New Embassy Compounds: State Faces Challenges in Sizing Facilities and Providing for Operations and Maintenance Requirements
Released: 2010-07-20T00:00:00

Letter

Background

The United States maintains facilities at more than 260 diplomatic missions, including embassies, consulates, and other diplomatic offices, located around the world. More than 80,000 U.S. government emplo yees from 30 age maintains. ncies depend on infrastructure that State provides and In 1998, terrorist bombings of embassies in Dar es Salaam, Tanzania, and Nairobi, Kenya, killed more than 220 people and injured 4,000 others. In 1998, State formed the Accountability Review Boards to investigate the bombings. The Boards reported that unless security vulnerabilities at U.S. embassies and consulates were addressed, U.S. government employees a the public would remain at risk from terrorist attacks at many overseas facilities. In 1999, the Secretary of State formed the Overseas Presence Advisory Panel to appraise the condition of overseas facilities and con the future of U.S. overseas representation. The Panel reported on the unsafe, overcrowded, deteriorating, and “shockingly shabby” co U.S. embassies and consulates. Both the Boards and the Panel recommended that State replace insecure and aging diplomatic facilities worldwide. That same year, State embarked on a multiyear, multibillion dollar program to replace overseas facilities. Through its Capital Security Construction Program, administered by OBO, State intends to construct new facilities at 214 overseas posts with the goal of providing safe, sec functional, and modern buildings as quickly as possible. The program incorporates the requirements of the Secure Embassy Construction and Counterterrorism Act of 1999 that calls for new diplomatic facilities to be sufficiently sized to ensure that all U.S. government personnel at th e post ure, are located on-site. In June 2006, we reported that State had made significant progress in completing new embassy and consulate compounds. As of April 2010, State has completed 52 NECs and placed over 21,000 U.S lation working government employees—or about one-quarter of the popu overseas—in more safe, secure, and functional facilities. .

To enable timely completion of its construction projects, OBO typically use the design-build project delivery method and a Standard Embassy Design (SED) that can be adapted to accommodate conditions at each project si NECs generally consist of a main office building (chancery), compound al access control buildings, utility buildings for mechanical and electric systems, and Marine Security Guard quarters (if a post has a Marine contingent). Depending on the site, the project budget, and the needs of the post, a new compound could also include a General Services support anne a warehouse, maintenance shops, recreation facilities, and employee and public parking areas. Some compounds also include an annex building for USAID or other program or agency functions. In 2003, we found that staf projections for NECs were developed without a systematic approach or d comprehensive rightsizing analyses, potentially resulting in wrong-size buildings, and recommended, among other things, that State provide overseas posts with comprehensive guidance on developing staffing projections for NECs. In 2004, State created the Office of Manageme Policy, Rightsizing, and Innovation (M/PRI), which now manages the process for developing NEC staffing projections. In establishing project requirements, OBO obtains information on a post’s projected staffing from te. nt M/PRI, which works closely with officials at the post, State’s regional bureau, and other U.S. government agencies to develop a 5-year projection of the post’s staffing needs based on an assessment of mission priorities and the staffing levels required to pursue those priorities. With this informatio OBO outlines space requirements that define functional needs for office (desks), common use (conference rooms, cafeteria), support (janito mechanical rooms), and future growth space. OBO uses this space requirements analysis to estimate the cost of each project, which forms the basis for State’s Capital Security Construction Program budget request. At the time of State’s budget submission, OBO considers project requirements to be “locked,” meaning it intends to construct the facility according to the requirements that were used to set the budget request. OBO generally lock project re quirements 2 years prior to awarding a contract for design-build services.

NECs Do Not Fully Meet the Space and Functionality Needs of Overseas Posts and State Actions Have Addressed Some, but Not All, Challenges

State is making progress moving staff into more secure and functional facilities. However, we found that over half of the 44 NECs completed from 2001 through 2009 have staffing levels that exceed the number of desks originally provided by 5 percent or more. Additionally, officials at nearly all of the 22 NECs we reviewed in greater depth reported the design of some spaces—such as consular areas, warehouses, or maintenance shops—did not fully meet their functional needs. According to State officials, it is difficult to predict changes in foreign policy priorities that can affect overseas staffing levels, and the current process for planning NECs has been unable to fully account for these changing needs. State officials also indicated that budget constraints affected decisions about the overall size and types of features provided in NECs. In some cases, space and functionality challenges resulted in the need to conduct follow-on projects after posts occupied the NEC, resulting in millions of dollars of additional costs. State has taken steps to address some space and functionality challenges, such as creating M/PRI to standardize the process for projecting future staffing levels; incorporating some additional flexibility for future growth into NECs; and implementing a lessons learned program to analyze issues in completed NECs and modify design criteria for future NECs. However, sizing NECs remains challenging and State did not provide the analytical basis for determining how much growth space should be incorporated into an NEC. Additionally, State has not conducted planned evaluations of completed NECs to ensure timely identification of issues.

State Is Making Progress Locating Staff in More Secure and Functional Facilities

As of April 2010, State has moved over 21,000 people—or about one- quarter of all overseas staff—into new facilities. State’s Inspector General (IG) and OBO have reported that posts are satisfied with many aspects of their NECs, such as the improved security they provide. In 2008, State’s IG reported that posts commented favorably about their NECs and praised their design, space, and security. In 2007, OBO surveyed officials at posts with NECs, and occupants responded positively about many aspects of their NECs, particularly when compared with old facilities. For example, 86 percent of respondents agreed or strongly agreed with the statement that “the layout of the NEC is well designed compared with the previous facility.” Overall, respondents rated security improvements and the fact that personnel were all located on a single compound as NECs’ two most important improvements to achieving their diplomatic mission. In many cases, posts moved from facilities that were in poor condition, insecure, and scattered throughout the city. State officials noted that, in general, NECs are a dramatic improvement over older facilities. For example, the former embassy in Sofia, Bulgaria, consisted of seven buildings spread throughout the city that did not meet current security standards and suffered from seismic and structural deficiencies. In comparison, officials in Sofia noted the NEC was one of the nicest buildings in Bulgaria. Additionally, officials at overseas posts and State’s regional bureaus commented on the professional environment of the NECs. For example, officials at overseas posts stated that NECs were a positive representation of the United States’ commitment to the host country. However, some officials also pointed out that the external appearance of NECs can be imposing and that increased security standards, including the fact that many NECs are located far from city centers, in part to meet more stringent security requirements, reduced the willingness of host government officials to hold meetings at NECs.

As Originally Constructed, Over Half of NECs Did Not Have Enough Desks for Current Staffing Levels, Resulting in the Need to Add Desks, Which Has Had Some Negative Consequences

Over half of the 44 NECs we analyzed did not have enough desk space to meet current staffing needs. Post management has converted common spaces, such as conference rooms or training rooms, into offices in order to accommodate additional desks on the compound. However, actions taken to accommodate additional staff have had some negative consequences, such as the loss of common spaces.

Current Staffing Levels Exceed Originally Constructed Desk Space at Over Half NECs

While NECs are a long-term investment that State intends to serve a post for decades, our analysis shows that most posts have filled their originally constructed space within just a few years of occupying the NEC. Over half (25 of 44) of the posts occupying NECs completed from 2001 through 2009 currently have more staff requiring desks than were provided in the NEC’s original construction. Specifically, as indicated in figure 1, our analysis of data for all 44 posts in our scope shows that current staffing levels exceed as-built desks—the number of desks provided when the NEC was constructed—by 10 percent or more at 21 of the 44 posts and exceed as- built desks by at least 5 percent at 4 additional posts. Not all posts have exceeded the desk space initially provided. For example, our analysis also shows 13 posts have current staffing levels at least 5 percent below as- built desk space. However, officials at overseas posts noted that having some excess space can be helpful, as posts may require additional space over time and it provides flexibility for post management to adapt to changing circumstances.

As figure 2 demonstrates, our analysis shows a difference of more than 50 desks for 11 of the 25 posts in which current staffing levels exceed as-built desk space by at least 5 percent.

State typically plans NECs with some additional desk space for future growth, but the amount of growth space provided fluctuated over time and across posts. When the NECs we examined were designed, State typically budgeted for NECs to include from 5 percent to 10 percent additional desk space as future growth space. Some growth space is designed as office space, with desks or cubicles installed during construction, while other growth space may initially be designed as conference rooms or file rooms, with the intention that they can be converted to office space in the future, if needed. State’s typical growth factor for NECs has fluctuated over time. Prior to 2003, OBO typically planned for growth space equivalent to 10 percent of the projected desk space in an NEC. However, in 2003, due to concerns about the high cost of the embassy construction program, OBO reduced the growth space allowance to 5 percent of an NEC’s projected desk space needs. In 2008, OBO returned to a 10 percent growth factor to provide a greater margin to accommodate unanticipated growth. These policies only serve as general guides, though, and some NECs received less growth space than is typically budgeted. For example, in Bamako, Mali, State eliminated growth space in the chancery in order to reduce total construction costs to meet construction contractor bids that were higher than anticipated.

For the 25 posts in which current staffing levels exceed as-built space by at least 5 percent, we found that, in general, the number of State positions has grown more than the number of positions for all other agencies, including the U.S. Agency for International Development (USAID). As shown in figure 3, for the 25 posts collectively, the number of current State desk positions exceeds as-built desk space by more than 1,400 desks, or 38 percent. Comparatively, the number of desk positions for all other U.S. government agencies combined exceeds as-built desk space by about 200 desks, or 10 percent. Individually, we found a larger increase—both in terms of absolute numbers and percentage increase—in the number of State desk positions than in the number of other agency desk positions at 20 of the 25 posts.

Because our analysis groups all non-State agencies into a single category, it may not highlight the changing make up of overseas posts. While some non-State agencies have grown substantially, other agencies have reduced their overseas presence. For example, according to one State official, law enforcement agencies have increased their overseas presence since September 11, 2001, while the Departments of the Treasury and Transportation reduced their overseas staffing levels. Additionally, some of the growth within State may have resulted from consolidating administrative services once all agencies collocated at the NEC. State has taken on additional administrative responsibilities while other agencies were able to reduce administrative staff.

Some State officials commented that the earliest-built NECs are more likely to have space shortages, since it is difficult to project staffing levels farther into the future and there has been more time for the post to outgrow the space originally provided. However, we found that the age of an NEC was not a major factor in explaining space shortages. For example, while 4 of the 6 NECs completed from 2001 to 2003 have shortages of 5 percent or more, 8 of the 16 NECs occupied since 2007 also have shortages of 5 percent or more.

Posts Have Used Growth Space, Converted Conference Rooms and Other Common Spaces, and Reduced Cubicle Size to Locate Staff On- Compound

We reviewed 22 posts in greater depth to determine how they found office space for additional staff. At most of the 22 posts we reviewed, State was able to find enough space on the new compound for all additional staff. Current staffing levels exceed as-built desk space by at least 5 percent in 15 of the 22 posts we reviewed. Eleven of those posts were able to accommodate all desk positions on compound by using growth space; converting common spaces, such as conference rooms or training rooms, into offices; or reducing cubicle sizes. Figure 4 provides examples of some spaces that posts have converted into office space.

However, 4 of the posts we reviewed had to retain some office space off- site. Table 1 lists the posts that have office space off-site, as well as the reasons for doing so.

In addition to potentially increasing the security risks for those employees not on-compound, State officials noted that having employees off- compound results in additional costs and can affect coordination across the mission and reduce the efficiency of posts’ operations because embassy personnel have to spend more time in transit between facilities. In the cases in which posts have some staff working off-site, post management has had to either retain old facilities or lease additional office space. In the case of Berlin, the most cost-effective option for locating staff off-site—at an estimated cost of $25 million—involved purchasing and renovating an office facility the post had formerly leased. In Abuja, leasing off-site office space costs over $800,000 per year.

Space Constraints and Actions Taken to Add Desks Have Had Some Negative Consequences for Post Operations

State officials noted that, because post management often has to convert common areas, such as conference rooms or training rooms, into offices to accommodate additional staff, posts may not have sufficient meeting or training space. For example, regional bureau officials stated that dedicated training rooms in NECs are often converted into office space, but that having training space is important for embassy operations. Officials also noted that other actions, such as having staff share desks or locating new staff in available spaces far from the rest of their agency or section, can result in operational inefficiencies. For example, at one African post, some FBI staff have to work in shifts in order to share a limited number of classified computers.

Additionally, officials at some of the posts we reviewed expressed concerns that space could increasingly become a consideration in approving requests for new overseas positions, potentially reducing the post’s ability to execute its mission. In general, the vast majority of new position requests are approved—over 97 percent of all requests were approved in 2008 and 2009. In considering new position requests, State advises Chiefs of Mission to consider space availability, among other issues, and we found that a few position requests at posts with NECs have been denied, at least in part, because of space constraints. According to State data, in a few instances, posts have cited resource limitations, including space constraints, when denying requests for new overseas positions. Of the seven posts that cited resource limitations when denying requests for overseas positions in 2008 and 2009, three currently occupy NECs and one is scheduled to move into an NEC with known space shortages in 2010. Some post officials also noted that space shortages can make it difficult to accommodate short-term, or temporary duty, positions. Officials noted that, in cases where the NEC has little or no available office space, it can be difficult to find places for short-term staff to work. At some posts, the number of short-term positions can be quite large. For example, an official in Beijing, China, stated that the post can have up to 100 short-term staff at the NEC on any given day and finding desks for them can be challenging.

Officials at Nearly All Posts We Reviewed Reported the Design of Some Spaces Did Not Fully Meet Their Functional Needs

Though staff at overseas posts noted many aspects of NECs function well, officials at 21 of the 22 posts we reviewed reported the design of some spaces within the NEC did not fully meet their functional needs, with an average of five functionality-related issues per post. While officials reported a variety of different concerns about each of the spaces, several officials noted an overarching concern that the design of some spaces in the NEC failed to take into account local conditions, such as weather or economic factors, or how the post would ultimately use the space. Table 2 shows the six most commonly cited issues.

Figures 5 through 10 provide descriptions of some of the types of issues post officials reported with each of the above functional areas.

Challenges with Projecting Future Staffing Levels and Budget Constraints Have Resulted in the Need to Conduct Follow-on Work

According to State officials, it is difficult to predict changes to staffing levels associated with shifting foreign policy priorities, and the process for planning NECs has not been able to fully account for those changes. State officials also indicated that budget limitations contributed to decisions about the overall size and types of features provided in NECs. In some cases, space and functionality challenges resulted in the need to conduct follow-on projects, resulting in millions of dollars of additional costs.

The Current Process for Sizing NECs Has Not Been Able to Fully Account for Changing Foreign Policy Priorities

According to State officials, the process for planning NECs has not been able to fully account for changing staffing levels associated with shifting foreign policy priorities. Because of the time required to plan and construct an NEC, there can be a lag of multiple years from the time staffing projections are finalized to the time a post moves into an NEC. The process for projecting future staffing needs starts with an assessment of mission priorities and the staffing levels necessary for carrying out those priorities. Therefore, State officials noted it can be very difficult to predict future staffing levels when changes occur as a result of unexpected events or initiatives. Officials at overseas posts, OBO, the regional bureaus, and M/PRI all agreed that changes in U.S. foreign policy priorities following the planning or construction of an NEC resulted in significant growth at many posts, contributing to the differences between current staffing levels and as-built desk space. According to State officials, some posts have had large increases in staffing due to recent initiatives, such as the President’s Emergency Plan for AIDS Relief (PEPFAR) and recent State and USAID initiatives to substantially increase their Foreign Service presences. For example, according to officials in Kigali, Rwanda, the post’s staffing projections predicted that the Centers for Disease Control and Prevention would have 18 desk positions at the time the NEC opened, but it actually had 34 desk positions when the NEC opened because of increases associated with PEPFAR. Staffing levels have also reflected changing needs in response to world events. For example, according to an M/PRI report, following the terrorist attacks of September 11, 2001, many law enforcement, security, and military agencies increased their overseas presence. According to State officials, many of these initiatives were not anticipated when NECs were planned.

Additionally, when staffing projections are prepared, an agency may not have clearly planned for or articulated future needs. According to State officials, some agencies have historically been better than others in developing staffing projections and articulating the policy justifications for staffing growth. However, other agencies have been less clear in their planning, complicating State’s ability to plan an NEC. For example, State officials report that USAID frequently revises its projected staffing levels, sometimes even after construction of a facility has begun. Also, as our earlier analysis showed, at the posts that have exceeded as-built desk space by at least 5 percent, State has grown substantially more than other agencies, indicating it has also been challenging for State to predict its own future staffing levels.

State officials also noted that the staffing projections that determine an NEC’s size are not directly tied to the process for approving actual staffing levels at each post. OBO sizes NECs based on staffing projections provided in a post’s rightsizing report. While posts, tenant agencies, and the regional bureaus all have input into the rightsizing process, M/PRI has final approval for these staffing projections. However, State officials noted that the Chief of Mission has authority over actual staffing levels at each post and may approve positions beyond the levels planned for in the NEC. According to State officials, in cases where M/PRI and the Chief of Mission do not agree on the appropriate staffing levels for a post, discrepancies can result between an NEC’s planned size and the post’s actual staffing levels. For example, in Addis Ababa, Ethiopia, the post’s initial projections anticipated the post would expand and become a regional center. Both M/PRI and State’s IG disputed the premise that Addis Ababa should be a regional center, noting that Nairobi, Kenya, already serves a regional role in East Africa. In addition, M/PRI found the post’s initial projections included substantial growth even though the post had dozens of unfilled positions. Therefore, the rightsized staffing projections anticipated more limited growth, reducing the post’s initial projections by 47 desk positions. However, the Chief of Mission continued to add new positions at a rate even faster than the post initially projected and, in 2009, OBO had to initiate changes after construction of the Addis Ababa NEC had already begun in order to accommodate 96 additional desk positions at a cost of about $13 million.

OBO officials report it is difficult to make changes to a project to accommodate changing needs after the staffing projections have been finalized. The NEC construction process typically requires a 2-year lag from the time staffing projections are initiated to the time a contract is issued and an additional 3-year lag between contract issuance and the time a post moves into the NEC. When changes are requested, State officials said State and other tenant agencies may reassess the project to determine whether the requirements are critical enough to warrant changing the project’s planned schedule and budget. In some instances, State officials reported changes could be accommodated to the program and in other cases changes could not. OBO officials noted it is easier to make changes to a project before a contract has been awarded. While changes have been made to a few projects after a contract has been issued, OBO officials stated it is not preferable because it can increase costs and delay construction.

Budget Limitations Also Contributed to Space Constraints and Functionality Issues

Budget limitations also contributed to space constraints and functionality issues in some NECs. According to OBO officials, congressional and executive concerns about the high cost of the embassy construction program were a primary reason for the 2003 decision to reduce the NEC growth factor from 10 percent to 5 percent. Budget limitations also impacted decisions about the overall size of the NEC at some posts with significant desk shortages. For example, State officials noted that, the overall size of the NEC in Dushanbe, Tajikistan—where, according to our analysis, current staffing levels are more than double the number of desks initially provided—was largely based on the planned budget. We identified 10 posts in which some spaces or features were reduced or eliminated between the initial planning and final construction of the NEC. Some NECs were significantly affected by budget limitations. In Berlin, Germany, for example, more than one-third of the originally planned space in the new facility was cut due to budget limitations. In Conakry, Guinea, functional spaces—including the cafeteria, multipurpose room, and most conference rooms—were cut in order to meet the project’s planned budget. According to OBO officials, programmatic support facilities, such as warehouses, recreational facilities, and cafeterias, were eliminated from a project’s scope before any changes were made to office space. State officials noted that, in some cases, reducing the scope of a project may have been preferable to delaying the project.

Space and Functionality Challenges Resulted in the Need for Follow-on Work at Some Posts

In some cases, problems with space and functionality resulted in the need to conduct follow-on work after the post moved into the NEC, such as planning for a major redesign of interior space or constructing an office annex or support facility, which has cost implications. In particular, State has completed or plans to complete new construction or major renovations in at least six of the 44 completed NECs within our scope. For example, State is constructing an office annex in Beijing, China, to accommodate 318 additional desks at a cost of $103 million. In Dushanbe, Tajikistan, OBO developed a plan to rearrange space within the existing chancery to accommodate new and projected desk positions, as well as build a warehouse and maintenance shops on-compound. In total, OBO estimates the changes will cost about $7.5 million, but notes that, even with the recommended changes to add office space, there will be no available space for future growth beyond the staffing levels projected for 2013. Additionally, in its 2010 Long Range Overseas Maintenance Plan, OBO identifies 96 needed projects for the 22 posts we reviewed in greater depth at a total cost of approximately $98 million. Most of the costs are attributable to major rehabilitation projects, including $42 million in Frankfurt, Germany, for renovations that were anticipated but not undertaken when the post originally moved into the new facilities in 2005. Additionally, officials at 16 of the 22 posts we reviewed reported they have already undertaken follow-on projects of varying size and complexity to correct problems with their respective NEC.

State Has Begun to Take Actions to Address Space and Functionality Challenges, but Not All Problems Have Been Fully Addressed

State has recognized many of the problems related to space and functionality and has taken actions that have resulted in improvements, but not all problems have been fully addressed. To improve NEC sizing, State created M/PRI to standardize the process for projecting future staffing levels. Additionally, OBO has taken some actions to incorporate additional flexibility for growth in NECs. However, accurately projecting future staffing needs remains challenging and State did not provide an analytical basis for determining how much growth space is appropriate. To address functionality challenges, OBO implemented a lessons learned program that analyzes issues in completed NECs and, as appropriate, modifies design criteria for future NECs. However, State has not ensured timely identification of problems in completed NECs through reviews, like post-occupancy evaluations.

State Has Taken Actions to Improve Sizing of NECs, but Challenges Remain

Through its creation of M/PRI in 2004, State standardized the process for developing staffing projections for posts receiving an NEC. As we noted in 2003, under State’s prior process, State’s headquarters gave embassies little guidance on factors to consider in developing projections, and U.S. agencies therefore did not take a consistent or systematic approach to determining long-term staffing needs. M/PRI now directs the process and has developed formal guidance on developing staffing projections for posts. According to State officials, in combination with the 2005 establishment of the Capital Security Cost Sharing program, through which each agency with an overseas presence contributes funds for construction on the basis of its overseas staffing levels and the type of space occupied, changes made through the rightsizing process have brought greater discipline to the planning process and have provided greater incentive for State and other agencies operating overseas to seriously consider their long-term staffing needs. State has also undertaken efforts to work more closely with tenant agencies to better understand their staffing needs. For example, State now meets with officials from USAID on a monthly basis to discuss future staffing needs.

OBO has also taken actions to incorporate some additional flexibility for growth into NECs. According to OBO officials, the SED was changed to incorporate more flexibility after the first year of its use. For example, the first version of the SED included detailed floor plans that dictated where offices and open workstations would be located. However, in the SED’s second year, OBO moved to a different approach that focused on the overall size of the NEC but left greater interior flexibility to rearrange office space. Recognizing the need to reassess the amount of growth space provided in NECs, in 2008 OBO increased the standard growth factor from 5 percent back to 10 percent, which it had been prior to 2003, to provide a greater margin to accommodate unanticipated growth. According to State officials, OBO has made an effort to be more accommodating to changing post needs through the design and construction process, when possible. OBO officials noted four cases in which they made changes to add space to an NEC’s design after the staffing projections were finalized. However, officials also stated that, while they want to accommodate posts’ needs, OBO prefers to avoid making changes after the contract has been issued because it is costly and can cause substantial delays.

While the implementation of a formal rightsizing process is an important step to improving projections for sizing NECs, accurately planning for future needs remains challenging. State officials acknowledged it remains difficult to accurately project future staffing needs. While only 6 of the 44 posts included in our scope underwent a thorough rightsizing review when planning their NEC, our analysis of staffing data at these posts suggests that accurately projecting future staffing needs can still be difficult. We found that current staffing levels exceed as-built desk space by at least 20 percent at four of the six posts that underwent a rightsizing review, all of which were completed in 2008 or later.

OBO, M/PRI, and regional bureau officials agreed that the NEC planning process should include a greater degree of flexibility to account for unanticipated changes. OBO officials indicated it may be more advantageous to plan buildings based on flexible bands that correspond to a post’s general size—for example, posts with a need of 200 to 250 desks might constitute one band—rather than focusing on a specific desk count. Officials noted construction costs tend to come in bands and such an approach could incorporate more flexibility than is allowed in the current process. M/PRI officials also said that placing less focus on a specific desk count in planning NECs could be beneficial, as it would allow them to focus more resources on assessing the potential for policy changes that could impact future staffing levels.

Analytical Basis for Growth Factor Unclear

While State revised the growth factor for NECs in 2008, officials did not provide the analytical basis for determining how much growth space is appropriate. OBO officials stated that, while the growth factor was originally intended to provide space for future growth, even a 10 percent growth factor can be exhausted very quickly at many posts, essentially providing some posts with no available growth space from the moment they occupy the NEC. As our earlier analysis showed, nearly half of all NEC posts have current staffing levels that exceed as-built space by more than 10 percent, while some posts have staffing levels lower than the initial projections. However, while the amount of growth space provided is sometimes reduced based on budget or other considerations, officials noted that State essentially applies a uniform growth factor across all posts and does not adjust the growth factor based on post-specific characteristics, such as a post’s geographic location or the presence of rapidly growing agencies or functions, that might help forecast growth not explicitly planned for in the staffing projections. State officials did not indicate they have conducted any analysis of characteristics associated with rapid growth at completed NECs, but officials from M/PRI acknowledged that examining such characteristics could improve the process for sizing NECs. OBO officials report they have considered changing the standard growth factor based on certain post characteristics, such as adding 5 percent additional growth space at posts in which USAID has a presence. While we could not identify clear industry or government standards regarding how much growth space is appropriate, one agency— the National Institutes of Health—recommends that in determining how much flexibility should be incorporated into a building, one should consider the cost of incorporating flexibility now compared with the cost of renovating space in the future, among other factors. However, according to State officials, State has no current plans to make any changes to the NEC growth factor.

State Implemented a Lessons Learned Program to Improve Future NEC Design

In 2004, State implemented a formal lessons learned program that seeks to improve the design of future NECs. According to OBO officials, the program entails bringing together representatives from a variety of technical disciplines within OBO to systematically evaluate issues identified in completed NECs and, if appropriate, take action to modify NEC design criteria to avoid similar problems in future facilities. OBO identifies topics to evaluate through the lessons learned program through a variety of sources, including post-occupancy evaluations, contractor roundtables, and facilities management industry best practices. Through the lessons learned program, State identified many of the functionality issues at the posts we reviewed and has taken action to change the design criteria for a number of functional areas of future NECs. According to State officials, for fiscal years 2005 through 2008, OBO implemented changes to design criteria for over half of the issues identified through the lessons learned program. OBO officials noted that, on average, the program reviews about 500 issues of varying size and complexity per year. Table 3 lists certain recent modifications that have been made through the lessons learned program to address functionality challenges.

Evaluations of completed NECs are one mechanism for obtaining information for the lessons learned program. State has undertaken post- occupancy evaluations on some completed NECs to assess what aspects of the building worked well and what aspects need improvement. State officials reported post-occupancy evaluations are a very important tool for identifying issues and noted that some of the design changes they have initiated were based on issues identified through post-occupancy evaluations. In conducting a post-occupancy evaluation on the NEC in Yerevan, Armenia, for example, State reported it identified a number of issues with the maintenance shops, which led to a recommendation to examine how State could improve maintenance shops in future NECs. In addition to post-occupancy evaluations, in 2008, OBO initiated a “look back” study to identify issues and problems for review through its lessons learned process with regard to the planning, design, construction, and maintenance of 55 NECs and office annexes completed from 2001 to 2007. For example, OBO officials report that the look back study found posts have had issues with consular windows, such as poor acoustics impacting the privacy afforded to visa applicants. While the look back study was an important tool for identifying issues in completed NECs, the study had some limitations. For example, according to an OBO official, it was completed in a very short time frame and the level of detail in its findings was inconsistent across posts.

While State’s efforts to implement the lessons learned program have resulted in improvements, State has not ensured that reviews of completed NECs are undertaken in a timely manner. Due to the time required to contract and construct NECs, it can take 4 years for an approved lessons learned recommendation to materialize as an improvement in future NECs. Therefore, according to State officials, timely identification of issues through OBO reviews, such as post-occupancy evaluations, is critical to ensure that problems are not repeated in future designs. We found that OBO has completed a post-occupancy evaluation for 10 of the 44 NECs completed since 2001 and has not completed any post-occupancy evaluations since 2008. OBO officials reported that OBO intended to complete 17 post-occupancy evaluations of NECs in 2009, but did not complete any because staff were diverted to other priorities. OBO officials also report they plan to complete 9 post-occupancy evaluations of NECs in 2010; however, as of May, 2010—almost halfway through the year—no evaluations have been completed.

NECs Are Challenging to Operate and Maintain; State Has Taken Steps to Address These Challenges, but Problems Remain

State has constructed NECs that are state-of-the-art buildings, built in accordance with current building codes, security, and energy-efficiency standards. The comparatively larger size of NECs, relative to the facilities they replaced, and complexity of NEC building systems have resulted in increases to operations and maintenance costs. State has developed a plan that identifies future maintenance requirements to protect the investments made in NECs but the plan does not report on the increased operating costs, and likely future costs, to operate NECs. NECs have also presented challenges for some posts due to rushed testing of building systems— recognized in the industry as “commissioning”—or poorly coordinated transfer of the NEC from OBO to the post, which has contributed to operational issues affecting building cooling and fire protection systems. More than half of the 22 NECs we reviewed also have experienced problems operating building systems, which have resulted in the need for earlier-than-anticipated repair and replacement projects. State has made organizational changes, revised its commissioning process, and changed design criteria to avoid problems with future NECs. However, State has not developed a plan to recommission or retest completed NECs to ensure building systems are operating as efficiently as possible and that outstanding and potential problems with NEC building systems, such as the increased risk of failure of NEC cooling systems, are being fully addressed. In addition, State has had problems in hiring U.S. facility managers and hiring and training locally employed maintenance staff that have the necessary technical skills to operate and maintain an NEC’s complex systems.

State Is Making Progress in Constructing Facilities That Meet Building Codes and Security Standards and Support Federal Energy Reduction Goals

State constructs NECs in accordance with modern building codes, State security standards, and federal energy-efficiency goals. The new facilities are modern, state-of-the-art buildings that incorporate technologically sophisticated building systems and are more secure than the old embassies and consulates that would not meet current codes and standards. (Fig. 11 shows examples of the equipment that support the sophisticated NEC building systems.)

NECs are modern, state-of-the-art facilities designed and built in accordance with the International Building Code, which guides design of the facilities’ structural components, fire and life safety features, and seismic engineering provisions, among other elements. For example, NECs have modern fire protection systems that require fire pumps to protect multiple buildings on a typical 10-acre compound. In addition, NECs are safer than older embassies because the designs for NECs consider the seismic conditions in local areas to enable the NECs to be constructed to withstand seismic events. The NEC in Port-au-Prince, Haiti, for example, was one of the few facilities to withstand the January 2010 earthquake in the country and was used in support of recovery operations. Meeting modern code requirements by including fire pumps and designing structural systems to withstand seismic events contribute to NECs being larger than the facilities they replaced. Additionally, NECs provide common areas (e.g., cafeterias, atriums, and recreational facilities) that also contribute to the larger size of NECs.

NECs are constructed to meet security standards and, as a result, are more secure than the facilities they replace because the buildings’ exteriors are hardened to provide blast protection, and windows and doors also are designed to meet forced-entry and ballistic-resistance standards. In addition, NECs’ heating, ventilation, and air conditioning systems are equipped with larger, technologically sophisticated systems to filter potentially harmful airborne contaminants and effectively create an air- tight environment within the buildings. NECs also have redundant systems such as generators that operate in the event of local power loss and provide storage for water and fuel so that posts are capable of maintaining operations. Some NECs receive services from local utility systems while others must independently produce their own utility services. The NEC in Port-au-Prince, Haiti, for example, operates its own utility systems that enable it to generate electricity, produce potable water on-site, and treat waste water. Constructing NECs to meet current security standards, such as hardening structures and having built-in system redundancies, contributes to NECs being more secure and larger than the old facilities.

To meet federal energy mandates to reduce energy and water consumption, NECs contain technologically sophisticated building automation and energy management systems that control and monitor heating, cooling, ventilation, lighting, and power systems. In addition, starting in 2008, State’s goal is to design all new NECs to meet the U.S Green Building Council’s Leadership in Energy and Environmental Design (LEED) certification requirements related to promoting energy efficiency and minimizing environmental impacts. To date, State has constructed LEED-certified NECs in Sofia, Bulgaria (see fig. 12); Panama City, Panama; Brazzaville, Republic of Congo; and Johannesburg, South Africa. State officials report that the department has approximately 30 projects registered with the LEED program and they expect many of the projects will receive LEED certification over the next few years.

Larger, More Technologically Complicated New Facilities Cost More to Operate and Maintain than Those They Replaced

The comparatively larger size of NECs and the complexity of their building systems have resulted in higher operations and maintenance costs than at the facilities they replaced. Costs of utilities, maintenance staff, and service contracts are contributing to the cost increases. In our review of 10 recently completed posts, we found that total post-managed operations and maintenance costs were about $12 million greater than at the facilities they replaced. Utility costs (e.g., electricity, gas, fuel oil, water, and sewer) increased on average $827,000—or about 250 percent—per post. Each of the 10 posts experienced at least a 75 percent increase in utility costs after moving into an NEC. Our analysis is consistent with a State 2009 benchmarking study of approximately 165 overseas posts that shows a trend of increasing operations and maintenance costs. In addition, State’s report shows that four of the five posts with the highest utility costs (calculated on a gross square meter basis) were NECs. Table 4, for NECs completed in 2007 and 2008, shows the pre-NEC utility costs approximately 1 year prior to the move into the NEC compared to posts’ fiscal year 2009 utility costs.

State officials noted that while building systems in NECs are more energy efficient compared to systems in buildings that were replaced, operating conditions cause them to consume a greater amount of energy due to, for example, additional security equipment such as security gates, lighting, cameras, and vehicle barriers that all require power. Further, NECs are physically larger than replaced facilities, meaning that costs to heat and cool the NECs will be greater. In addition, the air filtration equipment needed to maintain the sealed environment in NECs is about 50 percent larger in size and costs about 40 percent more to operate than if the filtration systems were not installed.

Maintenance Staff Costs Are Increasing at NECs

The costs for maintenance staff increased by approximately $200,000 on average at the 10 posts for which we analyzed cost data because of the need to hire additional facilities staff to operate and maintain the NECs. For example, officials in Kigali, Rwanda, reported the size of its facilities staff prior to occupying the NEC was 20. Kigali now has 50 facilities maintenance staff as a result of the larger chancery and increased staff housing. Fourteen of those staff are dedicated solely to the NEC operations and maintenance. The additional annual cost for those 14 positions solely dedicated to NEC maintenance in Kigali was approximately $236,000.

Service Contracts Are Needed to Support Some NEC Maintenance

For fiscal year 2011, to ensure proper maintenance of systems and equipment at NECs, OBO estimates that posts would spend approximately $150,000, on average, to fund maintenance service contracts. Posts use service contracts to obtain technicians to maintain some systems, like elevators and building automation systems, that may not have existed at the older facilities. Some posts also use service contracts to obtain maintenance service from regional sources when they are unable to find skilled labor to hire locally. Because some posts’ maintenance personnel may not be capable of fully addressing all maintenance requirements of an NEC’s technically sophisticated systems, use of maintenance service contracts enables posts to obtain contractors that can perform specialized maintenance, such as conducting infrared testing on equipment temperatures.

State Has Developed Its First Long-Range Overseas Maintenance Plan, but Plans Are Incomplete

State’s Strategy to Maintain NECs Includes Revisions to Processes for Funding Routine Maintenance and Service

In fiscal year 2010, partly in response to our 2006 recommendation, OBO developed its first Long-Range Overseas Maintenance Plan (LROMP) to support State in budgeting for what OBO reports in the plan as an “investment protection” strategy for the multibillion dollar investment made in constructing NECs. The LROMP outlines facility maintenance needs—characterized as “non-capital projects”—over a 6-year planning horizon for NECs as well as older facilities at posts not scheduled to move into an NEC. State intends to update the plan annually as a companion document to the Long-Range Overseas Buildings Plan which outlines State’s capital construction plan for building new embassies over the same period. The plan is intended to inform State’s budget requests beginning with the fiscal year 2011 budget request. The plan currently identifies over 3,300 potential projects for the period from fiscal year 2010 through fiscal year 2015. Overall, the plan presents what State characterizes as “the universe of requirements” (i.e., based on approximately 5,200 facilities located in over 260 locations) identified in fiscal year 2010, which total just over $3.7 billion. State has also identified a number of areas where the LROMP needs to be improved in next year’s edition, such as ensuring that posts have accurately identified all their maintenance requirements, better defining costs for major rehabilitation projects (e.g., costs to move staff into temporary space during a project), and better automating the process for escalating or reducing project costs as proposed projects move between fiscal years.

In addition to identifying future maintenance projects, State has taken action to improve its processes for establishing budgets targets for (1) determining and allocating funding for posts’ routine maintenance and repair and (2) setting funding targets for posts’ maintenance service contracts. The LROMP reports that starting with its fiscal year 2011 budget request, State changed its approach for setting posts’ annual routine maintenance and repair budgets that fund maintenance activities that are considered routine, recurring, and minor, and that are managed by posts, such as painting and weather stripping. Historically, routine maintenance and repair funds were allocated to posts by simply escalating prior year funding levels without consideration for factors such as the age of posts’ facilities. Under a new approach, a more objective determination of posts’ budget levels is made based upon factors such as the age and current condition of posts’ facilities, the amount of space needed to be maintained, and an index for geographic costs considerations, such as the costs to procure or ship maintenance materials in the region. Under this new approach, State identified a requirement of $98 million for fiscal 2011 to support routine maintenance and repair at overseas posts, more than double the amount of State’s 2009 budget of $44.5 million for routine maintenance and repair. The LROMP also reports that, starting in fiscal year 2009, State took action to establish a new cost category for Building Maintenance Expenses (BME) in order to improve how it budgets, funds, and captures costs for preventative maintenance service contracts (e.g., service contracts for elevators, generators, fire protection systems, and building automation systems) at overseas posts. The new process places the responsibility for setting State’s budget targets for maintenance service contracts with OBO as opposed to posts and other agencies; other agencies at posts are still required to fund their share of the maintenance service contracts. State made the decision to fund its agency’s share of the maintenance service contracts out of existing OBO funding in order to protect the investment made in NECs. According to a senior State official, development of the LROMP, as well as the shifting of responsibilities to OBO for setting funding targets for State’s share of posts’ maintenance service contracts, should be seen as moving State toward clarifying at least the maintenance requirements for overseas posts.

State’s Plan Does Not Provide Planning Time Frames to Implement Projects

While the LROMP has begun to outline maintenance requirements, and does prioritize projects, our analysis of the plan found it does not provide an indication as to when projects would be executed over the 6-year period and the likely implications of delaying projects due to lower-than- anticipated budgets. Rather, the plan outlines the “universe of requirements” of 3,300 potential projects at a cost of nearly $3.7 billion over a 6-year period. A senior State official acknowledged the plan does not indicate in what specific fiscal years projects are planned to be implemented. He noted that undertaking the first edition of the LROMP was itself a major undertaking and getting posts to identify maintenance requirements was challenging. Without some detail on the planned time frames to implement some of the maintenance projects, for at least the current fiscal year and pending budget year, the usefulness of the plan in supporting State’s budget requests is diminished.

State’s Plan Does Not Address Increasing Costs to Operate NECs

While the LROMP is a step toward providing insight into the maintenance resources needed to protect the investment in NECs, we found it does not provide insight into operating costs, such as the costs for utilities. In 2007, OBO took action to create a utility database to capture some of posts’ annual operating costs as well as posts’ energy and water consumption data; however, our review of database reports shows that many posts have reported incomplete or missing data for recent years, including data for some of the NECs we reviewed. OBO prepared a 2009 benchmarking study that may enable State to focus on reducing operating expenses at posts with high costs. However, according to OBO, except for providing posts with first-year operating cost estimates for individual NECs, planning for operations is not an area that OBO officials feel they can address directly, as it is outside OBO’s program area of responsibility. State and other agencies at overseas posts are responsible for funding operations through the International Cooperative Administrative Support Services (ICASS) process, while OBO is responsible for funding maintenance. Following State’s briefing of the LROMP to its Industry Advisory Panel, one of the panel members representing a leading international facilities management organization commented that he felt that State’s plan was missing the “operations piece.” He reported that his organization found that building owners must plan for both operations and maintenance and remarked that, while the LROMP does outline future maintenance budget needs, it does not provide insight into future operations costs.

Problems in Commissioning and Transferring the Early NECs from OBO to Post Posed Potential Safety Risks and Hindered Efficient Operations

NECs have presented operations and maintenance challenges for posts due to problems, in part, related to the inspection, testing, and documentation of building systems—recognized in the construction industry and by the federal government as “commissioning.” In 13 of the 22 posts we reviewed, we found problems that were linked, in part, to commissioning. State’s Inspector General identified significant problems with the commissioning process in its 2008 report on OBO’s operations, citing it as the most maligned issue raised by posts with NECs. Officials at NECs report they have had to contend with operational issues, including some systems not functioning properly due to commissioning- related issues. Officials’ concerns regarding commissioning relate to operational issues they have experienced with critical systems, such as NEC cooling, building automation, and fire protection systems. Prior to September 2008, the commissioning agents did not work for State directly, but rather were hired by the construction contractors. Furthermore, we found there were problems when NECs were transferred from OBO to post, such as the facility managers not receiving accurate drawings of the NEC to support maintenance.

Commissioning of Critical NEC Building Systems Has Been Challenging

At more than half the posts we reviewed, we found problems related, in part, to the commissioning of heating, ventilation, and cooling systems and the building automation systems controlling those systems. For example, in Berlin, Germany, the facility manager told us that, nearly a year after taking occupancy, the embassy’s building automation system has had ongoing operational problems, resulting in it not being able to fully control NEC mechanical systems. He believes these problems should have been identified during commissioning. He further noted that OBO is providing funding for a contractor to continue to work on the programming of the building automation system. In Sofia, Bulgaria, one official noted the building automation system as commissioned and transferred by OBO was not programmed to provide for the most efficient operation of heating and cooling systems and that it took time for maintenance staff to learn how to adjust the system and achieve energy savings by optimizing the system. Similarly, in Yaoundé, Cameroon, officials reported that the building automation system was only recently programmed—nearly 4 years after the NEC was completed—to run the NEC’s cooling system at a reduced level during periods of low occupancy such as during nights and on weekends. Post officials reported this change allowed them to save $4,000 per month ($48,000 per year) in utility costs. In addition, the embassy in Kathmandu, Nepal, reported that systems were not commissioned for efficient operation and that maintenance staff had to undertake their own efforts to optimize operations of the new chancery’s building automation, cooling, and power generator systems, resulting in reduced energy consumption and savings of approximately $58,000 in electrical energy costs and $84,000 in diesel fuel costs between approximately November 2008 and May 2009.

Prior to 2009, commissioning responsibilities for fire protection systems resided with OBO’s Office of Design and Engineering, rather than OBO’s Office of Fire Protection, which is largely responsible for inspections of existing fire protection systems, supporting posts in maintaining those systems, and investigating fires. While OBO’s Office of Design and Engineering had fire protection engineers verifying compliance with contract documents in an effort to ensure fire systems were commissioned before NECs were occupied, OBO officials reported those staff engineers did not have the direct authority to prevent occupancy of NECs. Also, while commissioning of fire protection systems may have been conducted before post personnel moved into the NECs, post officials reported many problems with those systems shortly after commissioning, including false alarms, problems with fire alarm panels, and some fire devices (e.g., smoke detectors) not being connected. In its written responses to our questions, OBO’s Office of Fire Protection reported that some early NECs were occupied without the correction of critical deficiencies.

In its review of OBO and its survey of overseas NECs, the State IG also reported there were numerous comments about NEC fire systems not being fully ready at occupancy. Embassy officials in Panama City, Panama, reported to us that when post personnel moved into the NEC, the fire alarm system in the warehouse was not hooked up, some smoke detectors were not installed, and the fire alarm panels were problematic. They believe that schedule pressures led to occupying the NEC before issues were fully resolved. Officials at 3 NECs we reviewed told us that OBO’s fire engineers, or its contractors, had visited their post to help fix problems that occurred after moving into the NECs.

State’s Commissioning Approach Lacked Independence

State reported that until 2008 the testing and commissioning of NECs was largely an activity controlled by OBO’s project director and the construction contractor who employed the commissioning agent, rather than a third-party independent entity working for State. Department of Energy (DOE) federal facilities commissioning guidance states that the use of independent third-party commissioning agents is the most common option used by federal agencies for conducting commissioning. The guidance also states that for large projects with highly sophisticated systems, the savings to the government by employing an independent agent typically outweigh the government’s cost to obtain those commissioning services. DOE further reports that using an independent commissioning agent provides an independent judge, with a minimum possible conflict of interest, and avoids instances when contractors perform commissioning activities on their projects and evaluate their own work. Some State officials further stated that the completion of the commissioning tests may have been subject to pressures driven by OBO officials wanting to complete projects on schedule and that in some cases commissioning was not completed before staff moved into the NECs. OBO officials reported that starting in 2008, State generally extended the duration of NEC project schedules by 4 to 5 months, in part, to allow more time for commissioning and transfer activities at the end of projects.

Some posts questioned the independence of commissioning agents that were working for the construction contractor. Officials at the NEC in Managua, Nicaragua, believe that OBO’s former commissioning process resulted in many problems that post officials have had to resolve. For example, they said post had to hire a contractor to fix problems with air pressurization controlled by the building’s air handling and ventilation system, which they said is due to the incorrect set up of the building automation system. They believe there would have been fewer problems after moving into the building had OBO used an independent commissioning agent. In addition, in response to our written questions on what could have been done differently to eliminate operations and maintenance problems that occurred, embassy officials in Belmopan, Belize, indicated that OBO should have hired an independent commissioning agent, which they believe would have resulted in OBO identifying many of the problems that post staff identified on their own after occupying the NEC.

Several Posts Reported the Transfer of an NEC from OBO to the Post Resulted in a Lack of Information

In addition to commissioning issues, we found that at 11 of 22 NECs, transferring of completed facilities from OBO’s on-site project director, who managed the construction of the NEC, to posts and their facility managers was not always well coordinated or without problems, resulting in some information—such as preventative maintenance plans, operations and maintenance manuals for building systems, and as-built drawings— either not being turned over to the maintenance staff or being incomplete. In addition, officials at many posts reported that the training for NEC maintenance staff to support effective operations and maintenance activities is inadequate. OBO officials acknowledged there has been a wide variance in the completeness and accuracy of construction contractors’ turnover documents. In particular, we found 6 of 22 posts had not received preventive maintenance plans; 8 of 22 posts did not receive as-built drawings that accurately reflect details of the final construction; and 16 of 22 posts thought that the basic familiarization training on new building systems provided by construction contractors to local facilities staff, by itself, is insufficient to fully train staff.

Among the problems reported by post officials were cases when maintenance plans were not fully loaded into the NEC’s computerized maintenance management system. As a result of not having complete information about system components (e.g., equipment make and model, required maintenance, and location in the facility), facilities staff at three posts we visited reported staff had to populate the incomplete maintenance databases, an effort that required posts’ maintenance staff to populate the databases themselves with information such as the location of equipment, the manufacturer, and the required preventative maintenance that needed to be undertaken on the systems. In Belmopan, Belize, for example, post officials said that wiring diagrams for the building automation system showing the connections between it and the NEC building systems it controlled were not provided with the as-built drawings. As a result, the facilities staff must use a trial-and-error approach to determine how the system is configured, which makes it difficult for them to respond in emergency situations.

State Revised Its Commissioning and Transfer Processes for Future NECs, but Issues with Completed NECs Remain

State Strengthened Its Processes for Commissioning and Transferring NECs and Made Organizational Improvements

OBO has recognized and taken action to address posts’ concerns regarding issues related to past commissioning and turnover of the early NECs. Senior OBO officials emphasize that while they believe that on-site project directors fully enforced contract requirements related to commissioning, there may have been some instances when commissioning by the construction contractor was rushed. In 2008, OBO changed its process for commissioning NECs; OBO now contracts with independent commissioning agents to oversee the commissioning process on behalf of the government and provide a more independent assessment of the testing of building systems than State had in the past. In 2009, in briefing its Industry Advisory Panel, OBO’s Director reported there was a disconnect between OBO’s on-site project directors, who oversaw construction, and posts’ facility managers with regard to expectations on system performance and turnover documentation that resulted in instances of each blaming the other for building systems’ problems. In recognition of the organizational disconnect between those constructing the NECs and those maintaining them, the OBO Director combined OBO’s Office of Construction Management and its Office of Facility Management under a single managing director to improve communication, coordination, and efficiency related to both commissioning and turnover of completed projects from OBO’s construction project directors to posts and their facility managers. In addition, given issues with commissioning and maintenance of fire protection systems, OBO’s Director removed the fire engineers from OBO’s Office of Design and Engineering and assigned them to OBO’s Office of Fire Protection. In written comments to us, OBO officials reported those staff engineers did not have the direct authority to prevent occupancy of NECs. According to the director of the Office of Fire Protection, starting in January 2009, that office now has full authority for overseeing commissioning tests of the fire protection systems in NECs and provides the final approval authority on acceptance of those systems prior to issuance of a certificate of occupancy that allows post to move into the NEC. Furthermore, that office is organized so that staff conducting and overseeing commissioning reviews and testing are fully independent of the fire protection engineers who conduct the design and construction reviews of the fire protection systems to support the on-site construction project director. This is to ensure OBO’s fire commissioning officials are not pressured by project director concerns related to completion schedules and that they have an independent perspective on the project.

OBO has also made changes to the process it uses to transfer a completed NEC to post. For example, in 2009 it established an NEC Transition Program and a new Transition Division, with the intent to assign an on-site Operations and Maintenance Transition Coordinator—6 months before, and 6 months after an NEC opens—to assist posts, the project director, and the incoming facility manager during the turnover to ensure, among other things, that maintenance staff receive required maintenance manuals, maintenance plans, and as-built drawings. The individual will also serve as coordinator with OBO headquarters to assist post management and the facility manager in resolving contractor punch lists and warranty issues that may still be at issue after a post has moved into the NEC and OBO’s project director has departed.

In 2009, OBO also updated its standard operating procedures governing the responsibilities of all parties involved in the transfer of NECs from the project director to the post facility manager and provided additional guidance to smooth the transition process of NECs. OBO officials also reported they now conduct a warranty inspection site visit approximately 8 to 11 months after construction to ensure all warranty-related issues have been addressed before the contractor’s 1-year warranty period expires. OBO officials report that NECs that are completed in fiscal year 2010 would be the first set of projects where the changes made to the commissioning process should be evident and result in fewer issues after posts move into the NECs.

Changes to the Commissioning and Transfer Processes Do Not Address Completed NECs

While OBO has taken action to change its commissioning process, the changes do not address problems that resulted at NECs completed under the old process. We note that DOE’s commissioning guide for federal agencies states that federal facilities should be recommissioned every 3 to 5 years and that the costs associated with commissioning the systems again—effectively a tune-up of the building—will typically be recaptured in about 2 years as the tune-up results in energy cost savings. More than a third of completed NECs are now nearly 5 years old, but OBO has not undertaken any complete recommissioning of NECs despite the many reported issues with some NECs’ building cooling, fire protection, and other systems. While OBO has undertaken some limited recommissioning on individual systems—such as systems in Beijing, China; Conakry, Guinea; and Phnom Penh, Cambodia—one official noted that the problems with one system sometimes have linkages to others. Industry commissioning experts cite that, while some building owners (e.g., the federal government) do undertake limited commissioning on existing building systems, focusing on a single system does not typically result in a facility that operates optimally overall; an integrated approach maximizes positive results to ensure the building is operating efficiently and safely. For example, the building cooling system may be affected by electrical power conditioning problems. One OBO management official indicated that he would like State’s goal to be to recommission NECs every 5 years but further noted there is no established budget for recommissioning. In our review of State’s Long-Range Overseas Maintenance Plan, we found the plan did not include any proposed prioritization, schedule, or costs for recommissioning completed NECs. OBO officials affirmed they are not performing recommissioning on a 5-year basis and do not have a formal plan to recommission NECs.

Several NECs Had Problems with Building Systems, Including Failures That Disrupted NEC Operations

More than half of the 22 NECs we reviewed have experienced problems with operating critical building systems, which have resulted in the need for projects to repair or replace some systems. The problems involved three building systems, including NEC cooling systems, fire alarm systems, and security doors and windows, and were common across many of the NECs we reviewed. In particular, we found that 14 of 22 NECs had problems with their cooling systems—specifically the chillers—not performing as intended, including failing completely; 16 of 22 NECs had false alarms or other recurring problems with the fire 16 of 22 NECs had problems with their forced-entry and ballistic-resistant security doors or windows.

These problems, some that should have been caught during commissioning, have caused varying levels of disruption to post operations, ranging from nuisances caused by false fire alarms to substantial disturbance resulting from chiller failures that have caused flooding with damage to property and equipment.

Posts Have Had Numerous Problems with NEC Building Cooling Systems

According to a 2007 OBO study, NECs have experienced numerous failures with the buildings’ cooling systems that are due to problems with the air conditioning chiller units. The report shows that over 100 chillers, installed since 2001, have either failed or experienced serious operating problems. OBO identified 22 completed NECs that have experienced problems that affected the proper operation of the units, including chiller failures. At the NEC in Panama City, Panama, for example, post officials noted that one of the chillers failed on several occasions, resulting in critical spaces being flooded with water used within the cooling system and causing damage to equipment. One post official further noted that to adequately address the problem, major portions of the cooling system had to be redesigned and that OBO is planning to replace the system in 2010. In 2009, OBO funded emergency repairs of two chillers that failed in Conakry, Guinea, at a reported cost of $250,000. In 2008, State’s IG reported that in Abuja, Nigeria, chillers did not work properly for at least 2 years after the post opened. One OBO official reported that a new chiller is planned to be installed in Abuja sometime in 2010.

OBO officials identified that most chiller problems are associated with a single manufacturer’s units and characterized some problems as “latent defects,” meaning that the problems were not detectable at the time of inspection and acceptance. Circuit board burn outs, refrigerant loss or leakage, defective refrigerant valves, and compressor failures have led to failures of the chillers. OBO reports that the manufacturer has addressed some of the problems with the chillers during the one year warranty period. However, our review of OBO reports found that some chillers have been replaced prior to the units’ expected useful life, which is estimated to be at least 25 years. Our review found that OBO has already identified a need to replace chillers in Yaoundé, Cameroon (completed in 2005), and Kathmandu, Nepal (completed in 2007). In interviews with OBO, the chief of the mechanical engineering branch reported that OBO is starting to develop a program to replace chillers where critical problems exist; however, OBO does not yet have a clear idea of which posts will definitively need their chillers replaced. OBO’s 2007 study estimated the cost to replace a single post’s chillers to range from $500,000 to over $1 million.

Our review of OBO’s study on chillers found OBO’s mechanical engineering branch was neither fully involved in the selection and approval of chillers as proposed by the contractor nor the commissioning of building cooling systems. In addition, OBO’s mechanical engineering branch chief noted the NEC design specifications for chillers were “not as tight as they perhaps could have been.” In some instances, he noted the building cooling systems were oversized resulting in chillers not operating properly. Those issues reveal that some problems State experienced were not due solely to problems with the units but rather were also due, in part, to problems with OBO’s internal processes. In addition, both OBO and post officials have reported that local facilities staff at some posts may not have the requisite technical skills to adequately maintain the chillers and could have also contributed to problems posts experienced. An OBO official reported that the design criteria for NECs prior to 2007 allowed contractors to install either water-cooled or air-cooled chillers based on life-cycle cost considerations. They further reported that maintaining water-cooled chillers is challenging due to technical issues, such as having to treat the water-cooled systems by using potentially hazardous chemicals. In 2007, after learning of the problems that facilities staff had maintaining the water-cooled systems, OBO changed its design criteria to require air-cooled chillers to be installed in future NECs. OBO based its decision on its conclusion that the units are less difficult to operate, in part, due to not having cooling towers to maintain. OBO reported that water-cooled systems will no longer be used in NECs, despite being generally more cost effective with regard to energy use. OBO officials believe there is no case where energy savings of using water cooled chillers would outweigh the costs of maintaining those systems.

In addition to problems with chillers, we found evidence of other issues related to the NECs cooling systems, including temperature control problems, building air pressure issues, condensation on pipes and in ductwork, mold, and inadequate cooling of computer server rooms. Some of the contributing factors include design and installation issues and lack of required preventative maintenance on the systems. (See figs. 13 and 14 for examples of problems we found that are related to the design, installation, operation, or maintenance of the NEC cooling systems.)

Several posts we reviewed have experienced false alarms or other repeated problems with operations of their fire alarm systems. These alarms disrupt operations—particularly consular services and classified operations—when post personnel need to cease activities and secure classified materials and workspaces prior to evacuating the building in the event of an alarm. Embassy officials in Sofia, Bulgaria, reported, for example, repeated false alarms during the first 4 years of occupancy that took several visits from OBO and contractor teams to troubleshoot and resolve. In Yaoundé, Cameroon, officials reported they experienced four false alarms per week and that OBO spent $120,000 on repairs to the NEC fire alarm system. At one NEC, officials said the ambassador would advise people he was meeting with that the NEC fire alarm system had problems and they need not evacuate the building unless the public address system indicated there was an actual fire incident.

In addition to false alarms, several NECs have had repeated problems with fire alarm control panels, with illuminated “trouble” or “supervisory” lights, or the sounding of an alarm on the panel that signals a problem with the system. OBO fire officials report that the problems with the fire alarm control panels are related to one manufacturer’s products that are complex to operate and cannot easily be corrected by the maintenance staff because of special tools and programming codes from the manufacturer that are needed to troubleshoot and fix the problems. These alarms can cause disruptions. For example, in Kigali, Rwanda, the General Service Officer who oversees warehouse operations commented that the fire alarm control panel in the warehouse routinely sounds an audible alarm. The alarm is very loud and disturbing to warehouse staff. While the alarm has been reset many times, she noted it has been an issue since the facility was completed in 2008. During our visit, we found the panel had both trouble and supervisory lights lit. Post facilities personnel noted they have been waiting for nearly 8 months for OBO to find a solution. Figure 15 shows the fire alarm control panel at Kigali, Rwanda, which we observed had warning lights indicating a condition in the system that requires attention. Similar trouble and supervisory conditions were found at some of the other posts we visited as well.

OBO fire officials report that while they assess most problems as being minor in nature, they report there are some problems that are more significant and require extensive troubleshooting by trained technicians. Fixing the problems is complicated by most posts’ lack of qualified and experienced staff to perform testing and maintenance of the complex fire protection systems. As a result, OBO staff or contractors must be sent to posts to resolve the problems. In discussions with OBO’s fire officials, they noted they are aware of many of the past problems with false alarms and are trying to address them; however, higher priorities to conduct final acceptance testing on NECs under construction has slowed their ability to respond to the problems as quickly as they would like.

NEC Security Doors and Windows Had Problems and Replacements Are Under Way

More than half the posts we reviewed have encountered problems with their security forced-entry and ballistic-resistant doors and windows, including problems with doors malfunctioning and window glass cracking. State officials reported, as the NEC program grew and the demand for security doors and windows increased, recurring problems with the doors and windows became evident as projects were completed. Problems with doors and windows relate to a combination of design, manufacturing, and installation defects. For example, doors used in early NECs were fitted with hinges that were incapable of supporting the door’s weight and prone to premature failure, especially in high-traffic areas such as main lobbies and the consular applicant waiting areas. Doors installed at NECs built prior to 2005 also presented maintenance challenges because their design specifications did not adequately allow for adjustment to keep doors properly aligned in relation to the door frame and building structure. State has revised its specifications to ensure the doors are installed correctly and that they allow for future adjustment to properly maintain the doors. Similarly, windows used at early NECs exhibited manufacturing defects that contributed to their cracking, especially in locations with high temperatures. Also, because some contractors were not experienced with these products, doors and windows were not always installed correctly, and as a result, did not operate properly after the facilities were occupied.

While OBO expects fewer problems with security doors and windows in the future because of improvements made to design specifications, manufacturing processes, and installation techniques, it is systematically managing efforts to repair or replace defective doors and windows at several existing NEC locations. For example, in Yaoundé, Cameroon, OBO reports that it funded a project to replace 24 doors at a cost of approximately $840,000. In Kathmandu, Nepal, 30 windows cracked shortly after the NEC opened in 2007, and post officials report OBO is planning to replace them. Going forward, our review shows that OBO plans to repair or replace security doors and windows in at least 16 additional NEC locations at a total estimated cost of $25 million (see figs. 16 and 17). While some replacements are reported by OBO officials as being driven by an increase in the security standards since the NECs were completed, it is unclear the extent to which replacements are also due to poor performance of those products or deficiencies in the design criteria for the doors in early NECs.

State Has Taken Steps to Avoid Future Problems with Building Systems

As previously discussed, State has a lessons learned process that examines issues and problems with past projects so as to inform future designs of NECs. OBO officials have acknowledged the numerous issues posts reported, such as problems with building cooling systems, fire alarm panels, and security doors and windows. We found that OBO has taken action to change the SED design and contract requirements that govern future NECs with regard to all three of those building systems. Table 5 outlines some of the changes that have been made through the lessons learned program to avoid the problems that exist with the underperformance or failure of building systems in earlier NECs; however, due to the time required to contract and construct NECs, it typically takes 4 years before these changes are evident in completed NECs. While changes to SED design criteria for future projects do not resolve problems with completed NECs, interviews with OBO officials and our review of State’s LROMP show evidence that OBO is trying to address some of the problems with chillers and security windows and doors through planned replacement projects, a few of which have already been completed. OBO fire officials are also working with posts to develop maintenance contracts to assist in troubleshooting maintenance problems with NEC fire alarm systems.

State Faces Challenges in Hiring and Training NEC Facilities Staff and Lacks a Plan to Fully Address Challenges

State has experienced problems in hiring U.S. Foreign Service facility managers and the locally employed maintenance staff that possess needed technical skills to operate and maintain the NECs. In addition, the local maintenance staff need more training on operating the sophisticated NEC building systems. As a result, facilities may be operating suboptimally and important maintenance activities may be compromised, leaving NECs at risk of not performing as expected. We found that State’s LROMP does not identify costs or a schedule to address the training needs of local maintenance staff to ensure the investment in NECs is protected. If State cannot hire enough facility managers and local maintenance staff with the technical skills and qualifications needed to understand the NEC building systems and also train the local facilities staff responsible for operating and maintaining those sophisticated systems, State puts at risk the investment made in those NECs, the safety of the people operating and working in the facilities, and the ability of U.S. government employees to conduct their work.

State Faces Challenges Hiring Qualified U.S. Foreign Service Facility Managers and Local Maintenance Staff

State officials reported that, based on sophisticated building systems installed in NECs, State’s hiring criteria needed to be strengthened for U.S. facility managers and, further, hiring appropriate staff has proven to be a slow process. Specifically, State now requires that newly hired facility managers have a degree in facilities management or a related engineering field. OBO currently has approximately 170 facility managers, of which approximately 145 are assigned to overseas posts and some facility managers have regional duties supporting more than one post; however, to meet its intent of placing specially qualified facility managers at every large embassy and consulate worldwide, OBO is undertaking a long-term recruitment and hiring effort. OBO officials reported a goal to hire 20 facility managers in fiscal year 2009, 20 in fiscal year 2010, and 24 total for fiscal years 2011 to 2015. However, OBO has fallen short of achieving its hiring goals. In fiscal year 2009, for example, OBO reported that it hired 11 facility managers (i.e., just over half of its goal), and as of May 2010, OBO had hired a total of 6 facility managers relative to its fiscal year 2010 goal of 20. Some of the challenges and delays in hiring were due to the process of developing new position descriptions that require facility managers to have a degree in facilities management or a related engineering field, and working with State’s human resources department to get those new qualifications requirements approved.

Overseas posts are responsible for hiring locally employed maintenance staff and sometimes face challenges hiring individuals with the technical skills and experience required to operate NECs’ complex systems. OBO officials report a key issue with NEC maintenance, which they believe has contributed to the problems with some systems, is that posts have not been able to hire appropriately qualified local staff. OBO provides individual posts with a recommended maintenance staffing plan and advises posts that, because NECs are large and have sophisticated building systems, posts should be prepared to hire additional staff to properly support the maintenance needs when an NEC opens. State’s IG, in surveying posts with NECs about whether they had hired the required maintenance staff, found that several did not hire the required maintenance staff due to budget constraints or had not hired them by the time the NEC initially opened.

As noted previously, local staffing costs at NECs increased by approximately $200,000, on average, at 10 posts we reviewed because of the need to hire additional local maintenance staff. State’s Inspector General reported that the level and quality of maintenance services appears to be determined by available ICASS funds rather than need, and a few posts reported concerns that ICASS budgets did not keep pace with increased NEC staff needs. Some posts also reported that it can be difficult in some less developed countries to find qualified maintenance technicians to hire. OBO officials reported to us that part of the reason why posts face problems hiring local maintenance staff in a timely manner is these additional positions must be approved by other agencies located at the post through ICASS. OBO officials also indicated that in some cases, the salaries needed to get qualified technical staff—such as a building automation operator— have created difficulties for posts when it would require paying the new hire more than senior local staff in other offices within the embassy.

To address hiring challenges related to facility manager positions, OBO officials report they are reaching out to industry facilities management associations and universities to increase the number of potential applicants that apply for the positions. As we reported, State did not meet its fiscal year 2009 goal for hiring new facility managers and may not meet its goal for fiscal year 2010. Starting in 2009, OBO reports that the new Operations and Maintenance Transition Coordinators assigned to each project will assist posts’ management officials in hiring additional local maintenance staff as needed; however, OBO officials reported that the approval and hiring of local facilities staff, to include setting salaries, remains an ICASS decision and is not under OBO’s control.

State Faces Challenges in Training Maintenance Staff to Operate and Maintain the NECs

State officials report that prior to 2008, the department had not focused on training and career development needed for its facilities maintenance personnel. While State had provided training in the areas of management and leadership for facility managers, there was no formal training program available that provided technical training on the sophisticated NEC systems and State policies governing overseas facility management in an embassy environment. In addition, there were no training programs for local maintenance staff. State has started to take action to address some of the challenges, but OBO officials report those actions will not fully address the needs of local maintenance personnel. In 2008, OBO developed a training program for State’s facility managers. Unlike local maintenance staff, OBO officials report they are directly responsible for training and career development for facility managers. OBO officials recognized the need to provide more training for facility managers and report that newly hired facility managers now attend courses at the Foreign Service Institute and receive specialized training in areas such as (1) building automation systems; (2) heating, cooling, and ventilation systems; and (3) fire protection systems. In addition, facility managers receive training on overseas facilities management related to specific State regulations governing maintenance budgets and the maintenance protocols for classified areas.

Training of the local maintenance staff remains a problem. As noted earlier, the basic familiarization training provided by the NEC construction contractor during the time of commissioning and prior to transfer is not sufficient by itself to fully train the local maintenance staff on the building systems. As a result, operation of building automation systems, in particular, has been challenging for posts. Our review of OBO reports and interviews with posts show that 14 of the 22 NECs we reviewed encountered problems with operating building automation systems. For example, embassy officials in Kigali, Rwanda, report that personnel will have difficulty learning enough programming on the system to facilitate programming replacement components in the event the original components fail; they report that emergencies may not enable post to wait for a service contractor or OBO to travel to post to troubleshoot or fix problems. One of State’s contractors noted that sufficiently operating and maintaining the building automation system is challenging, since it requires training and knowledge of both mechanical engineering and advanced computer programming. He reported that at some NECs he finds sensors, controllers, and equipment that have been shut off by facilities staff who have not had adequate training on the systems and may not understand the implications when components are merely turned off. For example, shutting a component down may restrict fresh air being provided to a closed office.

We found that State’s LROMP does not identify needed resources and costs to meet the training needs of local maintenance staff at NECs. OBO officials recognize that NEC building systems require extensive training to operate. OBO officials also recognize that if the local maintenance staff are not trained properly, the condition and operation of the NECs will be affected; however, OBO officials report they do not receive funding to train overseas maintenance staff, as it is an ICASS responsibility. Regardless, in 2009, OBO took some initial action to address some of the training deficiencies of local maintenance personnel and reported that it would be providing posts’ local staff with access to online training in areas such as water and wastewater treatment, environmental security protection systems, building automation systems, and work order management. However, two of these courses came online only recently and one is still in development; therefore, the action is too recent to assess in terms of the number of staff trained and the effectiveness of the training. OBO officials also reported that they have just begun discussions with a facility management training provider to explore if they can develop facility maintenance courses that could be made available to posts’ local staff. Again, the actions are too recent to assess in terms of their effectiveness.

According to State officials, they are trying to compensate for the lack of technical skills of the local staff through the use of regional maintenance programs and posts’ maintenance service contracts; however, that may not be the most cost-effective solution. For example, State’s IG reported that the U.S. embassy in Abidjan, Cote d’Ivoire, did not have trained personnel to maintain the critical elements of the NEC’s heating and cooling systems and that post had to bring in a contractor from South Africa for emergency repairs at a cost of about $9,000 per visit. OBO officials reported they are exploring the idea of making use of OBO’s facility managers to act as trainers to control costs as OBO does not have dedicated funding to train posts’ local maintenance staff. According to OBO officials, some of OBO’s efforts to provide more training to local maintenance staff are being funded out of existing NEC project funds. Starting in 2009, OBO began to set aside 0.1 percent of NEC project funding—which would equate to $100,000 on a $100 million NEC project—to provide additional training, but OBO officials acknowledged it alone will not be sufficient to fully train local maintenance staff. OBO officials further noted that, while ICASS should normally fund the training of local staff, OBO is funding what it can to try to address some of the local staff training needs.

Conclusions

State has built 52 NECs that are more secure, safe, and functional for U.S. government personnel working overseas. Constructing such facilities that meet stringent requirements, such as building codes, security standards, and energy-efficiency goals, has been a significant undertaking requiring billions of dollars and sustained effort over nearly 10 years. However, State has encountered a number of challenges in building NECs that are the appropriate size for immediate and long-term staffing levels and in planning for the increased operational and maintenance needs of these new, technologically sophisticated buildings. As a result, State has had to build additional office space at some locations, and may need to construct more, and has also faced higher operating, maintenance, and repair costs.

Currently, the process to determine the size of an NEC does not allow enough flexibility to ensure that NECs have sufficient space to accommodate staffing changes related to ever-shifting foreign policy priorities. State has not analyzed post-specific characteristics in completed projects that have been associated with rapid staff growth, such as geographic location, nor have officials been able to explain the analytical basis for determining the amount of growth space to include in building an NEC. In addition, overseas officials have found that the design of some spaces does not fully meet functional needs. While State has been able to identify and address certain design issues, identifying these design problems earlier, by, for example, conducting timely post-occupancy evaluations in accordance with State’s plans, is crucial to avoid similar problems in future NECs. Since State expects NECs to support U.S policy efforts for several decades, it is important that the facilities are large enough to safely and securely house the changing number of overseas staff in a manner in which staff are able to effectively carry out their missions.

State has not fully addressed the increased operations and maintenance requirements of the more technologically sophisticated NECs. Problems with commissioning and transferring the NECs from the contractors to the posts have resulted in some building systems that do not function as they should and led to added costs to repair and replace systems, contributed to higher operating costs, and created potential safety risks for staff. State has made changes to building design requirements to avoid future problems with NEC building systems. However, since changes can take at least 4 years to materialize in completed NECs, due to time to contract for and construct NECs, the changes are too recent to assess. State does not have a formal plan to recommission, or retest, the building systems at NECs that have already been completed. Recommissioning NECs would help ensure that the systems operate as efficiently as possible and that the problems with building systems are being fully addressed. State’s recent LROMP outlines—for the first time—NEC maintenance costs over a number of years and identifies the need for improvements in future editions, but it does not establish a time table for when specific projects should be completed which would help to further strengthen the planning process. In addition, the LROMP is focused solely on maintenance costs and does not address operating costs, resulting in an incomplete assessment of all costs associated with the functioning of NECs. Finally, without a plan that comprehensively outlines all human resources required to operate and maintain NECs, including identifying hiring and training needs, State will have difficulty ensuring NECs operate in an efficient and cost-effective manner. As State continues building NECs and strives to maintain those already constructed, addressing these challenges is important to provide U.S. employees with a secure and dependable working environment and ensure that State protects the country’s investment in these facilities.

Recommendations for Executive Action

In order to strengthen the operations of the extensive U.S. program that provides for new embassy compounds around the world, we recommend that the Secretary of State take the following six actions.

Take steps to improve the process for determining the appropriate size for an NEC, including reassessing the analytical basis for projecting future staffing levels and determining how much growth space is allocated.

Ensure that OBO conducts post-occupancy evaluations of completed NECs as planned.

Develop a plan to recommission those NECs completed before 2008 to, for example, resolve any problems posts may still have with building systems, and ensure that the operating costs are not being incurred unnecessarily as a result of building systems that are not operating as efficiently as intended.

Identify time frames for implementing the maintenance projects that are outlined in the LROMP.

Expand on future editions of the LROMP to include reporting on operating costs to allow for a more complete assessment of the costs to maintain and operate NECs.

Develop a human resource plan that addresses the requirements and cost implications for hiring required NEC facilities maintenance staff and sufficiently training the local maintenance staff.

Agency Comments

We received written comments on a draft of this report from the Department of State. State said that the report contains helpful input about its program to build NECs which State will use to further its efforts to improve the efficiency and effectiveness of its operations. State concurred with our principle findings, conclusions, and recommendations. For example, State wrote it will work to identify time frames for implementing the LROMP maintenance projects, develop a system to compile and report on operating costs, and undertake human resource planning to hire and train local maintenance staff. State further outlined specific actions that begin to address our recommendations in a few instances. For example, State said it is currently conducting post-occupancy evaluations at three posts and plans to evaluate at least six more by the end of 2010. In addition, State said it is conducting two pilot recommissioning studies, and plans to conduct two more studies in fiscal year 2011 if funding is available. State provided additional clarifying and technical comments on a number of points, which we have incorporated throughout the report, as appropriate. Many of State’s comments we had already acknowledged in our report. State’s complete comments, along with our responses to specific points, are reprinted in appendix II.

We are sending copies of this report to interested congressional committees. We are also sending copies of this report to the Secretary of State. In addition, this report will be available at no charge on the GAO Web site at http://gao.gov.

If you or your staff have any questions about this report, please contact Jess T. Ford at (202) 512-4268, fordj@gao.gov, or Terrell G. Dorn at (202) 512-6923, dornt@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 contact and staff acknowledgements are listed in appendix IV.

Appendix I: Scope and Methodology

The objectives of this report were to examine (1) the extent to which new diplomatic facilities match the space and functionality needs of overseas posts and the actions State has taken to address any space and functionality challenges; and (2) operations and maintenance challenges at these new facilities and State’s steps to address them.

Our scope included new facilities Overseas Buildings Operations (OBO) refers to as New Embassy Compounds (NEC), New Consulate Compounds, and New Office Buildings. In addition, we included a Acquired B intended to locate all U.S. governmen location. We inclu fiscal year 1999 and were comp at 44 posts that State’s Bureau of ny facility OBO refers to as a Newly uilding if the purchase and renovation of such a facility were t employees at a new and single ded all posts for which construction began in or after leted by September 30, 2009. o obtain information on space, functionality, and operations and T maintenance challenges identified at NECs within our scope, we reviewed State’s 2008 Revalidation Look Back Study, which identified issues and problems, as well as successes, with regard to the planning, design, construction, and maintenance of the new facilities. The study took place between August and October 2008 and identified 23 challenges as frequently occurring throughout completed NECs. We also conducted interviews with officials at OBO and State’s regional bureaus and reviewed other documentation, including the State Inspector General’s (IG) inspection of OBO; IG post inspection reports; posts’ responses to a March 2008 IG satisfaction survey; posts’ lessons learned cables; rightsizing reports; and post-occupancy evaluations of some completed projects.

To obtain more detailed information on space, functionality, and operations and maintenance challenges, we reviewed 22 NECs, or one-half of the posts within our scope, in greater depth. We selected these posts based on interviews with regional bureau officials, reviews of rightsizing reports and 2008 staffing data, OBO and OIG reports on embassy operations and maintenance issues, OBO’s Revalidation Look Back study, and past GAO reviews of the NEC program. In addition to selecting posts with many identified space, functionality, and operations and maintenance problems, we also selected some posts with few identified problems to be able to analyze a range of experiences. Geographical diversity of posts and project type were also factors in determining which posts to contact.

Of the 22 posts we reviewed in greater depth, we conducted site visits at 8 posts and conducted teleconference interviews with 14 posts. In addition to contacting officials at each post, we interviewed officials at the regional bureaus in Washington to obtain information on space, functionality, and operations and maintenance challenges at posts that we were unable to contact, as well as to gain further insight on how these challenges affect their respective regions as a whole.

Table 6 lists all 44 NECs within our scope and identifies those we visited or interviewed via teleconference.

To assess the extent to which initially constructed desk space matched co posts’ current desk space needs, we mpared State data on the number of at each post with desks originally built each post’s 20 positions, as reported in the purposes of determining each over Capital Security Cost Sharing program for all 44 We interviewed knowledgeablh data sources were sufficiently reliable for our with the 22 and determined that bot purposes. However, we identified a in agenci not be comple and subsequ posts; (3) the as-built data may not have d (4) the curre construction and do not include planned growth space; an staffing data report auth if all positio our checks f most of which, in our ju In addition, Policy, Right respective roles in planning for the s current authorize 09 submission seas agency’s charg our scope. iewed our analysis posts we interviewed, OBO, and each of the regional bureaus cluding: (1) in a small number of cas es, current staffing data es, particularly the U.S. Agency for International Development, may tely accurate; (2) the dat ent changes may have occ a are based on a urred that altered th s made during nt e post’s total need orized position ns were filled, but some po ound only a small number dgment, had lit we interviewed officials at s representing th sitions may not be f of Management sizing, and Innovation (M/PRI) and OBO to discuss their of inaccuracies in eit tle impact on our ov State’s Office erall findings. ce needs of NECs.

To examine functionality challenges, we asked officials at the 22 posts we contacted open-ended questions about functionality concerns. We then summarized functionality challenges that were commonly identified during our interviews and site visits. These ranged from the amount of controlled access and noncontrolled access space available at NECs to issues with the NEC’s quality-of-life facilities. Our methodology may not have captured all costs we reviewed, ed at all of the phallenges experienc as post officials ms they deemed to ted the challengeight have only repor be most significant.

To analyze challenges found in operating and mai quantified common challenges found a based on off and site visit reports and the Revalidation Look-Bac from proble windows to contractor and OBO to the posts. Our methodolo a we contacted, icials’ responses to open-ended questions in our interviews s, as well as our review of documentation, including State IG k study. These c ms with forced-entry and ballistic-resistant doors and the process of turning over the NEC from the construction gy may not have captured ll challenges experienced at all of the posts we reviewed, as post officials might have only reported the challenges they deemed to be most significant.

In addition, we analyzed operations and maintenance cost data from 10 NECs opened in fiscal years 2007 and 2008. We asked officials to pro vide fiscal year 2009 data on operating expenses (e.g. cost for utilities such aselectric, gas, water, and sewer as well as other costs like grounds keeping and janitorial services), costs for maintenance service contracts (e.g. elevator service contract), and the cost of hiring additional facilities maintenance staff (e.g. building automation system operator) for the We also asked for data on each of these expenses for the last full fiscal year in which the post operated from its previous facilities. Because these NECs were completed recently, inflation and other time-related issues, such as price changes, did not play a significant factor in our comparison of 2009 costs at the NECs with the last full year of operation in the previous facilities, and thus the reported cost are not adjusted for inflation or currency fluctuations. We discussed potential discrepancies in the data with post officials and tested the data for internal consistency. Although in some cases, posts may or may not have included utilities costs for leased NEC. facilities, we determined that unreported utility costs for leased facilities would not materially impact our findings. We determined the data we sufficiently reliable for the purpose of demonstrating that the operatin costs of the 10 NECs were substantially higher than the co facilities they replaced. Due to concerns about OBO having complete and accurate data on posts’ expenses, we obtained the cost data directly from posts.

Finally, to identify actions State has taken to address space, functionalit and operations and maintenance challenges, we interviewed State offici at OBO, the regional bureaus, and M/PRI. In addition, we reviewed documentation of programs or initiatives that State has developed to address identified challenges.

Appendix II: Comments from the Department of State

The following are GAO’s comments to the Department of State’s letter dated June 28, 2010. 1. We do not dispute that NEC maintenance costs may be in line with those for similar facilities as suggested by OBO’s analysis. Rather, our intent in comparing operations and maintenance costs of NECs to those at the facilities they replaced is to show that because of their larger size and the increased complexity of building systems, among other factors, NEC operations and maintenance costs are higher. Our analysis of utility costs indicates, for example, that NECs have a comparatively higher utility demand than previous facilities and pay correspondingly higher amounts for utilities. As the higher costs to operate and maintain NECs present long-term budget implications, we believe it is important for State to continue its efforts, as it has begun to do with the recent development of its Long Range Overseas Maintenance Plan (LROMP), to comprehensively plan for the long-term resource requirements necessary for protecting its investment in NECs. 2. We acknowledge that NECs provide an improved level of safety compared to the facilities they replaced. However, the intent of our discussion is to convey that safety concerns, particularly concerning the operation of fire protection systems, were apparent at some of the earlier NECs as a result of deficiencies with the commissioning process. For example, OBO’s Office of Fire Protection reported that some early NECs were occupied without the correction of critical deficiencies affecting operation of their fire protection systems, a situation that we believe would not have occurred if commissioning had been properly conducted. Because of the paramount importance of safety, we believe it is necessary to report on issues that potentially result in reduced safety levels. 3. We support State’s intention to place greater emphasis on proactive analysis and objective comparison. State concludes that its analysis of the 16 NECs planned since the inception of M/PRI, many of which are still under construction, indicates that “the problem of inadequate office space is gradually being resolved.” However, State’s analysis does not clearly demonstrate whether these NECs match the space needs of overseas posts. For example, State’s analysis includes all positions at overseas posts and does not distinguish between those positions that require office space in the NEC (referred to in our report as “desk” positions) and those, such as warehouse or maintenance personnel, that do not. While such an analysis could be appropriate for determining whether the rightsizing process is resulting in greater accuracy projecting overall staffing levels, it is does not provide a clear picture of whether the amount of office space that was planned for the NECs is adequate for current office space needs.

In addition to having concerns that State’s analysis may not provide a clear assessment of space requirements, we also believe that the results of State’s analysis do not indicate that NECs planned under rightsizing will face fewer space challenges than their predecessors. For example, State’s analysis of all positions shows that 7 of the 16 (44 percent) NECs planned under rightsizing have at least 5 percent m staff than were included in the initial projections, even though none o the NECs planned under rightsizing is more than 3 years old and ma are still under construction. Our analysis of 44 completed NECs showed that over half have current desk space needs that exceed the nally, amount of desk space constructed by at least 5 percent. Additio we found that 4 of the 6 NECs completed since the inception of M/PRI had current staffing levels that exceeded constructed desk space b more th analysis support our finding that many NECs have already run out of desk space and, therefore, the planning process might benefit from additional analysis of the relationship between post-specific characteristics and staffing growth. an 20 percent. We believe that both our analysis and State’s 4. We acknowledge OBO’s intention to revise the growth factor formula which would provide additional space in NECs. However, this does n address our concern that OBO has not provided any analytical basi demonstrate that a growth factor of 10 percent, applied uniformly across all projects, is appropriate. 5. We support State’s initial effort in taking action to identify and prioritize its maintenance needs as d the LROMP. Establishing a timeline concurrent with availability of funds would provide greater transparency for projects to be initiated during a specific funding period. However, we also believe State should consider outlining notional implementation time frames for requirements identified over each of the future budget years covered ocumented in its first edition of by the LROMP, including those years for which future funding is not certain. By identifying notional time frames, based on forecasted budget scenarios and not solely on available funds, we believe State will be better able to demonstrate whether the plan can effectively be resourced by future anticipated budget scenarios or whether maintenance requirements potentially exceed likely funding scenarios. We believe such an approach would strengthen State’s efforts to show how timely investments in maintenance can protect the multibillion dollar investment State is making in constructing NECs. 6. We support OBO’s efforts in developing first-year stimates for NECs when they open. However, we still maintain State e needs to develop an assessment of future operating costs that is included in the LROMP. A plan that outlines future operating costs is particularly important since, as our analysis shows, the operating co at NEC posts have clearly increased relative to the facilities they replaced. By developing estimates of future years’ operating costs and combining those with estimates of future maintenance costs that State has already outlined in its LROMP, we believe State will have a more complete assessment of the financial resources that State and other contributing agencies will need in future budget years to operate and maintain overseas facilities.

7.

We maintain that State needs a human resources plan for NEC facilities maintenance staff, regardless of the funding mechanism. Such a plan, that addresses cost implications for hiring and training necessary staff, could assist State in better identifying the necessary financial resources and planning to address resource limitations.

Appendix III: GAO Contacts and Staff Acknowledgments

GAO Contacts

Jess T. Ford, Director, International Affairs and Trade, (202) 512-4268 or fordj@gao.gov Terrell G. Dorn, Director, Physical Infrastructure, (202) 512-6923 or dornt@gao.gov.

Staff Acknowledgments

In addition to the individuals named above, Leslie Holen, Assistant Director; Michael Armes, Assistant Director; John Bauckman; Sam Bernet; Raj Chitikila; Kalvin Jenhung Lo; Kara Marshall; Christina Werth; and Richard Winsor made key contributions to this report. In addition, Joe Carney, Martin de Alteriis, Mark Dowling, and Faye Morrison provided technical or legal assistance.