However, OBO has maintained that greater  design control under Excellence will improve embassies’ functionality,  quality, operating costs, and their overall public impact in representing the  United States. State’s Project Delivery Pace Has Been Slower Than Projected, as Unforeseen Building Requirements and Inflation Have Affected Progress

Although State has built 77 new embassies since 1999 and at the end of  fiscal year 2017 had another 21 under construction, the CSCP’s project  delivery pace has fallen short of State’s 2005 target of constructing 150  new embassies by 2018. This is due, in part, to unexpected building  requirements and the effects of inflation. New or reopened posts, such as Kabul,  3. As a result, information for this performance  measure is inconsistent, precluding a  progress assessment of the CSCP using this  metric. Further, they noted that State does not intend to seek  annual inflation adjustments for the CSCP. For  example, the CSCP schedule contains no estimated 5-year program cost  for the next 25 embassies OBO plans to build, nor does it provide  stakeholders an estimate or cost range for the total capital investment  and feasible time frames needed to address the 47 embassies that OBO  has identified for replacement beyond the next 5 years. Without information on the projected pace of construction and  estimated effects of inflation, stakeholders’ may lack complete information  to make fully-informed budget decisions. Completed Embassy Projects Have Generally Stayed within Budgeting and Planning Allowances

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. We could not assess cost and  schedule performance of projects begun under the Excellence approach  because none had been completed by 2017. Table 2 provides  examples of such comments. Staffing Workload and Contractor Collaboration Challenges Impede Efficiency of Project Delivery

After shifting to the use of more customized designs under Excellence, it  is unclear if OBO’s staffing levels, particularly in its Office of Design and  Engineering (Design and Engineering), are sufficient to execute its full  workload. With regard to  project implementation, formal partnering between OBO and its  construction contractors could help avoid adversarial relationships that  inhibit swift resolution of issues. Construction contractors we spoke with expressed concerns about the  quality of OBO’s design reviews and capabilities to manage the amount of  questions from construction contractors about OBO’s Excellence designs. Three of the five  contractors we spoke with (all less experienced with embassy  construction) indicated they will not be pursuing future embassy projects  because they believe State has not acted as a fair partner in overseeing  its embassy construction projects. We note that two of those three early projects OBO identified as having  used formal partnering included the current two long-standing contractors  that have completed most of the CSCP embassy projects. In its letter, State  concurred with our four recommendations and described actions planned  to address each of them. GAO staff who made key  contributions to this report are listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

This report examines (1) the pace of the Department of State’s (State)  Capital Security Construction Program (CSCP) in constructing new  embassies, (2) the cost and schedule performance of State’s recent  embassy construction projects, and (3) factors that have affected State’s  ability to deliver construction projects efficiently. To conduct this review, we obtained information from agency planning,  funding, and reporting documents and interviewed State officials within  the Bureau of Overseas Buildings Operations (OBO); the Bureau of  Diplomatic Security (Diplomatic Security); and the Office of Acquisitions  Management. We  also examined OBO’s CSCP schedule outlining embassies planned to  begin construction through fiscal year 2022 and other embassies  identified beyond that time frame. The functionality of the completed compound may also be affected by  several issues.
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 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.
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.

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.