Overseas Staffing: Rightsizing Approaches Slowly Taking Hold but More Action Needed to Coordinate and Carry Out Efforts
Published: 2006-06-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In 2001, the administration identified the rightsizing of embassies and consulates as one of the President's management priorities. Rightsizing initiatives include: aligning staff overseas with foreign policy priorities and security and other constraints; demonstrating results by moving administrative functions from posts to regional or central locations; and eliminating duplicative functions at posts. This report (1) discusses the size and recent trends in the U.S. government overseas presence, (2) assesses the congressionally mandated Office of Rightsizing's progress in managing the U.S. government's overseas rightsizing efforts, and (3) assesses the process and outcomes of the legislatively mandated rightsizing reviews of overseas posts.
section_title: What GAO Found
paragraphs: Almost five years into the President's Management Initiative on rightsizing, the U.S. government does not yet have accurate data on the size of the U.S. overseas presence. At various times, we received estimates ranging from 66,000 to 69,000 American and non-American personnel. In addition, State estimated that there are approximately 78,000 U.S. government positions overseas, as of December 2005. State Department (State) officials said that they are working on a unified database which, if periodically updated by posts, will provide an accurate depiction of the overseas presence. State officials indicated that the database will be completed later this year. Because of the importance of having accurate data on overseas staffing and the length of time it has taken to develop this data, management oversight may be needed to ensure completion of this task. Several agencies reported that they have added staff overseas as a result of new mission requirements, and other agencies reported that they have repositioned their personnel to better meet mission needs and in response to rightsizing efforts. State established the congressionally mandated Office of Rightsizing the United States Government Overseas Presence (Office of Rightsizing) in 2004, which, after a slow start, has begun to provide overall direction to the government-wide rightsizing process. Some of the office's activities have included coordinating staffing requests of U.S. government agencies, developing guidance for and analyzing post rightsizing reviews, and formulating a rightsizing review plan. We found that coordination on rightsizing issues between State and other agencies with an overseas presence was initially slow, but has since improved. Nevertheless, non-State agencies have voiced a number of concerns regarding their interaction with the Office of Rightsizing, including their desire to be more included in the rightsizing process. Congress requires Chiefs of Mission to conduct rightsizing reviews at every overseas post at least once every 5 years. Between late 2004 and summer 2005, about 35 posts participated in the first cycle of reviews. However, the Office of Rightsizing provided limited guidance to posts on how the reviews should be conducted and did not have a systematic process for reporting the outcomes of the reviews. In fall 2005, officials in the Office of Rightsizing developed more comprehensive guidance, which posts we interviewed found useful. We found that cost was not considered a key element in the post reviews. Nevertheless, the Office of Rightsizing reported over $150 million in cost savings or avoidance to the U.S. government based on its analysis of these reviews. Although we have not been able to independently assess the Office of Rightsizing's estimates, it has presented evidence to show that some major cost avoidance and cost savings have occurred. Management officers identified various challenges to the review process, such as resistance from non-State agencies and a lack of time to conduct the review. It is unclear how posts will implement the rightsizing review decisions, such as elimination of duplicative functions, according to post officials and officials in State's regional bureaus.

section_title: Letter
paragraphs: After the 1998 terrorist attacks on two U.S. embassies in Africa, two key  studies recommended that the U.S. government evaluate and realign the  number and location of U.S. personnel working at embassies and  consulates overseas, and consider staff reductions where practical to  reduce security vulnerabilities. In 2001, the administration showed its  support for the realignment of personnel and stressed the importance of  security, efficiency, and accountability in U.S. government staffing overseas  by identifying the rightsizing of embassies and consulates as one of the  President’s management priorities. Rightsizing initiatives include  establishing mechanisms and processes to align the number and location of  staff assigned overseas with foreign policy priorities, and security and cost  constraints; moving administrative functions away from posts to remote  locations; and eliminating duplicative functions at posts. In 2002 we  developed a framework for assessing embassy staff levels to help support  rightsizing initiatives for existing facilities overseas. Our framework  identified critical elements of embassy operations—physical security,  mission priorities and requirements, and cost—and also included  rightsizing options for consideration. According to the State Department’s  (State) Office of Inspector General, rightsizing is likely to remain at the top  of State’s management agenda in the coming years because of high  construction and operating costs overseas, security vulnerabilities, and  continuing problems in assigning U.S. government personnel overseas.
Over the past five years, we have provided the subcommittee with  numerous reports and testimonies on staffing and operations at U.S.  embassies and consulates overseas (see app. II for a list of these reports).  In this report, we (1) discuss the size and recent trends in the U.S.  government’s overseas presence, (2) assess the progress that the  congressionally mandated Office of Rightsizing the United States  Government Overseas Presence (Office of Rightsizing) within State has  made in managing and coordinating the U.S. government’s overseas  rightsizing efforts, and (3) assess the process and outcomes of the  legislatively mandated rightsizing reviews of overseas posts.
To address these objectives, we analyzed the activities of State’s Office of  Rightsizing, as well as rightsizing activities of some of State’s regional and  functional bureaus. In addition, we met with seven agencies—the  Departments of Commerce, Agriculture, the Treasury, Defense, Homeland  Security, and Justice; and the U.S. Agency for International Development  (USAID)—which, including State, account for over 90 percent of personnel  at embassies and consulates. To determine if there was a systematic  process for reporting information in the first cycle of reviews, we reviewed  and analyzed 20 out of about 35 rightsizing reviews that were conducted by  posts from late 2004 through summer 2005, and which were provided to us  by the Office of Rightsizing. We also sought to complete structured  telephone interviews with all 22 posts that were conducting reviews in the  fall of 2005. Between February 2006 and March 2006, we conducted  structured telephone interviews with management officers from 20 of these  22 posts overseas on issues related to their review experience. In addition  to the telephone interviews, we visited three posts—Mexico City, Mexico;  Valetta, Malta; and Frankfurt, Germany—that had previously conducted a  rightsizing review or analysis. We conducted our overall work from May  2005 through May 2006, in accordance with generally accepted government  auditing standards (see app. I for more information on our scope and  methodology).
subsections: section_title: Background
paragraphs: The U.S. government maintains more than 260 diplomatic posts—including  embassies, consulates, and other diplomatic offices—in about 180  countries worldwide. In addition, according to various estimates, there are  over 66,000 personnel overseas, including both U.S. direct hires and locally  employed staff under chief of mission authority, representing more than 30  agencies and government entities. Agencies represented overseas include,  among others, the Departments of Agriculture, Commerce, the Treasury,  Defense, Homeland Security, Justice, and State and USAID. According to  the Office of Management and Budget, the average cost across all agencies  of having one U.S. direct hire overseas for 2007 is $491,000, including direct  and indirect personnel costs as well as support costs such as security,  office leases and furnishings, and field travel. According to State’s Bureau  of Resource Management, State’s average cost of having one U.S. direct  hire overseas for 2007 is approximately $400,000.
The White House, Congress, the Office of Management and Budget, and our  own agency have emphasized rightsizing as a key initiative to ensuring that  the overseas presence is at an optimal and efficient level to carry out  foreign policy priorities. The President’s Management Agenda has  identified rightsizing as one of the administration’s priorities. The agenda  stipulates that all agencies with an overseas presence should integrate  rightsizing into their workforce plans and reconfigure overseas staff  allocations to the minimum amount necessary to meet U.S. foreign policy  goals. Figure 1 illustrates the various levels of involvement in U.S.  government overseas rightsizing.
In fiscal year 2004, Congress mandated the establishment of the Office of  Rightsizing within State. The office was directed to lead State’s effort to  develop internal and interagency mechanisms to better coordinate,  rationalize, and manage the deployment of U.S. government personnel  overseas, under chief of mission authority. The Office of Rightsizing  reviews and approves rightsizing reports for all capital construction  projects for new embassy compounds or facilities, as well as the staffing  composition of 20 percent of all U.S. missions annually, so that each  mission is reviewed once every 5 years. According to the Office of  Rightsizing, without an approved rightsizing report based on these reviews,  the Office of Management and Budget will not forward to Congress a  programming notification for construction.
In addition to the Office of Rightsizing, a number of entities within State at  the Washington, D.C. and post levels are involved in initiatives and efforts  related to rightsizing. State’s regional bureaus are involved with posts’  rightsizing reviews as well as the administration of regional service  centers. In addition, State’s Bureau of Overseas Buildings Operations is  responsible for the worldwide overseas buildings program for State and the  U.S. government community serving abroad under chief of mission  authority. The Bureau of Overseas Buildings Operations is directing an  expanded new embassy construction program to provide safe, secure, and  functional work places for the diplomatic and consular missions overseas.  At the post level, the Chief of Mission is responsible for the security and  safety of every U.S. government and foreign national employee at the  mission. The precise structure of a mission is determined by the Chief of  Mission through the National Security Decision Directive 38 (NSDD-38)  process, which provides authority for the Chief of Mission to determine the  size, composition, or mandate of personnel operating at the mission. See  figure 1 for a depiction of the Chief of Mission’s involvement in the  rightsizing process.
The operation of embassies and consulates overseas requires basic  administrative support services for overseas personnel. The management  section, which is normally headed by a management counselor or officer, is  the section responsible for overseeing the administrative functions at a  post and generally serves as the recipient of requests from Washington,  D.C., pertaining to staffing and rightsizing. Administrative support services  at posts are generally provided through the State-managed International  Cooperative Administrative Support Services (ICASS) system, which  provides more than 30 services—including financial management  vouchering, human resources, travel services, housing, vehicle  maintenance, and motor pool—with costs of the services divided among  the agencies and sub-agencies with staff at the post, based on the level of  ICASS services used.
subsections: section_title: Cost Sharing and New Embassy Compounds
paragraphs: To address the security and other deficiencies of overseas embassies,  consulates, and other buildings, Congress established an interagency  Capital Security Cost Sharing Program to generate almost $18 billion over a  14-year period to accelerate the construction of approximately 150 new,  secure, and functional embassy and consular compounds. The main  objectives of the program are to generate funds for new embassy  compound construction and to encourage State and other agencies to  rightsize their staff by requiring that all agencies with an overseas presence  bear some of the costs for building construction. Capital security cost  sharing is based on the total number of existing or authorized positions that  an agency has overseas in U.S.-government-owned or leased facilities, as  well as any projected staff growth positions. Cost sharing is also based on  the type of space occupied by post personnel. Charges are being phased- in over 5 years with the fiscal year 2005 per capita charges being 20 percent  of the fully phased-in amount and fiscal year 2009 per capita charges  representing the full amount. Table 1 illustrates the fully phased-in per  person charges for Capital Security Cost Sharing.
section_title: Accurate Data on Personnel Overseas Not Yet Available; U.S. Government Rightsizing Efforts Under Way
paragraphs: Almost 5 years into the President’s Management Initiative on rightsizing,  the U.S. government does not yet have accurate data on the size and  composition of the U.S. overseas presence at embassies and consulates;  however, State is working on a unified database which, if periodically  updated by posts, should provide an accurate depiction of the overseas  presence. Several agencies have undertaken efforts to examine and adjust  their staffing configurations, which have been driven by various factors,  such as congressional mandates; the rising costs of building new, secure  embassy buildings; and other shared costs.
subsections: section_title: Accurate Data on Size and Composition of the U.S. Overseas Presence Currently Unavailable
paragraphs: According to State officials, there is not yet an accurate picture of the size  and composition of the U.S. overseas presence at embassies and  consulates. In order to be able to make informed staffing and rightsizing  decisions, and conduct accurate analysis of overseas staffing changes, it is  important that the U.S. government have an accurate account of all  overseas positions under chief of mission authority. Moreover, accurate  staffing data is needed to assess each agency a fair share of the cost of the  embassy construction program. Depending on the data’s source and time,  estimates of the total overseas presence under chief of mission authority  run from 66,000 to about 69,000 American and non-American personnel,  such as locally employed staff, from more than 30 agencies. In addition,  State estimated that there are approximately 78,000 U.S. government  positions overseas, as of December 2005. Some of these positions have  been eliminated or are in the process of being eliminated or reconciled,  according to an Office of Rightsizing document. Further, according to  State’s estimates, there are almost 22,000 direct-hire American positions  overseas. Figure 2 provides the estimated percentage breakdown of the  total American positions overseas under chief of mission authority by the  key agencies, according to the Office of Rightsizing.
According to State officials, State has faced various difficulties in  developing accurate data. For example, overseas staffing information is  recorded in a number of different databases at a post, depending on the  purpose of the information. In addition to the databases from Washington,  D.C., posts have created their own databases, resulting in information not  being uniform from post to post. Moreover, a State official reported that  some agencies have failed to provide human resources data to individual  posts. State officials added that changes made in one database do not  automatically populate others. Therefore, posts need to make changes in a  number of databases in order to ensure a full updating and, in particular, to  ensure the new information will show up accurately at State headquarters.
As a result, State’s numbers might include positions that have been  eliminated or are vacant; or some positions might be entered more than  once.
Officials in the Office of Rightsizing also said that there are large numbers  of employment categories overseas and that each agency might categorize  its personnel overseas in a different manner or use different  methodologies. They pointed out that, in some cases, agencies hire and  count employed family members as U.S. direct hires while, in other  instances, employed family members are counted as locally employed staff.  They further explained that State’s current databases have not kept pace  with changes in nomenclature. For example, although new agencies and  components were established as part of the formation of the Department of  Homeland Security, overseas positions might still appear in databases, for  example, as part of the old Immigration and Naturalization Services. The  incorrect reporting of staff positions could create problems for agencies,  such as being incorrectly charged for positions under Capital Security Cost  Sharing, according to non-State officials.
Since 2004, State has required posts to utilize the Post Personnel database  to account for overseas staffing positions for both American personnel and  locally employed staff, according to the Office of Rightsizing. The  Executive Director of the Bureau of Human Resources told us that, if used  properly, this database has the potential to provide the staffing data that  could lead to accurate overseas staffing numbers. However, officials in the  Office of Rightsizing stated that the database is only as complete as the  information that the posts enter into it, and that some posts might not fully  understand how to use the software properly. The Executive Director of  the Bureau of Human Resources indicated that his bureau has been  developing training modules to educate post officials on using the Post  Personnel database correctly.
subsections: section_title: State Developing Unified Staffing Accounting System
paragraphs: State’s Office of Rightsizing has been working with the Bureau of Human  Resources to develop an improved database that will enable State to  present a more accurate picture of all personnel and agencies assigned  overseas under chief of mission authority. According to the Office of  Rightsizing, the improved database will result in one complete and  accurate database of all U.S. government agencies overseas and will  eliminate the need for multiple requests to posts to update staffing data.  State has been working toward making the Post Personnel database  application the exclusive database for the entry of all staffing information  at posts. In addition, State has been devising standardized organizational  codes for post personnel for all agencies overseas. According to State  officials, the Post Personnel database will be linked to other existing  applications and will populate a number of other databases, including Post  Profiles, ICASS, and the Bureau of Overseas Buildings Operations database  for Capital Security Cost Sharing, thus eliminating potential errors  associated with duplicative and incorrect entries.
The Office of Rightsizing reported that the data in Post Personnel will soon  be made available to agencies with an overseas presence so that they can  verify it regularly to ensure consistency. Non-State agency officials  expressed the need for transparency in overseas staffing data since they  contended that often the data inputted at posts was not verified by them.  The Executive Director of the Bureau of Human Resources expressed  concern that there needs to be some type of accountability mechanism in  place that ensures posts are inputting information regularly and accurately  into Post Personnel. He added that without a mechanism in place, the  quality and validity of the data will be in question. State officials said that  the integrated staffing database is scheduled to be completed and  operational by fall 2006. However, State has not provided guidance to posts  that ensures staffing information in the Post Personnel database will be  continuously updated or that outlines the accountability mechanisms for  ensuring that staffing information is complete, according to a State official.
section_title: Agencies Rightsizing Efforts Lead to Increases or Decreases in Staff
paragraphs: Over the past several years agencies with an overseas presence have  undertaken initiatives to assess their overseas staffing configurations.  Several agencies reported that they have added staff overseas as a result of  new mission requirements, and others reported that they have relocated or  reduced their personnel to better meet mission needs and respond to the  rightsizing efforts. Many agency officials with whom we spoke indicated  that they have conducted comprehensive internal reviews or hired  consultants to assess their overseas programs and workload. For example,  the Department of Agriculture recently completed a global rightsizing  review and found that the department is overstaffed in some countries and  understaffed in others. As a result, the Foreign Agricultural Service is  repositioning its personnel to better accomplish organizational goals. In  addition, Department of Homeland Security officials indicated that they  have been working to fully assess their overseas presence and to identify  redundancies within the various Department of Homeland Security  components overseas. State also recently announced plans for the global  repositioning of its overseas presence, which entails moving hundreds of  positions across the world—primarily from Washington and Europe to  critical missions in regions such as Africa, South and East Asia, and the  Middle East.
subsections: section_title: Rightsizing Efforts Driven by Security and Administrative Costs
paragraphs: Some agency officials said that their decisions on the numbers of overseas  staff needed are guided by a number of factors, including congressional  mandates, mission requirements, and budget constraints, including Capital  Security Cost Sharing and ICASS costs. Officials with whom we spoke with  at several agencies said that they have increased staff overseas as a result  of the global war on terror, border security activities, and efforts to combat  drug trafficking and weapons of mass destruction. For example, officials in  the Department of Justice said that the department’s various components  have increased their overseas presence due to these factors, and, in fact,  U.S. Drug Enforcement Administration officials reported that they  increased their presence by almost 10 percent between 2000 and 2005. In  addition, Customs and Border Protection officials told us that they have  been increasing their personnel overseas since 2002 due to requirements  for the Container Security Initiative program. While a number of agencies  have been increasing their presence overseas, a few agencies have  decreased or are projected to maintain the current level of their overseas  presence due to cuts in program budgets. For example, the Foreign  Commercial Service reported that it reduced its overseas staffing levels by  approximately 13 percent since the beginning of fiscal year 2001. In  addition, Foreign Agricultural Services officials said that their overseas  presence is likely to remain static.
A number of agencies we spoke with cited that costs of overseas  operations, which include increasing Capital Security Cost Sharing  program and ICASS costs, have caused them to examine their overseas  presence. Department of Commerce officials reported that, while Capital  Security Cost Sharing costs represented 7 percent of their overseas costs in  fiscal year 2006, by fiscal year 2009 the cost is expected to be 21 percent of  the agency’s overseas costs. In addition, agency officials said that, because  the Capital Security Cost Sharing costs are based on every existing or  planned authorized overseas position, regardless of whether the position is  filled or not, agencies have effectively been encouraged to eliminate vacant  positions or keep their projected numbers low. For example, Department  of Commerce officials said that costs associated with Capital Security Cost  Sharing has forced the agency to keep its projected overseas numbers low  rather than develop more realistic projections since program costs are  based in part on projected as well as existing staffing numbers, and they do  not want to estimate and pay for positions that might not be needed in the  future. Some agency officials also indicated that rising ICASS costs have  affected their budgets and caused them to reevaluate their overseas  presence. For example, Department of Homeland Security officials said  that because of the high costs of using ICASS, they are currently  reevaluating their use of the services and stressed the importance of having  flexibility to opt out of ICASS services.
Some agency officials with whom we spoke raised several concerns about  the impacts of Capital Security Cost Sharing and ICASS costs on staffing  configurations. For Capital Security Cost Sharing, officials expressed  concern that it is difficult for them to accurately project their overseas  staffing numbers, since potential unforeseen events overseas, such as  natural disasters, could necessitate a reduction or increase in personnel.  Some agency officials expressed concern that, as the Capital Security Cost  Sharing costs increase, they might be priced out of an overseas presence or  have to tap into their program funds to sustain such a presence. Table 2  depicts the Capital Security Cost Sharing charges for fiscal year 2007 that  appear in the President’s budget for the agencies that we spoke with.
Moreover, in order to mitigate the effects of ICASS fees coupled with  agency budget cuts, some agency officials indicated that officials overseas  are doing more administrative activities themselves, which takes time away  from accomplishing their mission. In addition, agencies have sought other  cost-effective ways of operating overseas, including hiring family members  of staff, hiring local Americans, or utilizing locally employed staff (this final  option has limitations, however). For example, according to the U.S.  Marshals Service, utilizing locally employed staff over U.S. direct hires has  resulted in considerable savings to the agency, and it estimates that the  savings in relocation expenses, foreign housing, and other foreign  entitlements, which direct hires receive but locally employed staff do not,  would exceed $1 million every 3–4 years. However, agency officials  indicated that there are limitations to using locally employed staff at posts  to carry out some duties due to national security concerns. For example,  Department of the Treasury officials said that they are not able to utilize  locally hired foreign nationals to carry out the work of U.S. direct hires due  to the sensitive investigative nature of their work and privacy laws. In  addition, officials in the Departments of Homeland Security and Justice  indicated that, due to the sensitive nature of their work, they can only allow  American citizens with a security clearance to perform most of their  overseas duties. As an alternative to sending additional U.S. direct hires to  posts, some agencies employ eligible family members of agency staff or  hire U.S. citizens already living in the host country to carry out some of the  agency functions. Department of Homeland Security officials explained  that utilizing U.S. citizens living in the host country is much cheaper than  sending a U.S. direct hire to a post because the department does not have  to pay benefits such as housing, school costs, and other allowances to  locally hired U.S. citizens.
section_title: State Has Established an Office of Rightsizing, but More Interaction Needed between Office of Rightsizing and Agencies
paragraphs: In early 2004, State established the congressionally mandated Office of  Rightsizing to primarily coordinate all agency staffing requests, administer  rightsizing and staffing reviews, and work with State entities and other  agencies on rightsizing. The basic mission of the office is to better  coordinate, rationalize, and manage the deployment of U.S. government  personnel overseas, under chief of mission authority. Since its formation,  some of the activities of the office have included coordinating staffing  requests of U.S. government agencies, developing guidance for and  analyzing post rightsizing reviews, and formulating a rightsizing review  plan. Non-State agencies have voiced a number of concerns related to  interactions with the Office of Rightsizing, including their desire to be more  involved in the rightsizing process. To better involve all agencies in  rightsizing efforts and better understand their priorities, the Office of  Rightsizing co-hosted an interagency summit in March 2006.
subsections: section_title: Office of Rightsizing Established within State
paragraphs: In February 2004, the Office of Rightsizing was established within State.  The roles and responsibilities of the office include coordinating all agency  NSDD-38 requests; administering rightsizing and staffing reviews; and  working with State entities and other agencies on rightsizing,  regionalization, and shared service initiatives. The office started as a small  operation with only a few staff; however, over the past 2 years it has grown  in size. As of early May 2006, the office includes a director, three NSDD-38  analysts, and three rightsizing analysts. According to State officials,  additional staffing is needed to handle the growing number of initiatives  that the office is involved with. The Director of the Office of Rightsizing  told us that he has requested two additional staff to work on analyzing  rightsizing reviews and compiling rightsizing data, and hopes that the  positions will be filled by summer 2006.
section_title: Office of Rightsizing Is Involved in a Number of Initiatives
paragraphs: Since the Office of Rightsizing was established, it has initiated a number of  processes and has been involved in a number of efforts. These efforts have  included administering and analyzing post reviews, formulating a review  plan, developing instructions for post Mission Performance Plans,  automating the NSDD-38 application process, and issuing a number of  quarterly reports summarizing State’s rightsizing actions and  accomplishments. In addition, the office has been involved with two State  initiatives on rightsizing, which include demonstrating results achieved by  moving administrative functions away from posts to remote locations; and  eliminating duplicative functions at posts, also known as sharing support  services.
subsections: section_title: Rightsizing Reviews
paragraphs: One of the principal activities of the Office of Rightsizing has been  administering and analyzing post rightsizing reviews. In 2005, the office  established a formal review process and guidance for all posts overseas,  including new embassy construction projects. The process focuses on  linking staffing to mission goals, eliminating duplication, and promoting  shared services. In fiscal year 2005, about 35 reports were submitted by  posts and analyzed by the Office of Rightsizing. Figure 3 shows the  missions that conducted a rightsizing review in fiscal year 2005, according  to the office. All of these reports pertained to posts scheduled to have  construction projects for a new embassy compound or office building in  the near future. According to the Office of Rightsizing, the final reports  that have been analyzed by the office have been or will be submitted to  Congress as State seeks budget appropriations for these projects. In fiscal  year 2006, the office has tasked over 40 posts to conduct reviews—more  than 20 posts for both the fall and spring cycles.
The Office of Rightsizing has developed a 5-year plan, which includes the  schedule of when missions will be asked to conduct reviews by fiscal year  (see appendix IV). The plan is largely driven by State’s Bureau of Overseas  Buildings Operations’ building schedule, but also includes consideration of  posts participating in State initiatives, missions of highest priority, and  countries with multiple missions, according to an official in the Office of  Rightsizing. For fiscal year 2005, all of the reviews were conducted in  anticipation of the post receiving a new embassy compound or building in  the future. For reviews scheduled to be conducted in fiscal years 2006  through 2009, the yearly schedule dictates that posts with planned capital  projects will generally perform their rightsizing reviews in the fall of the  fiscal year, while those without planned projects will perform their reviews  in the spring. Figure 4 provides additional information on the review cycle  and steps.
The Office of Rightsizing has issued guidance to posts to include rightsizing  statements in their Mission Performance Plans, starting with the fiscal year  2007 submission. The guidance states that the plans must include a brief  discussion of the rightsizing reviews or other rightsizing initiatives  undertaken by the mission and should summarize the results, resource  implications, and actions taken to implement review recommendations.  However, we reviewed nine Mission Performance Plans for fiscal year 2007  and found that only one post had included discussion of any rightsizing  elements that the post had undertaken. Officials in the Office of Rightsizing  indicated that initially there had not been a serious effort to push for posts  to provide analysis on rightsizing in their fiscal year 2007 Mission  Performance Plans and, as a result, not all posts have done so. However,  they said that there has been more emphasis by the office to have posts  include rightsizing discussions in their 2008 plans. In May 2006, the  Director of the Office of Rightsizing reported that his office is participating  in the reviews of the recent Mission Performance Plans submitted by posts.
section_title: NSDD-38 Application Process
paragraphs: The Office of Rightsizing has been working with agencies and coordinating  with Chiefs of Mission at posts on NSDD-38 requests, particularly those  related to new programs. These requests are submitted to the Chief of  Mission for approval of any proposed changes in agencies’ staffing  elements at the post. Officials in the office said that they act in an advisory  capacity between the agencies that are looking to establish or increase  personnel at a post and the Chief of Mission to determine if the function  needs to be performed overseas. However, they told us that it is ultimately  the Chief of Mission’s decision to accept or deny an agency’s request to  send personnel to post. In fall 2005, the Office of Rightsizing implemented a  NSDD-38 Web-enabled application so that agencies can now submit their  overseas staffing requests via the Internet. According to an Office of  Rightsizing document, since the application process is now standardized  online—which ensures that agency NSDD-38 submissions are correct and  complete—Chiefs of Mission at posts can now immediately consider the  submissions.
section_title: Quarterly Rightsizing Reports
paragraphs: Since spring 2005, the Office of Rightsizing has published three quarterly  reports that highlight State’s overall rightsizing efforts and performance, as  well as summarize the accomplishments and publications of the office.   The quarterly reports have also included copies of State cables sent to  posts pertaining to rightsizing related issues, the Office of Management and  Budget’s President’s Management Agenda rightsizing score card and  summary, as well as the guidance and sample report that the Office of  Rightsizing has sent to posts. The Director of the Office of Rightsizing  stated that the quarterly reports are intended to provide both State bureaus  and non-State agencies with an understanding of rightsizing measures and  processes.
section_title: State Regionalization Efforts
paragraphs: The Office of Rightsizing is also involved with State’s efforts to ensure that  those administrative functions that do not need to be conducted at posts  are carried out from remote locations. According to State officials,  potential advantages to providing support to posts from remote locations  include potential cost savings, enhanced security for American personnel,  and improved quality of administrative support. State currently provides  remote support to many agencies at posts, primarily in the areas of  financial management and human resources, from two dedicated regional  service centers—the Florida Regional Center in Fort Lauderdale, Florida,  and the Regional Support Center in Frankfurt, Germany. In addition, State  also provides remote support of some administrative functions through  partnering arrangements whereby one post with the personnel and  expertise in certain administrative function assists a smaller post. In order  to further expand remote support, State’s fiscal year 2006 operational plan,  Organizing for Transformational Diplomacy: Rightsizing and  Regionalization, identifies additional post functions that can be performed remotely to minimize the U.S. overseas footprint and reduce costs. The  plan focuses on first removing non-location-specific functions—or  functions that could potentially be removed from posts and carried out  either from the United States or a regional center—from critical danger  missions, where State officials said it is crucial to have as few personnel  at posts as possible due to security concerns. The plan envisions eventually  removing those functions from all overseas posts. We provide a more  detailed discussion on State’s efforts and challenges to provide support  remotely in a separate report.
section_title: State/USAID Shared Support Services
paragraphs: The Office of Rightsizing is also involved with State’s efforts to increase  efficiencies in overseas administrative functions by identifying and  eliminating duplicative management support functions among agencies, as  well as overlapping or redundant program functions. Although increasing  efficiencies by streamlining functions applies to all overseas agencies,  State has been working primarily with USAID to reduce the duplication of  overseas support services. In 2004, State, along with USAID, launched pilot  programs aimed at consolidating support functions such as motor pool,  warehousing, residential maintenance, and leasing services at posts in  Jakarta, Indonesia; Phnom Penh, Cambodia; Cairo, Egypt; and Dar es  Salaam, Tanzania. The focus of the pilot programs was to determine how  State and USAID could best collaborate to realize significant savings and  improved service quality. However, only one of the pilot posts succeeded in  consolidating all four support functions. According to State, the pilots have  established that significant operational efficiencies and some cost savings  can be realized through the consolidation of duplicative services. Since the  pilots at the four posts, State and USAID have identified additional  consolidation opportunities. We will provide a more detailed discussion  and evaluation of State and USAID’s consolidation efforts in a report that  will be coming out later this year.
section_title: Agencies Cite Limited Interaction with Office of Rightsizing; More Coordination Under Way
paragraphs: One of the responsibilities of the Office of Rightsizing is to coordinate and  manage interagency rightsizing initiatives. However, during our discussions  with non-State agencies in late 2005 and early 2006, a number of agencies  with an overseas presence told us that they had limited interaction with  State’s Office of Rightsizing on matters aside from NSDD-38 requests.  Furthermore, some non-State agency officials told us that they were not  aware of the rightsizing mandate or guidance provided to posts by the  Office of Rightsizing. According to the Director of the Office of Rightsizing,  his office has made an effort over the last couple of months to visit or talk  with many of the agencies with an overseas presence. However, we found  that, in some cases, the pertinent offices were not reached. For example,  officials in Department of Homeland Security’s U.S. Citizenship and  Immigration Services told us that State entities tend to coordinate through  one office and do not reach the various entities within the department.  Both U.S. Citizenship and Immigration Services and Customs and Border  Protection officials indicated that they would like to be included in any  discussions that State, in particular the Office of Rightsizing, has with the  Department of Homeland Security, and suggested that State designate a  focal point within each Department of Homeland Security office with an  overseas presence. The Office of Rightsizing indicated that the Department  of Homeland Security requested that it coordinate through the  department’s Office of International Affairs. It is important that agency  components are receiving the necessary information to ensure that  rightsizing efforts are understood. The Department of Homeland Security  and the Office of Rightsizing share responsibility for developing a  mechanism to get this done.
Furthermore, during our discussions with agency officials in late 2005 and  early 2006, non-State agencies indicated that they would like more  transparency in the rightsizing review process. For example, some agencies  told us that they would like to know the outcomes of the reviews at each  post and know ahead of time when posts will be conducting reviews.  Moreover, some agency officials stated that they are looking for an overall  U.S. government strategy or vision from the Office of Rightsizing so that, as  they move ahead on their own rightsizing planning and efforts, they will be  in line with what the Office of Rightsizing is planning. Finally, some non- State agency officials indicated that, in order to be able to contribute to the  process, they would like to see more clearly stated standards and unified  processes that relate to rightsizing at posts. For example, officials said that  they would like to understand how posts determine the number of staffing  positions available at any given time and would like to ensure that the  requests for information coming from Washington, D.C., to posts are more  consistent.
subsections: section_title: State Holds Rightsizing Interagency Summit
paragraphs: In order to address rightsizing in context with non-State agencies' agendas  and priorities, the Office of Rightsizing and the Office of Management and  Budget co-hosted an interagency summit in early March 2006. According to  the Office of Rightsizing, participants included representatives from a  number of foreign affairs and non-foreign-affairs agencies; discussions  focused on key initiatives coordinated and managed by State, such as  consolidation of duplicative functions, rightsizing reviews, the NSDD-38  process, and State regionalization efforts.
While some officials from State’s regional bureaus feel that having an  interagency conference is a good start at getting all agencies involved with  rightsizing, they believe that additional interagency dialogue is needed. In  addition, some non-State agency officials told us that the interagency  summit did not provide them with a sense of a strategy for how they should  move forward with their own rightsizing plan to make sure that it does not  conflict with State’s rightsizing efforts. Moreover, in the course of our  structured interviews, 7 out of 20 management officers identified the need  for interagency involvement and agency “buy-in” at the Washington, D.C.,  and post level to ensure that rightsizing can move ahead at each post. For  example, one management officer with whom we spoke said that he would  like to see a firm, written commitment from other agency headquarters,  other than State, that consolidation of services is in the best interest of  every agency and is expected of posts overseas. One post noted in its  rightsizing report that the success of posts’ rightsizing studies is closely  linked to interagency efforts to agree on initiatives to maximize efficiency  at posts. In addition, another management officer with whom we spoke  said that it would be helpful to have interagency guidance on what to do  when eliminating duplicative services results in overall savings to the U.S.  government, but increased costs to an agency, at the post level.
Some non-State agency officials said that it would be beneficial to have  more frequent interagency meetings or summits, rather than just once a  year. For example, a USAID official said that having an interagency summit  before each rightsizing review cycle starts—one in the fall and another in  the spring—could help inform non-State agencies of rightsizing changes  and activities at posts that effect their agency overseas. The Director of the  Office of Rightsizing told us that, while there are no immediate plans to  hold more frequent interagency summits involving all agencies with an  overseas presence, he plans to continue holding a rightsizing summit  annually. The Office of Rightsizing also reported that it plans to implement  a Washington, D.C.-based forum whereby officials from foreign affairs  agencies, such as the Department of Commerce, USAID, and the  Department of Agriculture, can meet regularly to share information on  programs and ensure that there is a greater consistency in the information  coming from headquarters. The Director of the Office of Rightsizing told us  that the office could be doing more with other non-State agencies to  address rightsizing issues at posts, particularly on the issue of  consolidation of functions, but would first like to address issues raised as  part of the joint State–USAID shared services efforts.
section_title: Office of Rightsizing Initiates Rightsizing Reviews, but Reviews Have Not Realized Full Potential
paragraphs: Post rightsizing reviews are a key element of State’s rightsizing efforts.  These reviews are designed to link post staffing to the mission’s goals,  eliminate unnecessary duplication, and encourage shared services between  agencies at posts. Our analysis of the first round of the reviews showed that  there was limited guidance to posts and that there was not a systematic  process for how the posts structured their reviews, though State improved  its guidance for the second round of reviews. In reviewing the first and  second rightsizing cycles, the Office of Rightsizing reported over $150  million dollars of cost savings or avoidance based on the result of their  analysis of the reviews. Posts used a variety of methods to conduct their  rightsizing reviews. Some management officers with whom we spoke  identified various challenges in conducting their fall 2005 reviews and  ensuring that their post is rightsized. Additionally, the Office of Rightsizing  did not consider the need for posts to conduct a cost analysis as part of  their reviews. It is unclear how the rightsizing review decisions, such as  elimination of duplicative functions, will be implemented at each post,  according to officials at post and in State’s regional bureaus.
subsections: section_title: Rightsizing Review Structure and Guidance Have Evolved
paragraphs: In October 2004, the Office of Rightsizing began instructing overseas  missions scheduled to receive a new embassy compound to perform  rightsizing reviews. The reviews are intended to eliminate or justify any  duplicative or parallel functions at posts and consider the possibility for  reducing U.S. government employees at posts through such means as  remote services, more utilization of locally employed staff, and  outsourcing. Between late 2004 and summer 2005, about 35 posts  participated in the first cycle of reviews, and the office conducted formal  analyses of the posts’ reviews in late 2004 and early 2005.  The Office of  Rightsizing reported over $50 million in costs saved or avoided to the U.S.  government based on its analysis of the first cycle of reviews. Based on the  analysis that the Office of Rightsizing conducted of post reviews  representing eight new embassy compounds, the average reduction in desk  positions for each project was 18, which resulted in 145 desk reductions  overall. The office identified many of the removed desk positions in  cooperation with posts and regional bureaus. According to the Office of  Rightsizing, these desks represent significant partially or fully avoided  costs. Of the 145 reduced positions, 50 were U.S. direct hires. Assuming an  average saving of $400,000 per year for each position, the office estimated  that these 50 positions represent as much as $20 million in potential costs  avoided. Furthermore, the office stated that the desk positions removed  represented approximately an additional $20 million in savings to the  Bureau of Overseas Buildings Operations in capital security construction  costs, as well as approximately $18 million in savings due to not needing to  build separate annexes in three cases. The actual cost avoidance achieved  will depend upon whether offsetting costs can be avoided and whether  recommended staff reductions are implemented.
However, based on our analysis of 20 out of about 35 rightsizing reviews  that were part of the spring 2005 review cycle, we observed that there was  not a systematic approach for how the posts structured their reports or  how the Office of Rightsizing evaluated them. For example, the information  presented within the reports varied from post to post, and the rightsizing  elements that the posts evaluated and reported were not consistent. Some  posts provided narratives discussing various rightsizing elements, such as  outsourcing and post security, while other posts did not. Furthermore, we  found that none of the posts showed that they had conducted a cost  analysis as part of the post’s rightsizing efforts. In addition, we found that  the Office of Rightsizing did not have a systematic process to quantify costs  saved or avoided as a result of post staffing reductions stemming from  reviews in the spring 2005 cycle. The Director of the Office of Rightsizing  agreed that the office needs to implement a systematic process of  collecting data and determining cost savings and cost avoidance for future  rightsizing cycles, and has asked the rightsizing analysts in the office to  document the positions that are eliminated or costs saved due to posts  taking rightsizing measures into consideration. Finally, we also found that,  although the goal of the President’s Management Agenda and the Office of  Rightsizing is to limit the overseas presence to the minimum level  necessary to accomplish the U.S. government’s mission, overseas staffing is  increasing. Our analysis of the 20 reviews from the spring 2005 cycle  revealed that net staffing numbers will increase for 15 posts. Increased  levels in staffing abroad can be attributed to high-priority national security  interests, such as the global war on terror, anti-narcotics efforts, and  HIV/AIDS projects, which have implications on U.S. staffing and space at  posts abroad, according to the Office of Rightsizing as well as post  management officers.
The Director of the Office of Rightsizing agreed that the first round of  reviews was not conducted systematically, and said that the process and  format has evolved since the initial guidance was provided to posts for the  spring 2005 cycle. In particular, based on feedback from posts that  participated in the spring 2005 review cycle, the Office of Rightsizing  changed the guidance to be more systematic for the fall 2005 cycle. All  management officers that we interviewed at 20 posts which had conducted  a review as part of the second cycle in fall 2005 stated that the guidance  was either very useful or moderately useful, and several commented that  the guidance was clear, succinct, and easy to discern. Table 3 below  specifies the elements that the fall 2005 cycle posts were asked to address  when completing their reviews.
Seventeen of the twenty management officials with whom we spoke who  conducted a rightsizing review in fall 2005 said that the review helped them  better understand how post personnel meet mission objectives. When  asked whether they had additional comments, several management officers  stated that they found the review at their post to be a useful exercise. For  example, a management officer posted in Eurasia stated that the review  was an interesting and useful process, which helped the post focus on parts  of the Mission Performance Plan that they would otherwise not have  concentrated their efforts on. The Office of Rightsizing reported over $100  million in costs saved or avoided to the U.S. government based on their  analysis of the fall 2005 cycle of reviews. The estimate was based on an  analysis that the Office of Rightsizing conducted of post reviews  representing 21 missions. According to the office, its rightsizing efforts for  the fall 2005 cycle will result in a potential reduction of 683 total desk  spaces in new embassy compounds, of which 170 are U.S. direct hires. The  Office of Rightsizing estimated that each eliminated U.S. direct-hire  position would result in a cost avoidance of about $400,000. The actual cost  avoidance achieved will depend upon whether offsetting costs can be  avoided and whether recommended staff reductions are implemented. In  addition, the Office of Rightsizing reported that the rightsizing actions for  the fall 2005 cycle have resulted in approximately $90 million in savings to  the Bureau of Overseas Buildings Operations in capital security  construction costs, which includes cost saved by not needing to build four  annexes. Although we have not been able to independently assess the  Office of Rightsizing’s estimates, it has presented evidence that some major  cost avoidance and cost savings have occurred. Figure 5 illustrates the  posts from the fall 2005 review cycle where we interviewed officials as part  of our analysis.
section_title: Approach to Conducting Rightsizing Reviews Varies by Post
paragraphs: Posts used a variety of means to conduct their reviews. The approach used  by 19 of the 20 posts (all of which were included in the fall 2005 review  cycle where we interviewed officials) incorporated the participation of the  post management officer, Deputy Chief of Mission, or both. The Office of  Rightsizing suggested that posts, in conducting rightsizing reviews, use the  ICASS Council, working groups, or any ad hoc arrangement as a vehicle for  discussion and formulation of the report and corresponding data. In  addition, the Office of Rightsizing instructed posts to include all State and  non-State agencies, constituent posts, and embassy offices in the posts’  rightsizing analyses. However, posts took diverse approaches to carrying  out their reviews. Some posts conducted their reviews using rightsizing  committees, and others directed their review to existing goal oriented  discussion groups such as those that created the post’s Mission  Performance Plan.
The Office of Rightsizing also offered posts the opportunity to participate  in digital video conferences to answer any questions that they had about  the review. However, officials at 13 of the 20 posts mentioned above stated  that they did not participate in a video conference with the office.  Management officers said that their posts did not participate because,  among other reasons, they did not find it necessary; other posts did not  have the technological capabilities to participate. Moreover, several posts  did not participate in a digital video conference because officials did not  think that the Office of Rightsizing required it. Nonetheless, the Director of  the Office of Rightsizing stated that he found that those posts that took  advantage of this option had more success with their rightsizing reviews;  thus, starting with the spring 2006 cycle, the office will require that every  post participate in a conference. He also stated that he hopes other non- State agencies will participate in video conferences as posts conduct their  rightsizing reviews. Moreover, State, as well as the Office of Management  and Budget, expects all agencies at each post to understand that rightsizing  is government-wide and not just a State-oriented process. In the course of  our structured interviews, 7 out of 20 management officers identified the  need for interagency involvement, including agency “buy-in” to ensure that  rightsizing can move ahead at each post. For example, a management  officer in Europe stated that it would be very helpful if there was a one- page summary that non-State agency officials at each post received from  their headquarters in Washington, D.C., that describes what they need to do  as part of the rightsizing review. However, we found that the Office of  Rightsizing provided posts with very little guidance on interagency  participation.
The Director of the Office of Rightsizing stated that he also encourages  posts to utilize the resources and knowledge within the office and  recommends that posts, as they conduct the review, share sections of it  with the office for feedback. The posts participating in the fall 2005 cycle  generally took this approach, as 13 of 20 posts reported that they shared  sections of their report with the office during the review process. The  Office of Rightsizing also indicated that this approach may lead to more  expeditious approval of reviews and that they will therefore strongly  recommend that posts participating in the spring 2006 rightsizing cycle  share sections of their report prior to final submission. Additionally, 15  management officers we interviewed stated that sharing best practices  with other posts through online forums or receiving a visit from an expert  to help guide the post through the rightsizing review process would be very  useful for enhancing the rightsizing review process.
section_title: Posts Identified Challenges in Conducting Rightsizing Reviews
paragraphs: A number of management officers identified various challenges in  conducting the reviews at their post, including resistance by non-State  agencies at posts to address rightsizing measures. Another challenge  mentioned was a lack of direction and opportunities for regionalization and  outsourcing of services. In addition, overlapping data requests from  agencies’ headquarters, as well as redundant personnel databases,  complicated the review process.
subsections: section_title: Resistance by Non-State Agencies at Posts
paragraphs: Several posts that conducted a fall 2005 rightsizing review stated that they  encountered resistance from non-State agencies when trying to obtain  interagency involvement during the process. Specifically, four post  management officers stated that other agencies were not receptive to the  request to conduct a rightsizing review. According to a management officer  posted in Europe, non-State agencies at the post did not want to share  information on future staffing numbers for the review. The management  officer added that there was a lack of recognition by agencies that  rightsizing was not just a State initiative, but a government-wide initiative.  Moreover, some management officers explained that they had difficulties in  getting agencies to buy into the rightsizing review process and faced  interagency resistance regarding the consolidation of post services.  Consolidation of services proved to be a common challenge at posts, as 14  of the 20 management officers we interviewed identified duplication of  post services or programs, such as motor pool and cashiering, as a result of  the rightsizing review. Although these posts have identified duplicative  services or programs, 10 of 20 management officers stated that the post has  not taken action on consolidating the services and programs. According to  management officers, common reasons why some posts have not yet  consolidated these duplicative functions is because they are waiting to  merge their functions once they move into their new embassy compound or  because the agencies at the post could not come to an agreement about  consolidation. For example, a management officer posted in Africa stated  that USAID headquarters provided its staff at the post with conflicting  instructions about retaining duplicative administrative support services,  which countered the ongoing efforts to eliminate duplicative services at the  post.
section_title: Posts Lack Direction and Opportunities for the Regionalization and Outsourcing of Services
paragraphs: Several posts that participated in the spring and fall 2005 cycle of reviews  stated that they lacked direction and opportunities for the regionalization  and outsourcing of services. The guidance for the rightsizing review  requested posts to consider regionalization options. However, while 18 of  20 posts we interviewed stated that they rely on regional support services  to meet posts’ needs, a few management officers indicated that they found  it difficult to consider all regionalization options without having a base  understanding of what regional services are available. For example,  management officers posted in Asia and Africa stated that they lack  information on what types of regional support could be provided remotely  and how to access that support. Another management officer in Eurasia  stated that posts should be provided a baseline listing of services so that  post officials have a good sense of which services are available regionally.
Though posts were instructed to assess outsourcing possibilities within  their reviews, several posts that participated in the spring 2005 cycle of  rightsizing reviews reported that outsourcing of services is not a good  alternative due to the lack of choice, quality, and sophistication in the  marketplace. Another management officer posted in Asia, whose post  participated in the fall 2005 cycle of reviews, stated that outsourcing is a  concept that the post is not accustomed to using and that the rightsizing  review led them to examine which post functions can be outsourced. To  ascertain current outsourced functions at posts, State’s Office of Global  Support Services and Innovation administered an outsourcing survey to  which 119 posts responded. According to the survey results, the services  most likely to be outsourced were copier maintenance as well as packing  and shipping, while those services least likely to be outsourced were  procurement, property management, and phone billing. Officials at the  Office of Global Support Services and Innovation stated that the results of  the survey will serve as the Office of Rightsizing’s baseline for outsourcing.
section_title: Rightsizing Reviews Overlap with Additional State Data Requests
paragraphs: All of the management officers we interviewed stated that, within the last 2  years, they have received other requests or reviews from agency  headquarters seeking information similar to that requested for the  rightsizing review. Ten of twenty management officers we interviewed  identified the Mission Performance Plan as another headquarters request  for information similar to that of the rightsizing review, and several of these  posts indicated that there was a high degree of overlap between these two  data requests. Moreover, more than half of the management officers  indicated that there was a high or moderate degree of overlap between the  rightsizing review and other requests from the Bureau of Overseas  Buildings Operations, such as the Capital Security Cost Sharing Program  and the Long Range Overseas Buildings Plan data requests.
As explained by several posts, it was difficult to complete and keep track of  all of these overlapping data requests given the limited resources at each  post. For example, a management officer at a post in Africa stated that it  took approximately 3 months to complete the Capital Security Cost Sharing  request and approximately 2 months to complete the Mission Performance  Plan, with both requests requiring interagency staff collaboration. The  officer added that the post did not have time to focus on all of the requests  tasked to the post. Another management officer in Africa stated that the  post would have liked to have one database that was responsive to the  needs of all the requests from headquarters. In addition, 5 of the 20 posts  that we interviewed stated that it would be beneficial to streamline the  rightsizing review by including it with other data and information requests,  and, moreover, several management officers stated that the rightsizing  review should draw from information that currently exists in databases  that are centrally located in Washington, D.C.
The Office of Rightsizing has recognized the need for a single database and  told us that State has been working on developing an integrated Post  Personnel database. According to State officials, this database is expected  to populate all other databases currently maintained by overseas posts to  ensure all databases contain the same information. Furthermore, Office of  Rightsizing officials stated that—once there is one authoritative database  for all staffing data—they will no longer rely on multiple databases and,  therefore, will not have to spend as much time verifying overseas staffing  numbers projected in rightsizing reviews.
section_title: Cost Analysis Was Not a Primary Factor in Rightsizing Reviews
paragraphs: The Office of Rightsizing did not consider the need for posts to conduct  cost analyses as an essential supplement to the spring 2005 and fall 2005  reviews. The Director of the Office of Rightsizing stated that he did not  want the post reviews to become a cost cutting exercise, but rather to  focus more on identifying the needed resources to meet the posts’ mission  and goals and justify current and projected staffing compositions.  Moreover, he stated that actual cost savings at the post level would be hard  to determine and that sometimes rightsizing requires an increase in staff.
The guidance for the spring 2005 and fall 2005 rightsizing reviews did not  require posts to evaluate costs or perform cost analyses for the review  process. While none of the 20 post reports we reviewed for the spring 2005  cycle illustrated within their rightsizing report the results of a cost analysis  in association with rightsizing efforts at posts, 11 of 20 posts for the fall  2005 cycle told us that they conducted some or limited cost analyses for  various post staffing scenarios, such as the outsourcing of services and  substitution of locally engaged staff for U.S. direct-hire positions. In  addition, one management officer stated that the post conducted an  analysis to determine which service provider at the post would be more  cost effective. However, a management officer stated that it was difficult to  perform a comprehensive analysis of the cost effectiveness of service  providers because the post did not have comparable data for each provider.  Moreover, another management officer in Asia stated that the post’s cost  analysis was not comprehensive because post staff did not have the  necessary expertise to conduct such an analysis. Moreover, a management  officer added that the post would need more guidance if it were to conduct  a formal cost analysis with accurate cost data.
With the upcoming cycles of reviews, the Office of Rightsizing is  increasingly emphasizing the need to consider costs associated with  rightsizing. For example, the Director of the Office of Rightsizing directed  that additional analyses should be undertaken by posts to determine the  overall cost impact to the U.S. government and all customer agencies  before actual consolidation of shared administrative support services can  occur. This analysis should also assess whether the formation of the single  service provider will, over time, be a more viable and effective option for  the U.S. government. The Office of Rightsizing has not yet provided formal  guidance to posts on how to conduct an analysis to determine the most  cost effective service provider, but it is continually developing its guidance  for posts, and in particular, has developed guidance for a rightsizing  competitive sourcing business case analysis, which is being incorporated  into the spring 2006 cycle of reviews. Subsequently, all posts will be  required to complete this cost module as part of their rightsizing reviews,  according to the Office of Rightsizing.
section_title: Implementation of Rightsizing Review Results Unclear
paragraphs: Some management officials we interviewed, as well as officials in State’s  regional bureaus, were unclear about the outcomes of the reviews.  Although the reviews are intended to eliminate or justify any duplicative or  parallel functions at posts and consider the possibility for reducing U.S.  government employees at each post, some executive directors in State’s  regional bureaus pointed out that there is no implementation plan with  timelines to track rightsizing-related changes that have been identified.  Most executive directors in regional bureaus believe that it should be the  Office of Rightsizing’s responsibility to follow-up with posts to ensure  resources have been consolidated in line with rightsized staffing levels,  while one executive director in a regional bureau believes that it should be  both the Office of Rightsizing as well as the bureau’s own responsibility.
The Office of Rightsizing stated that it has informed posts what their  staffing configurations should be as a result of their reviews and that it is  the post’s responsibility to carry out corresponding staffing changes.  Furthermore, the office has asked posts to include the distribution of  services and schedules of when consolidation will occur within their  Mission Performance Plans. The office also expects posts to establish  reduction in force plans, which, according to the Office of Rightsizing,  should consider attrition, retirement, and vacant positions. Moreover,  Office of Rightsizing officials stated that they are planning to send a yearly  cable to posts that have already completed rightsizing reviews to remind  them of the need to meet agreed-upon staffing levels and to ensure that  rightsizing action has been taken before the post moves into a new  embassy compound. In early May 2006, the Director of the Office of  Rightsizing told us that, in lieu of sending a cable, his office will be tasking  posts that conducted reviews in the spring and fall 2005 cycles to develop a  rightsizing action plan leading up to the completion of their new embassy  compound. However, as of May 9, 2006, the office has not sent an action  plan tasking to posts.
As the Office of Rightsizing expects posts to develop their own rightsizing  implementation plan, some posts may not adhere to the staffing figures  agreed upon within their reviews. Specifically, some management officers  we interviewed stated that their posts are waiting to move into a new  embassy compound before taking any action to configure their post  staffing numbers. For example, a management officer posted in Asia stated  that the post’s plan to configure the staffing numbers as reflected in the  rightsizing review is not connected to any immediate time frame, but rather  will happen when the post moves into the new embassy compound.  Another management officer stated that, because the construction of the  post’s new embassy compound has been postponed, and because agencies  at the post have not agreed to the staffing changes made by the Office of  Rightsizing, no immediate post staffing changes are being contemplated. In  addition to a lack of an implementation plan for those posts receiving a  new embassy compound, it is also unclear what approach or incentives the  Office of Rightsizing will use to enforce implementation of rightsizing  measures for those posts not scheduled to receive a new embassy  compound. According to an official in the Bureau of Overseas Buildings  Operations, it is important for posts to have an implementation plan of how  they will reconfigure their staffing, particularly for those posts that will be  moving into a new embassy compound, because the new embassy or  consulate will be built based on the staffing numbers approved by the  Office of Rightsizing for that post.
section_title: Conclusion
paragraphs: Progress has been made in implementing the President's Management  Agenda initiative to rightsize the U.S. government’s overseas presence at  embassies and consulates. Agencies are generally adjusting their presence  based on mission, security, and cost factors. State is seeking ways to  reduce support staff overseas and overseas posts are conducting  rightsizing reviews required by legislation. Moreover, after a slow start,  State’s Office of Rightsizing is beginning to achieve momentum in  coordinating government-wide rightsizing efforts. However, more needs to  be done. Of foremost importance is the need to develop accurate staffing  data with which to measure staffing trends and the effects of rightsizing  activities. We recognize that efforts are currently under way to develop  accurate data; however because of the importance of having accurate data  on overseas staffing and the length of time it has taken to develop this data,  management oversight may be needed to ensure completion of this task.  State’s Office of Rightsizing also needs to aggressively reach out to  agencies at the headquarters level, and to overseas posts, to ensure that the  positive initiatives under way are implemented effectively.
section_title: Recommendations for Executive Action
paragraphs: To ensure that the U.S. government’s overseas presence under chief of  mission authority is accurately accounted for and to ensure that the U.S.  government’s rightsizing goals are being coordinated and that posts can  maximize savings and gain efficiencies through rightsizing, we recommend  that the Secretary of State take the following three actions:  Provide oversight to ensure the timely development and use of a single  database that accurately accounts for U.S. overseas personnel staffing  numbers and has accountability measures to encourage posts and  agencies to keep the database accurate and up to date;  Increase outreach activities with non-State agencies so that all relevant  agencies with an overseas presence can discuss and share information  on rightsizing initiatives on a regular and continuous basis; and  Require that posts develop action plans to transition to and meet the  agreed upon outcomes of their rightsizing reviews. This could include  developing milestones for posts reaching agreement on streamlining  and eliminating duplicative functions.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to State for comment. State’s comments,  along with our responses to them, can be found in appendix V. State  indicated that it has either recently implemented or is taking steps to  implement all of our recommendations.
We received technical comments from State, the Departments of Homeland  Security, the Treasury, Defense, and Justice and USAID, which we have  incorporated throughout the report, where appropriate. In addition, the  Department of Justice stated that it endorses our recommendation that  State continue to expand its outreach to agencies and departments with an  overseas presence to enhance discussion and information sharing on  rightsizing initiatives. Furthermore, the Department of the Treasury stated  that it would be helpful if agencies with personnel at posts developing  rightsizing action plans have the opportunity for their personnel to  participate in the rightsizing reviews and the development of the action  plans.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  date of this letter. At that time, we will send copies of this report to other  interested members of Congress, the Library of Congress, and the  Secretary of State. We will also make copies available to others upon  request. In addition, this report will be available at no charge on the GAO  Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-4128 or fordj@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. Other GAO contacts and staff acknowledgments are listed in  appendix VI.
section_title: Scope and Methodology
paragraphs: To ascertain the size of the U.S. government’s overseas presence we spoke  with officials in State Department’s (State) Office of Rightsizing the U.S.  Government Overseas Presence (Office of Rightsizing) and the Executive  Director of State’s Bureau of Human Resources; we also discussed the  limitations that State faces in portraying an accurate number for the  overseas presence. In addition, we spoke with an official in the Office of  Management and Budget to determine the methodology used to report the  size and cost of the overseas presence. To determine the U.S. government’s  efforts to rightsize its overseas presence we spoke with officials at a  number of agencies in Washington, D.C., that have a presence at overseas  posts. We spoke with officials from the the Departments of Agriculture,  Commerce, the Treasury, Defense, Homeland Security, and Justice; as well  as officials from the General Services Administration and the U.S. Agency  for International Development. In addition, we reviewed staffing  documents from numerous agencies, reports by State’s Office of Inspector  General, and rightsizing documents from State’s Office of Rightsizing. We  did not conduct a comprehensive review of each agencies’ rightsizing  efforts.
We spoke with officials in the Office of Rightsizing about the rightsizing  process and reviewed rightsizing guidance and related documentation. We  reviewed and analyzed nine Mission Performance Plans for fiscal year  2007, which we were able to obtain from State, to determine whether  rightsizing considerations were reported in the plans. We also spoke with  officials in each State regional bureau—Western Hemisphere Affairs,  European and Eurasian Affairs, African Affairs, East Asian and Pacific  Affairs, Near Eastern Affairs, and South and Central Asian Affairs—to  gauge their involvement with post rightsizing reviews and their interaction  with the Office of Rightsizing. In addition, we spoke with officials in State’s  Office of Global Support Services and Innovation about State’s initiatives  on regionalization and shared services. To determine costs saved or  avoided as a result of rightsizing exercises, we reviewed cost data from  State’s Office of Rightsizing and the Bureau of Overseas Buildings  Operations. To assess the reliability of State’s data, we interviewed officials  in the Office of Rightsizing and the Bureau of Overseas Buildings  Operations to ascertain how the data were captured and analyzed and  whether there were any limitations to the data. We determined the data to  be sufficiently reliable for the purposes of our review.
To determine if there was a systematic process for reporting information in  the first cycle of reviews, we reviewed and analyzed 20 out of about 35  rightsizing reviews that were conducted by posts from late 2004 through  summer 2005. The Office of Rightsizing provided us with over 20 reviews  for our analysis. However, we analyzed only those reviews for which we  had received both the post rightsizing review as well as the corresponding  analysis of the review conducted by the Office of Rightsizing. Between  February 2006 and March 2006 we administered 20 structured interviews  regarding post rightsizing review experiences. The interviews were  conducted by telephone primarily with management counselors or officers  at embassies. In one case we spoke with the Deputy Chief of Mission at the  post. The interviews involved 20 of the 22 posts that were part of the fall  2005 cycle and which had completed their rightsizing reviews by the time  we talked to the post. The posts were located in: Asuncion, Baku, Bandar  Seri Begawan, Bucharest, Bujumbura, Colombo, Harare, Jakarta,  Islamabad, Kiev, Warsaw, Maputo, N’djamena, Pretoria, Reykjavik, Rome,  Santo Domingo, Moscow, Taipei, and Tunis. We did not conduct interviews  with two posts—Monrovia and Ankara—because these posts did not follow  through with our request for interviews.
The structured interview contained open- and closed-ended questions  about guidance, timing, the review process, rightsizing considerations,  headquarters’ involvement and feedback, and the impact of the review on  the post. We developed the interview questions based on our review of  rightsizing documentation and discussions with post officials during our  fieldwork in Mexico City and Valletta. We provided an early version of the  questions to the Office of Rightsizing and the Office of Global Support  Services and Innovation for their review and comment, and we also  pretested the interview with three current management officers to ensure  that the questions were clear and could be answered. We modified the  interview questions on the basis of the pretest results and an internal  expert’s technical review. We provided the management officers and  Deputy Chief of Mission with the interview questions in advance to allow  them time to gather any data or information necessary for the interview. We  initiated follow-up discussions with 13 posts by telephone. We  subsequently sent posts follow-up questions by E-mail if we were not able  to reach them by telephone. The responses of the structured interviews are  not intended to be representative of all posts. We did not talk with  management officers or look at rightsizing reviews for those posts that  were part of the spring 2006 review cycle.
We conducted fieldwork at the embassies in Mexico City, Mexico, and  Valletta, Malta; and the consulate in Frankfurt, Germany, to gain a better  understanding of the rightsizing process. We chose these posts because  both Mexico City and Valletta had been asked by the Office of Rightsizing  to conduct a rightsizing review as part of the spring 2005 cycle. We chose to  visit Frankfurt because the consulate had conducted an informal  rightsizing exercise in response to a report from State’s Office of Inspector  General and because it is a regional hub in Europe. At each post we met  with State officials as well as other agency officials involved in the  rightsizing process to discuss their approach and outcomes of the review.  In addition, we met with the Ambassadors in Mexico City and Valletta, as  well as the Consul General in Frankfurt to understand their views and  involvement in the rightsizing process.
We conducted our work from May 2005 through May 2006, in accordance  with generally accepted government auditing standards.
section_title: GAO Reports on Staffing and Operations at U.S. Embassies and Consulates
paragraphs: GAO, Overseas Presence: Observations on a Rightsizing Framework,  GAO-02-659T (Washington, D.C.: May 1, 2002).
GAO, Overseas Presence: Framework for Assessing Embassy Staff Levels  Can Support Rightsizing Initiatives, GAO-02-780 (Washington, D.C.: July  26, 2002).
GAO, Overseas Presence: Rightsizing Framework Can Be Applied at U.S.  Diplomatic Posts in Developing Countries, GAO-03-396 (Washington,  D.C.: Apr. 7, 2003).
GAO, Embassy Construction: Process for Determining Staffing  Requirements Needs Improvement, GAO-03-411 (Washington, D.C.: Apr. 7,  2003).
GAO, Overseas Presence: Systematic Processes Needed to Rightsize Posts  and Guide Embassy Construction, GAO-03-582T (Washington, D.C.: Apr. 7,  2003).
GAO, Overseas Presence: Rightsizing Is Key to Considering Relocation of  Regional Staff to New Frankfurt Center, GAO-03-1061 (Washington, D.C.:  Sept. 2, 2003).
GAO, Embassy Management: Actions Are Needed to Increase Efficiency  and Improve Delivery of Administrative Support Services, GAO-04-511  (Washington, D.C.: Sept. 7, 2004).
GAO, Embassy Construction: Proposed Cost-Sharing Program Could  Speed Construction and Reduce Staff Levels, but Some Agencies Have  Concerns, GAO-05-32 (Washington, D.C.: Nov. 15, 2004).
GAO, Overseas Presence: Cost Analyses and Performance Measures Are  Needed to Demonstrate the Full Potential of Providing Embassy Support  Remotely, GAO-06-479 (Washington, D.C.: May 2, 2006).
section_title: GAO Rightsizing Framework and Corresponding Questions
paragraphs: This appendix lists the questions pertaining to mission, security, and cost  that we developed in 2002 to help support rightsizing initiatives for existing  facilities overseas.
Physical/Technical Security of Facilities and Employees What is the threat and security profile of the embassy?
Has the ability to protect personnel been a factor in determining staffing  levels at the embassy?
To what extent are existing office buildings secure?
Is existing space being optimally utilized?
Have all practical options for improving the security of facilities been  considered?
Do issues involving facility security put the staff at an unacceptable level of  risk or limit mission accomplishment?
What is the capacity level of the host country police, military, and  intelligence services?
Do security vulnerabilities suggest the need to reduce or relocate staff?
Do health conditions in the host country pose personal security concerns  that limit the number of employees that should be assigned to the post?
What are the staffing levels and mission of each agency?
How do agencies determine embassy staffing levels?
Is there an adequate justification for the number of employees at each  agency compared with the agency’s mission?
Is there adequate justification for the number of direct-hire personnel  devoted to support and administrative operations?
What are the priorities of the embassy?
Does each agency’s mission reinforce embassy priorities?
To what extent are mission priorities not being sufficiently addressed due  to staffing limitations or other impediments?
To what extent are workload requirements validated and prioritized, and is  the embassy able to balance them with core functions?
Do the activities of any agencies overlap?
Given embassy priorities and the staffing profile, are increases in the  number of existing staff or additional agency representation needed?
To what extent is it necessary for each agency to maintain its current  presence in-country, given the scope of its responsibilities and its mission?
Could an agency’s mission be pursued in other ways?
Does an agency have regional responsibilities or is its mission entirely  focused on the host country?
What is the embassy’s total annual operating cost?
What are the operating costs for each agency at the embassy?
To what extent are agencies considering the full cost of operations in  making staffing decisions?
To what extent are costs commensurate with overall embassy strategic  importance, with agency programs, and with specific products and  services?
What are the security, mission, and cost implications of relocating certain  functions to the United States, regional centers, or to other locations, such  as commercial space or host-country counterpart agencies?
To what extent could agency program and/or routine administrative  functions (procurement, logistics, and financial management functions) be  handled from a regional center or other locations?
Do new technologies and transportation links offer greater opportunities  for operational support from other locations?
Do the host country and regional environments suggest there are options  for doing business differently, that is, are there adequate transportation and  communications links and a vibrant private sector?
To what extent is it practical to purchase embassy services from the private  sector?
Does the ratio of support staff to program staff at the embassy suggest  opportunities for streamlining?
Can functions be reengineered to provide greater efficiencies and reduce  requirements for personnel?
Are there best practices of other bilateral embassies or private  corporations that could be adapted by the U.S. embassy?
To what extent are there U.S. or host country legal, policy, or procedural  obstacles that may impact the feasibility of rightsizing options?
section_title: The Office of Rightsizing’s Five-Year Rightsizing Schedule
paragraphs: Table 4 illustrates the 5-year rightsizing schedule, by fiscal year, that the  Office of Rightsizing has developed. The schedule also depicts those posts  that are proposed to receive a new embassy compound (NEC) and the  fiscal year that the facilities are scheduled to be built.
section_title: Comments from the Department of State
paragraphs: The following are our comments on State’s letter dated June 9, 2006.
subsections: section_title: GAO Comments
paragraphs: 1. We modified our text to show that, although we have not been able to  independently assess the Office of Rightsizing’s estimates, it has  presented evidence to show that some major cost avoidance and cost  savings have occurred. 2. We recognize that State has a standard methodology by which it  performs cost analyses using the International Cooperative  Administrative Support Services software. However, when we talked  with management officers at posts that had conducted a rightsizing  review, we were informed that these posts did not have comparable  cost data for each service provider. In addition, we were informed that  the posts did not have the necessary tools to make informed decisions  about how to conduct analysis to determine the most cost effective  service provider. 3. We provided the draft report to State on May 18, 2006. About two weeks  later, State instructed posts to develop implementation action plans. We  believe that the action that the Office of Rightsizing has taken largely  addresses our recommendation. However, until the Office of  Rightsizing has received all implementation action plans with the posts’  milestones, due on July 18, 2006, the office will not know what  additional action might still be needed to ensure that posts meet the  agreed-upon outcomes of their rightsizing reviews. 4. We understand that if a position is eliminated at a post it is not counted  as part of Capital Security Cost Sharing. Our statement was simply  meant to illustrate that eliminated or vacant positions could be  reflected in databases used to count overseas staffing numbers. 5. Our statement reflects non-State agency views. We have amended the  draft by attributing the statement to non-State agency officials. In  addition our statement reflects information we obtained from a  February 2006 State cable to all posts about staffing data and position  charges under Capital Security Cost Sharing.  6. We have modified our text to illustrate the varying estimates of the size  of the U.S. overseas presence. We have received numerous conflicting  estimates on the number of U.S. government officials overseas. One  source estimated that there are approximately 66,000 U.S. government  personnel under chief of mission authority, while another indicated that  there are approximately 69,000. We understand that some of the  numbers may come from different estimates and data sources. State’s  discussion on staffing data illustrates the difficulty of obtaining an  accurate count of overseas personnel. We recognize that that there are  vacant positions and that the total number of positions is higher than  the number of filled positions. We also note in our report that State is in  the process of eliminating vacant positions. It is important that State  continue to update its staffing database to ensure that a more accurate  accounting of U.S. government personnel overseas is available.  7. We acknowledge that State has sent several messages since 2004 to  posts instructing them that Post Personnel is the official database for  documenting all U.S. government staffing overseas. However, in  February 2006, State reported that not all posts are using Post  Personnel as their main human resources system. In addition, we were  told that the guidance provided to posts did not include accountability  mechanisms for ensuring that the staffing information is updated and  complete.
8.
It is important that all components of each agency receive information  from the Office of Rightsizing that pertains to rightsizing review efforts  and initiatives. During the course of our work at the Department of  Homeland Security it became clear that certain components within the  department had not received information on rightsizing. We understand  that the Department of Homeland Security has a central focal point that  the Office of Rightsizing works with. The Department of Homeland  Security and the Office of Rightsizing share responsibility in ensuring  that agency components are receiving the necessary information to  ensure that rightsizing efforts are understood. We have modified the  text to indicate that the Office of Rightsizing was asked by the  Department of Homeland Security to coordinate through one focal  point. 9. We believe that the actions and measures that the Office of Rightsizing  is taking, particularly the Interagency Rightsizing Summit, are useful  steps to implementing our recommendation. However, based on our  discussions with non-State agencies, we maintain that more outreach is  needed pertaining to areas involving rightsizing review efforts, strategy,  and vision.
section_title: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, John Brummet, Assistant  Director, Ann Baker, Joseph Carney, Virginia Chanley, Lyric Clark, Martin  De Alteriis, Etana Finkler, Beth Hoffman León, Ernie Jackson, Andrea  Miller, and Deborah Owolabi made key contributions to this report.