In addition, Congress passed the  Secure Embassy Construction and Counterterrorism Act of 1999. State Has Built Compounds in Stages

State has built new embassy compound facilities in separate stages to  accommodate the lack of USAID funding, according to State and USAID  officials. Building nonconcurrently can result in a second expensive mobilization of  contractor staff and equipment, additional work to procure building  materials, and added construction management oversight. Concurrent Construction of Future USAID Annexes Could Save Millions of Dollars

OBO estimates that future USAID annex projects now scheduled for  nonconcurrent construction will increase costs to taxpayers by $35 million. Extrapolating from these data, we project that annex construction costs  could rise between $68 million to $78 million if all 18 future annexes were  delayed. Including USAID Space within a Larger Chancery Rather Than Constructing a Separate USAID Annex May Decrease Costs

Depending on a number of factors, building a separate annex for USAID  increases costs over designing additional space for USAID within the  chancery. For example, some officials expressed concern about the safety of  USAID employees who remain in interim facilities after other U.S.  government personnel have moved to the new embassy compounds. Terrorists continue to look for targets, according to the security officials,  and an interim USAID facility might be perceived to be a “softer” target  than a new, more secure embassy, thus making USAID employees more  vulnerable to attack. Subsequent  construction of the USAID annex on the compound results in more  workers, vehicles, and equipment on site, which may increase the  vulnerability of the overall embassy compound and its personnel by giving  terrorists the opportunity to conduct surveillance or attack the embassy,  according to State and USAID officials. Opportunities Exist for More Concurrent Construction

OBO acknowledged that it would be advantageous to the U.S. government  to build embassy compounds concurrently. OBO said it may revise its  schedule to allow for more concurrent construction and consider on a  case-by-case basis whether USAID should have a separate annex if the  Capital Security Cost-Sharing Program is funded. Concurrent  construction will help State and USAID comply with the colocation  requirement. However, even if the plan is not implemented, opportunities exist to  schedule the construction of more projects concurrently. Matter for Congressional Consideration

In order to minimize costs and further improve security associated with  building new embassy compounds, if the Capital Security Cost-Sharing  Program is not implemented in fiscal year 2005, Congress may wish to  consider alternative funding approaches to support concurrent  construction of new embassy compounds. Scope and Methodology

To examine State’s efforts to incorporate office space for the U.S. Agency  for International Development (USAID) into the construction of new  embassy compounds and to assess the cost and security implications of its  approach, we  reviewed the State Department’s Bureau of Overseas Buildings  Operations (OBO) construction documents and the Long-Range  Overseas Buildings Plans for fiscal years 2002 to 2007, years 2003 to  2008, and 2004 to 2009;   interviewed State Department and USAID officials regarding completed,  ongoing, and planned new embassy compound projects that include a  separate annex for USAID, including operational, cost, and security  issues arising from nonconcurrent construction and the issues involved  in housing USAID in separate buildings;   interviewed officials from several U.S. construction firms experienced  in building new embassy projects regarding the costs of OBO  construction scheduling practices; and   analyzed OBO estimates of the cost differentials between concurrent  and nonconcurrent construction.
Why GAO Did This Study

After the 1998 bombings of two U.S. embassies in Africa, the State Department embarked on a multibillion-dollar, multiyear program to build new, secure facilities on compounds at posts around the world. The Secure Embassy Construction and Counterterrorism Act of 1999 generally requires that all U.S. agencies, including the U.S. Agency for International Development (USAID), colocate offices within the newly constructed compounds. This report discusses how State is incorporating office space for USAID into the construction of new embassy compounds and the cost and security implications of its approach.

What GAO Found

State has built new embassy compounds in separate stages--scheduling construction of the USAID annex after work has begun (or in many cases after work has been completed) on the rest of the compound. State and USAID attributed this practice to a lack of full simultaneous funding for construction at nine locations through fiscal year 2004. Concurrent construction of USAID annexes could help decrease overall costs to the government and help achieve security goals. Concurrent construction would eliminate the second expensive mobilization of contractor staff and equipment and added supervision, security, and procurement support expenses that result from nonconcurrent construction. State has estimated that if nine future USAID annexes scheduled for nonconcurrent construction are built concurrently, it could save taxpayers $35 million. Extrapolating from data provided by State, GAO estimated a total cost savings of around $68 million to $78 million if all 18 future USAID projects are built concurrently. GAO also found that designing additional space for USAID within the main office building, or chancery, may cost less than erecting a separate annex, depending on a number of factors, including the size and configuration of the planned buildings. In addition to cost considerations, concurrent construction could help State and USAID comply with the colocation requirement and decrease the security risks associated with staff remaining outside of the embassy compound. For example, USAID staff who remain in a temporary USAID facility after other U.S. government personnel move into a new embassy compound may be more vulnerable to terrorist attack because the temporary facility does not meet security standards for new buildings and may be perceived to be a "softer" target relative to the new, more secure embassy compound. State's current plans call for continued nonconcurrent construction through fiscal year 2009. State acknowledged that there are substantial advantages to concurrent construction and has indicated that it may revise its building schedule to allow for more concurrent construction if a new cost-sharing proposal to fund new embassies by allocating construction costs among all agencies having an overseas presence is implemented in fiscal year 2005. However, even if cost sharing is not implemented, there are still opportunities for building some USAID facilities concurrently with the overall construction of the embassy compound if State, with congressional consent, revised its plan and rescheduled some projects.