Embassy Construction
Achieving Concurrent Construction Would Help Reduce Costs and Meet Security Goals Gao ID: GAO-04-952 September 28, 2004After 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.
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.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-04-952, Embassy Construction: Achieving Concurrent Construction Would Help Reduce Costs and Meet Security Goals
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Report to the Chairman, Subcommittee on National Security, Emerging
Threats, and International Relations, Committee on Government Reform,
House of Representatives:
September 2004:
EMBASSY CONSTRUCTION:
Achieving Concurrent Construction Would Help Reduce Costs and Meet
Security Goals:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-952]
GAO Highlights:
Highlights of GAO-04-952, a report to the Chairman, Subcommittee on
National Security, Emerging Threats, and International Relations,
Committee on Government Reform, House of Representatives
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.
What GAO Recommends:
GAO recommends that State (1) achieve concurrent construction of USAID
facilities to the maximum extent possible; and (2) consider, in
coordination with USAID, incorporating USAID space into single office
buildings in future compounds, where appropriate. GAO also suggests
that if the new Capital Security Cost-Sharing proposal is not
implemented in fiscal year 2005, Congress may wish to consider
alternative funding approaches to support concurrent construction.
State and USAID agreed with our findings and supported our
recommendations.
www.gao.gov/cgi-bin/getrpt?GAO-04-952. To view the full product,
including the scope and methodology, click on the link above. For more
information, contact Jess T. Ford at (202) 512-4128, or fordj@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
State Has Built Compounds in Stages:
Concurrent Construction Could Decrease Costs, Improve Security:
Opportunities Exist for More Concurrent Construction:
Conclusion:
Matter for Congressional Consideration:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of State:
GAO Comments:
Appendix III: Comments from the U.S. Agency for International
Development:
GAO Comment:
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Staff Acknowledgments:
Tables Tables:
Table 1: Contract Award Dates for New Embassy Compound Projects That
Are Completed, Under Way, or Under Contract, and Dates of Award for
USAID Contract:
Table 2: New Embassy Compound Construction Projects, Fiscal Years 1999
through 2009:
Figures:
Figure 1: Diagram of U.S. Embassy Adjacent to USAID Construction:
Figure 2: Estimated Concurrent and Nonconcurrent Construction Costs for
18 USAID Annexes:
Figure 3: Hardened Access Facility at New Embassy Compound Compared
with USAID-Guarded Entrance in Same City:
Abbreviations:
OBO: Bureau of Overseas Buildings Operations:
USAID: U.S. Agency for International Development:
Letter September 28, 2004:
The Honorable Christopher Shays:
Chairman, Subcommittee on National Security, Emerging Threats, and
International Relations:
Committee on Government Reform:
House of Representatives:
Dear Mr. Chairman:
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[Footnote 1] requires that all U.S. agencies, including the U.S.
Agency for International Development (USAID), colocate offices within
the newly constructed compounds. USAID had historically provided its
own office space for larger missions, and according to the State
Department's Bureau of Overseas Buildings Operations (OBO) and USAID,
the agencies had unofficially agreed to largely continue this practice.
Under this agreement, according to State and USAID officials, OBO would
provide office space within State-funded facilities for USAID missions
with fewer than 50 staff, but USAID would fund its own annex buildings
within embassy compounds for larger missions.
At your request, this report examines (1) how State is incorporating
office space for USAID into the construction of new embassy compounds,
and (2) the cost and security implications of State's efforts to build
USAID office space into compounds.
To accomplish these objectives, we reviewed planning and construction
documents at OBO; interviewed State Department and USAID officials
regarding construction program plans, implementation, and funding; and
analyzed OBO estimates of the cost differentials between concurrent and
nonconcurrent construction of USAID annexes. We also interviewed
officials from four firms hired to build new embassy projects. Further,
we visited two field locations--in Nairobi, Kenya, and Kampala, Uganda-
-where we discussed the implications of construction sequencing for the
embassies and USAID. We conducted our review from December 2003 to July
2004 in accordance with generally accepted government auditing
standards. Appendix I provides more information on our scope and
methodology.
Results in Brief:
State has built new embassy compound facilities in separate stages--
first constructing the compound and then scheduling construction of a
USAID annex building at a later date. State and USAID officials said
that, because they were not able to obtain funding for construction of
USAID annex buildings at nine locations through fiscal year 2004, OBO
commenced construction of these compounds without the USAID annex. In
contrast, USAID did obtain funds to permit concurrent construction of
one new embassy compound that included the USAID annex. According to
OBO officials, OBO has always preferred to construct all components of
a new embassy compound concurrently and noted that its Long-Range
Overseas Buildings Plan covering fiscal year 2002 through fiscal year
2007 showed all USAID annexes being constructed at the same time as the
rest of the compound. OBO's current building plan through fiscal year
2009 calls for nonconcurrent construction of USAID annexes at an
additional nine locations. According to OBO, its plan to continue
nonconcurrent construction is a result of the funding issue.
Concurrent construction of USAID annexes could help reduce overall
costs to the government and achieve security goals. Concurrent
construction would eliminate the second expensive mobilization of
contractor staff and equipment, as well as additional supervision,
security, and procurement support expenses that result from
nonconcurrent construction. OBO has estimated that if nine future USAID
annexes scheduled for nonconcurrent construction are built
concurrently, it could save taxpayers $35 million.[Footnote 2] OBO's
cost estimates indicate that annex construction costs increase by an
average of about 24 percent to 31 percent when USAID facilities are
built nonconcurrently. Applying these average cost differentials to
OBO's data, we estimated a total cost savings of around $68 million to
$78 million if all 18 future USAID projects are built concurrently,
compared with current plans to build some of the compounds
nonconcurrently. These amounts, however, do not include other ongoing
operational, security enhancement, and lease costs that USAID could
save when staff move to the new compounds. We also found designing
additional space for USAID within the main office building, or
chancery, may cost less than erecting a separate annex. For instance,
OBO has estimated that, in two African locations where new
nonconcurrent embassy construction is scheduled for 2006, housing USAID
in the chancery would cost at least $6.5 million per site less than
building a separate USAID annex. In addition to cost considerations,
concurrent construction could help State and USAID comply with the
colocation requirement and decrease the security risks associated with
remaining outside of the embassy compound. For example, according to
State and USAID security officials, USAID staff who remain in an
interim USAID facility after other U.S. government personnel move into
a new embassy compound may be more vulnerable to terrorist attack
because the interim facility does not meet security standards for new
buildings and might be perceived to be a "softer" target relative to
the new, more secure embassy compound. Under nonconcurrent
construction, some U.S. personnel remain temporarily at risk, even
after OBO has completed construction of a new chancery within a secure
compound.
OBO acknowledged that there are substantial advantages to concurrent
construction and indicated that it may revise its building schedule to
allow for more concurrent construction if the new Capital Security
Cost-Sharing Program to fund new embassy buildings is implemented in
fiscal year 2005.[Footnote 3] However, even if cost sharing is not
implemented, there are still opportunities for building more USAID
facilities concurrently with construction of the overall compound if
OBO revises, with congressional consent, its construction schedule.
In order to minimize costs and further improve security associated with
building new embassy compounds, Congress may wish to consider
alternative funding approaches to support concurrent construction of
new embassy compounds if the Capital Security Cost-Sharing Program is
not implemented in fiscal year 2005.
In addition, we recommend that the Director of the Bureau of Overseas
Buildings Operations (1) update the Long-Range Overseas Buildings Plan
to achieve the concurrent construction of USAID facilities to the
maximum extent possible; and (2) in coordination with USAID, consider
incorporating USAID space into single office buildings in future
compounds, where appropriate.
In comments on a draft of this report, the State Department
characterized the report as a fair and accurate representation of the
issue and said it welcomed our recommendations. In its comments, USAID
said the report successfully attempts to address the rationale as well
as many of the difficulties in achieving concurrent construction and
agreed with the recommendations.
Background:
In the wake of the 1998 bombings at the U.S. embassies in Nairobi,
Kenya, and Dar es Salaam, Tanzania, State has received increased
funding for the construction of new, secure facilities overseas.
Funding from fiscal year 1999 to 2004 totaled about $3.4 billion. In
addition, Congress passed the Secure Embassy Construction and
Counterterrorism Act of 1999. The act established a number of security
requirements for diplomatic facilities overseas, one of which was that
all U.S. government personnel (except those under the command of an
area military commander) at any new U.S. diplomatic facility abroad
must be located at the same site.[Footnote 4] State identified
facilities at about 185 posts that would need to be replaced to meet
the security standards.
To help manage this large-scale construction program, OBO developed the
Long-Range Overseas Buildings Plan,[Footnote 5] first published in July
2001 and recently updated in March 2004. The plan is updated annually,
adding new projects as scheduled projects' construction contracts are
awarded. The plan prioritizes posts based on security and operational
considerations, including input from State's regional bureaus and the
Bureau of Diplomatic Security. The most recent version of the plan
prioritizes 77 proposed security capital and regular capital
projects[Footnote 6] from fiscal years 2004 through 2009, including 18
separate USAID annex buildings.
Until the late 1990s, the majority of USAID missions were not colocated
with embassies but existed in separate commercial or freestanding
buildings. Most of these facilities were rented; several were built
with host country trust funds, and a small number were constructed with
funds appropriated by the Foreign Operations Appropriations Acts.
Since the 1999 colocation requirement, State and USAID have not been
fully successful in obtaining funding for construction of separate
USAID annex buildings at locations where State was building a new
embassy compound. In its fiscal year 2001 report on Commerce, Justice,
and State funding, the House Committee on Appropriations wrote that it
did not approve the use of the funds for the USAID annexes because
appropriations requirements of USAID fall under the jurisdiction of the
Foreign Operations, Export Financing, and Related Programs
Subcommittee.[Footnote 7] In an effort to overcome funding problems,
USAID requested that the Foreign Operations subcommittee fund a new
account for fiscal year 2003, the Capital Investment Fund, to fund
information technology enhancements and construction of colocated USAID
facilities. Although the fund has been established, USAID has not
obtained full funding to construct all of its buildings. In its report
on the fiscal year 2003 Foreign Operations appropriation, the House
Committee on Appropriations noted that buildings and space for all
other government agencies overseas were appropriated through State's
account for overseas construction, and stated that therefore the
committee had not funded all requests for USAID buildings on new
embassy compounds.[Footnote 8] State's fiscal year 2005 budget request,
which has been approved by the House and is pending approval in the
Senate, includes the construction of four USAID buildings anticipated
to be funded from contributions through the Capital Security Cost-
Sharing Program.[Footnote 9]
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. Only one of three new embassy compounds completed to date
includes the planned annex for USAID. In addition, contracts have been
awarded or construction is under way on several more compounds that do
not include, but will eventually have, a separate annex for USAID.
Under OBO's current 6-year building plan, nonconcurrent construction
will continue through at least fiscal year 2009.
State and USAID Attribute Nonconcurrent Construction to Lack of Funds:
State initiated the Security Capital Construction Program to replace
its most vulnerable posts. Under this program, OBO is constructing
replacement facilities on embassy and consulate compounds that will
contain the main office building, or chancery, all support buildings,
and a separate annex building for USAID, where necessary. According to
OBO, it has always preferred to construct all components of a new
embassy compound concurrently, and its 2002 long-range plan included
projects in which the USAID building would be built concurrently with
rest of the compound. It was only after USAID did not receive funding
for its annexes in fiscal year 2001 that OBO began to move to a
nonconcurrent approach to construction, according to OBO officials.
Since 1999, OBO has completed construction of new embassy compounds in
Dar es Salaam, Nairobi, and Kampala, Uganda, which were planned to
include a separate facility for USAID. So far, OBO has completed the
annex for USAID only at the compound in Dar es Salaam. Initially, OBO
awarded a construction contract that did not include the USAID annex,
but USAID received $15 million in additional operating expense funds
through the regular appropriation process to pay for new construction.
In addition, $2.5 million from program funds were used with $25 million
obtained from the Security Supplemental Account for security upgrades.
The funding became available in time for OBO to modify the original
construction contract and complete the USAID annex at the same time as
the rest of the compound.
For Nairobi, OBO awarded a construction contract for a new embassy
compound in September 1999 that did not include the USAID facility
because there were no funds for this USAID annex. Subsequently, OBO and
the contractor negotiated to include the USAID annex as a modification
to the original contract, but sufficient funding did not become
available in time. Construction of the chancery building was completed
in 2003. USAID received funding for its annex in fiscal year 2003;
construction began in June 2004 and is scheduled to end in June 2006, 3
years after the compound was completed and became operational (see fig.
1). In the meantime, USAID is leasing space at a cost of about $300,000
per year on the campus of a nongovernmental research facility.
Figure 1: Diagram of U.S. Embassy Adjacent to USAID Construction:
[See PDF for image]
[End of figure]
A construction contract for the new embassy compound in Kampala was
awarded in 1999 and construction was completed in fiscal year 2002, but
USAID did not receive funding for its annex until fiscal year 2004. OBO
expects to award a construction contract for the USAID annex sometime
in 2004, according to an OBO official. USAID plans to remain in its
interim location outside the new compound--an office converted from a
residence in Kampala and leased for $144,000 per year--until its new
facility is built in about 2006.
In addition, contracts have been awarded or construction is under way
on the following seven compounds that do not include a separate
building for USAID because the agency lacked funding for the
construction: Yerevan, Armenia; Phnom Penh, Cambodia; Tbilisi, Georgia;
Conakry, Guinea; Bamako, Mali; Kingston, Jamaica; and Abuja, Nigeria.
At most of these posts, construction of the USAID facility will start
between 2 to 4 years after OBO awarded the contract for the compound.
For example, OBO awarded construction contracts for the new embassy
compounds in Phnom Penh and Conakry in fiscal year 2002 and plans to
solicit bids to construct the USAID annexes on these compounds during
fiscal year 2004. In Yerevan, the U.S. Ambassador and OBO devised an
alternative to waiting for funds to build a separate facility for
USAID: OBO is adding a floor to a warehouse building under construction
on the compound to house USAID. OBO can add a floor to the building for
less money than it would cost to build a separate annex, although USAID
will have less space, according to State and USAID officials. Table 1
shows the contract award dates for selected new embassy compounds and
the award dates for the corresponding USAID annex. The Secretary of
State has had to issue waivers of the colocation requirement for some
of these locations to permit USAID to remain outside the compound
pending construction of a facility on the compound.
Table 1: Contract Award Dates for New Embassy Compound Projects That
Are Completed, Under Way, or Under Contract, and Dates of Award for
USAID Contract:
Post: Kampala, Uganda;
Embassy contract: award date: (fiscal year): 1999;
USAID contract: award date: (fiscal year): 2004.
Post: Nairobi, Kenya;
Embassy contract: award date: (fiscal year): 1999;
USAID contract: award date: (fiscal year): 2003.
Post: Yerevan, Armenia;
Embassy contract: award date: (fiscal year): 2001;
USAID contract: award date: (fiscal year): N/A[A].
Post: Abuja, Nigeria;
Embassy contract: award date: (fiscal year): 2002;
USAID contract: award date: (fiscal year): 2006.
Post: Conakry, Guinea;
Embassy contract: award date: (fiscal year): 2002;
USAID contract: award date: (fiscal year): 2004.
Post: Phnom Penh, Cambodia;
Embassy contract: award date: (fiscal year): 2002;
USAID contract: award date: (fiscal year): 2004.
Post: Tbilisi, Georgia;
Embassy contract: award date: (fiscal year): 2002;
USAID contract: award date: (fiscal year): 2006.
Post: Bamako, Mali;
Embassy contract: award date: (fiscal year): 2003;
USAID contract: award date: (fiscal year): 2005.
Post: Kingston, Jamaica;
Embassy contract: award date: (fiscal year): 2003;
USAID contract: award date: (fiscal year): 2006.
Source: GAO analysis of State Department data.
[A] Post is incorporating USAID office space into a warehouse building
under construction on the compound.
[End of table]
Nonconcurrent Construction Will Continue for Years under Current Plan:
In addition to the projects previously discussed, OBO's current 6-year
building plan includes 18 new embassy compounds that will include a
separate facility for USAID, 9 of which are slated to be built
nonconcurrently. For the remainder of fiscal year 2004, OBO will award
construction contracts for 3 new embassy compounds without including
the USAID annex: in Managua, Nicaragua; Kathmandu, Nepal; and Accra,
Ghana. The current schedule also calls for awarding embassy
construction contracts in 5 locations in fiscal year 2006 but not
awarding the contracts for USAID annexes until fiscal year 2007; and
awarding 1 embassy project in fiscal year 2008 but not awarding the
USAID contract until at least fiscal year 2009.[Footnote 10] Table 2
lists new embassy compound construction projects through fiscal year
2009.
Table 2: New Embassy Compound Construction Projects, Fiscal Years 1999
through 2009:
Locations with USAID staff;
New compounds: planned or completed: (fiscal years 1999-2009): 54.
Locations without;
USAID staff;
New compounds: planned or completed: (fiscal years 1999-2009): 47.
Locations with USAID annexes;
New compounds: planned or completed: (fiscal years 1999-2009): 28.
Locations without USAID annexes;
New compounds: planned or completed: (fiscal years 1999-2009): 73.
Annexes built concurrently with chancery;
New compounds: with USAID annexes: planned or completed:
(fiscal years 1999-2004): 1.
Chancery completed, nonconcurrent construction of annex under way;
New compounds: with USAID annexes: planned or completed:
(fiscal years 1999-2004): 1.
Chanceries under construction, nonconcurrent construction of annexes
planned;
New compounds: with USAID annexes: planned or completed:
(fiscal years 1999-2004): 8[A].
Nonconcurrent construction of annexes planned;
New compounds: with USAID annexes: planned or completed:
(fiscal years 1999-2004): 9.
Concurrent construction of annexes planned;
New compounds: with USAID annexes: planned or completed:
(fiscal years 1999-2004): 9.
Total;
New compounds: planned or completed: (fiscal years 1999-2009): 101;
New compounds: with USAID annexes: planned or completed:
(fiscal years 1999-2004): 28.
Source: GAO analysis of State Department data.
[A] This number includes one compound where the chancery has been
completed, but the annex contract has not yet been awarded.
[End of table]
Concurrent Construction Could Decrease Costs, Improve Security:
Nonconcurrent construction increases the overall cost to the government
and raises concerns about security. We also found that, in some cases,
constructing a separate annex building could cost more than building a
larger chancery to accommodate USAID. OBO's own analysis of 9 projects
shows that the current schedule of nonconcurrent construction will add
more than $35 million in costs.[Footnote 11] In addition, extrapolating
from OBO's data, we have projected an overall cost increase of as much
as $78 million if all 18 future USAID annexes follow the historical
pattern of nonconcurrent construction. This estimate does not include
security enhancements and other costs that USAID will incur while its
staff are in interim facilities pending completion of the USAID annex.
This estimate also does not include potential cost savings from merging
USAID space into chancery buildings in the future. Finally,
nonconcurrent construction has security implications for USAID
employees left behind in interim facilities and for the other U.S.
government employees moved to more secure compounds.
State and USAID Officials and Contractors Agree That Nonconcurrent
Construction Is the More Costly Approach:
All government officials and private construction contractors with whom
we spoke agreed that the practice of nonconcurrent construction
significantly adds to the overall expense of building USAID office
space. 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. According to contractors experienced in building embassy
compounds overseas, such remobilization and duplication of support
activities can add 20 percent to 25 percent to what a concurrent
construction contract would have cost, depending on the location. They
said that when the U.S. government does not receive funds for the USAID
annex until after the contractor has finished building the embassy,
there is no chance of maximizing economies of scale that result from
contractor staff and equipment already on site. In Nairobi, for
example, according to one of the contractors we met with, OBO could
have built the USAID annex for $19 million using the same contractor
building the embassy chancery, but OBO awarded a contract for almost
$30 million to a different builder since funding was not available
until 4 years later. OBO officials have also said that in addition to
contractor mobilization costs, nonconcurrent expenses must include
OBO's added supervision and site security costs for a second project.
For instance, in Nairobi, OBO's project supervision and construction
security cost estimates for the USAID annex rose from $683,000 for
concurrent building to $2.9 million for nonconcurrent building.
Nonconcurrent construction also increases security enhancement
expenses. Until secure office space is built, USAID must either remain
in or move to interim facilities. The interim site may require
significant security upgrades to obtain some minimum level of
protection for staff, including the leasing of surrounding property to
create setbacks from roads, as well as the addition of perimeter
fencing and installation of anti-ram barriers. Security, supervision,
and maintenance personnel costs would continue to accrue until the new
USAID facility were completed. For instance, in Kampala, Uganda, USAID
will likely spend $3.2 million for operational and security expenses
from the time the new chancery opened in 2002 until the annex in the
new embassy compound is finished in 2006.
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. These expenses do not include the $27
million to $30 million[Footnote 12] cost increase that, based on OBO's
data, we inferred was generated by nonconcurrent construction of
annexes for embassy compounds awarded before 2004. There are no
opportunities to significantly reduce this expense because these
compounds are already built or under construction without USAID
annexes. Estimates from OBO calculate the cost increase for building
the 9 USAID annexes now scheduled for nonconcurrent construction over
the next 5 budget years at $43 million (or $35 million at present
value) above the cost for building at the same time.[Footnote 13] We
further extrapolated from these and other OBO cost estimates, an
average cost differential increase for a USAID annex of about 24
percent to 31 percent for nonconcurrent construction. Using OBO's cost
data, we calculated the range of the potential cost increase of
nonconcurrent construction for all future annex projects to be between
$88 million to $101 million over the next five budget years (or $68
million to $78 million at present value).[Footnote 14] Figure 2
compares concurrent and nonconcurrent construction costs for 18
projects to be built after fiscal year 2004.
Figure 2: Estimated Concurrent and Nonconcurrent Construction Costs for
18 USAID Annexes:
[See PDF for image]
[A] This amount reflects the lower end of the estimated range based on
a 24-percent average cost increase. Total costs could rise to $101
million in budget dollars and about $78 million at present value for
fiscal year 2004, if the higher average of 31 percent is used. See
appendix 1 for a more detailed description of the methodology we used.
[End of figure]
Further, our estimates do not include the costs of additional
operations and lease expenses or increased security and personnel
costs, for which we did not have comprehensive data but which could be
substantial. For example, OBO has estimated that in one European
location, USAID will have to pay an additional $690,000 for rent
because of a 1-year delay in awarding the construction contract. In two
African locations, USAID officials estimate they will have to pay an
additional $5.5 million for 3 or more years of rent and continuing
security expenses until their new facilities are built.
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. Two of the contractors we met with stated that constructing
one building could be more cost effective than constructing two. OBO
has estimated that in two African locations where new embassy
construction is scheduled for 2006, building a separate USAID annex
would cost at least $6.5 million per site more than housing USAID in
the chancery, assuming nonconcurrent construction. OBO officials have
said that, except for very large USAID missions, there may be little
reason to build a separate USAID annex other than the ease of
allocating construction costs to USAID. Further, OBO has recently re-
evaluated the office space parameters for new overseas missions,
significantly reducing the sizes of proposed USAID annexes. Assuming
these revised space allocations are adequate, an additional five to
eight proposed USAID annexes would be similar in size (2,500 gross
square meters or less) to those at the two African locations OBO
analyzed. The cost differentials between a separate annex versus
locating USAID within the chancery in those locations could be similar
if other key factors, such as building configuration and site
conditions, were also comparable.
However, there are factors other than costs that should be considered
when determining whether to build a separate annex or include space for
USAID in the chancery, according to USAID. Such factors include
geographic location, the type of work USAID is engaged in, and the
security profiles of the country. Moreover, a separate unclassified
USAID annex may allow greater access for local staff and visitors.
Nonconcurrent Construction Poses Security Risks:
In addition to cost considerations, nonconcurrent construction of the
USAID annexes raises a number of security concerns, according to State
Diplomatic Security and embassy officials as well as USAID security
officials. 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.
State is building the compounds to provide safe, secure facilities
because U.S. facilities and personnel have faced continued threats from
terrorist and other attacks since the Kenya and Tanzania embassy
bombings. For example, from 1998 through 2002, there were 30 terrorist
attacks against overseas posts, personnel, and diplomatic residences.
During that same period, overseas posts were forced to evacuate
personnel or suspend operations 83 times in response to direct threats
or unstable security situations in the host country.
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. For example, figure 3 shows a new
embassy compound main gate with an anti-vehicle delta barrier, anti-ram
perimeter wall, and blast-resistant guardhouse containing bomb
detection equipment, compared with an interim USAID facility entrance
with temporary barriers that are removed after work hours.
Figure 3: Hardened Access Facility at New Embassy Compound (left)
Compared with USAID-Guarded Entrance in Same City:
[See PDF for image]
[End of figure]
State, USAID, and embassy officials described a number of actions taken
to mitigate the risks for USAID employees who are not colocated in new
embassy compounds. For example, a post may construct special jersey
barriers and fences, dig trenches, close streets adjacent to a USAID
facility to create a setback around the building during the day, and
lease properties adjacent to its facilities to create a buffer. A post
may also use contract guard services, deploy surveillance detection
teams and mobile response teams, and use the services of local police.
Despite actions to mitigate the security risks of nonconcurrent
construction, State and USAID officials remain concerned because
interim facilities do not meet the security standards established by
the Overseas Security Policy Board. In addition to the Secure Embassy
Construction and Counterrorism Act of 1999, which requires a 100-foot
setback and colocation of all U.S. government employees at a new site,
the security standards for new office buildings include anti-ram
perimeter walls and barriers, construction to meet blast protection,
forced entry/ballistic resistant protection for doors and windows, and
controlled access points. A USAID security official stated that,
despite measures to reduce security risks, facilities are vulnerable
when they are not controlled by the U.S. government. For example, the
official said that posts using temporary jersey barriers eliminate the
setback each evening when the barriers are removed and the streets are
reopened to normal traffic. Further, a State security official stated
that the Bureau of Diplomatic Security was an early advocate of
colocating all U.S. personnel when the new embassy compound is built.
He said that the bureau is concerned from a threat perspective and that
the threat to U.S. personnel remains high. He said that when USAID
cannot be colocated, the bureau tries to find ways to mitigate the risk
but there is no perfect solution. However, he said the bureau does not
recommend delaying the construction of a compound until funding for the
USAID annex is available because that would leave a greater number of
staff vulnerable.
Nonconcurrent construction also has security implications for the
employees who move into the newly constructed compound. 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. To address this issue,
OBO and regional security officers in Nairobi, Kenya, and Kampala,
Uganda, described a number actions required to control the access of
construction personnel and equipment to the compound. For example, the
regional security officers told us that they need to hire additional
security guards to inspect trucks bringing building materials to the
compound. The regional security officer in Nairobi said he would need
about 14 additional guards to perform these inspections. For some
sites, destruction of part of the perimeter wall to add an entrance for
the construction vehicles and equipment has been discussed as a way of
allowing contractor access to the compound. Construction workers need
to undergo background checks and receive identification cards,
according to regional security officers; these requirements could place
a significant burden on their time and workload unless State hires a
site security manager.
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. However, even without
cost sharing, there are opportunities for more concurrent and efficient
construction. By delaying one project slated for fiscal year 2006 and
estimated to cost more than $100 million, State would have sufficient
funds to eliminate the backlog of USAID projects. Moreover, it is not
unprecedented for projects in successive annual plans to be moved from
one year to another. For example, over the last three planning cycles,
several planned projects have had to be moved from one year to another
due to factors such as a failure to acquire land in a timely manner or
a change in executive branch priorities. Therefore, if OBO could
reschedule planned projects it could make headway in minimizing
nonconcurrent construction. OBO emphasized that it would need
congressional support to do this.
Conclusion:
OBO's multibillion-dollar program to build new, secure embassies and
consulates around the world was designed to colocate all U.S. employees
stationed overseas within a secure compound, as required by law.
However, by building the compounds in stages, some employees must
temporarily remain in less secure space outside the compound.
Concurrent construction will help State and USAID comply with the
colocation requirement. Our analysis also shows that concurrent
construction likely results in cost savings for the taxpayer and that
incorporating all office space into the main chancery building rather
than building a separate annex may be, in some cases, a more efficient
approach. According to State, lack of funding and restrictions on the
use of funds has required OBO to phase construction of new embassy
compounds that have a USAID annex component. However, State said it
will consider revising its construction schedule to achieve more
concurrent construction if the Capital Security Cost-Sharing Program is
implemented in fiscal year 2005. 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.
Recommendations for Executive Action:
We recommend that the Director of State's Bureau of Overseas Buildings
Operations (1) update the Long-Range Overseas Buildings Pan to achieve
the concurrent construction of USAID facilities to the maximum extent
possible; and (2) in coordination with USAID, consider incorporating
USAID space into single office buildings in future compounds, where
appropriate.
Agency Comments and Our Evaluation:
The State Department and the U.S. Agency for International Development
provided written comments on a draft of this report (see app. II and
app. III). State also provided technical comments, which we have
incorporated into the report as appropriate.
In its comments, State said that the report is a fair and accurate
representation of the issue and welcomed our recommendations. State
said it would update the Long-Range Overseas Buildings Plan to achieve
concurrent construction to the maximum extent and coordinate with USAID
to consider incorporating USAID space into single office buildings in
future compounds where appropriate if the Capital Security Cost-Sharing
Program is implemented. However, our recommendations and matter for
consideration are designed to bring about concurrent construction to
the maximum extent regardless of the implementation of the Capital
Security Cost-Sharing Program.
In its comments, USAID said the report successfully attempts to address
the rationale as well as many of the difficulties in achieving the goal
of concurrent construction of new embassy compounds and facilities to
be occupied by USAID employees on those compounds. USAID said it agreed
with both our recommendations and provided information to support the
recommendations and explain its requirements.
We are sending copies of this report to interested congressional
committees, the Secretary of State, and the Administrator of USAID. We
will also make copies available to others upon request. In addition,
the report will be available at no charge on GAO's Web site at
[Hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-4128. Another GAO contact and staff
acknowledgments are listed in appendix IV.
Sincerely yours,
Signed by:
Jess T. Ford:
Director, International Affairs and Trade:
[End of section]
Appendixes:
Appendix I: 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.
Further, we visited two field locations--in Nairobi, Kenya, and
Kampala, Uganda--where we discussed with State and USAID officers at
each post the implications of construction sequencing to the embassies
and USAID.
To analyze the cost impacts of different USAID annex construction
scheduling, we developed a cost model enabling us to extrapolate from
State data the aggregate and annual costs for both concurrent or
nonconcurrent construction projects for USAID annexes. Our model is
based on cost estimate data provided by OBO for 26 projects. (Estimates
for Yerevan, Armenia, were not used because OBO no longer plans to
build a separate annex for USAID.) For some projects, we had estimates
of fiscal year contract award and midpoint construction costs in
nominal dollars for concurrent and nonconcurrent construction. Using
such data from 13 projects, we estimated the average percentage cost
differential per project[Footnote 15] to build a nonconcurrent annex as
a range of 30.75 percent and 23.83 percent. The higher end of the range
results from excluding data for 3 of the 13 locations (Kampala, Uganda;
Harare, Zimbabwe; and Kingston, Jamaica) where OBO indicated that site-
specific factors accounted for major deviations from the mean. Both
average percentage differentials are used to project base-year costs
for concurrent construction for Abuja, Nigeria, and for nonconcurrent
construction on 11 projects for which we had incomplete data. We also
had data on an additional project (Tbilisi, Georgia) but used it only
to represent the costs of that project, not to estimate the average
cost differential because the data for the project reflected building
sizes for concurrent and nonconcurrent construction costs that were
substantially different. Assumptions included:
* the length of construction period (24 months for concurrent and 15
months for nonconcurrent),
* the 1-year lag between proposed award year for concurrent
construction and nonconcurrent construction,
* cost distribution over the construction period, and:
* average dollar cost escalation of 3 percent per year.
These assumptions for each of the 26 projects enabled us to estimate:
* annual construction costs,
* total budget dollar costs, and:
* present value costs in fiscal year 2004 dollars.
We did not verify the accuracy of OBO's cost estimates or its
methodology for estimating costs. However, we did meet with OBO
officials responsible for the cost estimates to discuss their
methodology and underlying assumptions. The cost differentials between
concurrent and nonconcurrent construction that OBO estimated were
consistent with those estimated by two of the contractors we met with.
We conducted our work from December 2003 to July 2004 in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the Department of State:
United States Department of State:
Assistant Secretary and Chief Financial Officer:
Washington, D.C. 20520:
Ms. Jacqueline Williams-Bridgers:
Managing Director:
International Affairs and Trade:
Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548-0001:
SEP 14 2004
Dear Ms. Williams-Bridgers:
We appreciate the opportunity to review your draft report, "EMBASSY
CONSTRUCTION: Achieving Concurrent Construction Would Help Reduce Costs
And Meet Security Goals," GAO Job Code 320237.
The enclosed Department of State comments are provided for
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact Cy
Alba, Branch Chief, Bureau of Overseas Building Operations, at (703)
875-5748.
Sincerely,
Signed by:
Christopher B. Burnham:
cc: GAO - John Brummet:
OBO - Charles Williams:
State/OIG - Mark Duda:
Department of State Comments on GAO Draft Report EMBASSY CONSTRUCTION:
Achieving Concurrent Construction Would Help Reduce Costs And Meet
Security Goals (GAO-04-952):
Introduction:
The Department of State appreciates the opportunity to review and
comment on the GAO Draft Report, "EMBASSY CONSTRUCTION: Achieving
Concurrent Construction Would Help Reduce Costs and Meet Security
Goals." We believe the report is overall a fair and accurate
representation of the issue. However, the Department offers the
following observations.
Consistent Support for Concurrent Construction:
As noted in the report, the Department has always preferred and planned
to construct all components of a new embassy compound (NEC)
concurrently as evidenced by the first Long-Range Overseas Buildings
Plan (FY2002 - FY 2007). That Plan showed all USAID annexes being
constructed at the same time as the rest of the NEC. However, due to
funding restrictions the Department was required to move to a phased
approach for construction. We appreciate the GAO's acknowledgement of
this fact.
Capital Security Cost Sharing is the Solution:
As long as there are restrictions on the use of CJS appropriations for
USAID facilities, and as long as USAID is unable to secure sufficient
funding to complete the backlog of annexes, and as long as there is no
full Capital Security Cost Sharing, we believe the path we are
following is the most viable and most efficient. Delaying a NEC project
exposes personnel to the continued risks of security deficiencies.
OBO's current plan includes 4 USAID annexes in FY 06. After FY06 there
will only be 4 remaining backlogged USAID annexes. To add those to the
FY06 list would seem to some of our stakeholders as a misuse of other
agencies' cost sharing money in that new construction would be biased
in favor of one agency (USAID). Furthermore, this strategy would still
require reprogramming notification to the Congress.
The Department welcomes the report's two recommendations. The
Department has every intention of updating the Long-Range Overseas
Buildings Plan to achieve the concurrent construction of USAID
facilities to the maximum extent if Capital Security Cost Sharing goes
into effect. Furthermore, the Department will also be able to
coordinate with USAID to consider incorporating USAID space into single
office buildings in future compounds where this would be more
appropriate.
Security Standards:
The first portion of paragraph 1 on page 21 of the report should be
revised as follows to make the statement more accurate and complete:
Despite actions to mitigate the security risks of nonconcurrent
construction, State and USAID officials remain concerned because
interim facilities do not meet the security standards established by
the Overseas Security Board (OSPB). In addition to the Secure Embassy
Construction and Counterterrorism Act of 1999, which requires a 100-
foot setback and collocation of all USG employees at a new site, the
OSPB security standards for new office buildings include anti-ram
perimeter walls and barriers, construction to meet blast protection,
forced entry/ballistic resistant protection for doors and windows, and
controlled access points.
A Cooperative Effort:
Throughout the course of the GAO review, the Department's Bureau of
Overseas Buildings Operations (OBO) has been forthcoming in providing
information and access to pertinent records, making its staff available
to answer questions, and providing briefings. GAO staff members were
also invited to observe monthly internal review meetings. The GAO staff
has been professional in its endeavors and has been receptive to our
opinions and explanations. The cooperative effort between the
legislative and executive branches throughout this review on behalf of
the American taxpayer continues to serve as a model for future work.
The openness and cooperative spirit of OBO and GAO staffs has resulted
in a report that we believe will benefit all parties concerned.
The following are GAO's comments on the State Department letter dated
September 14, 2004.
GAO Comments:
1. Our recommendations and matter for consideration are designed to
bring about concurrent construction to the maximum extent regardless of
the implementation of the Capital Security Cost-Sharing Program.
2. We have revised our statement accordingly.
[End of section]
Appendix III: Comments from the U.S. Agency for International
Development:
Assistant Administrator for Management:
SEP 10 2004:
Mr. Jess T. Ford:
Director:
International Affairs and Trade:
U.S. General Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548:
Dear Mr. Ford:
I am pleased to provide the U.S. Agency for International Development's
(USAID) formal response on the draft GAO report entitled Embassy
Construction: Achieving Concurrent Construction Could Help Reduce Costs
and Meet Security Goals (GAO-04-952).
The report successfully attempts to address the rationale as well as
many of the difficulties in achieving the goal of concurrent
construction of New Embassy Compounds (NEC) and facilities to be
occupied by USAID employees on those compounds. USAID agrees with both
recommendations identified in the report and offers the following
information to support the recommendations as well as explain USAID's
unique requirements (see enclosure).
Thank you for the opportunity to respond to the GAO draft report and
for the courtesies extended by your staff in the conduct of this
review.
Sincerely,
Signed by:
John Marshall:
Assistant Administrator:
Bureau for Management:
Enclosure: a/s:
USAID Comments on the draft GAO report: EMBASSY CONSTRUCTION: ACHIEVING
CONCURRENT CONSTRUCTION COULD HELP REDUCE COSTS AND MEET SECURITY GOALS
(GAO-04-952):
In the aftermath of the 1998 Africa bombings, USAID has been challenged
to provide its field offices located outside embassy compounds with
adequate security protection. Given the nature of USAID's work in many
locations, our historical interests have been to locate outside of the
embassy compounds in order to work closely with local government
ministries, private voluntary and non-governmental organizations. With
the advent of the 1999 collocation law, the manner in which USAID will
be able to interact in the future with host country counterparts and
customers has changed. New security standards for NEC restrict what was
previously for USAID more of an open door to visitors. This is true now
for locations in which USAID still remains outside of the embassy
compound. Because of its development mission, USAID continues to
function and relate to host countries in a manner different from many
U.S. government organizations overseas, including the Department of
State.
The first recommendation calls for the Secretary of State to direct the
Bureau of Overseas Building Operations to achieve concurrent
construction of facilities for USAID employees to the maximum extent
possible. From a security perspective alone, USAID facilities face
unavoidable vulnerabilities when located outside of NECs, primarily as
softer targets, in relation to the more secure Embassy structures.
Throughout the process of identifying short-term security remedies to
long-term needs, USAID has worked closely with the Office of Diplomatic
Security and OBO to find interim solutions. USAID has temporarily moved
numerous office locations to enhance security protection or, at
minimum, provided security upgrades in all locations.
By FY 2002, the only USAID annex project funded for collocation on a
new embassy compound was Dar es Salaam. OBO had begun embassy
construction in Nairobi and Kampala but not for the USAID annexes and
our large staff presence. In FY 2003, funding was made available only
for Nairobi. In 2004, funding was received for Kampala, Phnom Penh, and
Conakry where, again, OBO had earlier initiated embassy construction.
Congressional wrangling over funding responsibility for USAID annexes
has delayed construction of facilities for USAID employees imposing
added security risks and costs.
The Capital Security Cost Sharing Program, if approved in FY05, will
place USAID on a parallel track with OBO NEC construction but not until
FY 2007. For this reason, a joint review of opportunities that
currently exist in which the construction of USAID facilities can begin
in tandem with OBO should be explored immediately. The Department and
OBO have done an excellent job of informing Congress of the need to
unify the funding source for overseas construction. This will help
guarantee concurrent construction in the future. However, in the
intervening years, and until USAID is viewed as an integral and tandem
part of current OBO construction planning and prioritization of
construction activities, USAID offices not collocated with embassies
will remain as softer targets in multiple overseas locations.
The second recommendation calls for incorporating USAID into single
office buildings, where appropriate. GAO use of the language "where
appropriate" is ambiguous and requires clarification to allow for the
collaborative dialog between State and USAID in identifying potential
cost saving opportunities. More to the point, the discussion to limit
the number of separate annexes for USAID employees will need to
reflect important factors other than simply costs.
USAID is the primary implementer of US foreign policy as it relates to
development assistance abroad. USAID's mandate, or mission, relies
heavily on its ability to interact with a wide and varied assortment of
organizations and individuals. Other critical and equally important
factors include the physical security considerations necessary to
protect all employees, and in deference to the taxpayer, additional
costs required for construction. All three of these factors must be
considered in the context of geographical locations, security profiles
of countries, the size of the USAID presence, and the type of work
USAID is engaged in, in order to appropriately determine if a separate
annex is more beneficial to US foreign policy.
In certain circumstances a separate annex, although potentially more
costly, may improve the overall security profile of the embassy
compound by avoiding a single, large target. This is particularly true
in larger USAID missions. Another consideration is that USAID utilizes
a much higher ratio of local foreign national staff than many of our
embassy counterparts. USAID annex buildings are unclassified allowing
greater yet appropriate access for local staff and visitors. Unlike the
Department of State, many of USAID's professional staff include host
country nationals. A single building constructed primarily for
classified use limits USAID's ability to interact with clients and
staff. This is the case for the NEC in Kabul. USAID will not occupy the
all-classified facility to be completed soon. Instead, in order to meet
current USAID requirements an interim unclassified:
modular facility was constructed for USAID and other agencies. The life
span of the interim modular facility (located on a leased property
adjacent to the Embassy) is five years. However, the long-term
requirements for USAID in Kabul, as in other locations, will likely
require an unclassified building solution. For this reason, future
construction planning for all single buildings that include USAID staff
requires OBO to introduce design elements that allows both appropriate
space for USAID to conduct its business, and appropriate access for
staff and customers in unclassified areas.
USAID remains a staunch supporter of the collocation concept and will
continue to work with OBO, GAO, and OMB to ensure USAID missions are
collocated in both secure and functional facilities.
The following is GAO's comment on the U.S. Agency for International
Development letter dated September 10, 2004.
GAO Comment:
We agree with the U.S. Agency for International Development that many
factors should be considered to determine whether housing USAID in a
separate building or within the chancery building is beneficial to the
U.S. government. We have added a brief description of some of these
factors.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
John Brummet, (202) 512-5260:
Staff Acknowledgments:
In addition to the individual named above, Omar Beyah, Janey Cohen,
David Hudson, Bruce Kutnick, and La Verne Tharpes made key
contributions to this report.
(320237):
FOOTNOTES
[1] Pub. L. 106-113, div. B, Sec. 1000(a)(7)(div. A, title VI, sec.
606).
[2] Estimates calculated in present value (fiscal year 2004) dollars.
[3] The executive branch recently developed the Capital Security Cost-
Sharing Program, under which all agencies having an overseas presence
will pay a share of the projects undertaken to replace embassies at
vulnerable posts. Planned to begin in fiscal year 2005, the program
will be phased in through fiscal year 2009. Legislation to fund this
program was included in HR 4754, which was passed by the House of
Representatives on July 8, 2004, and referred to the Senate; and S-
2809, which was approved by the Senate Committee on Appropriations on
September 15, 2004.
[4] The Secretary of State may waive the colocation requirement if the
Secretary, together with the head of each agency employing personnel
who would not be located at site, determines that security
considerations permit separate sites and it is in the national interest
of the United States. 22 U.S.C. 4865(a)(2)(B).
[5] See Bureau of Overseas Building Operations, U.S. Department of
State, Long-Range Overseas Buildings Plan: FY 2004-FY 2009 (Washington,
D.C., January 2004) for the latest version of the plan.
[6] The plan includes a number of posts where facilities must be
replaced because of compelling operational or other requirements.
[7] House of Representatives, Departments of Commerce, Justice, and
State, the Judiciary, and Related Agencies Appropriations Bill, Fiscal
Year 2001, Report 106-680, p. 106 (Washington, D.C., June 19, 2000).
[8] House of Representatives, Foreign Operations, Export Financing, and
Related Programs Appropriations Bill, 2003, Report 107-663 (Washington,
D.C., Sept. 19, 2002).
[9] See Department of State and U.S. Agency for International
Development fiscal year 2005 budget justifications.
[10] The next long-range plan will be published in fiscal year 2005.
According to OBO officials, construction scheduling may be revised in
this plan to build the last nonconcurrent USAID annex in fiscal year
2007.
[11] Estimates calculated in present value (fiscal year 2004) dollars.
[12] The $27 million to $30 million cost increase is calculated using
the present value (fiscal year 2004) of an estimated $40 million to $44
million (in budget dollars) increase for awarding USAID annex contracts
during fiscal years 2003 to 2006 for eight compounds already being
constructed without annexes before fiscal year 2004. See appendix I for
a more detailed description of the methodology we used.
[13] Although the current building schedule indicates "concurrent
execution" of the annex at Harare, Zimbabwe, OBO provided estimates for
the costs of nonconcurrent construction at that location.
[14] The cost increase is calculated for nonconcurrent construction of
18 planned USAID annexes to be awarded in or after 2004. See appendix I
for a more detailed description of the methodology we used.
[15] Calculated in fiscal year 2003 dollars.
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