    Overseas Staffing: Rightsizing Approaches Slowly Taking Hold but
    More Action Needed to Coordinate and Carry Out Efforts
    (30-JUN-06, GAO-06-737).

    In 2001, the administration identified the rightsizing of
    embassies and consulates as one of the President's management
    priorities. Rightsizing initiatives include: aligning staff
    overseas with foreign policy priorities and security and other
    constraints; demonstrating results by moving administrative
    functions from posts to regional or central locations; and
    eliminating duplicative functions at posts. This report (1)
    discusses the size and recent trends in the U.S. government
    overseas presence, (2) assesses the congressionally mandated
    Office of Rightsizing's progress in managing the U.S.
    government's overseas rightsizing efforts, and (3) assesses the
    process and outcomes of the legislatively mandated rightsizing
    reviews of overseas posts.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-06-737
        ACCNO:   A56203
      TITLE:     Overseas Staffing: Rightsizing Approaches Slowly Taking
    Hold but More Action Needed to Coordinate and Carry Out Efforts
         DATE:   06/30/2006
      SUBJECT:   Americans employed abroad
    	     Consulates
    	     Downsizing
    	     Embassies
    	     Human capital management
    	     Labor force
    	     Mission budgeting
    	     Policy evaluation
    	     Staff utilization
    	     Strategic planning
    	     Rightsizing

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    GAO-06-737

         * Report to the Chairman, Subcommittee on National Security, Emerging
           Threats, and International Relations, Committee on Government Reform,
           House of Representatives
              * June 2006
         * OVERSEAS STAFFING
              * Rightsizing Approaches Slowly Taking Hold but More Action Needed
                to Coordinate and Carry Out Efforts
         * Contents
              * Results in Brief
              * Background
                   * Cost Sharing and New Embassy Compounds
              * Accurate Data on Personnel Overseas Not Yet Available; U.S.
                Government Rightsizing Efforts Under Way
                   * Accurate Data on Size and Composition of the U.S. Overseas
                     Presence Currently Unavailable
                        * State Developing Unified Staffing Accounting System
                   * Agencies Rightsizing Efforts Lead to Increases or Decreases
                     in Staff
                        * Rightsizing Efforts Driven by Security and
                          Administrative Costs
              * State Has Established an Office of Rightsizing, but More
                Interaction Needed between Office of Rightsizing and Agencies
                   * Office of Rightsizing Established within State
                   * Office of Rightsizing Is Involved in a Number of Initiatives
                        * Rightsizing Reviews
                        * Post Rightsizing Review Plan
                        * Rightsizing in Post Mission Performance Plans
                        * NSDD-38 Application Process
                        * Quarterly Rightsizing Reports
                        * State Regionalization Efforts
                        * State/USAID Shared Support Services
                   * Agencies Cite Limited Interaction with Office of
                     Rightsizing; More Coordination Under Way
                        * State Holds Rightsizing Interagency Summit
              * Office of Rightsizing Initiates Rightsizing Reviews, but Reviews
                Have Not Realized Full Potential
                   * Rightsizing Review Structure and Guidance Have Evolved
                   * Approach to Conducting Rightsizing Reviews Varies by Post
                   * Posts Identified Challenges in Conducting Rightsizing
                     Reviews
                        * Resistance by Non-State Agencies at Posts
                        * Posts Lack Direction and Opportunities for the
                          Regionalization and Outsourcing of Services
                        * Rightsizing Reviews Overlap with Additional State Data
                          Requests
                   * Cost Analysis Was Not a Primary Factor in Rightsizing
                     Reviews
                   * Implementation of Rightsizing Review Results Unclear
              * Conclusion
              * Recommendations for Executive Action
              * Agency Comments and Our Evaluation
         * Scope and Methodology
         * GAO Reports on Staffing and Operations at U.S. Embassies and
           Consulates
         * GAO Rightsizing Framework and Corresponding Questions
         * The Office of Rightsizing's Five-Year Rightsizing Schedule
         * Comments from the Department of State
              * GAO Comments
         * GAO Contact and Staff Acknowledgments

    Report to the Chairman, Subcommittee on National Security, Emerging
    Threats, and International Relations, Committee on Government Reform,
    House of Representatives

    June 2006

    OVERSEAS STAFFING

    Rightsizing Approaches Slowly Taking Hold but More Action Needed to
    Coordinate and Carry Out Efforts

    Contents

    Tables

    Figures

    June 30, 2006Letter

    The Honorable Christopher Shays Chairman, Subcommittee on National
    Security,      Emerging Threats, and International Relations Committee on
    Government Reform House of Representatives

    Dear Mr. Chairman:

    After the 1998 terrorist attacks on two U.S. embassies in Africa, two key
    studies recommended that the U.S. government evaluate and realign the
    number and location of U.S. personnel working at embassies and consulates
    overseas, and consider staff reductions where practical to reduce security
    vulnerabilities.1 In 2001, the administration showed its support for the
    realignment of personnel and stressed the importance of security,
    efficiency, and accountability in U.S. government staffing overseas by
    identifying the rightsizing of embassies and consulates as one of the
    President's management priorities.2 Rightsizing initiatives include
    establishing mechanisms and processes to align the number and location of
    staff assigned overseas with foreign policy priorities, and security and
    cost constraints; moving administrative functions away from posts to
    remote3 locations; and eliminating duplicative functions at posts. In 2002
    we developed a framework for assessing embassy staff levels to help
    support rightsizing initiatives for existing facilities overseas.4 Our
    framework identified critical elements of embassy operations-physical
    security, mission priorities and requirements, and cost-and also included
    rightsizing options for consideration. According to the State Department's
    (State) Office of Inspector General, rightsizing is likely to remain at
    the top of State's management agenda in the coming years because of high
    construction and operating costs overseas, security vulnerabilities, and
    continuing problems in assigning U.S. government personnel overseas.

    Over the past five years, we have provided the subcommittee with numerous
    reports and testimonies on staffing and operations at U.S. embassies and
    consulates overseas (see app. II for a list of these reports). In this
    report, we (1) discuss the size and recent trends in the U.S. government's
    overseas presence, (2) assess the progress that the congressionally
    mandated Office of Rightsizing the United States Government Overseas
    Presence (Office of Rightsizing) within State has made in managing and
    coordinating the U.S. government's overseas rightsizing efforts, and (3)
    assess the process and outcomes of the legislatively mandated rightsizing
    reviews of overseas posts.

    To address these objectives, we analyzed the activities of State's Office
    of Rightsizing, as well as rightsizing activities of some of State's
    regional and functional bureaus. In addition, we met with seven
    agencies-the Departments of Commerce, Agriculture, the Treasury, Defense,
    Homeland Security, and Justice; and the U.S. Agency for International
    Development (USAID)-which, including State, account for over 90 percent of
    personnel at embassies and consulates. To determine if there was a
    systematic process for reporting information in the first cycle of
    reviews, we reviewed and analyzed 20 out of about 35 rightsizing reviews
    that were conducted by posts from late 2004 through summer 2005, and which
    were provided to us by the Office of Rightsizing. We also sought to
    complete structured telephone interviews with all 22 posts that were
    conducting reviews in the fall of 2005. Between February 2006 and March
    2006, we conducted structured telephone interviews with management
    officers from 20 of these 22 posts overseas on issues related to their
    review experience. In addition to the telephone interviews, we visited
    three posts-Mexico City, Mexico; Valetta, Malta; and Frankfurt,
    Germany-that had previously conducted a rightsizing review or analysis. We
    conducted our overall work from May 2005 through May 2006, in accordance
    with generally accepted government auditing standards (see app. I for more
    information on our scope and methodology).

    Results in Brief

    Almost five years into the President's Management Initiative on
    rightsizing, the U.S. government does not yet have accurate data on the
    size and composition of the U.S. overseas presence at embassies and
    consulates. At various times, we received estimates ranging from 66,000 to
    69,000 American and non-American personnel. In addition, State estimated
    that there are approximately 78,000 U.S. government positions overseas, as
    of December 2005. Difficulties faced in developing accurate data include
    varying practices among agencies and posts in accounting for positions. In
    the absence of accurate data, it is difficult to track how rightsizing
    actions are affecting overseas staffing levels. Moreover, lack of accurate
    staffing data makes it more difficult to determine requirements for new
    embassy construction and to assess each agency a fair share of the cost of
    the embassy construction program. State is working on a unified database
    which, if periodically updated by posts, should provide an accurate
    depiction of the overseas presence. State officials indicated that the
    database will be completed later this year. Because of the importance of
    having accurate data on overseas staffing and the length of time it has
    taken to develop this data, management oversight may be needed to ensure
    completion of this task. Several agencies reported that they have added
    staff overseas as a result of new mission requirements, and other agencies
    reported that they have shifted their personnel to better meet mission
    needs and respond to rightsizing efforts. For example, the U.S. Department
    of Agriculture recently determined that it had overstaffed some locations
    and understaffed others and, as a result, is repositioning its personnel.
    Some agencies reported that they have reduced overseas staff largely
    because they are now required to pay a share of the costs of building new,
    secure embassy buildings.

    State established the congressionally mandated Office of Rightsizing in
    2004, which, after a slow start, has begun to provide overall direction to
    the government-wide rightsizing process. Some of the office's activities
    have included coordinating rightsizing staffing requests from U.S.
    government agencies, developing guidance for and analyzing post
    rightsizing reviews, and formulating a rightsizing review plan. We found
    that coordination on rightsizing issues between State and other agencies
    with an overseas presence was initially slow, but has since
    improved-though several non-State agencies have voiced a number of
    concerns regarding their interaction with the Office of Rightsizing,
    including their desire to be more included in the rightsizing process. In
    addition, some post management officers indicated that the lack of
    interagency coordination in Washington, D.C., makes it difficult for the
    posts to make decisions and implement rightsizing actions.

    To move the rightsizing process forward, Congress required that
    rightsizing reviews be conducted at every overseas post at least once
    every 5 years in order to eliminate or justify any duplicative or parallel
    functions at the post, and consider the possibility for reducing U.S.
    government personnel. Between late 2004 and summer 2005, about 35 posts
    participated in the first cycle of reviews. However, the Office of
    Rightsizing provided limited guidance to posts on how the reviews should
    be conducted and did not have a systematic process for reporting the
    outcomes of the reviews. In fall 2005, officials in the Office of
    Rightsizing developed more comprehensive guidance, which post officials we
    interviewed said were useful. The Office of Rightsizing reported over $150
    million of savings or costs avoided based on their analysis of the first
    and second cycles of the rightsizing reviews. Although we have not been
    able to independently assess the Office of Rightsizing's estimates, it has
    presented evidence to show that some major cost avoidance and cost savings
    have occurred. Seventeen out of the twenty management officers we
    interviewed said that the review helped them better understand how post
    personnel meet mission objectives. However, management officers identified
    various challenges in conducting their fall 2005 reviews and ensuring that
    their post is rightsized. For example, management officers said that
    rightsizing challenges included resistance from non-State agencies on
    rightsizing measures, lack of direction and opportunities for
    regionalization and outsourcing measures, and a lack of time to conduct
    the review due to a number of competing data requests from headquarters.
    In addition, while a number of management officers told us that they had
    conducted some type of cost analysis as part of their review, some said
    that they could have benefited from additional guidance on conducting cost
    analysis. It is unclear how the rightsizing review decisions, such as
    elimination of duplicative functions, will be implemented, according to
    post officials and officials in State's regional bureaus. Moreover, the
    Office of Rightsizing has not tasked posts to develop a rightsizing action
    plan to implement decisions made in the rightsizing study.

    We are making recommendations to strengthen the U.S. government's
    rightsizing process. To ensure that the U.S. government overseas presence
    under chief of mission authority is accurately accounted for and to ensure
    that the U.S. government's rightsizing goals are being coordinated and
    that posts can maximize savings and gain efficiencies through rightsizing,
    we recommend that the Secretary of State take the following three actions:

    o Provide oversight to ensure the timely development and use of a single
    database that accurately accounts for U.S. overseas personnel staffing
    numbers and has accountability measures to encourage posts and agencies to
    keep the database accurate and up to date;

    o Increase outreach activities with non-State agencies so that all
    relevant agencies with an overseas presence can discuss and share
    information on rightsizing initiatives on a regular and continuous basis;
    and

    o Require that posts develop action plans to transition to and meet the
    agreed-upon outcomes of their rightsizing reviews. This could include
    developing milestones for posts reaching agreement on streamlining and
    eliminating duplicative functions.

    We provided a draft of this report to State for comment. State indicated
    that it has either recently implemented or is taking steps to implement
    all of our recommendations. We received technical comments from State and
    the Departments of Homeland Security, the Treasury, Defense, Justice, and
    USAID, which we have incorporated throughout the report, where
    appropriate.

    Background

    The U.S. government maintains more than 260 diplomatic posts-including
    embassies, consulates, and other diplomatic offices-in about 180 countries
    worldwide. In addition, according to various estimates, there are over
    66,000 personnel overseas, including both U.S. direct hires and locally
    employed staff under chief of mission authority,5 representing more than
    30 agencies and government entities. Agencies represented overseas
    include, among others, the Departments of Agriculture, Commerce, the
    Treasury, Defense, Homeland Security, Justice, and State and USAID.
    According to the Office of Management and Budget, the average cost across
    all agencies of having one U.S. direct hire overseas for 2007 is $491,000,
    including direct and indirect personnel costs as well as support costs
    such as security, office leases and furnishings, and field travel.6
    According to State's Bureau of Resource Management, State's average cost
    of having one U.S. direct hire overseas for 2007 is approximately
    $400,000.

    The White House, Congress, the Office of Management and Budget, and our
    own agency have emphasized rightsizing as a key initiative to ensuring
    that the overseas presence is at an optimal and efficient level to carry
    out foreign policy priorities. The President's Management Agenda has
    identified rightsizing as one of the administration's priorities.7 The
    agenda stipulates that all agencies with an overseas presence should
    integrate rightsizing into their workforce plans and reconfigure overseas
    staff allocations to the minimum amount necessary to meet U.S. foreign
    policy goals. Figure 1 illustrates the various levels of involvement in
    U.S. government overseas rightsizing.

    Figure 1: Levels of Involvement in Overseas Rightsizing

    In fiscal year 2004, Congress mandated the establishment of the Office of
    Rightsizing within State.8 The office was directed to lead State's effort
    to develop internal and interagency mechanisms to better coordinate,
    rationalize, and manage the deployment of U.S. government personnel
    overseas, under chief of mission authority. The Office of Rightsizing
    reviews and approves rightsizing reports for all capital construction
    projects for new embassy compounds or facilities, as well as the staffing
    composition of 20 percent of all U.S. missions annually, so that each
    mission is reviewed once every 5 years. According to the Office of
    Rightsizing, without an approved rightsizing report based on these
    reviews, the Office of Management and Budget will not forward to Congress
    a programming notification for construction.

    In addition to the Office of Rightsizing, a number of entities within
    State at the Washington, D.C. and post levels are involved in initiatives
    and efforts related to rightsizing. State's regional bureaus are involved
    with posts' rightsizing reviews as well as the administration of regional
    service centers.9 In addition, State's Bureau of Overseas Buildings
    Operations is responsible for the worldwide overseas buildings program for
    State and the U.S. government community serving abroad under chief of
    mission authority. The Bureau of Overseas Buildings Operations is
    directing an expanded new embassy construction program to provide safe,
    secure, and functional work places for the diplomatic and consular
    missions overseas. At the post level, the Chief of Mission is responsible
    for the security and safety of every U.S. government and foreign national
    employee at the mission.10 The precise structure of a mission is
    determined by the Chief of Mission through the National Security Decision
    Directive 38 (NSDD-38) process, which provides authority for the Chief of
    Mission to determine the size, composition, or mandate of personnel
    operating at the mission.11 See figure 1 for a depiction of the Chief of
    Mission's involvement in the rightsizing process.

    The operation of embassies and consulates overseas requires basic
    administrative support services for overseas personnel. The management
    section, which is normally headed by a management counselor or officer, is
    the section responsible for overseeing the administrative functions at a
    post and generally serves as the recipient of requests from Washington,
    D.C., pertaining to staffing and rightsizing. Administrative support
    services at posts are generally provided through the State-managed
    International Cooperative Administrative Support Services (ICASS) system,
    which provides more than 30 services-including financial management
    vouchering, human resources, travel services, housing, vehicle
    maintenance, and motor pool-with costs of the services divided among the
    agencies and sub-agencies with staff at the post, based on the level of
    ICASS services used.12

    Cost Sharing and New Embassy Compounds

    To address the security and other deficiencies of overseas embassies,
    consulates, and other buildings, Congress established an interagency
    Capital Security Cost Sharing Program to generate almost $18 billion over
    a 14-year period to accelerate the construction of approximately 150 new,
    secure, and functional embassy and consular compounds.13 The main
    objectives of the program are to generate funds for new embassy compound
    construction and to encourage State and other agencies to rightsize their
    staff by requiring that all agencies with an overseas presence bear some
    of the costs for building construction.14 Capital security cost sharing is
    based on the total number of existing or authorized positions that an
    agency has overseas in U.S.-government-owned or leased facilities, as well
    as any projected staff growth positions. Cost sharing is also based on the
    type of space occupied by post personnel.15 Charges are being phased-in
    over 5 years with the fiscal year 2005 per capita charges being 20 percent
    of the fully phased-in amount and fiscal year 2009 per capita charges
    representing the full amount.16 Table 1 illustrates the fully phased-in
    per person charges for Capital Security Cost Sharing.

    Table 1: Full Capital Security Cost Sharing Charges Based on Type of Space
    in Embassy or Consulate

    Type of space                                              Cost per person
    Principal officer                                                 $186,886
    Controlled access area                                             $50,724
    Non-controlled access area                                         $20,488
    Non-office space                                                    $3,546

    Source: Bureau of Overseas Buildings Operations.

    Accurate Data on Personnel Overseas Not Yet Available; U.S. Government
    Rightsizing Efforts Under Way

    Almost 5 years into the President's Management Initiative on rightsizing,
    the U.S. government does not yet have accurate data on the size and
    composition of the U.S. overseas presence at embassies and consulates;
    however, State is working on a unified database which, if periodically
    updated by posts, should provide an accurate depiction of the overseas
    presence. Several agencies have undertaken efforts to examine and adjust
    their staffing configurations, which have been driven by various factors,
    such as congressional mandates; the rising costs of building new, secure
    embassy buildings; and other shared costs.

    Accurate Data on Size and Composition of the U.S. Overseas Presence
    Currently Unavailable

    According to State officials, there is not yet an accurate picture of the
    size and composition of the U.S. overseas presence at embassies and
    consulates. In order to be able to make informed staffing and rightsizing
    decisions, and conduct accurate analysis of overseas staffing changes, it
    is important that the U.S. government have an accurate account of all
    overseas positions under chief of mission authority. Moreover, accurate
    staffing data is needed to assess each agency a fair share of the cost of
    the embassy construction program. Depending on the data's source and time,
    estimates of the total overseas presence under chief of mission authority
    run from 66,000 to about 69,000 American and non-American personnel, such
    as locally employed staff, from more than 30 agencies.17 In addition,
    State estimated that there are approximately 78,000 U.S. government
    positions overseas, as of December 2005.18 Some of these positions have
    been eliminated or are in the process of being eliminated or reconciled,
    according to an Office of Rightsizing document. Further, according to
    State's estimates, there are almost 22,000 direct-hire American positions
    overseas. Figure 2 provides the estimated percentage breakdown of the
    total American positions overseas under chief of mission authority by the
    key agencies, according to the Office of Rightsizing.

    Figure 2: Estimated Percentage of American Positions Overseas under Chief
    of Mission Authority by Agency, December 2005

    Note: Percentages do not add up to 100 due to rounding.

    According to State officials, State has faced various difficulties in
    developing accurate data. For example, overseas staffing information is
    recorded in a number of different databases at a post, depending on the
    purpose of the information.19 In addition to the databases from
    Washington, D.C., posts have created their own databases, resulting in
    information not being uniform from post to post. Moreover, a State
    official reported that some agencies have failed to provide human
    resources data to individual posts. State officials added that changes
    made in one database do not automatically populate others. Therefore,
    posts need to make changes in a number of databases in order to ensure a
    full updating and, in particular, to ensure the new information will show
    up accurately at State headquarters. As a result, State's numbers might
    include positions that have been eliminated or are vacant; or some
    positions might be entered more than once.

    Officials in the Office of Rightsizing also said that there are large
    numbers of employment categories overseas and that each agency might
    categorize its personnel overseas in a different manner or use different
    methodologies. They pointed out that, in some cases, agencies hire and
    count employed family members as U.S. direct hires while, in other
    instances, employed family members are counted as locally employed staff.
    They further explained that State's current databases have not kept pace
    with changes in nomenclature. For example, although new agencies and
    components were established as part of the formation of the Department of
    Homeland Security, overseas positions might still appear in databases, for
    example, as part of the old Immigration and Naturalization Services. The
    incorrect reporting of staff positions could create problems for agencies,
    such as being incorrectly charged for positions under Capital Security
    Cost Sharing, according to non-State officials.

    Since 2004, State has required posts to utilize the Post Personnel
    database to account for overseas staffing positions for both American
    personnel and locally employed staff, according to the Office of
    Rightsizing. The Executive Director of the Bureau of Human Resources told
    us that, if used properly, this database has the potential to provide the
    staffing data that could lead to accurate overseas staffing numbers.
    However, officials in the Office of Rightsizing stated that the database
    is only as complete as the information that the posts enter into it, and
    that some posts might not fully understand how to use the software
    properly. The Executive Director of the Bureau of Human Resources
    indicated that his bureau has been developing training modules to educate
    post officials on using the Post Personnel database correctly.

    State Developing Unified Staffing Accounting System

    State's Office of Rightsizing has been working with the Bureau of Human
    Resources to develop an improved database that will enable State to
    present a more accurate picture of all personnel and agencies assigned
    overseas under chief of mission authority. According to the Office of
    Rightsizing, the improved database will result in one complete and
    accurate database of all U.S. government agencies overseas and will
    eliminate the need for multiple requests to posts to update staffing data.
    State has been working toward making the Post Personnel database
    application the exclusive database for the entry of all staffing
    information at posts. In addition, State has been devising standardized
    organizational codes for post personnel for all agencies overseas.
    According to State officials, the Post Personnel database will be linked
    to other existing applications and will populate a number of other
    databases, including Post Profiles, ICASS, and the Bureau of Overseas
    Buildings Operations database for Capital Security Cost Sharing, thus
    eliminating potential errors associated with duplicative and incorrect
    entries.

    The Office of Rightsizing reported that the data in Post Personnel will
    soon be made available to agencies with an overseas presence so that they
    can verify it regularly to ensure consistency. Non-State agency officials
    expressed the need for transparency in overseas staffing data since they
    contended that often the data inputted at posts was not verified by them.
    The Executive Director of the Bureau of Human Resources expressed concern
    that there needs to be some type of accountability mechanism in place that
    ensures posts are inputting information regularly and accurately into Post
    Personnel. He added that without a mechanism in place, the quality and
    validity of the data will be in question. State officials said that the
    integrated staffing database is scheduled to be completed and operational
    by fall 2006. However, State has not provided guidance to posts that
    ensures staffing information in the Post Personnel database will be
    continuously updated or that outlines the accountability mechanisms for
    ensuring that staffing information is complete, according to a State
    official.

    Agencies Rightsizing Efforts Lead to Increases or Decreases in Staff

    Over the past several years agencies with an overseas presence have
    undertaken initiatives to assess their overseas staffing configurations.
    Several agencies reported that they have added staff overseas as a result
    of new mission requirements, and others reported that they have relocated
    or reduced their personnel to better meet mission needs and respond to the
    rightsizing efforts. Many agency officials with whom we spoke indicated
    that they have conducted comprehensive internal reviews or hired
    consultants to assess their overseas programs and workload. For example,
    the Department of Agriculture recently completed a global rightsizing
    review and found that the department is overstaffed in some countries and
    understaffed in others. As a result, the Foreign Agricultural Service is
    repositioning its personnel to better accomplish organizational goals. In
    addition, Department of Homeland Security officials indicated that they
    have been working to fully assess their overseas presence and to identify
    redundancies within the various Department of Homeland Security components
    overseas. State also recently announced plans for the global repositioning
    of its overseas presence, which entails moving hundreds of positions
    across the world-primarily from Washington and Europe to critical missions
    in regions such as Africa, South and East Asia, and the Middle East.

    Rightsizing Efforts Driven by Security and Administrative Costs

    Some agency officials said that their decisions on the numbers of overseas
    staff needed are guided by a number of factors, including congressional
    mandates, mission requirements, and budget constraints, including Capital
    Security Cost Sharing and ICASS costs. Officials with whom we spoke with
    at several agencies said that they have increased staff overseas as a
    result of the global war on terror, border security activities, and
    efforts to combat drug trafficking and weapons of mass destruction. For
    example, officials in the Department of Justice said that the department's
    various components have increased their overseas presence due to these
    factors, and, in fact, U.S. Drug Enforcement Administration officials
    reported that they increased their presence by almost 10 percent between
    2000 and 2005. In addition, Customs and Border Protection officials told
    us that they have been increasing their personnel overseas since 2002 due
    to requirements for the Container Security Initiative program. While a
    number of agencies have been increasing their presence overseas, a few
    agencies have decreased or are projected to maintain the current level of
    their overseas presence due to cuts in program budgets. For example, the
    Foreign Commercial Service reported that it reduced its overseas staffing
    levels by approximately 13 percent since the beginning of fiscal year
    2001. In addition, Foreign Agricultural Services officials said that their
    overseas presence is likely to remain static.

    A number of agencies we spoke with cited that costs of overseas
    operations, which include increasing Capital Security Cost Sharing program
    and ICASS costs, have caused them to examine their overseas presence.20
    Department of Commerce officials reported that, while Capital Security
    Cost Sharing costs represented 7 percent of their overseas costs in fiscal
    year 2006, by fiscal year 2009 the cost is expected to be 21 percent of
    the agency's overseas costs. In addition, agency officials said that,
    because the Capital Security Cost Sharing costs are based on every
    existing or planned authorized overseas position, regardless of whether
    the position is filled or not, agencies have effectively been encouraged
    to eliminate vacant positions or keep their projected numbers low. For
    example, Department of Commerce officials said that costs associated with
    Capital Security Cost Sharing has forced the agency to keep its projected
    overseas numbers low rather than develop more realistic projections since
    program costs are based in part on projected as well as existing staffing
    numbers, and they do not want to estimate and pay for positions that might
    not be needed in the future. Some agency officials also indicated that
    rising ICASS costs have affected their budgets and caused them to
    reevaluate their overseas presence. For example, Department of Homeland
    Security officials said that because of the high costs of using ICASS,
    they are currently reevaluating their use of the services and stressed the
    importance of having flexibility to opt out of ICASS services.

    Some agency officials with whom we spoke raised several concerns about the
    impacts of Capital Security Cost Sharing and ICASS costs on staffing
    configurations. For Capital Security Cost Sharing, officials expressed
    concern that it is difficult for them to accurately project their overseas
    staffing numbers, since potential unforeseen events overseas, such as
    natural disasters, could necessitate a reduction or increase in personnel.
    Some agency officials expressed concern that, as the Capital Security Cost
    Sharing costs increase, they might be priced out of an overseas presence
    or have to tap into their program funds to sustain such a presence. Table
    2 depicts the Capital Security Cost Sharing charges for fiscal year 2007
    that appear in the President's budget for the agencies that we spoke with.

    Table 2: Fiscal Year 2007 Capital Security Cost Sharing Charges by Select
    Agency

    Agency                                                       Total chargea
    Agriculture Department                                          $8,968,013
    Commerce Department                                             20,678,269
    Defense Department                                             134,893,425
    Homeland Security Department                                    24,052,046
    Justice Department                                              45,635,505
    State Department                                               674,155,851
    Treasury Department                                              2,796,268
    USAID                                                          100,349,057
    Other                                                           26,594,272
    Total                                                       $1,038,122,706

    Source: Bureau of Overseas Buildings Operations.

    aThe total charge includes building costs for each agency's personnel and
    ICASS employees that provide services to an agency, as well as rent
    offsets. For example, USAID's Capital Security Cost Sharing position total
    is $105,653,422, of which $10,737,155 is for ICASS contributions. However,
    a rent offset of $16,041,520 reduces USAID's total cost figure to
    $100,349,057.

    Moreover, in order to mitigate the effects of ICASS fees coupled with
    agency budget cuts, some agency officials indicated that officials
    overseas are doing more administrative activities themselves, which takes
    time away from accomplishing their mission. In addition, agencies have
    sought other cost-effective ways of operating overseas, including hiring
    family members of staff, hiring local Americans, or utilizing locally
    employed staff (this final option has limitations, however). For example,
    according to the U.S. Marshals Service, utilizing locally employed staff
    over U.S. direct hires has resulted in considerable savings to the agency,
    and it estimates that the savings in relocation expenses, foreign housing,
    and other foreign entitlements, which direct hires receive but locally
    employed staff do not, would exceed $1 million every 3-4 years. However,
    agency officials indicated that there are limitations to using locally
    employed staff at posts to carry out some duties due to national security
    concerns. For example, Department of the Treasury officials said that they
    are not able to utilize locally hired foreign nationals to carry out the
    work of U.S. direct hires due to the sensitive investigative nature of
    their work and privacy laws. In addition, officials in the Departments of
    Homeland Security and Justice indicated that, due to the sensitive nature
    of their work, they can only allow American citizens with a security
    clearance to perform most of their overseas duties. As an alternative to
    sending additional U.S. direct hires to posts, some agencies employ
    eligible family members of agency staff or hire U.S. citizens already
    living in the host country to carry out some of the agency functions.
    Department of Homeland Security officials explained that utilizing U.S.
    citizens living in the host country is much cheaper than sending a U.S.
    direct hire to a post because the department does not have to pay benefits
    such as housing, school costs, and other allowances to locally hired U.S.
    citizens.

    State Has Established an Office of Rightsizing, but More Interaction
    Needed between Office of Rightsizing and Agencies

    In early 2004, State established the congressionally mandated Office of
    Rightsizing to primarily coordinate all agency staffing requests,
    administer rightsizing and staffing reviews, and work with State entities
    and other agencies on rightsizing. The basic mission of the office is to
    better coordinate, rationalize, and manage the deployment of U.S.
    government personnel overseas, under chief of mission authority. Since its
    formation, some of the activities of the office have included coordinating
    staffing requests of U.S. government agencies, developing guidance for and
    analyzing post rightsizing reviews, and formulating a rightsizing review
    plan. Non-State agencies have voiced a number of concerns related to
    interactions with the Office of Rightsizing, including their desire to be
    more involved in the rightsizing process. To better involve all agencies
    in rightsizing efforts and better understand their priorities, the Office
    of Rightsizing co-hosted an interagency summit in March 2006.

    Office of Rightsizing Established within State

    In February 2004, the Office of Rightsizing was established within State.
    The roles and responsibilities of the office include coordinating all
    agency NSDD-38 requests; administering rightsizing and staffing reviews;
    and working with State entities and other agencies on rightsizing,
    regionalization, and shared service initiatives. The office started as a
    small operation with only a few staff; however, over the past 2 years it
    has grown in size. As of early May 2006, the office includes a director,
    three NSDD-38 analysts, and three rightsizing analysts. According to State
    officials, additional staffing is needed to handle the growing number of
    initiatives that the office is involved with. The Director of the Office
    of Rightsizing told us that he has requested two additional staff to work
    on analyzing rightsizing reviews and compiling rightsizing data, and hopes
    that the positions will be filled by summer 2006.

    Office of Rightsizing Is Involved in a Number of Initiatives

    Since the Office of Rightsizing was established, it has initiated a number
    of processes and has been involved in a number of efforts. These efforts
    have included administering and analyzing post reviews, formulating a
    review plan, developing instructions for post Mission Performance Plans,
    automating the NSDD-38 application process, and issuing a number of
    quarterly reports summarizing State's rightsizing actions and
    accomplishments. In addition, the office has been involved with two State
    initiatives on rightsizing, which include demonstrating results achieved
    by moving administrative functions away from posts to remote locations;
    and eliminating duplicative functions at posts, also known as sharing
    support services.

    Rightsizing Reviews

    One of the principal activities of the Office of Rightsizing has been
    administering and analyzing post rightsizing reviews. In 2005, the office
    established a formal review process and guidance for all posts overseas,
    including new embassy construction projects. The process focuses on
    linking staffing to mission goals, eliminating duplication, and promoting
    shared services. In fiscal year 2005, about 35 reports were submitted by
    posts and analyzed by the Office of Rightsizing. Figure 3 shows the
    missions that conducted a rightsizing review in fiscal year 2005,
    according to the office. All of these reports pertained to posts scheduled
    to have construction projects for a new embassy compound or office
    building in the near future.21 According to the Office of Rightsizing, the
    final reports that have been analyzed by the office have been or will be
    submitted to Congress as State seeks budget appropriations for these
    projects. In fiscal year 2006, the office has tasked over 40 posts to
    conduct reviews-more than 20 posts for both the fall and spring cycles.

    Figure 3: Missions Completing a Rightsizing Review in Fiscal Year 2005

    Post Rightsizing Review Plan

    The Office of Rightsizing has developed a 5-year plan, which includes the
    schedule of when missions will be asked to conduct reviews by fiscal year
    (see appendix IV). The plan is largely driven by State's Bureau of
    Overseas Buildings Operations' building schedule, but also includes
    consideration of posts participating in State initiatives, missions of
    highest priority, and countries with multiple missions, according to an
    official in the Office of Rightsizing. For fiscal year 2005, all of the
    reviews were conducted in anticipation of the post receiving a new embassy
    compound or building in the future. For reviews scheduled to be conducted
    in fiscal years 2006 through 2009, the yearly schedule dictates that posts
    with planned capital projects will generally perform their rightsizing
    reviews in the fall of the fiscal year, while those without planned
    projects will perform their reviews in the spring. Figure 4 provides
    additional information on the review cycle and steps.

    Figure 4: Rightsizing Review Cycle and Steps

    Rightsizing in Post Mission Performance Plans

    The Office of Rightsizing has issued guidance to posts to include
    rightsizing statements in their Mission Performance Plans, starting with
    the fiscal year 2007 submission.22 The guidance states that the plans must
    include a brief discussion of the rightsizing reviews or other rightsizing
    initiatives undertaken by the mission and should summarize the results,
    resource implications, and actions taken to implement review
    recommendations. However, we reviewed nine Mission Performance Plans for
    fiscal year 2007 and found that only one post had included discussion of
    any rightsizing elements that the post had undertaken. Officials in the
    Office of Rightsizing indicated that initially there had not been a
    serious effort to push for posts to provide analysis on rightsizing in
    their fiscal year 2007 Mission Performance Plans and, as a result, not all
    posts have done so. However, they said that there has been more emphasis
    by the office to have posts include rightsizing discussions in their 2008
    plans. In May 2006, the Director of the Office of Rightsizing reported
    that his office is participating in the reviews of the recent Mission
    Performance Plans submitted by posts.

    NSDD-38 Application Process

    The Office of Rightsizing has been working with agencies and coordinating
    with Chiefs of Mission at posts on NSDD-38 requests, particularly those
    related to new programs. These requests are submitted to the Chief of
    Mission for approval of any proposed changes in agencies' staffing
    elements at the post. Officials in the office said that they act in an
    advisory capacity between the agencies that are looking to establish or
    increase personnel at a post and the Chief of Mission to determine if the
    function needs to be performed overseas. However, they told us that it is
    ultimately the Chief of Mission's decision to accept or deny an agency's
    request to send personnel to post. In fall 2005, the Office of Rightsizing
    implemented a NSDD-38 Web-enabled application so that agencies can now
    submit their overseas staffing requests via the Internet. According to an
    Office of Rightsizing document, since the application process is now
    standardized online-which ensures that agency NSDD-38 submissions are
    correct and complete-Chiefs of Mission at posts can now immediately
    consider the submissions.

    Quarterly Rightsizing Reports

    Since spring 2005, the Office of Rightsizing has published three quarterly
    reports that highlight State's overall rightsizing efforts and
    performance, as well as summarize the accomplishments and publications of
    the office.23 The quarterly reports have also included copies of State
    cables sent to posts pertaining to rightsizing related issues, the Office
    of Management and Budget's President's Management Agenda rightsizing score
    card and summary, as well as the guidance and sample report that the
    Office of Rightsizing has sent to posts.24 The Director of the Office of
    Rightsizing stated that the quarterly reports are intended to provide both
    State bureaus and non-State agencies with an understanding of rightsizing
    measures and processes.

    State Regionalization Efforts

    The Office of Rightsizing is also involved with State's efforts to ensure
    that those administrative functions that do not need to be conducted at
    posts are carried out from remote locations. According to State officials,
    potential advantages to providing support to posts from remote locations
    include potential cost savings, enhanced security for American personnel,
    and improved quality of administrative support. State currently provides
    remote support to many agencies at posts, primarily in the areas of
    financial management and human resources, from two dedicated regional
    service centers-the Florida Regional Center in Fort Lauderdale, Florida,
    and the Regional Support Center in Frankfurt, Germany. In addition, State
    also provides remote support of some administrative functions through
    partnering arrangements whereby one post with the personnel and expertise
    in certain administrative function assists a smaller post. In order to
    further expand remote support, State's fiscal year 2006 operational plan,
    Organizing for Transformational Diplomacy: Rightsizing and
    Regionalization, identifies additional post functions that can be
    performed

    remotely to minimize the U.S. overseas footprint and reduce costs.25 The
    plan focuses on first removing non-location-specific functions-or
    functions that could potentially be removed from posts and carried out
    either from the United States or a regional center-from critical danger
    missions,26 where State officials said it is crucial to have as few
    personnel at posts as possible due to security concerns. The plan
    envisions eventually removing those functions from all overseas posts. We
    provide a more detailed discussion on State's efforts and challenges to
    provide support remotely in a separate report.27

    State/USAID Shared Support Services

    The Office of Rightsizing is also involved with State's efforts to
    increase efficiencies in overseas administrative functions by identifying
    and eliminating duplicative management support functions among agencies,
    as well as overlapping or redundant program functions. Although increasing
    efficiencies by streamlining functions applies to all overseas agencies,
    State has been working primarily with USAID to reduce the duplication of
    overseas support services. In 2004, State, along with USAID, launched
    pilot programs aimed at consolidating support functions such as motor
    pool, warehousing, residential maintenance, and leasing services at posts
    in Jakarta, Indonesia; Phnom Penh, Cambodia; Cairo, Egypt; and Dar es
    Salaam, Tanzania. The focus of the pilot programs was to determine how
    State and USAID could best collaborate to realize significant savings and
    improved service quality. However, only one of the pilot posts succeeded
    in consolidating all four support functions. According to State, the
    pilots have established that significant operational efficiencies and some
    cost savings can be realized through the consolidation of duplicative
    services. Since the pilots at the four posts, State and USAID have
    identified additional consolidation opportunities. We will provide a more
    detailed discussion and evaluation of State and USAID's consolidation
    efforts in a report that will be coming out later this year.

    Agencies Cite Limited Interaction with Office of Rightsizing; More
    Coordination Under Way

    One of the responsibilities of the Office of Rightsizing is to coordinate
    and manage interagency rightsizing initiatives. However, during our
    discussions with non-State agencies in late 2005 and early 2006, a number
    of agencies with an overseas presence told us that they had limited
    interaction with State's Office of Rightsizing on matters aside from
    NSDD-38 requests. Furthermore, some non-State agency officials told us
    that they were not aware of the rightsizing mandate or guidance provided
    to posts by the Office of Rightsizing. According to the Director of the
    Office of Rightsizing, his office has made an effort over the last couple
    of months to visit or talk with many of the agencies with an overseas
    presence. However, we found that, in some cases, the pertinent offices
    were not reached. For example, officials in Department of Homeland
    Security's U.S. Citizenship and Immigration Services told us that State
    entities tend to coordinate through one office and do not reach the
    various entities within the department. Both U.S. Citizenship and
    Immigration Services and Customs and Border Protection officials indicated
    that they would like to be included in any discussions that State, in
    particular the Office of Rightsizing, has with the Department of Homeland
    Security, and suggested that State designate a focal point within each
    Department of Homeland Security office with an overseas presence. The
    Office of Rightsizing indicated that the Department of Homeland Security
    requested that it coordinate through the department's Office of
    International Affairs. It is important that agency components are
    receiving the necessary information to ensure that rightsizing efforts are
    understood. The Department of Homeland Security and the Office of
    Rightsizing share responsibility for developing a mechanism to get this
    done.

    Furthermore, during our discussions with agency officials in late 2005 and
    early 2006, non-State agencies indicated that they would like more
    transparency in the rightsizing review process. For example, some agencies
    told us that they would like to know the outcomes of the reviews at each
    post and know ahead of time when posts will be conducting reviews.
    Moreover, some agency officials stated that they are looking for an
    overall U.S. government strategy or vision from the Office of Rightsizing
    so that, as they move ahead on their own rightsizing planning and efforts,
    they will be in line with what the Office of Rightsizing is planning.
    Finally, some non-State agency officials indicated that, in order to be
    able to contribute to the process, they would like to see more clearly
    stated standards and unified processes that relate to rightsizing at
    posts. For example, officials said that they would like to understand how
    posts determine the number of staffing positions available at any given
    time and would like to ensure that the requests for information coming
    from Washington, D.C., to posts are more consistent.

    State Holds Rightsizing Interagency Summit

    In order to address rightsizing in context with non-State agencies'
    agendas and priorities, the Office of Rightsizing and the Office of
    Management and Budget co-hosted an interagency summit in early March 2006.
    According to the Office of Rightsizing, participants included
    representatives from a number of foreign affairs and non-foreign-affairs
    agencies; discussions focused on key initiatives coordinated and managed
    by State, such as consolidation of duplicative functions, rightsizing
    reviews, the NSDD-38 process, and State regionalization efforts.

    While some officials from State's regional bureaus feel that having an
    interagency conference is a good start at getting all agencies involved
    with rightsizing, they believe that additional interagency dialogue is
    needed. In addition, some non-State agency officials told us that the
    interagency summit did not provide them with a sense of a strategy for how
    they should move forward with their own rightsizing plan to make sure that
    it does not conflict with State's rightsizing efforts. Moreover, in the
    course of our structured interviews, 7 out of 20 management officers
    identified the need for interagency involvement and agency "buy-in" at the
    Washington, D.C., and post level to ensure that rightsizing can move ahead
    at each post. For example, one management officer with whom we spoke said
    that he would like to see a firm, written commitment from other agency
    headquarters, other than State, that consolidation of services is in the
    best interest of every agency and is expected of posts overseas. One post
    noted in its rightsizing report that the success of posts' rightsizing
    studies is closely linked to interagency efforts to agree on initiatives
    to maximize efficiency at posts. In addition, another management officer
    with whom we spoke said that it would be helpful to have interagency
    guidance on what to do when eliminating duplicative services results in
    overall savings to the U.S. government, but increased costs to an agency,
    at the post level.

    Some non-State agency officials said that it would be beneficial to have
    more frequent interagency meetings or summits, rather than just once a
    year. For example, a USAID official said that having an interagency summit
    before each rightsizing review cycle starts-one in the fall and another in
    the spring-could help inform non-State agencies of rightsizing changes and
    activities at posts that effect their agency overseas. The Director of the
    Office of Rightsizing told us that, while there are no immediate plans to
    hold more frequent interagency summits involving all agencies with an
    overseas presence, he plans to continue holding a rightsizing summit
    annually. The Office of Rightsizing also reported that it plans to
    implement a Washington, D.C.-based forum whereby officials from foreign
    affairs agencies, such as the Department of Commerce, USAID, and the
    Department of Agriculture, can meet regularly to share information on
    programs and ensure that there is a greater consistency in the information
    coming from headquarters. The Director of the Office of Rightsizing told
    us that the office could be doing more with other non-State agencies to
    address rightsizing issues at posts, particularly on the issue of
    consolidation of functions, but would first like to address issues raised
    as part of the joint State-USAID shared services efforts.

    Office of Rightsizing Initiates Rightsizing Reviews, but Reviews Have Not
    Realized Full Potential

    Post rightsizing reviews are a key element of State's rightsizing efforts.
    These reviews are designed to link post staffing to the mission's goals,
    eliminate unnecessary duplication, and encourage shared services between
    agencies at posts. Our analysis of the first round of the reviews showed
    that there was limited guidance to posts and that there was not a
    systematic process for how the posts structured their reviews, though
    State improved its guidance for the second round of reviews. In reviewing
    the first and second rightsizing cycles, the Office of Rightsizing
    reported over $150 million dollars of cost savings or avoidance based on
    the result of their analysis of the reviews. Posts used a variety of
    methods to conduct their rightsizing reviews. Some management officers
    with whom we spoke identified various challenges in conducting their fall
    2005 reviews and ensuring that their post is rightsized. Additionally, the
    Office of Rightsizing did not consider the need for posts to conduct a
    cost analysis as part of their reviews. It is unclear how the rightsizing
    review decisions, such as elimination of duplicative functions, will be
    implemented at each post, according to officials at post and in State's
    regional bureaus.

    Rightsizing Review Structure and Guidance Have Evolved

    In October 2004, the Office of Rightsizing began instructing overseas
    missions scheduled to receive a new embassy compound to perform
    rightsizing reviews. The reviews are intended to eliminate or justify any
    duplicative or parallel functions at posts and consider the possibility
    for reducing U.S. government employees at posts through such means as
    remote services, more utilization of locally employed staff, and
    outsourcing. Between late 2004 and summer 2005, about 35 posts
    participated in the first cycle of reviews, and the office conducted
    formal analyses of the posts' reviews in late 2004 and early 2005. The
    Office of Rightsizing reported over $50 million in costs saved or avoided
    to the U.S. government based on its analysis of the first cycle of
    reviews. Based on the analysis that the Office of Rightsizing conducted of
    post reviews representing eight new embassy compounds, the average
    reduction in desk positions for each project was 18, which resulted in 145
    desk reductions overall.28 The office identified many of the removed desk
    positions in cooperation with posts and regional bureaus. According to the
    Office of Rightsizing, these desks represent significant partially or
    fully avoided costs. Of the 145 reduced positions, 50 were U.S. direct
    hires. Assuming an average saving of $400,000 per year for each position,
    the office estimated that these 50 positions represent as much as $20
    million in potential costs avoided.29 Furthermore, the office stated that
    the desk positions removed represented approximately an additional $20
    million in savings to the Bureau of Overseas Buildings Operations in
    capital security construction costs, as well as approximately $18 million
    in savings due to not needing to build separate annexes in three cases.
    The actual cost avoidance achieved will depend upon whether offsetting
    costs can be avoided and whether recommended staff reductions are
    implemented.

    However, based on our analysis of 20 out of about 35 rightsizing reviews
    that were part of the spring 2005 review cycle, we observed that there was
    not a systematic approach for how the posts structured their reports or
    how the Office of Rightsizing evaluated them. For example, the information
    presented within the reports varied from post to post, and the rightsizing
    elements that the posts evaluated and reported were not consistent. Some
    posts provided narratives discussing various rightsizing elements, such as
    outsourcing and post security, while other posts did not. Furthermore, we
    found that none of the posts showed that they had conducted a cost
    analysis as part of the post's rightsizing efforts. In addition, we found
    that the Office of Rightsizing did not have a systematic process to
    quantify costs saved or avoided as a result of post staffing reductions
    stemming from reviews in the spring 2005 cycle. The Director of the Office
    of Rightsizing agreed that the office needs to implement a systematic
    process of collecting data and determining cost savings and cost avoidance
    for future rightsizing cycles, and has asked the rightsizing analysts in
    the office to document the positions that are eliminated or costs saved
    due to posts taking rightsizing measures into consideration. Finally, we
    also found that, although the goal of the President's Management Agenda
    and the Office of Rightsizing is to limit the overseas presence to the
    minimum level necessary to accomplish the U.S. government's mission,
    overseas staffing is increasing. Our analysis of the 20 reviews from the
    spring 2005 cycle revealed that net staffing numbers will increase for 15
    posts. Increased levels in staffing abroad can be attributed to
    high-priority national security interests, such as the global war on
    terror, anti-narcotics efforts, and HIV/AIDS projects, which have
    implications on U.S. staffing and space at posts abroad, according to the
    Office of Rightsizing as well as post management officers.

    The Director of the Office of Rightsizing agreed that the first round of
    reviews was not conducted systematically, and said that the process and
    format has evolved since the initial guidance was provided to posts for
    the spring 2005 cycle. In particular, based on feedback from posts that
    participated in the spring 2005 review cycle, the Office of Rightsizing
    changed the guidance to be more systematic for the fall 2005 cycle. All
    management officers that we interviewed at 20 posts which had conducted a
    review as part of the second cycle in fall 2005 stated that the guidance
    was either very useful or moderately useful, and several commented that
    the guidance was clear, succinct, and easy to discern. Table 3 below
    specifies the elements that the fall 2005 cycle posts were asked to
    address when completing their reviews.

    Table 3: Summary of Required Sections of Post Rightsizing Reviews,
    September 2005

    Section                 Description
    Mission goals and       For each mission goal, identify the resources
    objectives              currently supporting that goal, and analyze the
                               post's specific achievements in meeting the
                               objectives.
    Duplicative activities  Assess areas of duplication, activities which are
                               no longer required or may require adjustment of
                               resource levels, and identify activities which
                               require increased resources to achieve their
                               objectives.
    Alternate sourcinga     Identify all services which are currently
                               outsourced including services that are contracted
                               by the embassy, such as local guard services,
                               vehicle maintenance, janitor services, gardening
                               services, etc.
    Regionalized services   Identify all activities that are performed by
                               regional or U.S. based government personnel such
                               as financial management and human resources
                               services.
    Substitution of locally Identify U.S. direct-hire positions for which
    employed staff for U.S. locally employed staff may be substituted.
    direct-hire positions
    Current and projected   Complete the summary staffing table, including all
    staffing                sections and/or agencies, showing current staffing
                               levels, projected staffing levels, and the net
                               change.
    Long range overseas     For posts receiving a new embassy compound,
    buildings plan staffing complete the Long Range Overseas Buildings Plan
    projectionsb            spreadsheet, which should include a count of all
                               projected staff, American and locally employed
                               staff, desk and non-desk, controlled access areas
                               and non-controlled access areas. For posts not
                               receiving a new embassy compound, use the Capital
                               Security Cost Sharing spreadsheet and add or
                               reduce positions accordingly.
    ICASS service matrix    Complete the ICASS service matrix which should
                               clearly show which services are provided to which
                               agencies, and which are not.

    Source: Office of Rightsizing.

    Seventeen of the twenty management officials with whom we spoke who
    conducted a rightsizing review in fall 2005 said that the review helped
    them better understand how post personnel meet mission objectives. When
    asked whether they had additional comments, several management officers
    stated that they found the review at their post to be a useful exercise.
    For example, a management officer posted in Eurasia stated that the review
    was an interesting and useful process, which helped the post focus on
    parts of the Mission Performance Plan that they would otherwise not have
    concentrated their efforts on. The Office of Rightsizing reported over
    $100 million in costs saved or avoided to the U.S. government based on
    their analysis of the fall 2005 cycle of reviews. The estimate was based
    on an analysis that the Office of Rightsizing conducted of post reviews
    representing 21 missions. According to the office, its rightsizing efforts
    for the fall 2005 cycle will result in a potential reduction of 683 total
    desk spaces in new embassy compounds, of which 170 are U.S. direct hires.
    The Office of Rightsizing estimated that each eliminated U.S. direct-hire
    position would result in a cost avoidance of about $400,000. The actual
    cost avoidance achieved will depend upon whether offsetting costs can be
    avoided and whether recommended staff reductions are implemented. In
    addition, the Office of Rightsizing reported that the rightsizing actions
    for the fall 2005 cycle have resulted in approximately $90 million in
    savings to the Bureau of Overseas Buildings Operations in capital security
    construction costs, which includes cost saved by not needing to build four
    annexes. Although we have not been able to independently assess the Office
    of Rightsizing's estimates, it has presented evidence that some major cost
    avoidance and cost savings have occurred. Figure 5 illustrates the posts
    from the fall 2005 review cycle where we interviewed officials as part of
    our analysis.

    Figure 5: Fall 2005 Cycle Posts GAO Interviewed

    Approach to Conducting Rightsizing Reviews Varies by Post

    Posts used a variety of means to conduct their reviews. The approach used
    by 19 of the 20 posts (all of which were included in the fall 2005 review
    cycle where we interviewed officials) incorporated the participation of
    the post management officer, Deputy Chief of Mission, or both. The Office
    of Rightsizing suggested that posts, in conducting rightsizing reviews,
    use the ICASS Council, working groups, or any ad hoc arrangement as a
    vehicle for discussion and formulation of the report and corresponding
    data. In addition, the Office of Rightsizing instructed posts to include
    all State and non-State agencies, constituent posts, and embassy offices
    in the posts' rightsizing analyses. However, posts took diverse approaches
    to carrying out their reviews. Some posts conducted their reviews using
    rightsizing committees, and others directed their review to existing goal
    oriented discussion groups such as those that created the post's Mission
    Performance Plan.

    The Office of Rightsizing also offered posts the opportunity to
    participate in digital video conferences to answer any questions that they
    had about the review. However, officials at 13 of the 20 posts mentioned
    above stated that they did not participate in a video conference with the
    office. Management officers said that their posts did not participate
    because, among other reasons, they did not find it necessary; other posts
    did not have the technological capabilities to participate. Moreover,
    several posts did not participate in a digital video conference because
    officials did not think that the Office of Rightsizing required it.
    Nonetheless, the Director of the Office of Rightsizing stated that he
    found that those posts that took advantage of this option had more success
    with their rightsizing reviews; thus, starting with the spring 2006 cycle,
    the office will require that every post participate in a conference. He
    also stated that he hopes other non-State agencies will participate in
    video conferences as posts conduct their rightsizing reviews. Moreover,
    State, as well as the Office of Management and Budget, expects all
    agencies at each post to understand that rightsizing is government-wide
    and not just a State-oriented process. In the course of our structured
    interviews, 7 out of 20 management officers identified the need for
    interagency involvement, including agency "buy-in" to ensure that
    rightsizing can move ahead at each post. For example, a management officer
    in Europe stated that it would be very helpful if there was a one-page
    summary that non-State agency officials at each post received from their
    headquarters in Washington, D.C., that describes what they need to do as
    part of the rightsizing review. However, we found that the Office of
    Rightsizing provided posts with very little guidance on interagency
    participation.

    The Director of the Office of Rightsizing stated that he also encourages
    posts to utilize the resources and knowledge within the office and
    recommends that posts, as they conduct the review, share sections of it
    with the office for feedback. The posts participating in the fall 2005
    cycle generally took this approach, as 13 of 20 posts reported that they
    shared sections of their report with the office during the review process.
    The Office of Rightsizing also indicated that this approach may lead to
    more expeditious approval of reviews and that they will therefore strongly
    recommend that posts participating in the spring 2006 rightsizing cycle
    share sections of their report prior to final submission. Additionally, 15
    management officers we interviewed stated that sharing best practices with
    other posts through online forums or receiving a visit from an expert to
    help guide the post through the rightsizing review process would be very
    useful for enhancing the rightsizing review process.

    Posts Identified Challenges in Conducting Rightsizing Reviews

    A number of management officers identified various challenges in
    conducting the reviews at their post, including resistance by non-State
    agencies at posts to address rightsizing measures. Another challenge
    mentioned was a lack of direction and opportunities for regionalization
    and outsourcing of services. In addition, overlapping data requests from
    agencies' headquarters, as well as redundant personnel databases,
    complicated the review process.

    Resistance by Non-State Agencies at Posts

    Several posts that conducted a fall 2005 rightsizing review stated that
    they encountered resistance from non-State agencies when trying to obtain
    interagency involvement during the process. Specifically, four post
    management officers stated that other agencies were not receptive to the
    request to conduct a rightsizing review. According to a management officer
    posted in Europe, non-State agencies at the post did not want to share
    information on future staffing numbers for the review. The management
    officer added that there was a lack of recognition by agencies that
    rightsizing was not just a State initiative, but a government-wide
    initiative. Moreover, some management officers explained that they had
    difficulties in getting agencies to buy into the rightsizing review
    process and faced interagency resistance regarding the consolidation of
    post services. Consolidation of services proved to be a common challenge
    at posts, as 14 of the 20 management officers we interviewed identified
    duplication of post services or programs, such as motor pool and
    cashiering, as a result of the rightsizing review. Although these posts
    have identified duplicative services or programs, 10 of 20 management
    officers stated that the post has not taken action on consolidating the
    services and programs. According to management officers, common reasons
    why some posts have not yet consolidated these duplicative functions is
    because they are waiting to merge their functions once they move into
    their new embassy compound or because the agencies at the post could not
    come to an agreement about consolidation. For example, a management
    officer posted in Africa stated that USAID headquarters provided its staff
    at the post with conflicting instructions about retaining duplicative
    administrative support services, which countered the ongoing efforts to
    eliminate duplicative services at the post.

    Posts Lack Direction and Opportunities for the Regionalization and
    Outsourcing of Services

    Several posts that participated in the spring and fall 2005 cycle of
    reviews stated that they lacked direction and opportunities for the
    regionalization and outsourcing of services. The guidance for the
    rightsizing review requested posts to consider regionalization options.
    However, while 18 of 20 posts we interviewed stated that they rely on
    regional support services to meet posts' needs, a few management officers
    indicated that they found it difficult to consider all regionalization
    options without having a base understanding of what regional services are
    available. For example, management officers posted in Asia and Africa
    stated that they lack information on what types of regional support could
    be provided remotely and how to access that support. Another management
    officer in Eurasia stated that posts should be provided a baseline listing
    of services so that post officials have a good sense of which services are
    available regionally.

    Though posts were instructed to assess outsourcing possibilities within
    their reviews, several posts that participated in the spring 2005 cycle of
    rightsizing reviews reported that outsourcing of services is not a good
    alternative due to the lack of choice, quality, and sophistication in the
    marketplace. Another management officer posted in Asia, whose post
    participated in the fall 2005 cycle of reviews, stated that outsourcing is
    a concept that the post is not accustomed to using and that the
    rightsizing review led them to examine which post functions can be
    outsourced. To ascertain current outsourced functions at posts, State's
    Office of Global Support Services and Innovation administered an
    outsourcing survey to which 119 posts responded. According to the survey
    results, the services most likely to be outsourced were copier maintenance
    as well as packing and shipping, while those services least likely to be
    outsourced were procurement, property management, and phone billing.
    Officials at the Office of Global Support Services and Innovation stated
    that the results of the survey will serve as the Office of Rightsizing's
    baseline for outsourcing.

    Rightsizing Reviews Overlap with Additional State Data Requests

    All of the management officers we interviewed stated that, within the last
    2 years, they have received other requests or reviews from agency
    headquarters seeking information similar to that requested for the
    rightsizing review. Ten of twenty management officers we interviewed
    identified the Mission Performance Plan as another headquarters request
    for information similar to that of the rightsizing review, and several of
    these posts indicated that there was a high degree of overlap between
    these two data requests. Moreover, more than half of the management
    officers indicated that there was a high or moderate degree of overlap
    between the rightsizing review and other requests from the Bureau of
    Overseas Buildings Operations, such as the Capital Security Cost Sharing
    Program and the Long Range Overseas Buildings Plan data requests.

    As explained by several posts, it was difficult to complete and keep track
    of all of these overlapping data requests given the limited resources at
    each post. For example, a management officer at a post in Africa stated
    that it took approximately 3 months to complete the Capital Security Cost
    Sharing request and approximately 2 months to complete the Mission
    Performance Plan, with both requests requiring interagency staff
    collaboration. The officer added that the post did not have time to focus
    on all of the requests tasked to the post. Another management officer in
    Africa stated that the post would have liked to have one database that was
    responsive to the needs of all the requests from headquarters. In
    addition, 5 of the 20 posts that we interviewed stated that it would be
    beneficial to streamline the rightsizing review by including it with other
    data and information requests,  and, moreover, several management officers
    stated that the rightsizing review should draw from information that
    currently exists in databases that are centrally located in Washington,
    D.C.

    The Office of Rightsizing has recognized the need for a single database
    and told us that State has been working on developing an integrated Post
    Personnel database. According to State officials, this database is
    expected to populate all other databases currently maintained by overseas
    posts to ensure all databases contain the same information. Furthermore,
    Office of Rightsizing officials stated that-once there is one
    authoritative database for all staffing data-they will no longer rely on
    multiple databases and, therefore, will not have to spend as much time
    verifying overseas staffing numbers projected in rightsizing reviews.

    Cost Analysis Was Not a Primary Factor in Rightsizing Reviews

    The Office of Rightsizing did not consider the need for posts to conduct
    cost analyses as an essential supplement to the spring 2005 and fall 2005
    reviews. The Director of the Office of Rightsizing stated that he did not
    want the post reviews to become a cost cutting exercise, but rather to
    focus more on identifying the needed resources to meet the posts' mission
    and goals and justify current and projected staffing compositions.
    Moreover, he stated that actual cost savings at the post level would be
    hard to determine and that sometimes rightsizing requires an increase in
    staff.

    The guidance for the spring 2005 and fall 2005 rightsizing reviews did not
    require posts to evaluate costs or perform cost analyses for the review
    process. While none of the 20 post reports we reviewed for the spring 2005
    cycle illustrated within their rightsizing report the results of a cost
    analysis in association with rightsizing efforts at posts, 11 of 20 posts
    for the fall 2005 cycle told us that they conducted some or limited cost
    analyses for various post staffing scenarios, such as the outsourcing of
    services and substitution of locally engaged staff for U.S. direct-hire
    positions. In addition, one management officer stated that the post
    conducted an analysis to determine which service provider at the post
    would be more cost effective. However, a management officer stated that it
    was difficult to perform a comprehensive analysis of the cost
    effectiveness of service providers because the post did not have
    comparable data for each provider. Moreover, another management officer in
    Asia stated that the post's cost analysis was not comprehensive because
    post staff did not have the necessary expertise to conduct such an
    analysis. Moreover, a management officer added that the post would need
    more guidance if it were to conduct a formal cost analysis with accurate
    cost data.

    With the upcoming cycles of reviews, the Office of Rightsizing is
    increasingly emphasizing the need to consider costs associated with
    rightsizing. For example, the Director of the Office of Rightsizing
    directed that additional analyses should be undertaken by posts to
    determine the overall cost impact to the U.S. government and all customer
    agencies before actual consolidation of shared administrative support
    services can occur. This analysis should also assess whether the formation
    of the single service provider will, over time, be a more viable and
    effective option for the U.S. government. The Office of Rightsizing has
    not yet provided formal guidance to posts on how to conduct an analysis to
    determine the most cost effective service provider, but it is continually
    developing its guidance for posts, and in particular, has developed
    guidance for a rightsizing competitive sourcing business case analysis,
    which is being incorporated into the spring 2006 cycle of reviews.30
    Subsequently, all posts will be required to complete this cost module as
    part of their rightsizing reviews, according to the Office of Rightsizing.

    Implementation of Rightsizing Review Results Unclear

    Some management officials we interviewed, as well as officials in State's
    regional bureaus, were unclear about the outcomes of the reviews. Although
    the reviews are intended to eliminate or justify any duplicative or
    parallel functions at posts and consider the possibility for reducing U.S.
    government employees at each post, some executive directors in State's
    regional bureaus pointed out that there is no implementation plan with
    timelines to track rightsizing-related changes that have been identified.
    Most executive directors in regional bureaus believe that it should be the
    Office of Rightsizing's responsibility to follow-up with posts to ensure
    resources have been consolidated in line with rightsized staffing levels,
    while one executive director in a regional bureau believes that it should
    be both the Office of Rightsizing as well as the bureau's own
    responsibility.

    The Office of Rightsizing stated that it has informed posts what their
    staffing configurations should be as a result of their reviews and that it
    is the post's responsibility to carry out corresponding staffing changes.
    Furthermore, the office has asked posts to include the distribution of
    services and schedules of when consolidation will occur within their
    Mission Performance Plans. The office also expects posts to establish
    reduction in force plans, which, according to the Office of Rightsizing,
    should consider attrition, retirement, and vacant positions. Moreover,
    Office of Rightsizing officials stated that they are planning to send a
    yearly cable to posts that have already completed rightsizing reviews to
    remind them of the need to meet agreed-upon staffing levels and to ensure
    that rightsizing action has been taken before the post moves into a new
    embassy compound. In early May 2006, the Director of the Office of
    Rightsizing told us that, in lieu of sending a cable, his office will be
    tasking posts that conducted reviews in the spring and fall 2005 cycles to
    develop a rightsizing action plan leading up to the completion of their
    new embassy compound. However, as of May 9, 2006, the office has not sent
    an action plan tasking to posts.

    As the Office of Rightsizing expects posts to develop their own
    rightsizing implementation plan, some posts may not adhere to the staffing
    figures agreed upon within their reviews. Specifically, some management
    officers we interviewed stated that their posts are waiting to move into a
    new embassy compound before taking any action to configure their post
    staffing numbers. For example, a management officer posted in Asia stated
    that the post's plan to configure the staffing numbers as reflected in the
    rightsizing review is not connected to any immediate time frame, but
    rather will happen when the post moves into the new embassy compound.
    Another management officer stated that, because the construction of the
    post's new embassy compound has been postponed, and because agencies at
    the post have not agreed to the staffing changes made by the Office of
    Rightsizing, no immediate post staffing changes are being contemplated. In
    addition to a lack of an implementation plan for those posts receiving a
    new embassy compound, it is also unclear what approach or incentives the
    Office of Rightsizing will use to enforce implementation of rightsizing
    measures for those posts not scheduled to receive a new embassy compound.
    According to an official in the Bureau of Overseas Buildings Operations,
    it is important for posts to have an implementation plan of how they will
    reconfigure their staffing, particularly for those posts that will be
    moving into a new embassy compound, because the new embassy or consulate
    will be built based on the staffing numbers approved by the Office of
    Rightsizing for that post.

    Conclusion

    Progress has been made in implementing the President's Management Agenda
    initiative to rightsize the U.S. government's overseas presence at
    embassies and consulates. Agencies are generally adjusting their presence
    based on mission, security, and cost factors. State is seeking ways to
    reduce support staff overseas and overseas posts are conducting
    rightsizing reviews required by legislation. Moreover, after a slow start,
    State's Office of Rightsizing is beginning to achieve momentum in
    coordinating government-wide rightsizing efforts. However, more needs to
    be done. Of foremost importance is the need to develop accurate staffing
    data with which to measure staffing trends and the effects of rightsizing
    activities. We recognize that efforts are currently under way to develop
    accurate data; however because of the importance of having accurate data
    on overseas staffing and the length of time it has taken to develop this
    data, management oversight may be needed to ensure completion of this
    task. State's Office of Rightsizing also needs to aggressively reach out
    to agencies at the headquarters level, and to overseas posts, to ensure
    that the positive initiatives under way are implemented effectively.

    Recommendations for Executive Action

    To ensure that the U.S. government's overseas presence under chief of
    mission authority is accurately accounted for and to ensure that the U.S.
    government's rightsizing goals are being coordinated and that posts can
    maximize savings and gain efficiencies through rightsizing, we recommend
    that the Secretary of State take the following three actions:

    o Provide oversight to ensure the timely development and use of a single
    database that accurately accounts for U.S. overseas personnel staffing
    numbers and has accountability measures to encourage posts and agencies to
    keep the database accurate and up to date;

    o Increase outreach activities with non-State agencies so that all
    relevant agencies with an overseas presence can discuss and share
    information on rightsizing initiatives on a regular and continuous basis;
    and

    o Require that posts develop action plans to transition to and meet the
    agreed upon outcomes of their rightsizing reviews. This could include
    developing milestones for posts reaching agreement on streamlining and
    eliminating duplicative functions.

    Agency Comments and Our Evaluation

    We provided a draft of this report to State for comment. State's comments,
    along with our responses to them, can be found in appendix V. State
    indicated that it has either recently implemented or is taking steps to
    implement all of our recommendations.

    We received technical comments from State, the Departments of Homeland
    Security, the Treasury, Defense, and Justice and USAID, which we have
    incorporated throughout the report, where appropriate. In addition, the
    Department of Justice stated that it endorses our recommendation that
    State continue to expand its outreach to agencies and departments with an
    overseas presence to enhance discussion and information sharing on
    rightsizing initiatives. Furthermore, the Department of the Treasury
    stated that it would be helpful if agencies with personnel at posts
    developing rightsizing action plans have the opportunity for their
    personnel to participate in the rightsizing reviews and the development of
    the action plans.

    As agreed with your office, unless you publicly announce the contents of
    this report earlier, we plan no further distribution until 30 days from
    the date of this letter. At that time, we will send copies of this report
    to other interested members of Congress, the Library of Congress, and the
    Secretary of State. We will also make copies available to others upon
    request. In addition, this report will be available at no charge on the
    GAO Web site at http://www.gao.gov.

    If you or your staff have any questions about this report, please contact
    me at (202) 512-4128 or f  ordj@gao.gov. Contact points for our Offices of
    Congressional Relations and Public Affairs may be found on the last page
    of this report. Other GAO contacts and staff acknowledgments are listed in
    appendix VI.

    Sincerely yours,

    Jess T. Ford Director, International Affairs and Trade

    Appendix I:  Scope and Methodology

    To ascertain the size of the U.S. government's overseas presence we spoke
    with officials in State Department's (State) Office of Rightsizing the
    U.S. Government Overseas Presence (Office of Rightsizing) and the
    Executive Director of State's Bureau of Human Resources; we also discussed
    the limitations that State faces in portraying an accurate number for the
    overseas presence. In addition, we spoke with an official in the Office of
    Management and Budget to determine the methodology used to report the size
    and cost of the overseas presence. To determine the U.S. government's
    efforts to rightsize its overseas presence we spoke with officials at a
    number of agencies in Washington, D.C., that have a presence at overseas
    posts. We spoke with officials from the the Departments of Agriculture,
    Commerce, the Treasury, Defense, Homeland Security, and Justice; as well
    as officials from the General Services Administration and the U.S. Agency
    for International Development. In addition, we reviewed staffing documents
    from numerous agencies, reports by State's Office of Inspector General,
    and rightsizing documents from State's Office of Rightsizing. We did not
    conduct a comprehensive review of each agencies' rightsizing efforts.

    We spoke with officials in the Office of Rightsizing about the rightsizing
    process and reviewed rightsizing guidance and related documentation. We
    reviewed and analyzed nine Mission Performance Plans for fiscal year 2007,
    which we were able to obtain from State, to determine whether rightsizing
    considerations were reported in the plans. We also spoke with officials in
    each State regional bureau-Western Hemisphere Affairs, European and
    Eurasian Affairs, African Affairs, East Asian and Pacific Affairs, Near
    Eastern Affairs, and South and Central Asian Affairs-to gauge their
    involvement with post rightsizing reviews and their interaction with the
    Office of Rightsizing. In addition, we spoke with officials in State's
    Office of Global Support Services and Innovation about State's initiatives
    on regionalization and shared services. To determine costs saved or
    avoided as a result of rightsizing exercises, we reviewed cost data from
    State's Office of Rightsizing and the Bureau of Overseas Buildings
    Operations. To assess the reliability of State's data, we interviewed
    officials in the Office of Rightsizing and the Bureau of Overseas
    Buildings Operations to ascertain how the data were captured and analyzed
    and whether there were any limitations to the data. We determined the data
    to be sufficiently reliable for the purposes of our review.

    To determine if there was a systematic process for reporting information
    in the first cycle of reviews, we reviewed and analyzed 20 out of about 35
    rightsizing reviews that were conducted by posts from late 2004 through
    summer 2005. The Office of Rightsizing provided us with over 20 reviews
    for our analysis. However, we analyzed only those reviews for which we had
    received both the post rightsizing review as well as the corresponding
    analysis of the review conducted by the Office of Rightsizing. Between
    February 2006 and March 2006 we administered 20 structured interviews
    regarding post rightsizing review experiences. The interviews were
    conducted by telephone primarily with management counselors or officers at
    embassies. In one case we spoke with the Deputy Chief of Mission at the
    post. The interviews involved 20 of the 22 posts that were part of the
    fall 2005 cycle and which had completed their rightsizing reviews by the
    time we talked to the post. The posts were located in: Asuncion, Baku,
    Bandar Seri Begawan, Bucharest, Bujumbura, Colombo, Harare, Jakarta,
    Islamabad, Kiev, Warsaw, Maputo, N'djamena, Pretoria, Reykjavik, Rome,
    Santo Domingo, Moscow, Taipei, and Tunis. We did not conduct interviews
    with two posts-Monrovia and Ankara-because these posts did not follow
    through with our request for interviews.

    The structured interview contained open- and closed-ended questions about
    guidance, timing, the review process, rightsizing considerations,
    headquarters' involvement and feedback, and the impact of the review on
    the post. We developed the interview questions based on our review of
    rightsizing documentation and discussions with post officials during our
    fieldwork in Mexico City and Valletta. We provided an early version of the
    questions to the Office of Rightsizing and the Office of Global Support
    Services and Innovation for their review and comment, and we also
    pretested the interview with three current management officers to ensure
    that the questions were clear and could be answered. We modified the
    interview questions on the basis of the pretest results and an internal
    expert's technical review. We provided the management officers and Deputy
    Chief of Mission with the interview questions in advance to allow them
    time to gather any data or information necessary for the interview. We
    initiated follow-up discussions with 13 posts by telephone. We
    subsequently sent posts follow-up questions by E-mail if we were not able
    to reach them by telephone. The responses of the structured interviews are
    not intended to be representative of all posts. We did not talk with
    management officers or look at rightsizing reviews for those posts that
    were part of the spring 2006 review cycle.

    We conducted fieldwork at the embassies in Mexico City, Mexico, and
    Valletta, Malta; and the consulate in Frankfurt, Germany, to gain a better
    understanding of the rightsizing process. We chose these posts because
    both Mexico City and Valletta had been asked by the Office of Rightsizing
    to conduct a rightsizing review as part of the spring 2005 cycle. We chose
    to visit Frankfurt because the consulate had conducted an informal
    rightsizing exercise in response to a report from State's Office of
    Inspector General and because it is a regional hub in Europe. At each post
    we met with State officials as well as other agency officials involved in
    the rightsizing process to discuss their approach and outcomes of the
    review. In addition, we met with the Ambassadors in Mexico City and
    Valletta, as well as the Consul General in Frankfurt to understand their
    views and involvement in the rightsizing process.

    We conducted our work from May 2005 through May 2006, in accordance with
    generally accepted government auditing standards.

    Appendix II:  GAO Reports on Staffing and Operations at U.S. Embassies and Consulates

    GAO, Overseas Presence: Observations on a Rightsizing Framework,
    GAO-02-659T (Washington, D.C.: May 1, 2002).

    GAO, Overseas Presence: Framework for Assessing Embassy Staff Levels Can
    Support Rightsizing Initiatives, GAO-02-780 (Washington, D.C.: July 26,
    2002).

    GAO, Overseas Presence: Rightsizing Framework Can Be Applied at U.S.
    Diplomatic Posts in Developing Countries, GAO-03-396 (Washington, D.C.:
    Apr. 7, 2003).

    GAO, Embassy Construction: Process for Determining Staffing Requirements
    Needs Improvement, GAO-03-411 (Washington, D.C.: Apr. 7, 2003).

    GAO, Overseas Presence: Systematic Processes Needed to Rightsize Posts and
    Guide Embassy Construction, GAO-03-582T (Washington, D.C.: Apr. 7, 2003).

    GAO, Overseas Presence: Rightsizing Is Key to Considering Relocation of
    Regional Staff to New Frankfurt Center, GAO-03-1061 (Washington, D.C.:
    Sept. 2, 2003).

    GAO, Embassy Management: Actions Are Needed to Increase Efficiency and
    Improve Delivery of Administrative Support Services, GAO-04-511
    (Washington, D.C.: Sept. 7, 2004).

    GAO, Embassy Construction: Proposed Cost-Sharing Program Could Speed
    Construction and Reduce Staff Levels, but Some Agencies Have Concerns,
    GAO-05-32 (Washington, D.C.: Nov. 15, 2004).

    GAO, Overseas Presence: Cost Analyses and Performance Measures Are Needed
    to Demonstrate the Full Potential of Providing Embassy Support Remotely,
    GAO-06-479 (Washington, D.C.: May 2, 2006).

    Appendix III:  GAO Rightsizing Framework and Corresponding Questions

    This appendix lists the questions pertaining to mission, security, and
    cost that we developed in 2002 to help support rightsizing initiatives for
    existing facilities overseas.

    Physical/Technical Security of Facilities and Employees

    What is the threat and security profile of the embassy?

    Has the ability to protect personnel been a factor in determining staffing
    levels at the embassy?

    To what extent are existing office buildings secure?

    Is existing space being optimally utilized?

    Have all practical options for improving the security of facilities been
    considered?

    Do issues involving facility security put the staff at an unacceptable
    level of risk or limit mission accomplishment?

    What is the capacity level of the host country police, military, and
    intelligence services?

    Do security vulnerabilities suggest the need to reduce or relocate staff?

    Do health conditions in the host country pose personal security concerns
    that limit the number of employees that should be assigned to the post?

    Mission Priorities and Requirements

    What are the staffing levels and mission of each agency?

    How do agencies determine embassy staffing levels?

    Is there an adequate justification for the number of employees at each
    agency compared with the agency's mission?

    Is there adequate justification for the number of direct-hire personnel
    devoted to support and administrative operations?

    What are the priorities of the embassy?1

    Does each agency's mission reinforce embassy priorities?

    To what extent are mission priorities not being sufficiently addressed due
    to staffing limitations or other impediments?

    To what extent are workload requirements validated and prioritized, and is
    the embassy able to balance them with core functions?

    Do the activities of any agencies overlap?

    Given embassy priorities and the staffing profile, are increases in the
    number of existing staff or additional agency representation needed?

    To what extent is it necessary for each agency to maintain its current
    presence in-country, given the scope of its responsibilities and its
    mission?

    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?

    To what extent are agencies considering the full cost of operations in
    making staffing decisions?

    To what extent are costs commensurate with overall embassy strategic
    importance, with agency programs, and with specific products and services?

    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?

    To what extent could agency program and/or routine administrative
    functions (procurement, logistics, and financial management functions) be
    handled from a regional center or other locations?

    Do new technologies and transportation links offer greater opportunities
    for operational support from other locations?

    Do the host country and regional environments suggest there are options
    for doing business differently, that is, are there adequate transportation
    and communications links and a vibrant private sector?

    To what extent is it practical to purchase embassy services from the
    private sector?

    Does the ratio of support staff to program staff at the embassy suggest
    opportunities for streamlining?

    Can functions be reengineered to provide greater efficiencies and reduce
    requirements for personnel?

    Are there best practices of other bilateral embassies or private
    corporations that could be adapted by the U.S. embassy?

    To what extent are there U.S. or host country legal, policy, or procedural
    obstacles that may impact the feasibility of rightsizing options?

    Appendix IV:  The Office of Rightsizing's Five-Year Rightsizing Schedule

    Table 4 illustrates the 5-year rightsizing schedule, by fiscal year, that
    the Office of Rightsizing has developed. The schedule also depicts those
    posts that are proposed to receive a new embassy compound (NEC) and the
    fiscal year that the facilities are scheduled to be built.

    Table 4: Five-Year Rightsizing Schedule

                         Mission                      Planned capital projects
    Fiscal year 2005
    Bosnia and Herzegovina                      Sarajevo NEC FY06
    Burkina Faso                                Ouagadougou NEC FY07
    Congo, Democratic Republic of               Kinshasa NEC FY07
    Congo, Republic of                          Brazzaville NEC FY06
    Djibouti                                    Djibouti NEC FY06
    Ethiopia                                    Addis Ababa NEC FY07
    Fiji                                        Suva NEC FY05
    Gabon                                       Libreville NEC FY06
    Georgia                                     Tbilisi Annex FY06
    Indonesia                                   Surabaya NEC FY06
    Latvia                                      Riga NEC FY07
    Lebanon                                     Beirut NEC FY06
    Macedonia                                   Skopje Annex, Warehouse, and
                                                   Marine Security Guard Quarters
                                                   FY06
    Madagascar                                  Antanarivo NEC FY07
    Malta                                       Valletta NEC FY08
    Mexico                                      Mexico City NEC FY06
                                                   Tijuana NEC FY10
    Micronesia                                  Interim Office Building FY05
    Nigeria                                     Abuja Annex FY06
    Norway                                      Oslo NEC FY07
    Palau                                       Interim Office Building FY05
    Philippines                                 Manila NEC FY07
    South Africa                                Johannesburg NEC FY06
    Sudan                                       Khartoum Annex and Marine
                                                   Security Guard Quarters FY06
                                                   Juba NEC FY07
    Yugoslavia                                  Belgrade NEC FY07
    Zambia                                      Lusaka NEC FY07
    Fiscal year 2006
    Algeria
    Azerbaijan                                  Baku NEC FY08
    Bermuda
    Brazil
    Brunei                                      Bandar Seri Begawan NEC FY08
    Burundi                                     Bujumbura NEC FY09
    Chad                                        N'djamena NEC FY09
    Chile
    Colombia
    Costa Rica
    Denmark
    Dominican Republic                          Santo Domingo NEC and Annex
                                                   FY09
    Eritrea                                     Asmara NEC FY09
    Finland
    Germany
    Holy See
    Iceland
    Indonesia                                   Jakarta NEC FY09
    Ireland
    Italy                                       Milan MEC FY09
    Jordan
    Korea                                       Seoul NEC FY09
    Liberia                                     Monrovia NEC FY08
    Libya                                       Tripoli NEC FY08
    Luxembourg
    Malaysia
    Morocco
    Mozambique                                  Maputo NEC and Annex FY08
    New Zealand
    Pakistan                                    Karachi NEC FY08
                                                   Peshawar NEC FY08
    Paraguay                                    Asuncion NEC FY08
    Poland                                      Krakow NEC FY08
    Romania                                     Bucharest NEC FY09
    Russia                                      St. Petersburg NEC FY09
    Saudi Arabia                                Jeddah NEC FY08
                                                   Riyadh NEC FYa
                                                   Dhahran NEC FYa
    Singapore
    South Africa                                Pretoria Annex FY08
    Sri Lanka                                   Colombo NEC FY09
    Switzerland
    Taiwan                                      Taipei NEC FY07
    Tunisia                                     Tunis Language School FY09
    Turkey                                      Ankara NEC FY09
    Ukraine                                     Kiev NEC and Annex FY09
    United Kingdom
    U.S. Mission to the United Nations Agencies
    for Food and Agriculture, Rome
    U.S. Permanent Mission to the United
    Nations Office and Other International
    Organizations in Geneva
    Zimbabwe                                    Harare NEC and Annex FY08
    Fiscal year 2007
    Bahamas
    Bahrain
    Bangladesh
    Barbados
    Belarus
    Belize
    Benin                                       Cotonou NEC and Annex FY10
    Botswana
    Burma
    Canada                                      Toronto NEC FY10
    Cape Verde
    China                                       Guangzhou NEC FY08
                                                   Shanghai NEC FYa
    East Timor                                  Dili NEC FY10
    Equatorial Guinea
    Estonia
    Grenada
    Guinea
    Guinea Bissau
    Guyana
    Hong Kong
    India                                       Calcutta NEC FY11
                                                   Chennai NEC FY10
                                                   Hyderabad NEC FYa

    Israel                                      Tel Aviv NEC and Annex FY10
    Jerusalem                                   Jerusalem NEC FY10
    Kenya
    U.S. Permanent Mission to United Nations
    Environment Program and United Nations
    Center for Human Settlements, Nairobi
    Kosovo                                      Pristina NEC FY10
    Kyrgyzstan
    Lithuania
    Malawi
    Mali
    Mauritania                                  Nouakchott NEC FY10
    Mauritius
    Mongolia
    Nepal
    Sierra Leone
    Slovak Republic                             Bratislava NEC FY10
    Slovenia
    Surinam                                     Paramaribo NEC FY10
    Syria                                       Damascus NEC FY10
    Tajikistan
    Thailand                                    Chiang Mai NEC FY10
    Turkmenistan
    Uruguay
    U.S. Mission to the International Civil
    Aviation Organization, Montreal
    Vietnam                                     Hanoi NEC FY
    Fiscal year 2008
    Angola
    Argentina                                   Buenos Aires NEC FY11
    Armenia
    Australia
    Belgium
    Bolivia
    Brazil                                      Rio de Janeiro LFO FY11
    Cambodia
    Cameroon
    Central African Republic                    Bangui NEC FY11
    Cote d'Ivoire
    Croatia
    Cuba
    Czech Republic
    Ecuador                                     Guayaquil LFO FY11
    France
    Gambia
    Ghana
    Greece                                      Thessaloniki NEC FYa
    Guatemala
    Laos                                        Vientiane NEC FY11
    Lesotho
    Moldova                                     Chisinau NEC FY11
    Namibia                                     Windhoek NEC FY11
    Netherlands                                 The Hague NEC FY11
    Netherlands Antilles
    Niger
    Oman
    Panama
    Senegal                                     Dakar NEC & Annex FY11
    Seychelles
    Spain                                       Madrid NEC FY11
    Swaziland                                   Mbabane NEC FY11
    Tanzania
    Togo
    Trinidad and Tobago
    United Arab Emirates                        Dubai NEC FY11
    U.S. Mission to the European Union
    U.S. Mission to the North Atlantic Treaty
    Organization
    U.S. Mission to the Organization for
    Economic Cooperation and Development, Paris
    U.S. Mission to the United Nations
    Educational, Scientific, and Cultural
    Organization, Paris
    Fiscal year 2009
    Afghanistan
    Albania
    Austria
    Bulgaria
    Cyprus
    Egypt
    El Salvador
    Haiti
    Honduras
    Hungary
    Iraq
    Jamaica
    Japan
    Kazakhstan
    Kuwait
    Marshall Islands
    Micronesia
    Nicaragua
    Niger
    Papua New Guinea
    Peru
    Portugal
    Qatar
    Rwanda

    Source: Office of Rightsizing.

    aThe Office of Rightsizing does not yet know the scheduled date of the
    capital project.

    Appendix V:  Comments from the Department of State

    The following are our comments on State's letter dated June 9, 2006.

    GAO Comments

    1.We modified our text to show that, although we have not been able to
    independently assess the Office of Rightsizing's estimates, it has
    presented evidence to show that some major cost avoidance and cost savings
    have occurred.

    2.We recognize that State has a standard methodology by which it performs
    cost analyses using the International Cooperative Administrative Support
    Services software. However, when we talked with management officers at
    posts that had conducted a rightsizing review, we were informed that these
    posts did not have comparable cost data for each service provider. In
    addition, we were informed that the posts did not have the necessary tools
    to make informed decisions about how to conduct analysis to determine the
    most cost effective service provider.

    3.We provided the draft report to State on May 18, 2006. About two weeks
    later, State instructed posts to develop implementation action plans. We
    believe that the action that the Office of Rightsizing has taken largely
    addresses our recommendation. However, until the Office of Rightsizing has
    received all implementation action plans with the posts' milestones, due
    on July 18, 2006, the office will not know what additional action might
    still be needed to ensure that posts meet the agreed-upon outcomes of
    their rightsizing reviews.

    4.We understand that if a position is eliminated at a post it is not
    counted as part of Capital Security Cost Sharing. Our statement was simply
    meant to illustrate that eliminated or vacant positions could be reflected
    in databases used to count overseas staffing numbers.

    5.Our statement reflects non-State agency views. We have amended the draft
    by attributing the statement to non-State agency officials. In addition
    our statement reflects information we obtained from a February 2006 State
    cable to all posts about staffing data and position charges under Capital
    Security Cost Sharing.

    6.We have modified our text to illustrate the varying estimates of the
    size of the U.S. overseas presence. We have received numerous conflicting
    estimates on the number of U.S. government officials overseas. One source
    estimated that there are approximately 66,000 U.S. government personnel
    under chief of mission authority, while another indicated that there are
    approximately 69,000. We understand that some of the numbers may come from
    different estimates and data sources. State's discussion on staffing data
    illustrates the difficulty of obtaining an accurate count of overseas
    personnel. We recognize that that there are vacant positions and that the
    total number of positions is higher than the number of filled positions.
    We also note in our report that State is in the process of eliminating
    vacant positions. It is important that State continue to update its
    staffing database to ensure that a more accurate accounting of U.S.
    government personnel overseas is available.

    7.We acknowledge that State has sent several messages since 2004 to posts
    instructing them that Post Personnel is the official database for
    documenting all U.S. government staffing overseas. However, in February
    2006, State reported that not all posts are using Post Personnel as their
    main human resources system. In addition, we were told that the guidance
    provided to posts did not include accountability mechanisms for ensuring
    that the staffing information is updated and complete.

    8.It is important that all components of each agency receive information
    from the Office of Rightsizing that pertains to rightsizing review efforts
    and initiatives. During the course of our work at the Department of
    Homeland Security it became clear that certain components within the
    department had not received information on rightsizing. We understand that
    the Department of Homeland Security has a central focal point that the
    Office of Rightsizing works with. The Department of Homeland Security and
    the Office of Rightsizing share responsibility in ensuring that agency
    components are receiving the necessary information to ensure that
    rightsizing efforts are understood. We have modified the text to indicate
    that the Office of Rightsizing was asked by the Department of Homeland
    Security to coordinate through one focal point.

    9.We believe that the actions and measures that the Office of Rightsizing
    is taking, particularly the Interagency Rightsizing Summit, are useful
    steps to implementing our recommendation. However, based on our
    discussions with non-State agencies, we maintain that more outreach is
    needed pertaining to areas involving rightsizing review efforts, strategy,
    and vision.

    Appendix VI:  GAO Contact and Staff Acknowledgments

    Jess Ford (202) 512-4128

    In addition to the individual named above, John Brummet, Assistant
    Director, Ann Baker, Joseph Carney, Virginia Chanley, Lyric Clark, Martin
    De Alteriis, Etana Finkler, Beth Hoffman Leon, Ernie Jackson, Andrea
    Miller, and Deborah Owolabi made key contributions to this report.

    (320338)

    www.gao.gov/cgi-bin/getrpt? GAO-06-737 .

    To view the full product, including the scope

    and methodology, click on the link above.

    For more information, contact Jess Ford at (202) 512-4128 or
    fordj@gao.gov.

    Highlights of GAO-06-737 , a report to the Chairman, Subcommittee on
    National Security, Emerging Threats, and International Relations,
    Committee on Government Reform, House of Representatives

    June 2006

    OVERSEAS STAFFING

    Rightsizing Approaches Slowly Taking Hold but More Action Needed to
    Coordinate and Carry Out Efforts

    In 2001, the administration identified the rightsizing of embassies and
    consulates as one of the President's management priorities. Rightsizing
    initiatives include: aligning staff overseas with foreign policy
    priorities and security and other constraints; demonstrating results by
    moving administrative functions from posts to regional or central
    locations; and eliminating duplicative functions at posts. This report (1)
    discusses the size and recent trends in the U.S. government overseas
    presence, (2) assesses the congressionally mandated Office of
    Rightsizing's progress in managing the U.S. government's overseas
    rightsizing efforts, and (3) assesses the process and outcomes of the
    legislatively mandated rightsizing reviews of overseas posts.

    What GAO Recommends

    We recommend that the Secretary of State provide management oversight to
    complete and maintain a unified database to accurately capture and
    validate U.S. overseas staffing numbers, increase outreach activities with
    non-State agencies, and require that posts develop rightsizing action
    plans. State indicated that it has either recently implemented or is
    taking steps to implement all of our recommendations.

    Almost five years into the President's Management Initiative on
    rightsizing, the U.S. government does not yet have accurate data on the
    size of the U.S. overseas presence. At various times, we received
    estimates ranging from 66,000 to 69,000 American and non-American
    personnel. In addition, State estimated that there are approximately
    78,000 U.S. government positions overseas, as of December 2005. State
    Department (State) officials said that they are working on a unified
    database which, if periodically updated by posts, will provide an accurate
    depiction of the overseas presence. State officials indicated that the
    database will be completed later this year. Because of the importance of
    having accurate data on overseas staffing and the length of time it has
    taken to develop this data, management oversight may be needed to ensure
    completion of this task. Several agencies reported that they have added
    staff overseas as a result of new mission requirements, and other agencies
    reported that they have repositioned their personnel to better meet
    mission needs and in response to rightsizing efforts.

    State established the congressionally mandated Office of Rightsizing the
    United States Government Overseas Presence (Office of Rightsizing) in
    2004, which, after a slow start, has begun to provide overall direction to
    the government-wide rightsizing process. Some of the office's activities
    have included coordinating staffing requests of U.S. government agencies,
    developing guidance for and analyzing post rightsizing reviews, and
    formulating a rightsizing review plan. We found that coordination on
    rightsizing issues between State and other agencies with an overseas
    presence was initially slow, but has since improved. Nevertheless,
    non-State agencies have voiced a number of concerns regarding their
    interaction with the Office of Rightsizing, including their desire to be
    more included in the rightsizing process.

    Congress requires Chiefs of Mission to conduct rightsizing reviews at
    every overseas post at least once every 5 years. Between late 2004 and
    summer 2005, about 35 posts participated in the first cycle of reviews.
    However, the Office of Rightsizing provided limited guidance to posts on
    how the reviews should be conducted and did not have a systematic process
    for reporting the outcomes of the reviews. In fall 2005, officials in the
    Office of Rightsizing developed more comprehensive guidance, which posts
    we interviewed found useful. We found that cost was not considered a key
    element in the post reviews. Nevertheless, the Office of Rightsizing
    reported over $150 million in cost savings or avoidance to the U.S.
    government based on its analysis of these reviews. Although we have not
    been able to independently assess the Office of Rightsizing's estimates,
    it has presented evidence to show that some major cost avoidance and cost
    savings have occurred. Management officers identified various challenges
    to the review process, such as resistance from non-State agencies and a
    lack of time to conduct the review. It is unclear how posts will implement
    the rightsizing review decisions, such as elimination of duplicative
    functions, according to post officials and officials in State's regional
    bureaus.
    *** End of document. ***