Border Security: State Department Should Plan for Potentially Significant Staffing and Facilities Shortfalls Caused by Changes in the Visa Waiver Program
Published: 2008-05-22T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Under the Visa Waiver Program (VWP), citizens from 27 countries can travel to the United States visa free. Terrorism concerns involving VWP country citizens have led some to suggest eliminating or suspending the program, while the executive branch is considering adding countries to it. Legislation passed in 2007 led the Department of Homeland Security (DHS) to develop its Electronic System for Travel Authorization (ESTA), to screen VWP country citizens before they travel to the United States; if found ineligible, travelers will need to apply for a visa. GAO reviewed how (1) program elimination or suspension, (2) program expansion, and (3) ESTA could affect visa demand, resource needs, and revenues. We collected traveler, staffing, facilities, and cost data from the Department of State (State), DHS, and embassy officials and developed estimates related to the three scenarios above.
section_title: What GAO Found
paragraphs: The potential elimination or suspension of the Visa Waiver Program could cause dramatic increases in visa demand--from around 500,000 (the average number of people from VWP countries who obtain a U.S. visa each year) to as much as 12.6 million (the average number of people who travel to the United States from VWP countries each year)--that could overwhelm visa operations in the near term. To meet visa demand, State officials said they could need approximately 45 new facilities, which we estimate could cost $3.8 billion to $5.7 billion. We estimate State would also need substantially more staff--around 540 new Foreign Service officers at a cost of around $185 million to $201 million per year, and 1,350 local Foreign Service national staff at around $168 million to $190 million per year, as well as additional management and support positions for a total annual cost of $447 million to $486 million. Because VWP elimination would increase the number of travelers needing a visa, we estimate annual visa fee revenues would increase substantially, by $1.7 billion to $1.8 billion, and would offset the year-to-year recurring staffing costs. State has done limited planning for how it would address increased visa demand if the program were suspended or eliminated. Adding countries to the Visa Waiver Program would reduce visa demand in those countries, but likely have a relatively limited effect overall on resources needed to meet visa demand and on State's visa fee revenues. The volume of visa applications is relatively small in most of the 13 "Road Map" countries the executive branch is considering for expansion. If all 13 Road Map countries were to join the program, and if all of those countries' citizens who previously traveled with visas were to travel to the United States without visas, the reduction in workload would, we estimate, permit State to move about 21 to 31 Foreign Service officers to other posts in need, and to cut 52 to 77 Foreign Service national positions. In addition, though program expansion would result in less space needed for visa operations, this would likely result in little or no building or lease savings because any resulting excess consular space is in government-owned facilities, and could not be sold. If all 13 Road Map countries were admitted to the Visa Waiver Program, we estimate that State would lose approximately $74 million to $83 million each year in collected visa fees, offsetting any savings in personnel costs. State and DHS officials acknowledged that the implementation of ESTA could increase visa demand in VWP countries, though neither State nor DHS has developed estimates of the increase. DHS is currently developing ESTA, and DHS officials told us the ESTA rejection rate could be between 1 percent and 3 percent, but they currently do not know. In addition, State and embassy officials believe some travelers might choose to apply for a visa rather than face potential, unexpected travel disruptions due to ESTA. Neither DHS nor State has attempted to estimate how these two factors would affect visa demand, and, as a result, State has not estimated what additional resources would be needed to manage the demand, and what additional visa fees would be received. However, State officials told us that, if 1 percent to 3 percent of current VWP travelers came to embassies in VWP countries for visas, it could greatly increase visa demand at some locations, which could significantly disrupt visa operations.

section_title: Letter
paragraphs: Under the Visa Waiver Program (VWP), citizens from 27 select countries  can travel to the United States for business or pleasure trips of up to 90  days without first obtaining a visa and paying a visa fee. The program has  many benefits, including facilitating international travel for millions of  foreign nationals seeking to visit the United States each year, creating  substantial economic benefits to the United States, and allowing the  Department of State (State) to allocate resources to visa-issuing posts in  countries with higher-risk applicant pools. However, the program also  poses inherent security, law enforcement, and illegal immigration risks to  the United States. In particular, VWP travelers are not subject to the same  degree of screening prior to their travel to the United States as travelers  with visas because they are not interviewed by a State consular officer  before arriving at a U.S. port of entry. Therefore, there is a greater risk that  some VWP travelers could exploit the program to gain entry into the  United States with the intent to violate U.S. immigration or other laws.
Terrorist acts and plots involving citizens of VWP countries have led some  critics of the program to suggest that it be eliminated or suspended  because of the security risks it could present. In September 2007, the  Director of National Intelligence testified that Al Qaeda is recruiting  Europeans because many of them do not require a visa to enter the United  States. Department of Homeland Security (DHS) and State officials have  acknowledged that the program could be eliminated or suspended in the  event of a major terrorist attack emanating from a VWP country. At the  same time, however, some proponents of the Visa Waiver Program have  called for expansion of the program. In fact, the executive branch  established in 2005 a “Road Map” initiative to clarify the statutory  requirements for designation as a participating VWP member and has been  consulting with 13 countries as part of the initiative. In August 2007, the  Implementing Recommendations of the 9/11 Commission Act of 2007 (9/11  Act) established more flexible criteria for participation in the program,  and the executive branch is now considering adding several countries to  the program later this year. In order to mitigate some of the security risks  of the program while permitting program expansion, the August 2007  legislation required the implementation of an electronic travel  authorization system, which DHS has named the Electronic System for  Travel Authorization (ESTA). ESTA would require citizens from all VWP  countries intending to travel to the United States under the Visa Waiver  Program to apply for and receive electronic authorization prior to  embarking on their travel to the United States. In the event that DHS  concludes, based on the ESTA application, that a traveler is ineligible to  travel under the Visa Waiver Program, or that the traveler poses a law  enforcement or security risk, ESTA authorization will be denied and the  traveler may not travel under the Visa Waiver Program. Travelers denied  ESTA authorization would need to apply for a visa if they want to travel to  the United States. DHS has announced that it intends for all visa waiver  travelers to use ESTA by mid 2009 and told us travelers from some VWP  countries could be using it by the summer of 2008.
In order to understand the potential impact on State visa operations as a  result of significant changes to the Visa Waiver Program, such as (1)  program elimination or suspension, (2) program expansion, and (3)  implementation of ESTA, you asked us to examine how each of these  three different changes could affect the demand for visas, and how  changes in demand could affect the resources that State needs to maintain  its consular operations and the amount of visa revenue that State receives.  We did not assess the security, trade, commerce, tourism, diplomatic,  reciprocity, or other potential effects of changes to the Visa Waiver  Program.
To address these three objectives, we analyzed DHS/U.S. Customs and  Border Protection (CBP) data on the number of travelers to the United  States from each VWP and Road Map country annually from 2001 to 2007  and reviewed State’s data from 2001 to 2007 on the numbers and types of  visas issued in each VWP country as well as on the number of staff  involved in processing visas in VWP and Road Map countries. With State,  we developed costs for each Foreign Service officer and Foreign Service  national staff position. In addition, we met with officials in State’s Bureau  of Consular Affairs, the Bureau of Overseas Buildings Operations (OBO),  and at embassies in three VWP countries—Japan, France, and Spain—and  in four Road Map countries—South Korea, Greece, Czech Republic, and  Hungary—to determine the extent of possible visa demand and staffing  and facilities needs in those countries. We chose these countries primarily  due to the size of their traveler or visa volume and their geographic  diversity. We also analyzed relevant laws regarding the program and its  requirements, and met with State’s Bureau of Consular Affairs to discuss  the fee that State charges for visa applications, what visa processing costs  the fee is intended to cover, and how much new revenue State would  generate in the event of program elimination. We also reviewed State’s  Performance Plan for the Bureau of Consular Affairs to determine State’s  goals and objectives regarding visa issuance, as well as any planning State  had done for these scenarios. Finally, we reviewed standards for internal  controls in the federal government, including those addressing the  importance of identifying risks to achieving program goals and planning  ways to mitigate those risks in order to continue to meet program  objectives.
To assess the staffing and resource costs associated with each scenario,  we developed our own high-level cost estimates, using data from State,  DHS, and embassies we visited. CBP provided us with data on the number  of travelers from each VWP and Road Map country. State’s Bureau of  Consular Affairs provided us with information on the number of visas  processed in VWP and Road Map countries as well as estimates on the  number of visas that could be expected to be processed by a Foreign  Service officer, the number of Foreign Service national staff that could be  expected to support Foreign Service officers, and—for the elimination  scenario—estimates of the number of new facilities that could be needed.  OBO provided data on the cost, type, and size of recently completed U.S.  government construction projects overseas, the costs and sizes of  overseas leased facilities used for visa processing, and estimates of  operations and maintenance costs for U.S. embassy facilities. State’s  Bureau of Resource Management provided information on the costs of  Foreign Service officers and Foreign Service national staff. In addition, we  collected post-specific data on the above costs when we traveled overseas.  We determined that the data provided to us were sufficiently reliable for  the purposes of the report. We prepared the cost estimates using fiscal  year 2007 constant dollars. Appendix I provides a detailed description of  our scope and methodology.
We recognize that there could be other implications of major changes in  the program, particularly if the program were eliminated. For instance,  major changes could affect security, tourism, commerce, business, trade,  diplomacy, and reciprocity regarding visa-free travel. However, we limited  the scope of our review to the impact on visa demand, visa resources— including staffing and facilities—and visa revenues. We conducted this  performance audit from May 2007 to April 2008 in accordance with  generally accepted government auditing standards. Those standards  require that we plan and perform the audit to obtain sufficient, appropriate  evidence to provide a reasonable basis for our findings and conclusions  based on our audit objectives. We believe that the evidence obtained  provides a reasonable basis for our findings and conclusions based on our  audit objectives.
subsections: section_title: Background
paragraphs: The Visa Waiver Program was created by legislation in 1986 to allow visa- free travel in some instances to citizens of select countries. According to  State, the program facilitates international travel for foreign nationals  seeking to visit the United States each year and allows State to allocate  resources to visa-issuing posts in countries with higher-risk applicant  pools. The program accepted its first participant country—the United  Kingdom—in 1988. Currently 27 countries participate in the program. See  figure 1 for a map of the VWP countries.
See table 1 for a list of current VWP countries and the average number of  travelers to the United States and average number of visas issued from  2001 to 2007. This table demonstrates that most citizens from these  countries who travel to the United States do so through the Visa Waiver  Program, rather than by obtaining a visa.
The Visa Waiver Program affects U.S. security, trade, commerce, tourism,  diplomatic, and other interests. Our previous work has found that  eliminating the program could have significant negative effects on these  interests, as well as on U.S. relationships with VWP countries. For  example, if the United States decided to eliminate the program, those  eliminated countries would likely reciprocate and require Americans to  obtain visas before visiting their countries.
subsections: section_title: Visa Fee
paragraphs: State has the authority, by law, to charge a fee for visas it issues to  foreign nationals. According to State, State attempts to recover its costs  for processing a visa with its fee, but the fee does not cover all associated  processing costs. Consular Affairs officials said this cost recovery  includes the direct costs of the activity, such as the costs of biometric  information, conducting name checks, interviewing applicants, conducting  follow-up investigations if necessary, and printing the visa. It also includes  what Consular Affairs officials called the indirect costs of whatever  percentage of a visa-processing staff position overseas is spent processing  visas. The visa fee is neither meant, nor used, for covering the costs of  facilities used to process visas, according to State.
section_title: State’s Efforts to Address Growing Visa Demand
paragraphs: The global demand for U.S. visas has grown substantially in recent years,  and State expects it to continue to grow in the foreseeable future. In 2006,  according to State, U.S. embassies processed over 8 million visa  applications and issued 5.84 million visas worldwide, which includes the  more than 700,000 visas issued in Road Map countries. This included  short-term business and tourism visas, as well as visas for students,  temporary workers, foreign exchange visitors, and other visa types. As we  reported in July of 2007, State has had difficulty meeting growing visa  demand over the long term, which has led to operational challenges,  including long wait times. We found that, though State has attempted to  address this demand by adding and reallocating staff worldwide, even with  the increased staffing, State has not been able to keep pace with visa  demand. In addition, we testified in August of 2007 that State’s initiative  to address its staffing shortages did not fully meet its goals and staffing  shortfalls remained a problem.
section_title: Security Threats Related to the Visa Waiver Program
paragraphs: Some members of Congress have stated and agency officials have  acknowledged that the Visa Waiver Program presents security risks, citing  terrorist attacks and plots involving VWP travelers. One of the terrorists  involved in the attack against the United States on September 11, 2001,  Zacarias Moussaoui, entered the country under the program. In addition,  since the 9/11 attacks, there have been some high-profile terrorist plots  emanating from VWP countries. In December of 2001, British citizen  Richard Reid, flying to the United States under the Visa Waiver Program  from France, attempted to detonate explosives midflight, but was  prevented from doing so by flight attendants and passengers. In August of  2006, U.S. and British security officials announced the disruption of a plot  by British citizens to use liquid explosives to blow up multiple airliners  during flights to the United States. Finally, as noted earlier, in September  of 2007, the Director of National Intelligence testified that Al Qaeda is  recruiting Europeans because many of them do not require a visa to enter  the United States. The director noted that this recruiting tactic provides Al  Qaeda with an “extra edge in getting an operative or two or three into the  country with the ability to carry out an attack that might be reminiscent of  9/11.”
section_title: Flexibility to Expand Visa Waiver Program
paragraphs: In 2005, President Bush announced plans to work with 13 Road Map  countries to facilitate their eventual entry into the Visa Waiver Program.  Figure 2 shows the 13 Road Map Initiative countries.
See table 2 for a list of current Road Map Initiative countries and those  countries’ average number of travelers to the United States and average  number of visas issued from 2001 to 2007. This table shows the number of  travelers from Road Map countries to be around 1 million per year.
In August of 2007, Congress passed the 9/11 Act, which authorizes the Secretary of Homeland Security, in consultation with the Secretary of  State, to waive the low, nonimmigrant visa-refusal rate requirement for  countries that meet certain conditions enumerated in the act, including  law enforcement and intelligence conditions. For example, countries must  cooperate with the United States on counterterrorism initiatives. However,  before the Secretary of Homeland Security can exercise this new  authority, the 9/11 Act requires that the department complete certain  actions aimed at enhancing the security of the program.
One of these required actions is that the Secretary of Homeland Security  must develop and certify the implementation of ESTA in VWP countries.  According to DHS, ESTA will allow DHS to screen citizens from VWP  countries who wish to travel to the United States before they depart for  U.S. ports of entry. Officials told us that DHS will advise applicants to go  online at least 72 hours before the date they plan to depart for the United  States in order to complete the ESTA application, which will collect  electronically information similar to the information collected in paper  form by CBP, which all VWP travelers present to CBP officers upon  arrival at a port of entry. According to DHS, after submitting the  application, DHS determines the applicant’s eligibility to travel under the  Visa Waiver Program and whether there exists a law enforcement or  security risk in permitting the applicant to travel to the country under the  program. To the extent possible, DHS says, applicants will find out almost  immediately whether their travel has been authorized, in which case they  are free to travel to the United States, or if their application has been  rejected, in which case they are ineligible to travel to the United States  under the Visa Waiver Program. Those found ineligible to travel under the  Visa Waiver Program must apply for a visa at a U.S. embassy in order to  travel to the United States. At the embassy, foreign citizens whose ESTA  applications were rejected apply for a visa and pay the visa fee and are  either approved to travel to the United States or denied. Figure 3  demonstrates how ESTA will work, according to DHS and State.
section_title: Elimination of Visa Waiver Program Could Dramatically Increase Visa Demand and Overwhelm Visa Operations in the Near Term, but State Has Not Developed Contingency Plans
paragraphs: Elimination or suspension of the Visa Waiver Program could cause  dramatic increases in the demand for visas that could overwhelm visa  operations in the near term. To meet visa demand, State would need  substantially more staff and facilities. State also would receive large  increases in the amount of visa fees collected, which would offset the  costs for staff, but not the cost of additional facilities. State has conducted  limited planning to address the potential impact of Visa Waiver Program  elimination or suspension.
subsections: section_title: Visa Demand Would Increase Dramatically if the Program Were Eliminated or Suspended
paragraphs: Elimination or suspension of the Visa Waiver Program could cause  dramatic increases in the demand for visas. We estimate that, given  existing travel patterns, the annual demand for visas at all VWP posts  combined could jump from over 500,000 to as much as around 12.6  million, a level of demand that would overwhelm existing staffing and  facility resources. For example, the U.S. mission in Japan, a post that is  accustomed to processing around 94,000 visas per year, could find 3.3  million potential travelers seeking visas if the program were eliminated.  Even countries that have smaller numbers of annual travelers to the  United States could see substantial demand increases. For example, in  Singapore, the U.S. embassy—accustomed to processing around 9,000  visas per year—could see visa demand grow almost 11-fold to nearly  100,000.
section_title: State Would Need Substantial Increases in Staff to Meet Increased Visa Demand
paragraphs: If the Visa Waiver Program were eliminated or suspended, State officials  told us that existing visa staffing resources would be unable to meet the  new visa demand. As a result, State would need a substantial increase in  staff to process visas to meet the increased workload. State officials told  us that, over the long term, they would likely hire Foreign Service officers  and Foreign Service national staff to support those Foreign Service  officers, though these officials acknowledged they have not evaluated all  of the options for meeting their staffing needs for this purpose. At three  U.S. embassies we visited in VWP countries—Japan, France, and Spain— embassy officials told us they would need hundreds of new Foreign  Service officers to perform visa interviews and adjudicate visa  applications for the millions of new visa applicants arriving at the  embassies. In Japan, for instance, we estimate the embassy would need at  least 134 new Foreign Service officers (an increase of 515 percent above  the current visa Foreign Service officer workforce of 26) to meet the  expected increased visa demand of over 3.3 million new applicants, as well  as around 334 new Foreign Service nationals (an increase of 451 percent  over the existing Foreign Service national workforce of 74). We estimate  that State would have to hire around 540 new Foreign Service officers  worldwide, at an estimated cost of between $185 million and $201 million  per year. In addition, State would have to hire around 1,350 new Foreign  Service national staff worldwide, which would cost around $168 million to  $190 million per year. Finally, State told us these new overseas positions  would need the management and support of additional staff overseas and  in Washington; we estimated these costs at $93 million to $111 million per  year. Over a 10-year period after the elimination of the program, these  costs would total between $4.4 billion and $4.9 billion.
State officials told us that a hiring effort of this kind would be historic in  its scope and very difficult to undertake. Both Consular Affairs and  embassy officials told us they were unsure exactly how State would  accomplish a hiring increase of this magnitude, given current staffing and  funding levels. Consular and embassy officials told us in the event that  only one of the larger current VWP countries were dropped from the  program, State may be able to provide a surge of staff on temporary duty  to cope with the immediate spike in visa demand in that country, though  State had not developed any plans on how to do so. However, these  officials noted, with all 27 countries, or even several of the larger VWP  countries dropped from the program, it would be impossible to meet new  demand with existing staff. Moreover, consular officials stated that it  could be very difficult for State to hire and for its Foreign Service Institute  to train the number of staff that would be needed in a short period of time.
For instance, from fiscal year 2005 to 2007, State produced around 300 to  400 new Foreign Service officers per year for all global State needs. As  many as 200 to 300 of these officers entered into consular functions upon  their initial deployment overseas to enable State to meet recent year-to- year visa demand. State, however, would need around 2 to 3 times this  number to meet the new demand for visas in the event of VWP elimination.
section_title: State Could Need Dozens of New Facilities Costing Billions of Dollars to Accommodate Increased Visa Demand
paragraphs: Though Consular Affairs officials told us they have not fully analyzed the  extent to which demand increases would impact resources in the event of  program elimination, they provided us with information indicating they  could need approximately 45 new buildings to handle the increased visa  demand. OBO officials said this estimate was generally realistic, based on  the potential increases in staffing that could be needed in the event of  program elimination and the capacity of buildings to absorb those levels of  new staff. However, both OBO and Consular Affairs officials indicated that  it was impossible to predict the exact number of facilities that would be  needed. OBO, Consular Affairs, and embassy officials told us it would be  challenging to build these facilities in a timely and cost-effective manner  or, alternatively, to find enough suitable space that could be leased for this  purpose. State officials told us they would immediately outgrow their  current visa processing space in dozens of posts, and embassy officials in  all three VWP countries we visited said they would need new buildings to  accommodate visa demand. In fact, these embassy officials noted that a  relatively small increase in visa demand would cramp visa waiting rooms  and consular adjudicating officer workspace. In addition, embassy  officials told us it would be extremely difficult to find suitable land that  would provide the space and the setting necessary for building, or leasing,  according to State’s building and security standards. Embassy officials in  these countries added that land, facility construction costs, and leasing  costs in their host countries would be extremely expensive—among the  most expensive in the world. OBO officials confirmed that VWP countries’  real estate markets did not offer easy or inexpensive opportunities for  building new embassy or separate annex buildings for consular use. OBO  officials further stated that finding appropriate sites and negotiating sales  in this type of environment would not only cost more, but also would  likely take longer to accomplish, tying up OBO resources and potentially  delaying the point at which visa operations could resume within a U.S.  mission. Until long-term arrangements are made to meet facility needs,  OBO officials said, the embassy would likely be forced to lease space to  accommodate increased visa demand.
We calculated that it would cost between $3.8 billion and $5.7 billion to  construct 45 new facilities in these countries. This total cost of $3.8 billion  to $5.7 billion would include: (1) new building construction costs, (2) the  costs of leasing temporary facilities to accommodate visa operations while  new facilities are constructed, (3) facility operations and maintenance  costs, and (4) the cost of additional OBO staff. OBO officials told us that if  these 45 buildings supplanted those already scheduled to be constructed,  it could take around 7 years to finish the design, planning, and  construction so that visa operations could be conducted there. However, if  OBO were to proceed with its existing building schedule in addition to the  45 new facilities, it would require an increase of approximately 400, or  around 40 percent more, full-time permanent or temporary contractor  staff. If OBO hired a mix of around 400 full-time and contractor staff, it  would cost between $648 million and $897 million over the roughly 7  years. OBO officials told us it would be difficult to find that many staff  without using contractors. In addition, OBO noted that since the staff  would be employed for only that 7-year period of time and phased out at  the end of this period, there would be an advantage to hiring contractors  since OBO would not have to provide them with benefits or severance pay.  In addition, we estimated the cost of leasing facilities to accommodate  dramatically increased visa operations over this 7-year construction period  would be between $226 million and $416 million.
section_title: State Would See Significant Increases in Visa Revenues, Offsetting New Staffing Costs
paragraphs: While staffing and facilities needs would increase if the Visa Waiver  Program were eliminated, this scenario also would increase the number of  travelers needing a visa; as a result, we estimate visa fee revenues would  increase substantially. Using the current fee of $131 per application, we  calculated the increase in State’s visa revenue to be $1.7 billion to $1.8  billion per year. We estimate that this increased revenue would offset the  year-to-year recurring costs associated with new staff. However, since visa  fees would not be collected until the end of the first year, the initial annual  staffing costs of $447 million to $486 million would not be offset by visa  fees. In addition, visa fee revenues would be far less than the costs for  facility construction and, further, are not used for the purpose of offsetting  facility construction costs—the largest portion of the initial costs—or the  year-to-year facility maintenance costs on those facilities.
section_title: State Has Done Limited Planning to Address the Impact of Visa Waiver Program Elimination
paragraphs: Though State has made efforts to address long-term growth in visa  demand, as noted earlier, the department has conducted limited planning  to address the significant operational challenges that could result from the  potential elimination of the Visa Waiver Program. State Department and  federal guidelines have highlighted the importance of planning for  potential program changes that could impact operations. This is  particularly important given that any significant disruptions to U.S. visa  operations could have severe repercussions on U.S. travel, trade, business,  tourism, and diplomatic interests. State’s Performance Plan for the Bureau  of Consular Affairs for 2007 sets a performance goal of “Proper Visa  Adjudication” and acknowledges challenges that could seriously impede  progress would include “an extended disruption of international travel and  any significant change in participation in .” State  and embassy officials told us during our review that the elimination of the  Visa Waiver Program could cause such disruptions of international travel.  According to internal control standards for the federal government, once  an agency has set its objectives and identified the risks that could impede  the efficient and effective achievement of those objectives at the entity  level and the activity level, the agency should analyze those risks for their  possible effect. Management then should formulate an approach for risk  management and decide upon the internal control activities required to  mitigate those risks and achieve the internal control objectives of efficient  and effective operations.
Although State has identified risks, it has not developed a plan for how it  would deal with these risks. State has conducted limited planning to  prepare for the possibility of Visa Waiver Program elimination, though  such a scenario could create significant operational challenges for State,  as visa demand would dramatically increase. Specifically, several years  ago, State undertook some preliminary thinking about the scenario— including the general magnitude of the resource challenges that would be  involved—and acknowledged the importance of doing so; we reviewed the  documentation provided and found that the limited planning was general  in nature, largely outdated, and does not address the full range of the  challenges that would arise, particularly how to provide the additional  staffing resources and facilities needed. For instance, a memo from  Consular Affairs to OBO requests that OBO identify the space  requirements that might be needed in the event of VWP elimination.
However, there is no information about how OBO would acquire the  substantial amount of additional space needed if the program were  eliminated. State officials told us they did not think planning for program  elimination or suspension was appropriate, given that current U.S.  government policy does not support program elimination. However, in  September 2007, the Director of National Intelligence testified that Al  Qaeda is recruiting Europeans because many of them do not require a visa  to enter the United States, which, he noted, provides Al Qaeda with an  “extra edge in getting an operative or two or three into the country with  the ability to carry out an attack that might be reminiscent of 9/11.”  Moreover, DHS, State, and embassy officials have acknowledged the  program could be suspended or eliminated in the event of a major attack  emanating from a VWP country.
If State does not develop contingency plans and the program is eliminated,  State could face tremendous challenges addressing staffing and facilities  shortfalls. State has had problems dealing with large demand increases in  the past. In 2007, when new passport requirements were implemented,  State faced substantial increases in demand for passports. However,  because State had not adequately planned for the implications of these  new requirements, it faced shortages in staffing and other resources that  led to tremendous backlogs that were only addressed when State  redeployed domestic and overseas staff and took other emergency  measures to address the surge in demand. Consular officials in  Washington told us that the impact of the new passport requirements on  that process and the resource shortages that State faced in 2007 would be  minor compared to the challenges State would face in meeting visa  demand in the event that the Visa Waiver Program were eliminated. For  instance, given the potential historic level of visa demand that program  elimination could bring about and State’s inadequate resources to address  this demand, State officials told us they would need to find creative  staffing and facility solutions in the short term and, moreover, may need to  make choices regarding changes in resource allocation, visa policies, and  other considerations to ensure the right balance between security and  facilitating legitimate travel. However, State has not developed a plan that  identifies its options for meeting the facility and staffing needs described  above, or how it would go about making any such changes.
State officials at posts we visited in existing VWP countries told us they  had not been contacted by their headquarters about undertaking any  contingency planning in the event of program elimination. In addition, they  said they had not been asked for data or post thinking on the issue, or  been provided any information on how post activities, programs, or  resources might change given such a scenario. Embassy officials in all  three VWP countries we visited told us that our visit and questions had  fostered their first real consideration of what was involved in these issues.  Consular officials in these posts expressed concern to us that, in the  absence of planning for this scenario, visa operations at their posts could  be severely disrupted as existing staffing and facilities resources would be  overwhelmed.
section_title: Expansion of the Visa Waiver Program Would Reduce Visa Demand, but Likely Have Limited Effect on State’s Visa Costs and Resources
paragraphs: Expansion of the Visa Waiver Program would reduce visa demand in Road  Map countries, but have a limited effect on the costs and resources needed  to meet the reduced demand and the amount of visa fees received.  Expansion would only modestly reduce overall staffing needs. Further,  expansion would not bring about significant cost savings from facilities, in  part because Road Map countries lack consular or other embassy space  that could be sold. If all 13 countries were admitted to the program, we  estimate that State would stand to lose approximately $74 million to $83  million each year in collected visa fee revenues. State would likely be able  to accommodate program expansion with relatively minimal disruption,  therefore requiring limited planning because of the minimal impact  expected on staffing and facilities.
subsections: section_title: Expansion of the Visa Waiver Program Would Reduce Visa Demand in Road Map Countries
paragraphs: Visa demand in any Road Map country would decline after the country’s  admission to the program. However, visa volume is relatively small in most  of the Road Map countries. For instance, the recent visa volume in Estonia  and the Czech Republic, two countries currently being considered for  expansion, is only around 6,000 visas and 32,500 visas per year,  respectively. Even if all 13 Road Map countries were to join the program,  and if all of those countries’ citizens who previously traveled with visas  were to travel to the United States without visas, the total reduction in visa  demand would be only around 710,000; more than 400,000 of this  reduction would be in South Korea alone. In addition, these posts, many of  which already issue relatively small numbers of visas, would continue to  experience some demand for tourism and business visas and continued  growth in student, long-term work, and other types of visas. Officials told  us they generally expect continued visa travel as some percentage of VWP  travelers will be rejected by ESTA and directed to apply for a visa at the  embassy. Further, consular officials told us they expect that some  travelers may choose to obtain a visa rather than travel via the Visa Waiver  Program due to the risk of being rejected by ESTA, as well as the greater  flexibility a visa offers. For instance, travelers with a 10-year visa can  choose to travel at any time during that 10-year period, and also can  decide to extend the length of their visit for longer than the 90 days  allowed under the program. In addition, consular officials in South Korea  stated that they continue to have large increases year to year in other  types of visas issued there. So, even if most demand for short-term  business and tourism visas were to decrease following acceptance into the  program, there could still be significant growth in demand for other types  of visas. Consular officials in the Road Map countries we visited stated  they expected that their visa volume in the near term would likely be  between 20 percent and 40 percent of recent numbers of travelers— between 220,000 visas and 440,000 visas. Given all of these factors that  could affect visa demand, consular management officials at locations we  visited stated that, if their posts were added to the Visa Waiver Program,  they would be reluctant in the near term to lose more than 50 percent of  their Foreign Service officers processing visas until they better understand  their new staffing needs.
section_title: Expansion of the Visa Waiver Program Would Modestly Impact Overall Staffing Needs
paragraphs: Expansion of the Visa Waiver Program would modestly impact overall  staffing needs in Road Map countries. Although consular conditions in  Road Map countries vary, consular officials in the Road Map countries we  visited expect modest reductions in their visa processing staff needs as  these countries gain acceptance to the program. For example, in the three  Road Map country posts of Athens, Prague, and Budapest, the combined  annual visa workload of around 90,000 is relatively small, and consular  management there told us that eliminating this workload would result in  only around four fewer Foreign Service officer staff among the three  countries. In the Czech Republic, where consular officials process around  32,500 visas per year, officials expect they will need only one fewer  Foreign Service officer when accepted into the program, and only two to  three fewer Foreign Service nationals. Similarly, consular officials  expected relatively modest staff reductions for South Korea, where  consular staff process around 402,000 visas per year—the highest number  of U.S. visas issued among Road Map countries. If South Korea is admitted  to the program, consular officials expect to need 6 to 9 fewer Foreign  Service officers and 15 to 20 fewer Foreign Service nationals. In total, if  all 13 Road Map countries joined the program, we estimate that about 21  to 31 Foreign Service officers could be moved to other posts in need of  staff and 52 to 77 Foreign Service national positions could be cut.
Beyond its limited impact on staffing in VWP Road Map countries,  expansion of the program would have even less of an effect on State’s  overall worldwide staffing needs and costs. First, for fiscal year 2006,  Consular Affairs reported that posts in Road Map countries represented a  small portion of total U.S. visa operations; these countries employed 105  Foreign Service officers and 301 other consular employees, less than 10  percent of the over 4,500 consular employees overseas in 2006. Moreover,  officials in State’s Consular Affairs Bureau said that Foreign Service  officers no longer needed at new VWP posts will not be eliminated but  rather transferred to other posts, thereby shifting, not eliminating, costs  and revenues generated by those staff. Consular officials noted there is a  need for additional staff in other countries with large backlogs of visa  applications, such as China, India, and Mexico, and consular officials in  South Korea noted that, if the country were accepted into the program,  Foreign Service officers not needed would likely be transferred to such  posts at the end of their regular tour of duty.
Although acceptance into the Visa Waiver Program would reduce total visa  processing costs for Road Map countries, State and embassy officials  expect increases in some short-term costs, such as severance pay to the  displaced Foreign Service national workforce and the costs of hiring new  Foreign Service national staff to support the transferred Foreign Service  officer staff at their new posts. State and embassy officials noted that  short-term costs for severance payments to displaced Foreign Service  national employees would vary depending on the laws of individual  countries. We estimate that nonrecurring costs of expanding the program  to Road Map countries would be between $3.7 million and $4.3 million— with around $3.3 million to $3.9 million to cover severance costs and  approximately $385,000 to $476,000 for the costs to hire and train  additional supporting Foreign Service nationals in the Foreign Service  officers’ new locations.
section_title: Little or No Consular Facilities Savings Anticipated as Road Map Countries Transition to the Visa Waiver Program
paragraphs: Embassy officials in Road Map countries we visited did not expect dollar  savings from reduced facility usage after the countries are accepted into  the Visa Waiver Program. In the countries we visited, the visa operations  generally occupy a portion of embassy facilities. None of U.S. embassy  visa operations in Road Map countries are currently housed in leased  space, and therefore no lease savings will accompany reduced visa  operations. Visa operations in South Korea, the Road Map country  processing the greatest number of visas, are based in an embassy  operating above normal capacity, and U.S. embassy officials there stated  that any space freed as a result of gaining acceptance to the Visa Waiver  Program would simply allow the existing consular space, which currently  requires a waiver since it does not meet fire code, to operate under less  cramped and strained conditions. Similarly, U.S. embassies in Road Map  countries we visited in Eastern Europe do not expect to gain any facility  cost savings as a result of joining the program.
section_title: Reduced Visa Revenues Anticipated as Road Map Countries Transition to the Visa Waiver Program
paragraphs: Acceptance of Road Map countries into the program would significantly  reduce the amount of visa fee revenues collected in those countries.  While embassy officials in all four Road Map countries we visited told us  they expected to retain some visa demand in the event their host country  entered into the program, they agreed most business and tourism visa  demands would significantly decrease. Assuming all 13 Road Map  countries were admitted to the program and that most eligible foreign  citizens traveled under the program, we estimate that State would lose  approximately $74 million to $83 million each year in collected visa fees,  generally offsetting any savings from reduced personnel costs.
section_title: State Is Prepared to Adjust to Meet Program Expansion
paragraphs: State likely would be able to accommodate program expansion with  minimal disruption because of the limited impact expected on staffing and  facilities. As a result, preparing for potential program expansion would  require little additional advanced planning by State. For example, as noted  above, even in South Korea—the Road Map country issuing the highest  number of U.S. visas, about 56 percent of all visas issued in Road Map  countries—consular officials expected relatively modest staff reductions.  Embassy officials in the four Road Map countries we visited told us that,  were their host countries’ entries into the program confirmed, they could  take steps at the posts to adjust to and accommodate decreased visa  demand and its impact on staffing and facility resources. In one Road Map  country we visited, embassy officials told us that if they were instructed by  State officials in Washington to prepare for immediate admission of the  host country into the program, the embassy would make decisions about  how to handle the repercussions of decreased visa demand on staffing and  on current visa processing facility space. For example, given the decreases  in the number of Foreign Service national staff positions needed at post  under program expansion, embassy officials said they would try to find  other positions for these staff, if possible, to ease the impact on the  Foreign Service national workforce and mitigate potential severance costs.  In addition, as discussed previously, while embassy officials in all four  Road Map countries we visited said they did not think program expansion  would significantly impact their mission’s facilities, they noted that any  freed space would be easily used by other consular or embassy functions,  and such a transition would be planned and implemented by the embassy.
section_title: ESTA Implementation Could Increase Visa Demand, but State and DHS Have Not Planned How to Manage an Increase
paragraphs: ESTA implementation could increase visa demand in existing VWP  countries. However, State and DHS are uncertain how many applicants  would likely be rejected through the ESTA screening process and  therefore required to apply for a visa, and they also are unsure how many  potential travelers would choose to get a visa rather than participate in the  ESTA screening. State has not developed contingency plans for how it will  manage the expected increase in visa demand, citing lack of information  from DHS on the effect of ESTA.
subsections: section_title: ESTA Implementation May Increase Visa Demand and Resource Needs, but Full Extent of Increase Remains Unknown
paragraphs: ESTA implementation will increase visa demand in VWP countries, though  the full extent to which it will do so remains uncertain. DHS officials told  us that, given CBP’s operational experience administering the Visa Waiver  Program as it currently exists, they currently believed that when ESTA is  fully implemented, less than 1 percent of all VWP country travelers would  be rejected by the ESTA screening. DHS officials also told us the rejection  rate could be 2 percent to 3 percent in early years, eventually tapering off  to 1 percent as the system became more established and travelers became  more acclimated to using it, while some officials said it could range as high  as 5 percent. However, DHS officials told us they can not yet determine  the rate of rejection from ESTA, because DHS has not yet decided what  databases it will use to screen names of ESTA applicants. In addition,  given ESTA’s potential for causing last-minute travel disruptions, consular  staff at the posts we visited told us they believe an additional unknown  number of travelers from VWP countries would choose instead to  proactively apply for visas at embassies. For example, around 14 percent  of annual entries to the United States from VWP countries are made by  repeat travelers; one senior consular official estimated that these travelers  who visit the United States multiple times a year may prefer to travel using  a visa rather than through the program. Most officials predicted that the  percentage of travelers who choose to obtain a visa could exceed potential  ESTA rejection rates of 1 percent to 3 percent. State officials told us that  the influx of even a small percentage of current travelers in larger VWP  countries to obtain visas could significantly disrupt visa operations at U.S.  embassies. For example, if 1 percent of the United Kingdom citizens who  currently travel to the United States without visas needed to or chose to  apply for a visa, visa demand there could increase by 35,000 per year, or  around a 31 percent increase in visa workload. Further, embassy officials  in the three VWP countries we visited told us that if 3 percent of current  visa waiver travelers applied for visas, it would result in visa demand that  would overwhelm their current staffing and facilities. However, DHS  acknowledges that it does not know how many travelers may prefer to  directly seek a visa rather than participate in ESTA-approved travel, and it  acknowledges that ESTA rejection rates and the rate of voluntary visa  travelers may vary by country.
We developed a series of estimates of ESTA’s potential impact on demand  and consular staffing needs, as well as on visa fees. Though State officials  provided us with data to support these estimates, they did not provide data  on ESTA’s impact on facility costs. A State official told us that predicting  ESTA’s impact was very difficult, particularly for facilities, and that  developing such data for facilities would require an extensive analytical  effort involving multiple offices within State, particularly OBO, as well as  extensive management involvement—and, moreover, would take a long  time. Our estimates in table 3 include scenarios where 1, 2, 3, 5, or 10  percent of travelers who currently travel under the Visa Waiver Program  come to U.S. embassies for a visa, and they take into account increases in  visa applications due to ESTA rejections as well as from travelers  choosing voluntarily to apply for visas. Further, table 3 represents  estimates of the potential increases in visa demand globally and for the  largest VWP countries, as a result of the implementation of ESTA,  assuming 1, 2, 3, 5, or 10 percent of current VWP travelers went to the  embassies to apply for a visa.
All of these scenarios would place a strain on existing embassy staffing,  particularly in larger VWP countries, while even small rates of increase in  larger VWP countries could strain consular facilities, necessitating the  construction of new facilities in some countries at potentially significant  costs, according to State and embassy officials. As noted earlier, State has  had a difficult time meeting recent staffing needs globally; State and  embassy officials told us they could find it difficult to meet staffing needs  in high-volume VWP posts in the near term if higher percentages of current  travelers come to the embassies for visas. Furthermore, while we did not  develop estimates of the number of facilities that would be needed, State  and embassy officials agreed that the costs of new facilities could  potentially be significant and that such facilities would most likely be  needed in high-traveler-volume countries where existing facilities are  more likely to become strained. Table 4 shows the impact, on all VWP  countries combined, that such increases in visa demand—of 1, 2, 3, 5, or 10  percent—would have on staffing needs and visa revenues; the table does  not include potentially significant facility costs. We estimate annual visa  fee revenues would increase and offset the year-to-year recurring staffing  costs. However, there would be a lag between when State would have to  fund the staffing increases in the first year and when it would receive the  offsetting increases in visa fees in the second year. Moreover, visa fee  revenues would be less than the costs for facility construction, and,  according to State, visa fee revenue is not used to offset the costs for  constructing new facilities to process visas.
Two high-traveler-volume VWP countries we visited in particular would be  challenged to address the likely increased visa demand resulting from  ESTA. In Japan, with around 3.26 million travelers to the United States  each year, embassy officials told us that if visa demand increased by 1  percent of Japan’s current VWP travelers, it would present significant  challenges for their existing staff and a workload level that could not be  sustained over the long term. An increase of 2 percent would increase visa  demand by about 70 percent over current levels; as a result, existing staff  could not meet the demand, and current facility space would become  crowded and strained to capacity. Any increase over 2 percent, embassy  officials said, would overwhelm existing staff and facilities; more staff  would be needed, and new facilities for processing visas would need to be  obtained or constructed. In France, where about 870,000 citizens travel to  the United States each year, embassy officials told us that if visa demand  increased by 1 percent of France’s current VWP travelers, their existing  staff would be greatly challenged to meet the demand. They said that  existing staff could handle this increase only for a temporary period of  time without additional staff. An increase of 2 percent could not be  accommodated with existing staff, and visa waiting rooms and processing  space, which are already crowded, would be strained, embassy officials  said. However, if more staff were added, embassy officials told us the  embassy could develop creative ways to work within the existing space,  for example, by adding another shift for visa processing every day. An  increase of 3 percent, embassy officials told us, would require acquiring or  constructing a new visa processing facility. Figure 4 shows that the visa  waiting room space in the U.S. embassy in Paris is already crowded.
section_title: State Has Not Developed Plans to Manage Increased Visa Demand Resulting from Implementation of ESTA
paragraphs: Though State has attempted to address general long-term growth in visa  demand, the department has done little planning to address the increased  visa demand that could result from implementation of ESTA, citing lack of  information from DHS on the effect of ESTA. State Department and  federal guidelines, as noted previously, have highlighted the importance of  planning for potential program changes that could impact operations.  Despite the fact that DHS officials have said they plan to have ESTA  operational for all countries by mid-2009 and for some countries by the  summer of 2008, DHS officials told us the department has not determined  what tests, if any, it will conduct to study ESTA rejection rates and  determine ESTA’s impact on visa demand. In addition, as noted earlier,  State has not developed data on ESTA’s likely impact on facility needs and  costs, despite the fact that ESTA could be implemented by the summer of  2008 and that State officials have acknowledged that developing such data  would be a complex and time-consuming process. Furthermore, embassy  officials we met with in three VWP countries told us that they have neither  prepared plans to address visa demand upon ESTA implementation, nor  has State headquarters communicated with them in order to plan for this  new requirement. For example, in one VWP country we visited, we found  that State had begun plans for a new embassy facility, but no additional  space had been included to accommodate additional visa demand,  including demand resulting from ESTA implementation. Consular and  management section officials there told us they had never heard of ESTA  and that OBO had not raised the issue of additional demand with them or  considered new visa demand in their initial design of the new facility.  Officials told us that our visit and questions had fostered their first real  consideration of what was involved in planning for the impact of ESTA. In  addition, consular officials in the three VWP countries we visited  expressed concern that, without information regarding the likely impact of  ESTA on visa demand, they are not able to plan at the embassy level to  address the staffing shortfalls and space limitations that could result from  ESTA implementation.
section_title: Conclusions
paragraphs: Many important factors need to be considered regarding potential changes  to the Visa Waiver Program, given its impacts on U.S. security, trade,  commerce, tourism, diplomatic, and other interests. Ensuring that the  proper resources are in place to handle visa demand globally is essential  for State to meet its mission to facilitate legitimate travel to the United  States while screening out possible threats. Elimination of the Visa Waiver  Program has the potential to dramatically increase visa demand, severely  disrupting U.S. visa operations in the short term and costing billions of  dollars. And, while State would likely be able to accommodate program  expansion with minimal disruption, U.S. embassies soon will have to deal  with the impact of the ESTA requirement, which could result in a  substantial number of new travelers needing or choosing to obtain a visa,  potentially creating significant resource gaps and affecting the ability of  the United States to conduct visa operations globally. State has done  limited planning in headquarters or the field for any such changes in the  program. Given the resource and cost implications involved, it is  imperative that State work with posts to plan for imminent as well as  potential program changes. Though the likelihood of program elimination  is unknown, having a comprehensive understanding of how staffing and  facilities would be impacted will enable State to help Congress make  informed decisions on the fate of the Visa Waiver Program and to devise  broad measures to address the immense challenges that would follow  elimination of the program, should it occur. In addition, the development  of estimates of the increases in visa demand in high traveler volume  countries likely to result from ESTA implementation would give State’s  headquarters and embassy officials the necessary information to make  decisions on allocations of staff among posts and also would give State’s  Bureau of Overseas Buildings Operations the information it needs to  construct any needed new facilities.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the Secretary of State develop contingency plans for  U.S. embassies in Visa Waiver Program countries to address the potential  increases in visa demand that could result from program elimination.  These plans would include identifying what options State has for providing  additional resources and taking actions that could be needed, as well as  the extent to which increased visa fee revenues would cover the cost of  these resources.
In addition, we recommend that the Secretaries of Homeland Security and  State develop estimates of increased visa demand in Visa Waiver Program  countries resulting from ESTA implementation. These estimates would  include information on how many applicants can be expected to be  rejected from ESTA and how many potential travelers can be expected to  choose to come to the embassy for a visa. Based on these estimates, we  recommend that the Secretary of State develop plans for how the  department will manage the increased workload in the existing 27 Visa  Waiver Program countries.
section_title: Agency Comments and Our Evaluation
paragraphs: State and DHS provided written comments on a draft of this report, which  are reproduced in appendixes II and III, respectively. We also received  technical comments from State and DHS, which we have incorporated  throughout the report where appropriate.
State said it would ask embassies to discuss management plans in the  event that the program were eliminated, but did not indicate whether it  fully concurred with our recommendation that State conduct contingency  planning. State said that it has responded to situations that presented  challenges to its workforce, during which it has considered and used  several tools that could be helpful in addressing some of the challenges  presented by program elimination. We believe that asking posts to discuss  their management plans in the event the program were eliminated, as State  said it would do, is a good step. In addition, we believe that State needs to  develop contingency plans that include options for addressing program  elimination so that State is better prepared to cope with the dramatic  increases in workload that would result from the elimination of the  program.
State agreed with our recommendation that it develop estimates of, and  conduct planning for, the impact of ESTA implementation, but said that its  ability to do so was limited by the fact that DHS had not resolved a  significant number of crucial details about ESTA and, as a result, had not  provided State with key information it would need to conduct related  planning. For example, according to State, CBP has provided data  suggesting how many names might be rejected by ESTA by considering the  rate of name rejections from CBP’s Advance Passenger Information  System (APIS) database. However, according to State and DHS, DHS and  CBP have not decided which databases ESTA will screen against, and it is  therefore unclear what the ESTA rejection rate will be. We believe it is  important for DHS to determine which databases it will use for ESTA  screening, so that it can develop accurate estimates of the number of  people whose ESTA applications might be rejected, which is essential  information for State’s planning purposes. Moreover, State said there is no  data on how many people would choose to obtain a visa to avoid the  uncertainty associated with ESTA, and State believes that number could  be significant. State said that the lack of such data is another factor  complicating its planning for ESTA implementation. We agree that this is  an important factor and that is why we recommend that DHS and State  should develop a method for producing accurate information on the  number of potential travelers who could be expected to choose to come to  the embassy for a visa, rather than applying through ESTA.
DHS agreed with our recommendation that it work with State to develop  estimates of the impact of ESTA implementation on visa demand. DHS  said that it has been coordinating with State as DHS develops ESTA and  plans its implementation. However, as noted previously, DHS and State  have not yet developed estimates of the changes in visa demand that could  result from implementation of ESTA. For example, DHS has not  determined how many VWP travelers would not be approved to travel  under the program and would have to obtain visas. Without this  information, it is difficult for State to plan for how it will meet changes in  visa demand.
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  report date. At that time, we will send copies of this report to interested  congressional committees and to the Secretaries of State and Homeland  Security. We will also make copies of this report available to others upon  request. We will also make copies available at no charge on the GAO Web  site at http://www.gao.gov.
If you or your staffs have any questions about this report, please contact  me 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. GAO staff who made major contributions to this report are  listed in appendix IV.
section_title: Appendix I: Scope and Methodology
paragraphs: We examined how three changes—Visa Waiver Program (VWP)  elimination, program expansion, and implementation of the Electronic  System for Travel Authorization (ESTA)—would affect the demand for  visas, and how changes in demand would affect the resources the  Department of State (State) needs and the amount of visa fee revenue that  State receives. We recognized that there could be other implications of  major changes in the program, particularly if the program were eliminated.  These implications—for security, tourism, commerce, business, trade,  diplomacy, and reciprocity regarding visa-free travel, for example—could  potentially be significant. However, we limited the scope of our review to  the impact on visa demand, visa resources—including staffing and  facilities—and the associated costs and revenues.
We undertook the following methodologies for all three of these  objectives. We analyzed relevant law regarding the program and its  requirements, and documentation, including State’s most recent cost of  consular services study from 2004, and met with State’s Bureau of  Consular Affairs to discuss the fee that State charges for visa applications,  what costs of processing a visa the fee is intended to cover, and how much  new revenue State would generate in the event of program elimination. To  assess the staffing and resource costs to State under these scenarios, we  developed our own high-level cost estimates, using State and Department  of Homeland Security (DHS) data. DHS/U.S. Customs and Border  Protection (CBP) provided us with data on the number of travelers from  each VWP and Road Map country. State’s Bureau of Consular Affairs  provided us with information on the number of visas processed in VWP  and Road Map countries as well as estimates on the number of visas that  could be expected to be processed by a Foreign Service officer, the  number of Foreign Service national staff that could be expected to support  Foreign Service officers, and—for the elimination scenario—estimates of  the number of new facilities that could be needed. State’s Bureau of  Overseas Buildings Operations (OBO) provided data on the cost, type, and  size of recently completed U.S. government construction projects  overseas, the costs and sizes of overseas leased facilities used for visa  processing, and estimates of operations and maintenance costs for U.S.  embassy facilities. State’s Bureau of Resource Management provided  information on the costs of Foreign Service officer and Foreign Service  national staff. In addition, we collected post-specific data on the above  costs when we traveled to selected U.S. embassies. We determined that  the data provided to us were sufficiently reliable for the purposes of the  report. We met with State officials to determine the sources of the data  provided to us. For instance, State’s data on the costs of putting a Foreign  Service officer overseas came from Resource Management’s database of  actual expenditures, which they use to input costs and for budget  purposes. In addition, we collected data from other sources to cross-check  State data whenever possible. For instance, we collected data on the  actual costs of Foreign Service officers and Foreign Service nationals in  the specific countries we visited. Similarly, we cross-checked the costs of  facility operations and maintenance against Department of Defense  facilities pricing guide data to ensure reasonableness. Finally, the  uncertainty analysis we conducted provided us with a level of confidence  in our estimates, because we took into account and stated a range of  possible costs spanning our point estimates. This analysis provided us  with sufficient confidence for the high-level type of estimates we are  presenting. We prepared the cost estimates using fiscal year 2007 constant  dollars. For purposes of estimating State’s costs, we assumed numbers of  travelers to remain constant, as State officials told us and State  documentation stated that its goal is to accommodate changes in visa  demand and avoid disruptions of travel to the United States. In addition,  we performed uncertainty analyses on cost models we developed for each  scenario, using a Monte Carlo simulation tool called Crystal Ball to analyze  the effects of varying inputs and outputs of the modeled scenarios. Monte  Carlo simulation uses a random number generator to simulate the possible  variance of designated inputs, such as estimates of the number of  additional Foreign Service officers needed in the VWP elimination  scenario, and calculates the subsequent possible ranges of the outputs.  This allowed us to try multiple hypothetical scenarios with our  spreadsheet cost model values. We used the results of these analyses to  provide a probability value for our point estimates, as well as to provide a  range of cost estimates for these scenarios. In addition to these activities,  we undertook methodologies specific to each of the three objectives,  which are described below.
To determine how program elimination in particular would affect the  demand for visas, and how changes in demand would affect the resources  State needs and the amount of visa fee revenue that State receives, we  analyzed CBP data on the number of travelers to the United States from  each VWP country annually from 2001 to 2007, and reviewed State’s data  from 2001 to 2007 on the numbers and types of visas issued in each VWP  country. We used 2001 to 2007 data from the number of travelers to the  United States from each VWP country, rather than the number of travelers  coming to the United States under the program. We did not use data on the  number of travelers coming to the United States under the program  because (1) data from 2001 to 2007 on the number of travelers coming to  the United States under the program were not available; (2) available data  from 2004 to 2007 averaged 12.5 million travelers, a difference of less than  1 percent from the 12.6 million calculated using the number of travelers to  the United States from each VWP country; and (3) we could not  independently calculate the number of travelers coming to the United  States under the program by subtracting the number of visas issued in  each country annually, because not all of those people who received visas  necessarily traveled in that year. We also reviewed data State provided on  the current number of Foreign Service officer and Foreign Service national  staff involved in visa processing in each VWP country. We analyzed  information provided by State on the number of visas that could be  expected to be processed by a Foreign Service officer and the number of  Foreign Service national staff that could be expected to support Foreign  Service officers. We also analyzed State’s rough order estimates of the  number of new facilities that could be needed in the event of program  elimination. Consular Affairs projected the possible number of facilities  that could be needed based on information on the conditions of existing  consular space in these countries, as well as assumptions of the number of  people that would be seeking visas if the program were eliminated, and the  subsequent increases in Foreign Service officer and Foreign Service  national staff necessary to accommodate the new visa demand. OBO  officials said Consular Affairs’s rough order estimate was generally  realistic, based on the potential increases in staffing that could be needed  in the event of program elimination and the capacity of buildings to absorb  those new staff. However, both Consular Affairs and OBO officials agreed  that it was impossible to predict the exact number of facilities that would  be needed. We met with officials in Consular Affairs, OBO, and at  embassies in three VWP countries—Japan, France, and Spain—to  determine the extent that embassy officials expected increases in visa  demand and the number of additional staff and facilities that would be  needed to meet those increases in those countries and to confirm  information that we had collected from State officials in Washington. We  selected U.S. embassies in Japan, France, and Spain for field work for  several reasons. First, we selected these embassies because they are in  VWP countries with high numbers of people traveling to the United States  each year. Specifically, Japan represents the VWP country with the  second-largest number of travelers to the United States each year, while  France represents the fourth-largest number, and Spain the eighth.  Further, of the countries we visited, differences in the sizes of traveler  volumes provided us with information on differences in the extent of  potential impacts among VWP posts in the event of program elimination.  Second, we selected these countries for purposes of assessing the  different potential aspects of program elimination for countries in  different regions of the world. Lastly, we selected these countries because,  in the case of France and Spain, there have been terrorist plots or attacks  in those countries in recent years, contrasting with Japan, where this has  not been the case. We met with officials in Consular Affairs and OBO and  with officials in State’s Bureau of Resource Management and the Office of  Rightsizing to gain data for constructing our cost estimates on the staffing  and facilities that would be needed to support increases in visa demand in  VWP countries. Using the data provided by State and DHS, we created cost  models to estimate the costs and savings due to changes in the number of  consular and overseas buildings operations personnel; the construction,  leasing, and operations and sustainment of consular facilities; and visa  application fee revenue. For this scenario, we estimated two sets of  nonrecurring cost elements: costs for the construction of new consular  facilities, and the costs for the temporary staffing increase to manage the  construction of those facilities. Also, we estimated four sets of recurring  cost elements: costs of additional consular personnel, costs to operate and  sustain new consular facilities, costs to lease consular facilities until the  completion of new construction, and visa application fee revenue. We then  performed the uncertainty analysis described above to generate cost  estimate ranges for each of the scenarios. To determine the extent to  which State had prepared for the possibility of program elimination, we  reviewed State’s Performance Plan for the Bureau of Consular Affairs to  determine State’s goals and objectives regarding visa issuance, as well as  any planning that State had done. We also reviewed standards for internal  controls in the federal government, including those addressing the  importance of identifying risks to achieving program goals and planning  ways to mitigate those risks in order to continue to meet program  objectives.
To assess how program expansion in particular would affect the demand  for visas, and how changes in demand would affect State’s resource need  and the amount of visa fees that State receives, we analyzed CBP data on  the number of travelers to the United States from each Road Map country  annually from 2001 to 2007. We also reviewed data that State provided on  the number of Foreign Service officer and Foreign Service national staff  involved in visa processing in each Road Map country. We met with  officials in State’s Bureau of Consular Affairs, OBO, and at embassies in  four Road Map countries—South Korea, Greece, Czech Republic, and  Hungary—to determine the extent to which embassy officials expected  decreases in visa demand, the number of staff that could potentially be  freed and any associated costs or savings, and the number of facilities, if  any, that could either be sold or where the embassy could relinquish lease  commitments. We selected U.S. embassies in these countries for several  reasons. First, these countries represent four of the seven highest visa- issuing Road Map countries. The U.S. embassy in Seoul processes by far  the most visas in the Road Map countries, while the embassies in Athens,  Prague, and Budapest, while much smaller, process among the highest  number of the remaining 12 Road Map countries. In addition, we selected  these countries for purposes of assessing the different potential aspects of  program expansion for countries in different regions of the world.  Consular Affairs provided data on the number of Foreign Service officers,  Foreign Service nationals, and visas processed in each Road Map country.  We used that data to estimate the number of Foreign Service officers that  could be moved to other posts from Road Map countries once they enter  the Visa Waiver Program, as well as the number of possible Foreign  Service national positions that could be terminated. We met with officials  in State’s Bureau of Consular Affairs, OBO, Bureau of Resource  Management, and the Office of Rightsizing to gain data for constructing  cost estimates on any costs and savings that may result regarding staffing  and facilities in Road Map countries. For the VWP expansion scenario, we  created cost models to estimate the costs and savings due to changes in  the number of consular personnel, ESTA development, initial and  recurring reviews by DHS of candidate countries’ suitability for the  program, and visa application fee revenue. We reported on two sets of  nonrecurring cost elements: estimated costs for the termination and hiring  of Foreign Service nationals, and the cost of development of ESTA, as  provided by DHS. We estimated two sets of recurring cost elements: costs  of DHS’s reviews of VWP countries, and visa application fee revenue. We  then performed the uncertainty analysis described above on these models  To assess how implementation of the new ESTA requirement in particular  would affect the demand for visas, and how changes in demand would  affect the resources State needs and the amount of visa fees that State  receives, we analyzed CBP data on the number of travelers to the United  States from each VWP country annually from 2001 to 2007, and reviewed  State’s data from 2001 to 2007 on the numbers and types of visas issued in  each VWP country. We also reviewed data State provided on the number  of Foreign Service officer and Foreign Service national staff involved in  visa processing in each VWP country. We met with officials in Consular  Affairs and OBO and at embassies in three VWP countries—Japan, France,  and Spain—to determine the extent to which embassy officials expected  increases in visa demand and the number of additional staff and facilities  that could be needed to meet those increases. We selected these three  countries for our field work for similar reasons as the VWP elimination  scenario—for reasons of size, geographical diversity, and recent history, or  lack thereof, of terrorist plots or attacks. We met with Consular Affairs  and OBO officials and with officials in State’s Bureau of Resource  Management and the Office of Rightsizing to gain data for constructing our  cost estimates on the staffing and facilities that would be needed to  support increases in visa demand in VWP countries. We also reviewed  relevant law, including the August 2007 Implementing 9/11 Commission  Recommendations Act of 2007. For the five ESTA scenarios to  demonstrate the effects of different possible percentages of travelers  coming to U.S. embassies for visas, we created cost models to estimate the  costs and savings due to changes in the number of consular and overseas  buildings operations personnel and visa application fee revenue. We  estimated two recurring cost elements: costs of additional consular  personnel and visa application fee revenue. We then performed the  uncertainty analysis described above to generate cost estimate ranges for  each of the scenarios. To determine the extent to which State had  prepared for the effects of the implementation of ESTA, we reviewed the  fiscal year 2007 Consular Affairs Bureau Performance Plan to determine  State’s goals and objectives regarding visa issuance, as well as any  planning that State had done. We also reviewed standards for internal  controls in the federal government, including those addressing the  importance of identifying risks to achieving program goals and planning  ways to mitigate those risks in order to continue to meet program  objectives.
We conducted this performance audit from May 2007 to April 2008 in  accordance with generally accepted government auditing standards. Those  standards require that we plan and perform the audit to obtain sufficient,  appropriate evidence to provide a reasonable basis for our findings and  conclusions based on our audit objectives. We believe that the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our audit objectives.
section_title: Appendix II: Comments from the Department of State
section_title: Appendix III: Comments from the Department of Homeland Security
paragraphs: The following are GAO’s comments on the Department of Homeland  Security’s letter dated April 30, 2008.
subsections: section_title: GAO Comments
paragraphs: 1.  DHS has indicated that it will begin implementing ESTA in the summer  of 2008. As of May 1, 2008, State had not received data from DHS  indicating how many VWP travelers would likely not be approved for  travel by ESTA and would therefore need to obtain a visa in order to  travel to the United States. It is important that DHS provide data to  State that will help State (1) determine how ESTA will affect visa  demand and (2) formulate plans to meet the demand.  2.  Under ESTA there would be some foreign citizens whose ESTA  application would not be approved and would therefore be required to  obtain a visa, and some who would choose proactively to obtain a visa  for the increased flexibility and travel convenience that a visa could  offer. DHS and State need to develop estimates of the total possible  increase in visa demand due to both outcomes brought about by ESTA.  DHS and State have asserted that there are existing data that could be  helpful in developing these estimates. We agree. However, until DHS  determines which databases it plans to use for screening ESTA  applications, DHS officials told us they will not be able to determine  how many VWP travelers would likely not be approved for travel by  ESTA. In addition, DHS officials told us that it was unclear at this point  what testing, if any, DHS would do to determine how many foreign  citizens would choose to obtain a visa, rather than use ESTA.  3.  We believe that sharing of this type of information between DHS and  State is a first step toward implementing our recommendation that  DHS and State estimate how ESTA will affect visa demand in existing  VWP countries, but we believe much more needs to be done.  4.  We did not intend to suggest that DHS is not sharing information with  State. Our point is that DHS has not made a final decision on what  databases it will use to screen ESTA applications; as a result, neither  DHS nor State can estimate the number of VWP citizens who would  not be approved to travel under the program. Without this information,  it is difficult for State to plan for how it will meet changes in visa  demand.  5.  We do not believe that DHS should estimate the resources that State  would need to manage increased visa demand or how ESTA could  affect visa fee revenues collected by State as a result of the  implementation of ESTA. These are actions that State needs to take.
However, State has not yet performed this analysis and planning  largely due to, according to State officials, the lack of information from  DHS on the number of foreign citizens whose ESTA application might  be rejected and might seek a visa from U.S. embassies.  6.  We agree that it is difficult to predict how many travelers would prefer  to apply for a visa instead of using ESTA. Consular officials in  Washington and overseas said that the number of travelers choosing to  do this could be significant. Some DHS, State, and embassy officials  suggested that an actual test or pilot use of ESTA in one or more  existing VWP countries could provide information on the number of  foreign citizens who choose to obtain a visa rather than use ESTA and  the number of foreign citizens whose ESTA applications are not  approved by ESTA. However, as noted previously, DHS told us it is  unclear what tests, if any, it will undertake to better understand  ESTA’s impact, even though DHS stated it plans to implement ESTA in  the summer of 2008.
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, John Brummet, Assistant  Director; J. Addison Ricks; Brian Bothwell; Joe Carney; Carmen Donohue;  Jennifer Echard; Tim Fairbanks; Grace Lui; and Karen Richey made key  contributions to this report.