When the proposed  program is fully implemented, from fiscal years 2009 through 2018, it could  result in funding of $1.4 billion annually from nearly 30 agencies, including  State. OBO  devised a fee-assessment plan that would spread the total embassy  construction costs among all agencies with an overseas presence. According to OBO, funds from cost sharing would enable the construction  of 150 new embassy and consulate compounds to be completed by 2018, 12  years sooner than OBO’s initial plan, which included a planned completion  date of 2030. After fees are phased in during fiscal years 2005 through 2008,  non-State agencies would pay $480 million annually for a 10-year period  through fiscal year 2018, while State’s annual payment would be $920  million. Proposed Cost Sharing Is Based on a Worldwide Head-Count Formula

In developing the proposed cost-sharing program, OBO, with OMB’s  approval, selected a per-capita or head-count formula based on the number  of agency staff at all overseas locations and the type of office space. Agencies Have Other Concerns about the Program

Some non-State agencies have other concerns about the proposed  program, including how potential disputes would be resolved and how  cost-sharing fees would affect their ability to accomplish their overseas  missions. Several agencies suggested that it would be useful to establish new  interagency mechanisms to discuss and resolve potential disputes. We did  not assess the mechanisms to be used to implement the program, if  Congress enacts it. Therefore, we have taken no position on whether new  interagency mechanisms would be needed. Nevertheless, in our prior work,  we have noted the importance of achieving interagency consensus and  striving to achieve equity, while minimizing management burden. Decision-makers need to continually focus on these factors in order to give  the program every opportunity to succeed. If the proposed program is enacted, it is important  that Congress and State monitor the program’s implementation and make  changes as needed. Objectives, Scope, and Methodology

Our objectives were to examine (1) the Department of State’s rationale for  and development of the proposed Capital Security Cost-Sharing Program,  (2) agency concerns about the program, and (3) the influence of the  proposed program on agencies’ decisions on overseas staff levels. To  complete our work, we analyzed data, reviewed documents, and discussed  the program in Washington, D.C., with officials of State’s Bureau of  Overseas Buildings Operations (OBO), which is responsible for the  embassy construction program; the Office of Management and Budget  (OMB); and eight other executive branch departments and agencies,  including the Departments of Agriculture, Commerce, Defense, Health and  Human Services, Homeland Security, Justice, and the Treasury, and the U.S.  Agency for International Development (USAID). The administration proposed the Capital Security Cost-Sharing  Program to fund the accelerated construction of secure new embassies  and consulates worldwide and to ensure that agencies rightsize the  number of staff needed to accomplish their overseas missions. 5.
Why GAO Did This Study

The Department of State is in the early stages of a proposed multibillion dollar program to build secure new embassies and consulates around the world. Under the proposed Capital Security Cost-Sharing Program, all agencies with staff assigned to overseas diplomatic missions would share in construction costs. This report describes (1) the rationale for and development of the program, (2) agency concerns about the program, and (3) the influence of the program on agencies' overseas staff levels.

What GAO Found

The administration's proposed Capital Security Cost-Sharing Program has been developed to accelerate the building of 150 new secure embassies and consulates around the world and to ensure that all agencies with overseas staff assign only the number of staff needed to accomplish their overseas missions. The Department of State's Bureau of Overseas Buildings Operations (OBO), which would manage the program, examined several formulas before deciding that all agencies with an overseas presence would share costs, based on a per capita or "head-count" formula. If enacted, nearly 30 U.S. agencies would be assessed a total of $17.5 billion for constructing 150 new embassies by 2018, or 12 years sooner than the projected completion date of 2030. After a gradual phase-in period beginning in fiscal year 2005, the program would generate $1.4 billion annually from fiscal years 2009 through 2018, with State paying $920 million and non-State agencies paying $480 million. Many non-State Department agencies have concerns about the proposed program. They would prefer a formula other than one based on head counts to assess fees, and they are concerned that cost-sharing fees could affect their ability to accomplish their overseas missions. In addition, they stated that it would be useful to establish new interagency mechanisms to discuss and resolve potential implementation issues. We did not assess the mechanisms to be used to implement the program and have taken no position on whether they would be needed. State is concerned that, without accelerated funding, U.S. government employees will remain at risk beyond the 2018 completion date. State is also concerned that, without cost sharing, OBO could overbuild office space due to agencies' imprecise staffing projections. In our prior work, we have noted the importance of achieving interagency consensus and striving to achieve equity while minimizing management burden. Decision-makers need to continually focus on these factors to give the program every opportunity to succeed. If enacted, it is important that Congress and State monitor its implementation and make changes as needed.