Overseas Presence: Observations on a Rightsizing Framework	 
(01-MAY-02, GAO-02-659T).					 
                                                                 
Rightsizing is the aligning of the number and location of staff  
assigned to U.S. embassies with foreign policy priorities,	 
security, and other constraints. GAO is developing a framework to
enable the executive branch to assess the number and mix of	 
embassy staff. The framework will link staffing levels to the	 
following three critical elements of overseas operations: (1)	 
physical security and real estate, (2) mission priorities and	 
requirements, and (3) operational costs. GAO reviewed policies	 
and practices at the U.S. Embassy in Paris because of its large  
size and history of rightsizing decisions. GAO found that about  
700 employees from 11 agencies work in main buildings at the	 
Paris Embassy. Serious security concerns in at least one embassy 
building in Paris suggest the need to consider staff reductions  
unless building security can be improved. Staffing levels are	 
hard to determine because agencies use different criteria and	 
priorities to place staff. The lack of comprehensive cost data on
all agencies' operations, which is estimated at more than $100	 
million annually in France, and the lack of an embassywide budget
eliminate the possibility of cost-based decisionmaking on	 
staffing. The number of staff could be reduced, particularly	 
those in support positions, which constitute about one-third of  
the total. Options include relocating functions to the United	 
States or to regional centers and outsourcing commercial	 
activities.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-659T					        
    ACCNO:   A03218						        
  TITLE:     Overseas Presence: Observations on a Rightsizing	      
Framework							 
     DATE:   05/01/2002 
  SUBJECT:   Best practices					 
	     Cost control					 
	     Embassies						 
	     Facility security					 
	     Labor force					 
	     Paris (France)					 

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GAO-02-659T
     
Testimony Before the Subcommittee on National Security, Veterans Affairs,
and International Relations, Committee on Government Reform, House of
Representatives

United States General Accounting Office

GAO For Release on Delivery Expected at 10: 00 a. m. Wednesday May 1, 2002
OVERSEAS PRESENCE

Observations on a Rightsizing Framework

Statement of Jess T. Ford Director, International Affairs and Trade

GAO- 02- 659T

Page 1 GAO- 02- 659T Overseas Presence: Observations on a Rightsizing
Framework

Mr. Chairman and Members of the Subcommittee: I am pleased to be here today
to discuss our ongoing work on rightsizing the U. S. overseas presence. For
our purposes, we define rightsizing as aligning the number and location of
staff assigned to U. S. embassies 1 with foreign policy priorities and
security and other constraints. To follow up on our November 2001 report on
the executive branch?s efforts in this area, 2 you asked us to determine
what rightsizing actions may be feasible to reduce costs and security
vulnerabilities while retaining effectiveness in meeting foreign policy
objectives. We reviewed reports, including those of the Accountability
Review Boards, 3 the Overseas Presence Advisory Panel (OPAP), 4 and a State
Department- led interagency rightsizing committee, 5 and we discussed
overseas staffing issues with officials from the State Department, other U.
S. agencies operating overseas, and the Office of Management and Budget
(OMB), which is currently implementing the president?s management initiative
to rightsize U. S. embassies. We also performed fieldwork at the U. S.
Embassy in Paris. We selected this embassy as a case study because it is a
large embassy that has been the subject of substantial rightsizing
discussions, including recommendations by the former ambassador to France to
reduce the number of staff in

1 Throughout this statement we refer to rightsizing issues at embassies.
However, the rightsizing process is also applicable to diplomatic offices
that are located outside the capital cities.

2 U. S. General Accounting Office, Overseas Presence: More Work Needed on
Embassy Rightsizing, GAO- 02- 143 (Washington, D. C.: Nov. 27, 2001). 3
Secretary of State Madeline K. Albright and CIA Director George Tenet
appointed the Accountability Review Boards to investigate the facts and
circumstances surrounding the 1998 embassy bombings in East Africa.
Department of State, Report of the Accountability Review Boards on the
Embassy Bombings in Nairobi and Dar Es Salaam (Washington, D. C.: Jan.
1999).

4 Secretary of State Madeleine K. Albright established OPAP following the
1998 embassy bombings in Africa and in response to recommendations of the
Accountability Review Boards to consider the organization of U. S. embassies
and consulates. Department of State,

America?s Overseas Presence in the 21st Century, The Report of the Overseas
Presence Advisory Panel (Washington, D. C.: Nov. 1999).

5 The interagency committee comprised members from the State Department and
other key agencies operating overseas, including the Departments of
Agriculture, Commerce, Defense, Justice, and the Treasury. Pilot studies
were conducted in 2000 at U. S. embassies in Amman, Jordan; Bangkok,
Thailand; Mexico City, Mexico; New Delhi, India; Paris, France; and Tbilisi,
Georgia, to assess staffing needs and to develop a methodology for assessing
staffing at all embassies and consulates.

Page 2 GAO- 02- 659T Overseas Presence: Observations on a Rightsizing
Framework

France by about one- half. We will report on this work in more detail later
this year.

Today I will discuss our preliminary observations on a framework for
assessing the feasibility of rightsizing the U. S. overseas presence. My
testimony will also highlight staffing issues we identified at the U. S.
Embassy in Paris. In addition, I will briefly discuss some of the steps
needed to implement the framework and the importance of developing a
mechanism to move the rightsizing process forward while ensuring greater
transparency and accountability in overseas staffing decisions.

Drawing on our prior and ongoing work, we are developing a framework that we
believe will provide a foundation for the executive branch to assess
staffing at embassies and to determine the right number and mix of staff.
Our framework is designed to link staffing levels to three critical elements
of overseas operations: (1) physical security and real estate, (2) mission
priorities and requirements, and (3) operational costs. The first element
includes analyzing the security of embassy buildings, the use of existing
secure space, and the vulnerabilities of staff to terrorist attack. The
amount of secure office space may place constraints on the number of staff
that should be assigned. The second element focuses on assessing priorities
and workload requirements. The third element involves developing and
consolidating cost information from all agencies at a particular embassy to
permit cost- based decision- making. After analyzing the three elements,
decision makers should then be in a position to determine whether
rightsizing actions are needed either to add staff, reduce staff, or change
the staff mix at an embassy. Options for reducing staff could include
relocating functions to the United States or to regional centers and
outsourcing functions. We and officials from State and OMB believe the basic
framework we are developing can be applied worldwide. However, additional
work is needed to refine the elements and to test the framework at embassies
in various working environments.

Our work in Paris illustrates how the framework we are developing could
affect embassy staffing. Approximately 700 employees from 11 agencies and
their component offices are located in the Paris Embassy primary buildings
(see app. II). 6 In applying the framework to this embassy, we

6 Approximately 190 additional employees are located outside of the embassy
in Paris and throughout France. Summary

Page 3 GAO- 02- 659T Overseas Presence: Observations on a Rightsizing
Framework

found security, workload, and cost issues that need to be considered,
including the following:

 Serious security concerns in at least one embassy building in Paris
suggest the need to consider staff reductions unless building security can
be improved. This building is located in the heart of a tourist district, on
main streets with little or no protective buffer zone. Other embassy
buildings are also vulnerable. Relocating staff could significantly lessen
the number of people at risk.  It is hard to say with any degree of
certainty how many staff are needed in

Paris. The embassy?s goals and Washington?s demands are not prioritized and
each agency uses separate criteria for placing staff in Paris. State
Department staff at the embassy reported that non- prioritized workload
demands from Washington result in missed opportunities for addressing
important policy issues. We believe that a disciplined and transparent
process linking priorities and staffing, and a reduction in non- core tasks,
could suggest opportunities to reduce staffing from the current level of
700.  The lack of comprehensive cost data on all agencies? operations,
which we

estimate cost more than $100 million annually in France, and the lack of an
embassywide budget eliminate the possibility of cost- based decisionmaking
on staffing. Development of these data would help determine the trade- offs
associated with various alternative approaches to doing business. The U. S.
ambassador to France acknowledged that lack of cost data was a serious
problem.

Our work in Paris suggests that there are alternatives that could reduce the
number of staff needed at the embassy, particularly for some of the support
positions, 7 which represent approximately one- third of the total number of
personnel. Options include relocating functions to the United States or to
regional centers and outsourcing commercial activities. These options may be
applicable to as many as 210 positions in Paris. The work of about 120 staff
could be relocated to the United States - State already plans to relocate
the work of more than 100 of these. In addition, the work of about 40 other
positions could be handled from other locations in

7 For our purposes, we define support positions as those funded through the
International Cooperative Administrative Support Services (ICASS) system,
which funds common administrative support, such as travel, mail and
messenger, printing, and telephone services. This does not include other
functions at the Paris Embassy of a support nature funded through other
accounts, such as most security and some information technology services.

Page 4 GAO- 02- 659T Overseas Presence: Observations on a Rightsizing
Framework

Europe, while more than 50 other positions are commercial in nature and
provide services that are available in the private sector. We believe these
positions should be closely examined.

Mr. Chairman, development of a framework to assess embassy security,
mission, and costs and to consider alternative ways of doing business is
only the first step. Providing greater accountability, transparency, and
consistency in agencies? overseas staffing decisions will require much
greater discipline within the executive branch. We believe that for the
president?s management initiative to be fully successful, the executive
branch will need to develop a mechanism to effectively implement a
rightsizing framework. Based on our discussions with experts and agency
officials, options for such a mechanism could include (1) establishing a
Washington- based interagency body to oversee the rightsizing process and
ensure coordination among the various parties involved; (2) establishing an
independent commission to consider where more or fewer staff are needed and
to make recommendations; (3) placing responsibility for approving overseas
staffing levels within the Executive Office of the President; or (4)
requiring ambassadors to certify that staffing is commensurate with security
risks, embassy priorities and requirements, and costs.

Following the 1998 terrorist attacks on our embassies in Dar es Salaam,
Tanzania, and Nairobi, Kenya, several investigative efforts cited the need
for embassy rightsizing.

 In January 1999, the Accountability Review Boards recommended that State
look into decreasing the size and number of embassies and consulates to
reduce employees? vulnerability to attack.  To follow up on the boards?
recommendations, OPAP reported in

November 1999 that overseas staffing levels had not been adjusted to reflect
changing missions and requirements; thus, some embassies were too large and
some were too small. OPAP said rightsizing was an essential component of an
overall program to upgrade embassy and consulate capabilities, and it
recommended that this be a key strategy to improve security by reducing the
number of staff at risk. OPAP also viewed rightsizing as a way to decrease
operating costs by as much as $380 million annually if a 10 percent
worldwide staffing reduction could be achieved. The panel recommended
creating a permanent interagency committee to adopt a methodology to
determine the appropriate size and locations for the U. S. overseas
presence. It also suggested a series of actions to adjust Background

Page 5 GAO- 02- 659T Overseas Presence: Observations on a Rightsizing
Framework

overseas presence, including relocating some functions to the United States
and to regional centers where feasible.  In response to OPAP?s
recommendations, in February 2000, President

Clinton directed the secretary of state to lead an interagency effort to (1)
develop a methodology for assessing embassy staffing, and (2) recommend
adjustments, if necessary, to staffing levels at six pilot study embassies.
While the interagency committee did mention some potential areas for staff
reductions, our review of its efforts found that the committee was not
successful in developing such a methodology. In fact, the committee
concluded that it was impractical to develop a standard approach because of
differences among embassies; however, we reported that the pilot studies had
limited value because they were conducted without focused, written
guidelines, and committee members did not spend enough time at each embassy
for a thorough evaluation. 8  In August 2001, The President?s Management
Agenda 9 identified

rightsizing as one of the administration?s priorities. In addition, the
president?s fiscal year 2003 international affairs budget 10 highlighted the
importance of making staffing decisions based on mission priorities and
costs and directed OMB to analyze agencies? overseas staffing and operating
costs.

In addition to citing the importance of examining the U. S. overseas
presence at a broad level, rightsizing experts have highlighted the need for
reducing the size of specific embassies.

 In November 1999, the chairman of OPAP said that rightsizing embassies and
consulates in western Europe could result in significant savings, given
their large size. OPAP proposed that flagship posts from the cold war be
downsized while some posts in other parts of the world be expanded. A former
undersecretary of state agreed that some embassies in western Europe were
heavily staffed and that positions could be reallocated to meet critical
needs at other embassies.  A former U. S. ambassador to France - also a
member of OPAP - testified

in April 2000 that the Paris Embassy was larger than needed and should be 8
GAO- 02- 143. 9 Office of Management and Budget, The President?s Management
Agenda, Fiscal Year 2002 (Washington, D. C.: Aug. 2001). 10 Office of
Management and Budget, Budget of the U. S. Government, Fiscal Year 2003

(Washington, D. C.: Feb. 4, 2002).

Page 6 GAO- 02- 659T Overseas Presence: Observations on a Rightsizing
Framework

a candidate for substantial staff reductions to lessen security
vulnerabilities, streamline embassy functions, and decrease costs.

Although there is general agreement on the need for rightsizing the U. S.
overseas presence, there is no consensus on how to do it. As a first step,
we believe it is feasible to create a framework that includes a set of
questions to guide decisions on overseas staffing. 11 We identified three
critical elements that should be evaluated together as part of this
framework: (1) physical security and real estate, (2) mission priorities and
requirements, and (3) operational costs. If the evaluation shows problems,
such as security risks, decision makers should then consider the feasibility
of rightsizing options. Figure 1 further illustrates the elements of our
framework that address desired staffing changes.

Figure 1: Proposed GAO Framework for Embassy Rightsizing

Source: GAO.

We envision State and other agencies in Washington, D. C., including OMB,
using our framework as a guide for making overseas staffing decisions. For
example, State and other agencies could use our framework to free up
resources at oversized posts, to reallocate limited staffing resources
worldwide, and to introduce greater accountability into the staffing
process. We can also see ambassadors using this framework to ensure that
embassy staffing is in line with security concerns, mission priorities and
requirements, and costs to reduce the number of people at risk.

11 See appendix I for a checklist of suggested questions that we are
developing as part of a rightsizing framework. Proposed Rightsizing

Framework

Page 7 GAO- 02- 659T Overseas Presence: Observations on a Rightsizing
Framework

The following sections describe in more detail the three elements of the
framework we are developing, some important questions to consider for each
element, and potential rightsizing options to be considered.

The substantial loss of life caused by the bombings of the U. S. embassies
in Africa and the ongoing threats against U. S. diplomatic buildings have
heightened concern about the safety of our overseas personnel. The State
Department has determined that about 80 percent of embassy and consulate
buildings do not fully meet security standards. Although State has a
multibillion- dollar plan under way to address security deficiencies around
the world, security enhancements cannot bring most existing facilities in
line with the desired setback and related blast protection requirements.
Recurring threats to embassies and consulates highlight the importance of
rightsizing as a tool to reduce the number of embassy employees at risk.

The Accountability Review Boards recommended that the secretary of state
review the security of embassies and consider security in making staffing
decisions. We agree that the ability to protect personnel should be a key
factor in determining the staffing levels of embassies. State has prepared a
threat assessment and security profile for each embassy that can be used
when assessing staff levels. While chiefs of mission 12 and the State
Department have primary responsibility for assessing overseas security needs
and allocating security resources, all agencies should consider the risks
associated with maintaining staff overseas.

There are a variety of ways to improve security including constructing new
buildings, adding security enhancements to existing buildings, and working
with host country law enforcement agencies to increase embassy protection.
In addition, space utilization studies may suggest alternatives for locating
staff to more secure office buildings or may point to other real estate
options, such as leasing commercial office space. If security and facilities
reviews suggest that security enhancements, alternative space arrangements,
or new secure real estate options are impractical, then decision makers
should consider rightsizing actions.

12 According to the Foreign Service Act of 1980 (P. L. 96- 465), ?chiefs of
mission? are principal officers in charge of diplomatic missions of the
United States or of a U. S. office abroad, such as U. S. ambassadors, who
are responsible for the direction, coordination, and supervision of all
government executive branch employees in a given foreign country (except
employees under a military commander). Physical Security and Real

Estate What Is the Threat and Security Profile of the Embassy?

What Actions Are Practical to Improve the Security of Facilities?

Page 8 GAO- 02- 659T Overseas Presence: Observations on a Rightsizing
Framework

The Paris Embassy, our case study, illustrates the importance of security
and real estate issues in determining overseas staffing levels. The security
situation in Paris is not good and suggests the need to consider reducing
staff. None of the embassy?s office buildings currently meets security
standards. One of the buildings is particularly vulnerable and staff face a
variety of threats. Space reengineering and security adjustments to embassy
buildings may improve security for some embassy staff, but significant
vulnerabilities will remain even after planned changes are made. However, it
is difficult to assess the full range of options for the embassy in Paris
because State does not have a comprehensive plan identifying facilities and
real estate requirements. If the State Department decides it is not feasible
to build or lease another office building in Paris that would provide better
security, then decision makers will need to seriously consider relocating
staff to reduce the number of people at risk.

The placement and composition of staff overseas must reflect the highest
priority goals of U. S. foreign policy. Moreover, The President?s Management
Agenda states that U. S. government overseas staffing levels should be the
minimum necessary to serve U. S. foreign policy goals.

Currently, there is no clear basis on which to evaluate an embassy?s mission
and priorities relative to U. S. foreign policy goals. State?s current
Mission Performance Plan 13 process does not differentiate among the
relative importance of U. S. strategic goals. In recent months, State has
revised the Mission Performance Plan process to require each embassy to set
five top priorities and link staffing and budgetary requirements to
fulfilling these priorities. A successful delineation of mission priorities
will complement the framework we are developing and support future
rightsizing efforts to adjust the composition of embassy staff.

Embassy requirements include influencing policy of other governments,
assisting Americans abroad, articulating U. S. policy, handling official
visitors, and providing input for various reports and requests from
Washington. In 2000, based on a review of six U. S. embassies, the State-
led interagency committee found the perception that Washington?s
requirements for reports and other information requests were not prioritized
and placed unrealistic demands on staff. We found this same

13 Mission Performance Plans are annual embassy plans describing performance
goals and objectives. Mission Priorities and

Requirements What Are the Priorities of the Embassy?

Are Workload Requirements Validated and Prioritized?

Page 9 GAO- 02- 659T Overseas Presence: Observations on a Rightsizing
Framework

perception as well among some offices in Paris. We believe that scrutiny of
workload could potentially identify work of low priority such as reporting
that has outlived its usefulness. Currently, the department monitors and
sends incoming requests for reports and inquiries to embassies and
consulates, but it rarely refuses requests and leaves prioritization of
workload to the respective embassies and consulates. Washington?s demands on
an embassy need to be evaluated in light of how they affect the number of
staff needed to meet the work requirements.

The President?s Management Agenda states that there is no mechanism to
assess the overall rationale for and effectiveness of where and how many U.
S. employees are deployed. Each agency in Washington has its own criteria
for placing staff overseas. Some agencies have more flexibility than others
in placing staff overseas, and Congress mandates the presence of others.
Thorough staffing criteria are useful for determining and reassessing
staffing levels and would allow agencies to better justify the number of
overseas staff.

Some agencies are entirely focused on the host country while others have
regional responsibilities or function almost entirely outside the country in
which they are located. Some agencies have constant interaction with the
public, while others require interaction with their government counterparts.
Some agencies collaborate with other agencies to support the embassy?s
mission, while others act more independently and report directly to
Washington. Analyzing where and how agencies conduct their business overseas
may lead to possible rightsizing options.

Our work in Paris highlights the complexity of rightsizing the U. S.
overseas presence given the lack of clearly stated mission priorities and
requirements and demonstrates the need for a more disciplined process. It is
difficult to assess whether 700 people are needed at the embassy because the
executive branch has not identified its overall priorities and linked them
to resources. For example, the current Mission Performance Plan for the
Paris Embassy includes 15 of State?s 16 strategic goals. Furthermore, the
cumulative effect of Washington?s demands inhibits some agencies? ability to
pursue their core missions in Paris. For example, the economics section
reported that Washington- generated requests resulted in missed
opportunities for assessing how U. S. private and government interests are
affected by the many ongoing changes in the European banking system. We also
found that the criteria to locate staff in Paris vary significantly by
agency. Some agencies use detailed staffing models but most do not. Nor do
they consider embassy priorities or the overall requirements on the embassy
in determining where and how many How Do Agencies Determine

Staffing Levels? Could an Agency?s Mission Be Pursued in Other Ways?

Page 10 GAO- 02- 659T Overseas Presence: Observations on a Rightsizing
Framework

staff are necessary. In addition, some agencies? missions do not require
them to be located in Paris. Given the security vulnerabilities, it makes
sense for these agencies to consider rightsizing options.

The President?s Management Agenda noted that the true costs of sending staff
overseas are unknown. Without cost data, decision makers cannot determine
whether a correlation exists between costs and the work being performed, nor
can they assess the short- and long- term costs associated with feasible
business alternatives.

We agree with President Bush that staffing decisions need to include a full
range of factors affecting the value of U. S. presence in a particular
country, including the costs of maintaining the embassy. Nevertheless, we
found there is no mechanism to provide the ambassador and other decision
makers with comprehensive data on all agencies? costs of operations at an
embassy. This lack of cost data for individual embassies makes linking costs
to staffing levels, mission priorities, and desired outcomes impossible.
This is a long- standing management weakness that, according to the
president, needs to be corrected.

Once costs are known, it is important to relate them to the embassy?s
performance. This will allow decision makers to assess the relative cost
effectiveness of various program and support functions and to make costbased
decisions when setting mission priorities and staffing levels and when
determining the feasibility of alternative business approaches.

Our work in Paris demonstrates that this embassy is operating without
fundamental knowledge and use of comprehensive cost data. State officials
concurred that it is difficult to fully record the cost of all agencies
overseas because of inconsistent accounting and budgeting systems. However,
we determined that the cost of an embassy?s operations can be documented,
despite difficulties in compiling data for the large number of accounts and
agencies involved. To collect cost information, we developed a template to
capture different categories of operating costs, such as salaries and
benefits, and applied the template to each agency at the embassy and at
consulates and other sites throughout France (see app. III). We have
documented the total cost for all agencies operating in France in fiscal
year 2001 to be about $100 million. However, the actual cost is likely
higher because some agencies did not report costs associated with staff
salaries and benefits and discrepancies exist in the reporting of some
operating costs. With comprehensive data, the Paris Embassy could make cost-
based decisions when conducting a rightsizing analysis. Cost of Operations

What Are an Embassy?s Operating Costs?

Are Costs Commensurate With Expected Outcomes?

Page 11 GAO- 02- 659T Overseas Presence: Observations on a Rightsizing
Framework

Analyses of security, mission, and costs may suggest the assignment of more
or fewer staff at an embassy or an adjustment to the overall staff mix. If
decision makers decide that it is necessary to reduce staff, rightsizing
experts have recommended that embassies consider alternative means of
fulfilling mission requirements. Moreover, President Bush has told U. S.
ambassadors that ?functions that can be performed by personnel in the U. S.
or at regional offices overseas should not be performed at a post.? In
considering options, embassy officials will also have to weigh the security,
mission effectiveness, and cost trade- offs. These may include the strategic
importance of an embassy or the costs of adopting different management
practices.

Our analysis highlights five possible options, but this list is not
exhaustive. These options include:

 relocating functions to the United States;  relocating functions to
regional centers;  relocating functions to other locations under chief of
mission authority

where relocation back to the United States or to regional centers is not
practical;  purchasing services from the private sector; and  streamlining
outmoded or inefficient business practices.

Each option has the potential to reduce staff in Paris and the associated
security vulnerability. Specifically:

 Some functions at the Paris Embassy could be relocated to the United
States. State is planning to relocate more than 100 budget and finance
positions from the Financial Services Center in Paris to State?s financial
center in Charleston, South Carolina, by September 2003. In addition, we
identified other agencies that perform similar financial functions and could
probably be relocated. For example, four Voice of America staff pay
correspondent bureaus and freelance reporters around the world and benefit
from collocation with State?s Financial Services Center. The Voice of
America should consider whether this function should also be relocated to
Charleston in 2003.  The Paris Embassy could potentially relocate some
functions to the

regional logistics center in Antwerp, Belgium, and the planned 23- acre
secure regional facility in Frankfurt, Germany, which has the capacity for
approximately 1,000 people. For example, the Antwerp facility could handle
part of the embassy?s extensive warehouse operation, which is currently
supported by about 25 people. In addition, some administrative operations at
the embassy such as procurement could potentially be Consideration of

Rightsizing Options

Page 12 GAO- 02- 659T Overseas Presence: Observations on a Rightsizing
Framework

handled out of the Frankfurt facility. Furthermore, staff at agencies with
regional missions could also be moved to Frankfurt. These include a National
Science Foundation representative who spent approximately 40 percent of his
time in 2001 outside of France, four staff who provide budget and finance
support to embassies in Africa, and some Secret Service agents who cover
eastern Europe, central Asia, and parts of Africa.  We identified
additional positions that may need to be in Paris but may not

need to be in the primary embassy buildings where secure space is at a
premium. For example, the primary function of the National Aeronautics and
Space Administration (NASA) representative is to act as a liaison to
European space partners. Accomplishing this work may not require retaining
office space at the embassy. The American Battle Monuments Commission
already has about 25 staff in separate office space in a suburb of Paris. In
addition, a Department of Justice official works in an office at the French
Ministry of Justice. However, dispersal of staff raises additional security
issues that need to be considered.  Given Paris? modern transportation and
communication links and large

private sector service industry, the embassy may be able to purchase
services from the private sector, which would reduce the number of fulltime
staff at risk at the embassy. 14 We identified as many as 50 positions at
the embassy that officials in Washington and Paris agreed are commercial in
nature, including painters, electricians, plumbers, and supply clerks. 
Streamlining or reengineering outmoded or inefficient functions could

help reduce the size of the Paris Embassy. Certain procurement procedures
could potentially be streamlined, such as consolidating multiple purchase
orders with the same vendor and increasing the use of government credit
cards for routine actions. Consolidating inefficient inventory practices at
the warehouse could also decrease staff workload. For instance, household
appliances and furniture are maintained separately with different warehouse
staff responsible for different

14 With the enactment of the Federal Activities Inventory Reform Act in 1998
(P. L. 105- 270), Congress mandated that U. S. government agencies identify
activities within each office that are not ?inherently governmental,? i. e.,
commercial activities. Competitive sourcing involves using competition to
determine whether a commercial activity should be performed by government
personnel or contractors. The President?s Management Agenda

states that competition historically has resulted in 20 to 50 percent cost
savings for the government.

Page 13 GAO- 02- 659T Overseas Presence: Observations on a Rightsizing
Framework

inventories. Purchasing furniture locally 15 at embassies such as Paris
could also reduce staffing and other requirements.

As others have pointed out, advances in technology, increased use of the
Internet, and more flights from the United States may reduce the need for
full- time permanent staff overseas. Moreover, we have reported in the past
about opportunities to streamline embassy functions to improve State?s
operations and reduce administrative staffing requirements, including
options to reduce residential housing and furniture costs. 16

Mr. Chairman, although it is only one of the necessary building blocks, the
framework we are developing can be the foundation for future rightsizing
efforts. However, a number of policy issues and challenges need to be
addressed for this process to move forward with any real success. For
instance, the executive branch needs to prioritize foreign policy goals and
objectives and insist on a link between those goals and staffing levels.
Developing comprehensive cost data and linking budgets and staffing
decisions are also imperative. To their credit, State and OMB appear to be
headed in the right direction on these issues by seeking both cost data and
revising embassies? mission performance planning process, which we believe
will further support a rightsizing framework.

We plan to do more work to expand and validate our framework. The previous
discussion shows that the framework we are developing can be applied to the
Paris Embassy. We also believe that the framework can be adjusted so that it
is applicable worldwide because the primary elements of security, mission,
and costs are the key factors for all embassies. In fact, rightsizing
experts told us that our framework was applicable to all embassies.
Nevertheless, we have not tested the framework at other embassies, including
locations where the options for relocation to regional centers or the
purchase of services from the private sector are less feasible.

15 The State Department currently has a central contract requiring that all
overseas posts purchase furniture from the United States and not from local
sources. Logistics management officials at State said that the contract is
currently under renegotiation and the revised agreement will include local
procurement allowances for pilot posts.

16 U. S. General Accounting Office, State Department: Options for Reducing
Overseas Housing and Furniture Costs, GAO/ NSIAD- 98- 128 (Washington, D.
C.: July 31, 1998). Implementing a

Rightsizing Framework

Page 14 GAO- 02- 659T Overseas Presence: Observations on a Rightsizing
Framework

We believe that the next stage should also focus on developing a mechanism
to ensure accountability in implementing a standard framework. Rightsizing
experts and officials we spoke with suggested several different options.
These options include establishing an interagency body similar to the State-
led committee that was formed to implement OPAP?s recommendations; creating
an independent commission comprising governmental and nongovernmental
members; or creating a rightsizing office within the Executive Office of the
President. Some State Department officials have suggested that State adopt
an ambassadorial certification requirement, which would task ambassadors
with periodically certifying in writing that the size of their embassies and
consulates are consistent with security, mission, and cost considerations.

Each of these suggestions appears to have some merit but also faces
challenges. First, an interagency committee would have to work to achieve
coordination among agencies and have leadership that can speak for the
entire executive branch. Second, an independent commission, perhaps similar
to OPAP, would require members of high stature and independence and a
mechanism to link their recommendations to executive branch actions. Third,
a separate office in the White House has potential, but it would continually
have to compete with other executive branch priorities and might find it
difficult to stay abreast of staffing issues at over 250 embassies and
consulates. Finally, an ambassadorial certification process is an
interesting idea but it is not clear what, if anything, would happen if an
ambassador were unwilling to make a certification. Furthermore, ambassadors
may be reluctant to take on other agencies? staffing decisions, and in such
situations the certification could essentially become a rubber stamp
process. Ultimately, the key to any of these options will be a strong
bipartisan commitment by the responsible legislative committees and the
executive branch.

Mr. Chairman and members of the subcommittee, this concludes my prepared
statement. I would be pleased to answer questions you may have.

For future contacts regarding this testimony, please call Jess Ford or John
Brummet at (202) 512- 4128. Individuals making key contributions to this
testimony included Lynn Moore, David G. Bernet, Chris Hall, Melissa
Pickworth, Kathryn Hartsburg, and Janey Cohen. Contacts and

Acknowledgments

Page 15 GAO- 02- 659T Overseas Presence: Observations on a Rightsizing
Framework

PHYSICAL SECURITY AND REAL ESTATE

What are the threat and security profiles? Do office buildings provide
adequate security? Is existing secure space being optimally utilized? What
actions are practical to improve the security of facilities? Do facilities
and security issues put the staff at an unacceptable level of risk or limit
mission accomplishment? Will rightsizing reduce security vulnerabilities?

MISSION PRIORITIES AND REQUIREMENTS

What are the staffing and mission of each agency? What is the ratio of
support staff to program staff at the embassy? What are the priorities of
the embassy? Does each agency?s mission reinforce embassy priorities? Are
workload requirements validated and prioritized and is the embassy able to
balance them with core functions? Are any mission priorities not being
addressed? How do agencies determine embassy staffing levels? Could an
agency?s mission be pursued in other ways? Does an agency have regional
responsibilities or is its mission entirely focused on the host country?

COST OF OPERATIONS

What is the embassy?s total annual operating cost? What are the operating
costs for each agency at the embassy? Are agencies considering the full cost
of operations in making staffing decisions? Are costs commensurate with
overall embassy importance and with specific embassy outputs?

CONSIDERATION OF RIGHTSIZING OPTIONS

What are the security, mission, and cost implications of relocating certain
functions to the United States, regional centers, or to other locations,
such as commercial space or host country counterpart agencies? Are there
secure regional centers in relatively close proximity to the embassy? Do new
technologies offer greater opportunities for operational support from other
locations? Do the host country and regional environment have the means for
doing business differently, i. e., are there adequate transportation and
communications links and a vibrant private sector? To what extent can
embassy business activities be purchased from the private sector at a
reasonable price? What are the security implications of increasing the use
of contractors over direct hires? Can costs associated with embassy products
and services be reduced through alternative business approaches? Can
functions be reengineered to provide greater efficiencies and reduce
requirements for personnel? Are there other rightsizing options evident from
the size, structure, and best practices of other bilateral embassies or
private corporations? Are there U. S. or host country legal, policy, or
procedural obstacles that may impact the feasibility of rightsizing options?

Source: GAO.

Appendix I: Proposed Rightsizing Framework and Corresponding Questions

Page 16 GAO- 02- 659T Overseas Presence: Observations on a Rightsizing
Framework

Agency Office Total Staff Americans FSNs a

Department of State Executive Section 558 b 157 401 Political Section
Economic Section Environment, Science, and Technology Section Office of
Regional Affairs Consular Section Administrative Section General Services
Office Budget and Fiscal Office Human Resources Office Information
Management Office Diplomatic Security Service Africa Regional Services
African Budget Office Public Affairs Section Financial Services Center U. S.
Observer Mission to the United Nations Educational, Scientific and Cultural
Organization Department of Defense Marine Security Guards 67 56 11

Defense Attachï¿½ Office Office of Special Investigations Office of Defense
Cooperation U. S. Air Force, Research & Development Liaison Office U. S.
Army, Research & Development Standardization Group U. S. Army Training and
Doctrine Command Liaison Office Department of Commerce Foreign Commercial
Service 23 5 18 Department of the Treasury Customs 19 16 3

Internal Revenue Service Secret Service Department of Justice Legal Attachï¿½
Office 11 10 1

Drug Enforcement Agency Department of Agriculture Foreign Agricultural
Service 9 3 6 Social Security Administration 5 05 Federal Aviation
Administration 4 31 Broadcasting Board of Governors Voice of America 4 2 2
National Aeronautics and Space Administration 2 11 National Science
Foundation 2 20

Total 704 255 449

a Foreign Service National. b This total includes approximately 240 staff
providing a variety of support services to all agencies.

Source: U. S. Department of State.

Appendix II: Staffing Profile of the Paris Embassy (Jan. 2, 2002)

Page 17 GAO- 02- 659T Overseas Presence: Observations on a Rightsizing
Framework

GAO consulted and worked with OMB and State to develop the following cost
data template applicable to all agencies overseas.

APPROXIMATE TOTAL OVERSEAS COSTS (Fiscal Year 2001) Agency/ Office:
__________________________

U. S. Embassy Sub- office( s) Salaries and Benefits Americans Foreign
Service Nationals Travel Post Assignment/ Relocation Costs Field/ Business
Allowances Hardship Post Differential Education Language Incentive Cost of
Living Allowance Housing Rents & General Expenses Residential Furniture &
Equipment International Cooperative Administrative Support

System (ICASS) Office Furnishing & Equipment Information Management (outside
of ICASS) Misc. Expenses (supplies, utilities, maintenance) Transportation
Diplomatic Security/ General Security Representation Other Total Source: GAO

Appendix III: Suggested Template for Collecting Cost Data

(320079)
*** End of document. ***