In the wake of the 1998 bombings at the U.S. embassies in Nairobi, Kenya, and Dar es Salaam, Tanzania, State has received increased funding for the construction of new, secure facilities overseas. Funding from fiscal year 1999 to 2004 totaled about $3.4 billion. In addition, Congress passed the Secure Embassy Construction and Counterterrorism Act of 1999. The act established a number of security requirements for diplomatic facilities overseas, one of which was that all U.S. government personnel (except those under the command of an area military commander) at any new U.S. diplomatic facility abroad must be located at the same site. State identified facilities at about 185 posts that would need to be replaced to meet the security standards. To help manage this large-scale construction program, OBO developed the Long-Range Overseas Buildings Plan, first published in July 2001 and recently updated in March 2004. The plan is updated annually, adding new projects as scheduled projects’ construction contracts are awarded. The plan prioritizes posts based on security and operational considerations, including input from State’s regional bureaus and the Bureau of Diplomatic Security. The most recent version of the plan prioritizes 77 proposed security capital and regular capital projects from fiscal years 2004 through 2009, including 18 separate USAID annex buildings. Until the late 1990s, the majority of USAID missions were not colocated with embassies but existed in separate commercial or freestanding buildings. Most of these facilities were rented; several were built with host country trust funds, and a small number were constructed with funds appropriated by the Foreign Operations Appropriations Acts. Since the 1999 colocation requirement, State and USAID have not been fully successful in obtaining funding for construction of separate USAID annex buildings at locations where State was building a new embassy compound. In its fiscal year 2001 report on Commerce, Justice, and State funding, the House Committee on Appropriations wrote that it did not approve the use of the funds for the USAID annexes because appropriations requirements of USAID fall under the jurisdiction of the Foreign Operations, Export Financing, and Related Programs Subcommittee. In an effort to overcome funding problems, USAID requested that the Foreign Operations subcommittee fund a new account for fiscal year 2003, the Capital Investment Fund, to fund information technology enhancements and construction of colocated USAID facilities. Although the fund has been established, USAID has not obtained full funding to construct all of its buildings. In its report on the fiscal year 2003 Foreign Operations appropriation, the House Committee on Appropriations noted that buildings and space for all other government agencies overseas were appropriated through State’s account for overseas construction, and stated that therefore the committee had not funded all requests for USAID buildings on new embassy compounds. State’s fiscal year 2005 budget request, which has been approved by the House and is pending approval in the Senate, includes the construction of four USAID buildings anticipated to be funded from contributions through the Capital Security Cost-Sharing Program. State has built new embassy compound facilities in separate stages to accommodate the lack of USAID funding, according to State and USAID officials. Only one of three new embassy compounds completed to date includes the planned annex for USAID. In addition, contracts have been awarded or construction is under way on several more compounds that do not include, but will eventually have, a separate annex for USAID. Under OBO’s current 6-year building plan, nonconcurrent construction will continue through at least fiscal year 2009. State initiated the Security Capital Construction Program to replace its most vulnerable posts. Under this program, OBO is constructing replacement facilities on embassy and consulate compounds that will contain the main office building, or chancery, all support buildings, and a separate annex building for USAID, where necessary. According to OBO, it has always preferred to construct all components of a new embassy compound concurrently, and its 2002 long-range plan included projects in which the USAID building would be built concurrently with rest of the compound. It was only after USAID did not receive funding for its annexes in fiscal year 2001 that OBO began to move to a nonconcurrent approach to construction, according to OBO officials. Since 1999, OBO has completed construction of new embassy compounds in Dar es Salaam, Nairobi, and Kampala, Uganda, which were planned to include a separate facility for USAID. So far, OBO has completed the annex for USAID only at the compound in Dar es Salaam. Initially, OBO awarded a construction contract that did not include the USAID annex, but USAID received $15 million in additional operating expense funds through the regular appropriation process to pay for new construction. In addition, $2.5 million from program funds were used with $25 million obtained from the Security Supplemental Account for security upgrades. The funding became available in time for OBO to modify the original construction contract and complete the USAID annex at the same time as the rest of the compound. For Nairobi, OBO awarded a construction contract for a new embassy compound in September 1999 that did not include the USAID facility because there were no funds for this USAID annex. Subsequently, OBO and the contractor negotiated to include the USAID annex as a modification to the original contract, but sufficient funding did not become available in time. Construction of the chancery building was completed in 2003. USAID received funding for its annex in fiscal year 2003; construction began in June 2004 and is scheduled to end in June 2006, 3 years after the compound was completed and became operational (see fig. 1). In the meantime, USAID is leasing space at a cost of about $300,000 per year on the campus of a nongovernmental research facility. A construction contract for the new embassy compound in Kampala was awarded in 1999 and construction was completed in fiscal year 2002, but USAID did not receive funding for its annex until fiscal year 2004. OBO expects to award a construction contract for the USAID annex sometime in 2004, according to an OBO official. USAID plans to remain in its interim location outside the new compound—an office converted from a residence in Kampala and leased for $144,000 per year—until its new facility is built in about 2006. In addition, contracts have been awarded or construction is under way on the following seven compounds that do not include a separate building for USAID because the agency lacked funding for the construction: Yerevan, Armenia; Phnom Penh, Cambodia; Tbilisi, Georgia; Conakry, Guinea; Bamako, Mali; Kingston, Jamaica; and Abuja, Nigeria. At most of these posts, construction of the USAID facility will start between 2 to 4 years after OBO awarded the contract for the compound. For example, OBO awarded construction contracts for the new embassy compounds in Phnom Penh and Conakry in fiscal year 2002 and plans to solicit bids to construct the USAID annexes on these compounds during fiscal year 2004. In Yerevan, the U.S. Ambassador and OBO devised an alternative to waiting for funds to build a separate facility for USAID: OBO is adding a floor to a warehouse building under construction on the compound to house USAID. OBO can add a floor to the building for less money than it would cost to build a separate annex, although USAID will have less space, according to State and USAID officials. Table 1 shows the contract award dates for selected new embassy compounds and the award dates for the corresponding USAID annex. The Secretary of State has had to issue waivers of the colocation requirement for some of these locations to permit USAID to remain outside the compound pending construction of a facility on the compound. In addition to the projects previously discussed, OBO’s current 6-year building plan includes 18 new embassy compounds that will include a separate facility for USAID, 9 of which are slated to be built nonconcurrently. For the remainder of fiscal year 2004, OBO will award construction contracts for 3 new embassy compounds without including the USAID annex: in Managua, Nicaragua; Kathmandu, Nepal; and Accra, Ghana. The current schedule also calls for awarding embassy construction contracts in 5 locations in fiscal year 2006 but not awarding the contracts for USAID annexes until fiscal year 2007; and awarding 1 embassy project in fiscal year 2008 but not awarding the USAID contract until at least fiscal year 2009. Table 2 lists new embassy compound construction projects through fiscal year 2009. Nonconcurrent construction increases the overall cost to the government and raises concerns about security. We also found that, in some cases, constructing a separate annex building could cost more than building a larger chancery to accommodate USAID. OBO’s own analysis of 9 projects shows that the current schedule of nonconcurrent construction will add more than $35 million in costs. In addition, extrapolating from OBO’s data, we have projected an overall cost increase of as much as $78 million if all 18 future USAID annexes follow the historical pattern of nonconcurrent construction. This estimate does not include security enhancements and other costs that USAID will incur while its staff are in interim facilities pending completion of the USAID annex. This estimate also does not include potential cost savings from merging USAID space into chancery buildings in the future. Finally, nonconcurrent construction has security implications for USAID employees left behind in interim facilities and for the other U.S. government employees moved to more secure compounds. All government officials and private construction contractors with whom we spoke agreed that the practice of nonconcurrent construction significantly adds to the overall expense of building USAID office space. Building nonconcurrently can result in a second expensive mobilization of contractor staff and equipment, additional work to procure building materials, and added construction management oversight.