Through State’s security upgrade program, the department has done much  since the 1998 bombings to upgrade physical security at existing overseas  posts without building new embassy or consulate compounds. However, even with  these improvements, most office facilities do not meet security standards  that State developed to protect overseas diplomatic office facilities from  terrorist attacks and other dangers. OBO Mechanisms to More Effectively Manage the Embassy Construction Program

Recognizing past problems managing State’s overseas construction  program, OBO in 2001 began to institute organizational and management  reforms in its structure and operations. OBO has instituted the following seven key mechanisms over the past 3  years to better manage its expanded embassy construction program:    the Long-Range Overseas Buildings Plan, which prioritizes and  summarizes capital projects over 6 years;    monthly project reviews at headquarters, where senior management  officials review ongoing projects to identify and resolve current or  potential issues at all stages of the project;    an Industry Advisory Panel, which advises OBO on industry best  practices in the construction sector;    efforts to broaden the contractor pool through events such as Industry  Day, where interested contractors are invited to learn about OBO’s  construction program;  ongoing work to standardize and streamline the planning, design, and  construction processes, including the initiation of design-build contract  delivery and a standard embassy design for most projects;   additional training for OBO headquarters and field staff; and   advance identification and acquisition of sites. According to the latest version of the  plan, State plans to start replacing facilities at 75 vulnerable posts from  fiscal year 2003 to fiscal year 2008 at an estimated cost of $7.4 billion. However, as discussed in the following section, it is still too early in the  new program’s implementation to assess their effectiveness in achieving  these goals. Status of and Challenges Facing the Construction Program

As of September 30, 2003, State had started construction of 22 projects to  replace embassies and consulates at risk of terrorist or other attacks. Over half of the 22  projects have faced challenges that have led or, if not overcome, could lead  to extensions to or cost increases in the construction contract. OBO  reports attribute project delays to such factors as changes in project design  and security requirements, difficulties hiring appropriate labor, differing  site conditions, and civil unrest. The U.S. government has had mixed success in dealing with this problem of  coordinating funding. In the comments, State said that the report is a fair and  accurate representation overall of the department’s overseas construction  process and provided additional information on (1) how State prioritizes  and plans for its construction projects, (2) the problems in funding USAID  building projects, and (3) other capital construction projects being  implemented by OBO. Scope and Methodology

To determine whether the Bureau of Overseas Buildings Operations (OBO)  has mechanisms in place to more effectively manage State’s construction  program to replace vulnerable embassies and consulates, we (1) reviewed  the report of the Overseas Presence Advisory Panel and earlier GAO  reports that outlined problems in embassy security and State’s embassy  construction program and (2) interviewed OBO and contractor officials  about specific steps OBO has taken to improve program management,  including the usefulness of and rationale behind both the standard embassy  design for new embassy and consulate compounds and the design-build  contract delivery method.
Why GAO Did This Study

Since the 1998 bombings of two U.S. embassies in Africa, the State Department has done much to improve physical security at overseas posts. However, most overseas diplomatic office facilities still do not meet the security standards State developed to protect these sites from terrorist attacks and other dangers. To correct this problem, State in 1999 embarked on an estimated $21 billion embassy construction program. The program's key objective is to provide secure, safe, and functional compounds for employees overseas--in most cases by building replacement facilities. In 2001, State's Bureau of Overseas Buildings Operations (OBO)--which manages the program--began instituting reforms in its structure and operations to meet the challenges of the embassy construction program. This report discusses (1) OBO's mechanisms for more effectively managing the embassy construction program and (2) the status of and challenges facing the program. We received comments from State, which said that the report is a fair and accurate representation overall of the Department's overseas construction process.

What GAO Found

OBO in 2001 began instituting organizational and management reforms designed to cut costs, put in place standard designs and review processes, and reduce the construction period for new embassies and consulates. OBO now has mechanisms to more effectively manage the embassy construction program, including (1) an annual Long-Range Overseas Buildings Plan to guide the planning and execution of the program over a 6-year period; (2) monthly project reviews at headquarters; (3) an Industry Advisory Panel for input on current best practices in the construction industry; (4) expanded outreach to contractors in an effort to increase the number of bidders; (5) ongoing work to standardize and streamline the planning, design, and construction processes, including initiation of design-build contract delivery and a standard embassy design for most projects; (6) additional training for OBO headquarters and field staff; and (7) advance identification and acquisition of sites. State's program to replace about 185 vulnerable embassies and consulates is in its early stages, but the pace of initiating and completing new construction projects has increased significantly over the past two fiscal years. As of September 30, 2003, State had started construction of 22 projects to replace facilities at risk of terrorist or other attacks. Overall, 16 projects have encountered challenges that have led or, if not overcome, could ultimately lead to extensions in the completion date or cost increases in the construction contract. According to OBO, project delays have occurred because of such factors as changes in project design and security requirements; difficulties hiring appropriate American and local labor with the necessary clearances and skills; differing site conditions; and unforeseen events such as civil unrest. In addition, the U.S. government has had problems coordinating funding for projects that include buildings for the U.S. Agency for International Development. None of the projects started since OBO instituted its reforms has been completed; thus GAO believes it is too early to assess the effectiveness of the reforms in ensuring that new embassy and consulate compounds are built within the approved project budget and on time.