis and

it has got to be kept current.

Mr. GILMAN. Thank you.

Thank you, Mr. Chairman.

Mr. SHAYS. Thank you.

Mr. Lewis.

Mr. LEWIS. Thank you, Mr. Chairman.

49

Secretary Green, how do physical security requirements affect

your staffing levels?

Mr. GREEN. Well, each post, of course, has a basic basket of security requirements that are necessary. It certainly, to a great degree, depends on where that post is and what the threat is.

Adding or taking away people from a post on the margins doesn’t

significantly—doesn’t affect the security requirements at that embassy. What does affect requirements more than physical security

is the need for classified space. As new agencies—as agencies

which require classified space—the law enforcement community,

the drug enforcement community, those dealing with terrorism—as

they increase the numbers of their people which do require classified space, that runs our costs up. But physical security—guard

force, the number of regional security officers and assistant regional security officers and so on that we have at the post—will not

vary greatly with small increases or decreases in personnel.

Mr. LEWIS. What’s the most serious physical security challenge

that you’re facing today with missions around the world?

Mr. GREEN. I would say it is location, vulnerability of many of

our embassies, residences, office buildings where, in many, many

places, whether it is Paris or Belgrade, we are in old buildings

right on the street, vulnerable. I think that’s our greatest challenge.

As we build new embassies, we are finding, selecting compound

areas where we have the appropriate setback, the 100-foot setback,

and we are using construction techniques that provide us more protection against blast, as an example. But I think that we are vulnerable in many of our missions.

Mr. LEWIS. Are you finding that most of the host countries are

helpful and supportive?

Mr. GREEN. Very cooperative. Yes. I can’t think of a single country that doesn’t provide adequate police, law enforcement protection, and even when we ask for additional if we have a threat,

which we have dozens daily. We often will ask for additional protection, and it is always forthcoming.

Mr. LEWIS. OK. Thank you.

Mr. SHAYS. Thank you. I just want to ask a few more questions

just for the record and then we’ll get on to our other two panels.

Mr. Green, you made a reference to the fact that the Overseas

Presence Advisory Panel did not provide the methodology to rightsize, even though they were required to. It seemed like a little needle in there. I was just curious.

Mr. GREEN. No.

Mr. SHAYS. OK. I thought maybe you’d want to just expand.

Mr. GREEN. My understanding was that the original charter for

OPAP—and Mr. Kaden can certainly correct that—that the original

charter did call for OPAP to make a recommendation on that.

Mr. SHAYS. And was your point in mentioning that it is difficult

to know what to do——

Mr. GREEN. Yes. Absolutely. We’ve many attempts to——

Mr. SHAYS. So your point is basically, even if you feel that was

the mandate, it wasn’t—you were not seeing it come. You’re not

being provided that kind of guidance, and so you all are still trying

to sort out what kind of methodology you will be using?

50

Mr. GREEN. Yes, sir. And post-OPAP, as you know, there was an

inter-agency group that went out and visited six posts, and they

couldn’t agree on a methodology.

Mr. SHAYS. Right.

Mr. GREEN. So I only point that out because this is a very difficult problem, but we are going to fix it.

Mr. SHAYS. Well, a good way to start is, obviously, the way you

all are doing it. But, Ms. Dorn, I mean, obviously, we need to

know—and every department should know, and agency—how many

people they have overseas and where they are, and every Ambassador should know who they have in their embassy and what

they’re doing, and there needs to be a recognition that the President is very clear on this. He has made it very clear the power and

responsibilities of the Ambassadors, the chiefs of missions, and he

should, as President, expect that his Secretaries are going to respond to that and respect that.

I think it will be helpful. We learned that some Ambassadors

have shared that letter with all their employees and some haven’t,

and I think that will be a good way to begin that process.

I would conclude by saying to you it seems so logical to me that,

if you charge the full cost for whatever service is being provided,

cost is a great way to know how to allocate resources. I mean, the

Soviet system kind of fell apart because they spent money in ways

they didn’t and shouldn’t have spent and under-spent in other

areas. When you get cost involved, you begin to say, well, ‘‘How

much do you really want this.’’

So it would seem to me—I mean, business is doing this. The nonprofit sector is doing it. They have overhead services they provide,

and now they tell their different units within a business, ‘‘You will

be able to decide whether you want to use these services from us

or go outside. If you want the advertising services to be from outside, you can do that. And if you don’t want to use the services you

don’t have to, but if you do use the service you have to pay for it.’’

Great change has happened in that process.

I want to know from you, Ms. Dorn, if you have any handle yet—

it is in your statement as to why some costs per person, USAID,

$129,000 per employee, up to State, U.S. Secret Service, $665,000.

I mean, is there anything that you could share with us now as to

say why it would be so different?

Ms. DORN. Well, I think part of it is that these agencies have accounted for things using different requirements. USAID, as you

know, has people all over the world. They have pretty well-established sort of rules about what they pay for and may have, I would

say, a better sort of enforcement mechanism to judge these costs.

Mr. SHAYS. We may have a best business practices that you can

identify and then get the other departments——

Ms. DORN. I think it is more of a standard operation at AID to

put people overseas, and so they have a little bit better handle on

how much it really costs and what costs are included in that. U.S.

Secret Service may, to their defense, have some additional requirements that AID does not have.

Mr. SHAYS. The difference is so significant.

Ms. DORN. Right.

Mr. SHAYS. So significant.

51

Ms. DORN. It is extremely significant, and I would say that therein lies the problem.

The other comment that I would make, Mr. Chairman, is that I

think we are all in agreement that we have a problem and that we

have a project underway to bring more clarity and more transparency to what is being done now and why, and even a process

to start to prioritize, from a policy perspective, what is important

at the different posts and what the composition should be.

When we get to the point where we start to actually assign specific costs to different agencies for their presence overseas, I’m not

prepared to say that there won’t be some who think that is controversial. I think we’ve had a little experience with this at OMB

in terms of basically making costs more transparent and putting

them on the shoulders of those who should be paying for them. I’m

not sure that it’s going to be all that easy. It is also not going to

be a single year kind of project.

So we welcome the help of this committee and the interest of this

committee in this endeavor.

Mr. SHAYS. That’s a great lead-in to just say that this committee—none of us can be certain whether we’ll be back again next

year, but I know that if I have any oversight over this issue that

we would like you all to come back. We would like to be able to

give you a sense that we are going to try to measure how you are

doing, but we really, truly want to help you in any way that we

can, any suggestions you have on how we can help this effort.

I, for instance, think you should be working with the Budget

Committee. They’ve done their budget resolution in the House.

They have staff. They have a macro view. They look at the total

picture, as appropriators sometimes segment it, and I think they

could be a tremendous ally in this effort. Knowing the chairman of

the Budget Committee, I think he would relish getting into this. It

could be a huge difference in terms of efficiency and effectiveness.

Ambassador, do you have any questions you want to ask, or comments?

Ms. WATSON. No. I just want to invite the two witnesses to come

to my office. We can sit down and I will share—I’m going to send

you a letter and make a request, but I think the input would be

very helpful as you go about shaping your programs. I want to commend you. I think you are right on target and I think that this review is absolutely essential in the light of what’s happening around

the globe today.

Thank you very much for your testimony. I look forward to meeting with you and maybe laying out a blueprint.

Mr. GREEN. Thank you very much.

Ms. DORN. Thank you.

Mr. SHAYS. Mr. Gilman, any other comment you’d like to make?

Mr. GILMAN. I’d thank the panelists for taking their time to be

with us today. Thank you, Mr. Chairman.

Mr. SHAYS. Thank you.

Is there any comment that you want to make, a brief comment

before you leave, anything that you want to put on the record that

we should put on the record?

[No response.]

Mr. SHAYS. Thank you both for being here. Thanks so much.

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Mr. GREEN. Thank you.

Ms. DORN. Thank you.

Mr. SHAYS. The second panel is comprised of: Mr. Jess T. Ford,

Director, International Affairs and Trade Division, U.S. General

Accounting Office; and Mr. Lewis B. Kaden, now of Davis Polk &

Wardwell, New York, NY, former chairman, Overseas Presence Advisory Panel.

Welcome to both. I’ll ask you to stay standing. I’ll swear you in

while you are up, and if you have anyone else that might be testifying in addition to you that might respond to any questions.

[Witnesses sworn.]

Mr. SHAYS. Note for the record our witnesses have responded, for

the record, in the affirmative.

Mr. Ford, we’ll start with you. And I’d like you to say whatever

you need to say for the record, and if there’s any comments you

want to make in response to the first panel before we even ask

them, you can do that. It might save some time in the process.

Welcome both of you. Mr. Ford, you have the floor.

STATEMENTS OF JESS T. FORD, DIRECTOR, INTERNATIONAL

AFFAIRS AND TRADE DIVISION, U.S. GENERAL ACCOUNTING

OFFICE; AND LEWIS B. KADEN, DAVIS POLK & WARDWELL,

NEW YORK, NY, FORMER CHAIRMAN, OVERSEAS PRESENCE

ADVISORY PANEL

Mr. FORD. Thank you, Mr. Chairman and members of this subcommittee. I’d like to have my full statement entered for the

record.

I think some of the comments I’m going to make in my opening

statement will address some of the issues that were raised by the

earlier panel, and I will be happy to shed any further light, to the

extent I am able to do so, on some of the comments that were

raised regarding the methodology, since that’s one of the main

things that we are currently working on. We’re calling it a ‘‘framework.’’ ‘‘Methodology’’ has a certain meaning in GAO, so we’re not

quite there calling it a methodology yet, but we are going to try to

come up with some suggestions on how we think this process could

be moved along.

I’m pleased to be here today to talk about our ongoing work on

right-sizing our overseas presence. As noted by OMB earlier, we

have about 60,000 U.S.-funded employees overseas. For our purposes, we are defining right-sizing as ‘‘aligning the number and location of staff assigned to U.S. embassies with foreign policy priorities, security, and other constraints.’’

This committee asked us to determine what right-sizing actions

might be feasible to reduce costs and security vulnerabilities while

retaining effectiveness in meeting foreign policy objectives. To do

this, we are developing an analytical framework to help the decisionmakers make more rational staffing decisions.

My testimony will highlight staffing issues that we identified

based on a case study that we did at the U.S. embassy in Paris.

In addition, I will briefly discuss some of the steps needed to develop a mechanism to move the right-sizing process forward while

ensuring greater transparency and accountability over overseas

staffing decisions.

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Drawing on our prior and ongoing work, we are developing a

framework that we believe will provide a foundation for the executive branch to assess staffing at embassies and to determine the

right number and mix of staff. Our framework is designed to link

staffing levels to three critical elements of overseas operations:

physical security, mission priorities and requirements, and operational costs.

The first element includes analyzing the security of embassy

buildings, the use of existing secure space, and the vulnerabilities

of staff to terrorist attacks. It is important to remember that an estimated 80 percent of U.S. embassies and consulates do not currently fully meet security standards. The amount of secure office

space may place constraints on the number of staff that should be

assigned.

The second element involves analyzing the placement and composition of staff overseas based on U.S. foreign policy goals and objectives. Our framework focuses on assessing priorities and validating workload requirements.

The third element involves developing and consolidating cost information from all agencies at a particular embassy to permit costbased decisionmaking.

We believe that after analyzing these three elements, decisionmakers should be then in a position to determine whether rightsizing actions are needed to add staff, reduce staff, or change the

staff mix at an embassy overseas.

We have identified some options that we think should be considered in this regard, including relocating some functions back to the

United States or to regional centers and out-sourcing certain functions to the private sector, where sufficient support is available.

We believe the basic framework we are developing can be applied

worldwide; however, additional work may be needed to refine the

elements and to test the framework at embassies at various working environments.

Our work in Paris illustrates how the framework we are developing could affect embassy staffing. Currently, there are about 700

employees from 11 major Federal agencies located at the Paris embassy. I might add this number is only related to the people assigned to the embassy proper. There are about another 190 people

who work in other parts of France.

In applying the framework to the embassy, we found that security, workload, and cost issues need to be considered, including the

following:

There are serious security concerns in at least one embassy

building in Paris, which suggests a need to consider staff reductions unless building security can be improved. This building is located in the heart of a terrorist district—excuse me, tourist district.

That was a bad one. [Laughter.]

Although it could be a terrorist District—on main streets with

little or no protective buffer zone. Other embassy buildings are also

vulnerable. Relocating staff could significantly lessen the number

of people at risk.

It is hard to say with any degree of certainty how many staff are

needed in Paris. The embassy’s goals and Washington’s demands

are not prioritized, and each agency uses separate criteria for placVerDate 11-MAY-2000 11:22 Apr 28, 2003 Jkt 000000 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 D:\DOCS\86342.TXT HGOVREF1 PsN: HGOVREF1
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ing staff in Paris. State Department staff at the embassy reported

that non-prioritized workload demands from Washington result in

missed opportunities for addressing important policy issues.

We believe that a disciplined and transparent process linking priorities and staffing and a reduction in non-core tasks could suggest

opportunities to reduce or relocate staff.

The lack of comprehensive cost data on all agency operations,

which we estimate is in excess of $100 million annually in France,

and the lack of embassy-wide budget complicate the possibility of

making sound, cost-based decisions. Development of these data

would help determine the tradeoffs associated with the various alternative approaches for doing business. The U.S. Ambassador to

France acknowledged that the lack of cost data is a serious cost for

him.

Our work in Paris suggests that there are alternatives that could

reduce the number of staff needed at the embassy, particularly for

some support functions which represent approximately one-third of

the number of personnel assigned there. Among the options we’ve

identified are relocating functions back to the United States—in

fact, the State Department has recently announced it is going to

send back over 100 people to their Charleston Financial Center—

relocating staff to some regionalized positions, posts in Europe

which have more-secure facilities available, such as in Frankfurt,

and also looking at the potential for out-sourcing some functions,

mostly administrative in nature, which we think could be handled

by the private sector.

We believe all of these options should be closely examined. We

also believe that setting priorities and validating workload requirements could lead to other staffing adjustments.

Mr. Chairman, the development of a framework to assess embassy security, mission, and cost, and to consider alternate ways of

doing business is only the first step. Providing greater accountability, transparency, and consistency in agencies’ overseas staffing decisions will require much greater discipline within the executive

branch. We believe that, for the President’s management initiative

to be fully successful, the executive branch will need to develop a

mechanism to effectively implement a right-sizing framework.

Based on our discussions with experts and agency officials, we

have identified four possible options.

One could be establishing a Washington-based inter-agency body

to oversee the right-sizing process and ensure coordination among

the various parties.

A second option would be establishing an independent commission to consider whether more or fewer staff are needed and to

make recommendations.

A third option would be placing the responsibility for approving

overseas staffing within the Executive Office of the President.

And a fourth possibility would be requiring embassies to certify

that staffing is commensurate with the security risks, embassy priorities, and requirements in cost.

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Ultimately, the executive branch must decide which options will

help achieve the overall goal of establishing a rational process for

assigning staff overseas.

This concludes my comments. I would be happy to answer any

questions.

Mr. SHAYS. Thank you very much.

[The prepared statement of Mr. Ford follows:]

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Mr. SHAYS. Mr. Kaden, I invite you to make your testimony.

Mr. SHAYS. Could you just first inform me—and I should know

this, but for the record, how long did your commission work on this

project? How long have you been involved in this issue?

Mr. KADEN. The Overseas Presence Advisory Commission began

its work early in 1999, around the beginning of 1999, issued its report at the end of that year, and was active in the early stages of

implementation through 2000 until the end of the Clinton administration.

Mr. Chairman, I have submitted my statement for the record.

Let me make a few observations about this subject.

First, I want to thank you, Mr. Chairman, and this committee for

taking an interest in this subject. It is, to those of us who did work

on the Overseas Presence Advisory Commission and its report, it

is very gratifying to see the issue on the agenda of this committee.

I think you can be very helpful.

When I was engaged in that work during 1999 and 2000, I can

say that I spent a great deal of time with some of your colleagues,

and particularly on this side of the Capitol Mr. Gilman and his

committee, Mr. Rogers and his Appropriations Subcommittee were

enormously helpful and supportive to us, and those interactions

were an important part of whatever effect we had in raising this

important issue of concern.

Let me tell you a bit of a story about why right-sizing became

so central to OPAP’s report and recommendations. When I began—

when I undertook that work and began to talk to people on my

panel and others at posts around the world, I was immediately

struck by one thing. I visited with Admiral Crowe who had been

in London and had just concluded the Commission of Inquiry on

the East Africa bombings and was a member of my commission,

and with Richard Holbrook, who had been in Bonn, and with Ambassador Rohatyn, who was then in Paris, and I said to each of

them, ‘‘What should I focus on as I begin this panel’s work?’’ and

they each said, ‘‘right-sizing,’’ in so many words, because their experience in those western European capitals had left them with a

question in their minds about why we need 1,200 or 1,300 people

in London, 900-plus in Paris, large number in Bonn, when the challenges in other parts of the world seem so great and staffing so limited, and other countries doing a quite effective job in those western european capitals had much smaller staffs.

The combination of mission priorities and security and cost effectiveness raised in the minds of those, among our most distinguished public servants, that question.

I then visited with Admiral Troyer in Beijing, our then Ambassador in Beijing, and Governor Celeste, who was in New Delhi, and

they made a pretty effective—and said the same thing, ‘‘What

should I concentrate on?’’ And they said right-sizing, but their argument, which was quit effective, was the that challenges in those

posts were growing by the day, were poorly served by not only the

numbers but the type of skills represented in their posts, and they

thought a right-sizing process would lead to stronger staffs with a

better mix of skills able to confront the growing challenges in those

that the United States faced in achieving its aims in those countries.

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I think by the end of our work we had come to the conclusion

that right-sizing had to be front and center, but that it was closely

related to all the other recommendations about improved technology, better human resources and personnel practices so that you

had the right skills and training, better facilities, both residential

and for work, a better priority-setting process—that all of those fit

into the task of right-sizing.

Now, I think the good news is that, since the beginning of this

administration, I, for one, have been encouraged by a couple of

things. As I said in my statement, Secretary Powell met with me

and Frank Carlucci on the first day in his new office and emphasized his determination to do something in this area of overseas

presence reforms.

And the President then put it on his management agenda last

August, which I was, frankly, surprised to see and pleased to see.

I think, as Ms. Dorn told you, OMB seems to be taking a lead

and digging in to trying to make some progress in this, and that’s

extremely satisfying.

It won’t be easy. I don’t really know what to make—I don’t think

it’s all that important to get into it, but I don’t know quite what

to make about Mr. Green’s comment about OPAP not putting forward a methodology, because I think our conclusion was quite clear

that past efforts to develop numerical formulas about what a large

post or a middle-sized post or a small post should look like were

not serving our Nation’s interests well; that what you had to do

was have an effective inter-agency process with leadership from the

White House, which is the only part of our government that can

ensure the effective participation of all the other agencies and departments. As distinguished an American and as well-respected

around the world as Secretary Powell is, the fact is that by himself,

unless he has the President’s mandate behind him, he can’t ensure

the effective participation of the Pentagon, the intelligence agencies, the Justice Department, the Treasury, in agreeing on what

proper staffing ought to be in any particular post in the world. It’s

hard enough in the White House to get those agencies to agree on

policy initiatives. That’s why we have the process of policy coordination, it’s so intricate.

So it requires White House leadership, and that’s what we said.

It requires an inter-agency process with all the agencies participating, and that’s what we recommended. And it requires the active

involvement of the chief if mission, the Ambassador, and he or she

needs to be charged with setting priorities in an effective way, communicating them with the relative agencies, interacting back with

the interagency group in Washington about those priorities, and

using those priorities together with security risks and cost effectiveness as the criteria for determining an appropriate staff, which

is exactly what the GAO report has recommended, I think entirely

consistent with the OPAP recommendation.

Now, to me that’s a methodology. That’s a procedure. You then

have to take it and apply it one by one to the posts. You can start

with whatever priority post you want, and we would urge that they

start with some of the big European posts where there may be gold

in them hills in terms of efficiency and reductions, and start with

some of the really challenging posts elsewhere in the world where

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probably we are going to need new and different and more resources. And some of those are the large posts like New Delhi and

Bangkok and Beijing, but some are the smaller posts in the stands

and the caucuses and areas of the world where the challenges, as

you well know, Mr. Chairman, to our Nation’s interests, both security and otherwise, are tremendous.

So this is not an easy task. I am a bit encouraged by the administration’s response, but they’re going to need your oversight and

your support and your encouragement to make sure they keep at

it and keep in touch with you.

And at the end of the day I’m not smart enough to predict whether we’ll have fewer people in the aggregate or more, but we’ll have

different skills and we’ll have different numbers in different places,

and I think what I can safely say is that some of these other agencies you’re going to hear from on the next panel are going to need

increasing overseas forces. That’s certainly true in the law enforcement community, of the economic community, including Treasury,

and some of the commercial-oriented departments like Agriculture

and Commerce. I think that will well serve our interests, because

that will give us the added expertise and skills that we need to

meet the current challenges. You could add to that some of the

public health challenges, as well.

So I was very pleased to hear that this committee was taking an

interest in it and I commend you for this hearing. Although my

charter is long gone and what limited function I had is over, I am

always available to help this committee or any other as you pursue

these goals.

Mr. SHAYS. Thank you, Mr. Kaden.

[The prepared statement of Mr. Kaden follows:]

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Mr. SHAYS. Mr. Kaden, your work will result in some very major

changes, I think, and the work of GAO. I see a tremendous agreement that we need to do something, and, you know, it truly does

stare us in the face. I mean, there’s not much room for debate,

frankly, so how we do it will be the issue.

The only group I would add in terms of that cooperation, having

the President and OMB focused on it, having Congress focused on

it, we do need the cooperation of the various departments and

agencies. They’ve got to buy into this, and then they’ve got to have

it filter down to the people that can make it happen.

Mr. Gilman, I’d be happy to start with you.

Mr. GILMAN. Thank you, Mr. Chairman. I want to welcome Mr.

Kaden. He appeared before International Relations Committee on

several occasions. The testimony is still appropriate. As chairman

of the Overseas Presence Advisory Board, you did some outstanding work.

Mr. Kaden, what can be done to strengthen Ambassadorial authority without undermining the independence of other U.S. agencies?

Mr. KADEN. I think there are two things. One is we suggested

that the President clarify the executive order setting out the Ambassador’s authority and make clear what the chief of mission authority meant and how much it extended to the full range of activities in a particular mission. I think that’s important, as well as the

tone and the message the President sends.

Our Ambassadors, after all, are the President’s representatives,

the Nation’s representatives. They don’t work just for the State Department or for any other department. We mean it when we say

they’re the chief of mission and the chief of all the personnel in

those departments.

The other thing, which goes without saying—and this is a conversation, Mr. Gilman, I think you and I have had before—we need

to find and appoint and confirm the very best chiefs of mission we

can from both the career service and from outside the career service, because the one thing our panel discovered with great clarity

as we visited so many posts is nothing makes as much of a difference in the quality of mission and its ability to achieve the priorities that are set than the quality of its chief. We had in those

years—and I’m sure we have today—some terrific chiefs of mission,

but we probably also have some that are a little weaker than they

ought to be. And so that whole process, which is something that

both Congress and the President are involved in, is a very important part, too, of improving our overseas presence.

Mr. GILMAN. Mr. Kaden, what have you found to be the major

obstacles to a meaningful right-sizing in our Federal Government?

Mr. KADEN. My own view is—and I haven’t spent enough time

in Washington to claim to really understand the processes of our

government, but my own view is that it is more the inertia of dealing with complex inter-agency issues. Each of the major departments has a clear idea of its own agenda and its own priorities,

and on the top level at a high altitude, the department heads that

I’ve talked to have a determination to address these problems. But

getting them all down through the ranks to work together on

whether it’s right-sizing or developing a common technology platVerDate 11-MAY-2000 11:22 Apr 28, 2003 Jkt 000000 PO 00000 Frm 00087 Fmt 6633 Sfmt 6633 D:\DOCS\86342.TXT HGOVREF1 PsN: HGOVREF1
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form or cooperating on a cost allocation system or developing a better way of building facilities and going through that planning and

design process, it’s not easy when you have so many agencies and

so many conflicting priorities. To me, that’s why you need the coordinating leadership, whether it is from OMB or from some other

part of the White House.

Mr. GILMAN. Thank you, Mr. Kaden.

Mr. Ford, while we are undergoing an aggressive program to reconstruct and replace some of the embassies around the world, do

you think that the right-sizing program can be established and

fully in effect in time for staffing decisions to be perfected in the

size of the new post?

Mr. FORD. We understand the Department of State, in the new

embassy building program, is attempting to have a more disciplined approach in identifying what the actual requirements at

the new embassy will be. I think the key issue here is the various

agencies that are going to be housed at a new embassy. Validating

their requirements is a part of the process that State hasn’t yet

been able to undertake, and it may be, as Mr. Kaden just said, it

may be that OMB is going to have to be the ultimate arbiter in

identifying what those requirements are, because that is what is

going to drive the size of the embassy. And it is an opportunity before the embassies are built to make sure that we’ve got the right

number of people in these embassies and that they are all properly

validated, so I think there is an opportunity there—probably a better opportunity than the ones that have already been established.

But I also think that it may be somebody like OMB that’s going

to have to be the agency that is going to require the validation of

those requirements.

Mr. GILMAN. Realistically, do you think you can accomplish that?

Mr. FORD. I think it is—yes, I do. I think it is possible to do it.

I think some agencies have pretty good matrix on validating how

many people they need, and I think that it is doable. I think it just

takes—it’s going to take some time and effort to make sure they

ask the right kind of questions.

Mr. GILMAN. And, Mr. Ford, can State enforce the requirements

that the Foreign Service officers are supposed to be worldwide

available?

Mr. FORD. Yes, sir. They are supposed to be worldwide available.

The Department of State has a bidding process which allows employees to put a preference in where they want to be assigned, and

the Department makes decisions based largely on that bidding

process.

We have found that, particularly with regard to what are called

‘‘hardship posts,’’ that it is difficult for the Department to get many

of its officers to bid for these positions.

Mr. GILMAN. Well, Mr. Ford, if I might interrupt, how many then

are worldwide available today?

Mr. FORD. I believe the current staffing profile for the Department for U.S. direct hires is around 16,000.

Mr. GILMAN. And are all of those 16,000 worldwide available, or

do they—are they dependent upon a choice of posts?

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Mr. FORD. They are worldwide available as far as the State Department is concerned. I mean, the State Department can direct

someone to go to any post in the world.

Mr. GILMAN. Regardless of the choice system?

Mr. FORD. That’s correct. They have that authority.

Mr. GILMAN. And just one last question. Is State Department

personnel office making an effort to reevaluate overseas jobs in

light of advances in technology?

Mr. FORD. I know that they have a number of initiatives, technology initiatives at the Department of State that are designed to

find better ways of doing business. There were some discussions

earlier about the lack of communications and things of that nature.

We believe that those efforts could, if they are married up with the

staffing requirement process, lead to assigning the right number of

people to the right places.

Mr. GILMAN. Thank you. I want to thank our panelists, Mr.

Kaden and Mr. Ford, for being with us.

Thank you, Mr. Chairman.

Mr. SHAYS. Thank you, Mr. Gilman.

Mr. Gilman, I want the record to state that this committee recognizes that your committee has been very active in this when you

were chairman of the committee, and that’s one reason why we’re

pursuing it, because of this being brought to our attention by Mr.

Gilman.

Candidly, I don’t have a lot of questions to ask either of you. I

think your statements were pretty clear. You both are a tremendous resource.

Mr. Kaden, still, even though you are not actively pursuing this,

you will be an excellent resource for our committee. We appreciate

that you took the time to be here.

Mr. Ford, obviously we will be putting you to work continually

on this.

I just will say for the record there is going to be no excuse if we

don’t deal with this issue. It would be just absolutely, given our national security needs and the needs to use resources well, given the

need to protect our employees, given budgetary challenges, to not

use employees well and effectively and where they are needed just

can no longer be tolerated. And given that the President has—and

I’m just kind of echoing your remarks, Mr. Kaden—given this is

one of his high priorities, the State Department only has—not only,

but they’re suggesting set five priorities and then work on them.

I can’t say it will be one of only five, but it is one of a few that

will be our priority, and certainly, as it relates to the State Department, our highest priority.

Do either of you have any kind of closing comment that you want

to make, any question that we should have asked that we didn’t?

[No response.]

Mr. SHAYS. Well, your testimonies both were very helpful. We

really appreciate your being here. Thank you very much.

Mr. KADEN. Thank you.

Mr. FORD. Thank you.

Mr. SHAYS. At this time we’ll call our third panel: the Honorable

Ken Lawson, Assistant Secretary for Enforcement, Department of

the Treasury; the Honorable Andrew Hoehn, Deputy Assistant SecVerDate 11-MAY-2000 11:22 Apr 28, 2003 Jkt 000000 PO 00000 Frm 00089 Fmt 6633 Sfmt 6633 D:\DOCS\86342.TXT HGOVREF1 PsN: HGOVREF1
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retary of Defense for Strategy, Department of Defense; and the

Honorable Robert Diegelman, Acting Attorney General for administration, Justice Management Division, Department of Justice.

I’ll state, before I swear any of these gentleman in, that the work

of all three departments is absolutely essential, and we appreciate

their being here and appreciate what they do here at home and obviously overseas, as well.

If you’ll stay standing, I’ll swear you in, and anyone else that

may assist you.

[Witnesses sworn.]

Mr. SHAYS. Note for the record that all three have responded in

the affirmative.

Mr. Lawson, were you in the military?

Mr. LAWSON. Yes, sir, I was.

Mr. SHAYS. Well, you waited for me to tell you to be seated. I figured that. [Laughter.]

I’m delighted that all three of you are here. I’d ask you to put

the microphone up, make sure it is turned on, and we’ll start with

you, Mr. Lawson, then Mr. Hoehn, and Mr. Diegelman, we’ll end

with you.

Thank you.

STATEMENTS OF KEN LAWSON, ASSISTANT SECRETARY FOR

ENFORCEMENT, DEPARTMENT OF THE TREASURY; ANDREW

HOEHN, DEPUTY ASSISTANT SECRETARY OF DEFENSE FOR

STRATEGY, DEPARTMENT OF DEFENSE; AND ROBERT

DIEGELMAN, ACTING ATTORNEY GENERAL FOR ADMINISTRATION, JUSTICE MANAGEMENT DIVISION, DEPARTMENT

OF JUSTICE

Mr. LAWSON. Thank you, sir.

Mr. Chairman and distinguished members of the subcommittee,

thank you for this opportunity to describe the Department of

Treasury’s strategy and procedure used to coordinate the placement of overseas personnel with Department of State.

Although I have submitted a written testimony for the record, let

me briefly describe some key points.

The Office of Enforcement, along with the Office of International

Affairs at main Treasury, and several key bureaus of the Treasury

Department have had an international presence for more than 50

years. Each office has a direct strategic, supportive, or crucial enforcement role in implementing U.S. Government policy, yet an ongoing review of positions abroad is vital for security, cost, and policy reasons.

Moreover, this is a timely subject, given our country’s ongoing efforts to combat the global scourge of terrorism, both at home and

abroad. The demand of our resources abroad are expanding and a

need to coordinate the Treasury Department’s efforts to protect our

homeland with the Department of State and other departments

and agencies is essential. Our ability to share information, work directly with foreign counterparts, and the ability to react quickly to

changing trends is essential not only for our battle against terrorism, but for other critical missions such as controlling trans-national crime, promoting U.S. interest in foreign markets, and proVerDate 11-MAY-2000 11:22 Apr 28, 2003 Jkt 000000 PO 00000 Frm 00090 Fmt 6633 Sfmt 6633 D:\DOCS\86342.TXT HGOVREF1 PsN: HGOVREF1
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viding essential technical assistance and training to our counterparts overseas.

As I have mentioned, coordination of our international presence

is essential to ensure that the respective missions of the various

agencies and departments, including Department of Treasury, are

fulfilled, and that the U.S. Government is speaking with a unified,

coordinated voice abroad.

Treasury’s goals and objectives are fully integrated into the U.S.

strategic plan for international affairs and involve these national

and international interests: expand exports and open markets;

maintain global growth and stability; promote economic development; manage the entry of visitors and immigrants; safeguard the

borders of the United States; combat international terrorism,

crime, and narcotics trafficking.

The Department of Treasury, in reaching these goals, reports annually to the State Department on the number of staff positions by

Treasury components, by embassies and consulates, or proposed

changes for the next 3 years, and Treasury follows the inter-agency

clearance process to secure the approval of the U.S. Ambassador,

chief of mission.

Treasury submits detailed justification for all proposed overseas

staffing changes, additions, or subtractions to the chief of mission,

with a copy to Department of State. State officials also provide to

the chief of mission and to Department of Treasury its views on the

necessity of overseas staffing changes proposed by Treasury.

The increasing demands of Treasury regarding homeland security through its financing and international financial markets require a vibrant overseas Treasury presence. It is important to note

that this total number of Treasury employees include Americans

posted abroad, local hires, foreign nationals, and personal contractors.

Let me give you a breakdown of Treasury’s personnel abroad, as

reported by OMB as follows:

For departmental offices, including technical assistance, we have

a total of 112 persons, and this includes the Office of International

Affairs and Treasury. For the Customs Service, it accounts for approximately over 300 persons abroad, and Customs is focused on

cargo security and terrorist financing. The Secret Service has a

total of 93 persons abroad, where their work focuses upon financial

crimes and counterfeiting. The Bureau of Alcohol, Tobacco, and

Firearms accounts for five persons abroad, focusing on firearm

work and also diversion cases, tobacco and alcohol. The IRS, both

civil and criminal divisions, have a total of 58 persons abroad,

where the criminal division focuses upon money laundering and tax

evasion cases.

I must say the Treasury Department has been very flexible in its

allocation of resources. Although we have these people, we recognize when there is no longer a need for a given office, either for

enforcement or non-enforcement personnel. The Treasury Department has been willing to relocate those resources to areas where

such personnel are needed.

This plan will continue where Treasury operates, since we are

dedicated to efficient use of resources abroad. We look forward to

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working with the State Department to ensure we do not have resources where the problems do not exist.

Now, just to address the issue of regionalization that was raised

earlier, the Department of Treasury law enforcement bureaus, as

well as our non-enforcement offices, have traditionally practiced

the concept of regionalization in varying degrees, the practice by

which a region is covered by a personnel stationed in one overseas

post. The concept has proved beneficial in certain locations, but

we’ve recognized that we need to have a presence where the crime

is, so we may have a regional office but we may need an office in,

say, Spain as opposed to just a regional office in Paris. That’s in

place of Secret Service.

I’ll note, Mr. Chairman, Treasury and its law enforcement bureaus recognize that we must work together with all agencies to

ensure the effective use of our foreign assets.

This is the end of my oral testimony. I will be glad to answer any

questions, sir.

Mr. SHAYS. Thank you very much, Mr. Lawson. We will have a

few questions. We appreciate your statement.

[The prepared statement of Mr. Lawson follows:]

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Mr. SHAYS. I would want to say for the record that when I have

gone overseas to deal with this issue and issues dealing with, for

instance, questions dealing on financial matters and how we track

down people who have fled this country or dealing with terrorist

issues, dealing with Defense issues, we have found all of your people very helpful, very informed, very talented, and I’m grateful to

have been able to utilize and have those opportunities to meet with

them and to learn so much from them.

Mr. Hoehn.

Mr. HOEHN. Thank you, Mr. Chairman, for the opportunity to appear before this committee on behalf of Secretary of Defense Rumsfeld.

As you know, our Defense responsibilities span the globe, and the

Secretary of Defense has developed a strategy to meet the many

challenges we face. That strategy was outlined in the quadrennial

Defense review report that he submitted to Congress last September.

The ongoing war on terrorism is the first real test of this strategy, and we need your support to ensure success in this war. A

strong and effective overseas posture is critical to support our Defense strategy, including the support we provide to U.S. diplomatic

missions overseas.

There are three basic components to our representation at and

support to the diplomatic missions. These are: our security assistance offices, which operate in support of the State Department; our

Defense attache offices; and the U.S. Marine Corps security details.

Although there is no single criterion or methodology by which to

determine our support to diplomatic missions, indeed most support

is country-specific, as has been discussed earlier today. The Department of Defense has applied the discipline of right-sizing, as emphasized by the president’s management agenda, to satisfy our

changing requirements.

For example, personnel assigned to our security assistance offices

have decreased by roughly 25 percent over the past 10 years. At

the same time, on the basis of advice provided from our regional

commanders, we have established 35 new offices to meet changing

requirements. Our security assistance personnel today are capped

at roughly 630 people.

Similarly, our Defense attache personnel are capped at approximately 1,000 people, and have been significantly realigned in recent years to meet changing requirements. We have closed some 29

stations and reduced another 35 offices. At the same time, we have

established 20 new attache offices and expanded 20 other stations.

I believe this is very much in line with the recommendations that

were offered on the prior panel.

Finally, our most visible presence at U.S. embassies and posts

are the 1,135 Marines with the Marine Security Guard Battalion.

The assignment of Marine security details is under continuous review and is accomplished in close coordination with the State Department.

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I have identified more details on how we determine our staffing

levels in order to right-size our presence overseas in my written

statement, which I have provided for the record. I am available to

you for your questions.

Thank you, sir.

Mr. SHAYS. Thank you very much.

[The prepared statement of Mr. Hoehn follows:]

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Mr. SHAYS. Mr. Diegelman.

Mr. DIEGELMAN. Thank you, Mr. Chairman. First of all, thank

you very much for the invitation to testify, but then also thank you

for holding a hearing on this critical topic. One of the benefits of

going last with three panels like this is first of all you get an opportunity to hear everybody else’s testimony, but also you get the opportunity to avoid some of the hard questions that people get to

throw at you. So I’m going to—I have submitted a detailed statement for the record, but I do want to point out a couple key items

that I think—I’m not going to repeat what you’ve heard, because

I believe there’s a lot of consensus among all of the witnesses, but

I do want to point out some differences in approach and even some

suggestions to where you can possibly go next, or where all of us

can go next.

First of all, in terms of the Department of Justice, we have a limited but growing presence abroad. If the world changed in 1989

with the Berlin Wall coming down, it also changed in 1998 with the

attack on our embassies in Africa. It also very, very significantly

changed for the Department of Justice and I believe for everybody

else on September 11th of last year.

The Department of Justice has a very limited but growing presence abroad. Ending with fiscal year 2001, Justice had only about

1,675 full-time and part-time employees and foreign nationals in 79

countries, which is a very, you know, very minimal presence, if I

might say so. In 2002, with the appropriation for 2002 and also the

counter-terrorism stuff, we’re going to increase by an additional 75

employees, and most of those employees and additions will be in

the FBI and the Criminal Division.

Justice is a large, complex agency with almost 39-some agencies

within it. Out of them, only five of them actually are represented

abroad—the obvious ones, the FBI, the DEA, the INS, the Criminal

Division, and also the Civil Division, but the Civil Division really

has a very minor presence. It has only three employees in London.

Traditionally, violations of U.S. criminal laws have been addressed by law enforcement and prosecution resources here exclusively in the United States. The last 20 years have seen a very dramatic impact on the globalization of crime, both with technology

and the nature of the drug problem and the terrorism problem. We

have ever-increasing threats to U.S. citizens, assets, and interests

at home and abroad posed by international terrorism, organized

crime, narcotics trafficking, money laundering, and all manner of

trans-national criminal activity. It has created a very critical need

to place law enforcement agents and attorneys, in some cases

criminal prosecutors, in specific locations abroad.

Since September 11th the Department of Justice has very actively been working more closely with law enforcement in countries

all around the world, some 79 different countries.

The overseas Presence Advisory Panel that Mr. Kaden testified

was the first attempt in 1998 to look at the issue of right-sizing in

a very considered and thoughtful way, and I think his testimony

also reflects that. Immediately after the issuance of their report,

the then Attorney General of the United States, Janet Reno, and

the Secretary of State both agreed that they would take the law enforcement presence abroad and just use it as a possible test case

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to come up with some way of determining how a law enforcement

presence should be sized in each of our locations.

We set up an inter-agency task force involving our colleagues

from both Treasury and also the Department of State, and then we

did undertake a pilot study that took us to U.S. missions in Paris,

Mexico City, and Bangkok.

I was a member of that working group, so I know both what was

on the ground and the considerations that all of us entered into,

and we did produce an approach in the law enforcement area that

I think is worthy of this panel’s consideration and also GAO, OMB,

and the Department of State.

We spent a lot of time in Paris, a very large mission. I would

simply say that we learned a lot by actually talking to the people.

We stayed on the site a week. We had a panel of about six members.

Let me just very quickly tell you about Justice abroad one more

time. Really, our focus is mainly four targets: counter-terrorism,

narcotics trafficking, international crime, and immigration.

We have placed our people where the problems are, where the

issues are. Our goals and purposes in putting people abroad really

supports the U.S. strategic plan for international affairs, the two

major law enforcement goals.

I’ll give you an example. The Federal Bureau of Investigation

today carries out a mandate of more than 50 statutes which provide extra-territorial reach, many of them providing exclusive jurisdiction to the FBI. Over half of these have been passed since 1980.

They address violence, international airports, foreign murder of

U.S. nationals, international parental kidnapping, violence against

maritime navigation, copyright and intellectual property fraud,

telemarketing fraud, use of weapons of mass destruction, terrorism,

and air piracy.

Obviously, we have a very heavy agenda for being abroad, and

it completely matches up with, from our perspective, the U.S. strategic plan for international affairs.

Let me just very quickly recap what the working group did. We

have been very actively involved with State and Treasury.

We came to a simple conclusion. It’s not easy to come up with

a way to right-size, but we do think it is doable. We do think that

there are criteria that should be taken into consideration, that it

should not be a numerical formula, that in reality there ought to

be a range of criteria that can be applied by an inter-agency team,

and basically my testimony does tick all this off. I’ll be glad to supply a little bit more detail for the record if you’d like it, but we see

basically eight criteria that should be used in evaluating the law

enforcement presence abroad:

No. 1, the trans-national crime threat that is present at the site;

No. 2, the non-crime-control policy interest for being in there.

Very frequently the crime issue impacts in any country on the development of democratic institutions and a free market economy.

No. 3, the host nation law enforcement capability.

Four, the host nation’s commitment. Do they want us there or

not? And how big do they want us there?

No. 5, the geographic regions served by the mission.

No. 6, the role performed by U.S. law enforcement personnel.

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No. 7, the resource and security constraints.

And, No. 8, the possibility of overlapping missions with anyone

else that is presently at the site.

I can give you a more-detailed summary of the eight criteria. I

will point out that we applied these in three major large missions—

Bangkok, Mexico City, and Paris. We also out-briefed the chief of

mission in each one of the sites, and the reaction to it was very

positive and they thought usable.

I’ll make some final observations. One, we do believe that this is

doable. Justice is more than willing to participate in an inter-agency effort to take the next step. We just made a major staff commitment the last time around, but we’re willing to make the same type

of commitment.

The word of caution we would add is that none of us should be

looking for silver bullets or easy answers to this. It is not just simply a three-factor analysis; it is a multi-varied analysis that you

have to do. When I say that, the drivers should not just simply be

cost and security. The driver’s really have to focus on operational

necessity and mission effectiveness at the missionsite.

We believe that if you take the June 21st report that we issued

as a working group as a starting point and build around it an

inter-agency group, you can take it the next step.

The key features of taking it the next step are actually turning

those eight concepts into some operational questions that could be

used by an assessment team. We would underscore that we have

to avoid the one-size-fits-all approach and we believe that there

should be an inter-agency—strong inter-agency participation and

this should be transparent. This should not be a situation where

one group or the other just lays out the formula for everybody to

play by. We’ve got to work it out together. We think it is workable,

and I think we are off to a good start.

I will be glad to answer any questions you might have, Mr.

Chairman.

[The prepared statement of Mr. Diegelman follows:]

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Mr. SHAYS. I thank you all very much. Mr. Diegelman, I think

you took advantage of being last and did a nice service to the committee in kind of summarizing some points. I appreciate the testimony of all three of you. It is very helpful.

You, Mr. Diegelman, seemed to make it very clear that the Attorney General would be cooperative and the Department will be cooperative in this effort. I’d like to know, Mr. Hoehn and Mr. Lawson,

what kind of cooperation we can expect from Treasury and Defense

in this effort to right-sizing our missions.

Mr. LAWSON. I think there’s no question, sir, that the Department of Defense will be cooperative in this effort. I think Mr.

Diegelman’s points are quite accurate, particularly on the issue of

the inter-agency approach and the idea that, although no one-sizefits-all, we do need to work out criteria by which to right-size, and

that this inter-agency approach must be transparent to all parties

as we’re working through it. There is no question that the Department of Defense will be committed to that.

Mr. SHAYS. Thank you. Mr. Lawson.

Mr. LAWSON. I must say the same. As you know, Secretary

O’Neill served on OPAP prior to his service as Secretary of Treasury, and he agrees with right-sizing, but not necessarily downsizing. Due to the problems that exist with trans-national crime,

we may need a clear presence from Secret Service that——

Mr. SHAYS. I’m going to make it very clear that we don’t even

need to go any further in this issue. Right-sizing means rightsizing. It may be up, it may be down, it may be staying the same.

We all agree on that.

Mr. LAWSON. All right, sir.

Mr. SHAYS. So you don’t need to be concerned that when you go

back we’ll have assumed that you said we can down size.

Mr. LAWSON. Yes, sir.

Mr. SHAYS. You won’t get in any trouble that way, sir.

Mr. SHAYS. All right, sir. Short answer—we’re willing to cooperate.

Mr. SHAYS. Willing would be very helpful, and hopefully even

eager.

Let me ask you, though, what are the practical challenges? I

mean, as I meet—when I go to every mission I sometimes meet

with Treasury, but I almost always meet with people from the Justice, Department of Defense. Let me say the Defense Department

has some of the best contacts in country with important nationals,

and it has been a tremendous asset for me to have the Department

of Defense introduce me to people who I need to meet with in my

work. I appreciate that. But what are the practical challenges that

a chief of mission has, an ambassador has in knowing about the

work in each of your different departments?

I would think, for instance, with Justice there are just some

things that Justice doesn’t even, you know, go out of its way. It’s

basically on a need-to-know basis. So tell me how we sort out the

practical application of the chief of mission knowing what you all

are doing.

Do you want to start, Mr. Diegelman?

Mr. DIEGELMAN. Yes. I’ll tell you my personal observation. My

personal observations are that an awful lot of it really turns

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around the mission performance plan, and when I say that I think

over the last couple of years——

Mr. SHAYS. Mission of the embassy or the mission of the various

departments?

Mr. DIEGELMAN. The mission, that’s for the embassy.

Mr. SHAYS. Right.

Mr. DIEGELMAN. Each embassy does produce an MPP in the

spring, a mission performance plan. I think one of the concerns

that we have had in the past is that very frequently it seems to

be a chief of mission to Washington discussion and not an on-sight

discussion.

The mission performance plan really should involve all of the

players that are onsite at a mission in its development and determination or priorities. That is a way in which the chief of mission

or the Deputy Chief of Mission could actually reach out to the law

enforcement presence that is there in that embassy or there in an

annex to that embassy and actually involve them in the planning

and the determination of priorities.

No question about it, very frequently some of the work that we’re

involved in, particularly in the FBI, is basically undercover investigative work and we’re not going to lay everything out on the

table, but surely any chief of mission ought to know how many people are present in his mission, how many—just what they’re doing,

generally, and how they support the priorities of that mission.

I think the answers can be found in the MPP, and also all the

agencies, including us, playing according to national security directive, decision directive 38, in terms of making sure that the chiefs

of missions know what assets we’re putting into the mission.

Mr. SHAYS. Thank you.

Mr. Lawson.

Mr. LAWSON. Sir, I think that one thing has been helpful has

been meetings with law enforcement bureaus at these embassies.

These meetings are held by the Deputy Chiefs of Mission to ensure

there is no conflict in terms of cases or investigations.

I find from Treasury law enforcement bureaus and also working

with the FBI that, by virtue of having these discussions on a weekly basis, this assures us no conflict and ensures that everyone understands what missions are to be accomplished and that we’re

working together.

Mr. SHAYS. Thank you.

Mr. Hoehn.

Mr. HOEHN. Yes, sir. Regarding challenges, the first that I would

observe is that, in two of our functions—that of our Defense attache, our attache is, in fact, the military advisor to the chief of mission, and so there is a very close relationship there in terms of the

function that the attache performs and that of the chief of mission.

Second, our security assistance offices are actually working on

behalf of the State Department at the missions, and so again there

is a very close relationship. And, as I mentioned, the role of the

Marine security details at each of the missions is done in very close

collaboration with the State Department.

But that leaves unsaid the issue that we highlight in our own

strategy, and that’s one of uncertainty. And so when we look in our

requirements and then when we look downstream at some of these

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requirements, it is often difficult to project exactly what those

needs will be. None of us I think could have imagined even a year

ago the requirements that we face now in central Asia and particularly in Afghanistan.

And so, I think as we look at this right-sizing initiative and as

we address these challenges, we will have to build sufficient flexibility into our approach here so that we can meet changing needs

not just over time but sometimes in time to face the requirements

that we confront.

Mr. SHAYS. Having the right number of people in the right place

is obviously the key objective. It is a little disconcerting to read

such disparity in terms of per person, per employee, per government employees’ cost. I’m wondering if you can shed any light on

such high costs for Secret Service.

Mr. LAWSON. I’ll be glad to, sir.

Mr. SHAYS. OK.

Mr. LAWSON. The figure that was given to you was extremely

high and perhaps——

Mr. SHAYS. A little louder.

Mr. LAWSON. I’m sorry. The figure that was given to you was not

correct. That figure was based on a study conducted by OMB where

Secret Service provided a worst-case scenario, and it was based on

having an agent in a new office in the most expensive foreign embassies—Hong Kong and Rome. And, by virtue of going on the high

end, that’s where we got $665,000. But trying to be completely candid with OMB in thinking about a worst-case scenario, I think that

gives the wrong picture as to how much it costs to have a Secret

Service agent.

Mr. SHAYS. If I hadn’t asked that question, you would have found

a way to bring it in, wouldn’t you, for the record, because this is

an important point.

Mr. LAWSON. It is. Yes, sir, because——

Mr. SHAYS. So would you have found a way?

Mr. LAWSON. At the very end when you say, ‘‘Is there anything

you would like to say,’’ I’d have something to say, sir.

Mr. SHAYS. OK.

Mr. LAWSON. And I also have charts to provide.

Mr. SHAYS. OK.

Mr. LAWSON. All right?

Mr. SHAYS. Well, they’ll all be in the record.

Mr. LAWSON. All right, sir. Just bottom line, it does not cost that

much money for a Secret Service agent to do his job at a foreign

embassy. The correct figure, sir, is around $400,000, and we’re

looking at, say, other costs than just salary and benefits, sir. But

for all our bureaus it does vary, depending on where your location

is and also the mission. So to develop a correct figure for our bureaus we need to look at one location across the board—let’s say

Mexico City. Look at it for ATF, Customs, Secret Service, and then

develop a number. But the number you heard earlier is incorrect.

Mr. SHAYS. OK. The number 400,000 still is a pretty penny for

an individual that you just mentioned, a more realistic cost. Just

shed some light as to why it would be that number, that amount.

Mr. LAWSON. Well, sir, what was calculated by Secret Service,

we’re not just looking at the individual’s salary.

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Mr. SHAYS. Right.

Mr. LAWSON. We’re also looking at perhaps for equipment, furniture, housing costs. If this person is bringing a——

Mr. SHAYS. What would be unique, though, to Secret Service that

would be above and beyond housing—you know, I’m assuming the

housing would be the same whatever employee we had—Defense,

the Treasury, State Department, as well. So what would be an additional cost for the Secret Service? They still seem to be at the

higher end.

Mr. LAWSON. That figure, again, is based on placing a Secret

Service agent with a family of four in, say, Rome or Hong Kong,

a high-end location versus a low-end location. But, to answer your

question directly, there would be no difference in cost for a Secret

Service agent or for a Defense employee for just salary and benefits, sir.

Mr. SHAYS. You know, let me just—my counsel has pointed out

that the per average cost of all employees is about 339. I get the

feeling that this number—we need to nail this number down a bit

more, obviously, in terms of comparing the same requirements and

so on.

Mr. LAWSON. Yes, sir.

Mr. SHAYS. Is there a difference in—let me back up and say

when you all feel there is a need to add to a mission—excuse me,

I don’t want to confuse mission and mission. When you feel there

is a need to add employees to overseas, what process do each of

your departments follow?

Mr. LAWSON. We comply with the NSDD 38, through State, coordinate for our bureaus through the Under Secretary of Treasury

to ensure that everyone is on the same sheet of music, sir, and

then there is an evaluation of cost and need to ensure that we are

not placing a person in a location when there’s not a true need.

And let me say this for Secret Service. Secret Service has closed

locations, such as closing its Ottawa office once it realized there

was no longer a law enforcement need there, and transferred it to

Ronset, where there was a need, where they found counterfeiting

occurring and prevalent pattern as opposed to Ottawa, sir.

Mr. SHAYS. Let me just go down the line here.

Mr. HOEHN. Yes, sir. Similarly, we adhere to the procedures

identified in NSDD 38. In this instance, we have an internal review

process within the Department of Defense for the three different

functions that I outlined, but ultimately the chief of mission has

the approval authority for any increases or decreases to the size of

our presence, and so we have both an internal review process, but

then we work that very carefully with the chief of mission.

Mr. DIEGELMAN. I can just basically second what has already

been said. We follow the NSDD approach, NSDD 38 requirements,

but also internally we do our own internal assessment why there’s

a need in that particular site, and that particularly looks at either

investigative leads that we have, caseloads that we have, contacts

that we have with foreign governments.

The FBI is mainly leading the charge on this right now, particularly in the wake of September 11th, where we actually are getting

investigative leads related to terrorism, investigations that can

only really be handled onsite. So we do an evaluation of how many

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leads, how many cases, the level of cooperation of law enforcement

agencies before even kicking off the NSDD 38.

Mr. SHAYS. Do overseas positions receive Ambassadorial approval

prior to the staffing decision and before the budget allocations are

made?

Mr. DIEGELMAN. My answer to that is yes for the Justice Department. It’s supposed to be that way. Now, that doesn’t mean that

always happens, but my answer to that is yes.

Mr. SHAYS. All right. I think that’s probably a more accurate description, ‘‘It’s supposed to happen.’’ I’m not sure it does happen.

Mr. Hoehn.

Mr. HOEHN. I would agree it is supposed to happen that way. I

can’t attest to you here that it always happens.

Mr. SHAYS. Mr. Lawson.

Mr. LAWSON. I have to agree, too, sir.

Mr. SHAYS. You know, I think this issue is pretty clear-cut for

us. I care most about the fact that you can convey that there will

be cooperation from your superiors, and I think that’s going to be

absolutely essential. I do recognize that each agency, each department has its separate missions. We want to have that work in tandem with the focus of the mission, but the bottom line is that sometimes the focus of the Ambassador may not be the focus of each of

your mandates, and your mandates are clearly directed by the

President, by the Secretaries, and also by Congress. You have certain missions to fulfill, certain objectives, certain things that you

have to get done. But I think it is clear to you all, it is clear to

the committee that there can be better coordination, there can be

better cooperation.

I think the thing that I find the most troubling—‘‘troubling’’ is

not the right word, but the area where I would find it difficult if

I were an ambassador or chief of a mission, in general, that I have

more than half my employees are nationals. They probably respond

to the wishes of the embassy closely because those jobs are fairly

well paid and we have excellent employees working for our embassies that are nationals. But they have long-term knowledge that

supersedes almost any employee, American employee, because of

the rotations that we have. That would be a challenge.

It would also be a challenge, I think, for an ambassador to step

in, know the resources he has available—or she—to its own Foreign Service employees, and then to see an agency come in with,

you know, significant resources that are dedicated for carrying out

the functions of that particular effort.

I think that we’ve got to find a way to somehow understand the

kinds of resources each agency and each department is dedicating.

And I don’t want to have it be—I wouldn’t want it to be a dumbing

down, like everything had to be the average, because somebody

didn’t have enough money nobody gets enough money. That’s not

what I’m suggesting. But it does represent a challenge for, I think,

morale, I think for making sure that the embassy is doing what is

required.

I would love for us in this process to know the true cost. First

of all, I’d like you all to be able to tell me, if I instantly asked—

I might even ask you—how many employees you have around the

world to the number. And it seems to me we should be able to

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know it. It shouldn’t take days or weeks. It should be just something we know. That seems fairly clear.

But it seems to me that every agency and department should

have a clear sense of what they’re spending in each mission around

the world, and to be able to justify it, and then we should be able

to have an open and candid conversation as to why does Treasury

devote this much per employee versus what Defense would or versus what Justice would and so on.

I don’t have any additional comments.

Is there anything you want on the record?

Mr. COSTA. Yes.

Mr. SHAYS. We’re going to allow the professional staff to ask two

questions, and then I’m going to let you all close up.

Yes, sir?

Mr. COSTA. Thank you, Mr. Chairman.

Previous panels mentioned putting a rent charge on new buildings or existing buildings, and I’m wondering what your departments feel about the rent option, and if it were enacted how would

that affect your operations overseas?

Mr. LAWSON. With treasury?

Mr. COSTA. We’ll go down the line.

Mr. LAWSON. We’ll pay our fair share, but we would like to have

some type of notice so we include that in our base so we can budget

for it.

Mr. COSTA. Thank you.

Mr. HOEHN. I think it is our view that we’ll work within the administration on this initiative of capital cost sharing, but I would

highlight that there are some important issues that would need to

be resolved, not least of which would be the congressional oversight

of different agency budgets, so we would now see in this instance,

where the capital costs for new construction might be spread

among all of our agency budgets, as opposed to contained in any

single agency budget, and that might prove to be a very difficult

issue for you.

Mr. SHAYS. I’m sorry. I should understand that but it’s just going

through me. Are you saying you would spread out the cost?

Wouldn’t it be better to have it be allocated per department? What

am I missing here? Explain it to me.

Mr. HOEHN. As I understand it, if the costs were allocated on a

pro rata basis in terms of——

Mr. SHAYS. Right.

Mr. HOEHN. Then that would be reflected in each of our budgets.

Mr. SHAYS. Correct.

Mr. HOEHN. And therefore, when oversight is given here in Congress, you would have a number of different committees looking at

different agency budgets that would have that pro rata share.

Mr. SHAYS. Correct.

Mr. HOEHN. As opposed to seeing the entire capital cost for the

investment in the State Department’s budget, which is the case

today.

Mr. SHAYS. All right. The value, though, of doing it per department is that you would begin to—you all would say, ‘‘Well, this is

worth it to me and this isn’t.’’ You would begin to know how you

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would want to allocate your resources to maximize your particular

mission. And so I hope I’m not misunderstanding you.

I think your concern is—let me ask you to make sure I’m understanding. It’s your concern that when you go through the appropriation process one committee might have one standard of dealing

with what you should be allowed to spend overseas versus what another committee would have when Defense goes before the Defense

Appropriations Subcommittee versus Treasury going before its subcommittee, it’s your concern that there would be a failure to recognize differences in cost?

Mr. HOEHN. That’s correct, sir.

Mr. SHAYS. Yes. I understand that. I do.

Mr. Diegelman, did you want to——

Mr. DIEGELMAN. The only thing that I could add is that, you

know, I agree with my colleagues. We will clearly pay our fair

share. But I think real consideration has to be given to the comment that I made earlier in my testimony in that cost should not

be the driving feature of whether we open or place somebody in a

particular mission or not. In today’s world, we happen to be a

growth industry. The change in our own presence abroad since

1991 has been dramatic. The FBI in 1991 had 17 legal attaches.

It now has 46. And these legal attaches are very small organizations, generally three people, just the assistant legal attache, the

legal attache, the administrative officer. We’re talking about three

and four people in a mission in critical locations like Kabul and

Abu Dhabi and Kuala Lumpur as we engage in the war against

terrorism. We shouldn’t have to make the decision to put three people or not three people in a particular site because the rent charge

is too high.

Mr. SHAYS. You know what? Can I say, though, if you follow that

logic you could apply it to anything in government. I would like to

read the answer to your question differently, and then I’d like you

to tell me if you agree.

Mr. DIEGELMAN. Yes.

Mr. SHAYS. That Congress has to recognize that you have a significant mission and should be willing to pay the cost, but we

shouldn’t disguise the cost or not know what it is costing.

Mr. DIEGELMAN. I agree with your statement.

Mr. SHAYS. OK.

Mr. DIEGELMAN. It is a fair and accurate statement of what I

said.

Mr. SHAYS. OK.

One last question?

Mr. COSTA. Actually, a question about reviewing staff abroad. It’s

a question of how often do you review positions to see if they’re still

necessary. For example, the CDC has a sunset provision on all of

its staff overseas. What sort of review process do you have to gauge

whether those staff are still needed?

Mr. LAWSON. Sure. Our bureaus—the Treasury, Secret Service,

Customs review regularly whether or not they need staffing in a

given office. As I said before, Secret Service has reviewed the Ottawa office and realized it no longer needed that office to accomplish its mission; therefore, it closed that office and it opened another office because they found criminal activity had transferred to

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Toronto. So our bureaus regularly review the need for an office in

a given foreign embassy.

Mr. COSTA. How often does that occur?

Mr. LAWSON. Yearly. I cannot say that every law enforcement bureau does it yearly, but I can tell you that Secret Service does and

Customs does.

Mr. HOEHN. Similarly, our requirements are reviewed annually,

and, as I noted in my remarks, we have made a number of changes

over recent years. I can’t say that every function in every post is

reviewed annually, but we do have an annual review process that’s

underway in which these determinations are being made. And in

some instances, because of some very rapidly developing requirements, we’ve had to expedite some of the changes that we had in

place, that we had planned for upcoming years, and move them

into this year, particularly some changes in central Asia that are

now in place.

Mr. DIEGELMAN. We also have an annual review process basically

as part of our budget formulation process, but then also we normally do not permanently station anybody abroad. We normally do

it in 1 or 2-year terms, tours of duty, and then reexamine that at

the end of that term to decide whether we’re going to keep those

people in that location.

Mr. COSTA. OK. Thank you.

Thank you, Mr. Chairman.

Mr. SHAYS. Thank you.

Gentlemen, do you have anything that you feel needs to be part

of the record? I’d truly welcome it, any closing comments.

Mr. LAWSON. No, sir.

Mr. HOEHN. No, thank you, sir.

Mr. DIEGELMAN. Just to thank you once again for holding the

hearing. I think it is a critical issue, and we are very actively interested in staying about.

Mr. SHAYS. Well, thank you. I feel that OMB and the President

has the cooperation of your departments, and that’s appreciated,

and certainly we appreciate your cooperation and look forward to

a continued dialog.

I’ll state again for the record, the work that our embassies do is

actually vital. It’s clear it is more important than ever. The work

that is done by both employees of the State Department and employees of other departments and agencies of our Government is

absolutely vital, as well, and we just want to make sure that we

have the right size in every case, and that may, in fact, mean that

we have more in some and less than others, but we will all benefit.

So I thank you very much. At this time the hearing is closed. I

thank our reporter. Thank you.

[Whereupon, at 12:34 p.m., the subcommittee was adjourned, to

reconvene at the call of the Chair.]

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