Overseas Staffing: Rightsizing Approaches Slowly Taking Hold but More Action Needed to Coordinate and Carry Out Efforts
Released: 2006-07-28T00:00:00

Letter

Background

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.

Cost Sharing and New Embassy Compounds

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.

Accurate Data on Personnel Overseas Not Yet Available; U.S. Government Rightsizing Efforts Under Way

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.

Accurate Data on Size and Composition of the U.S. Overseas Presence Currently Unavailable

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.

State Developing Unified Staffing Accounting System

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.

Agencies Rightsizing Efforts Lead to Increases or Decreases in Staff

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.

Rightsizing Efforts Driven by Security and Administrative Costs

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.

State Has Established an Office of Rightsizing, but More Interaction Needed between Office of Rightsizing and Agencies

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.

Office of Rightsizing Established within State

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.

Office of Rightsizing Is Involved in a Number of Initiatives

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.

Rightsizing Reviews

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.

NSDD-38 Application Process

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.

Quarterly Rightsizing Reports

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.

State Regionalization Efforts

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.

State/USAID Shared Support Services

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.

Agencies Cite Limited Interaction with Office of Rightsizing; More Coordination Under Way

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.

State Holds Rightsizing Interagency Summit

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.

Office of Rightsizing Initiates Rightsizing Reviews, but Reviews Have Not Realized Full Potential

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.

Rightsizing Review Structure and Guidance Have Evolved

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.

Approach to Conducting Rightsizing Reviews Varies by Post

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.

Posts Identified Challenges in Conducting Rightsizing Reviews

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.

Resistance by Non-State Agencies at Posts

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.

Posts Lack Direction and Opportunities for the Regionalization and Outsourcing of Services

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.

Rightsizing Reviews Overlap with Additional State Data Requests

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.

Cost Analysis Was Not a Primary Factor in Rightsizing Reviews

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.

Implementation of Rightsizing Review Results Unclear

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.

Conclusion

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.

Recommendations for Executive Action

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.

Agency Comments and Our Evaluation

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.

Scope and Methodology

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.

GAO Reports on Staffing and Operations at U.S. Embassies and Consulates

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).

GAO Rightsizing Framework and Corresponding Questions

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?

The Office of Rightsizing’s Five-Year Rightsizing Schedule

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.

Comments from the Department of State

The following are our comments on State’s letter dated June 9, 2006.

GAO Comments

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.

GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

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.