Embassy Construction:

Pace Is Slower Than Projected, and State Could Make Program Improvements

GAO-18-653: Published: Sep 25, 2018. Publicly Released: Oct 25, 2018.

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Contact:

Brian M. Mazanec
(202) 512-5130
mazanecb@gao.gov

 

Lori Rectanus
(202) 512-2834
rectanusl@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Responding to two 1998 terrorist bombings of U.S. embassies, the State Department embarked on a program to construct more secure embassies. While it had completed 77 as of September 2017, State won't reach its goal of 180 new embassies by 2018.

Unexpected requirements—such as adding office annexes—and not accounting for inflation have contributed to slowing project delivery. With over 20 embassies under construction and 72 planned, State faces staffing shortages and strained contractor relationships.

We made recommendations to State to plan for inflation, analyze funding and workforce needs, and seek improved contractor relationships.

The new U.S. Consulate General building in Monterrey, Mexico

Picture of a modern building with a brick entryway at night with lights and plantings.

Picture of a modern building with a brick entryway at night with lights and plantings.

Additional Materials:

Contact:

Brian M. Mazanec
(202) 512-5130
mazanecb@gao.gov

 

Lori Rectanus
(202) 512-2834
rectanusl@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

What GAO Found

The Department of State's (State) Bureau of Overseas Buildings Operations (OBO) has constructed new embassies at a slower pace than forecast due in part to unexpected building requirements and inflation. In 1999 State identified a need to replace 180 embassies. In 2005, with about 30 projects underway, State planned to replace the other 150 embassies by 2018. Since 1999, OBO has built 77 embassies under its Capital Security Construction Program (CSCP), at a total cost of about $24 billion as of fiscal year 2017. CSCP's pace has been affected by unexpected additional building requirements, such as office annexes and Marine quarters. Also, CSCP received only one program funding adjustment for inflation since 1999, and State does not intend to seek annual adjustments. Currently, OBO does not provide information on inflationary effects on CSCP or an estimated total capital investment or feasible time frames for the nearly 50 embassies identified for replacement beyond 2022. Lack of such information may affect stakeholders' ability to make informed budget decisions.

Status of State's Capital Security Construction Program for New Embassies and Consulates

Status of State's Capital Security Construction Program for New Embassies and Consulates

Note: While State forecast an intention to build 180 new embassies in 1999, it subsequently decided to take a different approach for about 10 posts by keeping some existing embassies and upgrading them.

While cost growth occurred on a majority of completed embassy projects and durations averaged about 36 months, these were generally within budgeting and planning allowances. GAO could not assess performance of Excellence projects because none had been completed as of the end of fiscal year 2017.

Staffing workload and contractor collaboration have affected OBO's project delivery. Without an OBO-wide workforce analysis, it is unclear whether OBO's staffing is commensurate with its workload needs. OBO maintains that its office overseeing project design reviews is understaffed, adversely affecting some of its critical functions. Contractors also expressed concerns about the quality of design reviews, which may be affected by a staffing shortage and the use of temporary contractors. Also, OBO and contractor officials acknowledged weaknesses in collaboration, particularly with regard to contractors less experienced with embassy construction. Of the five contractors GAO spoke with, three said they are unlikely to pursue future projects because of issues working with OBO. Formal construction partnering—an industry best practice—between OBO and its contractors could help avoid adversarial relationships that inhibit swift resolution of issues. OBO's two long-standing contractors that have completed most of the CSCP embassy projects participated in early projects OBO identified as having used formal partnering.

Why GAO Did This Study

In 1998, terrorists bombed two U.S. embassies in East Africa, killing over 220 people and injuring more than 4,000 others. In 1999, State launched the CSCP with the primary goal of providing secure, safe, and functional workplaces, and OBO adopted a streamlined, standard design for all new embassies. In 2011, OBO shifted to the Excellence approach for new embassies, where greater use of custom designs is intended to improve embassies' functionality, quality, operating costs, and appearance.

GAO was asked to review the performance of the CSCP. This report examines (1) the pace of the CSCP in constructing new embassies, (2) the cost and schedule performance of OBO's recent embassy construction projects, and (3) key factors that have affected State's ability to deliver construction projects efficiently. GAO analyzed information from State planning, funding, and reporting documents and interviewed State and contractor officials. As part of an assessment of nine construction case-study projects, selected for cost or schedule increases, GAO conducted four site visits to embassies under construction.

What GAO Recommends

GAO recommends that State (1) provide information on the estimated effects of inflation on planned projects, (2) provide an analysis of estimated total costs and time frames to complete the CSCP, (3) conduct an OBO-wide workforce analysis, and (4) pilot formal construction partnering. State concurred with our recommendations and also conveyed it is now pursuing other initiatives beyond Excellence.

For more information, contact Brian M. Mazanec at (202) 512-5130 or mazanecb@gao.gov or Lori Rectanus at (202) 512-2834 or rectanusl@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Priority recommendation

    Comments: State concurred with this recommendation. As of August 2019, State/OBO reported that it had developed a worldwide construction inflation rate and planned to provide this information to stakeholders through the fiscal year 2021 budgeting process. We will continue to monitor State's implementation of this recommendation.

    Recommendation: The Secretary of State should determine the estimated effects of cost inflation on planned CSCP embassy construction capacity and time frames and update this information for stakeholders on a regular basis, such as through the annual budgeting process. (Recommendation 1)

    Agency Affected: Department of State

  2. Status: Open

    Priority recommendation

    Comments: State concurred with this recommendation. As of August 2019, State/OBO had calculated estimated costs and projected time frames to replace its remaining 160 Post facilities at a $2.2 billion per year funding level, and planned to include this information in its fiscal year 2021 budget submission. We will continue to monitor State's implementation of this recommendation.

    Recommendation: The Secretary of State should provide an analysis for stakeholders identifying those embassies that still need to be replaced to meet State's security standards and estimating total CSCP costs and projected time frames needed to complete those projects. (Recommendation 2)

    Agency Affected: Department of State

  3. Status: Open

    Priority recommendation

    Comments: State concurred with this recommendation. As of August 2019, State/OBO had begun working with the Institute for Defense Analysis to conduct an OBO-wide workforce analysis, with initial deliverables planned for December 2019. We will continue to monitor State's implementation of this recommendation.

    Recommendation: The Secretary of State should ensure that the Director of OBO conducts an OBO-wide workforce analysis to assess staffing levels and workload capacity needed to carry out the full range of OBO's mission goals, to include the CSCP. Such an assessment could provide a basis for broader stakeholder discussion of OBO's human capital needs and potential prioritization of activities. (Recommendation 3)

    Agency Affected: Department of State

  4. Status: Closed - Implemented

    Comments: State concurred with this recommendation, and in response has begun two pilot projects for partnering with contractors less experienced with the CSCP: the Kampala New Office Annex and the Moscow Compound and Housing Renovation projects. According to OBO, these projects were selected based on the contractors, contract delivery method, size and location of the projects, and a willingness to partner on the part of the project teams. Additionally, OBO has selected a consultant to assist this program through development of partnering templates, scopes of work, and training materials for the two pilots' project teams. The partnering implementation process has formally begun on the Kampala project, and according to OBO officials, a partnering facilitator for this project has been selected. OBO officials projected formal partnering activities to kick off for Moscow in July 2019.

    Recommendation: The Secretary of State should ensure that the Director of OBO pilots formal construction partnering for the CSCP, particularly with construction firms that are new or less experienced with the program. (Recommendation 4)

    Agency Affected: Department of State

 

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