State Department: Staffing Shortfalls and Ineffective Assignment 
System Compromise Diplomatic Readiness at Hardship Posts	 
(18-JUN-02, GAO-02-626).					 
                                                                 
Foreign service employees experience a variety of adverse	 
environmental and living conditions while assigned to U.S.	 
embassies and consulates that the Department of State has	 
designated as hardship posts. Among these conditions are	 
inadequate medical facilities, few opportunities for spousal	 
employment, poor schools, high levels of crime, and severe	 
climate. Since State is understaffed relative to its permanent	 
positions, both in terms of the number and types of employees, it
is difficult to ensure that it has the right people in the right 
place at the right time. The impact of these staffing shortfalls 
is felt most at hardship posts, including some of strategic	 
importance to the United States. As a result, diplomatic programs
and management controls at hardship posts could be vulnerable and
the posts' ability to carry out U.S. foreign policy objectives	 
effectively could be weakened. State's assignment system is not  
effectively meeting the staffing needs of hardship posts.	 
Although American Foreign Service Association employees are	 
obligated to serve anywhere in the world, State rarely directs	 
employees to serve in locations for which they have not shown	 
interest by bidding on a position, and because few employees bid 
on these positions, State has difficulty filling them.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-626 					        
    ACCNO:   A03644						        
  TITLE:     State Department: Staffing Shortfalls and Ineffective    
Assignment System Compromise Diplomatic Readiness at Hardship	 
Posts								 
     DATE:   06/18/2002 
  SUBJECT:   Federal employees					 
	     Performance measures				 
	     Embassies						 
	     Consulates 					 
	     Human resources utilization			 
	     Labor force					 
	     China						 
	     Department of State Diplomatic Readiness		 
	     Initiative 					 
                                                                 
	     Saudi Arabia					 
	     Ukraine						 

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GAO-02-626
     
Report to the Honorable Vic Snyder House of Representatives

United States General Accounting Office

GAO

June 2002 STATE DEPARTMENT

Staffing Shortfalls and Ineffective Assignment System Compromise Diplomatic
Readiness at Hardship Posts

GAO- 02- 626

Page i GAO- 02- 626 State Department Letter 1

Results in Brief 2 Background 3 Staffing Shortfalls Put Diplomatic Readiness
at Risk 5 Assignment System Is Not Effective for Staffing Hardship Posts 10
Conclusions 25 Recommendations for Executive Action 26 Agency Comments and
Our Evaluation 27

Appendix I Scope and Methodology 29

Appendix II Overview of the Foreign Service Assignment System 32

Appendix III Staffing Issues at Selected Posts 38

Appendix IV Most Heavily Bid and Underbid Countries 45

Appendix V Characteristics of Posts 47

Appendix VI Comments from the Department of State 55 GAO Comments 59

Appendix VII GAO Contact and Staff Acknowledgments 61 GAO Contact 61
Acknowledgments 61

Tables

Table 1: State Department Worldwide American Staffing Allocation (as of
March 2002) 6 Contents

Page ii GAO- 02- 626 State Department

Table 2: Average Number of Bids by Type of Position and Level of Hardship 16
Table 3: Staffing Issues in China 38 Table 4: Staffing Issues in Kazakhstan
39 Table 5: Staffing Issues in Nigeria 40 Table 6: Staffing Issues in
Pakistan 41 Table 7: Staffing Issues in Russia 42 Table 8: Staffing Issues
in Saudi Arabia 43 Table 9: Staffing Issues in Ukraine 44 Table 10:
Countries with the Most and Fewest Bids 45 Table 11: U. S. Diplomatic Posts
and Their Hardship Differential

and Danger Pay Rates (2001/ 2002) 47

Figures

Figure 1: Hardship Posts by Region (2002) 4 Figure 2: Outcome of Fair Share
Bidding (2001) 13 Figure 3: Fewer Bids at Higher Differential Posts (2002)
15 Figure 4: How Is the Hardship Burden Shared? 19 Figure 5: Comparison of
D. C. Pay and Overseas Pay 21 Figure 6: Organization and Functions of the
Bureau of Human

Resources, Office of Career Development and Assignments 33

Abbreviation

HR/ CDA Bureau of Human Resources, Office of Career Development and
Assignments

Page 1 GAO- 02- 626 State Department

June 18, 2002 The Honorable Vic Snyder House of Representatives

Dear Mr. Snyder: Foreign Service employees from the Department of State
experience a variety of adverse environmental and living conditions while
assigned to U. S. embassies and consulates that are considered hardship
posts. Among these conditions are inadequate medical facilities, few
opportunities for spousal employment, poor schools, high levels of crime,
and severe climate. State has designated about 60 percent of its 259
diplomatic posts worldwide as hardship posts. Many of these posts are of
strategic interest to the United States, including those in China, the
Middle East, and the former Soviet states.

In response to your request to review State?s performance in filling
positions at hardship posts, we examined (1) the number, experience, and
skills of staff in hardship positions and how these may affect diplomatic
readiness 1 and (2) how well State?s assignment system is meeting the
staffing requirements of hardship posts.

To conduct our review, we examined staffing in seven countries of
significant importance to the United States and visited hardship posts in
three of these countries- China, Saudi Arabia, and Ukraine- to obtain human
resources data not available in headquarters and to assess the impact that
staffing shortfalls may have on diplomatic readiness. These staffing
shortfalls include positions that are vacant due to staff shortages as well
as positions that are filled by staff who lack the experience, skills, or
language requirements of their assignments. We analyzed the process and
results of the 2001 assignments cycle, bidding data for the 2002 assignments
cycle, and the assignment history of 1,100 Foreign Service officers. (For a
detailed discussion of our scope and methodology, see app. I.) We met with
State?s Office of Career Development and Assignments and other offices
within the Bureau of Human Resources, which is responsible for managing the
assignment system. In addition, we

1 State defines diplomatic readiness as its ?ability to get the right people
in the right place at the right time with the right skills to carry out
America?s foreign policy.?

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 02- 626 State Department

met with executive directors and human resources officials in five of
State?s regional bureaus, representatives of the American Foreign Service
Association, and nine current and former ambassadors.

State is understaffed relative to its permanent positions- both in terms of
the number and types of employees in its workforce. Therefore, it is
difficult for the department to ensure that it has the right people in the
right place at the right time. The impact of these staffing shortfalls is
felt most at hardship posts, including some of strategic importance to the
United States. As a result, diplomatic programs and management controls at
hardship posts could be vulnerable and posts? ability to carry out U. S.
foreign policy objectives effectively could be weakened. Seven countries we
reviewed, including three that we visited- China, Saudi Arabia, and Ukraine-
all had staffing shortfalls, in varying degrees. In addition, in these
countries, many employees, including new or untenured junior officers, were
either working well above their grade levels or did not meet the minimum
language proficiency requirements of the positions to which they were
assigned. However, the magnitude of this problem on an aggregate level is
not fully known because State lacks certain human resources data, which
makes it difficult for State to assess staffing limitations and capabilities
worldwide.

State?s assignment system is not effectively meeting the staffing needs of
hardship posts. Although Foreign Service employees are obligated to be
available to serve anywhere in the world, State rarely directs employees to
serve in locations for which they have not shown interest by bidding on a
position. Because few employees bid on positions at some hardship posts,
State has difficulty filling these positions. For example, in two countries
of strategic importance- China and Russia- a total of 25 positions had no
bidders this year. State has financial and nonfinancial incentives designed
to attract qualified staff to hardship posts, but our analysis found that
these incentives have not enticed a sufficient number of bidders for some
positions in a number of hardship posts. As part of its Diplomatic Readiness
Initiative, State hopes to address some of these problems by hiring more
Foreign Service employees. However, a comprehensive, integrated approach to
human capital management is required, which may include a rigorous
assessment of staffing priorities, targeted hiring, greater financial and
nonfinancial incentives, and more directive approaches to assignments, for
State to achieve its goal of having the right people in the right place with
the right skills. Results in Brief

Page 3 GAO- 02- 626 State Department

This report makes recommendations to the Secretary of State to improve
State?s human resources data, determine staffing priorities, consider a
targeted hiring strategy, and develop incentives and implement actions to
steer Foreign Service employees toward serving in hardship posts.

The State Department, in commenting on a draft of our report, concurred with
our recommendations relating to improving State?s human resources data
systems to enhance the department?s planning, management, and reporting
capabilities and developing a package of incentives and implementing actions
to steer employees toward serving at hardship posts. State did not comment
on our recommendations to rigorously and systematically determine priority
positions worldwide and to consider a targeted hiring strategy. We continue
to believe that our recommendations, if implemented, would help enable State
to steer officers to hardship posts, including those of critical importance
to the United States.

As of March 2002, State had 16,867 American employees worldwide- more than
one- third of whom are overseas. Of those serving overseas, about 60 percent
are stationed at hardship posts. Of the 158 hardship posts, nearly half are
found in Africa and Eastern Europe and Eurasia, which includes the Newly
Independent States (see fig. 1). Background

Page 4 GAO- 02- 626 State Department

Figure 1: Hardship Posts by Region (2002)

Note: The regions correspond with State?s six regional bureaus. Source: GAO
analysis based on State Department data.

State defines hardship posts as those locations where the U. S. government
provides differential pay incentives- an additional 5 to 25 percent of base
salary depending on the severity or difficulty of the conditions- to
encourage employees to bid on assignments to these posts and to compensate
them for the hardships they encounter. 2 Among the conditions State uses to
determine hardship pay are poor medical facilities, 3 substandard schools
for children, severe climate, high crime, political instability, and
physical isolation. Recently, State has begun recognizing the lack of
spousal employment opportunities as another factor in determining hardship.
Where conditions are so adverse as to require additional pay as a
recruitment and retention incentive, State can provide additional
differential pay of up to 15 percent of base salary. 4 Moreover, State pays
an additional 15 percent to 25 percent of salary for danger pay

2 5 U. S. C. 5925( a). 3 Eighty- nine posts do not have health units; 39 of
these posts are in hardship locations. State plans to open 30 health units
this year. 4 5 U. S. C. 5925( b).

Page 5 GAO- 02- 626 State Department

to compensate employees for the security risks they face in certain
countries. 5

Under State?s open assignment system, employees submit a list (bids) of
assignments they want and then the department tries to match bidders?
experience and preferences with the needs of posts and bureaus. (For an
overview of the bidding and assignment process, see app. II.)

The Department of State has reported a shortage of professional staff in its
Foreign Service overseas workforce. Many positions at hardship posts,
including some of strategic importance to the United States, remain vacant
for extended periods of time or are filled with staff whose experience or
skills fall short of the requirements for the position. Our discussions with
former and current ambassadors, senior post officials, and the regional
bureaus indicate that this is a widespread problem that weakens diplomatic
programs and management controls and impedes posts? ability to carry out U.
S. foreign policy objectives effectively. In the three countries we visited-
China, Saudi Arabia, and Ukraine- we found that (1) mid- level officers were
working in positions well above their grade, (2) first- tour officers were
in positions that require experienced officers, and (3) staff did not meet
the minimum language proficiency required to perform their jobs effectively.
However, the magnitude of this problem on an aggregate level is unclear
because State lacks certain human resources data that are necessary to fully
assess staffing limitations and capabilities worldwide.

State has more positions than it has staff to fill them. As shown in table
1, the State Department reported a staff deficit of 1,340 employees
worldwide as of March 2002. The biggest shortages are in overseas Foreign
Service employees, which had a staff deficit of 543, and in the civil
service, which had a staff deficit of 811. According to State, 60 percent of
its Foreign Service overseas workforce are in hardship posts, which have a
vacancy rate of 12.6 percent, compared with a vacancy rate of 8.4 percent in
nonhardship posts.

5 As of July 2001, danger pay was applicable at 16 posts, including 5 in
Africa and 6 in Yugoslavia and Bosnia- Herzegovina (see app. V.). Staffing
Shortfalls Put

Diplomatic Readiness at Risk

State Has Staff Shortages

Page 6 GAO- 02- 626 State Department

Table 1: State Department Worldwide American Staffing Allocation (as of
March 2002)

Full- time permanent

positions Full- time staff available Staff deficit

(surplus) Total State Department 18,207 16,867 1, 340 Total Foreign Service
10,025 9, 496 529

Foreign Service- overseas 6,646 6,103 543 a Foreign Service- domestic 3, 049
2,670 379 Foreign Service- training complement 330 b 723 (393)

Total civil service 8, 182 7,371 811

a This Foreign Service overseas deficit includes more than 200 new positions
created in fiscal 2002. Recruitment for these positions is under way. b
These 330 funded training positions include both junior officers and long-
term training positions.

These positions may be occupied by more than one incumbent, depending on the
number of employees in training at any given time. They are not included in
the other position totals.

Source: State Department.

Data from posts in the seven countries we reviewed showed staffing
shortfalls, in varying degrees. (Key staffing issues in these selected
countries are outlined in app. III.) These shortfalls, according to
ambassadors and senior post officials, compromise diplomatic readiness. We
found many employees working in positions well above their grade levels as
well as staff who did not meet the minimum language proficiency requirements
of the positions to which they were assigned. Moreover, post staff
complained of the lack of training to upgrade their language proficiency and
other skills.

Senior post officials, including chiefs of mission and former ambassadors,
stated that staffing shortfalls (1) weaken diplomatic programs and
management controls and (2) impede posts? ability to effectively carry out
U. S. foreign policy objectives. For a number of the hardship posts we
examined, the dual problem of a shortage in the number of positions a post
has and the lack of fully qualified, experienced, and trained staff to fill
them has been a long- standing concern, dating back to the 1990s when hiring
below attrition levels resulted in what some State officials characterize as
the ?hollowing out? of the Foreign Service workforce.

The State Inspector General has issued numerous reports citing serious
problems filling hardship posts with adequately skilled staff. In a May 2001
Inadequate Staffing

Compromises Diplomatic Readiness at Selected Posts

Staffing Shortfalls Impact Efficiency and Effectiveness of Post Operations

Page 7 GAO- 02- 626 State Department

semiannual report to the Congress, 6 the Inspector General stated that
inadequate training for first- tour staff in consular offices has led to
lapses in nonimmigrant visa management at posts in a region where alien
smuggling and visa fraud are prevalent. Furthermore, in Conakry (Guinea)- a
25 percent hardship post where visa fraud and administrative problems were
attributed to inexperienced staff- the Inspector General found a high
proportion of junior officers, mostly on their first tour, and officers in
positions above their grade, making them ill- prepared to deal with work
challenges. Similarly, in Bamako (Mali), another 25 percent hardship post
that is chronically understaffed, the Inspector General again cited staff
inexperience when consular employees failed to detect an alien smuggling
ring. In these cases, the Inspector General called on the State Department
to examine whether staff assigned to these posts have the level of
experience necessary to operate effectively. Meanwhile, chronic staffing
problems experienced in many African posts persist, and because consular
positions worldwide are often filled by lower level staff, the Bureau of
Consular Affairs considers African posts at risk. In Lagos (Nigeria), for
example, 12 State positions were unfilled as of February 2002; and many of
those filling positions were first- tour junior officers and civil service
employees who had never served overseas. In the 10- officer consular section
in Lagos, only the consul had more than one tour of consular experience.
According to bureau and post officials, with virtually no mid- level Foreign
Service officers at post, the few senior officers there were stretched thin
in training and mentoring junior officers.

While the State Department considers assignment of employees to positions
that are at grade and within their functional specialty to be the most
effective use of its human resources, many employees are working in
positions well above their grade. State policy does allow ?stretch?

assignments- positions either above an officer?s grade (an ?upstretch?) or
below an officer?s grade level (a ?downstretch?) 7 -at certain points of the
assignments cycle and under certain conditions. For instance, when there are
no eligible bidders at grade, an upstretch assignment may be made for
positions that are hard to fill, including those at high differential posts
(15 percent or higher) and posts that are among the most difficult to staff.

6 U. S. Department of State, Office of the Inspector General, Semiannual
Report to the Congress, October 1, 2000, to March 31, 2001 (Washington, D.
C.: May 2001). 7 In some situations, officers may choose a downstretch to a
position lower than their grade-- for example, tandem couples (where both
spouses are Foreign Service officers) whose bidding options may be limited.
Many Employees Are Working

in Positions above Their Grades

Page 8 GAO- 02- 626 State Department

State officials pointed out that one- grade stretches are often offered as a
reward and as career- enhancing opportunities for those who have
demonstrated outstanding performance. Thus, human resources officials at
State cautioned us that while global information on employees working in
positions above their grade could be generated from the department?s
personnel database, records would need to be examined on a case- by- case
basis to determine the rationale for each individual assignment.

In the countries we examined for our review, we focused on staffing data for
those officers working two or three grades above their rank. We found
instances where this occurred, often with junior officers serving in
midlevel and, occasionally, senior- level positions. For example, in Kiev
(Ukraine), about half of the Foreign Service officer positions were staffed
by junior officers or others in the positions for the first time; several
employees were working in positions at least two levels above their grades.
In addition, with the consul general position vacant in Kiev for a year and
the deputy consul general position vacant for 15 months, a junior officer
was serving as acting consul general. A similar situation occurred at a U.
S. consulate in Russia when an untenured junior officer was serving as the
consul general in 2001. A junior officer told us that, prior to joining the
Foreign Service in 1999, he was hired as a part- time intermittent temporary
employee in Almaty (Kazakhstan) to serve for 7 months as consular chief at
the embassy.

Data from several of our post staffing reviews suggest that language
requirements make it more challenging to staff some hardship posts-
particularly those with languages that are hard to learn. Many of those
assigned to these posts lacked the minimum language proficiency to perform
their jobs effectively. 8 State officials emphasized the importance of
language proficiency to perform effectively, and as one former ambassador
stated, ?a Foreign Service officer who does not know the language would be
inhibited at every turn.? Based on our review of language capabilities of
Foreign Service employees at the seven countries we examined, we found that
many staff lacked the minimum language proficiency requirements of the
positions to which they were assigned. For example, post officials told us
that at the U. S. mission in China, 62 percent of Foreign Service employees
did not meet the language proficiency

8 Most of State?s positions that require general proficiency in speaking and
reading abilities are categorized as ?language- designated? positions. In
addition, State has some positions categorized as ?language- preferred,?
where State considers language proficiency useful but not essential. Many
Staff Lack Minimum

Language Proficiency

Page 9 GAO- 02- 626 State Department

requirements of their positions. In Russia, 41 percent of U. S. mission
employees did not meet the language proficiency level designated for their
positions. In Pakistan, five public diplomacy positions in Islamabad,
Lahore, and Karachi were held by employees without the language proficiency
State would consider useful. In Saudi Arabia, the head of the public
diplomacy section at a consulate had no Arabic language skills. According to
post officials, language requirements are regularly lowered or waived to
fill some positions quickly and reduce lengthy staffing gaps. To compensate
for this, missions like China and Russia offer staff the opportunity to
pursue language training while they are at post. Although staff felt these
opportunities were very helpful, they told us that such training was
difficult to pursue because the languages were extremely hard to learn and
heavy workloads prevented them from devoting time during normal working
hours for training.

State?s human resources data system does not provide complete and accurate
information that can be readily used for management purposes. More
specifically, State officials could not provide, on a global basis,
information necessary to assess the extent of staffing shortfalls, including
whether the experience and skills of employees match those needed for the
positions they fill. We have reported that valid and reliable data are a key
element to effective workforce planning and strategic human capital
management. 9 While State officials told us they are making significant
efforts to improve the department?s mechanisms for workforce planning, we
found the existing human resources data that State maintains and analyzes to
be limited. For example, State does not maintain historical bidding data,
data on directed assignments, and data on the dispersion of employee ratings
and promotions at an aggregate level and the extent to which hardship
service was considered in these personnel actions. In addition, State does
not regularly analyze assignment histories to determine how the burden of
hardship service is shared among Foreign Service employees. Finally, State
has not fully assessed the impact that financial incentives and
disincentives may have on recruiting employees for hardship posts.

In January 2002, we reported that State had difficulties generating a
consistent global aggregate measure of its actual language shortfalls

9 U. S. General Accounting Office, A Model of Strategic Human Capital
Management,

GAO- 02- 373 SP (Washington, D. C.: Mar. 2002). Improving State?s Human

Capital Data Could Enhance Workforce Planning

Page 10 GAO- 02- 626 State Department

because of inadequate departmentwide data on the number of positions filled
with qualified language staff. 10 State officials acknowledged errors in
data collection and processing and indicated that corrective action was
imminent, but as of May 2002, the human resources bureau was still unable to
generate accurate language information from its database.

State?s assignment system is not effective in staffing hardship posts. While
Foreign Service employees are expected to be available to serve worldwide,
few bid on positions at some hardship posts, and very few- excluding junior
officers, whose assignments are directed 11 -are forced to take assignments
they have not bid on. We found that State?s mechanisms for sharing hardship
service and determining staffing priorities have not achieved their intended
purposes- to place qualified personnel in appropriate positions while
meeting the needs of the Foreign Service and the employees? professional
aspirations and career development goals. Furthermore, financial and
nonfinancial recruiting and retention incentives have not enticed employees
to bid on some hardship posts in sufficient numbers. According to State
officials, the problem of staffing hardship posts is exacerbated by a
shortage of officers in the mid- level ranks, as well as certain
restrictions such as medical problems (an employee?s or a family member?s),
difficulty obtaining jobs for spouses, inadequate schooling for children, or
the time to become proficient in a difficult language. (App. III discusses
many of the key staffing issues at selected posts.) State has launched an
aggressive program to hire more staff, but absent a comprehensive approach
to human capital management that addresses the needs of hardship posts,
these efforts may still fall short of putting the right people where they
are most needed and filling the most demanding positions with the most
experienced talent.

Foreign Service employees are obligated to serve overseas, and mid- level
and senior officers are expected to serve a substantial amount of time
overseas. However, there is no requirement for hardship service, and the
primary approaches State uses to encourage and steer employees toward
hardship service have fallen short of their intended objectives to fill

10 U. S. General Accounting Office, Foreign Languages: Human Capital
Approach Needed to Correct Staffing and Proficiency Shortfalls, GAO- 02- 375
(Washington, D. C.: Jan. 2002). 11 Junior officers also bid for their
positions, but their assignments are directed by the Bureau of Human
Resources, Entry Level Division, and not by a panel process. Assignment
System Is

Not Effective for Staffing Hardship Posts

Approaches to Filling Hardship Positions Fall Short of Fully Addressing
Staffing Problems

Page 11 GAO- 02- 626 State Department

critical staffing gaps and to share the burden of hardship assignments. One
example illustrating this problem is the assignment of senior officers.
These officers are needed at overseas posts, particularly at hardship posts,
to apply their experience and give guidance to junior officers. However, as
we discuss later, senior officers nearing retirement often prefer to
complete their careers in Washington for financial reasons. State?s
assignment system tends to accommodate these preferences even though this
means that some service needs at hardship posts will not be met.

Although procedures are in place to force employees into assignments if
there is an urgent service need to fill a position, procedures for directed
assignments have rarely been enforced in recent years. Because State does
not routinely track the number of directed assignments made, statistics for
the 2001 and 2002 assignments cycles were not available. However, previously
recorded data showed that only 39 assignments were directed by the Director-
General in 1998, 37 in 1999, and 12 from January to June 2000. 12 At the
same time, State has no criteria that clearly define what constitutes an
urgent service need- leaving this determination for the functional and
regional bureaus, rather than the human resources office that coordinates
assignments, to make. In a February 2002 joint statement, the Director-
General of the Foreign Service and the American Foreign Service Association
underscored the need to strengthen worldwide availability of Foreign Service
employees and called for more aggressive enforcement of existing procedures
so that Foreign Service employees serve where their skills are needed most.
While there were those who favored directed assignments to deploy staff
where and when they are needed, many State officials we interviewed were
concerned that such an approach would only create more problems at the post
level because employees who are forced into positions they do not want are
more apt to have poor morale and be less productive.

Based on an expectation that Foreign Service employees be available for
their share of hardship assignments, State has special bidding requirements
for employees who have not served at a hardship post in the last 8 years.
Under the program, Foreign Service employees who have not served 18 months
13 at a hardship post in an 8- year period are considered

?fair share? bidders. However, State does not require that these bidders 12
In 2001, State made 2,560 assignments. 13 Twelve months if the tour of the
duty of a post was only 12 months at the time of an officer?s assignment.
Directed Assignments Are Rare

Fair Share Bidding Does Not Require Hardship Assignments

Page 12 GAO- 02- 626 State Department

actually be assigned to hardship posts. In fact, rules under this program
permit some fair share bidders to bid only on domestic positions. 14 If fair
share bidders bid on any overseas assignment, three of the six bids that
they submit at their grades and within their specialty must be on hardship
posts. Bidders may include up to three bids on assignments one level above
their grade at 15 percent hardship posts or higher. However, employees may
still choose to bid on posts with lesser hardship (5 to 10 percent
differential). In the 2001 assignments cycle, 464 employees were designated
as fair share bidders. As shown in figure 2, the vast majority of the fair
share bidders- 322- were assigned to domestic positions or nonhardship
posts. Only 79 bidders, or 17 percent of the total, received hardship
assignments. Of this number, 49 bidders were assigned to the greater
hardship posts- those with a pay differential of 15 percent or higher. The
remaining 63 bidders have already retired or resigned from the Foreign
Service or will retire or resign soon.

14 As a rule, domestic assignments are for 2 years up to a maximum of 6
years (based on State regulation) or no more than 8 years (as allowed by the
Foreign Service Act). Fair share bidders may bid solely on domestic
positions if they have sufficient time remaining before they reach the 6-
year limit allowed for domestic service.

Page 13 GAO- 02- 626 State Department

Figure 2: Outcome of Fair Share Bidding (2001)

a Out of 322 nonhardship assignments, 96 were assigned to nondifferential
posts overseas and 226 were assigned to Washington, D. C. Source: GAO
analysis based on State Department data.

Recognizing that it faced a staffing deficit, State in the past engaged in
an exercise just prior to the assignments cycle to identify those positions
that are less essential and, therefore, it would not fill. However, this
exercise was not based on realistic expectations of the number of employees
available for placement, and State continues to advertise positions for
which it has no staff to fill. For example, in June 2000, only 53 mid- level
generalist positions were on the list of positions State decided not to
fill- a fraction of the 222 mid- level generalist positions that the
department identified as the shortfall for the 2001 cycle.

For the 2002 cycle, State officials decided not to designate positions it
would not fill. Instead, because of increased hiring, in July 2001, regional
bureaus identified about 120 mid- level positions to be offered to and
filled by junior officers- also well below the staffing shortfall of 607
mid- level positions in this current cycle. Efforts to Set Staffing
Priorities

Are Not Based on Realistic Assumptions

Page 14 GAO- 02- 626 State Department

Neither of these actions prioritized the positions that needed to be filled
based on the actual number of employees available for new assignment, and
neither is based on an assessment of State?s staffing priorities worldwide.
Several former and current ambassadors with whom we met believe the
assignment process should include a rigorous and systematic assessment
upfront that identifies critical positions that need to be filled based on
State?s worldwide strategic priorities and other positions that, although
important, should not be filled until State has more staff available.

In analyzing bidding data for the 2001 and 2002 summer assignments cycles,
we found that positions at hardship posts received significantly fewer bids
on average than positions at nonhardship posts. In addition, many mid- level
positions at posts with significant U. S. interests had few or no bidders,
and the higher the differential incentive paid for a hardship assignment,
the fewer the number of bidders. Figure 3 shows the average bids on mid-
level positions at overseas posts by differential rate for the 2002 summer
assignments cycle. As the graph shows, nondifferential posts such as London,
Toronto, Canberra (Australia), Madrid, and The Hague are highly sought, and
received, on average, 25 to 40 bids per position. On the other hand, many
positions at hardship posts received few, and sometimes no bids. For
example, posts such as Karachi (Pakistan), St. Petersburg (Russia), Shenyang
(China), Lagos (Nigeria), Kiev (Ukraine), and Jeddah (Saudi Arabia)
received, on average, two, one, or no bids per position. We found that, in
the 2002 assignments cycle, 74 mid- level positions had no bidders,
including 15 positions in China and 10 positions in Russia.

Figure 3 may suggest that the hardship pay has not been sufficient to
attract bidders to certain posts, even at posts where employees can earn an
additional 25 percent above their base pay. In fact, according to a State
Department Inspector General?s survey issued in 1999 of Foreign Service
employees, 80 percent of the respondents did not believe that the
differential pay incentives were sufficient to staff hard- to- fill
positions. 15

15 See U. S. Department of State, Office of the Inspector General, Review of
Tours of Duty,

Memorandum Report 99- SP- 013 (Washington, D. C.: May 1999). The Office of
the Inspector General contracted an independent consulting firm to perform
the survey. Hardship Posts Attract

Fewer Bidders

Page 15 GAO- 02- 626 State Department

The line in the graph (fig. 3) shows the median of the average number of
bids for each differential rate. As the line indicates, the median of the
average at a nonhardship post is about 14 bids while the median of the
average at a 25 percent differential rate post is about 3 bids.

Figure 3: Fewer Bids at Higher Differential Posts (2002)

Note: The line is based on the median of the average for each post
differential grouping. In addition, only selected posts are named; thus,
certain dots, each of which represents a post, may not show the name of the
post.

Source: GAO analysis based on State Department data.

For a complete list of the countries that we identified as the most heavily
bid and underbid for the 2001 and 2002 cycles combined, see table 10 in app.
IV.

Page 16 GAO- 02- 626 State Department

According to State, the biggest shortages are for Foreign Service
generalists in the mid- level ranks, particularly in the administrative,
consular, and public diplomacy areas, as well as Foreign Service specialists
who provide infrastructure support services. It is in these areas that
positions tend to have fewer bidders- oftentimes two or fewer bidders who
meet the grade and functional specialty requirements, the threshold at which
State considers a position hard- to- fill. As shown in table 2, we analyzed
the average number of bids submitted for the 2002 assignments cycle and
found an average of fewer than three bidders for administrative and consular
positions in 20 and 25 percent hardship posts; and an average of fewer than
three bidders for public diplomacy positions in 15 and 25 percent hardship
posts. Finally, Foreign Service specialist positions in 25 percent hardship
posts also had, on average, fewer than three bidders. Based on these data,
it appears that, on average, positions in other functional areas and in the
lesser hardship posts (e. g., economic, political, and rotational positions
in nondifferential posts) have a greater supply of interested bidders.

Table 2: Average Number of Bids by Type of Position and Level of Hardship
Average number of bids at each level of post hardship pay Type of position
or functional specialty All 0% 5% 10% 15% 20% 25%

Administrative 6.7 16.7 10.5 7. 6 4.0 2.2 2. 1

Consular 5.7 13.6 5. 7 3.7 3. 3 2.9 2. 4

Economic 11.4 21.5 8. 0 12.0 8. 3 8.9 3. 1 Interfunctional a 6.6 11.0 8. 5
10.5 4. 5 4.8 4. 7 Political 9.4 17.7 6. 7 8.0 5. 4 6.4 3. 1 Public
diplomacy 4. 6 8.0 6. 3 6.0 2.7 3.3 2.0

Rotational b 8.4 20.4 7. 8 7.0 4. 6 5.2 4. 0 Specialist c 6.2 12.1 3. 9 10.6
5. 3 4.5 2.5

a An interfunctional position is not covered by any single functional
specialty and requires a mix of skills and abilities from various functional
specialties. b A rotational position typically involves an employee spending
the first year of a 2- year tour in one

functional specialty and the second year of the tour in another functional
specialty. c A specialist position may include facets of administration,
construction engineering, information

technology, medical, office management, and security. Source: GAO analysis
based on State Department data.

Administrative, Consular, and Public Diplomacy Bidders and Specialists in
Higher Differential Posts Are in Short Supply

Page 17 GAO- 02- 626 State Department

To fill positions that are difficult to staff, primarily in hardship posts,
State?s policies allow bidding and assignment rules to be relaxed when there
are not enough bidders. In addition, various employment mechanisms are
available to allow post management to fill staffing gaps with temporary or
limited- term personnel when necessary. While these options help ease the
staffing problems at hardship posts and offer shortterm relief, they are
less than ideal. Senior post officials acknowledged that employing staff
with less experience and expertise than the positions require impedes the
efficiency of post operations but that the alternative- absorbing the impact
of extended staffing gaps- is worse.

Bidding and assignment rules may be relaxed for (1) hard- to- fill
positions- where there are two or fewer fully qualified bidders who are at
grade and are in the designated specialty and (2) posts that are identified
as among the most difficult to staff- where 50 percent of the positions
advertised have two or fewer bidders. Ninety- eight, or about 38 percent, of
the posts overseas met the criteria to be designated most difficult to staff
in the 2002 assignments cycle. To staff positions at these posts, State
eases certain rules, which could compromise diplomatic readiness. For
example, to attract employees to bid on these positions, the department may
allow stretch assignments early in the assignments cycle, waive language
requirements, or offer unusually short tours of duty (12 to 18 months). The
vast majority of the most- difficult- to- staff posts are in the Bureau of
African Affairs, with about 40 percent (39) of the posts, and the Bureau of
European and Eurasian Affairs, with 27 percent (26 posts, mostly in the
Newly Independent States). (A complete list of U. S. diplomatic posts
worldwide is shown in app. V.)

In addition, State offers assignment opportunities for State Department
civil service employees to temporarily fill Foreign Service positions that
remain underbid. State targeted 50 such positions to fill in 2001. In 2002,
State established a limit to fill 50 Foreign Service positions with civil
service employees, including those who were already in the program and went
on to a subsequent tour. Approximately 200 civil service employees are now
assigned to hard- to- fill positions overseas that are ordinarily staffed by
Foreign Service officers. In a report to State in March 2001, the Office of
the Inspector General supported using civil service employees to fill
overseas vacancies but stated that the program had not substantially Short-
Term Options to Fill

Hardship Positions Help but Are Less Than Ideal

Page 18 GAO- 02- 626 State Department

reduced the systemwide staffing shortage. 16 Moreover, despite widespread
support for the program, use of civil service staff in Foreign Service
positions raises workforce planning concerns, particularly for the bureaus
that are sending, and thus temporarily losing, their civil service staff.

State also employs retired Foreign Service officers for temporary duty,
international fellows and presidential management interns, family members,
and American residents who are hired locally as part- time intermittent
temporary employees or on personal services contracts or agreements.
According to post officials, although these staff augment the capabilities
of mission operations, the methods by which they are hired, the tasks to
which they are assigned, and the employee benefits to which they are
entitled are not applied consistently- thereby raising some personnel and
morale issues at the post level.

State does not regularly analyze how the burden of hardship service is being
shared among Foreign Service officers, although this has been a long-
standing concern. To measure how the burden is shared, we analyzed the
careers of 1,100 mid- level Foreign Service officers who were hired between
1986 and 1991, which represents about 10 to 15 years of service. We
performed the analysis by using the Lorenz curve, which is a methodology
traditionally used to measure income inequality. Figure 4 shows the
relationship between the percentage of employees and the percentage of
weighted hardship burden. (For a detailed discussion of our methodology, see
app. I.)

16 U. S. Department of State, Office of Inspector General, Office of Audits,
Civil Service to Foreign Service Hard- to- Fill Program, Report No. 01- HR-
L- 029 (Washington, D. C.: Mar. 2001). Differences Seen in

Individual Officers? Hardship Experience

Page 19 GAO- 02- 626 State Department

Figure 4: How Is the Hardship Burden Shared?

Source: GAO analysis based on State Department data.

The graph is an indication of how the hardship burden is being shared. The
broken diagonal line represents perfect sharing of burden while the curve
reflects how the actual burden is shared. The data indicate that half of the
officers experienced 27 percent of the hardship burden while the other half
experienced 73 percent (point A). Viewed another way, the bottom 20 percent
of employees served 5 percent of the hardship (point B) while the top 20
percent served about 37 percent of the hardship (point C). 17 State
officials noted several reasons why some employees cannot serve at certain
hardship posts, such as medical conditions, 18 inadequate schools for their
children, and a lack of spousal employment opportunities.

17 The 37 percent is derived by subtracting 63, which is at the 80- percent
point, from 100 percent. 18 Based on 2001 data, about 12 percent of Foreign
Service officers have limited medical clearances. State medical officers
determine, on a case- by- case basis, where an officer can serve.

Page 20 GAO- 02- 626 State Department

State offers some financial incentives for hardship service, which have
yielded mixed results. These financial incentives include a post
differential allowance (or hardship pay) ranging from 5 to 25 percent of
base pay 19 to compensate employees for service where environmental
conditions differ substantially from those in the United States and to
entice them to serve. 20 While there are factors other than money that may
keep an officer from bidding for a position at a particular hardship post or
restrict an officer?s options to only selected posts, our analysis of
bidding data (fig. 3) suggests that the differential rate does not appear to
be effective in enticing a significant number of employees to certain posts.
To address this issue, in 2001, State began to provide an additional 15
percent incentive to those who sign up for a third year at selected 2- year
posts that have been extremely difficult to staff.

According to State officials and Foreign Service employees, the incentive
provided by differential (hardship) pay for overseas service has been
diminished by rules governing locality pay. 21 Locality pay is a salary
comparability benefit to attract workers in the continental United States to
the federal government versus the private sector. In 1994, an executive
order began the process of allocating annual governmentwide pay increases
between base pay and locality pay. However, Foreign Service employees
serving overseas do not get locality pay. Thus, the differences in the
statutes governing differential pay for overseas service and locality pay
have created a gap between the compensation of domestic 22 and overseas
employees- a gap that grows each year as locality pay rates continue to rise
by 1 percent or more annually. State has not analyzed the effect that this
difference has had since 1994 on the number of Foreign Service employees who
bid on overseas assignments, including hardship posts. However, State
Department officials, the American Foreign Service Association, and many
officers with whom we met said that this gap penalizes overseas employees
and that if it continues to grow, it will

19 5 U. S. C. 5925( a). 20 The interagency committee on allowances, led by
State working in conjunction with other federal agencies, developed the
standards by comparing environmental and living conditions overseas with
those in the United States. A study of allowances is under way and expected
to be completed in summer 2002.

21 See 5 U. S. C. 5304. 22 For all practical purposes, in the case of
Foreign Service officers, domestic employees are based in Washington or in
other major metropolitan areas in the United States, such as New York.
Financial Incentives for

Hardship Service Show Mixed Results

Locality Pay Has Diminished the Relative Value of Differential Pay

Page 21 GAO- 02- 626 State Department

inevitably keep employees from choosing an overseas career in the Foreign
Service. Figure 5 illustrates the effect that increases in locality pay have
on the relative value of overseas differential rates. As figure 5 shows, the
advantage of overseas pay with differential has eroded over time and
locality pay has created a financial disincentive for all overseas
employees. As of January 2002, the locality pay rate for Washington, D. C.,
was 11.48 percent. We estimate that by 2006 and 2010, the differential pay
incentives for the 15 percent and 20 percent differential posts,
respectively, will be less than the locality pay for Washington, D. C.,
assuming that the locality pay rate continues to increase at about 1 percent
per year.

Figure 5: Comparison of D. C. Pay and Overseas Pay

Source: Office of Personnel Management data and GAO assumptions and
analysis.

Page 22 GAO- 02- 626 State Department

In addition, Foreign Service employees we interviewed emphasized that it is
also a financial disincentive to retire while serving overseas because post
differential is not used to determine an officer?s retirement benefits
whereas locality pay, which is offered to those employees who serve in
Washington, D. C., is factored into the retirement benefit. According to
State human resources officials, retiring with a high three average salary
calculated on service abroad can result in a substantial reduction in
annuity annually, compared with a Washington- based high three average
salary. 23 As a result, a significant number of employees who are nearing
retirement return to Washington, D. C., for their last tour of duty to have
their locality pay factored into their high three salaries for purposes of
calculating retirement benefits. In fact, according to State, since 1997, 62
percent of senior Foreign Service and management level employees who retired
concluded their careers in Washington rather than from an overseas tour.
This exacerbates the problem of staffing hardship posts because the most
experienced employees tend not to choose overseas service during their last
tour of duty.

To address these overseas pay and retirement benefit issues, State, with the
support of the American Foreign Service Association, proposed that Foreign
Service employees working overseas should get locality pay equal to the
Washington, D. C., rate. The Office of Personnel Management agrees that
locality pay should be extended to overseas employees and has asked the
Office of Management and Budget to consider this issue. The State Department
estimates that it would cost $50 million to $60 million a year to increase
overseas employees? pay to the Washington, D. C., level. State officials
believe that extending locality pay to overseas employees is the best way to
address pay comparability issues with employees serving in Washington, D. C.
As a short- term measure in the interim, the administration has approved and
forwarded to Congress a supplemental retirement proposal to address, for
those who are nearing retirement, the immediate problem of reduced
retirement annuities due to service overseas. 24 While these proposals could
encourage overseas service, there are no assurances that they will fully
address the problem of staffing hardship posts because all overseas Foreign
Service employees would gain

23 State?s estimates vary depending on the circumstances of an employee upon
retirement. State estimates that the gap in annuities for one who retired
from overseas rather than Washington, D. C., could range from about $3, 000
to $5, 740 annually.

24 The State Department anticipates that this proposal will be considered as
part of the State Department authorization bill for fiscal year 2002 to
2003. Post Differential Is Not

Considered in Determining Retirement Benefits

Page 23 GAO- 02- 626 State Department

the same benefit and may continue to bid on assignments at nonhardship
posts.

The State Department has developed a pilot program that offers an additional
financial incentive to employees accepting a 3- year tour in 41 designated
hardship posts. This effort has begun to make a difference in a number of
posts. Nonetheless, some employees choose not to remain at post for an
additional year and thus forego the additional differential of 15 percent.
Out of 173 positions that were eligible for the program in the 2001
assignments cycle, the first full year the program became operational, 127
employees (73 percent) signed up for a third year at posts that ordinarily
require a 2- year tour. Based on State records, the program was estimated to
cost about $1.8 million in fiscal year 2002. 25 While many State officials
with whom we met- in Washington and at the posts we visited- were
enthusiastic about the new program, it appears that some of the more
difficult hardship posts have not yet realized the benefits they had hoped
the additional incentive might bring. For example, 10 employees in two China
posts- Chengdu and Shenyang- extended their tours to take advantage of the
new incentive. However, bureau officials noted that, even with the
additional 15 percent differential offered as a recruiting incentive,
Shenyang has no bidders for any of the six positions advertised in the
current 2002 cycle; Chengdu had a few bidders, but none of them opted to
take advantage of the incentive and sign up for an additional year. None of
the staff assigned to two posts in Russia- Vladivostok and Yekaterinburg-
has chosen an extended tour, and none of the employees newly assigned to
these posts has opted for an additional year. In Kiev, about half of those
eligible signed up for the program and extended their tours for a third
year. In Lagos and Abuja, 16 percent of the employees who were eligible
extended their tours in 2002, the first year that the program went into
effect there.

While several State officials in Washington suggest that service at hardship
posts is favorably considered in various aspects of a Foreign Service
officer?s career, such as promotions and onward assignments, many of the
post staff with whom we met said they believe otherwise. However, State
could not provide data on the extent to which hardship service is actually
taken into account in such personnel decisions. The criteria that State?s

25 These estimated costs for fiscal year 2002 are for employees who were at
post in 2001 and extended in 2001 for a 3- year tour. Service Need
Differential

Program Is Beginning to Make a Difference

Rewards for Hardship Service Are Not Explicit

Page 24 GAO- 02- 626 State Department

selection boards use to determine promotion of Foreign Service officers do
not explicitly require hardship service. However, the guidelines do state
that an officer?s performance under unusually difficult or dangerous
circumstances is relevant in evaluating whether an officer has the qualities
needed for successful performance at higher levels. In addition, the
guidelines do not require service abroad as a prerequisite for promotion,
but they do encourage selection boards to consider an officer?s demonstrated
competence in that regard. Ironically, some employees believe that hardship
service could actually disadvantage them on promotion decisions.

State officials also told us that service at hardship posts is generally
considered in determining an employee?s next assignment, and a number of
post management officials agreed that fair onward assignments are one way to
reward employees for serving at hardship posts. However, many employees at
several hardship posts we visited were not convinced that their service at a
hardship assignment would necessarily be rewarded in determining their next
assignment. Nonetheless, we noted that bidding instructions for junior
officers do state that in filling heavily bid vacancies at popular
nonhardship posts, priority and appropriate credit will be given to those
serving at hardship posts. Bidding instructions for mid- level and senior
positions do indicate that prior service at hardship posts is one of several
factors considered in determining assignments, in addition to an employee?s
language competence, rank, and functional expertise for the position.

As part of its Diplomatic Readiness Initiative announced in January 2001,
State has launched an aggressive recruiting program to rebuild the
department?s workforce.

According to State officials, the department is on track to meet its hiring
goal of 465 new Foreign Service officers this fiscal year. As of March 2002,
State reported hiring or committing to hire 344 new junior officers, 74
percent of State?s hiring target for this fiscal year. Under the Diplomatic
Readiness Initiative, State requested a total of 1,158 new employees above
attrition over the 3- year period from fiscal years 2002 to 2004. State
officials, particularly those in Washington, D. C., believe that State?s
hiring program will largely address the staffing shortage the department now
faces as new entry- level junior officers advance to the mid- level ranks.
However, it will take years before the new hires advance to the mid- level
ranks, where State has reported experiencing its biggest staffing deficit.
State Has Launched an

Aggressive Recruiting Program to Boost Diplomatic Readiness

Page 25 GAO- 02- 626 State Department

Moreover, as the influx of new employees advance to mid- level positions,
they may also tend not to bid on hardship assignments.

Although post officials were encouraged by the new hiring, a number of them
were not clear as to whether and how the additional officers hired under the
Diplomatic Readiness Initiative will address specific staffing shortfalls
experienced at some hardship posts. A senior official in China told us that
neither the geographic bureau nor the post has advance knowledge about the
new recruits- posts in China can hope but have no assurances that there are
enough recruits with some language skills to keep an adequate pool of
language- trained staff in the pipeline. An officer in Nigeria noted that
individuals with backgrounds in development work and humanitarian affairs,
such as former Peace Corps volunteers and those who have worked with
nongovernmental organizations, would be especially appropriate for many of
the hardship posts in Africa; and for that reason, diversifying the pool of
applicants to reach out to such groups is important.

Human resources officials in Washington told us that State has embarked on
an active outreach program that targets, for example, college campuses,
professional associations, and other groups that offer a pool of potential
applicants who are proficient in difficult languages and possess other
knowledge, skills, and competencies the Foreign Service desires. In
addition, they said State is intensifying overseas recruitment efforts.
Although State has numerical hiring goals for broad occupational skill
categories, State does not have numerical targets for specific skill
requirements such as language or regional expertise. In general, the
department recruits generalists with a broad range of skills, and they are
later trained in specific areas to meet changing requirements. Thus,
although State officials are optimistic that enough new hires are being
brought in to address the overall staffing shortage, there are no assurances
that the recruiting efforts will result in the right people with the right
skills needed to meet specific critical shortfalls at some hardship posts.

The State Department is facing serious staffing shortfalls at many of its
posts, especially those designated hardship posts, and State?s system for
assigning available staff has been ineffective in ensuring that overseas
staffing requirements, particularly at strategic posts, are adequately
addressed. In making assignment decisions, State attempts to strike a
balance between matching the preferences, personal circumstances, and
professional development goals of individual employees with the needs of the
service. However, in an environment where the number of positions
Conclusions

Page 26 GAO- 02- 626 State Department

exceeds the number of staff to fill them, State is not able to ensure that
staff are assigned where they are needed most. The new service need
differential program holds some promise, but the extent to which it will
address the problem of staffing hardship posts remains unclear. State
believes that the department?s new hiring initiatives will gradually solve
its current staffing problem. However, positions at hardship posts will
continue to have fewer bids from qualified Foreign Service employees unless
(a) adequate incentives are in place to entice these employees to bid on and
accept assignments at hardship posts and (b) appropriate levers are used,
when necessary, to assign experienced staff where they are most needed.
Moreover, an assignment system that puts Foreign Service employees in the
driver?s seat and does not systematically prioritize the posts and positions
that must be filled does not ensure that State?s staffing requirements at
hardship posts are adequately addressed. Without a comprehensive, strategic
approach to marshaling and managing State?s human capital, there is little
assurance that State will be able to place the right people in the right
posts at the right time. As a result, diplomatic readiness could be at risk
at hardship posts, many of them of significant importance to the United
States.

In light of our findings that State?s assignment system has not been
effective in addressing staffing requirements at hardship posts, including
many of strategic importance, we recommend that the Secretary of State:

 improve personnel and assignment data so that they will (1) allow State to
fully assess its human capital capabilities and limitations and enhance the
department?s workforce planning efforts, and (2) enable State to take a
fact- based, performance- oriented approach to human capital management that
would involve analyzing bidding and assignment data to determine its success
in addressing staffing needs at all posts, including hardship posts and
posts of strategic importance to the United States;

 rigorously and systematically determine priority positions that must be
filled worldwide as well as positions that will not be filled during each
assignments cycle, based on the relative strategic importance of posts and
positions and realistic assumptions of available staff resources;

 consider a targeted hiring strategy, with measurable goals, designed to
specifically address critical shortfalls, such as employees who are
proficient in certain foreign languages; are interested in those particular
positions, functional specialties, or career tracks that are in short
supply; and are interested in serving in hardship locations; and
Recommendations for

Executive Action

Page 27 GAO- 02- 626 State Department

 develop a package of incentives and implement appropriate actions to steer
employees toward serving at hardship posts. Such measures could include:

1. proposing a set of financial incentives to Congress that State believes
will entice more employees to bid on and accept hardship positions based on
analyses that estimate the costs and likelihood of increasing the number of
Foreign Service employees who bid on assignments in the selected hardship
posts;

2. making hardship service an explicit criterion for promotions and onward
assignments; and

3. employing more directive approaches to assignments as necessary to steer
fully qualified employees toward hardship posts that require their skills
and experience and to ensure that hardship assignments are shared equitably.

The State Department provided written comments on a draft of our report.
State?s comments, along with our responses to specific points, are reprinted
in appendix VI.

In general, State found our report to be very helpful. It acknowledged the
difficulties the department faces in staffing hardship posts around the
world and the negative effect that staffing problems have on these posts.
State found our statistical findings, including our analyses of bidding and
assignment patterns as well as the relative decline of hardship pay due to
the lack of locality pay for employees assigned abroad, to be very useful.
State indicated that it would implement two of our recommendations. The
department said it will (1) study alternative ways to provide additional
incentives for employees to serve at hardship posts, and (2) review the
implementation of human resources data systems to enhance State?s reporting
capabilities along the lines that we suggested. State did not indicate its
position with regards to our two other recommendations- that State
rigorously and systematically determine staffing priorities worldwide and
consider a targeted hiring strategy.

State attributes the problem of staffing hardship posts to the department?s
staffing shortfall of 1,100 people, which the department is addressing
through its Diplomatic Readiness Initiative. In addition to hiring more
staff, a major thrust of State?s efforts is addressing the locality pay
issue. While we acknowledge that these efforts would ease State?s overall
Agency Comments

and Our Evaluation

Page 28 GAO- 02- 626 State Department

staffing problem, both domestically and overseas, we do not believe that
they would necessarily fully address the staffing requirements of hardship
posts, including those of significant importance to the United States. We
hold this opinion because staffing decisions made under State?s assignment
system tilt the balance toward employee preferences, rather than the needs
of the service. Although there will be more staff available to fill
positions, it will take years before the new hires advance to the midlevel
ranks where State has reported the largest deficit. Furthermore, as the new
employees advance to mid- level positions, they may tend to bid on and be
assigned to non- hardship posts unless State (1) hires people with the
specific skills that are in short supply and who are inclined to serve in
hardship posts and (2) puts in place appropriate levers to steer employees
with the right skills and experience to serve in hardship posts. We do not
believe that hardship posts should suffer disproportionately from staff
shortages. Our recommendations, if implemented, would help ensure that the
staffing needs of hardship posts, including those critical to U. S.
interests, are met.

We are sending copies of this report to appropriate congressional
committees. We are also sending copies of this report to the Secretary of
State. Copies will be made available to others upon request.

If you or your staff have any questions about this report, please contact me
on (202) 512- 4128. Other GAO contacts and staff acknowledgments are listed
in appendix VII.

Sincerely yours, Jess T. Ford Director, International Affairs and Trade

Appendix I: Scope and Methodology Page 29 GAO- 02- 626 State Department

To assess the number, experience, and skills of staff in hardship positions
and the potential impact on diplomatic readiness, we selected seven
countries identified by State as strategically important to U. S. interests:
China, Kazakhstan, Nigeria, Pakistan, Russia, Saudi Arabia, and Ukraine. We
also visited seven hardship posts in three of the countries we examined-
Beijing, Guangzhou, Shanghai, and Shenyang in China; Riyadh and Jeddah in
Saudi Arabia; and Kiev, Ukraine- where we met with numerous post officials
to obtain human resources data not available in headquarters and to assess
the impact that staffing shortfalls may have on diplomatic readiness.

To examine how well State?s assignment system is meeting the staffing
requirements of hardship posts, we reviewed State?s policies, processes, and
programs for filling hardship posts, as well as State?s open assignments
manuals and other human resources documents. In addition, we analyzed the
process, mid- level bidding data, and results of the 2001 assignments cycle,
including fair share assignments; mid- level bidding data on the 2002
assignments cycle; and the assignment histories of 1,100 midlevel
generalists hired between 1986 and 1991. We did not validate the accuracy of
the data obtained from State. We also met with several offices within the
Bureau of Human Resources; executive directors, post management, and human
resources officials in five of the six regional bureaus; nine current and
former ambassadors who have served in hardship posts; and representatives of
the American Foreign Service Association.

We analyzed bidding data to determine the average number of position bids by
posts, the median average bid for each differential rate, and the areas of
specialization that are difficult to staff. For these analyses, we used the
mid- level bidding data for the 2001 and 2002 summer assignments cycles. 26
The bidding data include the number of positions to be filled at each post
and the number of bids received for each position. We used the mid- level
bidding data because mid- level positions comprised 58 percent

26 The bidding and assignment data that we reviewed were for mid- level
positions. In terms of the Foreign Service grade structure, mid- level
positions are FS- 04 tenured, FS- 03, and FS- 02, which are equivalent to
the civil service GS- 12, FS- 13, and GS- 14, respectively. Junior officers
are FS- 06, FS- 05, and FS- 04 untenured, which are equivalent to GS- 9, GS-
11, and GS- 12. (Junior officers are allowed 5 years to be tenured; most of
them are tenured after 3 years.) Management- level and senior officers are
FS- 01 (GS- 15 equivalent) and the Senior Foreign Service (comparable to the
Senior Executive Service.) Appendix I: Scope and Methodology

Bidding Data

Appendix I: Scope and Methodology Page 30 GAO- 02- 626 State Department

of the total Foreign Service workforce. We also used the bidding data for
the summer assignments cycle because, according to State officials, most
employees are transferred during this cycle, compared to the winter cycle.
In addition, the analysis was limited to 2 years because State has bidding
data for only the 2001 and 2002 cycles. Although we analyzed data for the
two cycles, we provided information for only the 2002 cycle (see fig. 3)
because the results for 2001 were similar:

 To obtain the average number of bids for each post, we took the total
number of bids received on all positions at each post and divided it by the
total number of positions to be filled at the post. For example, in the 2002
summer assignments cycle, Beijing had 12 positions to be filled and received
a total of 53 bids, resulting in an average of 4. 4 bids for this post.

 To obtain the median bid at each differential rate, as represented in the
line in figure 3, we arranged in ascending order the average bid for each
post at the corresponding differential rate and used the middle average bid.
For example, assuming there are only 5 posts at the 25 differential rate and
their average bids are 3, 5, 7, 9, and 16, the median of the average bids is
7.

To measure how the hardship burden is shared by Foreign Service employees
(fig. 4), we analyzed about 10,000 assignments of 1,100 midlevel generalists
with 10 to 15 years of service. 27 We performed the analysis by using the
Lorenz curve, which is a methodology traditionally used to measure income
inequality:

 First, we assigned weights to posts based on State?s level of differential
(hardship) pay. State differential pay range from 5 percent to 25 percent of
base pay. For example, we assigned 1.0 to a nonhardship post, 1.10 to a 10
percent hardship post, and 1. 25 to a 25 percent hardship post.

 Next, we multiplied the number of days each mid- level generalist served
at each post by the weighted post differential to obtain total hardship
weighted days. We subtracted the total number of unweighted days served at
all posts to obtain the number of hardship burden days for each

27 Foreign Service specialists provide technical support or administrative
services (such as facilities maintenance, general services, health
practitioners, and security officers). We limited the scope of this analysis
to the generalists, which include Foreign Service officers in the economic,
political, administrative, consular, and public diplomacy areas. Hardship
Burden

Appendix I: Scope and Methodology Page 31 GAO- 02- 626 State Department

generalist. The number of hardship burden days was divided by the number of
career years served to obtain hardship burden per year per employee.

 The graph represents the ordering of employees from the lowest to the
highest weighted hardship burden.

In addition, we analyzed D. C. pay, which incorporates locality pay, versus
overseas pay with differential rates to determine the effects of the
locality rate on the relative value of overseas differential rates (fig. 5).
For our analysis, we focused on a hypothetical Foreign Service officer at
the FS- 04 step 13 level, who would have had a base salary of $50,526 when
locality pay was put in place in 1994. We then compared subsequent increases
in pay for D. C. employees with pay increases for personnel at nonhardship
posts and at posts with varying levels of differential rate. For the period
from 1994 through 2002, we used historical data provided by the Office of
Personnel Management. Based on these historical patterns and projections of
increases in federal pay levels by the Office of Management and Budget, we
assumed that D. C. pay increases will average 4 percent annually from 2003
to 2011 and that overseas pay increases will average 3 percent annually over
that period because locality pay is not included in overseas pay. The
overseas pay does not include other allowances such as education and
housing, of which the value varies depending on the circumstances of the
individual employee.

We conducted our review from July 2001 to May 2002 in accordance with
generally accepted government auditing standards. Locality Pay

Appendix II: Overview of the Foreign Service Assignment System

Page 32 GAO- 02- 626 State Department

The authority to make assignments, which is granted to the Secretary of
State, is delegated to the Undersecretary for Management. This authority is
exercised through the Director- General of the Foreign Service, who is
responsible for formulating and implementing personnel policies and
programs. Under the direction of the Director- General and the Principal
Deputy Assistant Secretary for Human Resources, the Director of the Office
of Career Development and Assignments (HR/ CDA) is responsible for assigning
Foreign Service personnel resources throughout the State Department and
overseas. The functions of HR/ CDA are divided into four divisions: Senior
Level, Mid- level, Entry Level, and Assignments. (Fig. 6 below illustrates
the organization and functions of HR/ CDA.) Appendix II: Overview of the
Foreign Service

Assignment System

Appendix II: Overview of the Foreign Service Assignment System

Page 33 GAO- 02- 626 State Department

Figure 6: Organization and Functions of the Bureau of Human Resources,
Office of Career Development and Assignments

Legend: HR/ CDA = Bureau of Human Resources, Career Development and
Assignments Source: State Department.

Appendix II: Overview of the Foreign Service Assignment System

Page 34 GAO- 02- 626 State Department

State policy is that Foreign Service employees are to be available to serve
worldwide. Foreign Service personnel are assigned through an ?open

assignment system.? The current open assignment process was established in
response to a directive issued from the Secretary of State in June 1975,
which called for creating a more open, centrally directed assignment
process. The system is designed to engage all Foreign Service employees
directly in the assignment process by providing information on all position
vacancies and giving them the opportunity to compete openly. According to
HR/ CDA, while a major element of the 1975 directive was to eliminate the
right of a bureau or post to veto assignments, the mandate for HR/ CDA to
take bureau and post interests into account in making assignments was
extended and strengthened.

Prior to the start of the assignments cycle, the open assignments agreement
is negotiated each year between management and the American Foreign Service
Association to cover applications for positions represented by the
association (bargaining unit positions). Based on State?s open assignments
manual, management, for the purposes of transparency and efficiency, also
applies the agreement to nonbargaining unit positions, such as the deputy
chiefs of mission. State has two assignments cycles: summer and winter. 28
State?s assignment process centers on the high- volume summer transfer
season, which is when most Foreign Service employees assume their new
assignments.

The assignment process begins when approximately 3,500 Foreign Service
employees who are eligible to be transferred from their current assignment
each year receive a list of instructions and upcoming vacancies for which
they may compete. Staff then must submit a list of those positions for which
they want to be considered. In general, employees must bid on at least 6
positions and no more than 15; 6 of the bids should be at their grades and
within their designated functional specialty (called

?core? bids) and be in more than one bureau or geographic region. 29 To 28
Foreign Service employees with tours of duty that end between May 1 and
October 31 are officially on the summer cycle, and those with tours of duty
that end between November 1 and April 30 are officially on the winter cycle.

29 The Department of State requires that a generalist applicant select a
?cone,? which is a functional area of specialization, when applying to take
the written examination. The Foreign Service generalist specializations are
administrative, consular, economic, political, and public diplomacy. All
Foreign Service officers are assigned a grade, which ranges from FS- 07 to
FS- 01, corresponding to entry level to senior level, respectively. State?s
Guiding Principles

The Process

Appendix II: Overview of the Foreign Service Assignment System

Page 35 GAO- 02- 626 State Department

encourage service at hardship posts, three bids on one- grade stretch
assignments at 15 percent and above differential posts now may count among
an employee?s core bids. 30 The remaining nine bids may be on any other
positions, including those outside of an officer?s specialty or for
training, detail, and stretch assignments. There are other regulations that
pertain to fair share and service at hardship posts, length of service in
Washington, D. C., tandem couple procedures, and medical clearances.
Employees also submit bids based on their preferences by indicating whether
bids are high, medium, or low priority. This designation is shared with the
panels but not with the bureaus or posts.

After employees make their choices, most submit bids electronically to their
career development officers, who review the bids for compliance with
applicable rules and regulations. From this point forward, the process takes
various paths depending upon an officer?s grade and functional specialty.
Junior and certain senior positions are governed by different procedures, as
are assignment categories including long- term training, 31 hard- to- fill
positions, and details to other agencies and organizations.

Certain assignments/ positions are determined early in the assignment
process. Starting about 3 months into the summer assignment process (around
the end of October), employees may be assigned to certain positions by a
panel. 32 These positions include at- grade fair share bidders at 15 percent
or higher differential post, deputy chief of mission, principal officer of
consulates, office director, positions at Special Embassy Program posts,
long- term training, and other key positions. Fair share bidders also may be
assigned to at- grade positions at differential posts, and to one- grade
stretch positions at 15 percent or higher differential posts. When the
regular assignment season begins in December, HR/ CDA proceeds with at-
grade assignments, where language requirements are met, and stretch
assignments at 15 percent differential and most difficultto- staff posts.
Other stretch proposals are held until March. HR/ CDA will continue to focus
on the hard- to- fill positions, and by the middle of March

30 Stretch assignments are positions above or below an employee?s grade. 31
HR/ CDA develops and administers training policy, including long- term
external training. 32 There are two panels: the interdivisional panel, which
considers assignments across divisional lines; and the mid- level panel,
which considers assignments for mid- level employees. The panels consist of
14 members and 13 members, respectively, representing employees and the
bureaus. The continuity counselor sits on both panels. Special Bidding
Requirements:

Priority of Assignments/ Posts

Appendix II: Overview of the Foreign Service Assignment System

Page 36 GAO- 02- 626 State Department

of the following year civil service personnel can bid on Foreign Service
hard- to- fill positions.

Certain specified domestic and overseas positions cannot be filled without
the agreement of the interested principal officer, assistant secretary, and/
or the ambassador. These positions include deputy assistant secretaries,
office managers for principal and assistant secretaries, deputy chiefs of
mission, special assistant to the ambassador, and chief of mission office
managers. The appropriate HR/ CDA division, working through the assignment
officers, consults with bureaus to define position requirements and to
request names of preferred potential candidates. Slates of qualified
candidates for policy- level positions (deputy chief of mission, deputy
chief of mission/ special embassy posts) are reviewed and approved by a
special committee and submitted to the Director- General for selection.
After a candidate is selected, the assignment officer or career development
officer will bring the assignment to panel for approval.

The mid- level employees comprise the majority of the Foreign Service staff.
Generally, the process brings together the employee?s interests, represented
by the career development officers, and the bureau?s interests, represented
by the assignment officers. State Department officials stressed that it has
become increasingly useful, and in some cases essential, for mid- level
employees to make themselves known to their prospective supervisors when
pursuing their next assignment.

After all the bids are submitted, HR/ CDA prepares a bid book, which lists
the bidders for every projected job vacancy. All bureaus and posts receive a
copy of the bid book, which represents the official start of what is
referred to at State as the ?meat market.? This is when the bureaus attempt
to identify the most qualified bidders for jobs available. It is also when
bidders start marketing themselves to secure their choice assignments.
However, State employees told us that marketing or lobbying actually starts
long before bids are submitted, adding that lobbying for a job is not easy
for many people. Assignment decisions ultimately are made by panels within
the Career Development and Assignments Office. According to State, panels
apply a variety of criteria when considering applicants for a position,
including transfer eligibility, language competence, rank, and functional
specialty. In addition, panels consider and give varying weights to service
need, employee and bureau preferences, employee career development and
professional aspirations, special personal circumstances (such as medical
limitations and educational requirements of family members), and prior
service at hardship posts. Bureaus or individuals may Senior Officers/ Key
Positions

Assignment Process Mid- Level Assignment Process

Appendix II: Overview of the Foreign Service Assignment System

Page 37 GAO- 02- 626 State Department

appeal panel decisions to the Director- General. The mid- level panel makes
roughly 60 percent of Foreign Service assignments.

The assignment process for untenured junior (entry- level) officers is
somewhat different than the process for mid- level and senior- level
officers. While junior officers also submit bids that indicate their
preferences, their assignments are directed by the Entry Level Division with
little input from the posts or bureaus on which the employees bid. In fact,
junior officers are strongly advised not to lobby the bureaus and posts in
which they have an interest. According to State, the directed approach
ensures maximum fairness in making assignments. The Entry Level Division
proposes assignments to the assignments panel only after taking into account
an officer?s preferences, language probation status, functional and
geographic diversity, equities from prior service in hardship posts, timing,
and other important factors. In addition, according to HR/ CDA, while the
list of bidders goes to the panel, the assignment is done

?off panel.? Junior officers serve their first two tours overseas and are
expected to serve in consular positions in either the first or second of
these assignments, normally for a minimum of 1 year but not less than 10
months. Junior Officers Assignment

Process

Appendix III: Staffing Issues at Selected Posts

Page 38 GAO- 02- 626 State Department

The following tables summarize staffing data and some of the factors that
affect staffing of hardship posts in each of the seven countries we
examined. Information for the four countries we included in our review but
did not visit- Kazakhstan, Nigeria, Pakistan, and Russia- was obtained from
the regional bureaus in Washington, D. C., with input from post officials.

Table 3: Staffing Issues in China Issue Field observations

Staffing data  Post officials agree that the number of positions is
inadequate to effectively perform the work of this major mission.

 Ninety- three percent of total positions require language skills, but only
38 percent of officers meet the language requirements.

 Staff at some posts wear multiple hats, many employees are in positions
higher than their grade, and some are in positions lower than their grade.

 Sections with the most shortages and employees in positions above their
grade are in the administrative and consular areas. Environmental factors
and other obstacles to recruitment/ retention

 Staff at the five China posts complained of extremely high workload,
especially in Guangzhou and Beijing.

 Local medical facilities are ill- equipped to handle basic care. Staff are
frequently medevaced to Beijing and Hong Kong for common medical problems
such as upper respiratory viruses and gastrointestinal diseases and are
faced with high medical costs.

 Opportunities for spousal employment are very limited.

 Staff are under strict surveillance, and travel is restricted to certain
parts of the country.

 Appropriate places of worship are limited and controlled.

 Language is a major problem for almost everyone at posts, including
spouses, especially in Guangzhou where Mandarin and Cantonese are essential.
Potential bidders also are intimidated by the length of time to learn the
language.

 Some posts lack adequate schools.

 Heavy air pollution and widespread sanitation problems are common. Impact
on post operations/ diplomatic readiness

 There are insufficient staff to cover and report on key issues, including
World Trade Organization compliance and human rights.

 Posts rely heavily on local staff, especially to assist with visa
interviews.

 There are insufficient staff and training to investigate visa fraud,
especially in a high volume consular post such as Guangzhou, which has a
high rate of visa fraud. Other information  Service need differential has
been effective in retaining staff in Shenyang and

Chengdu, where some employees extended their tour. However, it has not been
successful in attracting new bidders to Shenyang, which had no bidders in
2002. Chengdu had a few bidders, but none of them opted to sign up for an
additional year.

 Some junior officers are interested in developing area expertise and would
consider extending their tour but are unable to do so because they are
encouraged to work in at least two countries before they are tenured.

 Heavy workload limits officers? time for post language training.

 Housing conditions have vastly improved, but this is not yet widely known.

 Physical infrastructure is inadequate to properly perform work. Source:
GAO and State Department.

Appendix III: Staffing Issues at Selected Posts

Appendix III: Staffing Issues at Selected Posts

Page 39 GAO- 02- 626 State Department

Table 4: Staffing Issues in Kazakhstan Issue Post responses

Staffing data  A number of employees are serving in positions above their
grade- a few are working in positions two levels above their grade.
Incumbents who were the only bidders held four of the positions.

 The administrative, public diplomacy, and office management specialist
jobs are the hardest to fill- though most positions are considered hard- to-
fill.

 In the 2001 bidding cycle, Almaty had six bidders for four open positions;
only one was at the grade level required. There were no bidders for two
public diplomacy positions. Environmental factors and other obstacles to
recruitment/ retention

 Almaty has poor sanitation and medical facilities, as well as substandard
housing and public utilities.

 Geographic isolation inhibits out- of- country travel.

 Regional transportation is unsafe.

 There is uncertainty over when the embassy will move to the new capital.

 Potential bidders have preconceived notions of cold, Soviet- style
hardship.

 The quality of the local school raises concern. Impact on post operations/
diplomatic readiness

 Diplomatic readiness is characterized as fair. However, the embassy lacks
key administrative staff. The lack of information management and security
staff has forced existing staff to work excessive overtime. Some employees
in key positions lack required training.

 Section heads and supervisors must provide extra guidance to junior
officers in positions above their grade and experience level.

 In some cases, lack of language training hinders direct local contact
(although 83 percent of employees in language- designated positions do meet
the requirements). Other information  The service need differential program
has been successful and has boosted a

traditionally high extension rate. The program is credited with enticing a
tandem couple to extend their tour of duty. A few employees assigned to the
post in 2001 exercised their option to extend their service for a third
year. Post expects some employees assigned in 2002 to exercise their options
for a third year because of the program.

 A number of positions at post are occupied by employees who extended their
tour. In general, employees choosing to extend their service have often
cited the good seasonal weather and good morale at post.

Source: State Department.

Appendix III: Staffing Issues at Selected Posts

Page 40 GAO- 02- 626 State Department

Table 5: Staffing Issues in Nigeria Issue Post responses

Staffing data  Consular and administrative positions have been historically
difficult to fill.

 In Lagos, there are virtually no mid- level officers. Four political,
financial management, and public diplomacy positions have been vacant since
summer or fall of 2001. The political officer position will have been vacant
for over 10 months by the time the new officer arrives in the summer of
2002.

 In Abuja, a political officer position will have been vacant for over a
year, and an administrative officer position was vacant for 7 months.

 There were no mid- level bidders within their grade and functional
specialty for Lagos in the 2002 assignments cycle.

 In a 10- officer consular section in Lagos, only the consul general has
more than one tour of consular experience. Environmental factors and other
obstacles to recruitment/ retention

 Crime is high, and there is high potential for political unrest and
violence. Lagos is considered one of the most dangerous cities in the world.
Employees are virtually confined to small enclaves; many have adopted a
?bunker? mentality.

 Abuja and Lagos have poor public sanitation, prevalence of tropical
diseases and infections, and inadequate or nonexistent local health care.

 Housing is poorly constructed; power outages occur daily and other
utilities (water, telephone service) are unreliable.

 The climate is hot and humid.

 Secondary level schooling in Abuja is of poor quality.

 In Abuja, there are limited work opportunities for spouses.

 The feeling of isolation is a problem in Abuja.

 Especially for consular positions in Lagos, work is very demanding due to
high fraud environment and applicant volume. Impact on post operations/
diplomatic readiness

 Diplomatic readiness is inadequate, with inexperienced officers filling
vital positions requiring experience, and few experienced mentors are
available.

 Some employees are stretched thin and overworked. The few experienced
employees must also provide guidance to the others. Performance of more than
basic reporting and infrastructure support tasks has been problematic. Other
information  Out of the total eligible employees, only 16 percent assigned
to Lagos and Abuja in

2002 opted for the service need differential. It is probably too early to
assess the full impact of the added differential, which became available
only recently.

 Word that the post in Lagos is addressing the housing problem is filtering
out, resulting in serious inquiries from prospective bidders.

Source: State Department.

Appendix III: Staffing Issues at Selected Posts

Page 41 GAO- 02- 626 State Department

Table 6: Staffing Issues in Pakistan Issue Post responses

Staffing data  Sections with the greatest number of employees serving in
positions above their grade include consular, administrative, and public
diplomacy.

 Five language- preferred public diplomacy positions in Islamabad, Lahore,
and Karachi are held by incumbents without language skills.

 In Islamabad, many employees are in positions above their grade because no
qualified employees at- grade were interested in bidding on the positions.
In Karachi, a number of employees are in positions above their grade.

 One office management specialist position in Islamabad has been vacant
since September 2001. Three other positions, including one consular and one
facility supervisor position, have been vacant since February 2002. No
replacements are expected until the summer of 2002 at the earliest.
Environmental factors and other obstacles to recruitment/ retention

 Some staff have been evacuated recently due to political events. Employees
tend to think of Pakistan posts as being ?frequently evacuated?- the most
significant factor discouraging bidders. As a result, some employees
hesitate to bid on jobs in Pakistan, fearing disruption to their families.
Impact on post operations/ diplomatic readiness

 Employees with high levels of experience spend extra time performing more
than one job and more of their time mentoring less experienced employees.
This increases the potential for stress and burnout. Other information 
Peshawar is the only post that is part of the service need differential
program. None of

the employees eligible to participate has opted for a third year.

 Based on anecdotal information, a number of employees in Islamabad have
extended their tour of duty because they find the overall quality of life to
be high. Very few employees with families chose not to have their dependents
accompany them, although recent events may change this.

 Because of the positive information on extensions, posts decided to keep
the tour of duty at 3 years when the post differential went to 20 percent,
rather than reduce the tour to 2 years.

Source: State Department.

Appendix III: Staffing Issues at Selected Posts

Page 42 GAO- 02- 626 State Department

Table 7: Staffing Issues in Russia Issue Post responses

Staffing data  About one- third of the Foreign Service employees in Moscow
are working in positions above their grade; 60 percent of the section head
and principal deputy positions are staffed by officers in assignments above
their grade.

 Sections with the greatest number of employees above their grade include
consular, administrative, public affairs, and regional security.

 The mission?s inability to fill all its positions is most pronounced in
the consulates of Yekaterinburg and Vladivostok; a junior officer was
serving as consul general in Vladivostok in 2001.

 Four positions in Vladivostok had no bids; the public affairs position
(vacant for at least a year) had one bid but not at the required grade.
Neither the information management nor the public affairs positions in
Yekaterinburg received bids. Environmental factors and other obstacles to
recruitment/ retention

 Health care, housing, and public utilities are deficient throughout the
country, but to a greater degree in Yekaterinburg and Vladivostok, where
access to amenities and recreational activities is particularly difficult
due to geographic isolation.

 All types of crime are prevalent; public safety is a concern.

 Goods and services are difficult to obtain.

 Workload is demanding, accentuated by the number of high- level visitors.

 The weather is harsh.

 Acquiring proficiency in Russian takes a long time.

 The size of many housing units is inadequate or (in Moscow) distance from
post requires long commutes. Impact on post operations/ diplomatic readiness

 Diplomatic readiness is lowest in remote Yekaterinburg and Vladivostok;
the effect of junior officers filling positions of great responsibility is
felt acutely there because there is no one to give them advice.

 In Yekaterinburg and Vladivostok, existing staff members are required to
cover responsibilities of vacant positions.

 Internal controls suffer when responsible employees are inexperienced and
overworked. Other information  The service need differential program has
been unsuccessful in Yekaterinburg and

Vladivostok. None of the eligible staff opted for a 3- year tour under the
program.

 State?s language incentive program does appear to be a major incentive for
extensions in Moscow.

Source: State Department.

Appendix III: Staffing Issues at Selected Posts

Page 43 GAO- 02- 626 State Department

Table 8: Staffing Issues in Saudi Arabia Issue Field observations

Staffing data  Post management believes the limited number of bidders for
positions makes it difficult to assign qualified employees. As a result, the
overall qualifications of employees do not match the ideal level that is
sought.

 The public diplomacy section is particularly affected by shortages in
Riyadh. Two public affairs officers will leave in summer of 2002. One
possible replacement is civil service but with no Arabic skills; the other
transferred to another assignment.

 The head of the public diplomacy section in one consulate is also on civil
service excursion but with no Arabic language skills. He was selected
because there were no bidders.

 A position in the economic section in Riyadh had one at- grade bidder with
no language or area experience.

 Out of the total language- designated positions in Jeddah, 75 percent of
the incumbents do not meet the language requirement.

 The financial management officer position in Riyadh had been vacant for 1
year before it was filled. Environmental factors and other obstacles to
recruitment/ retention

 There is an overall sense of cultural and geographic isolation.

 Social culture, especially in Riyadh, is repressive, particularly for
women. Both women and men are subject to harassment by the local religious
police who enforce certain standards of dress and conduct.

 Women are not permitted to drive motor vehicles and rely entirely on post
motor pools or spouses for any kind of travel.

 Women face severe restrictions on traveling alone in public.

 There are enormous restrictions on social activities for single men and
women. There are no public places where men and women can socialize.

 Family activities are disrupted because public places close five times a
day for prayer time.

 Severe heat forces residents to stay indoors, compounding the sense of
isolation.

 Regional travel for vacations is very expensive. Impact on post
operations/ diplomatic readiness

 Diplomatic readiness is not as strong as desirable, particularly in terms
of public diplomacy.

 The prevalence of inexperienced employees increases the burden on senior
staff to provide more supervision. Other information  The service need
differential appears to have had an impact. A substantial number of

employees opted to take the incentive and serve for a third year. Source:
GAO and State Department.

Appendix III: Staffing Issues at Selected Posts

Page 44 GAO- 02- 626 State Department

Table 9: Staffing Issues in Ukraine Issue Field observations

Staffing data  Roughly 50 percent of the Foreign Service officer positions
in Kiev are staffed by junior or first- tour officers.

 Several employees are working in positions at least two levels above their
grade.

 Sections with the most shortages and employees working above their grade
include consular, economic, and public diplomacy.

 The consul general position was vacant for a year. The deputy consul
general position was vacant for 15 months. A junior officer had previously
been in charge of new immigrant visas for 8 months.

 The supervisory general services officer position has been vacant since
summer 2001.

 The economic section had two junior officers in positions two levels above
their grade; two public diplomacy employees were on civil service excursion
tours. Environmental factors and other obstacles to recruitment/ retention

 Kiev has an extremely high workload with consequent stress.

 Local medical facilities are poor or nonexistent.

 Interior housing is generally adequate, but entryways are poorly lit and
insecure; water shutoffs are a recurring problem.

 Street crime against westerners has increased. Minorities are particularly
subject to harassment.

 Adequate and accessible recreation facilities do not exist.

 Telephone and fax connections are poor; there are not enough upgraded
computers for the number of staff.

 Concerns continue about risks from Chernobyl.

 Post has a word- of- mouth reputation for an extremely high workload.

 Winters are severe. Impact on post operations/ diplomatic readiness

 Some first- tour employees are in positions requiring prior experience
(such as providing advice to government ministers on economic policies).

 There are few mentors to provide guidance to junior or first- tour
employees.

 First- tour employees suffer burnout, increasing chances they will decide
to leave the Foreign Service.

 There is insufficient time to more fully investigate visa fraud.

 There is insufficient time for further language study at post due to heavy
workload. Other information  The service need differential program has had
some success. Out of the total

employees eligible for the program in 2001 and 2002, 47 percent accepted the
additional incentive to remain for a third year. Three heads of sections
opted not to accept the incentive.

Source: GAO and State Department.

Appendix IV: Most Heavily Bid and Underbid Countries

Page 45 GAO- 02- 626 State Department

Table 10 lists the countries in each region that had the most number of bids
per position, on average, and the fewest bids.

Table 10: Countries with the Most and Fewest Bids Region/ country a

Most heavily bid countries (20 bids or more per position)

Most underbid countries (fewer than 3 bids per position) b

Africa Mauritius Algeria Angola Benin Burkina Faso Cameroon Cape Verde
Central African Republic Chad Congo, Democratic Republic of the (formerly
Zaire) Congo, Republic of Cï¿½te d?Ivoire Eritrea Gabon Guinea Liberia Malawi
Mali Niger Nigeria Rwanda Togo East Asia and Pacific Australia

Hong Kong New Zealand

China Mongolia Papua New Guinea South Korea Europe and Eurasia Austria

Czech Republic Cyprus Denmark France Ireland Italy Luxembourg The
Netherlands Spain Switzerland United Kingdom

Albania Armenia Belarus Bosnia- Herzegovina Georgia Kazakhstan Krygyzstan
Macedonia Moldova Russia Serbia- Montenegro Turkmenistan Ukraine Near East
Yemen South Asia Bangladesh

Appendix IV: Most Heavily Bid and Underbid Countries

Appendix IV: Most Heavily Bid and Underbid Countries

Page 46 GAO- 02- 626 State Department

Region/ country a Most heavily bid countries

(20 bids or more per position) Most underbid countries

(fewer than 3 bids per position) b

Western Hemisphere Bahamas Canada Grenada

Haiti Jamaica

a The geographic regions correspond to State?s six regional bureaus. b State
considers posts most difficult to staff when half of the positions open have
zero to two bidders.

Source: GAO analysis based on State bidding data for the 2001 and 2002
assignments cycles.

Appendix V: Characteristics of Posts Page 47 GAO- 02- 626 State Department

Table 11 lists the 259 diplomatic posts that State operates worldwide, by
region and by country. For every post, the tour of duty, hardship
differential pay, and any danger pay that may be applicable are shown. The
list also shows the 41 posts that have been designated for a service need
differential- an additional recruitment and retention incentive of 15
percent above base pay for those who agree to serve for a third year- and
the 98 posts that State has designated most- difficult- to- staff.

Table 11: U. S. Diplomatic Posts and Their Hardship Differential and Danger
Pay Rates (2001/ 2002) Regional bureau/ country Post

Length of tour (in years)

Hardship differential

(%) Danger pay (%)

Service need differential

( ) Most difficult

to staff ( ) Bureau of African Affairs

Angola Luanda 2 25

Benin Cotonou 2 20

Botswana Gaborone 3 0

Burkina Faso Ouagadougou 2 25

Burundi Bujumbura 2 25 25

Cameroon Yaounde 2 20

Cape Verde Praia 2 20

Central African Republic Bangui 2 25 20

Chad N?Djamena 2 25

Congo, Democratic Republic of the (formerly Zaire) Kinshasa 2 25

Congo, Republic of Brazzaville 2 25

Cï¿½te d?lvoire Abidjan 3 20

Djibouti, Republic of Djibouti 2 25

Eritrea Asmara 2 20

Ethiopia Addis Ababa 2 20

Gabon Libreville 3 15

Gambia Banjul 2 20

Ghana Accra 3 25 Guinea Conakry 2 25

Kenya Nairobi 2 25

Lesotho Maseru 3 15

Liberia Monrovia 2 25 15

Malagasy Republic Antananarivo 2 20

Malawi Lilongwe 3 15

Mali Bamako 2 25

Mauritania Nouakchott 2 25

Mauritius Port Louis 3 5

Mozambique Maputo 2 20

Appendix V: Characteristics of Posts

Appendix V: Characteristics of Posts Page 48 GAO- 02- 626 State Department

Regional bureau/ country Post

Length of tour (in years)

Hardship differential

(%) Danger pay (%)

Service need differential

( ) Most difficult

to staff ( )

Namibia Windhoek 3 0 Niger Niamey 2 25

Nigeria Abuja 2 25

Lagos 2 25

Rwanda Kigali 2 25

Senegal Dakar 3 15

Sierra Leone Freetown 2 25 25

South Africa Capetown 3 0 Durban 3 0 Johannesburg 3 0 Pretoria 3 0 Sudan
Khartoum 2 25 15

Swaziland Mbabane 3 0

Tanzania Dar es Salaam 3 25

Togo Lome 2 25

Uganda Kampala 2 25

Zambia Lusaka 3 15

Zimbabwe Harare 3 5 African Affairs subtotals 46 13 39 Bureau of East Asian
and Pacific Affairs

Australia Canberra 4 0 Melbourne 4 0 Perth 4 0 Sydney 4 0 Brunei Bandar Seri
Begawan 2 15 Cambodia Phnom Penh 2 25

China Beijing 3 15

Chengdu 2 25

Guangzhou 2 20

Shanghai 3 15 Shenyang 2 25

East Timor Dili 2 25 Fiji Islands Suva 3 10 Hong Kong Hong Kong 3 0
Indonesia Jakarta 3 20

Surabaya 3 25 Japan Fukuoka 3 0

Nagoya 3 0 Naha 3 0 Osaka- Kobe 3 0 Sapporo 3 0 Tokyo 3 0

Appendix V: Characteristics of Posts Page 49 GAO- 02- 626 State Department

Regional bureau/ country Post

Length of tour (in years)

Hardship differential

(%) Danger pay (%)

Service need differential

( ) Most difficult

to staff ( )

Laos Vientiane 2 25

Malaysia Kuala Lumpur 3 0 Marshall Islands Majuro 2 15

Micronesia Kolonia 2 15 Mongolia Ulaanbaatar 2 25

Burma (Myanmar) Rangoon 2 15

New Zealand Auckland 4 0 Wellington 4 0 Palau Koror 2 10 Papua New Guinea
Port Moresby 2 25

Philippines Manila 3 15

Samoa Apia 3 10 Singapore Singapore 4 0 South Korea Seoul 3 0 Thailand
Bangkok 3 10

Chiang Mai 3 10 Vietnam Hanoi 2 25

Ho Chi Minh City 2 20 East Asian and Pacific Affairs subtotals 40 6 13
Bureau of European and Eurasian Affairs

Albania Tirana 1 25

Armenia Yerevan 2 25

Austria Vienna 4 0 Vienna- OSCE 4 0 Vienna- UNVIE 4 0 Azerbaijan Baku 2 25

Belarus Minsk 2 20

Belgium Brussels 4 0 Brussels- NATO 4 0 Brussels- USEU 4 0 Bermuda Hamilton
3 0 Bosnia- Herzegovina Sarajevo 2 15 15

Sarajevo- OHR 1 15 25

Banja Luka 1 15 25

Mostar 1 15 25

Bulgaria Sofia 3 15

Croatia Zagreb 3 5 Cyprus Nicosia 3 0 Czech Republic Prague 4 0

Appendix V: Characteristics of Posts Page 50 GAO- 02- 626 State Department

Regional bureau/ country Post

Length of tour (in years)

Hardship differential

(%) Danger pay (%)

Service need differential

( ) Most difficult

to staff ( )

Denmark Copenhagen 4 0 Estonia Tallinn 3 10 Finland Helsinki 3 0 France
Paris 4 0

Paris- OECD 4 0 Bordeaux 3 0 Lille 3 0 Lyon 3 0 Marseille 3 0 Rennes 3 0
Toulouse 3 0 Strasbourg 3 0 Georgia Tbilisi 2 25

Germany Berlin 4 0 Dusseldorf 3 0 Frankfurt 4 0 Hamburg 3 0 Leipzig 3 0
Munich 4 0 Greece Athens 3 5

Thessaloniki 3 0 Holy See Vatican City 4 0 Hungary Budapest 4 0 Iceland
Reykjavik 3 0 Ireland Dublin 4 0 Italy Florence 4 0

Milan 4 0 Naples 4 0 Rome 4 0 Kazakhstan Almaty 2 25

Kyrgyzstan Bishkek 2 25

Latvia Riga 3 10 Lithuania Vilnius 3 5 Luxembourg Luxembourg 4 0 Macedonia
Skopje 3 15

Malta Valletta 3 5 Moldova Chisinau 2 20

Netherlands Amsterdam 4 0 The Hague 4 0 Norway Oslo 3 0 Poland Krakow 3 10

Appendix V: Characteristics of Posts Page 51 GAO- 02- 626 State Department

Regional bureau/ country Post

Length of tour (in years)

Hardship differential

(%) Danger pay (%)

Service need differential

( ) Most difficult

to staff ( )

Warsaw 3 10 Portugal Lisbon 4 0

Ponta Delgada 3 0 Romania Bucharest 3 20

Cluj 3 15

Russia Moscow 2 15

St. Petersburg 2 15

Vladivostok 2 25

Yekaterinburg 2 25

Slovak Republic Bratislava 4 0 Slovenia Ljubljana 4 0 Spain Barcelona 4 0

Madrid 4 0 Sweden Stockholm 3 0 Switzerland Bern 4 0

Geneva- IO 4 0 Tajikistan Dushanbe 2 25 15

Turkey Adana 3 5 Ankara 3 5 Istanbul 3 10 Turkmenistan Ashgabat 2 20

Ukraine Kiev 2 25

United Kingdom Belfast 3 0 Edinburgh 3 0 London 4 0 Uzbekistan Tashkent 2 25

Yugoslavia Belgrade 2 20 25

Pristina 1 20 20

European and Eurasian Affairs subtotals 88 13 26

Bureau of Near Eastern Affairs

Algeria Algiers 1 25 25

Bahrain Manama 3 10 Egypt Cairo 3 20

Alexandria 3 15 Israel Tel Aviv 3 5

Jerusalem Jerusalem 3 10

Jordan Amman 3 10 Kuwait Kuwait 2 15

Lebanon Beirut 1 25 Morocco Casablanca 3 0

Rabat 3 0

Appendix V: Characteristics of Posts Page 52 GAO- 02- 626 State Department

Regional bureau/ country Post

Length of tour (in years)

Hardship differential

(%) Danger pay (%)

Service need differential

( ) Most difficult

to staff ( )

Oman Muscat 3 10 Qatar Doha 3 20

Saudi Arabia Dhahran 2 25 Jeddah 2 20

Riyadh 2 25

Syria Damascus 3 20

Tunisia Tunis 3 5 United Arab Emirates Abu Dhabi 3 10

Dubai 3 5 Yemen Sanaa 2 25

Near Eastern Affairs subtotals 21 3 9

Bureau of South Asian Affairs

Afghanistan Kabul 1 25 25 Bangladesh Dhaka 2 25

India Calcutta 2 25

Chennai (Madras) 3 15

Mumbai (Bombay) 3 20 New Delhi 3 20 Nepal Kathmandu 2 20 Pakistan Islamabad
3 25

Karachi 2 20 15

Lahore 2 25

Peshawar 2 25

Sri Lanka Colombo 3 15

South Asian Affairs subtotals 12 3 8

Bureau of Western Hemisphere Affairs

Argentina Buenos Aires 4 0 Bahamas Nassau 4 0 Barbados Bridgetown 3 5 Belize
Belize City 3 15 Bolivia La Paz 2 15 Brazil Brasilia 3 0

Recife 3 5 Rio De Janeiro 3 0 Sï¿½o Paulo 3 5 Canada Calgary 3 0

Halifax 3 0 Montreal 4 0 Montreal- ICAO 4 0 Ottawa 4 0

Appendix V: Characteristics of Posts Page 53 GAO- 02- 626 State Department

Regional bureau/ country Post

Length of tour (in years)

Hardship differential

(%) Danger pay (%)

Service need differential

( ) Most difficult

to staff ( )

Quebec 3 0 Toronto 4 0 Vancouver 4 0 Chile Santiago 4 0 Colombia Bogota 2 5
15 Costa Rica San Jose 4 0 Cuba Havana 2 20 Dominican Republic Santo Domingo
3 15 Ecuador Guayaquil 3 15 Ecuador Quito 3 15 El Salvador San Salvador 3 15
Grenada St. George?s 3 10 Guatemala Guatemala City 3 10 Guyana Georgetown 2
20

Haiti Port- au- Prince 2 25

Honduras Tegucigalpa 3 15 Jamaica Kingston 3 5 Mexico Ciudad Juarez 3 5

Guadalajara 4 0 Hermosillo 3 0 Matamoros 3 0 Merida 3 5 Mexico City 2 10
Monterrey 3 5 Nogales 3 0 Nuevo Laredo 3 0 Tijuana 3 0 Netherlands Antilles
Curaï¿½ao 3 0 Nicaragua Managua 2 15 Panama Panama City 4 0 Paraguay Asuncion
3 5 Peru Lima 2 20 Suriname Paramaribo 2 15

Trinidad Port of Spain 3 5 United States New York- USUN 2 0

Washington- USOAS 1 0

Appendix V: Characteristics of Posts Page 54 GAO- 02- 626 State Department

Regional bureau/ country Post

Length of tour (in years)

Hardship differenti

al (%) Danger pay (%)

Service need differential

( ) Most difficult

to staff ( )

Uruguay Montevideo 4 0 Venezuela Caracas 3 5

Western Hemisphere Affairs subtotals 52 3 3

Total - worldwide 259 41 98

Legend: ICAO International Civil Aviation Organization IO Bureau of
International Organization Affairs NATO North Atlantic Treaty Organization
OECD Organization for Economic Cooperation and Development OHR Office of
High Commissioner OSCE Organization for Security and Cooperation in Europe
UNVIE U. S. Mission to the International Organizations in Vienna USEU U. S.
Mission to the European Union USOAS U. S. Mission to the Organization of
American States USUN U. S. Permanent Representative to the United Nations

Note: Length of tours, hardship differential rates, and danger pay rates are
those that were applicable in July 2001 when employees were submitting bids
for the 2002 assignments cycle. Service need differential and most difficult
to staff post designations are for 2002.

Source: State Department.

Appendix VI: Comments from the Department of State

Page 55 GAO- 02- 626 State Department

Appendix VI: Comments from the Department of State

Note: GAO comments supplementing those in the report text appear at the end
of this appendix.

Appendix VI: Comments from the Department of State

Page 56 GAO- 02- 626 State Department

See comment 1.

Appendix VI: Comments from the Department of State

Page 57 GAO- 02- 626 State Department

See comment 3. See comment 2.

Appendix VI: Comments from the Department of State

Page 58 GAO- 02- 626 State Department

See comment 4.

Appendix VI: Comments from the Department of State

Page 59 GAO- 02- 626 State Department

The following are GAO?s comments on the Department of State?s letter dated
June 5, 2002.

1. We agree that hiring staff under the Diplomatic Readiness Initiative will
enable State to fill more of its positions. However, unless other actions
are taken, such as those we have recommended, certain hardship posts may
continue to be disproportionately staffed with entry- level employees who
may not have the right experience, training, and skills to perform their
jobs effectively. Furthermore, it will take years for new employees to
acquire the skills and experience required to fill the mid- level positions.
In the meantime, State needs to ensure that hardship posts do not suffer
disproportionately from State?s shortages of mid- level employees.

2. We acknowledge that entry- level employees are frequently assigned to
hardship posts. Our concern is that entry- level employees are assigned to
positions that require more experience and that they may not get the
supervision and guidance they need from more experienced staff due to the
shortage of mid- level officers at hardship posts.

3. Our work shows that State is having difficulty filling positions at
hardship posts that are critical to U. S. interests with qualified,
experienced staff. Based on our case studies, State?s assignment system does
not necessarily ensure that staff are assigned to positions in locations
where they are needed most. For example, as noted in our report, State had
difficulties staffing public diplomacy positions in Saudi Arabia with
experienced, Arabic- speaking officers. In China and Russia, many Foreign
Service officers did not meet the language proficiency requirements for
their positions. Moreover, State does not rigorously and systematically
determine its worldwide staffing priorities.

4. In studying additional incentives for employees to serve at hardship
posts, State needs to examine not only financial incentives but also
nonfinancial incentives and other actions specifically designed to steer
qualified employees toward hardship posts that require their skills and
experience and to ensure that the burden of hardship service is shared
equitably. These actions could include, for example, making hardship service
an explicit criterion in promotion and onward assignment decisions and
employing more directive approaches to assignments. Any financial incentives
that State may propose should fully analyze the estimated costs associated
with each option and assess how they GAO Comments

Appendix VI: Comments from the Department of State

Page 60 GAO- 02- 626 State Department

will affect the likelihood of increasing the number of Foreign Service
employees who bid on assignments at selected hardship posts.

Appendix VII: GAO Contact and Staff Acknowledgments

Page 61 GAO- 02- 626 State Department

John Brummet (202) 512- 5260 In addition to the person named above, Joy
Labez, Barbara Shields, Phil McMahon, Melissa Pickworth, and Janey Cohen
made key contributions to this report. Rick Barrett, Tim Carr, Martin De
Alteriis, Mark Dowling, Jeffrey Goebel, Kathryn Hartsburg, Bruce Kutnick,
Mike Rohrback, and Ray Wessmiller also provided technical assistance.
Appendix VII: GAO Contact and Staff

Acknowledgments GAO Contact Acknowledgments

(320061)

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