Embassy Construction: State Has Made Progress Constructing New Embassies, but Better Planning Is Needed for Operations and Maintenance Requirements

GAO-06-641 Published: Jun 30, 2006. Publicly Released: Jun 30, 2006.
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In response to 2 bombings of U.S. embassies in Africa in 1998, the Department of State embarked on a $21 billion program to replace 201 insecure and dilapidated diplomatic facilities. In November 2004, GAO reported that State's Bureau of Overseas Buildings Operations (OBO), which manages the construction program, had implemented reforms to its planning, design, construction, and funding processes designed to expedite the construction process and prevent cost overruns that were common to previous State diplomatic construction programs. This report updates GAO's earlier report, by discussing OBO's completion rates and costs for embassy construction projects and the impact the reforms and other factors have on completion rates. It also discusses the changes in the costs for operating and maintaining these new facilities.

State has made significant progress constructing new embassy compounds (NEC). The average time to design and construct the 18 embassies and consulates completed from 1999 to 2005 is nearly 3 years faster than for embassies built during the 1980s and 1990s, despite these new facilities being significantly larger and more complex. Although only half of the 18 projects were completed according to planned schedules, 15 of the 18 NECs were opened ahead of, on, or within 1 month after their scheduled move-in dates, and approximately 8,700 U.S. government employees were relocated to these secure and modern facilities. Construction costs for 14 of the 18 completed projects were significantly lower than budget estimates OBO provided to Congress. Strategic and procedural reforms implemented by State, including elevating the former Foreign Buildings Office to bureau status, switching to the design-build contract delivery method, and developing a standard embassy design have had a cumulative positive effect on project cycle times; however, it is still difficult to quantify the effects of any single reform. GAO found that factors specific to individual projects affected OBO's ability to complete work on time and on budget, including the experience levels of OBO and contractors' projects teams, unforeseen conditions at construction sites, and weather conditions, among others. Due to increased size and complexity, annual operations and maintenance costs for NECs are significantly greater than the costs for previous locations; once all 201 NECs are completed, annual operations and maintenance costs could increase by at least $111 million, and possibly several times more. These costs include increases in utility usage; the need to hire highly qualified technical staff; new maintenance needs; and costly equipment, supplies, and spare parts. State does not clearly identify the projected operations and maintenance costs for NECs it builds. Thus, there is currently no mechanism that allows decision makers to determine whether NEC operations and maintenance needs are being adequately planned for and funded. A lack of a comprehensive long-term plan that clearly identifies the significant increases in resources that are likely to be needed as more NECs come online could increase the risk of earlier-than-expected deterioration of NECs.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Department of State To protect the $21 billion capital investment in 201 new embassy and consulate compounds, the Secretary of State should develop an integrated and comprehensive facilities plan that clearly specifies the financial and human resources for meeting the immediate and long-term operations and maintenance requirements for new embassy compounds.
Closed – Implemented
In response to our recommendation, State released the first edition of its Long-Range Overseas Maintenance Plan (LROMP) in fiscal year 2010. The plan outlines comprehensive maintenance requirements for New Embassy Compounds (NECs) and specifies the required financial resources for these activities. The LROMP outlines maintenance requirements in areas such as building security, fire protection, utilities and energy conservation, roofing, environmental protection, emergency egress, barrier-free accessibility, historic preservation of culturally significant diplomatic properties, and major building renovations. In addition, the plan outlines State's initial efforts to benchmark the financial costs associated with operating NECs and, further, discusses human resource initiatives to facilitate maintenance and operations. The document addresses key financial and human resource issues by, for example, providing the financial resources needed to maintain NECs over a 6-year planning period. The LROMP also notes that State's Bureau of Overseas Buildings Operations is working with the Bureau of Human Resources to implement a supplemental recruitment plan to hire additional U.S. Foreign Service Facility Managers needed at overseas embassies and consulates. State's intent is that the LROMP will be updated annually to inform State's budget submissions.

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