The Foreign Buildings Act of 1926, as amended, authorizes the secretary of state to sell, exchange, or lease any property acquired abroad that is used for diplomatic and consular establishments in foreign countries. The law authorizes the secretary to use the sales proceeds to acquire and maintain other property overseas. It also requires the secretary to report such transactions to the Congress with the department’s annual budget estimates. The secretary of state delegated the secretary’s authority under the law to the Bureau of Overseas Buildings Operations (OBO). Thus, OBO is responsible for establishing and overseeing policies and procedures for the department’s real estate properties. In 1996, we reported that the State Department did not have a systematic process for identifying unneeded properties and disposing of them. At that time, the department identified potentially unneeded properties through a variety of ad hoc and uncoordinated actions that we believed did not constitute an organized and effective system for identifying such properties. We also reported that decisions about the sale of unneeded overseas real estate properties had been delayed for years because of disputes between OBO and the regional bureaus and embassies. To speed these decisions by providing a final, authoritative forum for the disputing parties to argue their positions, we recommended that the State Department establish an independent panel to review disputed properties and decide which ones should be sold. In September 1996, the Congress directed the secretary of state to establish an advisory board on real property management to (1) review information about properties proposed for sale and (2) compile a list of properties recommended for sale to be approved by the under secretary of state for management. The Congress also directed the State Department to transmit this list to the appropriate congressional committees and to “proceed with the immediate sale of on the approved list” as soon as market conditions were appropriate. In response to the congressional direction, in April 1997, the assistant secretary of state for administration created the Real Property Advisory Board to review and make recommendations about the sale of disputed properties. The advisory board’s charter authorizes a seven-member panel appointed by the under secretary of state for management consisting of three real estate professionals from outside the State Department and four high-ranking department officials. The board is authorized to (1) review information on properties proposed for sale by the State Department, the State IG, our office, or any other federal agency and (2) compile a list of properties recommended for sale to be approved by the under secretary of state for management. The charter directs the advisory board to meet at least once each fiscal year and to proceed “as far as possible” by consensus in deciding which properties to recommend for sale. A 1999 State IG’s report found that the State Department had substantially complied with the Congress’s intent (and our 1996 recommendation) in drafting the advisory board’s charter and reporting the board’s actions to the Congress. The report also found that the advisory board had functioned in a manner consistent with its charter, and that its recommendations were based on sufficient and balanced information. Since 1996, OBO has taken steps to implement a more systematic process for identifying unneeded properties, which has resulted in post and OBO officials’ placing greater emphasis on identifying properties that could be sold. Steps reflecting this emphasis include an annual request to posts asking them to identify government-owned properties that should be considered for disposal and increased efforts by OBO and IG officials to identify such properties when they visit posts. However, the department’s ability to monitor property use and identify potentially unneeded properties is hampered by weaknesses in its property inventory system. In response to our 1996 report, OBO began asking posts during an annual property inventory to identify properties that should be considered for disposal. OBO has included this request as part of State’s annual chiefs of mission certification that posts are in compliance with the Foreign Affairs Manual in regards to the management of real property. This process has helped the State Department to more systematically identify unneeded property. For example, in 2001, OBO cabled all posts for this purpose in July and sent follow-up cables to unresponsive posts in August. OBO’s initial cable requested that posts report all government-owned real property that should be considered for disposal, including properties for which posts had disposal processes under way. Posts were instructed to include excess office space, excess and oversized/overstandard housing, vacant or underutilized lots, properties used infrequently or for purposes such as unofficial business, and any other properties that could be considered appropriate for disposal. OBO officials explained that the effectiveness of this identification effort depended on posts’ responding fully and promptly. In 2001, almost all posts complied. As a result of this process, the department identified 130 potentially unneeded properties. In addition to the annual post certification process, the director of OBO has instructed bureau officials to emphasize identification of unneeded property. For example, OBO officers have been instructed to pay more attention to identifying potentially disposable property during post visits to oversee and resolve real estate issues. OBO officials said this increased emphasis has helped posts and OBO to continually focus on the need to dispose of unneeded property. The State Department’s IG reviews property use issues as part of its regular inspections. In addition, in February 1998, the under secretary for management asked the IG to specifically include identification of excess, underutilized, and obsolete properties as part of the IG’s inspections and audits at overseas posts and to provide periodic summaries on these data collection efforts. This work was aimed at identifying potentially excess, underutilized, and obsolete properties on the basis of existing criteria and was not a substantive review of the reasons why posts should or should not retain these properties. It ended in June 2001 by mutual consent between the IG and the under secretary for management, but the IG still reviews property status and use as part of its post inspections. The IG’s final report stated that the office found 21 excess, 160 underutilized, and 51 obsolete properties during this 3-year review. The State Department agreed to sell 72 of these properties. The IG stated that these reviews were useful and productive. It added that chiefs of mission and other senior officials were interested in this work, and, as a result, the IG noted increased emphasis on real property management. An IG official said they would only start a similar effort again if it is requested by the under secretary. According to this official, OBO’s new director has taken a more aggressive approach to identifying and selling unneeded property, which reduces the need for any additional IG effort at this time. The State Department’s worldwide real property inventory contains many errors and omissions. To better monitor property use and identify potentially unneeded properties, accurate inventory data are needed. Accurate real property data are also needed for the worldwide inventory that the General Services Administration keeps at the Congress’s request. OBO, however, has had difficulty getting posts to ensure that data in its inventory database are accurate, which is a long-standing problem. We observed problems involving properties sold but not removed from the inventory, properties acquired but not added to the inventory, and errors in cost and other descriptive information. For example, In June 2001, the inventory still listed an office building and the consul general’s residence in Alexandria, Egypt, which were sold in 1997 and 1998 (for more than $5 million). Acquisition cost was overstated by about $300 million for three properties in Bamako, Mali, and by nearly $132 million for one property in Yaounde, Cameroon, due to data input errors, according to OBO. Inaccurate inventory information can result in unneeded properties not being identified for potential sale. For example, a parking lot in Paris purchased in 1948 was not included in the inventory until an IG visit in 1998 highlighted the lot’s absence from the inventory. The property is currently being marketed and is valued at up to $10 million. We also found that the number of properties listed in the inventory does not accurately reflect the number of properties the State Department manages because, according to OBO, posts have inconsistently assigned property identification numbers. Posts sometimes assigned separate numbers to land and associated buildings. For example, the embassy in Paris is listed as three separate properties—the land and two buildings. The buildings were acquired separately but are now connected. The three properties comprise one compound. At other times, posts assigned one number to multiple properties—for example, in Brasilia, four separate lots were given one property identification number. Along with its other efforts, OBO is attempting to improve the accuracy, and therefore the reliability, of the State Department’s worldwide overseas property inventory data. According to OBO officials, since individual posts are responsible for entering their own data, correcting inaccuracies requires that they routinely check and update data in their property inventories. To help posts keep accurate inventory data, OBO has provided 238 posts with computer software for recording their property inventories, along with a user manual that gives step-by-step instructions. However, according to OBO, 185 posts have installed or are in the process of installing the software, leaving 53 posts that are not using it—thereby negatively affecting the consistency and accuracy of inventory data. In November 2001, OBO reported that about 20 posts had not corrected known errors or omissions in their property inventories. Because of such errors and omissions, some OBO staff said they do not rely on the property inventory for their work and instead keep their own property inventory information. The State Department’s performance in selling unneeded property has significantly improved in the last 5 years. Property sales proceeds were more than 3 times greater than for the previous 5-year period. However, despite this progress, the department still has a large number of potentially unneeded properties that remain unsold.