    Border Security: State Department Should Plan for Potentially
    Significant Staffing and Facilities Shortfalls Caused by Changes
    in the Visa Waiver Program (22-MAY-08, GAO-08-623).

    Under the Visa Waiver Program (VWP), citizens from 27 countries
    can travel to the United States visa free. Terrorism concerns
    involving VWP country citizens have led some to suggest
    eliminating or suspending the program, while the executive branch
    is considering adding countries to it. Legislation passed in 2007
    led the Department of Homeland Security (DHS) to develop its
    Electronic System for Travel Authorization (ESTA), to screen VWP
    country citizens before they travel to the United States; if
    found ineligible, travelers will need to apply for a visa. GAO
    reviewed how (1) program elimination or suspension, (2) program
    expansion, and (3) ESTA could affect visa demand, resource needs,
    and revenues. We collected traveler, staffing, facilities, and
    cost data from the Department of State (State), DHS, and embassy
    officials and developed estimates related to the three scenarios
    above.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-08-623
        ACCNO:   A82186
      TITLE:     Border Security: State Department Should Plan for
    Potentially Significant Staffing and Facilities Shortfalls Caused
    by Changes in the Visa Waiver Program
         DATE:   05/22/2008
      SUBJECT:   Cost analysis
    	     Embassies
    	     Employee transfers
    	     Employees
    	     Facility construction
    	     Federal facilities
    	     Fees
    	     Foreign governments
    	     Homeland security
    	     Human capital planning
    	     Internal controls
    	     International cooperation
    	     International relations
    	     International travel
    	     Personnel management
    	     Program evaluation
    	     Program management
    	     Security threats
    	     Staff utilization
    	     Terrorism
    	     Travel
    	     Visas
    	     Waivers
    	     Cost estimates
    	     Program costs
    	     Program implementation
    	     Visa Waiver Program

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    GAO-08-623

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    Report to the Chairman, Committee on Homeland Security, House of
    Representatives:

    United States Government Accountability Office:

    GAO:

    May 2008:

    Border security:

    State Department Should Plan for Potentially Significant Staffing and
    Facilities Shortfalls Caused by Changes in the Visa Waiver Program:

    GAO-08-623:

    GAO Highlights:

    Highlights of GAO-08-623, a report to the Chairman, Committee on
    Homeland Security, House of Representatives.

    Why GAO Did This Study:

    Under the Visa Waiver Program (VWP), citizens from 27 countries can
    travel to the United States visa free. Terrorism concerns involving VWP
    country citizens have led some to suggest eliminating or suspending the
    program, while the executive branch is considering adding countries to
    it. Legislation passed in 2007 led the Department of Homeland Security
    (DHS) to develop its Electronic System for Travel Authorization (ESTA),
    to screen VWP country citizens before they travel to the United States;
    if found ineligible, travelers will need to apply for a visa. GAO
    reviewed how (1) program elimination or suspension, (2) program
    expansion, and (3) ESTA could affect visa demand, resource needs, and
    revenues. We collected traveler, staffing, facilities, and cost data
    from the Department of State (State), DHS, and embassy officials and
    developed estimates related to the three scenarios above.

    What GAO Found:

    The potential elimination or suspension of the Visa Waiver Program
    could cause dramatic increases in visa demand�from around 500,000 (the
    average number of people from VWP countries who obtain a U.S. visa each
    year) to as much as 12.6 million (the average number of people who
    travel to the United States from VWP countries each year)�that could
    overwhelm visa operations in the near term. To meet visa demand, State
    officials said they could need approximately 45 new facilities, which
    we estimate could cost $3.8 billion to $5.7 billion. We estimate State
    would also need substantially more staff�around 540 new Foreign Service
    officers at a cost of around $185 million to $201 million per year, and
    1,350 local Foreign Service national staff at around $168 million to
    $190 million per year, as well as additional management and support
    positions for a total annual cost of $447 million to $486 million.
    Because VWP elimination would increase the number of travelers needing
    a visa, we estimate annual visa fee revenues would increase
    substantially, by $1.7 billion to $1.8 billion, and would offset the
    year-to-year recurring staffing costs. State has done limited planning
    for how it would address increased visa demand if the program were
    suspended or eliminated.

    Adding countries to the Visa Waiver Program would reduce visa demand in
    those countries, but likely have a relatively limited effect overall on
    resources needed to meet visa demand and on State�s visa fee revenues.
    The volume of visa applications is relatively small in most of the 13
    �Road Map� countries the executive branch is considering for expansion.
    If all 13 Road Map countries were to join the program, and if all of
    those countries� citizens who previously traveled with visas were to
    travel to the United States without visas, the reduction in workload
    would, we estimate, permit State to move about 21 to 31 Foreign Service
    officers to other posts in need, and to cut 52 to 77 Foreign Service
    national positions. In addition, though program expansion would result
    in less space needed for visa operations, this would likely result in
    little or no building or lease savings because any resulting excess
    consular space is in government-owned facilities, and could not be
    sold. If all 13 Road Map countries were admitted to the Visa Waiver
    Program, we estimate that State would lose approximately $74 million to
    $83 million each year in collected visa fees, offsetting any savings in
    personnel costs.

    State and DHS officials acknowledged that the implementation of ESTA
    could increase visa demand in VWP countries, though neither State nor
    DHS has developed estimates of the increase. DHS is currently
    developing ESTA, and DHS officials told us the ESTA rejection rate
    could be between 1 percent and 3 percent, but they currently do not
    know. In addition, State and embassy officials believe some travelers
    might choose to apply for a visa rather than face potential, unexpected
    travel disruptions due to ESTA. Neither DHS nor State has attempted to
    estimate how these two factors would affect visa demand, and, as a
    result, State has not estimated what additional resources would be
    needed to manage the demand, and what additional visa fees would be
    received. However, State officials told us that, if 1 percent to 3
    percent of current VWP travelers came to embassies in VWP countries for
    visas, it could greatly increase visa demand at some locations, which
    could significantly disrupt visa operations.

    What GAO Recommends:

    GAO recommends: (1) State and U.S. embassies in VWP countries develop
    contingency plans in the event of program elimination; and (2) DHS and
    State develop estimates of increased visa demand resulting from ESTA,
    and State develops plans to manage the increased workload. State said
    it would ask embassies to discuss plans to manage possible program
    elimination, but did not note whether it fully concurred with our
    recommendation. State agreed with the need to plan for ESTA, but noted
    its ability to plan was limited because DHS had not yet resolved
    critical details about ESTA. DHS agreed with our recommendation.

    To view the full product, including the scope and methodology, click on
    [http://www.gao.gov/cgi-bin/getrpt?GAO-08-623]. For more information,
    contact Jess Ford at (202) 512-4128 or fordj@gao.gov.

    [End of section]

    Contents:

    Letter:

    Results in Brief:

    Background:

    Elimination of Visa Waiver Program Could Dramatically Increase Visa
    Demand and Overwhelm Visa Operations in the Near Term, but State Has
    Not Developed Contingency Plans:

    Expansion of the Visa Waiver Program Would Reduce Visa Demand, but
    Likely Have Limited Effect on State's Visa Costs and Resources:

    ESTA Implementation Could Increase Visa Demand, but State and DHS Have
    Not Planned How to Manage an Increase:

    Conclusions:

    Recommendations for Executive Action:

    Agency Comments and Our Evaluation:

    Appendix I: Scope and Methodology:

    Appendix II: Comments from the Department of State:

    Appendix III: Comments from the Department of Homeland Security:

    GAO Comments:

    Appendix IV: GAO Contact and Staff Acknowledgments:

    Tables:

    Table 1: Current VWP Countries and Average Number of Travelers and
    Average Number of Visas Issued from 2001 to 2007:

    Table 2: Road Map Initiative Countries and Average Number of Travelers
    and Average Number of Visas Issued from 2001 to 2007:

    Table 3: Potential Effects of ESTA on Visa Demand:

    Table 4: Estimated ESTA Impacts and Costs in Different Scenarios:

    Figures:

    Figure 1: Current Visa Waiver Program Countries:

    Figure 2: Road Map Initiative Countries:

    Figure 3: Foreign Citizens Apply through ESTA for Travel to the United
    States:

    Figure 4: Cramped Visa Waiting Room in U.S. Embassy Paris, April, 2008:

    Abbreviations:

    9/11 Act: Implementing Recommendations of the 9/11 Commission Act of
    2007:

    CBP: U.S. Customs and Border Protection:

    DHS: Department of Homeland Security:

    ESTA: Electronic System for Travel Authorization:

    OBO: Bureau of Overseas Buildings Operations:

    State: Department of State:

    VWP: Visa Waiver Program:

    United States Government Accountability Office:

    Washington, DC 20548:

    May 22, 2008:

    The Honorable Bennie G. Thompson:
    Chairman:
    Committee on Homeland Security:
    House of Representatives:

    Dear Chairman Thompson:

    Under the Visa Waiver Program (VWP), citizens from 27 select countries
    can travel to the United States for business or pleasure trips of up to
    90 days without first obtaining a visa and paying a visa fee.[Footnote
    1] The program has many benefits, including facilitating international
    travel for millions of foreign nationals seeking to visit the United
    States each year,[Footnote 2] creating substantial economic benefits to
    the United States, and allowing the Department of State (State) to
    allocate resources to visa-issuing posts in countries with higher-risk
    applicant pools. However, the program also poses inherent security, law
    enforcement, and illegal immigration risks to the United
    States.[Footnote 3] In particular, VWP travelers are not subject to the
    same degree of screening prior to their travel to the United States as
    travelers with visas because they are not interviewed by a State
    consular officer before arriving at a U.S. port of entry. Therefore,
    there is a greater risk that some VWP travelers could exploit the
    program to gain entry into the United States with the intent to violate
    U.S. immigration or other laws.

    Terrorist acts and plots involving citizens of VWP countries have led
    some critics of the program to suggest that it be eliminated or
    suspended because of the security risks it could present. In September
    2007, the Director of National Intelligence testified that Al Qaeda is
    recruiting Europeans because many of them do not require a visa to
    enter the United States. Department of Homeland Security (DHS) and
    State officials have acknowledged that the program could be eliminated
    or suspended in the event of a major terrorist attack emanating from a
    VWP country. At the same time, however, some proponents of the Visa
    Waiver Program have called for expansion of the program. In fact, the
    executive branch established in 2005 a "Road Map" initiative to clarify
    the statutory requirements for designation as a participating VWP
    member and has been consulting with 13 countries as part of the
    initiative. In August 2007, the Implementing Recommendations of the 9/
    11 Commission Act of 2007 (9/11 Act)[Footnote 4] established more
    flexible criteria for participation in the program, and the executive
    branch is now considering adding several countries to the program later
    this year. In order to mitigate some of the security risks of the
    program while permitting program expansion, the August 2007 legislation
    required the implementation of an electronic travel authorization
    system, which DHS has named the Electronic System for Travel
    Authorization (ESTA). ESTA would require citizens from all VWP
    countries intending to travel to the United States under the Visa
    Waiver Program to apply for and receive electronic authorization prior
    to embarking on their travel to the United States. In the event that
    DHS concludes, based on the ESTA application, that a traveler is
    ineligible to travel under the Visa Waiver Program, or that the
    traveler poses a law enforcement or security risk, ESTA authorization
    will be denied and the traveler may not travel under the Visa Waiver
    Program. Travelers denied ESTA authorization would need to apply for a
    visa if they want to travel to the United States. DHS has announced
    that it intends for all visa waiver travelers to use ESTA by mid 2009
    and told us travelers from some VWP countries could be using it by the
    summer of 2008.

    In order to understand the potential impact on State visa operations as
    a result of significant changes to the Visa Waiver Program, such as (1)
    program elimination or suspension, (2) program expansion, and (3)
    implementation of ESTA, you asked us to examine how each of these three
    different changes could affect the demand for visas, and how changes in
    demand could affect the resources that State needs to maintain its
    consular operations and the amount of visa revenue that State receives.
    We did not assess the security, trade, commerce, tourism, diplomatic,
    reciprocity, or other potential effects of changes to the Visa Waiver
    Program.[Footnote 5]

    To address these three objectives, we analyzed DHS/U.S. Customs and
    Border Protection (CBP) data on the number of travelers to the United
    States from each VWP and Road Map country annually from 2001 to 2007
    and reviewed State's data from 2001 to 2007 on the numbers and types of
    visas issued in each VWP country as well as on the number of staff
    involved in processing visas in VWP and Road Map countries. With State,
    we developed costs for each Foreign Service officer and Foreign Service
    national staff position. In addition, we met with officials in State's
    Bureau of Consular Affairs, the Bureau of Overseas Buildings Operations
    (OBO), and at embassies in three VWP countries--Japan, France, and
    Spain--and in four Road Map countries--South Korea, Greece, Czech
    Republic, and Hungary--to determine the extent of possible visa demand
    and staffing and facilities needs in those countries. We chose these
    countries primarily due to the size of their traveler or visa volume
    and their geographic diversity. We also analyzed relevant laws
    regarding the program and its requirements, and met with State's Bureau
    of Consular Affairs to discuss the fee that State charges for visa
    applications, what visa processing costs the fee is intended to cover,
    and how much new revenue State would generate in the event of program
    elimination. We also reviewed State's Performance Plan for the Bureau
    of Consular Affairs to determine State's goals and objectives regarding
    visa issuance, as well as any planning State had done for these
    scenarios. Finally, we reviewed standards for internal controls in the
    federal government, including those addressing the importance of
    identifying risks to achieving program goals and planning ways to
    mitigate those risks in order to continue to meet program objectives.

    To assess the staffing and resource costs associated with each
    scenario, we developed our own high-level cost estimates, using data
    from State, DHS, and embassies we visited. CBP provided us with data on
    the number of travelers from each VWP and Road Map country. State's
    Bureau of Consular Affairs provided us with information on the number
    of visas processed in VWP and Road Map countries as well as estimates
    on the number of visas that could be expected to be processed by a
    Foreign Service officer, the number of Foreign Service national staff
    that could be expected to support Foreign Service officers, and--for
    the elimination scenario--estimates of the number of new facilities
    that could be needed. OBO provided data on the cost, type, and size of
    recently completed U.S. government construction projects overseas, the
    costs and sizes of overseas leased facilities used for visa processing,
    and estimates of operations and maintenance costs for U.S. embassy
    facilities. State's Bureau of Resource Management provided information
    on the costs of Foreign Service officers and Foreign Service national
    staff. In addition, we collected post-specific data on the above costs
    when we traveled overseas. We determined that the data provided to us
    were sufficiently reliable for the purposes of the report. We prepared
    the cost estimates using fiscal year 2007 constant dollars. Appendix I
    provides a detailed description of our scope and methodology.

    We recognize that there could be other implications of major changes in
    the program, particularly if the program were eliminated. For instance,
    major changes could affect security, tourism, commerce, business,
    trade, diplomacy, and reciprocity regarding visa-free travel. However,
    we limited the scope of our review to the impact on visa demand, visa
    resources--including staffing and facilities--and visa revenues. We
    conducted this performance audit from May 2007 to April 2008 in
    accordance with generally accepted government auditing standards. Those
    standards require that we plan and perform the audit to obtain
    sufficient, appropriate evidence to provide a reasonable basis for our
    findings and conclusions based on our audit objectives. We believe that
    the evidence obtained provides a reasonable basis for our findings and
    conclusions based on our audit objectives.

    Results in Brief:

    The potential elimination or suspension of the Visa Waiver Program
    could cause dramatic increases in the demand for nonimmigrant visas
    that could overwhelm visa operations in the near term. To meet visa
    demand, State would need substantially more staff and facilities. Based
    on current visa fee rates, the additional visa fee revenue collected
    would offset the costs for staff, but not of additional facilities. We
    estimate that, given recent travel patterns, the demand for visas at
    all VWP posts combined could jump from around 500,000 to around 12.6
    million,[Footnote 6] a level of demand that would overwhelm existing
    staffing and facility resources. State officials have not fully
    analyzed the extent to which demand increases would impact resources.
    However, in response to our request, State officials provided us with
    information indicating they could need approximately 45 new facilities
    to handle an increased visa demand of over 12 million. State did not
    estimate the cost of constructing new facilities, though we estimate
    the cost could range from $3.8 billion to $5.7 billion; moreover, State
    officials told us this construction effort could take around 7 years.
    In addition, we estimate State would need substantial numbers of
    additional staff to process visas to meet the increased workload--
    approximately 540 new Foreign Service officers at a cost of around $185
    million to $201 million per year, and 1,350 local Foreign Service
    national staff at a cost of around $168 million to $190 million per
    year, as well as additional management and support positions overseas
    and in Washington, at a cost of around $93 million to $111 million per
    year. Because VWP elimination would increase the number of travelers
    needing a visa, we estimate annual visa fee revenues would increase
    substantially, by about $1.7 billion to $1.8 billion, and would offset
    the year-to-year recurring staffing costs.[Footnote 7] State has done
    limited planning for how it would address the increased visa demand if
    the Visa Waiver Program were suspended or eliminated. Although State
    periodically estimates global growth in visa demand, it has not
    developed estimates on what growth in visa demand could result from the
    elimination of the program in order to plan for that scenario. In
    addition, State has not evaluated all of the options for how to meet
    the facility and staffing needs described previously, Moreover, posts
    we visited had not prepared contingency plans. Embassy officials in the
    three VWP countries we visited told us that State had not instructed
    them to undertake planning for this scenario and that our visits there
    had fostered their first thinking on the matter. State said that it had
    not developed plans or tasked posts with contingency planning because
    it did not see program suspension or elimination as in line with
    current U.S. government policy.

    Adding countries to the Visa Waiver Program would reduce visa demand in
    those countries, but would likely have a relatively limited effect
    overall on resources needed to meet visa demand and on State's visa fee
    revenues. Visa volume is relatively small in most of the Road Map
    countries; for instance, the recent visa volume in Estonia and the
    Czech Republic, two countries currently being considered for expansion,
    is only around 6,000 visas and 32,500 visas per year, respectively.
    Further, even if all 13 Road Map countries were to join the program,
    and if all of those countries' citizens who previously traveled with
    visas now were to travel to the United States without visas, the total
    reduction in visa demand would be only around 710,000--and over 400,000
    of this reduction would be in South Korea alone. Such a reduction in
    workload would, we estimate, permit State to move about 21 to 31
    Foreign Service officers to other posts in need, and to cut 52 to 77
    Foreign Service national positions overall. U.S. consular management
    officials at locations we visited stated that, if their posts were
    added to the Visa Waiver Program, they would nonetheless need to retain
    a certain number of staff for several reasons--primarily to address
    projected growth in other types of visas--and therefore would be
    reluctant to lose more than 50 percent of their Foreign Service
    officers processing visas until they better understood their new
    staffing needs. In addition, though program expansion would result in
    less space being needed for visa operations, this would likely result
    in little or no building or lease savings because any resulting excess
    consular space is in government-owned facilities, with other U.S.
    government offices, and could not be sold. If all 13 Road Map countries
    were admitted to the Visa Waiver Program, we estimate that State would
    lose approximately $74 million to $83 million each year in collected
    visa fees, offsetting any savings in personnel costs. State would
    likely be able to accommodate program expansion with minimal disruption
    because of the limited impact expected on staffing and facilities.

    State and DHS officials have stated that the implementation of ESTA
    could increase visa demand in current VWP countries, though neither
    State nor DHS has developed estimates of the increase. As a result,
    State has not yet developed plans to manage the increased demand, which
    officials agreed would have the greatest impact in VWP countries with
    the highest numbers of travelers to the United States. DHS is currently
    developing ESTA and is uncertain how many applicants would likely be
    rejected through the ESTA screening process and therefore required to
    apply for a visa. DHS officials told us they believed that, when ESTA
    is fully implemented, less than 1 percent of all VWP country travelers
    would be rejected by the ESTA screening. However, DHS officials also
    told us the rejection rate could be 2 percent to 3 percent in early
    years, eventually tapering off to 1 percent, as the system became more
    established and travelers became more acclimated to using it. In
    addition, State and embassy officials believe that some travelers might
    choose to apply for a visa rather than face potential, unexpected
    travel disruptions due to ESTA. Neither DHS nor State has attempted to
    estimate how ESTA would affect visa demand, and, as a result, State has
    not estimated what additional resources would be needed to manage the
    demand, and what additional visa fees would be received. However, State
    officials told us that, if 1 percent to 3 percent of current VWP
    travelers came to embassies in VWP countries for visas, it could
    greatly increase visa demand at some locations, which could
    significantly disrupt visa operations. For example, if 1 percent of the
    United Kingdom citizens who currently travel to the United States
    without visas needed to or chose to apply for a visa, visa demand there
    could increase by 35,000 per year, or around a 31 percent increase in
    visa workload. Embassy officials in the three VWP countries we visited
    told us that if 3 percent of current visa waiver travelers applied for
    visas, it would result in visa demand that would overwhelm their
    current staffing and facilities. DHS officials told us that DHS has not
    determined what tests, if any, it will conduct to study ESTA rejection
    rates and determine ESTA's impact on visa demand. Furthermore, State
    has no plans to study how implementation of ESTA might affect the
    number of travelers who would choose to apply for a visa rather than
    using ESTA. State indicated that it has not developed plans for how it
    will manage the expected increase in visa demand, citing lack of
    information from DHS on the anticipated rejection rates of ESTA.

    To ensure that State is prepared to address the possible huge increases
    in visa demand that could result from elimination of the Visa Waiver
    Program, we are recommending that the Secretary of State develop
    contingency plans for VWP countries, which would include identifying
    what options State has for providing additional resources and taking
    actions that could be needed, as well as the extent to which increased
    visa fees would cover the cost of these resources.

    In addition, to ensure that State is prepared to manage a potential
    increase in visa demand resulting from the implementation of ESTA, we
    are recommending that DHS and State develop estimates of increased visa
    demand in VWP countries. Based on these estimates, we recommend that
    State develop plans for how it will manage the increased workload.

    We requested comments on this draft from State and DHS. Their comments
    are reprinted in appendixes II and III, respectively.

    State said it would ask U.S. embassies to discuss management plans in
    the event that the Visa Waiver Program were eliminated, but did not
    indicate whether it concurred with our recommendation that State
    conduct contingency planning. State agreed it was crucial to plan for
    the impact that ESTA may have on the 27 VWP countries. However, State
    said its ability to plan for the implementation of ESTA was limited by
    the fact that DHS had not resolved a significant number of crucial
    details about ESTA.

    DHS agreed with our recommendation that it work with State to develop
    estimates of the impact of ESTA implementation on visa demand. DHS said
    that it has been coordinating with State as DHS develops ESTA and plans
    its implementation.

    Background:

    The Visa Waiver Program was created by legislation[Footnote 8] in 1986
    to allow visa-free travel in some instances to citizens of select
    countries. According to State, the program facilitates international
    travel for foreign nationals seeking to visit the United States each
    year and allows State to allocate resources to visa-issuing posts in
    countries with higher-risk applicant pools. The program accepted its
    first participant country--the United Kingdom--in 1988. Currently 27
    countries participate in the program.[Footnote 9] See figure 1 for a
    map of the VWP countries.

    Figure 1: Current Visa Waiver Program Countries:

    This figure is a map of the current Visa Waiver program countries.

    Iceland;
    United Kingdom;
    Ireland;
    France;
    Spain;
    Portugal;
    Andorra;
    Switzerland;
    Monaco;
    Italy;
    San Marino;
    Liechtenstein;
    Slovenia;
    Austria;
    Luxembourg;
    Germany;
    Denmark;
    Sweden;
    Finland;
    Norway;
    The Netherlands;
    Belgium;
    Japan;
    Singapore;
    Brunei;
    Australia;
    New Zealand.

    [See PDF for image]

    Source: GAO; Map Resources (image).

    [End of figure]

    See table 1 for a list of current VWP countries and the average number
    of travelers to the United States and average number of visas issued
    from 2001 to 2007. This table demonstrates that most citizens from
    these countries who travel to the United States do so through the Visa
    Waiver Program, rather than by obtaining a visa.

    Table 1: Current VWP Countries and Average Number of Travelers and
    Average Number of Visas Issued from 2001 to 2007:

    Country: Andorra;
    Average Number of Travelers to the United States: 645;
    Average Number of Visas Issued: 29.

    Country: Australia;
    Average Number of Travelers to the United States: 501,477;
    Average Number of Visas Issued: 30,439.

    Country: Austria;
    Average Number of Travelers to the United States: 119,790;
    Average Number of Visas Issued: 6,194.

    Country: Belgium;
    Average Number of Travelers to the United States: 153,544;
    Average Number of Visas Issued: 6,215.

    Country: Brunei;
    Average Number of Travelers to the United States: 1,050;
    Average Number of Visas Issued: 175.

    Country: Denmark;
    Average Number of Travelers to the United States: 146,217;
    Average Number of Visas Issued: 8,028.

    Country: Finland;
    Average Number of Travelers to the United States: 79,802;
    Average Number of Visas Issued: 5,029.

    Country: France;
    Average Number of Travelers to the United States: 869,331;
    Average Number of Visas Issued: 47,690.

    Country: Germany;
    Average Number of Travelers to the United States: 1,296,681;
    Average Number of Visas Issued: 64,043.

    Country: Iceland;
    Average Number of Travelers to the United States: 33,859;
    Average Number of Visas Issued: 1,512.

    Country: Ireland;
    Average Number of Travelers to the United States: 266,969;
    Average Number of Visas Issued: 16,462.

    Country: Italy;
    Average Number of Travelers to the United States: 555,126;
    Average Number of Visas Issued: 26,029.

    Country: Japan;
    Average Number of Travelers to the United States: 3,261,747;
    Average Number of Visas Issued: 94,064.

    Country: Liechtenstein;
    Average Number of Travelers to the United States: 1,764;
    Average Number of Visas Issued: 54.

    Country: Luxembourg;
    Average Number of Travelers to the United States: 7,005;
    Average Number of Visas Issued: 311.

    Country: Monaco;
    Average Number of Travelers to the United States: 711;
    Average Number of Visas Issued: 24.

    Country: The Netherlands;
    Average Number of Travelers to the United States: 451,505;
    Average Number of Visas Issued: 15,304.

    Country: New Zealand;
    Average Number of Travelers to the United States: 155,792;
    Average Number of Visas Issued: 9,359.

    Country: Norway;
    Average Number of Travelers to the United States: 125,156;
    Average Number of Visas Issued: 8,656.

    Country: Portugal;
    Average Number of Travelers to the United States: 90,928;
    Average Number of Visas Issued: 4,831.

    Country: San Marino;
    Average Number of Travelers to the United States: 495;
    Average Number of Visas Issued: 19.

    Country: Singapore;
    Average Number of Travelers to the United States: 98,911;
    Average Number of Visas Issued: 8,703.

    Country: Slovenia;
    Average Number of Travelers to the United States: 10,994;
    Average Number of Visas Issued: 1,171.

    Country: Spain;
    Average Number of Travelers to the United States: 397,028;
    Average Number of Visas Issued: 18,740.

    Country: Sweden;
    Average Number of Travelers to the United States: 247,809;
    Average Number of Visas Issued: 13,254.

    Country: Switzerland;
    Average Number of Travelers to the United States: 214,781;
    Average Number of Visas Issued: 10,822.

    Country: United Kingdom;
    Average Number of Travelers to the United States: 3,543,984;
    Average Number of Visas Issued: 113,534.

    Country: Total;
    Average Number of Travelers to the United States: 12,633,101;
    Average Number of Visas Issued: 510,693.

    Source: GAO analysis of State and DHS data.

    [End of table]

    The Visa Waiver Program affects U.S. security, trade, commerce,
    tourism, diplomatic, and other interests. Our previous work has found
    that eliminating the program could have significant negative effects on
    these interests, as well as on U.S. relationships with VWP countries.
    For example, if the United States decided to eliminate the program,
    those eliminated countries would likely reciprocate and require
    Americans to obtain visas before visiting their countries.

    Visa Fee:

    State has the authority, by law,[Footnote 10] to charge a fee for visas
    it issues to foreign nationals. According to State, State attempts to
    recover its costs for processing a visa with its fee, but the fee does
    not cover all associated processing costs.[Footnote 11] Consular
    Affairs officials said this cost recovery includes the direct costs of
    the activity, such as the costs of biometric information, conducting
    name checks, interviewing applicants, conducting follow-up
    investigations if necessary, and printing the visa. It also includes
    what Consular Affairs officials called the indirect costs of whatever
    percentage of a visa-processing staff position overseas is spent
    processing visas. The visa fee is neither meant, nor used, for covering
    the costs of facilities used to process visas, according to State.

    State's Efforts to Address Growing Visa Demand:

    The global demand for U.S. visas has grown substantially in recent
    years, and State expects it to continue to grow in the foreseeable
    future. In 2006, according to State, U.S. embassies processed over 8
    million visa applications and issued 5.84 million visas worldwide,
    which includes the more than 700,000 visas issued in Road Map
    countries. This included short-term business and tourism visas, as well
    as visas for students, temporary workers, foreign exchange visitors,
    and other visa types. As we reported in July of 2007, State has had
    difficulty meeting growing visa demand over the long term, which has
    led to operational challenges, including long wait times.[Footnote 12]
    We found that, though State has attempted to address this demand by
    adding and reallocating staff worldwide, even with the increased
    staffing, State has not been able to keep pace with visa demand. In
    addition, we testified in August of 2007[Footnote 13] that State's
    initiative to address its staffing shortages did not fully meet its
    goals and staffing shortfalls remained a problem.

    Security Threats Related to the Visa Waiver Program:

    Some members of Congress have stated and agency officials have
    acknowledged that the Visa Waiver Program presents security risks,
    citing terrorist attacks and plots involving VWP travelers. One of the
    terrorists involved in the attack against the United States on
    September 11, 2001, Zacarias Moussaoui, entered the country under the
    program.[Footnote 14] In addition, since the 9/11 attacks, there have
    been some high-profile terrorist plots emanating from VWP countries. In
    December of 2001, British citizen Richard Reid, flying to the United
    States under the Visa Waiver Program from France, attempted to detonate
    explosives midflight, but was prevented from doing so by flight
    attendants and passengers. In August of 2006, U.S. and British security
    officials announced the disruption of a plot by British citizens to use
    liquid explosives to blow up multiple airliners during flights to the
    United States. Finally, as noted earlier, in September of 2007, the
    Director of National Intelligence testified that Al Qaeda is recruiting
    Europeans because many of them do not require a visa to enter the
    United States. The director noted that this recruiting tactic provides
    Al Qaeda with an "extra edge in getting an operative or two or three
    into the country with the ability to carry out an attack that might be
    reminiscent of 9/11."

    Flexibility to Expand Visa Waiver Program:

    In 2005, President Bush announced plans to work with 13 Road Map
    countries to facilitate their eventual entry into the Visa Waiver
    Program. Figure 2 shows the 13 Road Map Initiative countries.

    Figure 2: Road Map Initiative Countries:

    This figure is a map showing the Road Map Initiative countries.

    Czech Republic;
    Hungary;
    Romania;
    Bulgaria;
    Greece;
    Malta;
    Cyprus;
    Slovekia;
    Poland;
    Lithuania;
    Latvia;
    Estonia;
    South Korea.

    [See PDF for image]

    Source: GAO Map Resources (image).

    [End of figure]

    See table 2 for a list of current Road Map Initiative countries and
    those countries' average number of travelers to the United States and
    average number of visas issued from 2001 to 2007. This table shows the
    number of travelers from Road Map countries to be around 1 million per
    year.

    Table 2: Road Map Initiative Countries and Average Number of Travelers
    and Average Number of Visas Issued from 2001 to 2007:

    Country: Bulgaria;
    Average Number of Travelers to the United States: 32,229;
    Average Number of Visas Issued[A]: 25,295.

    Country: Cyprus;
    Average Number of Travelers to the United States: 8,028;
    Average Number of Visas Issued[A]: 4,911.

    Country: Czech Republic;
    Average Number of Travelers to the United States: 18,908;
    Average Number of Visas Issued[A]: 32,534.

    Country: Estonia;
    Average Number of Travelers to the United States: 6,145;
    Average Number of Visas Issued[A]: 6,053.

    Country: Greece;
    Average Number of Travelers to the United States: 52,044;
    Average Number of Visas Issued[A]: 34,146.

    Country: Hungary;
    Average Number of Travelers to the United States: 38,828;
    Average Number of Visas Issued[A]: 22,925.

    Country: Latvia;
    Average Number of Travelers to the United States: 8,703;
    Average Number of Visas Issued[A]: 7,648.

    Country: Lithuania;
    Average Number of Travelers to the United States: 13,028;
    Average Number of Visas Issued[A]: 10,995.

    Country: Malta;
    Average Number of Travelers to the United States: 3,780;
    Average Number of Visas Issued[A]: 3,021.

    Country: Poland;
    Average Number of Travelers to the United States: 160,089;
    Average Number of Visas Issued[A]: 106,823.

    Country: Romania;
    Average Number of Travelers to the United States: 46,347;
    Average Number of Visas Issued[A]: 37,754.

    Country: Slovakia;
    Average Number of Travelers to the United States: 17,551;
    Average Number of Visas Issued[A]: 18,253.

    Country: South Korea;
    Average Number of Travelers to the United States: 693,175;
    Average Number of Visas Issued[A]: 401,594.

    Country: Total;
    Average Number of Travelers to the United States: 1,098,855;
    Average Number of Visas Issued[A]: 711,952.

    Source: GAO analysis of State and DHS data.

    [A] According to State officials, the number of visas issued in a
    country could exceed the number of travelers from the same country due
    to several factors. For instance, individuals issued visas may not
    travel in that year, and visas may be issued there to citizens from
    other countries (third country nationals).

    [End of table]

    In August of 2007, Congress passed the 9/11 Act,[Footnote 15]which
    authorizes the Secretary of Homeland Security, in consultation with the
    Secretary of State, to waive the low, nonimmigrant visa-refusal rate
    requirement[Footnote 16] for countries that meet certain conditions
    enumerated in the act, including law enforcement and intelligence
    conditions. For example, countries must cooperate with the United
    States on counterterrorism initiatives. However, before the Secretary
    of Homeland Security can exercise this new authority, the 9/11 Act
    requires that the department complete certain actions aimed at
    enhancing the security of the program.

    One of these required actions is that the Secretary of Homeland
    Security must develop and certify the implementation of ESTA in VWP
    countries.[Footnote 17] According to DHS, ESTA will allow DHS to screen
    citizens from VWP countries who wish to travel to the United States
    before they depart for U.S. ports of entry.[Footnote 18] Officials told
    us that DHS will advise applicants to go online at least 72 hours
    before the date they plan to depart for the United States in order to
    complete the ESTA application, which will collect electronically
    information similar to the information collected in paper form by
    CBP,[Footnote 19] which all VWP travelers present to CBP officers upon
    arrival at a port of entry. According to DHS, after submitting the
    application,[Footnote 20] DHS determines the applicant's eligibility to
    travel under the Visa Waiver Program and whether there exists a law
    enforcement or security risk in permitting the applicant to travel to
    the country under the program. To the extent possible, DHS says,
    applicants will find out almost immediately whether their travel has
    been authorized, in which case they are free to travel to the United
    States, or if their application has been rejected, in which case they
    are ineligible to travel to the United States under the Visa Waiver
    Program. Those found ineligible to travel under the Visa Waiver Program
    must apply for a visa at a U.S. embassy in order to travel to the
    United States. At the embassy, foreign citizens whose ESTA applications
    were rejected apply for a visa and pay the visa fee and are either
    approved to travel to the United States or denied. Figure 3
    demonstrates how ESTA will work, according to DHS and State.

    Figure 3: Foreign Citizens Apply through ESTA for Travel to the United
    States:

    This figure is a flow chart illustrating how foreign citizens apply
    through ESTA for travel to the United States.

    [See PDF for image]

    Source: GAO analysis of DHS and State information; Nova development
    (clip art).

    Note: In addition to the process described above, CBP officers screen
    travelers at U.S. ports of entry and can deny admission if the traveler
    is determined for any reason to be inadmissible under U.S. law.

    [End of figure]

    Elimination of Visa Waiver Program Could Dramatically Increase Visa
    Demand and Overwhelm Visa Operations in the Near Term, but State Has
    Not Developed Contingency Plans:

    Elimination or suspension of the Visa Waiver Program could cause
    dramatic increases in the demand for visas that could overwhelm visa
    operations in the near term. To meet visa demand, State would need
    substantially more staff and facilities. State also would receive large
    increases in the amount of visa fees collected, which would offset the
    costs for staff, but not the cost of additional facilities. State has
    conducted limited planning to address the potential impact of Visa
    Waiver Program elimination or suspension.

    Visa Demand Would Increase Dramatically if the Program Were Eliminated
    or Suspended:

    Elimination or suspension of the Visa Waiver Program could cause
    dramatic increases in the demand for visas. We estimate that, given
    existing travel patterns, the annual demand for visas at all VWP posts
    combined could jump from over 500,000 to as much as around 12.6
    million,[Footnote 21] a level of demand that would overwhelm existing
    staffing and facility resources. For example, the U.S. mission in
    Japan, a post that is accustomed to processing around 94,000 visas per
    year, could find 3.3 million potential travelers seeking visas if the
    program were eliminated. Even countries that have smaller numbers of
    annual travelers to the United States could see substantial demand
    increases. For example, in Singapore, the U.S. embassy--accustomed to
    processing around 9,000 visas per year--could see visa demand grow
    almost 11-fold to nearly 100,000.

    State Would Need Substantial Increases in Staff to Meet Increased Visa
    Demand:

    If the Visa Waiver Program were eliminated or suspended, State
    officials told us that existing visa staffing resources would be unable
    to meet the new visa demand. As a result, State would need a
    substantial increase in staff to process visas to meet the increased
    workload. State officials told us that, over the long term, they would
    likely hire Foreign Service officers and Foreign Service national staff
    to support those Foreign Service officers, though these officials
    acknowledged they have not evaluated all of the options for meeting
    their staffing needs for this purpose. At three U.S. embassies we
    visited in VWP countries--Japan, France, and Spain--embassy officials
    told us they would need hundreds of new Foreign Service officers to
    perform visa interviews and adjudicate visa applications for the
    millions of new visa applicants arriving at the embassies. In Japan,
    for instance, we estimate the embassy would need at least 134 new
    Foreign Service officers (an increase of 515 percent above the current
    visa Foreign Service officer workforce of 26) to meet the expected
    increased visa demand of over 3.3 million new applicants, as well as
    around 334 new Foreign Service nationals (an increase of 451 percent
    over the existing Foreign Service national workforce of 74). We
    estimate that State would have to hire around 540 new Foreign Service
    officers worldwide, at an estimated cost of between $185 million and
    $201 million per year. In addition, State would have to hire around
    1,350 new Foreign Service national staff worldwide, which would cost
    around $168 million to $190 million per year. Finally, State told us
    these new overseas positions would need the management and support of
    additional staff overseas and in Washington; we estimated these costs
    at $93 million to $111 million per year. Over a 10-year period after
    the elimination of the program, these costs would total between $4.4
    billion and $4.9 billion.[Footnote 22]

    State officials told us that a hiring effort of this kind would be
    historic in its scope and very difficult to undertake. Both Consular
    Affairs and embassy officials told us they were unsure exactly how
    State would accomplish a hiring increase of this magnitude, given
    current staffing and funding levels. Consular and embassy officials
    told us in the event that only one of the larger current VWP countries
    were dropped from the program, State may be able to provide a surge of
    staff on temporary duty to cope with the immediate spike in visa demand
    in that country, though State had not developed any plans on how to do
    so. However, these officials noted, with all 27 countries, or even
    several of the larger VWP countries dropped from the program, it would
    be impossible to meet new demand with existing staff. Moreover,
    consular officials stated that it could be very difficult for State to
    hire and for its Foreign Service Institute to train the number of staff
    that would be needed in a short period of time. For instance, from
    fiscal year 2005 to 2007, State produced around 300 to 400 new Foreign
    Service officers per year for all global State needs. As many as 200 to
    300 of these officers entered into consular functions upon their
    initial deployment overseas to enable State to meet recent year-to-year
    visa demand. State, however, would need around 2 to 3 times this number
    to meet the new demand for visas in the event of VWP elimination.

    State Could Need Dozens of New Facilities Costing Billions of Dollars
    to Accommodate Increased Visa Demand:

    Though Consular Affairs officials told us they have not fully analyzed
    the extent to which demand increases would impact resources in the
    event of program elimination, they provided us with information
    indicating they could need approximately 45 new buildings to handle the
    increased visa demand. OBO officials said this estimate was generally
    realistic, based on the potential increases in staffing that could be
    needed in the event of program elimination and the capacity of
    buildings to absorb those levels of new staff. However, both OBO and
    Consular Affairs officials indicated that it was impossible to predict
    the exact number of facilities that would be needed. OBO, Consular
    Affairs, and embassy officials told us it would be challenging to build
    these facilities in a timely and cost-effective manner or,
    alternatively, to find enough suitable space that could be leased for
    this purpose. State officials told us they would immediately outgrow
    their current visa processing space in dozens of posts, and embassy
    officials in all three VWP countries we visited said they would need
    new buildings to accommodate visa demand. In fact, these embassy
    officials noted that a relatively small increase in visa demand would
    cramp visa waiting rooms and consular adjudicating officer workspace.
    In addition, embassy officials told us it would be extremely difficult
    to find suitable land that would provide the space and the setting
    necessary for building, or leasing, according to State's building and
    security standards. Embassy officials in these countries added that
    land, facility construction costs, and leasing costs in their host
    countries would be extremely expensive--among the most expensive in the
    world. OBO officials confirmed that VWP countries' real estate markets
    did not offer easy or inexpensive opportunities for building new
    embassy or separate annex buildings for consular use. OBO officials
    further stated that finding appropriate sites and negotiating sales in
    this type of environment would not only cost more, but also would
    likely take longer to accomplish, tying up OBO resources and
    potentially delaying the point at which visa operations could resume
    within a U.S. mission. Until long-term arrangements are made to meet
    facility needs, OBO officials said, the embassy would likely be forced
    to lease space to accommodate increased visa demand.

    We calculated that it would cost between $3.8 billion and $5.7 billion
    to construct 45 new facilities in these countries. This total cost of
    $3.8 billion to $5.7 billion would include: (1) new building
    construction costs, (2) the costs of leasing temporary facilities to
    accommodate visa operations while new facilities are constructed, (3)
    facility operations and maintenance costs, and (4) the cost of
    additional OBO staff. OBO officials told us that if these 45 buildings
    supplanted those already scheduled to be constructed, it could take
    around 7 years to finish the design, planning, and construction so that
    visa operations could be conducted there. However, if OBO were to
    proceed with its existing building schedule in addition to the 45 new
    facilities, it would require an increase of approximately 400, or
    around 40 percent more, full-time permanent or temporary contractor
    staff. If OBO hired a mix of around 400 full-time and contractor staff,
    it would cost between $648 million and $897 million over the roughly 7
    years. OBO officials told us it would be difficult to find that many
    staff without using contractors. In addition, OBO noted that since the
    staff would be employed for only that 7-year period of time and phased
    out at the end of this period, there would be an advantage to hiring
    contractors since OBO would not have to provide them with benefits or
    severance pay. In addition, we estimated the cost of leasing facilities
    to accommodate dramatically increased visa operations over this 7-year
    construction period would be between $226 million and $416 million.

    State Would See Significant Increases in Visa Revenues, Offsetting New
    Staffing Costs:

    While staffing and facilities needs would increase if the Visa Waiver
    Program were eliminated, this scenario also would increase the number
    of travelers needing a visa; as a result, we estimate visa fee revenues
    would increase substantially. Using the current fee of $131 per
    application, we calculated the increase in State's visa revenue to be
    $1.7 billion to $1.8 billion per year. We estimate that this increased
    revenue would offset the year-to-year recurring costs associated with
    new staff. However, since visa fees would not be collected until the
    end of the first year, the initial annual staffing costs of $447
    million to $486 million would not be offset by visa fees. In addition,
    visa fee revenues would be far less than the costs for facility
    construction and, further, are not used for the purpose of offsetting
    facility construction costs--the largest portion of the initial costs-
    -or the year-to-year facility maintenance costs on those facilities.

    State Has Done Limited Planning to Address the Impact of Visa Waiver
    Program Elimination:

    Though State has made efforts to address long-term growth in visa
    demand, as noted earlier, the department has conducted limited planning
    to address the significant operational challenges that could result
    from the potential elimination of the Visa Waiver Program. State
    Department and federal guidelines have highlighted the importance of
    planning for potential program changes that could impact operations.
    This is particularly important given that any significant disruptions
    to U.S. visa operations could have severe repercussions on U.S. travel,
    trade, business, tourism, and diplomatic interests. State's Performance
    Plan for the Bureau of Consular Affairs for 2007 sets a performance
    goal of "Proper Visa Adjudication" and acknowledges challenges that
    could seriously impede progress would include "an extended disruption
    of international travel and any significant change in participation in
    [the Visa Waiver Program]." State and embassy officials told us during
    our review that the elimination of the Visa Waiver Program could cause
    such disruptions of international travel. According to internal control
    standards for the federal government,[Footnote 23] once an agency has
    set its objectives and identified the risks that could impede the
    efficient and effective achievement of those objectives at the entity
    level and the activity level, the agency should analyze those risks for
    their possible effect. Management then should formulate an approach for
    risk management and decide upon the internal control activities
    required to mitigate those risks and achieve the internal control
    objectives of efficient and effective operations.

    Although State has identified risks, it has not developed a plan for
    how it would deal with these risks. State has conducted limited
    planning to prepare for the possibility of Visa Waiver Program
    elimination, though such a scenario could create significant
    operational challenges for State, as visa demand would dramatically
    increase. Specifically, several years ago, State undertook some
    preliminary thinking about the scenario--including the general
    magnitude of the resource challenges that would be involved--and
    acknowledged the importance of doing so; we reviewed the documentation
    provided and found that the limited planning was general in nature,
    largely outdated, and does not address the full range of the challenges
    that would arise, particularly how to provide the additional staffing
    resources and facilities needed. For instance, a memo from Consular
    Affairs to OBO requests that OBO identify the space requirements that
    might be needed in the event of VWP elimination. However, there is no
    information about how OBO would acquire the substantial amount of
    additional space needed if the program were eliminated. State officials
    told us they did not think planning for program elimination or
    suspension was appropriate, given that current U.S. government policy
    does not support program elimination. However, in September 2007, the
    Director of National Intelligence testified that Al Qaeda is recruiting
    Europeans because many of them do not require a visa to enter the
    United States, which, he noted, provides Al Qaeda with an "extra edge
    in getting an operative or two or three into the country with the
    ability to carry out an attack that might be reminiscent of 9/11."
    Moreover, DHS, State, and embassy officials have acknowledged the
    program could be suspended or eliminated in the event of a major attack
    emanating from a VWP country.

    If State does not develop contingency plans and the program is
    eliminated, State could face tremendous challenges addressing staffing
    and facilities shortfalls. State has had problems dealing with large
    demand increases in the past. In 2007, when new passport requirements
    were implemented, State faced substantial increases in demand for
    passports. However, because State had not adequately planned for the
    implications of these new requirements, it faced shortages in staffing
    and other resources that led to tremendous backlogs that were only
    addressed when State redeployed domestic and overseas staff and took
    other emergency measures to address the surge in demand.[Footnote 24]
    Consular officials in Washington told us that the impact of the new
    passport requirements on that process and the resource shortages that
    State faced in 2007 would be minor compared to the challenges State
    would face in meeting visa demand in the event that the Visa Waiver
    Program were eliminated. For instance, given the potential historic
    level of visa demand that program elimination could bring about and
    State's inadequate resources to address this demand, State officials
    told us they would need to find creative staffing and facility
    solutions in the short term and, moreover, may need to make choices
    regarding changes in resource allocation, visa policies, and other
    considerations to ensure the right balance between security and
    facilitating legitimate travel. However, State has not developed a plan
    that identifies its options for meeting the facility and staffing needs
    described above, or how it would go about making any such changes.

    State officials at posts we visited in existing VWP countries told us
    they had not been contacted by their headquarters about undertaking any
    contingency planning in the event of program elimination. In addition,
    they said they had not been asked for data or post thinking on the
    issue, or been provided any information on how post activities,
    programs, or resources might change given such a scenario. Embassy
    officials in all three VWP countries we visited told us that our visit
    and questions had fostered their first real consideration of what was
    involved in these issues. Consular officials in these posts expressed
    concern to us that, in the absence of planning for this scenario, visa
    operations at their posts could be severely disrupted as existing
    staffing and facilities resources would be overwhelmed.

    Expansion of the Visa Waiver Program Would Reduce Visa Demand, but
    Likely Have Limited Effect on State's Visa Costs and Resources:

    Expansion of the Visa Waiver Program would reduce visa demand in Road
    Map countries, but have a limited effect on the costs and resources
    needed to meet the reduced demand and the amount of visa fees
    received.[Footnote 25] Expansion would only modestly reduce overall
    staffing needs. Further, expansion would not bring about significant
    cost savings from facilities, in part because Road Map countries lack
    consular or other embassy space that could be sold. If all 13 countries
    were admitted to the program, we estimate that State would stand to
    lose approximately $74 million to $83 million each year in collected
    visa fee revenues. State would likely be able to accommodate program
    expansion with relatively minimal disruption, therefore requiring
    limited planning because of the minimal impact expected on staffing and
    facilities.

    Expansion of the Visa Waiver Program Would Reduce Visa Demand in Road
    Map Countries:

    Visa demand in any Road Map country would decline after the country's
    admission to the program. However, visa volume is relatively small in
    most of the Road Map countries. For instance, the recent visa volume in
    Estonia and the Czech Republic, two countries currently being
    considered for expansion, is only around 6,000 visas and 32,500 visas
    per year, respectively. Even if all 13 Road Map countries were to join
    the program, and if all of those countries' citizens who previously
    traveled with visas were to travel to the United States without visas,
    the total reduction in visa demand would be only around 710,000; more
    than 400,000 of this reduction would be in South Korea alone. In
    addition, these posts, many of which already issue relatively small
    numbers of visas, would continue to experience some demand for tourism
    and business visas and continued growth in student, long-term work, and
    other types of visas. Officials told us they generally expect continued
    visa travel as some percentage of VWP travelers will be rejected by
    ESTA and directed to apply for a visa at the embassy. Further, consular
    officials told us they expect that some travelers may choose to obtain
    a visa rather than travel via the Visa Waiver Program due to the risk
    of being rejected by ESTA, as well as the greater flexibility a visa
    offers. For instance, travelers with a 10-year visa can choose to
    travel at any time during that 10-year period, and also can decide to
    extend the length of their visit for longer than the 90 days allowed
    under the program. In addition, consular officials in South Korea
    stated that they continue to have large increases year to year in other
    types of visas issued there. So, even if most demand for short-term
    business and tourism visas were to decrease following acceptance into
    the program, there could still be significant growth in demand for
    other types of visas. Consular officials in the Road Map countries we
    visited stated they expected that their visa volume in the near term
    would likely be between 20 percent and 40 percent of recent numbers of
    travelers--between 220,000 visas and 440,000 visas. Given all of these
    factors that could affect visa demand, consular management officials at
    locations we visited stated that, if their posts were added to the Visa
    Waiver Program, they would be reluctant in the near term to lose more
    than 50 percent of their Foreign Service officers processing visas
    until they better understand their new staffing needs.

    Expansion of the Visa Waiver Program Would Modestly Impact Overall
    Staffing Needs:

    Expansion of the Visa Waiver Program would modestly impact overall
    staffing needs in Road Map countries. Although consular conditions in
    Road Map countries vary, consular officials in the Road Map countries
    we visited expect modest reductions in their visa processing staff
    needs as these countries gain acceptance to the program. For example,
    in the three Road Map country posts of Athens, Prague, and Budapest,
    the combined annual visa workload of around 90,000 is relatively small,
    and consular management there told us that eliminating this workload
    would result in only around four fewer Foreign Service officer staff
    among the three countries. In the Czech Republic, where consular
    officials process around 32,500 visas per year, officials expect they
    will need only one fewer Foreign Service officer when accepted into the
    program, and only two to three fewer Foreign Service nationals.
    Similarly, consular officials expected relatively modest staff
    reductions for South Korea, where consular staff process around 402,000
    visas per year--the highest number of U.S. visas issued among Road Map
    countries. If South Korea is admitted to the program, consular
    officials expect to need 6 to 9 fewer Foreign Service officers and 15
    to 20 fewer Foreign Service nationals.[Footnote 26] In total, if all 13
    Road Map countries joined the program, we estimate that about 21 to 31
    Foreign Service officers could be moved to other posts in need of staff
    and 52 to 77 Foreign Service national positions could be cut.

    Beyond its limited impact on staffing in VWP Road Map countries,
    expansion of the program would have even less of an effect on State's
    overall worldwide staffing needs and costs. First, for fiscal year
    2006, Consular Affairs reported that posts in Road Map countries
    represented a small portion of total U.S. visa operations; these
    countries employed 105 Foreign Service officers and 301 other consular
    employees, less than 10 percent of the over 4,500 consular employees
    overseas in 2006. Moreover, officials in State's Consular Affairs
    Bureau said that Foreign Service officers no longer needed at new VWP
    posts will not be eliminated but rather transferred to other posts,
    thereby shifting, not eliminating, costs and revenues generated by
    those staff. Consular officials noted there is a need for additional
    staff in other countries with large backlogs of visa applications, such
    as China, India, and Mexico, and consular officials in South Korea
    noted that, if the country were accepted into the program, Foreign
    Service officers not needed would likely be transferred to such posts
    at the end of their regular tour of duty.

    Although acceptance into the Visa Waiver Program would reduce total
    visa processing costs for Road Map countries, State and embassy
    officials expect increases in some short-term costs, such as severance
    pay to the displaced Foreign Service national workforce and the costs
    of hiring new Foreign Service national staff to support the transferred
    Foreign Service officer staff at their new posts.[Footnote 27] State
    and embassy officials noted that short-term costs for severance
    payments to displaced Foreign Service national employees would vary
    depending on the laws of individual countries.[Footnote 28] We estimate
    that nonrecurring costs of expanding the program to Road Map countries
    would be between $3.7 million and $4.3 million--with around $3.3
    million to $3.9 million to cover severance costs and approximately
    $385,000 to $476,000 for the costs to hire and train additional
    supporting Foreign Service nationals in the Foreign Service officers'
    new locations.

    Little or No Consular Facilities Savings Anticipated as Road Map
    Countries Transition to the Visa Waiver Program:

    Embassy officials in Road Map countries we visited did not expect
    dollar savings from reduced facility usage after the countries are
    accepted into the Visa Waiver Program. In the countries we visited, the
    visa operations generally occupy a portion of embassy facilities. None
    of U.S. embassy visa operations in Road Map countries are currently
    housed in leased space, and therefore no lease savings will accompany
    reduced visa operations. Visa operations in South Korea, the Road Map
    country processing the greatest number of visas, are based in an
    embassy operating above normal capacity, and U.S. embassy officials
    there stated that any space freed as a result of gaining acceptance to
    the Visa Waiver Program would simply allow the existing consular space,
    which currently requires a waiver since it does not meet fire code, to
    operate under less cramped and strained conditions. Similarly, U.S.
    embassies in Road Map countries we visited in Eastern Europe do not
    expect to gain any facility cost savings as a result of joining the
    program.

    Reduced Visa Revenues Anticipated as Road Map Countries Transition to
    the Visa Waiver Program:

    Acceptance of Road Map countries into the program would significantly
    reduce the amount of visa fee revenues collected in those
    countries.[Footnote 29] While embassy officials in all four Road Map
    countries we visited told us they expected to retain some visa demand
    in the event their host country entered into the program, they agreed
    most business and tourism visa demands would significantly decrease.
    Assuming all 13 Road Map countries were admitted to the program and
    that most eligible foreign citizens traveled under the program, we
    estimate that State would lose approximately $74 million to $83 million
    each year in collected visa fees, generally offsetting any savings from
    reduced personnel costs.

    State Is Prepared to Adjust to Meet Program Expansion:

    State likely would be able to accommodate program expansion with
    minimal disruption because of the limited impact expected on staffing
    and facilities. As a result, preparing for potential program expansion
    would require little additional advanced planning by State. For
    example, as noted above, even in South Korea--the Road Map country
    issuing the highest number of U.S. visas, about 56 percent of all visas
    issued in Road Map countries--consular officials expected relatively
    modest staff reductions. Embassy officials in the four Road Map
    countries we visited told us that, were their host countries' entries
    into the program confirmed, they could take steps at the posts to
    adjust to and accommodate decreased visa demand and its impact on
    staffing and facility resources. In one Road Map country we visited,
    embassy officials told us that if they were instructed by State
    officials in Washington to prepare for immediate admission of the host
    country into the program, the embassy would make decisions about how to
    handle the repercussions of decreased visa demand on staffing and on
    current visa processing facility space. For example, given the
    decreases in the number of Foreign Service national staff positions
    needed at post under program expansion, embassy officials said they
    would try to find other positions for these staff, if possible, to ease
    the impact on the Foreign Service national workforce and mitigate
    potential severance costs. In addition, as discussed previously, while
    embassy officials in all four Road Map countries we visited said they
    did not think program expansion would significantly impact their
    mission's facilities, they noted that any freed space would be easily
    used by other consular or embassy functions, and such a transition
    would be planned and implemented by the embassy.

    ESTA Implementation Could Increase Visa Demand, but State and DHS Have
    Not Planned How to Manage an Increase:

    ESTA implementation could increase visa demand in existing VWP
    countries. However, State and DHS are uncertain how many applicants
    would likely be rejected through the ESTA screening process and
    therefore required to apply for a visa, and they also are unsure how
    many potential travelers would choose to get a visa rather than
    participate in the ESTA screening. State has not developed contingency
    plans for how it will manage the expected increase in visa demand,
    citing lack of information from DHS on the effect of ESTA.

    ESTA Implementation May Increase Visa Demand and Resource Needs, but
    Full Extent of Increase Remains Unknown:

    ESTA implementation will increase visa demand in VWP countries, though
    the full extent to which it will do so remains uncertain. DHS officials
    told us that, given CBP's operational experience administering the Visa
    Waiver Program as it currently exists, they currently believed that
    when ESTA is fully implemented, less than 1 percent of all VWP country
    travelers would be rejected by the ESTA screening. DHS officials also
    told us the rejection rate could be 2 percent to 3 percent in early
    years, eventually tapering off to 1 percent as the system became more
    established and travelers became more acclimated to using it, while
    some officials said it could range as high as 5 percent. However, DHS
    officials told us they can not yet determine the rate of rejection from
    ESTA, because DHS has not yet decided what databases it will use to
    screen names of ESTA applicants. In addition, given ESTA's potential
    for causing last-minute travel disruptions, consular staff at the posts
    we visited told us they believe an additional unknown number of
    travelers from VWP countries would choose instead to proactively apply
    for visas at embassies. For example, around 14 percent of annual
    entries to the United States from VWP countries are made by repeat
    travelers; one senior consular official estimated that these travelers
    who visit the United States multiple times a year may prefer to travel
    using a visa rather than through the program. Most officials predicted
    that the percentage of travelers who choose to obtain a visa could
    exceed potential ESTA rejection rates of 1 percent to 3
    percent.[Footnote 30] State officials told us that the influx of even a
    small percentage of current travelers in larger VWP countries to obtain
    visas could significantly disrupt visa operations at U.S.
    embassies.[Footnote 31] For example, if 1 percent of the United Kingdom
    citizens who currently travel to the United States without visas needed
    to or chose to apply for a visa, visa demand there could increase by
    35,000 per year, or around a 31 percent increase in visa workload.
    Further, embassy officials in the three VWP countries we visited told
    us that if 3 percent of current visa waiver travelers applied for
    visas, it would result in visa demand that would overwhelm their
    current staffing and facilities. However, DHS acknowledges that it does
    not know how many travelers may prefer to directly seek a visa rather
    than participate in ESTA-approved travel, and it acknowledges that ESTA
    rejection rates and the rate of voluntary visa travelers may vary by
    country.

    We developed a series of estimates of ESTA's potential impact on demand
    and consular staffing needs, as well as on visa fees. Though State
    officials provided us with data to support these estimates, they did
    not provide data on ESTA's impact on facility costs. A State official
    told us that predicting ESTA's impact was very difficult, particularly
    for facilities, and that developing such data for facilities would
    require an extensive analytical effort involving multiple offices
    within State, particularly OBO, as well as extensive management
    involvement--and, moreover, would take a long time. Our estimates in
    table 3 include scenarios where 1, 2, 3, 5, or 10 percent of travelers
    who currently travel under the Visa Waiver Program come to U.S.
    embassies for a visa, and they take into account increases in visa
    applications due to ESTA rejections as well as from travelers choosing
    voluntarily to apply for visas. Further, table 3 represents estimates
    of the potential increases in visa demand globally and for the largest
    VWP countries, as a result of the implementation of ESTA, assuming 1,
    2, 3, 5, or 10 percent of current VWP travelers went to the embassies
    to apply for a visa.

    Table 3: Potential Effects of ESTA on Visa Demand:

    Country: United Kingdom;
    Average number of visas issued annually: 113, 534;
    Average number of travelers annually: 3.54 million;
    If extra 1% of travelers, number of visas issued increases by: 35,440;
    If 2%: 70,880;
    If 3%: 106,320;
    If 5%: 177,200;
    If 10%: 354,400.

    Country: Japan;
    Average number of visas issued annually: 94,064;
    Average number of travelers annually: 3.26 million;
    If extra 1% of travelers, number of visas issued increases by: 32,617;
    If 2%: 65,235;
    If 3%: 97,852;
    If 5%: 163,087;
    If 10%: 326,175.

    Country: Germany;
    Average number of visas issued annually: 64,043;
    Average number of travelers annually: 1.3 million;
    If extra 1% of travelers, number of visas issued increases by: 12,967;
    If 2%: 25,934;
    If 3%: 38,900;
    If 5%: 64,834;
    If 10%: 129,668.

    Country: France;
    Average number of visas issued annually: 47,690;
    Average number of travelers annually: 869,000;
    If extra 1% of travelers, number of visas issued increases by: 8,693;
    If 2%: 17,387;
    If 3%: 26,080;
    If 5%: 43,467;
    If 10%: 86,933.

    Country: Italy;
    Average number of visas issued annually: 26,029;
    Average number of travelers annually: 555,000;
    If extra 1% of travelers, number of visas issued increases by: 5, 551;
    If 2%: 11,103;
    If 3%: 16,654;
    If 5%: 27,756;
    If 10%: 55,513.

    Country: Australia;
    Average number of visas issued annually: 30,439;
    Average number of travelers annually: 501,000;
    If extra 1% of travelers, number of visas issued increases by: 5,015;
    If 2%: 10,030;
    If 3%: 15,044;
    If 5%: 25,074;
    If 10%: 50,148.

    Country: Netherlands;
    Average number of visas issued annually: 15,304;
    Average number of travelers annually: 451,000;
    If extra 1% of travelers, number of visas issued increases by: 4,515;
    If 2%: 9,030;
    If 3%: 13,545;
    If 5%: 22,575;
    If 10%: 45,151.

    Country: Remaining 20 VWP members;
    Average number of visas issued annually: 119,590;
    Average number of travelers annually: 2.15 million;
    If extra 1% of travelers, number of visas issued increases by: 21,532;
    If 2%: 43,065;
    If 3%: 64,598;
    If 5%: 107,663;
    If 10%: 215,325.

    Country: Total;
    Average number of visas issued annually: 510,693;
    Average number of travelers annually: 12.6 million;
    If extra 1% of travelers, number of visas issued increases by: 126,331;
    If 2%: 252,662;
    If 3%: 378,993;
    If 5%: 631,655;
    If 10%: 1.26 million.

    Source: GAO analysis of State Department and DHS data.

    [End of table]

    All of these scenarios would place a strain on existing embassy
    staffing, particularly in larger VWP countries, while even small rates
    of increase in larger VWP countries could strain consular facilities,
    necessitating the construction of new facilities in some countries at
    potentially significant costs, according to State and embassy
    officials. As noted earlier, State has had a difficult time meeting
    recent staffing needs globally; State and embassy officials told us
    they could find it difficult to meet staffing needs in high-volume VWP
    posts in the near term if higher percentages of current travelers come
    to the embassies for visas. Furthermore, while we did not develop
    estimates of the number of facilities that would be needed, State and
    embassy officials agreed that the costs of new facilities could
    potentially be significant[Footnote 32] and that such facilities would
    most likely be needed in high-traveler-volume countries where existing
    facilities are more likely to become strained. Table 4 shows the
    impact, on all VWP countries combined, that such increases in visa
    demand--of 1, 2, 3, 5, or 10 percent--would have on staffing needs and
    visa revenues; the table does not include potentially significant
    facility costs. We estimate annual visa fee revenues would increase and
    offset the year-to-year recurring staffing costs. However, there would
    be a lag between when State would have to fund the staffing increases
    in the first year and when it would receive the offsetting increases in
    visa fees in the second year. Moreover, visa fee revenues would be less
    than the costs for facility construction, and, according to State, visa
    fee revenue is not used to offset the costs for constructing new
    facilities to process visas.

    Table 4: Estimated ESTA Impacts and Costs in Different Scenarios:

    % of current VWP travelers who could instead apply for a visa: 1%;
    Estimated increase in visa demand in current VWP countries: 126,331;
    Estimated increased number of FSO[A] staff needed: 11;
    Estimated cost of increased number of FSO staff: $4.2 million;
    Estimated increased number of FSN[B] staff needed: 28;
    Estimated cost of increased number of FSN staff: $4.2 million;
    Estimated increased amount of visa revenues collected: $16.55 million.

    % of current VWP travelers who could instead apply for a visa: 2%;
    Estimated increase in visa demand in current VWP countries: 252,662;
    Estimated increased number of FSO[A] staff needed: 23;
    Estimated cost of increased number of FSO staff: $8.3 million;
    Estimated increased number of FSN[B] staff needed: 56;
    Estimated cost of increased number of FSN staff: $8.5 million;
    Estimated increased amount of visa revenues collected: $33.1 million.

    % of current VWP travelers who could instead apply for a visa: 3%;
    Estimated increase in visa demand in current VWP countries: 378,993;
    Estimated increased number of FSO[A] staff needed: 44;
    Estimated cost of increased number of FSO staff: $16.2 million;
    Estimated increased number of FSN[B] staff needed: 110;
    Estimated cost of increased number of FSN staff: $16.5 million;
    Estimated increased amount of visa revenues collected: $49.65 million.

    % of current VWP travelers who could instead apply for a visa: 5%;
    Estimated increase in visa demand in current VWP countries: 631,655;
    Estimated increased number of FSO[A] staff needed: 67;
    Estimated cost of increased number of FSO staff: $24.7 million;
    Estimated increased number of FSN[B] staff needed: 167;
    Estimated cost of increased number of FSN staff: $25.1 million;
    Estimated increased amount of visa revenues collected: $82.75 million.

    % of current VWP travelers who could instead apply for a visa: 10%;
    Estimated increase in visa demand in current VWP countries: 1.26
    million;
    Estimated increased number of FSO[A] staff needed: 123;
    Estimated cost of increased number of FSO staff: $45.3 million;
    Estimated increased number of FSN[B] staff needed: 307;
    Estimated cost of increased number of FSN staff: $46.0 million;
    Estimated increased amount of visa revenues collected: $165.5 million.

    Source: GAO analysis of State Department and DHS data.

    [A] FSO = Foreign Service officer.

    [B] FSN = Foreign Service national.

    [End of table]

    Two high-traveler-volume VWP countries we visited in particular would
    be challenged to address the likely increased visa demand resulting
    from ESTA. In Japan, with around 3.26 million travelers to the United
    States each year, embassy officials told us that if visa demand
    increased by 1 percent of Japan's current VWP travelers, it would
    present significant challenges for their existing staff and a workload
    level that could not be sustained over the long term. An increase of 2
    percent would increase visa demand by about 70 percent over current
    levels; as a result, existing staff could not meet the demand, and
    current facility space would become crowded and strained to capacity.
    Any increase over 2 percent, embassy officials said, would overwhelm
    existing staff and facilities; more staff would be needed, and new
    facilities for processing visas would need to be obtained or
    constructed. In France, where about 870,000 citizens travel to the
    United States each year, embassy officials told us that if visa demand
    increased by 1 percent of France's current VWP travelers, their
    existing staff would be greatly challenged to meet the demand. They
    said that existing staff could handle this increase only for a
    temporary period of time without additional staff. An increase of 2
    percent could not be accommodated with existing staff, and visa waiting
    rooms and processing space, which are already crowded, would be
    strained, embassy officials said. However, if more staff were added,
    embassy officials told us the embassy could develop creative ways to
    work within the existing space, for example, by adding another shift
    for visa processing every day. An increase of 3 percent, embassy
    officials told us, would require acquiring or constructing a new visa
    processing facility. Figure 4 shows that the visa waiting room space in
    the U.S. embassy in Paris is already crowded.

    Figure 4: Crowded Visa Waiting Room in U.S. Embassy, Paris, April 2008:

    This figure is a photograph of a crowded visa waiting room in the U.S.
    Embassy in Paris in April 2008.

    [See PDF for image]

    Source: U.S. Embassy, Paris.

    [End of figure]

    State Has Not Developed Plans to Manage Increased Visa Demand Resulting
    from Implementation of ESTA:

    Though State has attempted to address general long-term growth in visa
    demand, the department has done little planning to address the
    increased visa demand that could result from implementation of ESTA,
    citing lack of information from DHS on the effect of ESTA. State
    Department and federal guidelines, as noted previously, have
    highlighted the importance of planning for potential program changes
    that could impact operations. Despite the fact that DHS officials have
    said they plan to have ESTA operational for all countries by mid-2009
    and for some countries by the summer of 2008, DHS officials told us the
    department has not determined what tests, if any, it will conduct to
    study ESTA rejection rates and determine ESTA's impact on visa demand.
    In addition, as noted earlier, State has not developed data on ESTA's
    likely impact on facility needs and costs, despite the fact that ESTA
    could be implemented by the summer of 2008 and that State officials
    have acknowledged that developing such data would be a complex and time-
    consuming process. Furthermore, embassy officials we met with in three
    VWP countries told us that they have neither prepared plans to address
    visa demand upon ESTA implementation, nor has State headquarters
    communicated with them in order to plan for this new requirement. For
    example, in one VWP country we visited, we found that State had begun
    plans for a new embassy facility, but no additional space had been
    included to accommodate additional visa demand, including demand
    resulting from ESTA implementation. Consular and management section
    officials there told us they had never heard of ESTA and that OBO had
    not raised the issue of additional demand with them or considered new
    visa demand in their initial design of the new facility. Officials told
    us that our visit and questions had fostered their first real
    consideration of what was involved in planning for the impact of ESTA.
    In addition, consular officials in the three VWP countries we visited
    expressed concern that, without information regarding the likely impact
    of ESTA on visa demand, they are not able to plan at the embassy level
    to address the staffing shortfalls and space limitations that could
    result from ESTA implementation.

    Conclusions:

    Many important factors need to be considered regarding potential
    changes to the Visa Waiver Program, given its impacts on U.S. security,
    trade, commerce, tourism, diplomatic, and other interests. Ensuring
    that the proper resources are in place to handle visa demand globally
    is essential for State to meet its mission to facilitate legitimate
    travel to the United States while screening out possible threats.
    Elimination of the Visa Waiver Program has the potential to
    dramatically increase visa demand, severely disrupting U.S. visa
    operations in the short term and costing billions of dollars. And,
    while State would likely be able to accommodate program expansion with
    minimal disruption, U.S. embassies soon will have to deal with the
    impact of the ESTA requirement, which could result in a substantial
    number of new travelers needing or choosing to obtain a visa,
    potentially creating significant resource gaps and affecting the
    ability of the United States to conduct visa operations globally. State
    has done limited planning in headquarters or the field for any such
    changes in the program. Given the resource and cost implications
    involved, it is imperative that State work with posts to plan for
    imminent as well as potential program changes. Though the likelihood of
    program elimination is unknown, having a comprehensive understanding of
    how staffing and facilities would be impacted will enable State to help
    Congress make informed decisions on the fate of the Visa Waiver Program
    and to devise broad measures to address the immense challenges that
    would follow elimination of the program, should it occur. In addition,
    the development of estimates of the increases in visa demand in high
    traveler volume countries likely to result from ESTA implementation
    would give State's headquarters and embassy officials the necessary
    information to make decisions on allocations of staff among posts and
    also would give State's Bureau of Overseas Buildings Operations the
    information it needs to construct any needed new facilities.

    Recommendations for Executive Action:

    We recommend that the Secretary of State develop contingency plans for
    U.S. embassies in Visa Waiver Program countries to address the
    potential increases in visa demand that could result from program
    elimination. These plans would include identifying what options State
    has for providing additional resources and taking actions that could be
    needed, as well as the extent to which increased visa fee revenues
    would cover the cost of these resources.

    In addition, we recommend that the Secretaries of Homeland Security and
    State develop estimates of increased visa demand in Visa Waiver Program
    countries resulting from ESTA implementation. These estimates would
    include information on how many applicants can be expected to be
    rejected from ESTA and how many potential travelers can be expected to
    choose to come to the embassy for a visa. Based on these estimates, we
    recommend that the Secretary of State develop plans for how the
    department will manage the increased workload in the existing 27 Visa
    Waiver Program countries.

    Agency Comments and Our Evaluation:

    State and DHS provided written comments on a draft of this report,
    which are reproduced in appendixes II and III, respectively. We also
    received technical comments from State and DHS, which we have
    incorporated throughout the report where appropriate.

    State said it would ask embassies to discuss management plans in the
    event that the program were eliminated, but did not indicate whether it
    fully concurred with our recommendation that State conduct contingency
    planning. State said that it has responded to situations that presented
    challenges to its workforce, during which it has considered and used
    several tools that could be helpful in addressing some of the
    challenges presented by program elimination. We believe that asking
    posts to discuss their management plans in the event the program were
    eliminated, as State said it would do, is a good step. In addition, we
    believe that State needs to develop contingency plans that include
    options for addressing program elimination so that State is better
    prepared to cope with the dramatic increases in workload that would
    result from the elimination of the program.

    State agreed with our recommendation that it develop estimates of, and
    conduct planning for, the impact of ESTA implementation, but said that
    its ability to do so was limited by the fact that DHS had not resolved
    a significant number of crucial details about ESTA and, as a result,
    had not provided State with key information it would need to conduct
    related planning. For example, according to State, CBP has provided
    data suggesting how many names might be rejected by ESTA by considering
    the rate of name rejections from CBP's Advance Passenger Information
    System (APIS) database. However, according to State and DHS, DHS and
    CBP have not decided which databases ESTA will screen against, and it
    is therefore unclear what the ESTA rejection rate will be. We believe
    it is important for DHS to determine which databases it will use for
    ESTA screening, so that it can develop accurate estimates of the number
    of people whose ESTA applications might be rejected, which is essential
    information for State's planning purposes. Moreover, State said there
    is no data on how many people would choose to obtain a visa to avoid
    the uncertainty associated with ESTA, and State believes that number
    could be significant. State said that the lack of such data is another
    factor complicating its planning for ESTA implementation. We agree that
    this is an important factor and that is why we recommend that DHS and
    State should develop a method for producing accurate information on the
    number of potential travelers who could be expected to choose to come
    to the embassy for a visa, rather than applying through ESTA.

    DHS agreed with our recommendation that it work with State to develop
    estimates of the impact of ESTA implementation on visa demand. DHS said
    that it has been coordinating with State as DHS develops ESTA and plans
    its implementation. However, as noted previously, DHS and State have
    not yet developed estimates of the changes in visa demand that could
    result from implementation of ESTA. For example, DHS has not determined
    how many VWP travelers would not be approved to travel under the
    program and would have to obtain visas. Without this information, it is
    difficult for State to plan for how it will meet changes in visa
    demand.

    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 report date. At that time, we will send copies of this report
    to interested congressional committees and to the Secretaries of State
    and Homeland Security. We will also make copies of this report
    available to others upon request. We will also make copies available at
    no charge on the GAO Web site at [hyperlink, http://www.gao.gov].

    If you or your staffs have any questions about this report, please
    contact me at (202) 512-4128 or fordj@gao.gov. Contact points for our
    Offices of Congressional Relations and Public Affairs may be found on
    the last page of this report. GAO staff who made major contributions to
    this report are listed in appendix IV.

    Sincerely yours,

    Signed by:

    Jess T. Ford:

    Director, International Affairs and Trade:

    [End of section]

    Appendix I: Scope and Methodology:

    We examined how three changes--Visa Waiver Program (VWP) elimination,
    program expansion, and implementation of the Electronic System for
    Travel Authorization (ESTA)--would affect the demand for visas, and how
    changes in demand would affect the resources the Department of State
    (State) needs and the amount of visa fee revenue that State receives.
    We recognized that there could be other implications of major changes
    in the program, particularly if the program were eliminated. These
    implications--for security, tourism, commerce, business, trade,
    diplomacy, and reciprocity regarding visa-free travel, for example--
    could potentially be significant. However, we limited the scope of our
    review to the impact on visa demand, visa resources--including staffing
    and facilities--and the associated costs and revenues.

    We undertook the following methodologies for all three of these
    objectives. We analyzed relevant law regarding the program and its
    requirements, and documentation, including State's most recent cost of
    consular services study from 2004, and met with State's Bureau of
    Consular Affairs to discuss the fee that State charges for visa
    applications, what costs of processing a visa the fee is intended to
    cover, and how much new revenue State would generate in the event of
    program elimination. To assess the staffing and resource costs to State
    under these scenarios, we developed our own high-level cost estimates,
    using State and Department of Homeland Security (DHS) data. DHS/U.S.
    Customs and Border Protection (CBP) provided us with data on the number
    of travelers from each VWP and Road Map country. State's Bureau of
    Consular Affairs provided us with information on the number of visas
    processed in VWP and Road Map countries as well as estimates on the
    number of visas that could be expected to be processed by a Foreign
    Service officer, the number of Foreign Service national staff that
    could be expected to support Foreign Service officers, and--for the
    elimination scenario--estimates of the number of new facilities that
    could be needed. State's Bureau of Overseas Buildings Operations (OBO)
    provided data on the cost, type, and size of recently completed U.S.
    government construction projects overseas, the costs and sizes of
    overseas leased facilities used for visa processing, and estimates of
    operations and maintenance costs for U.S. embassy facilities. State's
    Bureau of Resource Management provided information on the costs of
    Foreign Service officer and Foreign Service national staff. In
    addition, we collected post-specific data on the above costs when we
    traveled to selected U.S. embassies. We determined that the data
    provided to us were sufficiently reliable for the purposes of the
    report. We met with State officials to determine the sources of the
    data provided to us. For instance, State's data on the costs of putting
    a Foreign Service officer overseas came from Resource Management's
    database of actual expenditures, which they use to input costs and for
    budget purposes. In addition, we collected data from other sources to
    cross-check State data whenever possible. For instance, we collected
    data on the actual costs of Foreign Service officers and Foreign
    Service nationals in the specific countries we visited. Similarly, we
    cross-checked the costs of facility operations and maintenance against
    Department of Defense facilities pricing guide data to ensure
    reasonableness. Finally, the uncertainty analysis we conducted provided
    us with a level of confidence in our estimates, because we took into
    account and stated a range of possible costs spanning our point
    estimates. This analysis provided us with sufficient confidence for the
    high-level type of estimates we are presenting. We prepared the cost
    estimates using fiscal year 2007 constant dollars. For purposes of
    estimating State's costs, we assumed numbers of travelers to remain
    constant, as State officials told us and State documentation stated
    that its goal is to accommodate changes in visa demand and avoid
    disruptions of travel to the United States. In addition, we performed
    uncertainty analyses[Footnote 33] on cost models we developed for each
    scenario, using a Monte Carlo simulation tool called Crystal Ball to
    analyze the effects of varying inputs and outputs of the modeled
    scenarios. Monte Carlo simulation uses a random number generator to
    simulate the possible variance of designated inputs, such as estimates
    of the number of additional Foreign Service officers needed in the VWP
    elimination scenario, and calculates the subsequent possible ranges of
    the outputs. This allowed us to try multiple hypothetical scenarios
    with our spreadsheet cost model values. We used the results of these
    analyses to provide a probability value for our point estimates, as
    well as to provide a range of cost estimates for these scenarios. In
    addition to these activities, we undertook methodologies specific to
    each of the three objectives, which are described below.

    To determine how program elimination in particular would affect the
    demand for visas, and how changes in demand would affect the resources
    State needs and the amount of visa fee revenue that State receives, we
    analyzed CBP data on the number of travelers to the United States from
    each VWP country annually from 2001 to 2007, and reviewed State's data
    from 2001 to 2007 on the numbers and types of visas issued in each VWP
    country. We used 2001 to 2007 data from the number of travelers to the
    United States from each VWP country, rather than the number of
    travelers coming to the United States under the program. We did not use
    data on the number of travelers coming to the United States under the
    program because (1) data from 2001 to 2007 on the number of travelers
    coming to the United States under the program were not available; (2)
    available data from 2004 to 2007 averaged 12.5 million travelers, a
    difference of less than 1 percent from the 12.6 million calculated
    using the number of travelers to the United States from each VWP
    country; and (3) we could not independently calculate the number of
    travelers coming to the United States under the program by subtracting
    the number of visas issued in each country annually, because not all of
    those people who received visas necessarily traveled in that year. We
    also reviewed data State provided on the current number of Foreign
    Service officer and Foreign Service national staff involved in visa
    processing in each VWP country. We analyzed information provided by
    State on the number of visas that could be expected to be processed by
    a Foreign Service officer and the number of Foreign Service national
    staff that could be expected to support Foreign Service officers. We
    also analyzed State's rough order estimates of the number of new
    facilities that could be needed in the event of program elimination.
    Consular Affairs projected the possible number of facilities that could
    be needed based on information on the conditions of existing consular
    space in these countries, as well as assumptions of the number of
    people that would be seeking visas if the program were eliminated, and
    the subsequent increases in Foreign Service officer and Foreign Service
    national staff necessary to accommodate the new visa demand. OBO
    officials said Consular Affairs's rough order estimate was generally
    realistic, based on the potential increases in staffing that could be
    needed in the event of program elimination and the capacity of
    buildings to absorb those new staff. However, both Consular Affairs and
    OBO officials agreed that it was impossible to predict the exact number
    of facilities that would be needed. We met with officials in Consular
    Affairs, OBO, and at embassies in three VWP countries--Japan, France,
    and Spain--to determine the extent that embassy officials expected
    increases in visa demand and the number of additional staff and
    facilities that would be needed to meet those increases in those
    countries and to confirm information that we had collected from State
    officials in Washington. We selected U.S. embassies in Japan, France,
    and Spain for field work for several reasons. First, we selected these
    embassies because they are in VWP countries with high numbers of people
    traveling to the United States each year. Specifically, Japan
    represents the VWP country with the second-largest number of travelers
    to the United States each year, while France represents the fourth-
    largest number, and Spain the eighth. Further, of the countries we
    visited, differences in the sizes of traveler volumes provided us with
    information on differences in the extent of potential impacts among VWP
    posts in the event of program elimination. Second, we selected these
    countries for purposes of assessing the different potential aspects of
    program elimination for countries in different regions of the world.
    Lastly, we selected these countries because, in the case of France and
    Spain, there have been terrorist plots or attacks in those countries in
    recent years, contrasting with Japan, where this has not been the case.
    We met with officials in Consular Affairs and OBO and with officials in
    State's Bureau of Resource Management and the Office of Rightsizing to
    gain data for constructing our cost estimates on the staffing and
    facilities that would be needed to support increases in visa demand in
    VWP countries. Using the data provided by State and DHS, we created
    cost models to estimate the costs and savings due to changes in the
    number of consular and overseas buildings operations personnel; the
    construction, leasing, and operations and sustainment of consular
    facilities; and visa application fee revenue. For this scenario, we
    estimated two sets of nonrecurring cost elements: costs for the
    construction of new consular facilities, and the costs for the
    temporary staffing increase to manage the construction of those
    facilities. Also, we estimated four sets of recurring cost elements:
    costs of additional consular personnel, costs to operate and sustain
    new consular facilities, costs to lease consular facilities until the
    completion of new construction, and visa application fee revenue. We
    then performed the uncertainty analysis described above to generate
    cost estimate ranges for each of the scenarios. To determine the extent
    to which State had prepared for the possibility of program elimination,
    we reviewed State's Performance Plan for the Bureau of Consular Affairs
    to determine State's goals and objectives regarding visa issuance, as
    well as any planning that State had done. We also reviewed standards
    for internal controls in the federal government, including those
    addressing the importance of identifying risks to achieving program
    goals and planning ways to mitigate those risks in order to continue to
    meet program objectives.

    To assess how program expansion in particular would affect the demand
    for visas, and how changes in demand would affect State's resource need
    and the amount of visa fees that State receives, we analyzed CBP data
    on the number of travelers to the United States from each Road Map
    country annually from 2001 to 2007. We also reviewed data that State
    provided on the number of Foreign Service officer and Foreign Service
    national staff involved in visa processing in each Road Map country. We
    met with officials in State's Bureau of Consular Affairs, OBO, and at
    embassies in four Road Map countries--South Korea, Greece, Czech
    Republic, and Hungary--to determine the extent to which embassy
    officials expected decreases in visa demand, the number of staff that
    could potentially be freed and any associated costs or savings, and the
    number of facilities, if any, that could either be sold or where the
    embassy could relinquish lease commitments. We selected U.S. embassies
    in these countries for several reasons. First, these countries
    represent four of the seven highest visa-issuing Road Map countries.
    The U.S. embassy in Seoul processes by far the most visas in the Road
    Map countries, while the embassies in Athens, Prague, and Budapest,
    while much smaller, process among the highest number of the remaining
    12 Road Map countries. In addition, we selected these countries for
    purposes of assessing the different potential aspects of program
    expansion for countries in different regions of the world. Consular
    Affairs provided data on the number of Foreign Service officers,
    Foreign Service nationals, and visas processed in each Road Map
    country. We used that data to estimate the number of Foreign Service
    officers that could be moved to other posts from Road Map countries
    once they enter the Visa Waiver Program, as well as the number of
    possible Foreign Service national positions that could be terminated.
    We met with officials in State's Bureau of Consular Affairs, OBO,
    Bureau of Resource Management, and the Office of Rightsizing to gain
    data for constructing cost estimates on any costs and savings that may
    result regarding staffing and facilities in Road Map countries. For the
    VWP expansion scenario, we created cost models to estimate the costs
    and savings due to changes in the number of consular personnel, ESTA
    development, initial and recurring reviews by DHS of candidate
    countries' suitability for the program, and visa application fee
    revenue. We reported on two sets of nonrecurring cost elements:
    estimated costs for the termination and hiring of Foreign Service
    nationals, and the cost of development of ESTA, as provided by DHS. We
    estimated two sets of recurring cost elements: costs of DHS's reviews
    of VWP countries, and visa application fee revenue. We then performed
    the uncertainty analysis described above on these models:

    To assess how implementation of the new ESTA requirement in particular
    would affect the demand for visas, and how changes in demand would
    affect the resources State needs and the amount of visa fees that State
    receives, we analyzed CBP data on the number of travelers to the United
    States from each VWP country annually from 2001 to 2007, and reviewed
    State's data from 2001 to 2007 on the numbers and types of visas issued
    in each VWP country. We also reviewed data State provided on the number
    of Foreign Service officer and Foreign Service national staff involved
    in visa processing in each VWP country. We met with officials in
    Consular Affairs and OBO and at embassies in three VWP countries--
    Japan, France, and Spain--to determine the extent to which embassy
    officials expected increases in visa demand and the number of
    additional staff and facilities that could be needed to meet those
    increases. We selected these three countries for our field work for
    similar reasons as the VWP elimination scenario--for reasons of size,
    geographical diversity, and recent history, or lack thereof, of
    terrorist plots or attacks. We met with Consular Affairs and OBO
    officials and with officials in State's Bureau of Resource Management
    and the Office of Rightsizing to gain data for constructing our cost
    estimates on the staffing and facilities that would be needed to
    support increases in visa demand in VWP countries. We also reviewed
    relevant law, including the August 2007 Implementing 9/11 Commission
    Recommendations Act of 2007. For the five ESTA scenarios to demonstrate
    the effects of different possible percentages of travelers coming to
    U.S. embassies for visas, we created cost models to estimate the costs
    and savings due to changes in the number of consular and overseas
    buildings operations personnel and visa application fee revenue. We
    estimated two recurring cost elements: costs of additional consular
    personnel and visa application fee revenue. We then performed the
    uncertainty analysis described above to generate cost estimate ranges
    for each of the scenarios. To determine the extent to which State had
    prepared for the effects of the implementation of ESTA, we reviewed the
    fiscal year 2007 Consular Affairs Bureau Performance Plan to determine
    State's goals and objectives regarding visa issuance, as well as any
    planning that State had done. We also reviewed standards for internal
    controls in the federal government, including those addressing the
    importance of identifying risks to achieving program goals and planning
    ways to mitigate those risks in order to continue to meet program
    objectives.

    We conducted this performance audit from May 2007 to April 2008 in
    accordance with generally accepted government auditing standards. Those
    standards require that we plan and perform the audit to obtain
    sufficient, appropriate evidence to provide a reasonable basis for our
    findings and conclusions based on our audit objectives. We believe that
    the evidence obtained provides a reasonable basis for our findings and
    conclusions based on our audit objectives.

    [End of section]

    Appendix II: Comments from the Department of State:

    United States Department of State:
    Assistant Secretary for Resource Management and Chief Financial
    Officer:

    Ms. Jacquelyn Williams-Bridgers:
    Managing Director:
    International Affairs and Trade:
    Government Accountability Office:
    441 G Street, N.W.:
    Washington, D.C. 20548-0001:

    Washington, D.C. 20520:
    May 1, 2008:

    Dear Ms. Williams-Bridgers:

    We appreciate the opportunity to review your draft report, "Border
    Security: State Department Should Plan for Potentially Significant
    Staffing and Facilities Shortfalls Caused by Changes in the Visa Waiver
    Program," GAO Job Code 320475.

    The enclosed Department of State comments are provided for
    incorporation with this letter as an appendix to the final report.

    If you have any questions concerning this response, please contact
    Jennifer Savage, Management Analyst, Bureau of Consular Affairs, at
    (202) 663-2505.

    Sincerely,

    Signed by:

    Bradford R. Higgins:

    cc: GAO � John Brummet:
    CA � Janice Jacobs:
    State/OIG � Mark Duda:

    Department of State Comments on GAO Draft Report:

    Border Security: State Department Should Plan for Potentially
    Significant Staffing and Facilities Shortfalls Caused by Changes in the
    Visa Waiver Program:

    (GAO-08-623, GAO Code 320475):

    The Department of State welcomes the opportunity to comment on the
    GAO's draft report, "Border Security: State Department Should Plan for
    Potentially Significant Staffing and Facilities Shortfalls Caused by
    Changes in the Visa Waiver Program" and offers the following comments.

    The current policy of this administration is to expand the Visa Waiver
    Program (VWP). State is very actively planning for the addition of new
    member countries and has considered broadly the budgetary, staffing,
    and facility impacts of expansion both under the current rules, and
    under Electronic Systems for Travel Authorization (ESTA). More
    specifically, State is developing individual action plans for each road
    map country.

    Recommendation 1: We recommend that the Secretary of State develop
    contingency plans for Visa Waiver Program countries to address the
    potential increases in visa demand that could result from program
    elimination. These plans would include identifying what options State
    has for providing additional resources and taking actions that could be
    needed, as well as the extent to which increased visa fees would cover
    the cost of these resources.

    Response: The Bureau of Consular Affairs (CA) has consistently
    demonstrated flexibility and quick response in its workforce planning.
    Through the annual consular repositioning exercise, CA has developed
    experience in shifting positions to locations where they are needed
    most. CA also maintains an active temporary duty (TDY) program to
    quickly send staff to posts to either fill anticipated staffing gaps or
    react to unexpected and urgent staffing crises. CA has very
    aggressively recruited retired officers through the When Actually
    Employed (WAE) program and has maximized hiring to the greatest extent
    possible. This has given us a relatively robust pool of available
    officers to address staffing issues. CA also uses Eligible Family
    Members (EFMs) as a staffing resource, with EFMs working as Consular
    Assistants and as Consular Associates in most consular sections abroad.
    Finally, CA makes full use of alternate staffing mechanisms, such as
    internship and fellowship programs. CA continually looks at
    possibilities for new staffing mechanisms and in fact, recently
    announced pilot programs for new roles of Professional Adjudication
    Specialists (EFMs who have authority to adjudicate based on their high
    level of qualifications, training, and experience), and Roving
    Adjudication Specialists (those with non-competitive eligibility �
    EFMs, returned Peace Corps Volunteers, and members of the National
    Security Education Program - who will have authority to adjudicate at a
    variety of posts in Mexico based on their high level of qualifications,
    training, and experience).

    CA also constantly explores ways to gain efficiencies in the visa
    adjudication process and limit reliance on overseas staff and
    facilities as much as possible. For example, CA is currently piloting
    an offsite data collection program that places some of the visa data
    collection in the hands of an offsite contractor. The data collected is
    verified by a consular officer, and the initiative promises significant
    savings by keeping the need for consular workspace from growing as fast
    as currently projected, along with savings in time. In addition, CA is
    piloting a fully web-based Non Immigrant Visa (NIV) application form
    which, when expanded worldwide, will remove the data entry workload
    from posts and allow for some domestic pre-screening of applications,
    which will increase efficiency overseas. CA has reviewed but not
    implemented options such as interview via digital video conferencing
    (reduced reliance on USG facilities), expanding the pool of applicants
    who are eligible for visa adjudication without an interview (reduced
    reliance on USG facilities), and putting NIV software on a portable
    laptop (reduced reliance on USG facilities, but significantly decreased
    officer efficiency and increased travel costs).

    While facilities cannot quickly be modified (and facilities do present
    the most significant obstacle to expanding workload capacity), the
    programs described above could provide CA with the ability to respond
    to a VWP elimination scenario. Any response would be fully reliant on
    significant levels of additional funding and staffing, and would
    reflect the circumstances that brought about elimination. We also note
    that, in any scenario, any blanket suspension or elimination of VWP
    would be very expensive, and would have a serious impact on
    international travel and the economy, with the travel plans of many
    individuals being seriously disrupted for a significant period of time.
    A major requirement for dealing with any elimination would likely be a
    request to increase the number of Foreign Service Officers entering the
    Service. State has not received funds to increase intake above
    replacement of attrition for some time, with the exception of increases
    funded by visa fees.

    We engage posts in workload planning on a regular basis as part of our
    ongoing contingency planning, and will also ask them to discuss their
    management plans if VWP were to be eliminated.

    Recommendation 2: In addition. we recommend that the Secretaries of
    Homeland Security and State develop estimates of increased visa demand
    in Visa Waiver Program countries resulting from ESTA implementation.
    These estimates would include information on how many applicants can be
    expected to be rejected from ESTA and how many potential travelers can
    be expected to choose to come into the embassy for a visa. Based on
    these estimates, we recommend that the Secretary of State develop plans
    for how the department will manage the increased workload in the
    existing 27 VWP countries.

    Response: The State Department agrees that it is crucial to plan, as
    accurately as possible, for the impact that ESTA implementation may
    have on the 27 VWP countries, as well as the aspirant VWP countries. We
    have been working closely with Department of Homeland Security (DHS)
    and Customs and Border Protection (CBP) to obtain as much information
    as possible on the development, work plan, rollout schedule, and impact
    of ESTA. However, a significant number of crucial details have not been
    resolved, which limits our planning.

    We recently received an estimate of ESTA denial rates from CBP, based
    on APIS passenger information that was run against the currently
    planned set of ESTA screening databases. This data indicates that ESTA
    denial rates would range from 0 percent to 0.86 percent, with denial
    rates for the highest-volume VWP countries, the United Kingdom and
    Japan, at .05 percent and .02 percent respectively. While DHS and CBP
    have stated that the choice of databases they plan to use for ESTA
    screening is not yet final, using this preliminary data allows us to
    project some workload increases and plan some responses. Until any new
    positions required to address ESTA workload are authorized and created,
    and people are hired, trained and placed on the payroll, additional
    staffing requirements can be filled through the existing TDY program.
    France, Japan, and the United Kingdom would require modifications to
    existing facilities, but no post would require entirely new facilities.

    However, there are a number of other factors that, without additional
    data, we cannot add into our workload planning. For instance, we have
    not yet received clear guidance as to what the National Targeting
    Center (NTC) secondary screening procedure of ESTA near matches will
    entail, and how the result of that process will be communicated to
    posts and ports of entry. It is also not yet finalized how ESTA denials
    will be noted in the Treasury Enforcement Communications System (TECS),
    which will affect the length of time posts will need to resolve these
    denials when that traveler applies for a visa. We are working with DHS
    on detailed outreach and press guidance information so that our posts
    can alert the travel industry and business organizations, as well as
    the travelers and host governments.

    All of these factors contribute to another element of our workload
    planning, which is the number of applicants we can expect to apply for
    visas in advance of ESTA "just in case." In light of the uncertainty
    surrounding ESTA implementation, we would anticipate this number to be
    significant.

    [End of section]

    Appendix III: Comments from the Department of Homeland Security:

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

    U.S. Department of Homeland Security:
    Washington, DC 20528:
    [hyperlink, http://www.dhs.gov]:

    Homeland Security:

    April 30, 2008:

    Mr. Jess Ford:
    Director, International Affairs and Trade:
    U.S. Government Accountability Office:
    441 G Street, NW:
    Washington, DC 20548:

    Dear Mr. Ford:

    Re: Draft Report GAO-08-623, Border Security: State Department Should
    Plan for Potentially Significant Staffing and Facilities Shortfalls
    Caused by Changes in the Visa Waiver Program (Job Code 320475):

    The Department of Homeland Security (DHS) appreciates the opportunity
    to review and comment on the draft report referenced above. The United
    States Government Accountability Office (GAO) makes two
    recommendations, one of which involves the DHS. The GAO recommends that
    the Secretaries of Homeland Security and State develop estimates of
    increased visa demand in Visa Waiver Program (VWP) countries resulting
    from implementation of the Electronic System for Travel Authorization
    (ESTA). These estimates would include information on how many
    applicants can be expected to be rejected from ESTA and how many
    potential travelers can be expected to choose to come into the embassy
    for a visa. We agree with the recommendation and have been working with
    the Department of State to meet the intent of this recommendation.

    Pursuant to Section 711 of the "Implementing the 9/11 Commission
    Recommendations Act of 2007" (9/11 Act), DHS is required to develop and
    implement an Electronic System for Travel Authorization to determine
    the eligibility of aliens to travel to the United States under the VWP
    and whether such travel poses a law enforcement or security risk prior
    to the aliens boarding a carrier en route to the United States. ESTA is
    a cornerstone security enhancement from the 9/11 Act that supports
    transforming the VWP from a program that addresses security threats on
    a country-by-country basis into one that can screen for risks on a
    passenger-by-passenger basis.

    DHS has been coordinating the development of the ESTA program with the
    Department of State (DOS) since March 2007, before the program was
    statutorily required under the 9/11 Act. Since the early stages of ESTA
    program development, DHS has discussed ESTA screening methodologies
    with DOS, and shared analysis of the number of anticipated travelers to
    the United States under the VWP, together with projections on how many
    ESTA applications may result in positive matches against law
    enforcement databases that have been considered for ESTA screening. DOS
    has also been an active participant in the ESTA Integrated Project Team
    that was formally established in December 2007 by the U.S. Customs and
    Border Protection (CBP) ESTA Program Management Office.

    (See comment 1):

    DHS considers DOS to be a partner in the development of the ESTA
    program, and will continue to coordinate closely with DOS as we
    mutually work to address concerns and issues that evolve as the ESTA
    program is designed and implemented. DHS and DOS officials have
    previously reviewed anticipated volumes of VWP travel and potential
    rates for positive database matches against ESTA applications that may
    result in an ESTA applicant's referral to a United States Embassy or
    Consulate to apply for a non-immigrant visa. DHS is already
    coordinating with DOS, and providing them with updated statistics that
    will support the development of estimates for the potential increase in
    visa demand in VWP countries resulting from ESTA program
    implementation.

    (See comment 1):

    As a baseline for estimating potential visa applications that may
    result from ESTA applications that are not approved, DHS has provided
    DOS with the number of aliens that were refused admission into the
    United States by CBP at the ports of entry during fiscal years 2006 and
    2007. These statistics are broken out by both the existing and Roadmap
    VWP countries. This number of refusals, particularly for the existing
    VWP countries, presents a reasonable baseline for potential visa
    applications as these individuals would no longer be eligible to travel
    under the VWP and would be required to apply for a non-immigrant visa
    to travel to the United States.

    (See comment 2):

    Additionally, DHS is providing DOS with the results of a CBP Advance
    Passenger Information System query for all existing VWP and Roadmap
    travelers from July through September 2007 against the databases that
    DHS is currently planning to screen ESTA applications. This simulated
    query is designed to provide DOS with estimates that accurately reflect
    the anticipated number of ESTA applications that may not be approved
    during a peak period of travel.

    (See comment 3):

    The draft as written suggests that DHS has not shared information with
    DOS officials. As previously mentioned, DOS is a partner in the

    implementation of the ESTA program. Both parties are working together
    to identify technical solutions for the transmission of data, and are
    involved weekly in dissemination of ESTA information through the
    Integrated Project Teams and working groups with DOS and CBP.

    (See comment 4):

    GAO states that DHS has not developed estimates on the potential
    increase in visa demand that may result from ESTA implementation, and
    further implies that DHS has not been coordinating with DOS to address
    that issue. In fact, CBP has invited and welcomed DOS participation to
    all meetings and shared all data that was developed since March 2007
    when the ESTA program was initially being discussed. A project plan was
    developed in conjunction with DOS. The plan outlined the total number
    of VWP applicants that travel to the United States and also provided an
    overview of options that CBP proposed for screening ESTA applications
    against appropriate law enforcement databases to determine the
    eligibility of an applicant to travel to the United States under the
    VWP and whether such travel poses a law enforcement or security risk.

    (See comment 3,4):

    The report states that DHS has not attempted to estimate what
    additional resources would be needed to manage the potential increase
    in visa demand and the anticipated additional fees received as a result
    of that potential increase. Since the visa application, denial, and
    issuance process is within the purview of DOS, DHS should not be held
    responsible for calculating anticipated visa revenue and resources. As
    previously stated, DHS is already coordinating with DOS, and providing
    them with updated statistics that will support the development of
    estimates for the potential increase in visa demand in VWP countries
    resulting from ESTA program implementation.

    (See comment 5):

    GAO states that DOS lacks information on the effect of ESTA from DHS.
    The final report should mention that, to CBP's knowledge, officials are
    unaware of any request for information from DOS that has gone
    unanswered. DOS has been invited to participate in CBP's program
    development from the beginning stages and has always been able to
    request any information that DOS felt was necessary to prepare for ESTA
    implementation.

    (See comment 4):

    GAO accurately states that DHS does not know how many travelers would
    prefer to apply for a visa instead of using ESTA. While DHS cannot
    predict the mindset of potential VWP travelers that may seek to visit
    the United States, DHS believes that since initial implementation and
    use of ESTA is expected to be free for applicants, prospective VWP
    travelers are more likely to try to meet the requirement for an
    authorization via the ESTA website that is currently under development
    by CBP, rather than interview at a U.S. Embassy or Consulate to apply
    for a visa and pay the accompanying visa application fee.

    (See comment 6):

    DHS and CBP officials look forward to continuing the working
    relationship that has been established with DOS as we move toward
    implementing ESTA which will serve to enhance the security of the Visa
    Waiver Program.

    Technical comments have been provided under separate cover.

    Sincerely,

    Signed by:

    Penelope G. McCormack:
    Acting Director:
    Departmental GAO/OIG Liaison Office:

    The following are GAO's comments on the Department of Homeland
    Security's letter dated April 30, 2008.

    GAO Comments:

    1. DHS has indicated that it will begin implementing ESTA in the summer
    of 2008. As of May 1, 2008, State had not received data from DHS
    indicating how many VWP travelers would likely not be approved for
    travel by ESTA and would therefore need to obtain a visa in order to
    travel to the United States. It is important that DHS provide data to
    State that will help State (1) determine how ESTA will affect visa
    demand and (2) formulate plans to meet the demand.

    2. Under ESTA there would be some foreign citizens whose ESTA
    application would not be approved and would therefore be required to
    obtain a visa, and some who would choose proactively to obtain a visa
    for the increased flexibility and travel convenience that a visa could
    offer. DHS and State need to develop estimates of the total possible
    increase in visa demand due to both outcomes brought about by ESTA. DHS
    and State have asserted that there are existing data that could be
    helpful in developing these estimates. We agree. However, until DHS
    determines which databases it plans to use for screening ESTA
    applications, DHS officials told us they will not be able to determine
    how many VWP travelers would likely not be approved for travel by ESTA.
    In addition, DHS officials told us that it was unclear at this point
    what testing, if any, DHS would do to determine how many foreign
    citizens would choose to obtain a visa, rather than use ESTA.

    3. We believe that sharing of this type of information between DHS and
    State is a first step toward implementing our recommendation that DHS
    and State estimate how ESTA will affect visa demand in existing VWP
    countries, but we believe much more needs to be done.

    4. We did not intend to suggest that DHS is not sharing information
    with State. Our point is that DHS has not made a final decision on what
    databases it will use to screen ESTA applications; as a result, neither
    DHS nor State can estimate the number of VWP citizens who would not be
    approved to travel under the program. Without this information, it is
    difficult for State to plan for how it will meet changes in visa
    demand.

    5. We do not believe that DHS should estimate the resources that State
    would need to manage increased visa demand or how ESTA could affect
    visa fee revenues collected by State as a result of the implementation
    of ESTA. These are actions that State needs to take. However, State has
    not yet performed this analysis and planning largely due to, according
    to State officials, the lack of information from DHS on the number of
    foreign citizens whose ESTA application might be rejected and might
    seek a visa from U.S. embassies.

    6. We agree that it is difficult to predict how many travelers would
    prefer to apply for a visa instead of using ESTA. Consular officials in
    Washington and overseas said that the number of travelers choosing to
    do this could be significant. Some DHS, State, and embassy officials
    suggested that an actual test or pilot use of ESTA in one or more
    existing VWP countries could provide information on the number of
    foreign citizens who choose to obtain a visa rather than use ESTA and
    the number of foreign citizens whose ESTA applications are not approved
    by ESTA. However, as noted previously, DHS told us it is unclear what
    tests, if any, it will undertake to better understand ESTA's impact,
    even though DHS stated it plans to implement ESTA in the summer of
    2008.

    [End of section]

    Appendix IV: GAO Contact and Staff Acknowledgments:

    GAO Contact:

    Jess T. Ford, Director, International Affairs and Trade, (202) 512-4128
    or fordj@gao.gov:

    Staff Acknowledgments:

    In addition to the individual named above, John Brummet, Assistant
    Director; J. Addison Ricks; Brian Bothwell; Joe Carney; Carmen Donohue;
    Jennifer Echard; Tim Fairbanks; Grace Lui; and Karen Richey made key
    contributions to this report.

    [End of section]

    Footnotes:

    [1] The visa application fee, which is $131, is meant to offset some of
    the costs associated with processing visa applications, interviewing
    applicants, and issuing or denying the visa. The Department of State
    raised the visa fee to $131 on Jan. 1, 2008. The fee had been $100
    since 2002.

    [2] The program also requires reciprocity from VWP countries, allowing
    U.S. citizens to travel without visas to VWP countries under certain
    circumstances.

    [3] See GAO, Border Security: Stronger Actions Needed to Assess and
    Mitigate Risks of the Visa Waiver Program, GAO-06-854 (Washington,
    D.C.: July 28, 2006).

    [4] Pub. L. No. 110-53, � 711 (c), 121 Stat. 266, 339.

    [5] In GAO, Border Security: Implications of Eliminating the Visa
    Waiver Program, GAO-03-38 (Washington, D.C.: Nov. 22, 2002), we
    reported that eliminating the program could have significant negative
    effects on tourism, trade, and commerce, as well as on U.S.
    relationships with VWP countries.

    [6] 12.6 million is the average traveler volume from VWP countries
    between 2001 and 2007. This number specifically represents the number
    of travelers from VWP countries--not the number of entries under the
    Visa Waiver Program, which, for example, was around 16 million in 2006.

    [7] However, there would be a lag between when State would have to fund
    the staff increases in the first year and when it would receive the
    offsetting increases in visa fees in the second year.

    [8] The Immigration Reform and Control Act of 1986, Pub. L. No. 99-603,
    � 313, 100 Stat. 3359, 3435-39 created the Visa Waiver Program as a
    pilot in 1986. It became a permanent program in 2000 under the Visa
    Waiver Permanent Program Act, Pub. L. No. 106-396, 114 Stat. 1637
    (2000).

    [9] Two countries--Argentina and Uruguay--have been removed from the
    program after failing to meet several program criteria. In 2003, the
    Attorney General removed Uruguay from the Visa Waiver Program, stating
    that Uruguay's participation in the program was inconsistent with U.S.
    interests. According to a 2003 Federal Register notice on the subject,
    Uruguayan nationals were, on average, 2 to 3 times more likely than all
    nonimmigrants to have been denied admission at the border. See Attorney
    General's Evaluations of the Designations of Belgium, Italy, Portugal,
    and Uruguay as Participants under the Visa Waiver Program, 68 Fed. Reg.
    10954 (Mar. 7, 2003). Uruguayan air entries had an apparent overstay
    rate more than twice that of the average apparent overstay rate for all
    nonimmigrant air entries. In addition, Argentina was removed from the
    program in 2002, following an economic crisis in that country and an
    increase in the number of Argentinean nationals attempting to use the
    Visa Waiver Program to live and work illegally in the United States.
    See Termination of the Designation of Argentina as a Participant Under
    the Visa Waiver Program, 67 Fed. Reg. 7943 (Feb. 21, 2002).

    [10] 8 U.S.C. � 1351. Also, by law, State shall charge the higher of
    $65 or the cost of the machine-readable visa service. See 8 U.S.C. �
    1713(b).

    [11] State adjusts the visa fee periodically, following cost of service
    studies conducted by independent contractors under the supervision of
    State, in order to ensure that State recovers its costs of processing
    visas. The visa fee increased from $65 to $100 in 2002, and to $131
    January 1, 2008. The 2004 cost of service study found that the $100 fee
    State was charging did not cover the full cost of processing a visa
    application and issuing a visa, and the actual cost in 2004 was
    calculated to be $107.32. However, State did not increase the fee until
    2008. State officials told us the fee was increased $31 due to $13.75
    of increases in State's direct costs and to a new per-visa fee cost to
    State of $17.25 for the Federal Bureau of Investigation to conduct its
    applicant screening for State. State officials told us that when the
    current cost of service study is completed in 2008, the visa fee could
    change again, based on the study's findings.

    [12] See GAO, Border Security: Long-term Strategy Needed to Keep Pace
    with Increasing Demand for Visas, GAO-07-847 (Washington, D.C.: July
    13, 2007). We reported that State had difficulty in reducing visa wait
    times, but had made progress.

    [13] See GAO, State Department: Staffing and Foreign Language
    Shortfalls Persist Despite Initiatives to Address Gaps, GAO-07-1154T
    (Washington, D.C.: Aug. 1, 2007) and GAO, State Department: Staffing
    and Foreign Language Shortfalls Persist Despite Initiatives to Address
    Gaps, GAO-06-894 (Washington, D.C.: Aug. 4, 2006).

    [14] See GAO, Border Security: Stronger Actions Needed to Assess and
    Mitigate Risks of the Visa Waiver Program, GAO-06-854 (Washington,
    D.C.: July 28, 2006).

    [15] Pub. L. No. 110-53, � 711 (c).

    [16] Before the 9/11 Act, the program was open only to countries whose
    applications for nonimmigrant visas were refused less than 3 percent of
    the time in the prior fiscal year, among other requirements. The 9/11
    Act provides the Secretary of Homeland Security with the authority to
    waive this rule, in consultation with the Secretary of State, for
    countries whose applications for nonimmigrant visas were refused
    between 3 percent and 10 percent of the time in the prior fiscal year,
    as long as other prescribed conditions are met.

    [17] Pub. L. No. 110-53, � 711 (d)(1)(E).

    [18] CBP officials told us that initially ESTA will apply to travelers
    arriving by air and sea, but not at land border crossings.

    [19] This form is CBP's I-94W Nonimmigrant Visa Waiver Arrival/
    Departure Form.

    [20] DHS and CBP officials told us that, while DHS has the statutory
    authority to charge a fee to recover its ESTA costs, DHS currently does
    not plan to do so initially, because DHS received enough funding for
    ESTA from Congress in the 2008 Appropriations. However, DHS will
    continue to assess the issue and may charge a fee in the future.

    [21] The average traveler volume to the United States from VWP
    countries was 12.6 million from 2001 to 2007.

    [22] State officials told us that, while it is impossible to predict
    visa demand with any precision, they would expect an initial surge of
    visa applicants in the first few years following program elimination,
    and another surge 10 years later, when those visas expire. State
    officials told us that, given projections on future travel to the
    United States, visa demand would generally remain strong in all years
    for the foreseeable future.

    [23] See GAO, Standards for Internal Control in the Federal Government,
    GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).

    [24] We are currently reviewing this issue and plan on issuing a report
    on this later this year.

    [25] DHS would incur some costs associated with expansion of the
    program--among them, the costs of developing and implementing ESTA and
    conducting the initial and recurring reviews to determine a country's
    suitability to join or continue in the program. DHS officials told us
    that the cost of developing ESTA would exceed $20 million, and
    recurring ESTA costs at this point are unknown; however, they noted
    that in the future, DHS ESTA costs could be recovered by user fees. We
    estimate recurring annual costs to conduct reviews for all Road Map
    countries would be between $132,000 and $251,000.

    [26] Consular officials in Seoul stated that, if the program were
    expanded to South Korea, they could attempt to mitigate the costs of
    severance payments and the impact on Foreign Service national staff,
    when possible, by finding other non-visa-related positions for these
    staff within the embassy, using attrition to reduce Foreign Service
    national staff levels, and hiring Foreign Service national workers to
    temporary positions or short-term contracts.

    [27] Consular Affairs officials told us they believed that most
    transfers of Foreign Service officers to new posts would occur at the
    time of their already-scheduled rotations, meaning that transferring
    these officers out of new VWP countries would add no additional cost to
    the overall costs associated with the normal rotation cycle.

    [28] Consular Affairs officials observed that some Road Map countries,
    such as Poland, may not require severance payments while others, such
    as South Korea, may require substantial severance payments. Embassy
    management officials told us that South Korean law generally requires
    severance payment of 1 month's salary for each year of work for an
    employer.

    [29] Transfer of Foreign Service officers from Road Map countries to
    other countries likely will result in increased visa fee revenue at the
    new posts receiving the transferred Foreign Service officers, as the
    Foreign Service officers will process additional visa applications.

    [30] State officials in Washington told us that because this visa
    demand is driven by choice, it could be partly managed, for example,
    through its visa application interview appointment system or, over
    time, through embassies conveying information to the public in VWP
    countries encouraging the use of ESTA.

    [31] Further, State and DHS officials stated that visa approval for
    travelers rejected by ESTA may be more difficult and time consuming
    because of the need to resolve the issue identified by the ESTA
    rejection.

    [32] We determined the average cost of constructing a facility to be
    between $63 million and $101 million. This number includes only the
    construction cost and not the recurring cost of operating and
    maintaining the facility year to year.

    [33] Uncertainty analysis is an important tool that establishes a
    confidence interval for a range of possible costs--as opposed to a
    single-point estimate--and facilitates good management decisions and
    oversight. Such analysis is a best practice in GAO's Cost Assessment
    Guide.

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