Summary

The State Department could potentially save millions of dollars at its overseas posts by adopting practices to reduce residential housing and furniture costs. These practices include (1) using relocation companies and similar service providers to search for housing and negotiate leases to reduce in-house support costs and shift some property preparation and related maintenance expenses to landlords, (2) providing employees with housing allowances to select their homes rather than maintaining a housing pool of government leases and preassigned residences, and (3) shipping employees' household effects and acquiring furniture overseas as an alternative to operating an extensive government-buying and inventory program. GAO found that State has not based its current approach to providing overseas residential housing and furniture on a comparative cost analysis. Private sector practices suggest that two options should be considered to reduce costs associated with residential furniture. First, State could ship employees' household effects as its primary means of furnishing residences. Second, State could give overseas posts the option of acquiring furniture on the local market.

GAO noted that: (1) its examination of practices in the private sector suggests that several options may exist to reduce State's overseas residential housing and furniture costs, including: (a) using relocation companies and similar service providers to search for housing and negotiate leases to reduce in-house support costs, and shift some property preparation and related maintenance expenses to landlords; (b) providing employees with housing allowances to select their own homes rather than managing and maintaining a housing pool of government leases and preassigning residences; and (c) shipping employees' household effects and/or acquiring furniture overseas as an option to operating an extensive government-buying and inventory program; (2) GAO's analysis of State's processes shows that State has not based its current approach to providing overseas residential housing and furniture on a comparative cost analysis; (3) based on GAO's analysis of selected posts, State could potentially reduce its costs by adopting some or all of these practices; (4) GAO's analysis of practices in Brussels and London showed that State's internal housing support costs are several hundred thousand dollars greater than the costs that would be incurred if homefinding services were outsourced to a relocation company; (5) such practices are potentially applicable for a large number of annual relocations that State and other agencies conduct; (6) expanding housing allowance programs consistent with practices of the private sector could also result in recurring savings, primarily by minimizing in-house support requirements; (7) private-sector practices indicate that two options should be considered for reducing costs associated with residential furniture; (8) State could ship employees' household effects as its primary means of furnishing residences; (9) actual shipping data show that State often ships nearly the same amount of employees' household effects to posts offering government furniture as it does to its unfurnished posts; (10) thus, an expansion in the number of unfurnished posts could occur with relatively minor increases in shipping costs for household effects and avoid the often significant procurement, storage, and handling costs associated with the government furniture program; (11) the second option is to give overseas posts the alternative of acquiring furniture on the local market; and (12) cost savings would potentially result from lower furniture prices and reduced shipping, inland transportation, and inventory costs.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Recommendations for Executive Action