[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]




THE PRESIDENT'S MANAGEMENT AGENDA: RIGHTSIZING THE U.S. PRESENCE ABROAD

=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON NATIONAL SECURITY,
                   EMERGING THREATS AND INTERNATIONAL
                               RELATIONS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 7, 2003

                               __________

                           Serial No. 108-21

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform


                                 ______

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                            WASHINGTON : 2003
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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana                  HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California                 DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky                  DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia               JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania    WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   DIANE E. WATSON, California
ADAM H. PUTNAM, Florida              STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia          CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee       LINDA T. SANCHEZ, California
JOHN SULLIVAN, Oklahoma              C.A. ``DUTCH'' RUPPERSBERGER, 
NATHAN DEAL, Georgia                     Maryland
CANDICE S. MILLER, Michigan          ELEANOR HOLMES NORTON, District of 
TIM MURPHY, Pennsylvania                 Columbia
MICHAEL R. TURNER, Ohio              JIM COOPER, Tennessee
JOHN R. CARTER, Texas                CHRIS BELL, Texas
WILLIAM J. JANKLOW, South Dakota                 ------
MARSHA BLACKBURN, Tennessee          BERNARD SANDERS, Vermont 
                                         (Independent)

                       Peter Sirh, Staff Director
                 Melissa Wojciak, Deputy Staff Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
              Philip M. Schiliro, Minority Staff Director

 Subcommittee on National Security, Emerging Threats and International 
                               Relations

                CHRISTOPHER SHAYS, Connecticut, Chairman

MICHAEL R. TURNER, Ohio
DAN BURTON, Indiana                  DENNIS J. KUCINICH, Ohio
STEVEN C. LaTOURETTE, Ohio           TOM LANTOS, California
RON LEWIS, Kentucky                  BERNARD SANDERS, Vermont
TODD RUSSELL PLATTS, Pennsylvania    STEPHEN F. LYNCH, Massachusetts
ADAM H. PUTNAM, Florida              CAROLYN B. MALONEY, New York
EDWARD L. SCHROCK, Virginia          LINDA T. SANCHEZ, California
JOHN J. DUNCAN, Jr., Tennessee       C.A. ``DUTCH'' RUPPERSBERGER, 
TIM MURPHY, Pennsylvania                 Maryland
WILLIAM J. JANKLOW, South Dakota     CHRIS BELL, Texas
                                     JOHN F. TIERNEY, Massachusetts

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
            Lawrence J. Halloran, Staff Director and Counsel
                Thomas Costa, Professional Staff Member
                        Robert A. Briggs, Clerk
                    David Rapallo, Minority Counsel



                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 7, 2003....................................     1
Statement of:
    Ford, Jess T., Director, International Affairs and Trade 
      Division, U.S. General Accounting Office; Ambassador Ruth 
      A. Davis, Director General, U.S. Department of State; Major 
      General Charles E. Williams, retired, Director, Overseas 
      Buildings Office, U.S. Department of State; Richard Nygard, 
      Deputy Assistant Administrator for Management, U.S. Agency 
      for International Development; Ambassador Anne Sigmund, 
      Acting Inspector General, U.S. Department of State; and 
      William Itoh, Acting Deputy Inspector General, U.S. 
      Department of State........................................     8
Letters, statements, etc., submitted for the record by:
    Davis, Ambassador Ruth A., Director General, U.S. Department 
      of State, prepared statement of............................    40
    Ford, Jess T., Director, International Affairs and Trade 
      Division, U.S. General Accounting Office, prepared 
      statement of...............................................    12
    Nygard, Richard, Deputy Assistant Administrator for 
      Management, U.S. Agency for International Development, 
      prepared statement of......................................    65
    Shays, Hon. Christopher, a Representative in Congress from 
      the State of Connecticut, prepared statement of............     3
    Sigmund, Ambassador Anne, Acting Inspector General, U.S. 
      Department of State, prepared statement of.................    70
    Williams, Major General Charles E., retired, Director, 
      Overseas Buildings Office, U.S. Department of State, 
      prepared statement of......................................    51

 
THE PRESIDENT'S MANAGEMENT AGENDA: RIGHTSIZING THE U.S. PRESENCE ABROAD

                              ----------                              


                         MONDAY, APRIL 7, 2003

                  House of Representatives,
Subcommittee on National Security, Emerging Threats 
                       and International Relations,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 1:05 p.m., in 
room 2154, Rayburn House Office Building, Hon. Christopher 
Shays (chairman of the subcommittee) presiding.
    Present: Representatives Shays, Duncan, Kucinich, and 
Ruppersberger.
    Staff present: Lawrence Halloran, staff director and 
counsel; R. Nicholas Palarino, Phd., senior policy advisor; 
Thomas Costa, professional staff member; Robert A. Briggs, 
clerk; David Rapallo, minority counsel; Earley Green, minority 
chief clerk; and Jean Gosa, minority assistant clerk.
    Mr. Shays. A quorum being present, the subcommittee on 
National Security, Emerging Threats and International Relations 
hearing entitled, ``The President's Management Agenda, 
Rightsizing the U.S. Presence Abroad'' is called to order.
    After the guns stop firing, the battle for freedom, peace 
and security in Iraq and throughout the world will continue to 
be waged with words and ideas.
    Success in that global arena will be determined by the 
size, scope and skill of the U.S. diplomatic presence abroad. 
Today, America's diplomatic front lines are staffed by more 
than 60,000 people, representing up to 40 Federal agencies 
working at 260 embassies and consulates worldwide.
    But that overseas posture appears to be the product of cold 
war habits and bureaucratic inertia rather than any systematic 
effort to put the right people in the right places to advance 
U.S. interests.
    Currently, no one can even say with any accuracy how many 
executive branch employees are posted at foreign missions. No 
common accounting system measures the true cost of 
international activities by so many different Federal agencies 
and programs.
    Ambassadors have little more than titulary authority to 
manage the comings and goings of nonState Department personnel.
    Many embassies are not safe and new buildings are being 
built without reliable projections of how many people will have 
to work there. The President's Management Agenda calls for a 
rightsized overseas presence to better shape, focus and secure 
the work of U.S. citizens and foreign nationals abroad.
    Today we continue our assessment of how aggressively and 
effectively the State Department and the Office of Management 
and Budget are pursuing this important initiative. Last year at 
the subcommittee's request, the General Accounting Office 
[GAO], undertook a series of studies to assess rightsizing 
efforts. To rationalize and standardize decisionmaking, GAO 
developed an analytic framework that gives priority to 
security, mission and cost considerations.
    In two new reports released today, GAO recommends broader 
application of that framework and an improved process to derive 
the staffing projections upon which new embassy designs are 
based.
    More than a decade after the cold war, 5 years after 
terrorist targeted our embassies in Africa and 18 months since 
the attacks of September 11th, we still lack a systematic 
approach to determine who will be tasked to project U.S. ideals 
and policies into a more dynamic, more dangerous world.
    International economic political military and cultural 
alignments are changing rapidly. The size and skill of U.S. 
diplomatic engagements must change with them. Sitting as one 
panel, all our witnesses this afternoon share one goal, a 
rightsized U.S. presence abroad that puts the right people with 
the right skills in secure facilities throughout the world. We 
truly appreciate their time, their dedication and their 
expertise, and we look forward to their testimony, the dialog 
that will take place among them and with us, as well as Members 
of Congress.
    [The prepared statement of Hon. Christopher Shays follows:]

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    Mr. Shays. Mr. Kucinich, thank you for being here, the 
ranking member.
    Mr. Kucinich. Thank you very much, Mr. Chairman. Good 
afternoon. Let me welcome our witnesses. Glad you could be with 
us today, and I want to begin by expressing my appreciation for 
the men and women who serve this country, not only in the Armed 
Forces but those who serve in the diplomatic corps at the many 
missions around the world.
    Mr. Chairman, the idea of rightsizing is sound. We should 
determine goals and priorities; discern needed resources and 
implement an efficient plan while balancing costs and security 
concerns.
    The State Department, indeed all agencies that utilize 
embassy space should rightsize. Not to do so would squander 
valuable resources.
    But the concept of rightsizing is also broad. It forces us 
to ask whether this country is adequately supporting our 
international diplomatic corps in performing their critical 
mission. Recently, we've seen the dramatic impact diplomacy can 
make on this country's security when successful diplomacy has 
the potential to work wonders. In the wake of September 11th, 
Secretary of State Colin Powell assembled one of the largest 
coalitions in modern times, challenging terrorism in 
Afghanistan.
    When diplomacy fails, however, it can have dire 
consequences. As we all know, the United Nations rejected the 
President's arguments for military action against Iraq. As a 
result, the President chose to launch this Nation on new and 
perilous course of action, embarking on a unilateral and 
unprovoked military attack without the support of the Security 
Council. Predictably, a majority of the world's nations do not 
support the President's action.
    Part of this--the question is no doubt philosophical, what 
value does this administration place on the support of the 
international community, and part of the question is also 
resources. Mr. Chairman, if I may, I would like to provide some 
context.
    The President's budget for fiscal year 2004 proposes $9.8 
billion for the State Department. This includes operations and 
maintenance for all embassies, consulates and missions in every 
country. The President's budget proposes $379.9 billion for the 
Defense Department. In other words, the Defense Department will 
receive more than 38 times as much as the State Department, and 
this does not include about $63 billion in additional spending 
in the supplemental appropriations bill to pay for the first 
installment of the war in Iraq.
    If you combined that amount, the Pentagon gets about 45 
times as much as the State Department. As another example, the 
State Department has proposed $16 billion over the next 20 
years to construct new embassies and secure existing U.S. 
structures around the world. Next year they are seeking a 
relatively modest $890 million for new building construction.
    Yet the Defense Department expects to pay more than $60 
billion for about 200 F-22 aircraft. Next year alone, the 
Pentagon will spend nearly $8.7 billion, almost the entire 
budget of the State Department, just on missile defense 
programs.
    Consider the irony. The U.S. unilaterally withdrew from the 
ABM treaty, a successful product of diplomacy. To spend almost 
the entire annual State Department budget, an amount equal to 
the entire annual State Department budget, on a so-called 
missile defense system that has not been tested to work under 
realistic conditions. Some estimates for that system top $200 
billion.
    In contrast, Mr. Chairman, allow me to point out the 
findings of the overseas presence advisory board whose report 
we will be discussing today.
    The panel noted the gap between our Nation's goals and 
resources it provides its overseas operations. The world's most 
powerful Nation does not provide adequate security to its 
overseas personnel. The overseas facilities are the wealthiest 
Nation in history are often overcrowded, deteriorating and even 
shabby.
    In addition to capital deficiencies, the panel also noted 
insufficiencies in staffing. Morale has suffered under staffing 
forces, many to work extensive overtime hours. Junior officers 
are often required to do back to back consular tours on the 
visa line. However the Bureau is unable to hire additional 
people to address workload problems, because of funding 
limitations that strict employment ceilings.
    The panel made its conclusions in stark terms. The 
condition of U.S. posts, it said and missions abroad is 
unacceptable. The panel fears that our overseas presence is 
perilously close to the point of system failure.
    Mr. Chairman, as this committee goes forward, I would point 
out that rightsizing is not statement as reducing, trimming or 
consolidating. Although each of these may occur. A true 
commitment to rightsizing includes a commitment to the men and 
women serving this Nation and risking their lives abroad.
    In my opinion, rightsizing must also include a broad 
aggressive new commitment to substantially greater funding, not 
just for security, but also for pay, for benefits, for 
training, recruitment, state-of-the-art communications, modern 
facilities, all of which are critical components of the 
essential diplomatic mission of the United States.
    It is time to recapitalize our international relations 
force.
    Thank you, Mr. Chairman, and thank the witnesses.
    Mr. Shays. I thank the gentleman.
    The gentleman from Maryland, Mr. Ruppersberger.
    Mr. Ruppersberger. Thank you, Mr. Chairman. I look forward 
to the testimony today. In this global environment and in our 
current international climate, we need to make sure that our 
mission abroad has the resources and adequate personnel to 
address any of the issues that may arise. Now, this is a new 
time, and we must and we will face the challenges abroad. And 
you're going to be a major part of it.
    Our overseas mission is one of the most vital functions of 
the Federal Government. We need to make sure that we have the 
right number of persons stationed at specific areas. We have to 
make sure that they have the right technical, knowledge and 
expertise to address concerns in their designated assignments.
    There are many concerns and issues with U.S. presence 
abroad. It is my understanding that there is some difficulty in 
determining the number of personnel abroad, and it is even 
harder to determine the cost involved, and we need to make sure 
that our mission abroad has the personnel to do their jobs 
effectively.
    Now, I know the administration has tasked the OMB with 
rightsizing the U.S. presence abroad. And I like the word 
``rightsizing.'' I think a lot of times our personnel in 
government are always concerned that any type of restructuring 
is downsizing. It is more rightsizing and getting the right 
people in the right positions.
    Now, hopefully, this will provide for rightsizing action 
taken by the administration and to make sure that we have the 
adequate personnel. There is not one formula, or there is not 
one solution that can be applied to every situation. For 
example, in one country, we may need some narcotic specialists, 
and field agents, while in another country we may need a more 
cultural specialist.
    One issue that we should be concerned about, though, is 
security for our personnel. I know that--I was with a group 
that was briefed by Secretary Powell. I was very impressed with 
the presentation. Talked about the--taking care of working with 
the infrastructure and a lot of our areas abroad and our 
embassies that it is needed, and it has been a long time 
coming. And I think that is the right step.
    A few years ago, two of our advocate embassies were 
attacked. Again we have to make sure what we focus on the issue 
of security. And since then, we have started work to help 
secure our facilities in all of these foreign nations.
    With the current war, I hope that our personnel have the 
protections that are necessary to keep them and their families 
safe. U.S. mission abroad is nuanced and faces serious real 
threats. Hopefully in today's hearing, we're going to get 
better insight into what is happening with U.S. staffing 
abroad. Again, Mr. Chairman, thank you for calling this 
hearing.
    Mr. Shays. I thank the gentleman.
    At this time let me just take care of some housekeeping. I 
ask unanimous consent that all members of the subcommittee may 
be permitted to place an opening statement in the record, and 
that the record remain open for 3 days for that purpose. 
Without objection, so ordered.
    I ask further unanimous consent that all witnesses be 
permitted to include their written statements in the record. 
Without objection, so ordered.
    I'll announce the panel, and then I'll swear them in.
    Mr. Jess T. Ford, Director, International Affairs and Trade 
Division, U.S. General Accounting Office. The honorable 
Ambassador Ruth A. Davis, Director General, U.S. Department of 
State. The honorable Major General Charles E. Williams, 
retired, Director, Overseas Buildings Office, U.S. Department 
of State. Mr. Richard Nygard, Deputy Assistant Administrator 
for Management, U.S. Agency for International Development. The 
honorable Ambassador Anne Sigmund, Acting Inspector General, 
U.S. Department of State. And the honorable William. Itoh, 
Acting Deputy Inspector General, U.S. Department of State.
    Let me state at the outset that we could have divided this 
in two panels. We could have divided it into 3 panels. We put 
you all together. Six is what we can fit on this table, because 
we do want the exchange of dialog. And I have a feeling that we 
probably aren't going to disagree on too many things here, 
maybe, but I doubt it. But it would be healthy to have you 
respond to questions, and then if someone has answered a 
question and you want to qualify it or say how you agree or 
disagree with some new answer, that would be helpful as well.
    At this point, if you would stand and raise your right 
hands, we'll swear you in.
    [Witnesses sworn.]
    Mr. Shays. Note for the record that all of our witnesses 
responded in the affirmative. And I think we have you by the 
order I read, also in line here. So we can just go that way. 
And we'll just start with you, Mr. Ford.
    As you know, we do 5 minutes, and then we give you another 
5 minutes. So the light will be green and then red and then it 
will go to green. But as close to the 5 minutes you can be 
would be helpful. But we wait a minute you to put on the word 
and publicly the things that you feel you need to. So we're 
happy to do a little listening. All right? Mr. Ford.

STATEMENTS OF JESS T. FORD, DIRECTOR, INTERNATIONAL AFFAIRS AND 
TRADE DIVISION, U.S. GENERAL ACCOUNTING OFFICE; AMBASSADOR RUTH 
  A. DAVIS, DIRECTOR GENERAL, U.S. DEPARTMENT OF STATE; MAJOR 
   GENERAL CHARLES E. WILLIAMS, RETIRED, DIRECTOR, OVERSEAS 
  BUILDINGS OFFICE, U.S. DEPARTMENT OF STATE; RICHARD NYGARD, 
DEPUTY ASSISTANT ADMINISTRATOR FOR MANAGEMENT, U.S. AGENCY FOR 
  INTERNATIONAL DEVELOPMENT; AMBASSADOR ANNE SIGMUND, ACTING 
INSPECTOR GENERAL, U.S. DEPARTMENT OF STATE; AND WILLIAM ITOH, 
   ACTING DEPUTY INSPECTOR GENERAL, U.S. DEPARTMENT OF STATE

    Mr. Ford. Thank you, Mr. Chairman, members of the 
subcommittee. I'm pleased to be here today to discuss GAO's 
work on rightsizing the overseas presence, that is, deciding 
the number and types of personnel that should be assigned to 
our embassies and consulates. U.S. overseas presence is 
significant, with more than 60,000 Americans and foreign 
nationals in over 260 posts overseas.
    Because of the security threats facing many of our 
embassies, which are heightened due to the current war in Iraq, 
as well as changes in foreign aid policy, missions and 
priorities and the high cost of maintaining our significant 
presence, this effort is vitally important.
    Today I will discuss three reports which we have issued on 
rightsizing issues, since I testified before this subcommittee 
last May, two of which are being released today.
    These reports describe the rightsizing framework that we 
developed last year, the results of applying the framework in 
developing countries, and the process that is used to project 
staffing levels for new embassy construction and the proposals 
to share construction costs among U.S. agencies.
    In July 2002, we presented a rightsizing framework that 
provides a systematic approach for assessing overseas work 
force size. The framework is a set of questions designed to 
link staffing levels to three critical elements of overseas 
diplomatic operations. Missions and priorities, physical and 
technical security and the cost of operations.
    The framework also provides rightsizing options that 
decisionmakers could consider to adjust embassy staffing 
levels. In our report we recommended that OMB use it as a basis 
for assessing staffing levels as part of the administration's 
rightsizing initiative.
    According to OMB, they are using this framework as part of 
their ongoing study of staffing in embassies and consulates in 
Europe and Eurasia.
    Following our report in July and in response to your 
request, we examined whether our framework could be applied to 
U.S. embassy in developing countries. Today we are issuing a 
report on this work. Our analysis of three embassies that we 
have visited in West Africa indicates that the rightsizing 
framework can be applied in that environment. We found that if 
embassies used our framework to complete a full and 
comprehensive analysis of their services and their support to 
other embassies, then staffing levels could possibly be 
adjusted at some of the region's posts.
    For example, we report that possible rightsizing actions 
that could be taken at three posts include regionalizing 
certain operations and exploring outsourcing of some support 
services.
    Based on our work, it is clear that our framework has broad 
applications and that it provides a logical and common sense 
approach to systematically considering rightsizing issues in 
both developed and developing countries.
    We are recommending that OMB, in coordination with the 
State Department, expand the use of our framework in assessing 
staffing levels at all U.S. embassies and consulates.
    We are also recommending that the State Department include 
the framework as part of its mission performance planning 
process.
    Today we are also issuing a report that demonstrates how 
the lack of a systematic process for determining staffing 
requirements can have serious repercussions in State 
Department's embassy construction program. The State Department 
has embarked on a multi-year, multibillion dollar facility 
replacement program. State plans to build new facilities at 
about a 185 locations around the world and an estimated cost of 
$16 billion. The size and cost of these facilities depend on 
staffing projections that U.S. embassies develop.
    Based on our analysis of 14 posts where State plans to 
build new embassy compounds, we found that agencies are not 
developing staffing projections using a systematic approach or 
a comprehensive rightsizing analyses. Officials at the post we 
visited approached the processes in different ways. For 
example, some of the better posts solicited inputs from all 
agencies and held several meetings at a high level to discuss 
future needs, while other embassies developed requirements 
without serious effort or review.
    Although embassies play a key role in the projection 
process, the State Department headquarters officials did not 
provide embassies with much formal guidance on the factors that 
they should consider when setting requirements, nor did they 
stress the importance of accurate projections.
    Moreover, at each of the posts that we visited, we found 
little or no documentation to show that staff had compiled a 
comprehensive assessment of the numbers and types of people 
they would need in the year to which the compound was to be 
completed. In fact, a failure to account for recent growth in 
current staffing levels at one embassy we visited led to final 
projections that were too low and may result in significant 
overcrowding in the new facility.
    Further complicating the process is the frequent turnover 
of embassy personnel who did not maintain documentation on 
projection exercises or the factors they considered when 
developing projections.
    Finally, the staffing projections are not consistently 
vetted in all the agencies headquarters.
    Building secure and modern facilities for the thousands of 
U.S. Government employees working overseas is extremely 
important and will require a significant investment. However, 
without a systematic process, the U.S. Government risks 
building wrong-sized facilities, which could lead to security 
concerns, additional costs and other inefficiencies and 
overcrowding.
    To help ensure that the U.S. Government builds rightsized 
facilities, we are recommending that the State Department adopt 
a more disciplined and systematic process for projecting 
staffing requirements. State has indicated that it plans to 
implement their recommendations.
    The report also discusses the administration's plan to 
require agencies to pay a greater share of costs associated 
with our overseas presence. Currently, most U.S. agencies are 
not required to fund capital improvements to overseas 
facilities. While we have not analyzed the cost-sharing 
proposals in detail, the concept of agencies paying a fair 
share of costs has the potential to put more incentive in 
carefully rightsizing the staffing needs.
    OMB is working with State and other agencies through an 
interagency committee to develop a cost sharing mechanism that 
would provide more discipline when determining U.S. Government 
overseas staffing needs.
    The administration is committed to implementing greater 
cost sharing among agencies that use overseas facilities, 
because it believes that if agencies pay a portion of costs 
commensurate with their overseas presence, they will think more 
carefully before posting people overseas.
    There are numerous issues that will need to be resolved for 
the cost sharing program to be successful, such as how to best 
structure the program, how changes will be determined, and how 
payments will be made.
    Mr. Chairman, the concept of rightsizing is as important 
today as it was following the bombings of our embassies 5 years 
ago. The key elements of our rightsizing framework, security, 
mission cost and rightsizing options, need to be considered 
collectively to determine embassy staffing and decisionmakers 
need to be looking for alternative ways of conducting business.
    Our work in the past year has further demonstrated the 
feasibility of achieving a systematic and comprehensive 
approach. Such approach can have substantial payoffs if OMB, 
State and other agencies operating overseas support it.
    I believe we all recognize that to be successful, 
rightsizing will be a long-term effort requiring the commitment 
of all agencies operating overseas.
    I'm encouraged that the momentum for developing a 
meaningful approach to rightsizing continues. Both the State 
Department and OMB have endorsed our rightsizing framework and 
are working together with other agencies to improve the 
process.
    Our recommendations to support this process in our reports 
issued today should help ensure that this momentum continues.
    Mr. Chairman, that concludes my statement. I'll be happy to 
answer any questions.
    Mr. Shays. Thank you very much, Mr. Ford.
    [The prepared statement of Mr. Ford follows:]

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    Mr. Shays. Ambassador Davis.
    Ms. Davis. Thank you very much.
    Mr. Shays. I don't think your mic is on. I never looked. 
Does a light come on when they're on?
    Ms. Davis. It is on now? Can you hear me?
    Mr. Shays. Yes.
    Ms. Davis. Thank you. Good afternoon, Mr. Chairman and 
other members of the subcommittee----
    Mr. Shays. You've got a great smile. Nice way to start out 
my day.
    Ms. Davis. I'm very happy to be here. I'm happy for your 
interest. I'm really very pleased, as I said, to participate in 
this hearing on the President's Management Agenda: Rightsizing 
the U.S. Presence Abroad. The Department of State welcomed the 
decision to include rightsizing as one of the initiatives of 
the President's Management Agenda. We're working very closely 
with the Office of Management and Budget as it leads the inner 
agency effort to move the initiative forward, and we are 
committed to working with OMB in the development and 
implementation of a successful rightsized initiative.
    The General Accounting Office has kept us informed of the 
status of its rightsizing work, including the rightsizing 
framework that it has developed. GAO has stated that 
rightsizing means aligning the number and location of staff 
assigned overseas with foreign policy priorities and security 
and other constraints. GAO notes that rightsizing may result in 
the addition or reduction of staff or in a change in the mix of 
staff at a given embassy or consulate.
    We agree with that. We do not believe that the rightsizing 
necessarily means--we don't agree that rightsizing necessarily 
means downsizing. Quite the contrary. We're in the second year 
of increased hiring with our Diplomatic Readiness Initiative 
[DRI]. DRI was launched by the Secretary of State with 
congressional support to address the serious staffing gaps 
created during the 1990's when we hired under attrition. This 
initiative seeks to strengthen our U.S. diplomatic corps with 
almost 1,200 new-hires beyond attrition, and we are grateful 
for your support.
    These new positions will allow us to fill unmet needs 
overseas and to provide for enough personnel to respond to 
crises and to go to training without leaving staffing gaps.
    The DRI is therefore a part of our efforts to have the 
right sized State Department staffing overseas to meet our 
mission requirements. GAO lists 3 elements as part of its 
rightsizing framework. Security, mission and cost. We strongly 
believe that the top priority is without question mission. The 
first question that must be asked before all others is whether 
the United States has a compelling reason to be in a particular 
location.
    If the answer is yes, then it may be necessary to place 
personnel there, even in the face of serious security concerns 
or excessive cost.
    As an example, the opening of the U.S. embassy in Kabul 
Afghanistan. But if we're going to have people overseas, we 
must ensure their security as best as we can and at the lowest 
possible cost.
    Mission requirements can change, as you well know, and we 
have a dynamic system to respond to these changes.
    Now, let me address what the department is ultimately 
responsible for, our own staffing overseas and how we manage 
our overseas presence. Rightsizing is an ongoing process. We 
continually review changing priorities and emerging issues and 
make staffing changes between regions or between functions, 
reallocating people so that higher priority needs are met. We 
have done this recently by putting more people overseas in 
consular sections to meet increased border security needs, post 
and regions have moved resources to meet the priority 
counterterrorism mission at the expense of lesser priorities. 
Sometimes we can accomplish this without strain, because other 
requirements are in decline. But oftentimes we pull people to 
address new issues while old ones still exist.
    With the increased staffing under the DRI, we will have a 
better capacity to respond without leaving day-to-day work 
neglected. Ultimately rightsizing of the State Department 
staffing is accomplished through our strategic planning and 
budgeting process and is supported by our work force planning 
process. Chiefs of mission have the primary responsibility for 
deciding U.S. staffing in their missions. They are in the best 
position to make decisions on staffing needs that accurately 
reflect U.S. foreign policy priorities. Their mission 
performance plans cover the policy objectives of the entire 
mission, including all other agencies.
    The Department's regional bureau's review and use these 
mission plans to prioritize and justify position requirements 
in support of strategic goals. Bureaus request any additional 
staffing in their performance plans at an interagency annual 
senior policy and resource review chaired by the deputy 
secretary.
    To assist the department's leadership in assessing staffing 
needs and requests, we have the overseas staffing model ESOM. 
This work force planning tool identifies the staffing 
requirements at overseas posts based on specific categories and 
criteria and provides a comparative assessment of posts. The 
OSM evaluates each post rationally, using key work load and 
host country factors. We use the results of the OSM as a 
baseline in assessing staffing needs and then add to our 
assessment the recent changes in foreign policy requirements 
that are not captured in the model such as the changes needed 
for staffing in Kabul.
    The new-hires under the diplomatic readiness initiative are 
being placed overseas based largely on needs identified in the 
OSM. The department's senior leadership makes final decisions 
on the department's staffing requirements and hiring plans 
based on emerging priorities, funding potential, overseas 
staffing model projections as well as the senior reviews. This 
ensures that staffing decisions are made in support of mission 
requirements. We believe that the strong linkage between 
strategic priorities and resource decisions with senior 
management involvement ensures our ability to meet our mission.
    Other important factors in our strategic planning process 
include the use of local-hires, security, staff reallocation to 
meet crises and regionalization. Maintaining a safe environment 
overseas is a top priority for the Secretary of State. So we 
look for ways to ensure that we are not doing functions 
overseas that would be better done in the United States or via 
regional centers.
    The Department of State has looked at administrative, 
consular and certain policy functions in various regions, and 
we have regionalized some of these functions. We've put people 
in more centralized locations, either overseas or in the United 
States from which they now support multiple posts. This 
regionalization is consistent with both our rightsizing efforts 
and the principle of universality. While we maintain 
universality of our embassies, many functions can be managed 
regionally. State makes extensive use of regional offices with 
regional centers in U.S. locations such as Charleston, SC, Fort 
Lauderdale, FL, and Portsmouth, NH, and at major overseas hubs 
such as Frankfurt and Bangkok. All of these considerations, 
mission security cost are part of our decisions on overseas 
staffing.
    Let me close by saying that we are working with OMB on its 
rightsizing effort as part of the President's Management 
Agenda. We believe that it is the appropriate mechanism to 
further study this issue. Thank you for your interest in this 
issue and for your support of our overseas presence. And I 
welcome any questions.
    Mr. Shays. Thank you very much, Ambassador.
    [The prepared statement of Ms. Davis follows:]

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    Mr. Shays. Just so I'm clear, when we talk of the director 
general, does that make you head of the Foreign Service and in 
charge of all personnel for----
    Ms. Davis. Yes.
    Mr. Shays [continuing]. The Department of State?
    Ms. Davis. For the Department of State. I'm the Director 
General of the Foreign Service and the Director of Human 
Resources, which includes all personnel in the Department of 
State.
    Mr. Shays. The term director general is used only in your 
case or are there----
    Ms. Davis. Yes. There is only one director general.
    Mr. Shays. It's a great title.
    OK. General.
    General Williams. Thank you, Chairman Shays and other 
members of the subcommittee, for this opportunity to discuss 
with you the role of the overseas buildings operations [OBO], 
in implementing the President's Management Agenda directive 
toward rightsizing the U.S. presence abroad.
    The OBO mission reshaped by the 1998 bombings of our 
embassies in Dar es Salaam, Tanzania, and Nairobi, Kenya, it 
was reinforced by the September 11th events, is to accelerate 
construction of new facilities that can satisfy the 
Department's stringent security requirements and provide 
domestic--provide our diplomatic personnel with safe, secure 
and functional office and residential environment.
    Rightsizing the U.S. presence overseas will help OBO ensure 
that we have the right facilities in place to conduct the 
effective U.S. foreign policy.
    As you know, Congress and the executive branch have 
identified the overseas building operations in the State 
Department as the single property management for diplomatic 
consular and other related civilian support properties of the 
United States overseas.
    I want to take the opportunity now to thank the Congress 
for its recent effort, in reinforcing this single manager role 
as recommended by the GAO.
    When I joined Secretary Powell's transition team early on 
in December 2000 to evaluate the Department's overseas 
facilities status and program, I reviewed the Inman Report, the 
Crowe Report, the overseas presence advisory panel report and 
anything else I could get my hands on, because the files were 
quite hefty.
    All of these reports in summary basically said the same 
thing, we were experiencing facilities overseas that were 
unsafe, many of them, many not secure, and of course, 
overcrowded. And as a result of that, we were creating in 
presenting a very negative image for our country.
    Our government currently employs about 60,000 people 
represented from 30 or so agencies at those 260 overseas posts. 
The Diplomatic Security Bureau of the Department has concluded 
that at least 160 of these posts do not meet current security 
standards and should be replaced by new embassy compounds.
    Over the last 2 years, we have already seen significant 
successes in being able to bring on board a program that would 
attack this problem. We have had successes in cutting costs. We 
have put in place standard embassy designs. We have an 
integrated design review process, and we have put our program 
on a fast track.
    In the 19--I'm sorry. In the fiscal year 2002 awards, we 
presented savings of $65 million, and we also anticipate 
substantial savings in 2003 by using best practices.
    Let me briefly address the reforms that we have put in 
place to manage this program. First of all, Mr. Chairman, and 
members, I would like to report that we now have developed a 
capacity to manage at least $1.8 billion of work per year. We 
obviously had a closeout year last year at $1.75. We have 
increased the contractor pool from 3 contractors 2 years ago 
participating in our work to 15. This gives us a tremendous 
capacity to move forward.
    We have restructured the entire organization around a 
results-based operational concept, and this is yielding us 
tremendous results.
    We have set up a systematic process now for gathering 
information for our long-range plan. This was the first 
strategic document that we put in place during the first 6 
months of our tenure. This plan now guides our program over a 
6-year period.
    It is currently in its second year of being, and it is 
causing a very good framework and a road map to accomplish our 
work.
    We have also established an industry advisory panel. Nine 
members from industry advises us on a quarterly basis on the 
best practices from industry. We have chartered an interagency 
facilities council to facilitate the interaction among the 
agencies who operate and do business in our platforms. We have 
also put in place, as I mentioned before, standard designs so 
that now we can move very quickly with the process. We reduced 
the time from the traditional 4\1/2\ to 2 years for 
construction. And we have an integrated process for all of the 
vetting partners.
    We are getting results, Mr. Chairman, and members, and to 
that extent, the Congress has responded and provided us with 
some additional funds, not all that we would like to have. As I 
mentioned, the capacity is at $1.8, and we have a program which 
is slightly under $1 billion this year. But I do want to report 
that we have 22 new embassy complexes underway. We'll be 
cutting the ribbon this year for the first time for eight new 
complexes. The average for our Department through many, many 
years, at as far as we can research, show the maximum of 2 per 
year.
    We have opened the facilities in Tunis. We have opened 
facilities in Dar es Salaam, both our embassy and our USAID 
facility. Also in Nairobi. We are planning, in the next couple 
of months, to open facilities in Istanbul, Zagreb, Croatia; Abu 
Dhabi in the Emirates, Sao Paulo in Brazil, etc. So we'll have 
8 new openings this year, in much the same way we'll have 10 
groundbreakings as well. So we are getting results, and things 
are moving along very nicely for us.
    Also we have have launched a new initiative. This new 
initiative is cost sharing. This was highlighted in the 
overseas presence advisory panel, at that time referred to as a 
rent surcharge-type of program. This cost sharing program will 
allow those participating tenants to pay a cost associated with 
the type seat that they would be requesting from the State 
Department.
    We think, Mr. Chairman and committee, that a combination of 
the introduction of standard designs where we have 
parametrically built a building size to control costs and we've 
significantly reduced the time for delivery and linked to this 
new initiative of cost sharing will serve as a very good path 
forward for our colleagues to connect the rightsizing 
methodology too.
    Again, I appreciate the opportunity of appearing before 
you, and I look forward to answering any of your questions.
    Mr. Shays. Thank you, General Williams.
    [The prepared statement of General Williams follows:]

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    Mr. Shays. Mr. Nygard.
    Mr. Nygard. Thank you, Mr. Chairman. Mr. Chairman, members 
of the subcommittee, I'm pleased to appear before you today to 
discuss the efforts of the U.S. Agency for International----
    Mr. Shays. Can you move the mic a little closer to you?
    Mr. Nygard. Sure. To assure the number of U.S. staff 
deployed overseas is the right number to assure effective and 
efficient planning and management of programs.
    We have reviewed the three criteria proposed by the General 
Accounting Office for determining overseas staffing levels. We 
agree with them, and we've been using them in setting our field 
staffing levels, though perhaps not in a fully systematic way.
    USAID is a critical instrument of U.S. foreign policy. The 
Agency carries out development, transitional and humanitarian 
assistance programs in more than 150 countries and maintains 
some 70 bilateral and regional field missions abroad.
    We have found that a significant field presence is key to 
the success of our program. There are two main reasons for our 
overseas presence: Influence and oversight. Our overseas 
employees understand the capacity of our programs and the needs 
of the countries in which they work, and their presence helps 
assure successful results. Their presence also promotes 
programmatic and financial accountability. Our people oversee 
the work being done by contractors and grantees who implement 
their programs.
    The main determinants of USAID's overseas presence are 
effective program management, or mission, and cost. Security 
has also taken on increased importance in recent years and will 
be a major factor in the future. The Agency has been 
rightsizing its overseas presence for many years. Number of 
U.S. direct-hire staff posted overseas by our Agency has fallen 
from 1,256 in 1990 to 687 as of last September 30th, despite 
level or rising assistance levels worldwide and the expansion 
of USAID operates to 27 countries in eastern Europe and the 
former Soviet Union in the past 13 years.
    Individual country missions are therefore significantly 
smaller than they were 15 years ago. USAID has taken a number 
of measures to keep the costs of our overseas presence to a 
minimum. We work with the Department of State and other 
overseas agencies of the U.S. Government to provide common 
administrative services through the International Combined 
Administrative Service System. ICASS has proved very effective 
for allocating costs fairly among users, and all agencies are 
working to make it a stronger tool for efficiency as well.
    USAID is currently providing ICASS services to other 
agencies at nine posts where it is cost effective to do so. We 
provide certain services, contracts, finance and legal, through 
regional offices in some parts of the world. We use modern 
information technology to facilitate both voice and data 
communications among our field missions, USAID headquarters and 
the offices of our contractors and grantees.
    We utilize our Foreign Service national staffs in recipient 
countries for professional, as well as support work, reducing 
the costs of many functions without sacrificing quality. And we 
have closed down USAID in countries where our work has been 
completed. Over the past 5 years, overseas missions in Poland, 
the Czech Republic, Slovakia and the Baltic republics has been 
closed as programs in those countries ended.
    An area where the factors of cost and security come 
together is that of office space for our field missions. USAID 
must assure that our overseas staff work in the safest possible 
environment.
    Consistent with the Secure Embassy and Counterterrorism Act 
of 1999, the Agency seeks to collocate with embassies wherever 
possible. At present, we are collocated in less than half of 
our overseas posts. We haved worked closely with General 
Williams and his office over the past 2 years to assure that 
USAID is an active participant in the Department of State's 
worldwide building program.
    Our fiscal 2003 appropriation provides funding for a USAID 
building on the embassy compound in Nairobi. We will continue 
to work with State and with the Congress to assure that safe 
and secure facilities are provided for our overseas staff.
    USAID is also undertaking a number of additional steps 
related to overseas rightsizing, including the following. We 
are updating our financial procurement and other business 
processes to be many efficient and effective, increase the 
provision of services regionally and adopt common information 
technology and process approaches worldwide.
    We're exploring with the Department of State the extent to 
which our financial systems and operations can be integrated.
    An initial study has demonstrated the feasibility of at 
least partial integration. Next steps will include determining 
the specifics of putting portions of our systems together.
    We're developing a template, or model, for a standard 
overseas USAID mission to permit the optimum allocation of what 
will continue to be limited human resources to best fulfill our 
mission. And we're finalizing a comprehensive human capital 
plan that will describe the specific core competencies needed 
by overseas staff for effective and efficient Agency 
operations, and the steps that must be taken such as 
recruitment and training to produce these competencies.
    As you're aware, Mr. Chairman, President Bush has 
stipulated that the rightsizing of overseas official U.S. 
presence will be a part of his management agenda. We look 
forward to building on our efforts to date, working with the 
Office of Management and Budget, the Department of State and 
other overseas agencies to find broad, lasting approaches to 
assuring the most effective overseas presence.
    Mr. Chairman, that concludes my statement. I'll be happy to 
respond to any questions the committee may have.
    Mr. Shays. Thank you, Mr. Nygard.
    [The prepared statement of Mr. Nygard follows:]

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    Mr. Shays. We'll now hear from the acting Inspector 
General, Ms. Sigmund.
    Ms. Sigmund. Mr. Chairman, members of this subcommittee, 
thank you for the opportunity this afternoon to comment on the 
Department's rightsizing initiatives. The Department has made 
real progress in its rightsizing of its overseas posts. The 
Bureau of Overseas Buildings Operations has introduced 
significant improvements in planning and management that bring 
transparency and sound business practices to the construction 
of suitable and safe facilities for U.S. Government personnel 
overseas.
    The Department is defining more systematically personnel 
requirements through its overseas staffing model and working 
with geographic bureaus energetically to rightsize embassies.
    The Department should be commended for aggressively 
recruiting much-needed Foreign Service staff under its 
diplomatic readiness initiative.
    Acknowledging the sacrifices that staff and their families 
make in serving in many parts of the world, the Department is 
looking for creative ways to mitigate the hardships of service 
at some posts where staffing gaps often exacerbate already 
difficult conditions.
    The emphasis the Department is placing on rightsizing 
today, however, cannot immediately resolve problems that are 
the result of inadequate planning in earlier years, 
insufficient resources or inherently difficult environments 
which can change from benign to dangerous overnight.
    Of the 48 embassies we inspected since January 2002, we 
found a number of posts to be rightsized in terms of staff. 
Among them are Oslo, Helsinki, Stockholm, Freetown, Monrovia 
and Abidjan. However, we also found embassies with 
deteriorating buildings without setback and key positions 
unfilled or staffed by officers committed but without the 
necessary experience and sometimes supervision always to do 
their jobs well.
    In addition, since January 2002, we completed 49 security 
inspections. Only nine posts had sufficient setback; 40 did 
not.
    We found inadequate staffing, lack of work space and unsafe 
facilities to be acute in Africa and in the new independent 
states. In Nigeria, for example, Embassy Abuja suffers from an 
inability to fill many mid-level positions. This was true in 
1993 and 1997 when we inspected Nigeria. It was still true in 
2002 when we returned.
    At the same time, U.S. Government agencies are placing a 
greater priority on Nigeria with a concomitant increase in 
programs. The embassy does not have the staff or infrastructure 
to support this expansion.
    The NSDD-38 process is an important tool for rightsizing. 
However, we find that some agencies lose sight of NSDD-38 in 
their haste to implement programs. The assignment of advisers 
directly to host government entities or back to back temporary 
duty personnel circumvents NSDD-38 and undermines the efforts 
of chiefs of mission to rightsize.
    To take Nigeria once more, much of the growth of Embassy 
Abuja and the consulate in Lagos have been the result of added 
positions from other U.S. Government agencies. A number of 
these new positions are currently listed as temporary and are 
not subject to the NSDD-38 review.
    The Department is developing regional support centers to 
alleviate staffing and administrative problems at some posts. 
Consolidated services out of Frankfurt are directed to the 
Balkans and the NIS and out of Florida for the embassies of 
Latin America are proving to be effective mechanisms for 
supporting posts, particularly those where staffing gaps and 
lack of administrative experience have a negative impact on 
operations.
    Frankfurt is also beginning to provide valuable consular 
support for African posts. In recent inspections of Port of 
Spain, Georgetown and Paramaribo, OIG found that all three 
receive excellent support from the Florida center that is 
mitigating the negative effects of staffing gaps.
    I would also note that in keeping with OPAP'S support for 
phasing out of the financial services center in Paris and 
moving its functions to Charleston, the Department expects to 
complete the project this year, at which time Charleston will 
provide financial services to 84 posts previously serviced by 
FCS Paris.
    Finally, I would like to comment briefly on GAO's proposed 
framework for rightsizing. The framework provides a clear 
articulation of criteria that should be considered in 
determining mission size. The Department has begun to 
incorporate rightsizing guidelines in its mission performance 
plan process. I want, however, to introduce a cautionary note. 
Although not implicit in the framework, there is the potential 
for drift in staffing size. The staffing of an embassy should 
not become only a reflection of the agencies that can afford to 
be there. Mission and the national interest are critical in 
defining the most effective personnel profile for an embassy in 
any given country.
    Policy objectives must be clearly defined and agreed to by 
all. Important to remember, too, is that no building, 
regardless of the resources and planning it represents, can 
ever be completely safe. The security of an embassy is not 
merely the sum of protections a building can provide, but the 
totality of programs, procedures, and host-country 
relationships that embassy management uses to supplement the 
physical limitations of its building. In the last analysis, 
some degree of risk will always remain.
    Thank you, Mr. Chairman. I am happy to respond to your 
questions.
    Mr. Shays. Thank you very much, Ms. Sigmund.
    [The prepared statement of Ms. Sigmund follows:]

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    Mr. Shays. At this time, we will invite William Itoh to 
comment, and then we will have a little dialog and kind of get 
at this stuff.
    I am going to be questioning whether my staff is telling me 
the truth, so you all are going to get in the middle of a 
little internal fight here.
    Mr. Itoh.
    Mr. Itoh. Thank you, Mr. Chairman, members of the 
subcommittee.
    I appreciate the opportunity to join you today. As a member 
and executive secretary of the Overseas Presence Advisory 
Panel, I am pleased to give you my personal perspective on 
recent efforts to respond to the issues that we highlighted in 
our report. I want to emphasize that I am speaking today in my 
OPAP role, not as the Acting Deputy Inspector General.
    At the time of the release of the OPAP report, we 
emphasized the need to consider our recommendations in their 
entirety. We recognized, however, that in an election year and 
in the transition to a new administration, we could not 
realistically expect a wholesale adoption of our proposals.
    A number of our recommendations relating to security, human 
resources, information and communications technology, consular 
services, administrative services, and Ambassadorial authority 
were embraced by the Department. The Department continues to 
work toward full implementation of many of those 
recommendations.
    OPAP's recommendations on the management and financing of 
overseas facilities called for the creation of a new government 
corporation, the Overseas Facilities Authority. We envisioned 
the OFA as an organization following private sector practices 
which could manage the construction and operation of our 
facilities overseas with costs allocated proportionately to all 
agencies. Linking facilities costs to staffing decisions would 
not only create a more equitable means for sharing those costs, 
but could also reinforce our efforts on rightsizing by 
identifying for each agency the real costs of assigning 
personnel overseas.
    The OPAP proposal on overseas facilities generated a great 
deal of discussion, and the Department did not accept our 
recommendation on the creation of a new OFA. However, with the 
arrival of Secretary Powell, the Secretary agreed to seek 
solutions to the many issues we raised, short of creating a new 
entity outside of the Department.
    As a result, FBO was taken out of the Bureau of 
Administration and restructured as the Bureau of Overseas 
Building Operations in May 2001. Under the direction of General 
Williams, OBO has moved to become a more results-based 
organization run on private sector lines. OBO has developed a 
5-year capital program plan that provides long-term planning 
for the construction of new facilities, and security upgrades 
for many existing facilities.
    I believe that much has been accomplished to implement the 
OPAP recommendations which should address the deficiencies that 
we found in the past.
    In addition to our proposals regarding facilities overseas, 
our OPAP recommendations on rightsizing generated considerable 
debate within the Department. OPAP found that there was no 
overall system to link the size and composition of our missions 
to the primary foreign policy goals of those missions.
    While the International Affairs Strategic Plan outlined 
executive branch goals and foreign policy, actual decisions on 
Agency staffing overseas seemed coincidental to the goals 
stated. The Mission Performance Plan, required of each embassy, 
received little feedback from Washington, and was almost 
irrelevant to the allocation of resources. The NSDD-38 process 
seemed to be broken. Staffing decisions appeared to be largely 
based on the success of various agencies in obtaining the 
necessary support from Congress for additional positions 
abroad.
    OPAP recommended that a permanent interagency committee be 
created by the President and chaired by the Secretary of State 
to establish the criteria to be used in determining the size 
and composition of our overseas missions. The committee would 
determine appropriate staffing levels at all of our embassies 
based on an understanding of our foreign policy objectives. 
This was to clearly link mission size to mission objectives and 
was meant to be a dynamic process making adjustments as 
necessary.
    We used the term rightsizing to describe the proper 
allocation of resources to mission objectives, but we caution 
that rightsizing and downsizing were not necessarily 
synonymous. In some cases, we would have to increase staffing 
levels at some posts to reflect changing circumstances, while 
reducing staff elsewhere. We believed, however, that real 
savings could accrue to the government over time if rightsizing 
were embraced along with many other recommendations to improve 
our operations abroad, including proper cost allocations by 
Agency, safer and better facilities, improved communications, 
consolidation of certain administrative functions, and improved 
human resource practices including training.
    At the time of the release of the OPAP report in November 
1999, the Department did not accept the principle 
recommendation among our proposals for rightsizing, namely, the 
creation of an interagency panel on rightsizing to be 
established by the President.
    However, the panel at the time believed that any serious 
effort at rightsizing could only come through a process 
initiated by the White House that clearly had the President's 
strong support. The rightsizing recommendations of OPAP were 
included in the report of the Independent Task Force on State 
Department Reform published in January 2001 and conveyed to the 
incoming administration of President Bush. In August 2001, the 
President's Management Agenda was released, and included 
rightsizing as a major goal of the administration with OMB 
leading an effort to establish a comprehensive overseas 
staffing allocation process.
    The White House, through OMB, has established an 
interagency working group to look at overseas presence issues, 
starting with fundamental questions such as the real costs 
associated with having personnel overseas. OMB's role in the 
budget process gives it leverage in using budget levels to 
force agencies to provide justification for positions overseas.
    Within the Department of State, an effort is under way to 
address rightsizing by using a strategic planning framework and 
by improvements into the Mission Performance Plan and Bureau 
Performance Plan process.
    The Department and USAID are committed to complete a joint 
strategic plan by June 2003. Elements of strategic human 
capital planning and embassy rightsize planning are included in 
the draft 2004 to 2009 Strategic Plan, as well as in the MPPs 
and the BPPs.
    With the new Strategic Plan and a much more rigorous MPP 
and BPP process, we will have in place the foundations for an 
effective means of linking resource allocations to policy 
objectives.
    From an OPAP perspective, what still needs to be done is to 
create a rightsizing process that clearly applies to all 
agencies overseas. It is my judgment that we also need to do a 
better job of looking at long-term trends and developments, and 
to make that part of a process of defining our foreign policy 
goals.
    The International Affairs Strategic Plan, last issued in 
2000, should be updated and should reflect the views of all 
agencies operating overseas. Once such a comprehensive state of 
foreign policies goals is established, there should be a 
coherent process to make responsible allocations of resources 
across all agency lines. That is the essence of our OPAP 
recommendation on rightsizing.
    I am encouraged that many of the OPAP conclusions and 
recommendations on overseas presence and rightsizing have been 
accepted, though by any assessment, we still have far to go. As 
the Agency traditionally responsible for shaping and executing 
our foreign policy abroad, the State Department must continue 
to demonstrate a strong interest in making any process of 
rightsizing an effective one.
    Other agencies must see it in their own interests to carry 
out their specific functions as part of an effective country 
team. The White House must bear ultimate responsibility for 
making any rightsizing process work across agency lines.
    Finally, Congress will have an important contribution to 
make as you consider the proposals that will come before you as 
we try to establish a more effective process for shaping our 
overseas presence.
    Thank you very much.
    Mr. Shays. Thank you very much, Mr. Itoh.
    I think this is a huge issue. I think we had, you know, 
some pretty long presentation, and it seems like it is a lot of 
numbers and formulas and so on. But, for me, going to an 
embassy and seeing such dedicated workers, but looking at their 
facilities just from the standpoint of security, we pack people 
in. They are practically in hallways in some places. And then 
we have to have places for them all to live. I was amazed--
amazed may be a strong word. I was very surprised to realize 
how we break down--how few in the State Department are 
actually--how few people in our embassies are actually in the 
State Department, and I am looking for that, for the--it was 39 
percent.
    Ms. Davis. It is about one-third, sir.
    Mr. Shays. Yeah. It just blows me away, and then Defense is 
40 percent. I notice Transportation, 1 percent, and Treasury 
and so on.
    In May 2001, we had a hearing on rightsizing, and we had 
the tenants. You know what I mean by tenants?
    Ms. Davis. Other agencies.
    Mr. Shays. Other agencies. That's kind of what State 
Department feels it's like. It's a tenant for all the other 
agencies.
    So let me just ask in terms of--and not that these missions 
aren't important. But let me just ask you in terms of cost, and 
I will start with you Mr. Ford.
    Is it likely that if you were able to attach the true cost 
to every person who is assigned to an embassy and the payment 
had to be made by the Department that sent them there? Is it 
likely that we might see less people in some of our facilities? 
In other words, all the costs, not just the salary; the staff 
support, the facility, and if it is a U.S. Government facility, 
the cost of that facility. And security? All the things added 
to it, their housing.
    Mr. Ford. As far as I know, there is nobody in the 
government who knows what those costs are. OMB is in the 
process of trying to identify costs for all of the tenants as 
was mentioned earlier at overseas posts. I noticed in their 
statement for the record they had some very interesting numbers 
for--at different costs for individuals in the same Agency.
    For example, I think they had the FBI, they showed the cost 
of an FBI agent in three different locations, and the costs 
varied--I don't have their statement here in front of me--but 
as much as a couple hundred thousand dollars, which indicates 
to me that either the estimates aren't very good or the FBI 
needs to take a hard look at how it assigns its people, since, 
if they have an agent at one place that costs three times as 
much as another, they may not want to make that kind of 
investment.
    But the bottom line is, the overall costs by an agency 
overseas, as far as I know, is not known, and I know that that 
is one of the key objectives of the OMB project. I don't know 
where they are with it right now in terms of whether they feel 
like they can give hard numbers, but I think that's one of the 
first things you need to find out before you make the right 
kind of decisions about who you are going to assign overseas.
    Mr. Shays. Ms. Sigmund, do you have anything to add to the 
comments that were made by Mr. Ford?
    Ms. Sigmund. With respect to costs?
    Mr. Shays. Yeah. He didn't really answer the one question I 
asked though. If you were able to determine the full costs, 
would it be likely that some of those individuals sent 
overseas, that the departments might send less? And that's the 
question that Mr. Ford began. Yes or no? You don't know?
    Mr. Ford. I can't speak for the executive branch, sir.
    Mr. Shays. No. You're not hearing my question.
    Mr. Ford. You want to know if they would send----
    Mr. Shays. The answer, is a free service overutilized? And 
the answer is yes. So, to the determination of a free service. 
No, it's just by just the actual laws of it.
    Ms. Sigmund. Of course, it's difficult to say concretely, 
but I'm assuming that it would certainly be an influential 
factor in rightsizing on the part of other agencies.
    Mr. Shays. I guess what I'm--with our formulas and the 
concept that we would look at the cost and the mission and 
security, we look at all three of those. It would just strike 
me that one of the things we could do pretty quickly is 
determine costs, and at least make sure that the cost is borne 
not by the State Department but borne by the tenants who go 
there. And it would strike me that we would probably need 
some--you would probably see some right then some contraction.
    You wanted to make another comment, Ms. Sigmund?
    Ms. Sigmund. Well, only that there are processes at work in 
the embassy itself that assign various administrative costs. 
They are not perfect, but they do attempt to distribute and 
share costs.
    I think part of the problem, if I understand it, is that 
the formula that different agencies use is different in 
calculating those costs. And so I think that, for example, some 
in Washington, administrative costs are attached to the cost of 
serving overseas. I think there has to be agreement among all 
of the participants on a standard formulation of what would be 
counted in those costs.
    Mr. Shays. The Department of Defense cannot pass an audit. 
There are over $1 trillion, $1.7 trillion of basically points 
that--of transactions that aren't auditable. It blows me away, 
and we are working on it, but would someone explain to me why 
the State Department--we use as the number 260 the number of 
missions. I want to know. It is just too neat, 260, 60,000 
people overseas.
    Ms. Davis, I'm sorry, I have not been properly addressing 
you. Ambassador Davis, Ambassador Sigmund, and Ambassador Itoh, 
I apologize.
    Ms. Davis. Actually, the number that I was using is about 
263.
    Mr. Shays. 263. OK. That's the number we're going to use 
here.
    How about the number of employees overseas?
    Ms. Davis. The number of employees we use, the number of 
direct American-hire employees is about 19,000. That's 
Americans across the board, not just for State Department, but 
the number of employees, total, that we use overseas is about 
46,000.
    Mr. Shays. And those are----
    Ms. Davis. That includes direct-hire Americans, it includes 
foreign-service Nationals, and it includes personal-service 
contractors and others.
    Mr. Shays. Why has it taken so long to agree on a common 
set of criteria for rightsizing? What's the dispute, and who's 
involved in this dispute?
    Ms. Davis. Sir, it's--when you talk about rightsizing, I 
guess you have to talk about it in two parts.
    There is no dispute in terms of rightsizing within the 
State Department, but the difficulty I suppose is the 
rightsizing in terms of the other agencies. And I believe that 
the problem has been that there has not been sufficient 
interest to get the job done, and I believe that the interest 
is there now.
    For instance, rightsizing is now a part of the President's 
agenda, and that gives an impetus to really, focusing much more 
on the actual process of rightsizing.
    Mr. Shays. And obviously a focus of the Secretary's.
    Ms. Davis. Yes. Most definitely.
    Mr. Shays. Because when he was before the Budget Committee, 
he was very clear about his support.
    We've had a little bit of trouble getting GAO to get 
information from State, and I'd like to know. Mission and 
Bureaucratic Program Plans are an important part of planning 
documents, which State talks about as key to rightsizing. And 
what I'm told is that GAO has had difficulty getting these from 
State because State lawyers assert the program plans are 
predecisional.
    Is this being resolved, and can I be pretty comfortable 
that GAO is going to get this information from now on? Is this 
striking you out of the blue here?
    Ms. Davis. Excuse me. Just a second.
    Sir, you are correct. We will have to take this discussion 
back to the Under Secretary for management, and I will get you 
an answer.
    Mr. Shays. Yeah. We've had a little bit of trouble getting 
information out of State. And in order for us to do our job, 
and when we ask GAO or the Inspector General to do certain 
things, we would really like, before the next year and a half, 
to really make a dent, a significant dent in this problem. And 
I think you would as well. And we could work I think better as 
a team.
    Mr. Kucinich.
    Mr. Kucinich. Thank you very much, Mr. Chairman.
    To Ambassador Sigmund, do you believe the Department has 
all the resources it needs right now to secure its overseas 
facilities?
    Ms. Sigmund. I think that the Department today is better 
positioned than it has been in previous years. I think it still 
needs more resources, yes.
    Mr. Kucinich. Now, your description of the U.S. post in 
Nigeria.
    Ms. Sigmund. Yes.
    Mr. Kucinich. I found it troubling. In fact, a staffer from 
our committee entered the Foreign Service, and her first post 
was in Nigeria. She had some extremely troubling accounts of 
working there, both in terms of security and insufficient 
staffing.
    Do you think additional resources could be used throughout 
the world to enhance security?
    Ms. Sigmund. Yes, sir. I do.
    Mr. Kucinich. Even if we are not talking about building new 
facilities, couldn't many posts use significant upgrades that 
could be done more quickly than, let's say building?
    Ms. Sigmund. I think it's important for the Department to 
put in place processes and plans to use additional resources 
wisely. And I think it's--it is doing that now.
    Mr. Kucinich. In your testimony, you state that rightsizing 
cannot resolve all the problems we have today. Specifically, 
you cite insufficient resources. Where could Congress most 
quickly and effectively bring about additional resources?
    Ms. Sigmund. I'm sorry, I'm not sure I understand your 
question.
    Mr. Kucinich. At what point--do you have any specific 
recommendations for the Congress about what resources should be 
brought to bear?
    Ms. Sigmund. I think in my statement I was referring to 
previous years when, in fact, staffing shortages were allowed 
to develop. Decisions were taken, for example, in the 1990's to 
compensate for budget shortfalls by not hiring, so that hiring 
levels went lower than attrition. It's in those areas that I 
was referring to, sir.
    Mr. Kucinich. Thank you.
    Mr. Ford, you state on page 19 of your written testimony 
that maintaining our overseas presence is, ``An enormous 
expense, particularly with current budget deficits.'' I was 
surprised to hear this, in part, because the current budget 
deficits did not begin until the President and this Congress 
passed a tax cut which primarily benefited those in the top 
bracket. I was also surprised because I think the State 
Department budget--it's my own opinion--was an absolute bargain 
when you compare it to the Defense Department budget, which I 
did in my statement.
    Do you have any thoughts about the disparity between the 
money that this country spends on the Department of Defense and 
the Department of State? And do you ever think that maybe if we 
spent more money in the Department of State, we may not have to 
spend as much in the Department of Defense?
    Mr. Ford. I don't think GAO has a view on that. I mean, you 
know, we want the money that is going to be spent to be spent 
efficiently. That's the bottom line. Whether it's spent by DOD 
or State Department or anybody else in the Federal Government.
    Mr. Kucinich. Ambassador Davis.
    Ms. Davis. Sir, we always welcome additional resources, 
such as the resources that we got for the Diplomatic Readiness 
Initiative. I think that this is an instance that I can 
happily, happily cite that the Congress has been 
extraordinarily supportive of the State Department. And we have 
shown that we have utilized those resources properly and are 
continuing to show that we are utilizing resources properly.
    So we appreciate increased resources with our increased 
responsibilities in the world.
    Mr. Kucinich. Thank you, Ambassador.
    To Ambassador Itoh. I am glad you are here to represent the 
Overseas Presence Advisory Panel, a panel that does a 
significant amount of work. I'd like to ask you to focus on one 
aspect of this work, which you refer to in your testimony, the 
question of overall resource and staffing.
    According to the report, the panel noted the gap between 
our Nation's goals and the resources it provides its overseas 
operations. The world's most powerful nation does not provide 
adequate security to its overseas personnel. Despite its 
leadership in developing and deploying technology, U.S. 
overseas facilities lack a common Internet and e-mail 
communications network. The overseas facilities of the 
wealthiest nation in history are often overcrowded, 
deteriorating, and even shabby.
    Ambassador Itoh, from what we have heard here today, it 
sounds like the panel's conclusion that the Nation's overseas 
presence is essentially severely undercapitalized still holds. 
Is that right?
    Mr. Itoh. I think that members of the panel--and I have 
communicated with several of them before I came here to testify 
today in order to try to speak on their behalf and not just 
from my personal impressions--I think members of the panel are 
generally encouraged by a number of trends that they have seen.
    Back at the time when we were actually writing the report, 
we consulted with a number of Members of Congress. During that 
particular process Members of Congress made the point that, 
yes, they recognized that the Department of State did not have 
adequate resources, but they also argued that when given money 
in the past, on occasion the Department of State did not spend 
those resources wisely. So one of the messages we brought back 
as a panel to the Department was that we needed to make a 
commitment within the Department to reform.
    So it wasn't just an issue of resources. We could argue 
that if you made a commitment to reform practices in the 
Department of State to try to improve how we allocate these 
resources that we do get, we would actually improve the ability 
to make that argument to get additional resources.
    One of the areas where I think we are most encouraged is 
the overseas facilities issue. At the time of the OPAP report, 
we recognized that there were serious deficiencies in many of 
our overseas missions, and yet the rate at which we were able 
to address those deficiencies in our current strategy under FBO 
was totally inadequate. It would take us 10 or 20 years in 
order to get just the embassies that were critically deficient 
in security to--come up to speed. And that's one----
    Mr. Kucinich. Thank you, Ambassador.
    I want to ask, I was struck by the panel's conclusion which 
was made in harsh terms, said: The condition of U.S. posts in 
missions abroad is unacceptable. The panel fears that our 
overseas presence is perilously close to the point of system 
failure. And you stated: New resources will be needed for 
security, technology, and training to upgrade facilities. In 
some countries where the bilateral relationship has become more 
important, additional posts may be needed to enhance the 
American presence or to meet new challenges.
    Where do you think we are in terms of getting overseas 
facilities up to minimum acceptable levels?
    Mr. Itoh. I think that one of the areas which has been a 
success story in terms of our recommendations and in terms of 
the Department and administration's response is what OBO is 
doing now. It really does meet the requirements and the goals 
of our panel at this particular time.
    Likewise, on personnel resources, this is another area 
where we argued that there should be additional resources for 
the Department, because we were seeing staffing gaps and lots 
of problems as a result of inadequate in-flows of new Foreign 
Service officers. And, as Ambassador Davis indicated, the 
diplomatic readiness initiative has been supported by the 
Congress. We on the panel argued that we needed 10 or 15 
``percent training float''--I don't think we are quite there 
yet--in order to be able to train the people that we think need 
to come into the Foreign Service and also move upwards in terms 
of the management skills.
    I think in terms of all three of those issues that you 
mentioned, starting with facilities, human resources terms and 
information technology, we have made considerable progress. We 
haven't gotten there yet in terms of the unclassified 
communications technology, but we certainly are in much, much 
better shape than we were in 1999.
    Mr. Kucinich. Thank you. Mr. Chairman.
    Mr. Shays. Thank you. And thank you, sir, for your 
patience. Mr. Ruppersberger.
    Mr. Ruppersberger. Thank you, yes. It was a good committee.
    I know there's some questions you can't ask, and we would 
like to get into more detail, but I think overall my impression 
of the committee is that we are starting--there is a beginning 
of a reform.
    I think before you can start a reform, you have to have 
support from the top. And you've discussed that, and you have 
stated today that the President and Secretary Powell--and I 
know I feel strongly that Secretary Powell is supporting, just 
based on some of the briefings that we have had.
    I think part of what I see here is, the first thing, you 
have different agencies and there is always a problem with 
interagency, be it cooperation or different systems or 
whatever. But what we need to do, I think, from an 
international point of view, based on what I'm hearing today, 
is set up a system that is going to work and a system that will 
develop accountability. You are never going to get to the next 
level until you have accountability of what you're doing and to 
be able to justify the expenses.
    And I agree with you, Mr. Ford, that right now there is 
still not that system in place. And that it needs to be if you 
are going to get the support to spend the money. And yet we 
have got to do it quickly, because I think we can all agree, 
after we hopefully win this war, you are going to have more 
burden on you than ever. And you have got to be able to perform 
that mission, have the right people in the right place and the 
right facilities to do the job.
    Now, let me just ask you a couple questions just to try to 
get to the system arena. No. 1. Do we have a data base on 
personnel? Is there any--I mean, just forget just State 
Department as an example. I don't see how we can manage without 
having information. And with the technology that exists here 
today, do we have a data base about where, how many overseas 
personnel we have, what they are doing? And can we tie in to 
find out how we can judge their performance? Does that exist at 
all? I don't care who asks the question. Maybe I should ask 
you, and then I'll ask Mr. Ford.
    Mr. Ford. For all of the agencies that are over seas, I'm 
not aware of any centralized data base.
    I know the State Department has probably the best data base 
that is available. And if I had to go there to--if I had to go 
and get that answer, I'd probably go to Ruth and ask her if 
they have that information.
    But in terms of all of the presence overseas, I don't know 
if the State Department data base has that or not. I'd have to 
defer to her on that.
    Ms. Davis. This is a problem. It is a problem that is being 
worked on. Let me give you some elements, however.
    Mr. Ruppersberger. Including some security problems that 
might exist because of that data base?
    Ms. Davis. No. It's a problem that we haven't pulled 
together all of the various technical applications that we 
have. For example, this is another one that we have to look at 
in two forms. First of all, how many State personnel do we have 
overseas? And, second, how many other Agency personnel?
    In terms of the other Agency personnel, we do have some 
read on the number of full-time, direct-hire personnel, and we 
have that under the NSDD-38 process. We keep relatively good 
records on that. The problem being that we have more people 
than the people who are direct hire. We have, as I said, we 
have contractors, we have Foreign Service nationals, we have 
people who are hired on personal services contracts. And so we 
don't have one data base that captures all of these people.
    Now, ICASS captures some of that data. We have a personnel 
system called GEMS that captures the data for the State 
Department. We also now have a new system called the Post 
Profile system, which is a central data base, a new central 
data base at our post that has the information about a direct 
hire as well as FSNs and other personnel.
    What I'm trying to say is, that we have got a lot of 
strands out there, and we need to develop a system to 
consolidate and to pull it all together, so that we can get the 
information that we need.
    Mr. Ruppersberger. Let me ask you this question about your 
mission.
    It seems to me the two areas of reform that you need to get 
a better hold on are who is there and what they're doing and 
how they're performing from accountability.
    We also need to look at the facilities' end capital, so to 
speak, and to develop the planning techniques as far as what do 
we need from a security, from an intelligence point of view, 
and from a communications point of view, to make sure that we 
are looking down the road.
    Now, do we have a committee? I guess Mr. Itoh, you might 
maybe answer this question. I believe--I have always felt very 
strongly that if you are going to get the information on what 
you need, you go to the front line. I mean, managers sometimes 
get in the way of doing business. And are we asking the users, 
the front line throughout, where the needs are as it relates 
not only to now but maybe down to the future on the capital 
ends?
    And I know Secretary Powell is looking at this and is 
trying to get it moving, so to speak. Even the amount of money 
that is being put in, it seems very, very small because it is 
over a 15-year period, I think, $16 billion. Is it a 15-year 
period or 20-year period? Are we addressing that and looking 
and talking to front line about what we need from a facilities 
point of view? And, where do you think we are right now, and 
what do we need?
    Mr. Itoh. I'll have to defer to General Williams. But just 
as a general observation, I think that what the Department has 
done since the time of our report is to try to strengthen the 
planning process. And that is, to come up with a strategic plan 
that they are working on right now, and also the MPP, the 
Mission Performance Plans, and the BPP, Bureau Performance 
Plans, which require the missions to take a careful look at 
what their policy objectives are and identity what resources 
they require, both in terms of human resources and also 
physical resources, obviously, to try to protect those 
personnel over time.
    As far as the panel is concerned, one of the things that we 
pointed out is the fact that we needed a long-term 
comprehensive set of foreign policy goals that all of the 
agencies agreed to. What we have right now is something called 
International Affairs Strategic Plan, which actually is out of 
date as it does not reflect this administration's interests.
    This strategic plan was issued in 2000, and it was an 
overarching set of objectives, foreign policy objectives, for 
all U.S. Government agencies overseas. Our panel position was 
that we need to continue to have a document like that, and not 
just a strategic plan that basically represents the views of 
the State Department with some other agencies, but an 
overarching plan for all agencies, and then try to project your 
requirements both in personnel and in physical security over 
time.
    I've always thought that the military does a reasonably 
good job of planning, because with force projection 
requirements and alsin the procurement of weapons systems, 
they're really required to look 10 years or 20 years down the 
road. I'm afraid that we at the State Department and other 
foreign policy agencies don't tend to have those kind of far 
horizons. I think that's one of the things that we should do.
    Mr. Ruppersberger. And we should implement it then. I mean, 
I agree with you. And we need to start implementing.
    I think my time is almost up, but the gentleman----
    Mr. Williams. If you would allow me.
    I would just like to speak specifically the facilities side 
of it. One of the first tasks that Secretary Powell and I 
agreed upon at the early part of 2001 is that we needed a 
strategic capital plan, which was never in existence.
    We prepared this during the first 120 days of 2001, had it 
ready for publication, and put it into the system the early 
part of the next year. This plan captured all of our expected 
work and requirements over the next 6 years. It's a roadmap. It 
guides us. It has a priority. Everyone understands it. The 
Ambassadors have it. Members of our committees here in the 
Congress, OMB, and also the Secretary. So it puts us all on the 
same page. We know exactly what we are asking for and what the 
project is expected to cost and how it will be executed4.
    In addition to that, we zero-based every post--every post, 
and policed-up all of the deferred maintenance which had never 
been done before. We put that in a data base in our operation. 
So, that's valued, for example, today at about $700 million of 
about deferred maintenance. So, that coupled with the 160 or so 
buildings or new embassies that we need to apply new capital to 
is the program that we are currently executing. And we update 
these plans and this data base on a continuous basis.
    Mr. Ruppersberger. Just a conclusion. I think that what I'm 
seeing and hearing so far, the first thing, I think you have a 
good leader and that's the first prerequisite to management. 
You have good people, and that's the second. And then you have 
to give them their mission and hold them accountable for 
performance and also give the resources.
    I think the one area that I think we need work on here is 
to be able to put together the assistance based on the 
technology that we have today and to pull that together so that 
we can then analyze where we need to go. Because, as 
performance goes up, cost goes down, and that cost can go right 
back into your operation to increase the moneys that we need to 
do the things that we need to help you down the road. Thank 
you.
    Mr. Shays. I'd just like to note the presence of Mr. 
Tierney from Massachusetts, who has been very involved in this 
issue. And also point out the last questioner, while he's a new 
member, serves on the Intelligence Committee and obviously is 
getting some insights into this--probably learning more than 
you wanted to know.
    I want to kind of feel a little more comfortable about what 
we are doing with this panel, because you all are wonderful 
resources here, and we've got six of you.
    Mr. Ford, your perspective is that we basically asked you 
to task this issue of rightsizing from our perspective, and you 
have done that quite well and you continue to do.
    Ms. Davis, my sense is that you are in charge of this whole 
issue of rightsizing as it relates to personnel primarily.
    Ms. Davis. Yes. In the State Department.
    Mr. Shays. In the State Department. As well, General 
Williams, in the State Department. You are focused on the 
building sides of this whole issue of rightsizing.
    And Mr. Nygard, you are here, I think, primarily because 
you are a part of the State Department. We made you that, AID, 
and I think there is probably some tension in terms of whether 
you should be in your own separate place or part of State, and 
that's something that's worked out by powers higher than you. 
But I would be interested to know how you see AID and where it 
should be, so I'm going to come to you first in my questioning.
    And Ambassador Sigmund, you are here as your role as 
Inspector General. Your people do a lot of post or mission 
visits. Is that correct?
    Ms. Sigmund. That's correct, sir.
    Mr. Shays. And you're looking to see, you know, are things 
working. Even forgetting rightsizing, how are things going. 
You're kind of doing the audit. You are making, you are viewing 
the sites and you're looking at it from the standpoint of 
rightsizing.
    Ms. Sigmund. That's correct. In fact, we have made 
rightsizing one of the issues that we look at now at every 
post.
    Mr. Shays. And Ambassador Itoh, you are here primarily, 
obviously, as part of Inspector General, but because of your 
being on the President's Advisory Panel. That's kind of the 
perspective. So when I ask you some questions, I want you to 
all feel free to jump in from your perspective.
    Mr. Nygard, if you would tell me, how is AID doing by 
State? You have, for instance, a huge presence in South Africa. 
Huge is a strong word. You have a very large presence. Is it 
the intent of the State Department to kind of consider you as 
embassy employees and put you there? Are they saying we're 
going to send you into the field a little bit?
    What can you tell me about that?
    Mr. Nygard. Well, I can tell you that in general, and in 
South Africa in particular--South Africa is one of our largest 
missions; I think we have 15 direct-hire Americans there.
    So, huge is a relative term, but we also have a lot of the 
other categories of employees that Ambassador Davis was talking 
about, personal-services contractors, Foreign-Service 
nationals. I think these days, post-1990's, both the law and 
common sense tell us that we should be collocated with the 
Department of State wherever possible, largely for security 
reasons.
    Obviously, AID goes back a long way. We started out as part 
of State. In 1979 we were separated from State, and for the 
past 4 years we have been back a part of State. We have always 
been, however, an instrument of U.S. foreign policy and see 
ourselves very much as part of the Secretary's team. We have 
some preferences on the part of individuals within AID that 
they'd rather be outside, but I think our policy is clearly 
that we want to be part of State's operation overseas.
    Mr. Shays. Yes, sir.
    Mr. Williams. Chairman Shays, if I could just chime in from 
the facilities side. You are absolutely right. USAID has a very 
large presence in Africa. The two facilities that we just 
opened, which we are very proud of, Dar es Salam in Tanzania, 
one of the largest USAID facilities we have in recent times, 
was just opened at the same time conjunctively with our new 
embassy opening.
    We have plans but not the funds sorted out for Nairobi. We 
did site work on the grounds, and we are waiting now just 
simply for the funds, and we will do the same thing in Nairobi.
    We have a similar situation--these are new facility I'm 
talking about--in Kampala, Uganda, which was built over a year 
and a half ago. We have site-prepped the grounds and landscaped 
and masterplanned for a USAID facility, again waiting on funds. 
Six other locations in Africa. South Africa, a new consulate 
going in Abidjan, Cote d'Ivoire.
    Mr. Shays. But that are part of a compound?
    Mr. Williams. These are separate buildings.
    Mr. Shays. In the compound? Or----
    Mr. Williams. On the compound with us.
    Mr. Shays. See, I would think--and Mr. Nygard, you can tell 
me--as a former Peace Corps volunteer, we were obviously 
attempting to do right by the countries that we served.
    We knew that we were American citizens who were bringing 
the ideals of our great country overseas and respecting the 
culture of the people we were serving in, but we didn't think 
of ourselves as in a sense an instrument of our Foreign Policy. 
And there would be a desire on the part of Peace Corps 
volunteers to be with the men and women and children and so on 
that--the host country folks, to be among them. I would think 
that the culture and idea is somewhat similar.
    Mr. Nygard. I think the culture is somewhat similar, Mr. 
Chairman. I think we'll probably find that almost a majority of 
our Foreign Service officers are former Peace Corps volunteers. 
So they have the same background that you do in that respect.
    However, I mentioned in my prepared statement that the size 
of our overseas direct-hire staff, now, is just slightly more 
than half of what it was 13 years ago. The result in part is 
that AID is not really implementing programs. In other words 
our people, are not out in the field as much as they used to be 
15, 20 years ago, perhaps when you were overseas.
    Mr. Shays. And so it's the indigenous folk.
    Mr. Nygard. I beg your pardon?
    Mr. Shays. It's indigenous people that are there, basically 
the host-country nationals that are basically carrying out the 
work?
    Mr. Nygard. We have a good number of indigenous host-
country private and voluntary organizations and firms. We also 
have a good number of U.S. universities, PVO's, contractors, 
companies working for us----
    Mr. Shays. Contractors.
    Mr. Nygard. Contractors. Who generally are not co-located 
with us. One difference that we have from the embassy lately is 
that our interests, as you say, is primarily in dealing with 
the people. Our needs for security in terms of classified 
information are much less than those of the State Department.
    That is what bodes in terms of perhaps having a separate 
building in some cases on the embassy compound. And we've 
worked very closely with General Williams and his staff to see 
the cases where we can do that.
    Mr. Shays. Let me just be clear, Ambassador Davis. When I 
hear the number 46,000 total, 19,000 American citizens, is that 
correct?
    Ms. Davis. Sir, I was saying 19,000, it represents the 
number of U.S. direct hire. That includes the other agencies as 
well.
    Mr. Shays. Right. You anticipated my question. But does it 
also include contractors?
    Ms. Davis. No. Only U.S. direct hire.
    Mr. Shays. And so whose obligation and security wise--and 
housing wise we don't have a challenge. Is that right, General? 
We don't have to house the contractors?
    Mr. Williams. No.
    Mr. Shays. But in terms of security, obviously American 
citizens that have to be----
    Ms. Davis. Falls under the responsibility of the Chief of 
Mission.
    Mr. Shays. Right. But not your responsibility as head of 
personnel?
    Ms. Davis. The security? No.
    Mr. Shays. Yeah. The focus--well, even the contract. You 
don't interface directly or have control over the contractors?
    Ms. Davis. No.
    Mr. Shays. OK.
    Ms. Davis. No.
    Mr. Shays. I want to say Ms. Davis, Ambassador Davis, you 
kind of won my heart early on by your answer to one of my 
questions: Why has it taken so long to agree on a common set of 
criteria for rightsizing? I love honest, succinct answers: It 
wasn't a priority, it is now. And that explains a lot. It got 
rid of a lot of questions I wanted to ask you after that, I 
would like to know, why should State incorporate the GAO 
rightsizing framework into its Mission Performance Plan? That 
would be open, I guess, to you and the General.
    Ms. Davis. First of all, I would like to say that we 
obviously have reviewed the plan, and we find it very useful. 
We find that it addresses with the three basic legs, which is: 
Mission, security, and cost. It addresses issues that we are 
very interested in, and it also addresses issues that our 
Chiefs of Missions just generally do address. Consequently, we 
have taken a look at the framework and have utilized it to a 
certain extent in our Mission Program Plan.
    Mr. Shays. OK.
    Mr. Williams. Mr. Chairman, I would like to say, for our 
business, getting the seat number right from the beginning is 
really what drives the size.
    Mr. Shays. Getting the what? I'm sorry.
    Mr. Williams. The seat. The presence number. Getting the 
number of personnel that's going to be served at a particular 
post is absolutely paramount for our business, because it 
drives the size of the building which ultimately drives the 
budget.
    So we are very interested in getting the number of the 
population that is anticipated to be served rights in the 
beginning, so that we can size and build a building correctly. 
Our formula today is to build to the rightsize, and also build 
in some growth percentages so that, over time, if there are 
some tweaks to that number, we can do that. So we are very 
interested in the whole issue of rightsizing.
    Mr. Shays. OK. Would you explain to me how the State plans 
to implement the GAO criteria? In other words, accepting it is 
one thing, how does it get implemented?
    Mr. Williams. Well, first of all, we would hope once the 
plan is put in place we would use the results of this plan to 
ensure that we--as I said--do that front end planning 
correctly, get in the types and number of seats, whether they 
are unclassified or classified correct, so that we can size and 
build the building correctly.
    Mr. Shays. Ambassador Davis, how would we be implementing 
the GAO criteria? What would be a concrete way that you are 
starting to do that?
    Ms. Davis. We have included some of the elements in our 
Mission Performance Plan. A number of Chiefs of Missions have 
taken a look at the framework, and they have said that, as a 
matter of fact, it encompasses many of the issues that they 
have talked about and studied in terms of developing the 
Mission Program Plan in any event.
    I think that what we are doing is our Resource Management 
bureau is taking a look at how it might be better incorporated 
into the planning process.
    Mr. Shays. How do we--and maybe Mr. Ford you would want to 
jump in. How do you integrate the cost of security in the 
mission between the tenants, for lack of another name, and the 
State Department? In other words, I can see the State 
Department using this as a basis for their own allocation, but 
the 19,000 employees include more than State. Correct? 
Ambassador Davis.
    Ms. Davis. Yes.
    Mr. Shays. And so you technically have about how much 
control over--of the 19, only a third are approximately your 
State Department, you clearly have direct control over them. 
Describe to me now what kind of control you would have on the 
two-thirds that aren't State.
    Ms. Davis. OK. Sir, the Chief of Mission has a 
responsibility as designated to the Chief of Mission by the 
President of the United States in the President's letter of 
instructions.
    Mr. Shays. And we have a few Presidents--we have a few 
Presidents that have made that point.
    Ms. Davis. Yes.
    Mr. Shays. But we don't really have an example yet that 
it's been implemented, that part of it, control by State over 
the tenants in a sense. In theory, it's there. In practice, 
it's not.
    Ms. Davis. In theory it is there. The chief of mission is 
charged with working with the various----
    Mr. Shays. I know that. I visited with too many Ambassadors 
and chiefs of missions, and they all make it very clear that in 
theory that is true, but, in fact, they don't have day-to-day 
control. They might have general----
    Ms. Davis. That is correct.
    Mr. Shays. They don't know what they are doing. They don't 
know why they are there in some cases. You know, if we're 
being--in the spirit that you answered my question, you know, 
they don't know why they're there. They assume that they're 
doing some good, and they know in many cases they are. There's 
interaction with State Department individuals and non-State. 
They interact, but there's no master plan where the Ambassador 
says, this is really great for my mission.
    Ms. Davis. I guess there are two issues here, sir. No. 1, 
it would be better if the Ambassadors were able to get on the 
NSDD-38 process earlier in the game. In many instances when 
people are assigned--when agencies wish to put new positions at 
the mission, they have already run the request by OMB, and 
they've already received the funding for the position. So the 
chief of mission doesn't have very much say-so at that late 
stage of the game.
    The other thing is that the chief of mission would benefit 
a great deal if the chief of mission were able to designate 
that funding from various programs from agencies be utilized, 
sort of the cross-jurisdictional possibility of utilizing 
funding.
    Mr. Shays. One of the things that I saw and my staff saw as 
well was the fact that some of the tenants had greater 
resources than others.
    Ms. Davis. Yes.
    Mr. Shays. So they could do things that their counterparts 
in State couldn't do and----
    Ms. Davis. And the chief of mission does not have the 
authority to say that if you have a healthy--more healthy 
amount of funds than another agency or another program, then 
you can't tell another agency that you're going to reprogram 
some of those funds. That's the problem.
    Mr. Shays. So my question was to you. Does the chief of 
mission have the tools to properly rightsize his or her post? 
The answer, I think, from your answers is no. I didn't ask the 
question, but you basically have answered that.
    And what I would want to know is what authority does the 
chief of mission have to have to prevent new staff from coming 
on post?
    Ms. Davis. The authority is there. The authority is there 
in the President's letter and in the law, but in practice what 
happens is that the chief of mission gets involved in the 
process at a later date, once a number of decisions are already 
made back in Washington.
    What the chief of mission needs is to be involved in the 
process right up front. When agencies start to discuss new 
positions, before they get the OK of OMB and before they are 
included in the budgets, chiefs of missions should be 
consulted.
    Mr. Shays. Would it be fair to say that a chief of mission 
has the ability to remove someone from post who is State 
Department, but really does not have the authority to move 
someone who is a tenant?
    Ms. Davis. Oh, you mean in terms of the position or in 
terms of the person?
    Mr. Shays. I have 400 employees in the embassy. I'm the 
Ambassador.
    Ms. Davis. Uh-huh.
    Mr. Shays. One-third are State. Two-thirds are non-State. 
They are good government officials. They are Treasury. They are 
FBI. They are Transportation. They are Agriculture. They are 
Justice folks. They are Commerce. OK. They're all there. Do I 
have the ability to say that we don't need any of these 
individuals and ask them to leave?
    Ms. Davis. NSDD-38 actually does provide for the reduction 
of--the process through which a chief of mission would go to 
reduce the staff at another agency.
    Mr. Shays. Can you cite an example where you know this 
authority has been used?
    Ms. Davis. To reduce the staff? No, I cannot.
    Mr. Shays. Ambassador Itoh, tell me--this dialog that I'm 
having right now, tell me how you react to it, that we're 
having with this----
    Mr. Itoh. Well, Mr. Chairman, in my prepared remarks, I 
think I gave you a fairly upbeat assessment as an OPAP panel 
member in terms of how well our recommendations across the 
board, have been accepted, and certainly exceeded our 
expectations in many areas. But I think one of the areas where 
we've been disappointed is in rightsizing. As I suggested, I 
think that getting OMB involved is certainly a good thing, and 
the State Department certainly is taking this process much, 
much more seriously.
    Mr. Shays. If I could interrupt you just for a second, I 
mean, OMB would strike me as being key, because they basically 
have budgetary oversight over all departments.
    Mr. Itoh. That's correct, and the fact that the 
administration has chosen for OMB to get involved, I think, is 
a good development for that reason. But our original OPAP 
recommendation was the creation of a committee which would be 
created by the President of the United States and chaired by 
the Secretary of State, with all of the major foreign policy 
agencies represented in this committee, to review all staffing 
requirements worldwide and to determine appropriate levels of 
staffing and link those appropriate levels of staffing directly 
to the international affairs strategic plan. That was our goal.
    We still feel like anything short of that probably is not 
going to work, because much of what we've been talking about 
here is rightsizing, but only involving the Department of State 
and maybe a few other agencies that are willing to go along in 
the process. But ultimately I would think that the process that 
we described back in 1999, that the NSDD-38 structure was 
basically flawed or was not working properly at that time, has 
not really changed fundamentally. We do have a much stronger 
letter from the President in terms of underscoring chief of 
mission authority, but I think in practical terms, rightsizing 
is really not going to work unless you've got the authority 
from the very top, and judgments taken at the very top, to 
determine what overseas our staffing should be.
    I should just cite the example from my 3 years in Thailand. 
Certain agencies did not have a successful time in terms of 
going to the Appropriations Committee and getting resources, 
and specifically the State Department, USAID and USIS, we found 
that staffing numbers went down considerably during that period 
of time.
    On the other hand, law enforcement agencies were quite 
successful in making the argument to their committees that by 
stationing people overseas, you were actually serving the best 
interest of the American people by having those resources 
overseas.
    So from an NSDD-38 perspective, and in my role as 
Ambassador, it was very, very difficult for us to assess those 
particular requests.
    Mr. Shays. You were an ambassador for how long in Thailand?
    Mr. Itoh. Three years in Thailand.
    Mr. Shays. And about how many of your--at the mission were 
State Department employees there? About a third or----
    Mr. Itoh. We had--at one point we had 570 authorized 
positions, of which State Department had approximately 35 
percent of those positions.
    Mr. Shays. Now, is it fair to say that you knew you had 
direct control over that 35 percent, but that the others you 
were more in a negotiating role?
    Mr. Itoh. Well, I don't think negotiating role is quite it. 
I think it depends a lot on the individual Ambassador, and you 
are the President's representative and not just the State 
Department's representative. But much of how it works on a 
practical basis is the relationship that an ambassador 
establishes with the heads of the different agencies at post, 
and I think Bangkok is a good example of how you do get fairly 
good interagency cooperation on U.S. foreign policy goals such 
as counternarcotics.
    On the other hand, it is very, very clear that since we 
don't have budget control over the other agencies that send 
their personnel to post, you really don't ultimately have 
control over the numbers. You can make tactical arguments back 
and forth, but the reality is that agencies that are able to 
make the case in terms of mission, and are able to fund their 
positions overseas, are the ones that are going to put their 
people overseas.
    Mr. Shays. So you might have DEA officials, and they are 
doing--and I think it's important for the record to note 
they're doing very important roles; for instance, dealing with 
illegal drugs, Treasury, illegal financing, commerce, promoting 
businesses, all of those are noble. But did you feel 
intuitively that you had the right combination, or did you feel 
that it was sometimes weighted toward certain areas and not 
enough in other areas?
    Mr. Itoh. Well, I think that what disturbed me was the fact 
that while at that point we had arguably the second or third 
largest U.S. embassy operating overseas, because we did a lot 
of functional regional operations out of Bangkok, what was 
happening was that over time a lot of the tools of foreign 
policy that were engaging with the public at large in Thailand 
were being cut back.
    For example, 2 years before I arrived at post, we cut two 
of our consulates, in Songkhla down south and in Udon in the 
north. We also closed USAID's bilateral mission in 1995, and in 
1996 we went ahead and closed the regional mission. We also 
closed our Cultural Affairs Office in Chiang Mai. We also cut 
half of our U.S.-based USIS information service people in the 
embassy in Bangkok.
    Mr. Shays. USIS is----
    Mr. Itoh. U.S. Information Agency Personnel.
    Mr. Shays. Right. But is that under the State Department?
    Mr. Itoh. Well, at that point they were not. My point is, 
is that at a time when we were actually increasing law 
enforcement and intelligence-gathering activities in Thailand, 
all of which were totally understandable and something that I 
supported, nonetheless decisions were made in Washington, 
largely on budgetary reasons, to cut personnel in individual 
agencies that could not sustain their presence overseas. So the 
end result was that after a 4 or 5-year period, we had a much 
different profile in Thailand than we started out with. And I 
would also argue that----
    Mr. Shays. And that is in spite of the fact that they 
weren't paying the true costs.
    Mr. Itoh. That's true.
    Mr. Shays. And so if they were paying the true--I believe 
in the concept of opportunity costs. I mean, you do one thing. 
And you give up doing something else. And I do think cost is an 
important factor in how much you value that activity. But at 
any rate, even then given what we were doing in budgets, you 
were seeing some reductions.
    Mr. Itoh. Well, part of that, of course, is the function, 
as I suggested, of some agencies being more successful than 
others. At that time the State Department was not doing well, 
and so one of the arguments for closing our consulates and, in 
fact, reducing some of our reporting positions, had to do with 
other priorities as we were opening posts elsewhere.
    So we ended up having after 4 or 5 years, I think, a much 
different kind of an embassy in terms of where our priorities 
were. I guess the argument I would make about relating staffing 
to a strategic plan is that I'm not entirely sure that we ended 
up where our overall foreign policy interests are best served. 
Yet for a whole variety of reasons, that's what we ended up 
with, a much, much different kind of embassy than we started 5 
years before.
    Mr. Shays. Anybody want to jump in before I get to 
another--I won't keep you much longer. Anybody want to comment 
on what we talked about in the last few minutes?
    How have staffing levels changed since the attacks on 
September 11th overseas?
    Ms. Davis. There have been some changes, and basically 
those changes are in the increase of other agencies overseas. 
The State Department has grown as well, but the numbers--
there's not been any sort of uncontrollable growth, I'd say, 
because the numbers have stayed pretty stable. But the increase 
basically has been in other agencies overseas because of issues 
such as the focus on counterterrorism, because of increasing 
demands on our consular service for our border security and 
those types of issues.
    Mr. Shays. I'm going to conclude when I do and ask what the 
biggest obstacle is for rightsizing. And I'd like each of you 
to be able to tell me what you think the biggest obstacles are. 
So I'd just like you to think about that.
    But let me--before I do that, I'd like to talk about the 
whole issue of cost. Excuse me. I would like to first have some 
of you describe to me the tension between mission and security, 
and maybe, General Williams, you could do this.
    When you get in a dialog, when you look in an embassy, is 
your first focus mission, or is your first focus security or 
what?
    Mr. Williams. First of all, the foremost concern in our 
mind is to build a secure facility for the number of people 
that we have been told will occupy the facility. So our focus 
is to make absolutely certain that the number that we provide 
in this secure facility is right and then focus on doing a 
secure building.
    Ms. Davis. I think the first focus would be on mission, 
because if the mission does not fit into the priorities and the 
goals and objectives of U.S. foreign policy, then we don't get 
as far as the security. So for me I think that mission is 
actually the first.
    Mr. Shays. And then a higher power will resolve the 
differences, right?
    It's fair to say, General, that there are some facilities 
that are extraordinarily vulnerable, and it's no secret. They 
are right along major streets.
    Mr. Williams. That is correct.
    Mr. Shays. It makes me think when I've had dialog with some 
of my constituents, as threatened as they feel and as concerned 
as first responders are, there's no question that in terms of a 
priority, we still have a significant way to go with our 
embassies. Is that not true?
    Mr. Williams. That is correct. And, Congressman Shays, I 
would just add this in. I travel an awful lot, and when we 
encounter a particular facility that obviously is in harm's way 
from a security standpoint, we feel it's our duty to come back 
and point this out to our regional bureaus to make certain that 
we're looking at this in a holistic way. And there is dialog, 
and I might point out it's healthy dialog, that is taking 
place. So I think it's working quite well.
    The Chairman. I'm going to try to finish up in the next 15 
minutes.
    Let me just be clear. We talked about costs. I'd like to--
I'd like to just make sure we have a little bit of a dialog 
about it. I'd like to know what the unresolved issues in cost-
sharing proposals, what are the unresolved issues?
    Mr. Williams. As it stands now, this--quite frankly I'm 
glad to----
    Mr. Shays. And I'm throwing this up to everybody, and I'm 
happy to have you gentlemen jump in.
    Mr. Williams. I'm happy to get to this one, Mr. Chairman, 
because I frankly believe that this gives us the best 
opportunity, I think, to help the chief of mission and our 
Department get the rightsizing, because if a tenant knows that 
before new additions or initial personnel are sent to a 
particular post, there's a cost-sharing mechanism in place, 
this makes the process ordered from the very beginning. And one 
of the reasons now I think that it's a little difficult to 
control is because the only effort involved here is to make a 
request, and we think that this cost-sharing issue will do two 
things. No. 1, it will put more money in the coffer to allow us 
to move ahead and build facilities quicker and get out of 
harm's way and get this matter behind us that was identified--
--
    Mr. Shays. Why do you think it would be quicker?
    Mr. Williams. Pardon me, sir?
    Mr. Shays. Why do you think it would be quicker?
    Mr. Williams. Well, because if we're able to implement the 
cost-sharing along the lines that we have suggested, the 
additional funds that would be generated as a function of a 
tenant paying a prorated share receipt and the type receipt, 
this would generate more available funds per year in order to 
apply to the new embassy construction.
    Mr. Shays. Anybody else want to jump in?
    Mr. Ford. Yes.
    Mr. Shays. Mr.----
    Mr. Ford. Ford, yeah.
    I think some of the issues is the devil is in the details. 
I think there's a lot of unresolved issues based on what we've 
heard from discussions with the General and with OMB on issues 
of how you're going to calculate cost-sharing, whether or not 
the tenants will be able to secure funding from the various 
funding agencies here and in Congress, the differentials in 
costs between, say, classified space and unclassified space. So 
there's a lot of details to this that I think are going to have 
to be worked out in order to create an incentive for everybody 
to sign up to this.
    Mr. Shays. And is this, in a sense, almost buying a space 
in a condominium, or, in other words, once they've paid this 
cost, does that entitle them to use this space indefinitely 
even if they don't need it? Or do they sell it? How does that 
work?
    Mr. Ford. I think that is a possibility. We did some work 
recently with the Department of Agriculture in which they felt 
that some residences that they had lived in for many, many, 
many years should be managed by them instead of General 
Williams, and so I think it's a possibility that if someone 
feels like, hey, I paid my fair share, therefore it's my place, 
I can stay there forever, I think that is an issue.
    Mr. Shays. And that is not a healthy issue. It's easier for 
us to allocate cost in rented space; is that correct?
    Mr. Williams. That is correct.
    Mr. Shays. So why can't we just determine the square 
footage based on capital and just charge them a rent?
    Mr. Williams. Well----
    Mr. Shays. I just think if you start getting them to pay 
the capital costs, you end up with some challenges in the 
future.
    Mr. Williams. Well, we have looked at this, Mr. Chairman, 
very, very hard. We've had the support and the advice of our 
industry advisory panel which helps us along these lines, and 
they suggested very strongly that we stay away from the rent 
type of concept and deal with a sharing formula that was very 
simple to implement on seats. If you require--in the case of 
USAID--a certain type of space which would be an unclassified 
space primarily in the USAID situation, it's only fair to 
charge USAID for what they're really buying, and that's an 
unclassified seat.
    On the other hand, if the Department of Defense, my old 
world, require classified space, and most of them do, then you 
pay a prorated share for that.
    Mr. Shays. That part I understand, I truly understand, but 
I--and I don't want to have to spend the time of the hearing to 
really--it's just a question that we won't probably resolve 
now. I just--it seems to me having these various departments 
and agencies almost have ownership creates problems in the 
future and takes away even more--takes away even more control 
from State.
    I would--maybe I could just ask our Inspector General to 
comment, or maybe even AID would like to comment based on past 
experience, or Mr. Ambassador Itoh. Does it make sense to try 
to have them capitalize the cost, or does it make--and to 
basically feel like they've bought a part of the facility, or 
does it make better sense to have them be paying a cost of what 
would be a square footage cost in any other building?
    Mr. Itoh. Actually, in the OPAP recommendations, we 
actually recommended both. We thought that there should be 
rent, in other words, a situation similar to what GSA does 
domestically in the United States, and that there also should 
be an assessment for future capital construction, particularly 
to meet the security requirements that we were faced with in 
this building campaign.
    The other interesting point in our discussions is that we 
felt that by moving these costs to all of the agencies with 
personnel overseas, that in fact they would then have to go to 
all of their subcommittees to make the case that the costs 
associated with their presence overseas was going to be 
considerably more than it had been in the past, and we thought 
that was a good thing, because it would actually involve a 
broader sector of the Congress, an effort to understand exactly 
what all these agencies----
    Mr. Shays. But what you're describing is, to me, making 
sure we identify the true costs and have them pay the true 
costs.
    Let me ask each of you what has been, in your judgment, the 
largest obstacle to meaningful rightsizing in the Federal 
Government? Why don't I start with you, Ambassador Itoh.
    Mr. Itoh. Well, I think to me the answer is really 
leadership and the commitment of leadership to be able to 
accomplish this. This is not an easy task, particularly the 
rightsizing concept, and I must say that while we did come 
together with a suggestion that there be an interagency 
committee on rightsizing created by the President, and chaired 
by the Secretary of State, getting that to a point in reality, 
we all recognize, is a very, very difficult undertaking.
    But I think what needs to be done is just as in the State 
Department, I think the Secretary of State and certainly 
General Williams have demonstrated that the engagement of the 
leadership at the very top on management issues like this 
really makes the difference. I'm a little worried, quite 
frankly about what happens if General Williams decides to leave 
us any time soon, because I hope that what we've been able to 
create under his leadership can be sustained over time. I think 
the point is----
    Mr. Shays. Not to knock heads together.
    Mr. Itoh. Exactly.
    But the point is I think it takes a commitment of 
leadership at the very top to be able to accomplish these very, 
very difficult undertakings.
    Ms. Sigmund. I also think that Ambassador Davis was correct 
in that rightsizing has to be made a priority. I think in 
principle our chiefs of mission have been empowered to engage 
in rightsizing through the NSDD-38 process, but in practice 
they haven't been, and all too often we find that through the 
use of TDY processes or through assigning Americans directly to 
a host government entity, that NSDD rightsizing instrument is 
weakened considerably. All too often Ambassadors get last-
minute notification that personnel will be arriving, and it's a 
tradeoff at that point between implementing important programs 
or refusing personnel who have been identified as being in the 
national interest, and that's a lot of pressure to put on an 
ambassador. He needs to be in the process at the beginning, and 
he needs to be truly empowered to make those rightsizing 
decisions.
    Mr. Shays. If I had said he, my wife would have questioned 
me right away. So it was really fun for me to have that 
opportunity. Thank you.
    Mr. Nygard.
    Mr. Nygard. I would say leadership, too, Mr. Chairman. I 
guess it's not so much the case with USAID, but for the other 
Cabinet agencies who are overseas, who belive their missions 
are different from that of the Department of State. I think the 
exercise that OMB is now going to be going through on 
rightsizing that will involve not only the Department and us, 
but the other agencies as well will bring a new equality or 
equity, if you will, to the rightsizing process. And the fact 
that the administration has taken this one on and is prepared 
to run with it, I think, gives us the first hope that it really 
will be a priority, as Ambassador Davis said earlier. That's 
been the problem.
    Mr. Williams. Without question, Chairman, it's leadership 
and the general acceptance of reality. We simply have to do 
something different and pronounced that will allow us to get 
out of this fix.
    Ms. Davis. I would agree with all of my colleagues. I would 
simply add that I think one of the blocks to appropriate 
rightsizing is the attitude that rightsizing means downsizing, 
and that is a dangerous proposition. Rightsizing does not, as 
the counsel said earlier in his presentation, mean downsizing.
    Mr. Shays. I figured out why I have an affection for you, 
Ambassador and General, because my first contact with the State 
Department, I felt they spoke in tongues. And I can actually 
understand what you men and women are saying to me, which is 
wonderful. I hope it spreads.
    Mr. Ford.
    Mr. Ford. I'm with everyone else on the panel. I think you 
have to have leadership, you have to have commitment, and we've 
got to create some incentives for all of the agencies that post 
people overseas to want to do this. And I think that's going to 
be the big hurdle, because the Ambassadors clearly don't have 
the wherewithal or the interest in pursuing this, and unless we 
get somebody at a fairly high level, be it the Secretary of 
State or OMB, to really force this issue and make it 
sustained--because I'm afraid, you know, these things can come 
and go, there's not a sustained level of effort here--then I'm 
afraid that the fruits of labor are not going to carry--be 
carried on in this program.
    Mr. Shays. I'm very impressed with all of you and feel 
we're very fortunate as a country to have your service. So I 
thank you for that. I'd allow you to--encourage you to make any 
closing comment. Is there anything that we need to put on the 
record we haven't put on the record that you feel should be put 
on the record?
    Mr. Williams. I would just like to leave, Mr. Chairman, 
with one point, because it's very significant and has so much 
linkage to this difficult situation and discussion we have had 
today.
    I think the fact that we have worked hard and put in place 
with great support from our Secretary of State--he's been 
leading the battle here--to put in place a framework now, 
framework for our government to get out of this situation that 
the OPAP so rightly pointed out, that we try our very best to 
make this go.
    I will commit to work as hard as I can, as I've done for 
the last 2 years, to try to point this in the proper direction. 
It's a lot of work to be done, and I appreciate the support of 
the Congress to date, and I hope that we can continue to have 
the support to stay the course.
    Mr. Shays. Any other comments?
    Well, the promise is if we do it right, we may have more or 
less people working, but they will--we will have used our 
resources better. We'll be better focused. We'll be better able 
to protect them, and the mission of our government will make a 
lot more sense. It's clearly a task that we should all want to 
do, and I think that we are seeing that leadership, and we are 
seeing that priority being given. And we're also seeing it 
being backed up with, I think, very outstanding employees who 
want to make it work.
    So with that, we will adjourn this hearing. Thank you.
    [Whereupon, at 3:30 p.m., the subcommittee was adjourned.]
    [Additional information submitted for the hearing record 
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