Embassy Management
Actions Are Needed to Increase Efficiency and Improve Delivery of Administrative Support Services Gao ID: GAO-04-511 September 7, 2004Costs for overseas posts' administrative support services have risen nearly 30 percent since fiscal year 2001, reaching about $1 billion in 2003. These costs are distributed among 50 agencies through the International Cooperative Administrative Support Services (ICASS) system, which was designed to reduce costs and provide quality services in a simple, transparent, and equitable manner. Since ICASS was implemented in 1998, its performance has not been systematically reviewed. GAO was asked to examine (1) whether ICASS has led to efficient delivery of administrative services and (2) whether ICASS is an effective mechanism for providing quality services.
ICASS has not resulted in more efficient delivery of administrative support services because it has neither eliminated duplication nor led to efforts to contain costs by systematically streamlining operations. GAO found that agencies often decide not to use ICASS services and self-provide support services--citing reasons of cost, programmatic needs, and greater control--which can lead to duplicative structures and a higher overall cost to the U.S. government. Although some agencies' reasons for self-providing services may be supportable, GAO found that agencies rarely made business cases for why they chose not to take ICASS services initially or withdrew from services later. In addition, service providers and customer agencies have undertaken few systematic efforts to consolidate services or contain costs by streamlining administrative support structures. Furthermore, GAO found that deterrents to consolidating and streamlining administrative structures largely outweigh the incentives. However, there are efforts, both internal and external to ICASS, that may address some of the obstacles that prevent ICASS from operating more efficiently. Based on the system's primary goals, ICASS is generally effective in providing quality administrative support services in an equitable manner, although not to the extent that it could be if certain impediments were addressed. GAO found that ICASS is simple and transparent enough for customers to understand its basic principles. Furthermore, most personnel agree that ICASS is more equitable than its predecessor. However, ICASS strategic goals lack indicators to gauge progress toward achieving them, and progress toward achieving posts' performance standards is not annually reviewed or updated. Other obstacles to maximizing ICASS include limits to overseas staffs' decision-making authority, which can diminish ICASS's goal of "local empowerment." Finally, GAO found that training and information resources, which could enhance participants' knowledge and implementation of ICASS, are underutilized.
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-04-511, Embassy Management: Actions Are Needed to Increase Efficiency and Improve Delivery of Administrative Support Services
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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 MANAGEMENT:
Actions Are Needed to Increase Efficiency and Improve Delivery of
Administrative Support Services:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-511]:
GAO Highlights:
Highlights of GAO-04-511, a report to the Chairman, Subcommittee on
National Security, Emerging Threats, and International Relations, House
Committee on Government Reform
Why GAO Did This Study:
Costs for overseas posts‘ administrative support services have risen
nearly 30 percent since fiscal year 2001, reaching about $1 billion in
2003. These costs are distributed among 50 agencies through the
International Cooperative Administrative Support Services (ICASS)
system, which was designed to reduce costs and provide quality services
in a simple, transparent, and equitable manner.
Since ICASS was implemented in 1998, its performance has not been
systematically reviewed. GAO was asked to examine (1) whether ICASS has
led to efficient delivery of administrative services and (2) whether
ICASS is an effective mechanism for providing quality services.
What GAO Found:
ICASS has not resulted in more efficient delivery of administrative
support services because it has neither eliminated duplication nor led
to efforts to contain costs by systematically streamlining operations.
GAO found that agencies often decide not to use ICASS services and
self-provide support services”citing reasons of cost, programmatic
needs, and greater control”which can lead to duplicative structures
and a higher overall cost to the U.S. government. Although some
agencies‘ reasons for self-providing services may be supportable, GAO
found that agencies rarely made business cases for why they chose not
to take ICASS services initially or withdrew from services later. In
addition, service providers and customer agencies have undertaken few
systematic efforts to consolidate services or contain costs by
streamlining administrative support structures. Furthermore, GAO found
that deterrents to consolidating and streamlining administrative
structures largely outweigh the incentives. However, there are efforts,
both internal and external to ICASS, that may address some of the
obstacles that prevent ICASS from operating more efficiently.
Based on the system‘s primary goals, ICASS is generally effective in
providing quality administrative support services in an equitable
manner, although not to the extent that it could be if certain
impediments were addressed. GAO found that ICASS is simple and
transparent enough for customers to understand its basic principles.
Furthermore, most personnel agree that ICASS is more equitable than its
predecessor. However, ICASS strategic goals lack indicators to gauge
progress toward achieving them, and progress toward achieving posts‘
performance standards is not annually reviewed or updated. Other
obstacles to maximizing ICASS include limits to overseas staffs‘
decision-making authority, which can diminish ICASS‘s goal of ’local
empowerment.“ Finally, GAO found that training and information
resources, which could enhance participants‘ knowledge and
implementation of ICASS, are underutilized.
Independent State and U.S. Agency for International Development
Warehouses on Adjacent Properties in Cairo, Egypt
[See PDF for image]
[End of figure]
What GAO Recommends:
GAO recommends that the ICASS Executive Board (1) eliminate duplicative
administrative support structures where possible, (2) reengineer
processes by seeking innovative managerial approaches, (3) develop
strategies to improve ICASS accountability, and (4) ensure that all
personnel participating in ICASS receive detailed training.
We received comments on a draft of this report from the ICASS
Executive Board and 9 executive agencies. All those commenting on the
draft generally agreed with our recommendations, but each emphasized
different aspects.
www.gao.gov/cgi-bin/getrpt?GAO-04-511.
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:
ICASS Has Not Eliminated Duplicative Administrative Support Structures
or Streamlined Operations:
ICASS Is Generally Effective in Providing Quality Services Based on Its
Stated Goals, but Impediments Still Hinder Its Success:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: ICASS Cost Centers:
Appendix III: Agency Participation in ICASS:
Appendix IV: Comments from the ICASS Executive Board:
Appendix V: Comments from the Department of State:
GAO Comments:
Appendix VI: Comments from the U.S. Agency for International
Development:
GAO Comment:
Appendix VII: Comments from the Department of Agriculture:
GAO Comments:
Appendix VIII: Comments from the Department of Commerce:
GAO Comments:
Appendix IX: Comments from the Department of Defense:
GAO Comments:
Appendix X: Comments from the Department of Homeland Security:
GAO Comments:
Appendix XI: Comments from the Department of Justice:
GAO Comments:
Appendix XII: Comments from the Department of the Treasury:
Appendix XIII: Comments from the U.S. Peace Corps:
GAO Comments:
Appendix XIV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Staff Acknowledgments:
Tables Tables:
Table 1: Actual and Estimated Fees under the Capital Security Cost-
Sharing Program, Fiscal Years 2005-2007:
Table 2: Cost Centers and Workload Factors for ICASS Standard and ICASS
Lite Posts:
Table 3: Rate of Participation in Available Cost Centers, by Agency,
1998-2003:
Figures:
Figure 1: Principal Actors in the ICASS System and Their Respective
Roles and Responsibilities:
Figure 2: Effects of Agencies' Decisions to Opt out of ICASS Services
on Total Governmental Costs:
Figure 3: Total ICASS Costs, Total ICASS Labor Costs, and Number of
ICASS Employees, Fiscal Year 2000:
Figure 4: Total ICASS Costs, Fiscal Years 1998-2003:
Figure 5: Independent State and USAID Warehouse Operations on Adjacent
Properties in Cairo, Separated by a Wall:
Abbreviations:
CLO: Community Liaison Office:
DEA: Drug Enforcement Administration:
FAAS: Foreign Affairs Administrative Support:
ICASS: International Cooperative Administrative Support Services:
ISO: International Organization for Standardization:
NEC: New Embassy Compound:
OMB: Office of Management and Budget:
USAID: U.S. Agency for International Development:
Letter September 7, 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:
The U.S. government spent nearly $1 billion in 2003 to provide
administrative support services to more than 250 overseas posts
worldwide. These costs are divided among more than 50 agencies and
subagencies with staff assigned to these posts primarily through the
International Cooperative Administrative Support Services (ICASS)
cost-distribution system. The Department of State (State) has the
primary responsibility for operating the system and employs
approximately 18,000 workers to provide more than 30 basic
administrative support services. A primary purpose for developing ICASS
was to achieve greater efficiencies in the delivery of basic
administrative support services to federal employees at overseas posts.
The system was also intended to ensure that users of overseas
facilities receive quality administrative support services, that they
each pay the costs associated with the amount of services they use, and
that all users have a say in determining how resources are allocated.
In light of rising budget deficits, it is important that overseas
employees receive administrative support services in the most cost-
effective manner possible.
Since ICASS was fully implemented in 1998, its performance has not been
systematically reviewed.[Footnote 1] Therefore, you asked that we
examine (1) whether ICASS has led to efficient delivery of
administrative services and (2) whether ICASS is an effective mechanism
for providing quality services. To answer these questions, we reviewed
ICASS policies and procedures; interviewed headquarters officials from
nine departments about customer satisfaction, quality of service,
training, cost-containment measures, and numerous other
issues;[Footnote 2] attended meetings of the ICASS Executive Board and
the ICASS Working Group in Washington, D.C; and reviewed global
surveys implemented by the ICASS Service Center and State's Center for
Administrative Innovation. In addition, we observed ICASS operations at
seven embassies and conducted telephone interviews with staff at an
eighth post.[Footnote 3] We conducted our work from April 2003 through
August 2004 in accordance with generally accepted government auditing
standards. See appendix I for additional information on the scope and
methodology used to complete this report.
Results in Brief:
ICASS has not led to efficient delivery of administrative support
services by eliminating unnecessary duplication of these services or by
streamlining operations to contain costs. From the start of the
program, many agencies decided not to subscribe to some ICASS services,
opting instead to provide some administrative support services for
themselves. When agencies self-provide these services at overseas
posts, it can create duplicative administrative systems that increase
overall government costs. While agencies cited affordability concerns,
programmatic needs, and control issues as reasons for not subscribing
to ICASS services, we found that they rarely provided detailed business
cases that rationalize decisions to self-provide support services.
Furthermore, agencies that provide administrative support services
(service providers) and those that receive the services (customer
agencies) have undertaken few systematic efforts to consolidate or
streamline administrative support structures. Officials from State and
other agencies reported that few incentives exist for post personnel to
contain costs by consolidating or streamlining services, and incentives
that do exist are not adequate to overcome organizational
disincentives. However, there are a number of efforts under way or in
the planning process, both internal and external to ICASS, which may
address some of the obstacles that prevent ICASS from operating more
efficiently.
ICASS is a generally effective mechanism for delivering quality
administrative support services; however, obstacles exist that prevent
the system from fully achieving its goals. We found that agencies
generally approve of the quality of ICASS services, but the level of
satisfaction is difficult to quantify. We also found that ICASS is
simple and transparent enough for customers to understand its basic
structures. Moreover, agency officials at posts and headquarters agree
that ICASS is more equitable than the cost-sharing mechanism it
replaced. Nevertheless, it is difficult to determine the extent to
which ICASS is meeting some of its stated strategic goals because they
lack indicators to gauge progress. Moreover, despite a requirement to
annually review service performance standards, posts seldom do so.
Other obstacles to maximizing the system include limits to overseas
staffs' decision-making authority, which can diminish "local
empowerment" by affecting their ability to make decisions on the best
use of a post's resources. In addition, customers and service providers
do not take full advantage of ICASS training and other available
information resources, which further limits the system's overall
effectiveness.
This report contains recommendations to the ICASS Executive Board,
which is chaired by the Assistant Secretary of State for Administration
and includes equivalent-level officers from participating agencies, to
(1) eliminate duplicative administrative support structures where
possible; (2) contain costs by reengineering processes and seeking
innovative managerial approaches; (3) develop strategies to improve
ICASS accountability; and (4) ensure that all ICASS participants
receive detailed training on their roles, responsibilities, and
authorities. We are making our recommendations to the ICASS Executive
Board because it is the highest level ICASS policy-making body. As
such, it has the responsibility for addressing worldwide administrative
service improvements and cost reductions.[Footnote 4]
We received written comments on a draft of this report from the ICASS
Executive Board and nine agencies that are primary participants in
ICASS--the Departments of State, Defense, Justice, Agriculture,
Commerce, Homeland Security, and the Treasury; the U.S. Agency for
International Development; and the U.S. Peace Corps. (See apps. IV-
XIII.) The ICASS Executive Board said it plans to take a more active
role in the overall management of ICASS. The board agreed that action
was needed to eliminate duplication, contain costs by reengineering
business processes, and improve accountability. The agencies generally
agreed with our recommendations. State emphasized the importance of
eliminating wasteful duplication, whereas other agencies emphasized the
importance of containing costs. The non-State agencies believed that
our report focused too much on eliminating duplication and not enough
on containing costs of support services billed to them. As a result, we
made modifications to the report to stress that elimination of
unnecessary duplication and containment of costs were equally
important. We believe that implementation of our recommendations will
help the executive branch both reduce wasteful duplication and contain
costs while improving overall management of the ICASS system.
Background:
The operation of U.S. embassies and consulates requires basic
administrative support services for overseas personnel, such as
building maintenance, vehicle operations, and travel services, among
others. Traditionally, these services were provided by State. In 1955,
State established the Shared Administrative Support Program under which
it provided administrative support services, on a reimbursable basis,
to other agencies. The Foreign Affairs Administrative Support (FAAS)
system, under which State paid fixed support costs and agencies paid
the remaining administrative support costs, was established in 1976.
However, FAAS's cost-allocation processes were opaque and customers
felt that fees were not in line with the quality of services received.
During the 1980s and 1990s, overseas posts experienced increases in
staffing from nontraditional foreign affairs agencies and demand for
services. In addition, agencies' growing dissatisfaction with how the
system operated and shrinking resources led, in part, to the
establishment of ICASS.[Footnote 5]
Primary Goals of ICASS:
ICASS is a performance-based cost distribution system designed to
provide quality administrative support services at the lowest cost
while attempting to ensure that each agency pays the true cost of its
overseas presence. According to the Foreign Affairs Handbook, the
system's four primary goals are as follows: [Footnote 6]
* Contain or reduce costs. ICASS seeks, in part, to contain or reduce
overall government costs for overseas administrative support services.
Service providers and customers are to select the most cost-effective
methods for providing services by choosing among competitive
alternatives, whether internal or external to the U.S. government. The
system's designers felt this cooperative approach would encourage
greater participation by agencies that traditionally operated their own
administrative support structures and would ultimately lead to a
reduction in duplicative structures; streamlined service provision;
and, therefore, savings through the development of economies of scale.
* Provide quality administrative services and increase customer
satisfaction. Under ICASS, the customers and service providers at each
post are responsible for agreeing on service standards that define
quality, cost-efficient service at that post. The local ICASS Council,
comprised of senior managers representing each agency at a given post,
is responsible for tracking and evaluating service provider performance
in meeting cost and quality standards.
* Establish a simple, transparent, and equitable cost-distribution
system. ICASS Councils are supposed to agree on a transparent method
whereby the basis for all post-and nonpost-related ICASS service costs
can be shown to and understood by customers and service providers both
at the posts and at Washington headquarters. Moreover, a database
containing billing, budgeting, and other management information was
developed and can be accessed by all participants in the system. ICASS
seeks to encourage equity by charging customers their fair share of
administrative service costs at posts and by giving agencies a greater
voice in how shared administrative services are managed and delivered.
* Promote local empowerment. Under ICASS, posts were granted more
responsibility and authority to manage their resources because posts
were seen as best positioned to determine the levels of administrative
support needed. Under the previous system, these decisions were made
centrally in Washington. However, under ICASS, decisions on the
services that will be provided at a post, the methods for providing
them, and who will provide them are made at the post by the local ICASS
Council. Moreover, posts have the primary role in resolving disputes
between customers and service providers.
Service Subscription and Cost Distribution:
Agencies obtain support services by subscribing to cost centers, which
are groups of similar services bundled into larger categories (see app.
II). All agencies with American direct-hire staff must subscribe to two
cost centers: the Basic Package--services that can only be obtained by
the embassy, such as securing diplomatic credentials from the host
country--and services provided by the Community Liaison Office, such as
providing welcoming and orientation materials, assisting family members
with employment opportunities, and helping enroll dependent children in
education programs. All remaining cost centers are optional for
agencies. Costs of services are distributed among customers enrolled in
each cost center either on the basis of the number of people an agency
has at post (capitation) or on the amount of service the agency
actually uses (workload). In addition, agencies may modify the level of
services cost centers provide by taking the full amount, a medium
level, or a low level. Agencies selecting medium or low levels of
services are charged 60 percent and 30 percent of the full costs
associated with the cost center, respectively.
Principal Actors and Decision Making:
ICASS is a two-tiered system based in Washington and at overseas posts
that relies on collaboration among multiple agencies to develop and
implement ICASS policies (see fig. 1). The Foreign Affairs Handbook
details the responsibilities of three Washington-based ICASS
bodies.[Footnote 7] The ICASS Executive Board is the top decision-
making authority within ICASS and is responsible for reviewing and
making policy and providing leadership in addressing worldwide
improvements and cost reductions for administrative services. It also
resolves issues and disputes raised by Washington-based or overseas
ICASS groups. The Assistant Secretary of State for Administration
permanently chairs the Executive Board, and members generally include
assistant secretary-level officers from participating agencies. The
interagency ICASS Working Group, which is open to all agencies
represented on ICASS Councils at overseas posts, is a staff arm of the
Executive Board responsible for presenting policy issues to the board,
making policy decisions when delegated to do so by the board, resolving
issues raised by posts, and reviewing and approving nonpost costs and
factors. The ICASS Service Center, an interagency-staffed office
organizationally located in State's Bureau of Resource Management, is
primarily responsible for overseeing worldwide ICASS operations,
including providing support to embassies and consulates on training,
financial, and budgetary matters and general guidance on implementing
ICASS. The Service Center also provides support to the Working Group
and the Executive Board in developing new policy, but the center has no
policy-making authority of its own.
Figure 1: Principal Actors in the ICASS System and Their Respective
Roles and Responsibilities:
[See PDF for image]
[End of figure]
Although general ICASS policy is set in Washington, overseas diplomatic
posts are responsible for decisions on implementing the system. At the
core of operational decision making is the post's ICASS Council. This
is an interagency body consisting of representatives from each of the
agencies at the post that receive ICASS services. Representatives to
the ICASS Council must be direct-hire U.S. citizen employees and are
usually the local head of the agency they represent. A Council Chair
elected by the representatives for a 1-year term heads the group. ICASS
Councils are charged with developing all local policies on what
services will be available at the post; how those services will be
delivered; whether State, another agency, or a contractor will provide
the services; and how fees are established and customers charged. The
councils are also responsible for developing ICASS performance
standards for all services provided at their respective posts; for
annually reviewing service providers' performance and customer
satisfaction; and for updating standards, as needed. Although consensus
building is the preferred mode for decision making, voting is allowed
on a one funding-code, one-vote basis. However, agencies that are not
subscribed to a specific ICASS service may not vote on decisions that
affect that service.
Although they are chiefly tasked with overseeing ICASS operations and
service delivery, the Deputy Chief of Mission and service provider
representatives also participate as ex-officio council members. In this
capacity, they provide advice and technical assistance to the
representatives but are not authorized to vote on matters affecting the
post's ICASS policies or operations. Locally employed staff, such as
foreign nationals, and others may also provide technical assistance to
the council, both in terms of making presentations or participating in
local working groups assigned to a specific task, but they have no
formal role in helping the council achieve consensus on issues.
The Chief of Mission[Footnote 8]--who is usually a U.S. ambassador but
could also be a Charge d'Affaires, Consul General, or Director of a
U.S. Office (such as in Pristina, Kosovo), depending on the post--
retains the ultimate oversight and responsibility for ICASS at overseas
posts. In cases where the Chief of Mission vetoes a decision, or
implements a decision contrary to the ICASS Council's desires, the
council may appeal the decision to the Executive Board in Washington.
ICASS Has Not Eliminated Duplicative Administrative Support Structures
or Streamlined Operations:
ICASS has not resulted in efficient delivery of administrative support
services or achieved economies of scale because it has neither
eliminated costly duplicationof administrative support services nor led
to systematic cost-containment measures and the streamlining of
operations. From the start of ICASS, many agencies did not sign up for
ICASS services and decided instead to self-provide administrative
support services, which created duplicative administrative systems that
can raise overall government costs. While agencies cited affordability
concerns, programmatic needs, and control issues as reasons for not
subscribing to ICASS services, we found that they seldom provided
detailed business cases that justified decisions to self-provide
support services. In addition, neither service providers nor customer
agencies have made systematic efforts to contain costs by consolidating
or streamlining services. Moreover, ICASS structures designed to
encourage and reward managerial reforms are not adequate for overcoming
strong disincentives deriving from resource management authorities and
parochial interests of both customers and service providers. However,
State and the U.S. Agency for International Development (USAID) have
recently taken some steps to make the delivery of embassy support
services more efficient.
Agency Self-Provision of Support Services Can Lead to Duplicative
Structures and Higher Costs to Government:
When agencies choose not to subscribe to ICASS services, they still
have administrative needs that must be filled, which may lead to the
establishment of redundant administrative structures at posts. From the
very beginning of the program, agencies frequently chose not to take
some ICASS services available to them. In fiscal year 1998, the average
rate of non-State agencies' participation in available cost centers
ranged from about 31 percent to about 87 percent (see app.
III).[Footnote 9] Decisions to not take ICASS services at the program's
onset may represent missed opportunities to achieve economies of scale.
When an agency opts out of a service it needs, it often must provide
that service either by creating new positions at the post or securing
the service from the local market. This results in a duplication of
services--a situation where an agency creates an administrative
structure similar to, but apart from, what it could receive under
ICASS. There are often defensible reasons for an agency to develop such
a structure, such as demonstrated program needs or logistical
constraints. Less supportable duplication, however, exists when
agencies self-provide services without any apparent demonstrated need.
The State Inspector General reported in 2000 that although self-
provision rather than subscribing to an ICASS service may save
individual agencies money, it can also result in increased costs for
agencies that continue taking the ICASS service, as well as for the
U.S. government overall.[Footnote 10] Officials in Washington and at
posts said that adjustments to a post's ICASS personnel are generally
not made to compensate for the reduced ICASS workload that occurs when
agencies opt out of a cost center. As a result, the ICASS costs
associated with that cost center remain the same and must be
distributed among a smaller population of subscribers. In addition,
overall costs rise due to the new costs associated with the agency's
self-provision of the service. For example, USAID in Dakar recently
identified a need to obtain vehicle maintenance services outside the
ICASS structure because the location of its new offices in relation to
the ICASS vehicle maintenance facility prevented USAID from getting
convenient, timely service.[Footnote 11] As a result, USAID developed
and implemented a business plan to contract with a local service
station near its offices, which USAID officials expected would reduce
their fixed costs for this service from about $21,200 under ICASS in
2003 to about $7,400 in 2004 (see fig. 2).[Footnote 12] However,
although USAID notified the post ICASS Council of its intention to
withdraw from the ICASS service, the reason for its doing so, and its
general plan to contract with a local vendor for its vehicle
maintenance needs, the agency did not provide details on how it would
receive the needed services, nor did the council request that
information or discuss whether USAID's new approach could be adopted
postwide. Moreover, despite a reduction in the workload associated with
13 USAID vehicles, there was no change in the composition of ICASS
staff responsible for vehicle maintenance after USAID withdrew from the
service.[Footnote 13] Thus, the approximately $21,200 for labor and
ICASS redistribution charges formerly associated with USAID's bill
would be distributed among agencies that retain their service
subscriptions. In addition, labor costs associated with USAID's newly
self-provided service represent increased overall government spending
because the agency now pays additional people (i.e., the local vendor)
to provide a service it could otherwise receive from existing embassy
employees. Thus, total government costs for vehicle maintenance in
Dakar would rise by about $7,400.
Figure 2: Effects of Agencies' Decisions to Opt out of ICASS Services
on Total Governmental Costs:
[See PDF for image]
[End of figure]
Agencies Cite Cost, Unique Program Circumstances, Greater Control, and
Lack of Need as Reasons for Self-Providing Services:
Agency officials in Washington and the field said the most common
reasons for not subscribing to a service are the cost of the service,
agencies' unique programmatic circumstances, agencies' desire to have
greater control over services, and a lack of need for some services.
Agencies cited two cost-related reasons to seek administrative support
outside of ICASS. First, many agencies said that ICASS services are too
expensive, in part due to the high labor costs associated with U.S.
government employees hired to work overseas, and reported that they
could self-provide the same services for less money by hiring local
labor. Under ICASS, customers pay the salaries and benefits for both
Foreign Service officers and foreign nationals who provide
administrative support services. Figure 3 shows that in 2000, labor
costs comprised over 60 percent of total ICASS costs. American direct-
hire employees comprise roughly 5 percent of ICASS employees but
represent 30 percent of the total labor costs. State estimates the
average annual cost of maintaining a Foreign Service officer at an
overseas post to be about $346,000 per year.
Figure 3: Total ICASS Costs, Total ICASS Labor Costs, and Number of
ICASS Employees, Fiscal Year 2000:
[See PDF for image]
[A] Local hires include personal service contractors, Foreign Service
nationals, and other locally employed staff.
[End of figure]
Second, agency officials reported that ICASS cost increases have forced
them to place greater emphasis on finding savings, including examining
the need to continue subscribing to some ICASS services. Total ICASS
costs rose 29.4 percent between 2001 and 2003, from $758 million to
$981 million, as a result of new security requirements following the
terrorist attacks of September 11, 2001; State's increased hiring of
American personnel;[Footnote 14] new services to be provided; and
adjustments to the exchange rate, among other reasons (see fig. 4). As
a result, agencies have chosen to subscribe to fewer ICASS services
than in previous years (see app. III). Of the 23 agencies located at 10
or more posts in both 2001 and 2003, 21 had lower participation rates
in 2003 than in 2001. Participation rate reductions ranged from 1.4 to
6.6 percentage points. In addition, 18 of the 23 agencies paying ICASS
fees at 10 or more posts in both 1998 and 2003 had participation rates
that were lower in 2003 than in 1998, ranging from 0.7 to 14.1
percentage points. Because of rising costs and budgetary constraints,
the U.S. Commercial Service reduced its average subscription rate for
all services available at all posts at which it has a presence from
83.8 percent in 2000, one of the highest rates for any agency, to 74.8
percent in 2003.
Figure 4: Total ICASS Costs, Fiscal Years 1998-2003:
[See PDF for image]
[End of figure]
Agencies also cited unique programmatic circumstances associated with
overseas programs that require them to self-provide services. For
example, Peace Corps officials in Dakar stated that the remote location
of Peace Corps volunteers throughout Senegal, combined with the need
for staff in Dakar to make routine visits to these remote locations,
requires that the office own, operate, and maintain a vehicle fleet
separate from the ICASS vehicle service. Similarly, a U.S. federal law
enforcement officer in Vienna said that all of his agency's overseas
officers are authorized to maintain a government-owned vehicle because
they need immediate access to transportation on a 24-hour basis. In
addition, because USAID's offices in Egypt and Senegal are in locations
outside the respective main U.S. embassies, these offices employ staff
to provide administrative support services, such as nonresidential
building operations.
Agencies also cited control as a factor for self-providing services.
Some customer agency officials perceived an implicit service delivery
bias toward State employees, saying State employees' needs are placed
ahead of others. Although we discovered no evidence--hard or
circumstantial--supporting this contention, agencies throughout the
eight posts we examined stated that they maintained their own vehicle
fleets so they would have immediate transportation access. In addition,
unless an ambassador requires all agencies at a post to participate in
the furniture pool, the Drug Enforcement Administration (DEA) provides
furniture for its American workers outside of ICASS. Officials in
Washington said this is because DEA felt there was an implicit bias
toward State personnel, both in terms of priority of distribution and
furniture quality. Supplying its employees with furniture gave DEA
greater control over both these aspects and better met its employees'
needs, according to the agency.
Finally, some agencies choose to opt out of a service because they do
not actually need the service at post. For example, the Foreign
Agricultural Service processes payroll and travel services in the
United States for American employees overseas, and the Department of
Defense has no need to subscribe to personnel services for local staff
in posts where it does not employ foreign service nationals. In
addition, some agencies occupy offices provided by host country
ministries and thus have no need for services such as nonresidential
maintenance or local guard services.
Fieldwork Revealed Numerous Redundant Structures:
Despite the reasons agencies cited for self-providing support services,
in our fieldwork, we found numerous cases of duplicative administrative
structures that seemed to be unnecessarily redundant. For example,
State and USAID operate two separate warehouses on adjacent properties
in Cairo, separated by a concrete wall (see fig. 5). Staff from both
agencies said the two warehouses could be run more efficiently if they
were consolidated, and staff from both agencies said they could take on
the work of the other. In Dar es Salaam, Tanzania, USAID and State
provide redundant services in 14 ICASS cost centers despite occupying
buildings 30 feet apart on the newly built embassy compound. According
to post officials, these redundant support structures include shipping
and customs, cashiering, human resources, home fuel and water delivery,
janitorial services, warehousing, housing/leasing services, motor
vehicle operations and maintenance, procurement, travel services,
budgeting and financial planning, contracting, and housing maintenance.
Furthermore, according to the 2003 ICASS Global Database, USAID was not
billed for information management services, International Voice Gateway
access, payrolling, and personnel services for American and foreign
national employees. Although we did not assess the rationale of each
service USAID self-provides in Dar es Salaam, both USAID and State
officials acknowledged that some of the services could be consolidated.
Officials in Washington confirmed that the above examples are common
occurrences worldwide.
Figure 5: Independent State and USAID Warehouse Operations on Adjacent
Properties in Cairo, Separated by a Wall:
[See PDF for image]
[End of figure]
Lack of Business Case for Self-Provided Services Hinders Posts' Ability
to Maximize Cost-effectiveness:
Agencies seldom engage in a disciplined process for rationalizing
decisions to opt out of services, which often limits posts' ability to
benefit from innovative managerial approaches to service delivery.
ICASS is a voluntary system, and agencies are not required to justify
their decisions for self-providing services they could obtain through
ICASS. Although some agencies' reasons for self-providing services
outside the system may be supportable, we found that their decisions to
do so are generally made without a disciplined business case based on
analyses of alternatives, including how the alternatives affect the
individual agency, other agencies at post, and overall government
costs. We found that business cases were not made when agencies first
opted out of ICASS services when the system began and also subsequently
when agencies have withdrawn from services.
The Foreign Affairs Handbook states that an agency must notify the post
ICASS Council of its plans to withdraw from a service; however, that
notification process is not intended as a justification for approval
for withdrawing from ICASS services. Rather the notification is
designed to ensure that all member agencies benefit from service
options that are more cost-effective than existing ICASS services.
Issues to be discussed in the notification include the reasons for
withdrawing, where and how the agency will obtain the service, whether
the council should consider the alternate service source for all member
agencies, and any potential cost savings. However, agencies are not
required to provide detailed analyses, such as cost-benefit analysis,
for these notifications.
Although we found that ICASS Councils enforce the notification
requirement, they seldom examine agencies' self-provided services for
potential ways to improve ICASS services. In interviews at our case
study posts, ICASS Council members said that agencies informed the
ICASS Council before ending subscription to an ICASS service, as
required, but frequently did not present information beyond the
requirements. Furthermore, ICASS Councils at the posts we visited did
not seek information on whether agencies' service arrangements outside
of ICASS could be adapted for use by the rest of the ICASS customers at
post. Without such explanations and discussions, posts may have missed
opportunities to improve existing ICASS services or adopt more cost-
effective alternatives.
Few Systematic Efforts Have Been Made to Consolidate or Streamline
Administrative Support Structures:
ICASS seeks to encourage elimination of redundant administrative
support services and to contain costs through innovative managerial
approaches to service delivery that could lead to economies of scale.
However, we found that few systematic efforts to consolidate
duplicative administrative structures or streamline administrative
processes have occurred at either the postwide or worldwide level.
Of the eight posts we examined, Embassy Vienna has taken the most
proactive approach to streamlining services. In recent years, the post
has made numerous efforts to streamline services, including reducing
the number of vehicle mechanics, revamping warehouse operations,
changing processes for procuring administrative supplies, upgrading and
changing utilities contractors, competitively sourcing the in-house
upholstery operation, reducing the travel services contract to 20 hours
per week and moving that office off the compound, and establishing a
furniture pool in which each agency in Vienna voluntarily enrolled.
Embassy officials also reported services in 15 ICASS cost centers that
could be wholly or partially outsourced. Other posts we examined also
conducted efforts to consolidate services--for instance, Embassy Lima
made changes in how it delivers telephone and some maintenance services
and discovered a way to reduce electricity bills by 7 percent--but
these efforts generally focused only on one or two services at the
post, rather than a more systematic approach like that taken in Vienna.
Potential for Consolidation and Streamlining during Planning for New
Embassy Compounds:
One area with great potential for consolidating and streamlining
operations is in the planning for New Embassy Compounds (NEC). In
response to the 1998 bombings of U.S. embassies in Dar es Salaam,
Tanzania, and Nairobi, Kenya, State embarked on a $21 billion program
to replace about 185 embassies and consulates. The size and cost of
building an NEC is directly related to the number of staff set to
occupy it and the type of work they will perform. According to State,
per capita building costs average about $209,000 per office for space
for top embassy management, $59,300 per office in controlled access (or
classified) space, $28,100 per office in noncontrolled access (or
nonclassified) space, and $4,900 per person for nonoffice space.
In 1999, a law was passed requiring that all U.S. agencies working at
posts slated for new construction be located on the new site unless
they are granted a special waiver.[Footnote 15] Although in the past
there were logistical reasons for agencies to self-provide support
services "off compound," justifications based on proximity have less
weight as agencies become colocated on the new compounds. In April
2003, we reported that staffing projections for NECs were developed
without a systematic or comprehensive rightsizing approach--
assessments of the security environment; mission requirements; cost of
operations; and potential rightsizing options, which would include
consideration of consolidating and streamlining administrative support
operations.[Footnote 16] Following our report, State implemented a
formal process with criteria for developing, vetting, and certifying
staffing projections for NECs. The new process requires posts to review
all positions under Chief of Mission authority, including
administrative support, even if they are not colocated in the embassy
or consulate at the time projections are made.
Considering the high costs associated with constructing new embassy
compounds, the staffing projection process is an opportune time for
posts to examine administrative platforms. In addition to reducing
annual U.S. government expenditures for support services, consolidating
and streamlining services at this stage would likely reduce the overall
costs of embassy construction because such actions would result in
reduced office space needs in the NEC. Four of our eight case study
posts have either recently completed construction of an NEC (Embassies
Dar es Salaam and Lima), begun constructing an NEC (Embassy Conakry),
or are in the planning stage for an NEC (Embassy Dakar). Officials at
the first three posts indicated there was no discussion, or they were
unaware of discussions, of consolidating or streamlining administrative
support services when developing staffing projections for the new
compounds, although at the time their respective projections were due,
no formal guidance or requirements existed for what posts should
include.[Footnote 17] Nonetheless, these posts may have missed
opportunities to minimize construction costs for their new compound.
Furthermore, during our December 2003 site visit to Dakar, officials
indicated that consolidation of duplicative administrative services has
not been considered in planning for the new NEC despite the fact that
most agencies are or will be colocated on the new compound.
ICASS Structures Do Not Overcome Disincentives to Streamlining:
During our work, we found that deterrents to consolidating and
streamlining operations outweighed the ICASS structures and tools
designed to encourage innovative managerial reforms. Among these
deterrents were the ICASS Councils' lack of authority to fully manage
ICASS resources, as well as service providers' and customers' focus on
their own interests rather than the collective interests of the
agencies at post. Further, tools such as the ICASS Working Capital Fund
and a formal ICASS awards program did not work as envisioned and thus
did not provide sufficient impetus for consolidation and streamlining
efforts.
Councils Lack Authority to Fully Manage ICASS Resources:
The Foreign Affairs Handbook states that ICASS Councils are responsible
for determining "which services are to be provided, by whom, and at
what level," and for evaluating cost and staffing alternatives and
establishing budgets for posts' ICASS operations. However, according to
the Director of the ICASS Service Center, there are no "[ICASS]
guidelines, rules, or regulations stating that ICASS Councils set
staffing levels of the service provider." Indeed, agency headquarters
and field staff agreed that while they have input on whether an
existing position is staffed, they do not have input on actually
setting the number of ICASS positions at a post. As a result, the
agency providing services determines the staffing complement needed to
deliver the services. This seeming contradiction to ICASS councils'
authorities was designed, in part, to minimize micromanagement by the
local councils. Nonetheless, it reduces a council's ability to
streamline ICASS operations and manage the largest potential source for
savings--labor costs. For example, an ICASS Council could decide to
outsource an ICASS service, yet it would have no authority to adjust
ICASS personnel to reflect the changed in-house labor needs for that
service.
Focus on Own, Rather Than Collective, Interest:
Rather than the cooperation the developers of ICASS envisioned, both
service providers and customer agency personnel focus primarily on
their own interests. Reforms that reduce the costs of administrative
support structures, whether streamlining practices or consolidating
services to a single provider, should lead to reductions in staffing
levels. However, we found that service providers are reluctant to
implement reforms that would reduce ICASS staffing levels. Officials
said that reforming administrative support operations requires
significant time and effort that administrative officers at posts said
they often do not have. Moreover, administrative officers at posts
reported that there are few incentives to reduce ICASS costs, and that
few rewards come to those making administrative structures more
efficient. As a manager at one of our case study posts succinctly put
it, "You don't get ahead by firing people and making waves."
Customer agency personnel also focus on self-interests. Faced with
budget constraints and rising ICASS costs, agencies have been forced to
discover ways to reduce spending. In some cases, agencies' first choice
has been to opt out of ICASS services, either on orders from their
respective Washington headquarters or because of decisions made
locally. For example, to save money, the U.S. Commercial Service in
Vienna has withdrawn from numerous cost centers since 1998, including
those for budgeting and fiscal (1998), information technology support
(1999), administrative supply and vehicle maintenance (2001),
International Voice Gateway telecommunications (2002), and American
personnel services (2003). In other cases, agencies do try to work
under the ICASS rubric; but because they cannot fully engage in
resource management, they become frustrated and consider opting out.
For example, in Dakar, USAID has proposed pilot testing a new method
for delivering residential maintenance services, but it has been
unsuccessful in gaining approval to conduct the pilot test. Although
USAID has not yet made a decision to withdraw from that cost center,
officials in Dakar expressed frustration over the high costs associated
with residential maintenance and indicated that withdrawal from the
service could be an option.
In addition to agencies' self-interests, personal interests of post
personnel sometimes hinder reform efforts, particularly those related
to streamlining processes. At Embassy Bern, post management reported
suggesting that the American staff get local bank accounts and/or
automatic teller cards, which they said would have the dual effect of
reducing costs associated with check cashing--$17 per check in Bern--
and allowing the current cashier to be trained for work in other
services that are understaffed. Post officials stated, however, that
customers resisted changing the service because it would require them
to leave the embassy to cash a check. As a result, the post missed
chances to reduce ICASS costs and improve service quality by cross-
training staff.
ICASS requires that post councils and service providers work together
to choose the most cost-effective method for delivering services. This
requirement was designed to ensure selection of the best methods for
delivering services by examining all available competitive
alternatives, including those developed or adopted by customers who
self-provide services they could otherwise obtain through ICASS. In
theory, this requirement would lead to the most efficient delivery of
ICASS services because it would be in the interest of both customers
and service providers to discover the least expensive method for
delivering services at the levels needed by the post. However, as
previously noted, post ICASS Councils have not systematically
considered the service options available to them. Some post officials
reported that program requirements demand too much of their time to
conduct analyses showing how the embassy as a whole would benefit from
new approaches to service delivery. Moreover, only a few agencies other
than State have the capacity to actually provide services to other
agencies, and only one agency other than State, USAID, actually does
this on a very limited basis.[Footnote 18]
ICASS Tools Are Not Working as Envisioned:
The Working Capital Fund is a no-year fund that permits posts to retain
a portion of their unobligated funds from one fiscal year to the next.
This tool allows posts some fiscal flexibility by reducing the pressure
to engage in wasteful end-of-year spending on items they may not need.
It provides ICASS Councils with an opportunity to engage in long-term
planning and have greater autonomy in allocating resources--factors
that were expected to ultimately lead to greater efficiencies. Although
some of the posts we visited did roll over some funds from one year to
the next, post officials said they were afraid they would lose an
equivalent amount of money in future years if they demonstrated they
could save in the current year. As a result, posts prefer to spend
their entire budget within the fiscal year it is disbursed. In
technical comments on a draft of this report, the ICASS Executive Board
stated that it was unaware of any case in which carried-over funds were
withdrawn from a post because it "actively supports posts carefully
stewarding and planning for the best use of funds." However, the
Executive Board did acknowledge that future funding targets could be
adjusted downward for posts that carry over significant funds so that
money could be redirected to other underfunded posts.
Customers and service providers stated that the program designed to
reward individuals and posts for developing innovative approaches to
service delivery does not overcome the disincentives previously
described. The ICASS Service Center has three annual awards for
contributions that lead to improved quality of service and/or greater
efficiencies. The ICASS Outstanding Leadership Award recognizes
contributions from individual post employees who best acted as agents
for change to improve the quality of services and/or reduce costs at
overseas posts. The ICASS Team Achievement Award goes to the one team
worldwide that best improves service delivery and customer satisfaction
and/or achieves cost savings. Finally, the Diplomatic Readiness Goal
Sharing Award rewards one or two teams worldwide for establishing new
goals that improve a post's capacity to achieve U.S. objectives.
Despite the stated purposes of these awards, we found that they did not
motivate overseas staff to seek innovative approaches for delivery of
ICASS services. Results from a global survey conducted by the ICASS
Service Center in 2002 showed that the rewards system did not meet
service providers' and customers' expectations. Moreover, State and
agency officials reported that the awards program does not motivate
their staff to seek innovative methods for delivering administrative
support services. Customers and providers agreed that the success of
ICASS at a post was highly personality driven, and that innovative
reforms derive from individuals or teams interested in reducing costs
or improving services, rather than from the potential to receive an
award.
Efforts Are Under Way to Promote Consolidation and Streamlining of
Services:
Recently, State and USAID initiated an effort that could greatly affect
ICASS service delivery and costs, and State began three other
initiatives that could have significant impacts on ICASS. Two of the
efforts, a study of the potential for consolidating support services at
four overseas posts and implementation of a tool to help rationalize
service delivery, were generated specifically to make service delivery
at posts more efficient. The remaining two approaches, centralizing
administrative functions and sharing the costs of embassy construction,
were generated outside of ICASS but could have significant
ramifications for costs under the system.
Study on Consolidation and Streamlining at Four Posts:
In November 2003, State and USAID reached an agreement to examine
consolidation of duplicative administrative functions at four posts:
Embassies Cairo, Dar es Salaam, Jakarta, and Phnom Penh. The goal of
the study was to "identif[y] and eliminat[e] wasteful and/or
unnecessary duplication wherever—improved service and/or cost savings
accrue to both agencies."[Footnote 19] In May 2004, State and USIAD
issued their report stating that they found "significant advantages in
consolidating motorpools, warehousing/property management, residential
maintenance, and leasing at every post" and that in every case,
consolidation would improve services and reduce costs. The reports
recommendations are currently being implemented.
ISO 9000 Certification for Administrative Support Services:
Another effort involves bringing embassies' administrative support
services into compliance with quality management principles developed
by the International Organization for Standardization (ISO). These
principles, known as ISO 9000, were developed with the goal of ensuring
that an organization's products or services satisfy a customer's
quality requirements and comply with any regulations applicable to
those products or services. The ISO 9000 principles, which apply to
both for-profit and nonprofit organizations, stress customer focus;
detailed documentation of processes, including specific and
quantifiable performance criteria; and continuous tracking of
performance and improvement in systems. Five embassies--Brussels,
Cairo, London, Vienna, and Warsaw--were selected for a pilot study on
applying ISO 9000 quality management principles and achieving ISO 9000
certification. We believe this certification has the potential to lead
to significant cost reductions for ICASS because it would require
service providers to focus on quality and timely service delivery and
to eliminate inefficient practices. Moreover, it would require that
ICASS service providers and ICASS Councils rationalize staffing levels-
-the primary costs associated with service delivery. State officials
believe ISO 9000 certifications would, in the long term, provide an
incentive for consolidating duplicative services because as unit costs
decline, agencies would become more amenable to subscribing to support
services that were less costly than those they self-provide.
Pilot Program to Relocate More Functions to Regional Centers:
State also has begun an effort to centralize functions that are not
location-specific to regional centers in the United States and abroad.
Although this effort evolved from the rightsizing initiatives in The
President's Management Agenda,[Footnote 20] it could also significantly
reduce ICASS costs and consolidate delivery of ICASS services. State
plans to begin this effort at posts within the Bureau of Western
Hemisphere Affairs by relocating some administrative support activities
to the Florida Regional Center in Fort Lauderdale. State estimates that
up to 90 American direct-hire positions could be removed from overseas
posts at a savings of as much as $140 million over the first 5 years of
the effort. These cost savings would be passed directly to other
agencies in the form of lower ICASS bills. State officials said that if
this pilot program works well in that bureau, State would consider
expanding the effort to other regions.
Capital Security Cost Sharing as Financial Incentive to Consolidate and
Streamline Services:
State and the Office of Management and Budget (OMB) have recently
proposed a new program that would require agencies with overseas staff
to help finance the cost of the embassy construction program. The
Capital Security and Cost-Sharing Program, if implemented, would
require agencies to share construction costs based on the per capita
proportion of total overseas staff and the type of space (controlled
access, noncontrolled access, or nonoffice) they need. As a result,
non-State agencies would be required to share about $61 million in
costs in 2005, about $147 million in 2006, and about $233 million in
2007 (see table 1). Moreover, costs for constructing office space
designated for ICASS service providers would be distributed among
agencies on the basis of their respective proportions of total ICASS
expenditures for the year. Agencies' ICASS-related contributions for
sharing construction costs are estimated to total about $23 million in
2005, about $46 million in 2006, and about $68 million in 2007. By
2009, non-State agencies would share about one-third of the estimated
annual $1.4 billion construction fund. These charges are in addition to
fees that agencies pay under ICASS. OMB officials believe the new
capital cost sharing requirement will spur all agencies, including
State, not only to scrutinize staffing for their program needs but also
to consolidate duplicative administrative structures and develop
creative ways to deliver support services. However, another possibility
is that agencies could withdraw from ICASS services at increasing
rates, as they have done since 2001, to compensate for their increased
costs.
Table 1: Actual and Estimated Fees under the Capital Security Cost-
Sharing Program, Fiscal Years 2005-2007:
Agency: State;
Type of space: Agency space;
Fiscal year: 2005: Actual cost: $102,557,400;
Fiscal year: 2006: Estimated cost: $253,837,205;
Fiscal year: 2007: Estimated cost: $402,398,120.
Agency: State;
Type of space: ICASS space[A];
Fiscal year: 2005: Actual cost: 60,090,841;
Fiscal year: 2006: Estimated cost: 120,181,678;
Fiscal year: 2007: Estimated cost: 180,272,516.
Subtotal;
Fiscal year: 2005: Actual cost: $162,648,241;
Fiscal year: 2006: Estimated cost: $374,018,883;
Fiscal year: 2007: Estimated cost: $582,670,636.
Type of space: Agency space[B];
Fiscal year: 2005: Actual cost: $60,896,849;
Fiscal year: 2006: Estimated cost: $146,888,647;
Fiscal year: 2007: Estimated cost: $232,880,439.
Type of space: ICASS space;
Fiscal year: 2005: Actual cost: 22,774,802;
Fiscal year: 2006: Estimated cost: 45,549,602;
Fiscal year: 2007: Estimated cost: 68,324,404.
Subtotal;
Fiscal year: 2005: Actual cost: $83,671,651;
Fiscal year: 2006: Estimated cost: $192,438,249;
Fiscal year: 2007: Estimated cost: $301,204,843.
Total;
Fiscal year: 2005: Actual cost: $246,319,892;
Fiscal year: 2006: Estimated cost: $566,457,132;
Fiscal year: 2007: Estimated cost: $883,875,479.
Source: GAO analysis of State data.
[A] Assumes State's proportion of total ICASS costs remains constant at
the 2005 rate (about 72.5 percent).
[B] Cost estimates for 2006-2007 do not reflect agencies' rent credits
or charges derived from agency staffing projections for an NEC.
[End of table]
ICASS Is Generally Effective in Providing Quality Services Based on Its
Stated Goals, but Impediments Still Hinder Its Success:
Based on the system's primary goals, ICASS is generally effective in
providing quality administrative support services, although not to the
extent that it could be if certain impediments were addressed. Global
surveys and interviews at case study posts show that agencies generally
approve of the quality of ICASS services; but because customer
satisfaction is not routinely tracked by ICASS Councils at posts, it is
difficult to determine the extent to which customers are satisfied. We
found that ICASS is simple and transparent enough for customers to
understand the basic structures that govern service provision at post.
Furthermore, virtually all personnel involved in setting policy or
implementing ICASS at posts and in Washington agree that the system is
more equitable than the previous cost-distribution mechanism for
overseas administrative support services. However, it is difficult to
determine the extent to which ICASS is meeting its stated strategic
goals because they lack indicators to gauge progress. Moreover, posts
rarely implement a requirement to annually review service performance
standards. Other obstacles to maximizing the system's effectiveness
include limits to overseas staffs' decision-making authority, which can
weaken ICASS's goal of "local empowerment." Finally, we found that
available training and informational resources that could enhance
participants' knowledge and implementation of ICASS are underutilized.
ICASS Customers Generally Are Satisfied with Service Quality, but
Quantifying Levels of Satisfaction Has Proven Difficult:
Results of a global ICASS survey indicated that customers are generally
satisfied with ICASS services. In 2002, the ICASS Service Center
surveyed the ICASS Executive Board and Working Group members, State
Department Regional Bureaus, service provider personnel, post ICASS
Council members, Chiefs of Mission, and Deputy Chiefs of Mission.
Responses showed that ICASS customers generally agreed that ICASS
facilitates efforts to improve the quality of life and work at posts.
Further, in 24 of 25 service areas, customers reported that the Service
Center was generally effective in meeting its performance
standards.[Footnote 21] However, the Service Center survey's response
rate was about 42 percent, which limits the degree to which these
results are generalizable.
ICASS customers at our case study posts typically confirmed the survey
results, stating that they were generally satisfied with the overall
quality of the ICASS services they receive. Some customers said ICASS
provided better services than they could provide themselves. Others
stressed that, although they had specific complaints about services,
they were pleased with the overall service quality. We found that
customer complaints about service quality were generally the result of
unique cases or circumstances regarding a specific service at an
individual post. Moreover, customers reported that in cases where they
had complaints, they generally knew where to get solutions and that
corrective measures were generally implemented quickly and to their
satisfaction. Customers at our case study posts rarely cited poor
service quality as the reason to consider withdrawing or to actually
withdraw from a service.
Although we found that customers are generally satisfied with ICASS
services, quantifying customer satisfaction is difficult because post
ICASS Councils are not maximizing the use of annual local customer
satisfaction surveys. We found that not all post ICASS Councils
administer regular customer satisfaction surveys, as recommended by the
ICASS Service Center. A global survey conducted by State in 2001 said
that 32 percent of 56 posts responding had not performed a customer
satisfaction survey in at least 3 years. Although all but two of our
case study posts reported administering at least one customer
satisfaction survey in the last 3 years, only one post reported that
the ICASS Council had input in the creation of its post's surveys. Most
surveys were conducted unilaterally, either by the management team or a
specific management office. Some customers said these surveys failed to
accurately measure customer satisfaction because survey questions did
not provide them with an opportunity to express their real concerns or
because customers did not think the surveys would lead to service
improvements. In addition, while State's global survey reports that 61
percent of respondents said service had improved, only 38 percent
reported they had actually measured improvements.
Post Staff Have Basic Understanding of ICASS Structure:
Based on interviews with customers and service providers at post, we
found that most understood the basic ICASS structures and that ICASS
therefore generally meets its goal of being a simple and transparent
system. Most customers demonstrated that they generally understood
which administrative support services they received from ICASS and
which services they did not receive because of their respective
agencies' subscription choices. Customers also said they generally
understood how bills were calculated and how costs were distributed at
a basic operational level. Service providers generally understood which
agencies had subscribed to the services.
However, customers were largely unaware of their roles and
responsibilities as post ICASS Council members and how to effectively
utilize their authority to improve ICASS operations at posts. Some
council members told us the ICASS Councils at their posts did not deal
with issues with which they thought they should be dealing, such as how
to contain and reduce costs. At three posts that held local ICASS
Council meetings during our site visits, we found that discussions
focused on routine ICASS tasks, such as reviewing an individual
agency's billing questions, that would be better discussed in other
forums. For example, in Cairo, part of one ICASS Council meeting
addressed why one agency's housing maintenance bill was so high. After
some discussion, the council chairman and a financial specialist agreed
to meet with the council member after the meeting to resolve the issue.
Customers Say ICASS Is Generally Equitable, yet Several Systemic Equity
Problems Remain:
ICASS customers typically said that ICASS implementation is generally
equitable, but we found that some potentially inequitable policies
still exist. Customers agreed that the system was more equitable than
its predecessor, the FAAS system. Customers from some agencies with
whom we spoke said that under ICASS, they paid for few, if any,
services they did not use. In addition, service providers told us that,
under ICASS, they know which ICASS customers subscribed to their
service and could ensure that customers generally received only the
services for which they paid.
Some service providers noted, however, that it was difficult to deny a
nonsubscriber's request for help, and some said that they occasionally
provided some services to nonsubscribers. Medical services staff, for
example, said they were professionally obligated in some cases to serve
embassy staff and dependents, whether or not they were signed up for
medical services. ICASS customers who paid for these services did not
complain about such cases.
ICASS customers also said that ICASS costs and services were equitably
allocated among the customers taking services at posts. Special
arrangements whereby individual agencies received services at a
different cost than other agencies at posts were common under FAAS.
Such side deals are not allowed under ICASS, and we found no evidence
of them occurring. ICASS permits service providers to directly charge
any agency for using a service that can be easily identified as
benefiting that specific agency, and some customers confirmed that this
occurred.
Nonetheless, agency staff at posts reported perceptions that service
provision was not always equitable. Some customers told us they
believed that State employees received preferential treatment in both
the quality and priority of service because ICASS employees report
directly to State management officers. Although we found no evidence to
substantiate these allegations of systematic preferential treatment,
the perception of bias affected customers' morale.
Other equity issues involve the methodology for distributing costs
generated by temporary duty and regional ICASS staff. At the posts we
visited, costs incurred by temporary duty personnel were typically
distributed among all ICASS customer agencies at a post, rather than
just the agency sponsoring the temporary duty staff. Although the ICASS
Executive Board approved a new policy that details how posts may charge
temporary duty staff for these incurred costs, fewer than 30 posts have
implemented policies worldwide. In addition, some costs associated with
ICASS staff providing regional services are borne solely by the "home"
post. For example, the regional medical staff based in Vienna, Austria,
serves several posts, yet the service costs are paid by agencies in
Vienna. Agencies with offices in the Balkans but not in Vienna, such as
USAID, receive benefits from these services. Some agency staff said
such situations were inequitable since agencies were receiving benefits
for which they did not pay. In technical comments on a draft of this
report, the ICASS Executive Board stated that this inequity is being
addressed, citing four posts--Embassies London, Vienna, Pretoria, and
Singapore--that have successfully petitioned to have costs for medical
evacuation services distributed on other than a home post basis.
However, although this is a costly service, it was only one of the many
services provided by the regional medical units at these posts where
the costs are borne solely by the home post customers.
ICASS Lacks Measurable Goals and Performance Indicators:
A chief barrier to effective implementation of ICASS derives from the
lack of measurable goals and performance indicators. ICASS is
consistent with the approach set forth in the Government Performance
and Results Act, which requires that most agencies (1) establish 5-year
strategic plans, (2) set measurable performance goals in annual
performance plans, and (3) annually report on performance toward
achieving the performance goals. Annual performance plans should
provide direct linkages between the agencies' strategic plans and their
day-to-day activities. As previously stated, ICASS has four strategic
goals, and although progress toward achieving them could be measured,
the system's designers did not set clearly defined and measurable
performance goals and how progress toward achieving those goals would
be assessed. For example, the Foreign Affairs Handbook states that
ICASS is to be an equitable system, and defines "equity" as agencies
paying "their fair share of post administrative costs based on usage."
However, the handbook does not provide specific, measurable indicators
by which progress toward achieving the goal would be monitored and
evaluated. Moreover, annual reviews of progress toward achieving ICASS
strategic goals have not been conducted. As a result, it is difficult
to state whether ICASS as a system is accomplishing what it set out to
do: establish an efficient, fair, and effective cost-distribution
system.
The Foreign Affairs Handbook also states that the ICASS Council and
services providers at each post cooperate to set standards for
administrative services so that service provider performance can be
monitored. The handbook states that these performance standards should
be specific, measurable, achievable, relevant, results-oriented, and
time-specific and that performance should be evaluated each year.
Although all posts we examined had adopted performance standards,
providers' actual performance was not annually assessed against posts'
ICASS performance standards. The handbook states that ICASS Councils
should monitor service providers' "overall performance against agreed
upon standards"[Footnote 22] and provide "an annual written assessment
on the quality and responsiveness of the services furnished by the
service provider to the customer, using the agreed upon service
standards as the performance yardstick."[Footnote 23] Councils should
also routinely review standards to ensure that they remain relevant.
ICASS Service Center officials said that few ICASS Councils either
reviewed or updated standards on a routine basis, and we found that
none of the eight posts we reviewed conducted full assessments of
performance against the standards. At some posts, the service providers
did conduct customer satisfaction surveys; however, these surveys do
not assess whether service providers achieved the standards. We did,
however, find that some of our posts had reviewed the relevance of
their standards in recent years. Embassies Vienna and Dar es Salaam
last updated their standards in the past year, while three others last
updated standards in 2001, and 1 in 2000. During our fieldwork,
Embassies Conakry and Lima, indicated they had begun efforts to revise
their standards, which had not been updated in several years.
ICASS Councils' Ability to Make Decisions Can Be Weakened by Other
Decision-Making Authorities:
A further impediment to maximizing ICASS's effectiveness is that local
empowerment, granted to allow posts the ability to manage their
resources through the ICASS Councils' decision-making authority, has
not been fully exercised. We observed that decisions made by ICASS
authorities were at times subordinated to decisions by other
authorities. We also found that, although the system was designed to
give local ICASS Councils a wide range of responsibilities to ensure
cost-effective use of resources, many council representatives were
reluctant to actively participate in ICASS decision making.
ICASS Governance Structure Is Sometimes Subordinated to Other
Authorities:
The ICASS governance structure at times comes into conflict with other
authorities, resulting in a loss of its power to make decisions. For
example, one U.S. ambassador required that all agencies at post that
wanted to reside in post-owned housing would also have to participate
in the furniture pool. Discussions at two ICASS Executive Board
meetings indicate that agencies were concerned because they would be
required to subscribe to a voluntary ICASS service--the furniture pool-
-to receive another service--embassy housing--that had never come under
the ICASS structure. Moreover, agencies were anxious that this action
could be a precedent for State to link other voluntary ICASS services
to either the two mandatory ICASS services (see app. II) or other non-
ICASS services. A State official said that on appeal, the ICASS
Executive Board voted to overrule the ambassador, but the board's
chairman said that as State's representative to the board, he would
advise the Secretary to support the ambassador.
In addition, agency representatives reported that post management can
be unwilling to allow councils to explore alternatives for service
delivery. For example, post management at one of our case study posts
was reluctant to support an agency's feasibility study on potential
cost-efficient options to deliver services, citing security concerns.
This unwillingness discouraged the customer agency from seeking
innovative ways to reduce ICASS costs and improve services. Agency
officials in Washington agreed with our observation that council
members who make proposals often face an unreceptive environment. As a
result, few council members feel motivated to seek reforms in service
delivery.
Officials from both State and customer agencies commented that local
empowerment is sometimes not fully exercised because council members
feel that the big issues are out of the post's control. For example,
the methodologies for determining how ICASS services will be charged
are defined at the Washington level among agencies, and some officials
said there is very little flexibility for posts to adapt them to local
needs. In addition, overseas employees, including State personnel,
receive demands from, or can be overruled by, Washington headquarters,
which limits their autonomy to make decisions that reflect the needs
and circumstances at post. For example, of the 467 instances that
agencies withdrew from services between 2000 and 2002, agencies
reported that about 24 percent of the time it was because their
respective headquarters directed them to do so.[Footnote 24] Officials
at the posts we examined stated that headquarters also frequently
pressured them to reduce costs without explicitly directing them to
withdraw from specific services.
Agency Representatives Are Reluctant to Assume ICASS Roles,
Responsibilities, and Authority:
Another barrier to local empowerment is the reluctance by some agency
representatives to assume ICASS responsibilities. In addition to the
organizational disincentives discussed in the previous section, some
post staff indicated the amount of time it takes to actively
participate more fully in ICASS would compete with the time available
for their primary programmatic responsibilities. For example, some
agency representatives have regional responsibilities that require
spending much of their time at other posts, which limits their time to
become involved in ICASS decisions. In addition, some agency
representatives expressed a lack of interest in getting involved. As a
result, many agency representatives participate in the decision-making
process only by reviewing their agency's ICASS bill.
Training and Information Resources Are Not Being Used to Full
Advantage:
Numerous sources of information dedicated to ICASS policies and program
guidance--such as Washington-and post-based training and a Web site
maintained by the ICASS Service Center--exist for customers and service
providers. However, we found that few individuals make full use of
these resources to gain the knowledge base that would help them
implement ICASS most effectively. The failure to make full use of
information resources, particularly training, limits local ICASS
Council effectiveness because representatives have varying degrees of
understanding and acceptance of their roles and responsibilities in
council decision making and about the mechanisms by which ICASS
operates. Moreover, the staff primarily responsible for day-to-day
ICASS operations seldom received detailed training on the system.
Training Is Available Prior to Assuming Overseas Positions but Often Is
Not Taken:
The Foreign Affairs Training Center provides two ICASS training courses
for State and other agency staff. The "Executive Seminar" provides
agency representatives with a general understanding of ICASS and their
roles and responsibilities, and "Working with ICASS" offers more in-
depth training targeted at both service providers who make daily use of
the system and customers who want more detailed knowledge of how the
ICASS system works. All of State's management officers are required to
receive at least some ICASS training prior to deployment
overseas.[Footnote 25] However, most non-State employees are not
required to take either of the training classes. In fact, only five
customer agencies--the Defense Security Cooperation Agency, the Foreign
Agricultural Service, the U.S. Commercial Service, USAID, and DEA--
reported requiring that at least some of their overseas officers
receive ICASS training prior to an overseas assignment, and staff from
the first four of these agencies were the most consistently active
customer representatives on the ICASS Councils at the posts we visited.
However, we found that the representatives from most other agencies had
not taken or been provided the opportunity to take the recommended
training and, as a result, were required to learn their duties while
"on the job." Most agency personnel responsible for overseeing their
agencies' participation spend only a small amount of their time dealing
with ICASS issues--sometimes as little as 2 or 3 hours per month. ICASS
Service Center officials expressed concern that personnel going
overseas without the benefit of training would need significantly more
time to learn how to work within the program's sphere of activities
than those who had received training prior to arriving at post.
The ICASS Service Center also developed a post-specific curriculum.
This training is available to agency representatives, local ICASS
staff, and other officials who might not otherwise get ICASS training.
The training is centered on circumstances specific to the post so that
staff may gain a better understanding of how to apply ICASS principles
and procedures. Service providers at posts that had received this
training felt that training local Foreign National employees is
important because the local staff are responsible for the system's day-
to-day operations at post, and they would likely continue to be
employed at the post long after the American employees rotated to other
posts. In Lima, which had post-dedicated training just prior to our
site visit, we found both providers and customers were energized to put
what they had learned into practice. The ICASS Service Center confirmed
our observation, saying that Foreign National employees seemed
especially appreciative of the opportunity to receive this training.
ICASS Web Site Is Not Utilized Fully:
In addition to the training it offers, the ICASS Service Center
maintains a Web site, [Hyperlink, http://www.icass.gov] w [Hyperlink,
http://www.icass.gov] ww.icass.gov, which is a source of historical and
current information on policy guidance, procedures, best practices,
training opportunities, staff contacts, budgets, and meeting minutes of
the ICASS Executive Board and the Washington ICASS Working Group. We
found this site to be a useful source of information, yet many overseas
staff, both service providers and customers, were unaware of this
resource despite it being advertised through numerous media--cables,
listservs, chat rooms, and departmental notices, among others.
Conclusions:
The U.S. Government annually spends nearly $1 billion and employs
approximately 18,000 Americans and foreign nationals to provide
administrative support services for embassies and consulates. In the
current fiscal environment, it is essential that all U.S. agencies look
for ways to contain spending. ICASS was designed, in part, to the
contain costs of overseas administrative services. However, the system
has not achieved that goal because it has not led posts to eliminate
unnecessary duplication or to reengineer the processes by which they
deliver administrative support services. Although there are many
supportable reasons for an agency to self-provide services, we saw many
instances where decisions to do so did not appear to be based on valid
business cases or other factors that led to clearly demonstrated
benefits. We also saw few instances of posts systematically reviewing
service delivery or searching for alternatives that could make service
delivery less costly, such as contracting for services with local
vendors, placing greater reliance on regionally supplied services,
making better use of technology, and systematically considering "best
practices" developed and implemented by others. Consolidation and
streamlining did not occur because implementing innovative reforms
required great personal effort to effect a change in the status quo. As
a result, U.S. taxpayers are supporting costly and unnecessarily
duplicative administrative structures at overseas posts. Moreover,
deficiencies in the ICASS mechanism itself inhibit service delivery
efficiency. Despite the existence of at least three types of available
training, posts' agency heads and ICASS Council representatives
frequently do not know their roles, responsibilities, and authorities
as decision makers and operators of the system, and staff providing
service frequently have not received levels of training that would
allow them to truly understand and run the system more efficiently. In
addition, customers have few mechanisms by which they can hold service
providers accountable, and those that are available have often been
ineffectively implemented.
Recommendations for Executive Action:
To ensure more efficient delivery of embassy administrative support
services, we recommend that the ICASS Executive Board take the
following five actions:
* The board should aggressively pursue the elimination of duplicative
administrative support structures at U.S. overseas facilities with the
goal of limiting each service to the one provider that local ICASS
Councils have determined can provide the best quality service at the
lowest possible price. This effort should include:
* encouraging agencies not subscribing to ICASS services to submit
detailed explanations (business cases) of how they will fulfill these
service needs and at what cost so that potential benefits can be shared
by all ICASS customers at post and:
* ensuring that the consolidation and streamlining of support services
are key factors when posts develop staffing projections for new embassy
compounds, as required by State.
* The board should work to contain costs by reengineering
administrative processes and seeking innovative managerial approaches
through competitive sourcing, regionalization of services, improved
technology, and adoption of other best practices developed by agencies
and other posts.
* The board should also consider developing independent teams to review
ICASS operations at overseas posts and to recommend and implement
reforms that reduce duplicative administrative structures and contain
costs.
* The board should develop strategies to improve the system's
accountability, which could include:
* clearly defining the long-and near-term goals and objectives of
ICASS, developing measurable indicators to track performance, and
presenting annual reports on the progress toward achieving the goals
and objectives;
* ensuring that post ICASS Councils annually evaluate service provider
performance and customer satisfaction and annually certify that
performance standards are relevant, specific, and accurately reflect
customer needs; and:
* requiring that post ICASS Councils annually certify that they have
sought opportunities to streamline and consolidate ICASS services by
implementing best practices developed either by local staff or other
posts.
* The board should ensure that all personnel responsible for
implementing ICASS operations at overseas posts receive detailed
training on their roles, responsibilities, and authorities, including
detailed customer service and other technical training for Americans
and foreign nationals responsible for the actual delivery of services.
We are making our recommendations to the ICASS Executive Board because
ICASS is an interagency operation that relies on the collective input
of affected agencies. As such, the Executive Board must approve
decisions that affect ICASS policies and operations.
Agency Comments and Our Evaluation:
We received written comments on a draft of this report from the ICASS
Executive Board and nine agencies that are primary participants in
ICASS--the U.S. Departments of Agriculture, Commerce, Defense, Homeland
Security, Justice, State, and the Treasury; the U.S. Agency for
International Development; and the U.S. Peace Corps. Their comments,
along with our responses to specific points, are reprinted in
appendixes IV-XIII. The board and agencies also provided technical
comments, which we have incorporated throughout the report where
appropriate.
The ICASS Executive Board agreed with the report. The board indicated
that it met several times in recent months and has decided to take a
more active role in the overall management of the ICASS system. It said
it is trying to eliminate duplicative administrative support structures
where possible and cited a recent State/USAID Shared Services Study,
which ICASS partially funded, that reviewed support services at several
posts and concluded that consolidating some services could save costs
and improve quality. The board also endorsed efforts to reengineer
business processes, citing State Department efforts to centralize
certain support operations at regional support centers in Bangkok,
Thailand; Paris, France; Frankfurt, Germany; Ft. Lauderdale, Florida;
and Charleston, South Carolina. The board also agreed that strategies
must be developed to improve ICASS accountability. Finally, the board
noted that cost management is a priority.
The U.S. Departments of Agriculture, Commerce, Defense, Homeland
Security, Justice, State, and the Treasury; the U.S. Agency for
International Development; and the U.S. Peace Corps generally agreed
with our recommendations. State stressed the importance of eliminating
wasteful duplication. In addition, State defended the cost structure of
ICASS and criticized other agencies for resisting actions such as
investments in technology, which State believes could reduce costs. In
contrast, comments from the other agencies focused on the high costs of
ICASS support services, saying that ICASS had failed to contain costs.
These agencies generally believed that our draft report was too focused
on duplication and did not place sufficient emphasis on the need to
contain costs. They argued that the voluntary nature of ICASS needed to
be retained so that each agency can determine what support services it
requires and how to obtain them in the most cost-effective way. In
addition, the agencies provided their perspectives on a variety of
ICASS issues, including training, system fairness, and transparency.
Based on these comments, we modified our report to clarify that
elimination of duplication and the containment of costs were equally
important.
We believe that implementation of our recommendations will help the
executive branch achieve economies of scale by reducing duplication and
contain costs by focusing on streamlining business practices. We
generally support the voluntary nature of ICASS participation because
agency needs differ. We also understand that some agencies choose not
to use some ICASS services because they believe they can obtain these
services elsewhere at less cost. However, we believe such decisions
should be supported with strong business cases.
We are sending copies of this report to interested congressional
committees. We are also sending copies of this report to all current
members of the ICASS Executive Board, including the Secretaries of
Agriculture, Commerce, Defense, Homeland Security, State, the Treasury,
and Veterans Affairs; the Attorney General; the Administrator for the
U.S. Agency for International Development; the Commissioner of the
Social Security Administration; the Director of the U.S. Peace Corps;
the Director of the Office of Management and Budget; and the Librarian
of Congress. Copies will be made available to others upon request. In
addition, this report will be available at no charge on the GAO Web
site at [Hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me on (202) 512-4128. Another GAO contact and staff
acknowledgments are listed in appendix XIV.
Sincerely yours,
Signed by:
Jess T. Ford:
Director, International Affairs and Trade:
[End of section]
Appendixes:
Appendix I: Scope and Methodology:
To respond to both objectives of our review--whether the International
Cooperative Administrative Support Services (ICASS) system has led to
efficient delivery of administrative services and whether ICASS is an
effective mechanism for providing quality services--we conducted
fieldwork and reviewed documentation in Washington, D.C., and at eight
posts worldwide. In Washington, we reviewed ICASS policies and
procedures outlined in the Foreign Affairs Handbook; reviewed documents
and interviewed Department of State (State) officials from the Bureaus
of Administration, Medical Services, and Overseas Buildings Operations,
six geographic bureaus, the Offices of Management Policy and
Rightsizing, and the ICASS Service Center; attended meetings of the
ICASS Executive Board and the ICASS Working Group; participated in
ICASS training at the Foreign Affairs Training Center in Arlington,
Virginia; and reviewed documents and interviewed headquarters officials
from the U.S. Departments of Agriculture, Commerce, Defense, Homeland
Security, Justice, and the Treasury, as well as from the Office of
Management and Budget, the U.S. Peace Corps, and the U.S. Agency for
International Development (USAID). In addition, we conducted data
analyses using data from the ICASS Global Database, which was developed
and maintained by the ICASS Service Center and contains information for
each ICASS cost center at each overseas post on service subscription,
workloads, billing, service withdrawal, and other information necessary
for operating the system. To assess the reliability of the ICASS data,
we (1) performed electronic testing for errors in accuracy and
completeness, (2) discussed data reliability issues with agency
officials knowledgeable about the data, and (3) reviewed relevant
reports from the State Office of Inspector General and GAO and
financial audits of the ICASS system. Although we found some areas of
concern dealing with information security, we determined that the data
were sufficiently reliable for the purposes of this report. Data
showing estimates for future costs under the Capital Security Cost-
Sharing Program were provided in a briefing by staff from the Bureau of
Overseas Buildings Operations. The estimate for the average annual cost
of maintaining American personnel overseas was developed by State's
Office of Rightsizing.
To assess how well ICASS operates at posts, we visited seven posts and
held telephone interviews with an eighth post. Selection of case study
posts was based on a variety of factors, including geographic spread; a
range in the size of posts; potential for reform; levels of service
duplication; input from the ICASS Service Center, State's geographic
bureaus, and customer agencies; and posts' availability. Based on the
criteria, we collected information from the U.S. embassies in Bern,
Switzerland; Cairo, Egypt; Conakry, Guinea; Dakar, Senegal; Dar es
Salaam, Tanzania; Lima, Peru; San Jose, Costa Rica; and Vienna,
Austria. In Vienna, we also conducted interviews with the U.S. Mission
to the Organization for Security and Cooperation in Europe and with the
U.S. Mission to the United Nations Agencies in Vienna. Due to national
elections that corresponded with our scheduled work in Guinea, at the
request of the Ambassador, we conducted telephone interviews with
Embassy Conakry staff, rather than travel to the post.
For our case study posts, we collected data and documentation from and
conducted interviews with embassy personnel involved in ICASS,
including Ambassadors and Charges d'Affaires, Deputy Chiefs of Mission,
State management officers, ICASS staff, and customer agency managers
and staff who work with ICASS, on:
* the role of the ICASS Council and its decision-making process;
* mechanisms for ensuring quality services, including evaluating
service provider performance and customer satisfaction;
* the degree to which customers understand ICASS goals and structures,
and whether they agree that service quality matches ICASS costs;
* the level of ICASS training among council members and service
providers, including foreign nationals;
* the management burden associated with ICASS, and the pros and cons of
alternative approaches;
* the effect of the changing nature of agencies' staffing (including
State's) on ICASS costs and quality of service;
* the effect of temporary duty personnel and regional staffing on ICASS
costs;
* whether agencies pay the full costs associated with their presence at
posts;
* the cost centers to which each customer agency subscribes;
* the cost centers to which each agency does not subscribe, the basis
for not subscribing to those services, and how agencies provide for
administrative support services to which they do not subscribe under
ICASS;
* the effect that opting out of services has on other agencies; and:
* the degree to which the ICASS Council has considered new approaches
to providing ICASS services, including streamlining processes and
adopting best practices developed by agencies at posts or by other
posts in the region.
Also at these overseas posts, we collected and analyzed information on
the costs associated with agencies owning and operating motor vehicle
fleets independent of ICASS and self-providing residential furniture
for American direct-hire staff. In addition, we inspected warehouses
and other support operation facilities and attended ICASS Council
meetings when those meetings coincided with our visit.
We conducted our work between April 2003 and August 2004 in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: ICASS Cost Centers:
Customers receive ICASS services by subscribing to "cost centers,"
which are groups of similar services bundled into larger categories.
"Workload factors" for each cost center are the primary bases by which
customers are charged for services. These methodologies, developed in
Washington, D.C., are applied to unit cost factors specific to posts to
determine the actual fee an agency owes for services it uses. The unit
costs are based on:
* the salaries and benefits of service providers' employees, who
include both the staff actually delivering or providing the services as
well as the direct-hire American managers overseeing the services;
* the furniture, equipment, and operating expenses necessary for
delivering the services; and:
* the total number of people serviced or the amount of service provided
by the employees associated with specific cost centers.
Overall, ICASS is implemented in one of two manners. An ICASS Standard
post breaks the services into 32 cost centers, while an ICASS Lite post
consolidates the number of cost centers into 16 groups (see table 2).
Generally speaking, ICASS Lite tends to be used at small posts because
the management burden is lower than at Standard posts. ICASS Standard,
however, allows for greater flexibility to customers in choosing which
services they will take and avoiding paying for services they do not
receive. Agencies are required to subscribe to two cost centers--the
Basic Package and the Community Liaison Office (CLO). The Basic Package
cost center provides services by State that agencies would benefit
from, whether or not they choose to use the services. Included in the
Basic Package are:
* diplomatic accreditation to the host government;
* licenses and special permits;
* maintenance of the Emergency Evacuation Plan;
* reciprocity issues with the host government on items such as car
imports, spousal employment, and reimbursement for value-added taxes;
* identification cards, accounts receivable and payable, and other
check-in/check-out procedures;
* welcoming kits for newly posted or temporary duty employees;
* maintenance of post reports;
* determination of exchange rates;
* local banking services;
* International School accreditation surveys, grant management, and
Suspense Deposit Abroad accounting and voucher processing;
* cost-of-living surveys;
* negotiated hotel rates;
* support for employee recreation centers and commissary boards; and:
* support structures for visits by Very Important Persons.
These items should be considered standard services at all posts, but
individual posts may add to the list. The CLO provides services to help
integrate employees and their dependents into the surrounding
community. For example, the CLO provides welcoming materials, assists
family members with employment and educational opportunities, and
organizes cultural activities, among many other services.
Table 2: Cost Centers and Workload Factors for ICASS Standard and ICASS
Lite Posts:
Function code: Standard post: 6150;
Function code: Lite post: 6150;
Cost center: Basic Package;
Workload factor: Number of direct-hire U.S. citizen employees.
Function code: Standard post: 6443;
Function code: Lite post: 6443;
Cost center: Community Liaison;
Workload factor: Number of serviced U.S. citizen employees (including
dependents), third-country nationals, and U.S. contractors.
Function code: Standard post: 5458;
Function code: Lite post: 5458;
Cost center: Information Management;
Technical Support;
Workload factor: Number of devices serviced[A].
Function code: Standard post: 5624;
Function code: Lite post: 5624;
Cost center: Health Services;
Workload factor: Number of authorized users[B].
Function code: Standard post: 5826;
Function code: Lite post: 5826;
Cost center: Non-Residential Local Guard;
Program;
Workload factor: Net square meters occupied.
Function code: Standard post: 5880;
Cost center: Security Services;
Workload factor: Number of direct-hire U.S. citizen employees and
locally employed staff.
Function code: Standard post: 6144;
Function code: Lite post: 6144;
Cost center: Residential Furniture,;
Appliances and Equipment;
Pool;
Workload factor: Number of housing units.
Function code: Lite post: 6145;
Cost center: General Services;
Workload factor: Number of U.S. citizen employees serviced plus the
number of locally employed staff serviced times 0.2[C].
Function code: Standard post: 6132;
Cost center: Vehicle Maintenance;
Workload factor: Number of vehicles maintained.
Function code: Standard post: 6133;
Cost center: Administrative Supplies Services;
Workload factor: Dollar value of supplies issued.
Function code: Standard post: 6134;
Cost center: Procurement Services;
Workload factor: Number of executed procurement documents[D].
Function code: Standard post: 6135;
Cost center: Reproduction Services;
Workload factor: Number of copies printed and/or reproduced.
Function code: Standard post: 6136;
Cost center: Shipment & Customs Services;
Workload factor: Number of shipments sent and/or received.
Function code: Standard post: 6139;
Cost center: Direct Vehicle Operations;
Workload factor: Number of miles driven.
Function code: Standard post: 6143;
Cost center: Non-expendable Property Management;
Workload factor: Number of items inventoried.
Function code: Standard post: 6148;
Cost center: Leasing Services;
Workload factor: Number of leases maintained.
Function code: Standard post: 6462;
Cost center: Travel Services;
Workload factor: Number of travelers serviced.
Function code: Lite post: 6196;
Cost center: Information Management;
Workload factor: Number of direct-hire U.S. citizen employees (and
locally employed staff, if no direct-hire U.S. citizen employees).
Function code: Standard post: 6192;
Cost center: Pouching Services;
Workload factor: Weight of pouches sent.
Function code: Standard post: 6194;
Cost center: Mail and Messenger Services;
Workload factor: Number of direct- hire U.S. citizen employees (and
locally employed staff, if no direct- hire U.S. citizen employees).
Function code: Standard post: 6195;
Cost center: Reception & Switchboard Services;
Workload factor: Number of instruments serviced (switchboard and
direct lines).
Function code: Standard post: 5449;
Function code: Lite post: 5449;
Cost center: Diplomatic Telecommunications Service - Program Office -
(DTSPO);
Workload factor: Number of instruments serviced by International Voice
Gateway lines (office and residences).
Function code: Lite post: 6225;
Cost center: Financial Management Services;
Workload factor: Number of strip codes processed (12-month fiscal year
count).
Function code: Standard post: 6211;
Cost center: Prepare Financial Plans & Budgets;
Workload factor: Percentage of time spent budgeting.
Function code: Standard post: 6221;
Cost center: Accounts and Records;
Workload factor: Number of obligations (12-month fiscal year count).
Function code: Standard post: 6222;
Cost center: Payrolling;
Workload factor: Number of direct-hire U.S. citizen employees and
locally employed staff payrolled.
Function code: Standard post: 6223;
Cost center: Vouchering;
Workload factor: Number of strip codes processed (12-month fiscal year
count).
Function code: Standard post: 6224;
Cost center: Cashiering;
Workload factor: Number of strip codes processed (12-month fiscal year
count).
Function code: Lite post: 6445;
Cost center: Personnel Services;
Workload factor: Number of direct-hire U.S. citizen employees and
locally employed staff serviced.
Function code: Standard post: 6441;
Cost center: U.S. Citizen Employee Personnel Services;
Workload factor: Number of direct-hire U.S. citizen employees serviced.
Function code: Standard post: 6451;
Cost center: Locally Employed Staff Services;
Workload factor: Number of locally employed staff serviced.
Function code: Standard post: 6451;
Cost center: Building Operations.
Function code: Standard post: 7810;
Function code: Lite post: 7810;
Cost center: Government-owned/Long-Term-Lease Residential Bldg.
Operations;
Workload factor: Net square meters occupied.
Function code: Standard post: 7820;
Function code: Lite post: 7820;
Cost center: Government-owned/Long-Term-Lease Non-Residential Bldg.
Operations;
Workload factor: Net square meters occupied.
Function code: Standard post: 7850;
Function code: Lite post: 7850;
Cost center: Short-Term-Lease Residential Building Operations;
Workload factor: Net square meters occupied.
Function code: Standard post: 7860;
Function code: Lite post: 7860;
Cost center: Short-Term-Lease Non-Residential Building Operations;
Workload factor: Net square meters occupied.
Function code: Standard post: 8790;
Function code: Lite post: 8790;
Cost center: Overhead;
Workload factor: Indirect motor pool and items difficult to distribute
to specific cost centers.
Source: ICASS Service Center.
[A] "Devices" include computer processing units, monitors, keyboards,
mouses, printers, scanners, and other internal or external devices
specific to the computer processing unit servers.
[B] "Authorized users" are all direct-hire U.S. citizen employees and
family members included on the sponsors' assignment orders, whether
physically residing full-time at post or not. Also included are third-
country nationals, contract personnel, and any other person approved by
the Chief of Mission to receive services. "Authorized users" do not
include emergency/first-aid services provided to Foreign Service
nationals or other locally employed staff.
[C] Foreign Service nationals are included if services are received.
[D] Executed procurement documents include purchase orders, contracts,
petty cash purchases, personal service contracts, requisitions, and
other standard means of procuring goods and/or services.
[End of table]
The overhead cost center is designed to reflect costs that are not
easily confined to another cost center but are essential administrative
activities. Examples of overhead costs include ICASS awards, post
office box rentals, and postage. Overhead costs are distributed on the
basis of each agency's percentage of net cost of all services it
receives in the remaining cost centers.
There are also other costs that agencies must pay for that are not
considered cost centers, per se. For example, ICASS personnel are both
service providers and service customers. As such, the ICASS "office" is
treated as any other customer or entity at post in terms of generating
costs for the services it consumes. However, this "office" is not
billed because the services it consumes are done so in the course of
providing services to the other customers. For example, when a vehicle
mechanic drives an ICASS motor pool vehicle to a parts supplier, he
generates costs in the direct vehicle operations cost center. These
costs, which include overhead, are distributed among customers on the
basis of the proportion of total costs of services and overhead that
each agency generates in a given cost center. In addition, costs
associated with operations of the ICASS Service Center are distributed
to agencies' headquarters for general support given to posts worldwide,
or to specific posts for services that are uniquely provided to them
(e.g., post-dedicated ICASS training).
[End of section]
Appendix III: Agency Participation in ICASS:
Table 3 shows the number of posts and ICASS participation rates for
agencies with direct-hire staff assigned to 10 or more posts in any
year from 1998 through 2003. The participation rate equals the average
rate of cost center subscription for each agency at all posts. The
analysis excluded State. Participation rates for USAID reflect changes
in agency coding, such that the rates for 1998 represent all of USAID
(code 7200.0), while the rates for 1999-2003 represent only USAID
Operating Expenses funds (code 7203.1).
We acknowledge that there are services for which an agency has no need
and, thus, they do not subscribe to them. For example, agencies that do
not employ local staff have no need to subscribe to Locally Employed
Staff Personnel Services. Because we could not determine agencies' need
for services, we were required to consider all cost centers as
available for subscription. As a result, our analysis simply states the
average rate at which agencies subscribe to available cost centers.
However, we were able to control for cases in which agencies are
located in facilities outside of State-owned or State-leased
facilities. Examples could include instances when agencies own office
facilities, as with some USAID and Peace Corps offices, and when agency
personnel are located at host country ministries, among others. Agency
personnel reported that in such cases, they neither have the need for
some ICASS services, nor would the embassy provide these services.
Specifically, these services would include (1) nonresidential local
guard programs, (2) government owned/long-term leased residential
building operations, (3) government owned/long-term leased
nonresidential building operations, (4) short-term leased residential
building operations, and (5) short-term leased nonresidential building
operations. Therefore, in cases where agencies were not charged for
these five services at a post, we removed them from the list of
"available" cost centers and recalculated their rate of participation
for those agencies.
Table 3: Rate of Participation in Available Cost Centers, by Agency,
1998-2003:
Agency/Office: Defense Intelligence Agency;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 114;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 86.8;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 117;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 88.0;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 123;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 87.9;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 126;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 88.9;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 129;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 88.8;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 132;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 84.2.
Agency/Office: U.S. Agency for International Development;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 82;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 66.8;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 75;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 66.4;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 75;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 66.4;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 75;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 65.6;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 73;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 64.8;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 77;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 62.2.
Agency/Office: Defense Security Cooperation Agency;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 80;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 73.2;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 83;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 73.6;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 84;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 72.8;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 86;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 72.5;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 91;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 72.6;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 93;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 69.2.
Agency/Office: U.S. Peace Corps;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 74;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 66.5;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 69;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 57.4;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 66;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 56.3;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 66;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 56.8;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 66;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 57.3;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 66;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 54.5.
Agency/Office: U.S. and Foreign Commercial Service;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 70;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 81.7;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 69;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 83.1;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 68;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 83.8;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 70;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 79.0;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 71;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 80.2;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 73;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 74.8.
Agency/Office: Foreign Agricultural Service;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 64;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 77.0;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 64;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 77.1;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 65;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 75.7;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 63;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 72.7;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 65;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 71.9;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 63;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 68.0.
Agency/Office: Drug Enforcement Administration;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 53;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 77.6;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 55;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 78.7;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 57;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 78.5;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 56;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 78.2;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 56;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 78.0;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 58;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 74.6.
Agency/Office: Immigration and Naturalization Service;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 34;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 77.2;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 33;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 80.1;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 33;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 81.4;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 32;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 82.6;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 34;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 80.4;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 34;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 76.5.
Agency/Office: Federal Bureau of Investigation/Legal Attaché Office;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 33;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 71.0;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 37;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 71.5;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 41;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 71.3;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 47;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 72.7;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 46;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 71.6;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 48;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 68.3.
Agency/Office: Animal Plant and Health Inspection Service;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 24;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 67.3;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 25;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 64.9;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 27;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 64.1;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 28;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 64.2;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 28;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 62.7;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 30;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 60.8.
Agency/Office: U.S. Customs Service;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 20;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 73.4;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 19;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 72.8;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 20;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 74.0;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 19;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 73.5;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 22;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 72.6;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 23;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 69.6.
Agency/Office: Foreign Broadcast Information System;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 19;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 67.5;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 18;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 66.2;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 20;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 58.6;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 19;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 59.7;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 19;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 56.6;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 19;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 53.4.
Agency/Office: Federal Aviation Administration;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 18;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 68.6;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 18;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 67.8;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 19;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 67.3;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 18;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 68.6;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 16;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 65.8;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 13;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 63.9.
Agency/Office: Centers for Disease Control and Prevention;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 16;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 50.0;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 18;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 45.3;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 25;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 43.8;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 26;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 56.1;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 29;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 61.0;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 27;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 56.9.
Agency/Office: Defense Communications Systems Support Group;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 16;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 64.4;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 16;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 67.8;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 16;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 70.6;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 14;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 70.1;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 14;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 68.2;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 14;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 64.9.
Agency/Office: Internal Revenue Service;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 15;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 62.0;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 12;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 59.7;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 14;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 60.1;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 13;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 62.0;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 12;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 63.8;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 13;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 59.9.
Agency/Office: Navy - Personnel Exchange Program;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 14;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 41.1;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 14;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 36.2;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 13;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 37.3;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 13;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 33.6;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 14;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 37.2;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 15;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 37.5.
Agency/Office: Air Force –Professional Exchange Program;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 13;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 39.2;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 14;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 33.7;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 13;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 38.7;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 13;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 34.9;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 13;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 31.4;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 15;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 33.5.
Agency/Office: Social Security Administration;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 13;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 59.2;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 13;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 61.1;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 15;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 63.8;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 17;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 64.4;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 16;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 64.4;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 17;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 61.0.
Agency/Office: Library of Congress;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 12;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 54.7;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 12;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 56.3;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 12;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 56.2;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 12;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 53.3;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 12;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 53.1;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 11;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 51.6.
Agency/Office: Army – European Command (JCTP);
Number of posts and participation rates, by fiscal year: 1998:
Posts: 12;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 53.5;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 9;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 62.7;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 15;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 64.7;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 16;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 62.7;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 17;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 58.1;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 10;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 56.1.
Agency/Office: U.S. Secret Service;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 11;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 66.5;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 13;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 65.4;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 14;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 70.4;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 14;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 70.1;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 13;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 69.6;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 14;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 68.6.
Agency/Office: National Aeronautics and Space Administration;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 11;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 56.0;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 10;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 58.0;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 10;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 55.6;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 10;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 55.6;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 10;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 53.8;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 10;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 50.6.
Agency/Office: Treasury - Office of International Affairs;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 8;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 69.5;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 8;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 61.5;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 7;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 62.7;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 11;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 55.5;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 7;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 63.9;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 5;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 65.3.
Agency/Office: Justice - ICITAP;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 7;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 77.5;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 7;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 78.2;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 9;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 67.3;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 10;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 73.5;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 8;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 76.0;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 8;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 71.1.
Agency/Office: American Battle Monuments Commission;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 7;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 43.1;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 7;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 44.2;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 8;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 39.9;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 8;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 42.3;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 8;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 38.1;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 10;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 36.7.
Agency/Office: Agricultural Trade Office;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 6;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 70.5;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 10;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 75.1;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 10;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 69.8;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 9;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 67.4;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 9;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 65.7;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 10;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 65.0.
Agency/Office: Justice - Criminal Division;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 4;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 56.1;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 7;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 51.4;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 9;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 65.6;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 12;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 64.1;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 15;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 68.4;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 15;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 65.8.
Agency/Office: U.S. Coast Guard;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 4;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 51.1;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 4;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 52.9;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 6;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 43.1;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 7;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 49.2;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 8;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 57.1;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 10;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 56.6.
Agency/Office: Treasury -Customs and International Affairs;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 3;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 67.1;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 5;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 64.9;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 8;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 60.7;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 11;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 73.2;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 19;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 77.2;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 23;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 73.4.
Agency/Office: U.S. Marine Corps;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 2;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 32.5;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 3;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 48.6;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 4;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 58.5;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 9;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 39.0;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 8;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 48.3;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 12;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 43.3.
Agency/Office: Centers for Disease Control and Prevention -AIDS;
Number of posts and participation rates, by fiscal year: 1998:
Posts: 2;
Number of posts and participation rates, by fiscal year: 1998:
Rate (%): 67.2;
Number of posts and participation rates, by fiscal year: 1999:
Posts: 3;
Number of posts and participation rates, by fiscal year: 1999:
Rate (%): 58.0;
Number of posts and participation rates, by fiscal year: 2000:
Posts: 4;
Number of posts and participation rates, by fiscal year: 2000:
Rate (%): 65.6;
Number of posts and participation rates, by fiscal year: 2001:
Posts: 7;
Number of posts and participation rates, by fiscal year: 2001:
Rate (%): 69.9;
Number of posts and participation rates, by fiscal year: 2002:
Posts: 11;
Number of posts and participation rates, by fiscal year: 2002:
Rate (%): 72.8;
Number of posts and participation rates, by fiscal year: 2003:
Posts: 13;
Number of posts and participation rates, by fiscal year: 2003:
Rate (%): 68.3.
Source: GAO analysis of ICASS Service Center data.
[End of table]
[End of section]
Appendix IV: Comments from the ICASS Executive Board:
United States Department of State:
Assistant Secretary of State for Administration:
Washington, D. C 20520:
MEMORANDUM:
UNCLASSIFIED:
TO: GAO - John Brummet:
FROM: ICASS Executive Board - William A. Eaton:
SUBJECT: GAO Draft Report "Embassy Management: Actions Needed to
Increase Efficiency and Improve Delivery of Administrative Support
Services"
Attached, please find the ICASS Executive Board submission to the GAO
Draft Report regarding Embassy Management (GAO-04-511 - GAO Code
320185).
Interagency Executive Board Comments on GAO Draft Report "Embassy
Management: Actions Needed to Increase Efficiency and Improve Delivery
of Administrative Support Services"
The ICASS Interagency Executive Board (IEB) appreciates the opportunity
to comment on the draft report entitled Actions Needed to Increase
Efficiency and Improve Delivery of Administrative Support Services,
dated June 2004.
The IEB has met three times in recent months, having resolved to take a
more active role in the overall management of the ICASS system. As
indicated below, the IEB has set up working committees on key ICASS
components, and is committed to actively improving the management of
the system in a coordinated approach.
The IEB is pleased at the recognition that ICASS is generally effective
in providing quality administrative support services overseas. This is
consistent with what our training teams have found in numerous visits
to posts, as well as with results of State OIG inspections and other
sources of feedback. We agree that improved metrics would allow us to
focus in better on areas for improvement, and are committing resources
to develop those metrics.
The IEB is actively involved in trying to eliminate duplicative
administrative support structures where possible. As GAO is aware,
efforts in that direction have already been started. The State/USAID
Shared Services Study, which ICASS partially funded, recognized that
costs could be saved and the quality of services improved by
consolidating services at all the posts surveyed. We understand pilot
projects are to be introduced at all four posts consolidating various
services. Clearly the elimination of duplication overseas is an area
that will require long-term sustained effort by many agencies.
We endorse the efforts of the State Department, as primary ICASS
service provider, to reengineer processes by seeking innovative
managerial approaches. It has centralized certain operations through
regional centers in Bangkok, Paris, Frankfurt, Charleston, and Ft.
Lauderdale. As another means of streamlining operations, the State
Department is reemphasizing.
Regionalization to support operations in the newest Embassy, Baghdad,
which if successful can be adapted to other missions are well. That
effort consists of locating functions in the United States where
possible - including various Security, IT and Travel services. Other
services that cannot be provided in the U.S. are to be performed
regionally in Amman, Kuwait, Frankfurt or Bangkok. These include a
variety of Financial and other services. The IEB has been briefed on
these improvements by the State Department, and believes they will
benefit all ICASS stakeholders.
The IEB also supports the State Department's efforts to identify
innovative managerial approaches that may be applied and standardized
at all or most missions overseas. This initiative for standardization
of processes represents a significant departure from past practices,
which often valued local empowerment over consistency and overall
efficiency. The IEB also is committed to attempting to standardize
customer expectations of services, in support of the State Department's
efforts at greater standardization of service delivery.
We recognize and appreciate GAO's observation that strategies must be
developed to improve ICASS accountability. In the first years of ICASS
it was important to establish a system that could provide services
equitably and transparently in the field. Now that goal has for the
most part been successfully accomplished, the IEB is committed to
establishing metrics to measure the quality, effectiveness and customer
satisfaction of the ICASS services. The IEB has established a working
committee to further identify opportunities to improve metrics and
accountability, and is co-funding with the State Department a system to
collect data from all posts on Customer Satisfaction.
The IEB continues to search for improved ways to ensure that all
personnel participating in ICASS receive detailed training. In
recognition of that the ICASS training budget has been increased over
the past several years, so that more Post-Based Training can be
accomplished. So far this fiscal year 21 Post Based Training sessions
have been conducted overseas, impacting almost 1100 employees. At the
same time, orientation sessions have been provided to some 600
individuals domestically from a variety of agencies, on 29 separate
occasions. The pool of trainers has been expanded by aggressively
recruiting six experienced recent retirees from a variety of agencies
with experience in ICASS. Coordination is also ongoing with FSI on its
training program. Moreover, this fiscal year ICASS training was
conducted for ICASS Council Chairs (for the second consecutive
year) as well as Service Providers (for the first time). There is a
pilot project underway to introduce joint training to Service Providers
and Council Chairs together in FY-04/05, and another to push
orientation materials out to ICASS Councils. Despite these efforts we
are aware that many employees do not receive training before they get
to their posts, and will continue to search for ways to address this
issue.
The IEB is pleased to note that of the original goals of ICASS, most of
those dealing with ICASS as a financial system have been met -
particularly transparency and equity. The managerial challenges of
ICASS - working as an agent for change, bringing local empowerment, and
affecting cost savings - are still in progress, and represent most of
ICASS' biggest current challenges. As discussed above, local
empowerment may have to be redefined as a goal in order to meet the
challenges of cost savings, service quality and efficiencies.
ICASS does not and probably cannot provide all services needed for all
agencies. That is one of the reasons the ICASS system provides for
direct charging of identifiable and discreet costs. Agencies that have
developed alternatives that deliver administrative support services
better and/or cheaper are encouraged to share those solutions with
their ICASS Councils so that all agencies may benefit. Alternatively,
some agencies have relocated services to their headquarters, and ICASS
welcomes such self-provision. While certain generic ICASS services,
such as motorpool, vehicle maintenance and warehousing lend themselves
well to consolidation, there are other support needs that ICASS cannot
provide. Certain specialized types of procurements, for example, exceed
the knowledge and training of most ICASS contracting officials
overseas. Because ICASS must provide services to a broad range of
customers, tailoring services for a particular customer's requirements
may not be practical or cost-effective.
Finally, the IEB notes that cost effectiveness is a key issue for all
participants in the ICASS process. Financial constraints affect all
agencies. The past several years have seen needed investment in
infrastructure overseas, with resultant cost increases. While these
investments were approved in advance, they have been compounded by
negative exchange rates. The IEB has formed a committee to review and
report out on budget processes within ICASS, to ensure better
coordination at the agency level, and on metrics/accountability, to
focus on key priorities.
The IEB also would point out that the first concern for all agencies
overseas is program, and so cost, while a primary concern, is not the
sole criterion in selecting support services. Due to trade-offs between
cost, quality and speed in service delivery, some agencies may look
outside of ICASS because the outside service may fit an agency's
particular needs better. Regionalization and centralization provide
targets of opportunity for ICASS and all agencies to be more cost-
effective. The pressure on virtually all agencies' budgets ensures that
cost management will continue to be a priority in ICASS for the
foreseeable future.
[End of section]
Appendix V: 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:
General Accounting Office:
441 G Street, N.W.
Washington, D.C. 20548-0001:
JUL 6 2004:
Dear Ms. Williams-Bridgers:
We appreciate the opportunity to review your draft report, "EMBASSY
MANAGEMENT: Actions Needed to Increase Efficiency and Improve Delivery
of Administrative Support Services," GAO Job Code 320185.
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
Christina Somma, ICASS Program Analyst, Bureau of Resource Management,
at (202) 663-3883.
Sincerely,
Christopher B. Burnham:
cc: GAO - John Brummet:
RM/ICASS - Larry Mandel:
State/OIG - Mark Duda:
State/H - Paul Kelly:
RESPONSE OF THE DEPARTMENT OF STATE TO GAO AUDIT 04-511 EMBASSY
ADMINISTRATIVE SUPPORT SYSTEM:
The Department of State welcomes the GAO audit of International
Cooperative Administrative Support Services (ICASS) system. Like any
large organization, ICASS benefits from regular outside examination of
its operations and recommendations on areas for improvement. Because of
its inter-agency nature, the General Accounting Office is one of the
few entities that can conduct an audit of the ICASS system. No single-
agency inspector general, for example, has jurisdiction over all ICASS
participants. While the Department of State's inspector general can,
and regularly does, offer recommendations regarding areas for
improvement, its mandate does not extend to the policies, decisions and
implementations of non-State ICASS customer agencies. Thus, the GAO can
play a constructive role in the improvement of ICASS as a system.
The Department is not surprised by the GAO's finding that most
customers overseas profess satisfaction with the quality of service.
Our customer surveys generally reflect the same level of satisfaction
with the quality of service. Indeed, in a 2002 briefing at the Office
of Management and Budget, customer agencies reported that the pre-
existing administrative platform the Department provides through ICASS
enabled them to increase rapidly their overseas presence to carry out
new high-priority U.S. Government programs overseas.
The Department also was gratified to read that the GAO teams, despite
some unsubstantiated assertions, were unable to find examples of biased
or preferential treatment. Our service providers take pride in
providing equitable treatment to all customers.
The Department deeply appreciates GAO's support for the long-sought
opportunity to work with USAID to eliminate wasteful duplication in
service provision overseas. The Department raised the elimination of
service provision duplication early in the history of ICASS (see 99
State 134581, para 2G) at the June 1999 ICASS Off Site. At the 1999 Off
Site, two executive directors of our regional bureaus strongly urged
other agencies to become the primary service provider to State
Department and other-agency employees at certain overseas posts. The
Department is pleased that the U.S. Agency for International
Development now provides administrative support services at some 9
overseas posts and has joined us in testing elimination of duplicative
services at four pilot posts. Our State/USAID Joint Management Council
study in conjunction with the ICASS service center, demonstrated the
clear opportunity our agencies have to improve service and reduce costs
through consolidation of services at many overseas posts. The
Department is anxious to get the program pilots underway and is pleased
to note that one post already has consolidated leasing. The
Department's leadership is firm in their resolve that pilots will start
as soon as possible. Secretary Powell has communicated with the field
about the State-USAID shared services initiative, strongly encouraging
all Chiefs of Mission to analyze their operations and, whenever
possible, to take action to examine combining services now. We have
encouraged all COMs to conduct mission reviews at their own posts now
to initiate action to eliminate duplication of services to take
advantage of gains that could be realized through elimination of
duplication of services.
The Department agrees with GAO that better ICASS measurement can
significantly improve the quality of decision-making. The Department of
State is, as the GAO report noted, using the International Standards
Organization series 9000 to map service processes and standardize
support-services procedures. In addition, the Department has launched
four pilot projects to develop baseline and performance metrics for
support services. Furthermore, the Department proposed at the June 23,
2004, ICASS Executive Board meeting that we introduce a new global
internet-based system to measure and track customer satisfaction at all
overseas posts. The ICASS Executive Board endorsed this proposal, voted
to make its use mandatory for all posts and contributed $65,000 to
finance its deployment. This initiative will also support rightsizing
goals by moving the management of customer satisfaction surveys to
Washington-based staff, thereby reducing the workload of post service
providers.
We discuss a number of our conceptual and textual suggestions for the
report in the sections below:
Legislation:
The Department recommends that GAO cite the provisions of law that
underlie ICASS, namely section 23 of the Department of State Basic
Authorities Act, 23 U.S.C. 2695; and section 13 of the same act, 22
U.S.C. 2684; and possibly the Economy Act (31 U.S.C. 1535) that some
agencies rely on to contribute into the ICASS working capital fund.
Primarv Goals of ICASS:
Contain Costs: The GAO is correct that the ICASS Handbook [6 FAH-5 H-
201] states a goal of ICASS is to "reduce and contain costs." We do not
agree with the GAO more expansive interpretation of this goal, "ICASS
was designed, in part, to contain or reduce overall government costs
for overseas administrative support services." There are many original
features of ICASS that suggest the system's designers were focused on
containing or reducing the cost of the stakeholder agencies, not the
overall government cost to the taxpayer. One clear example is the
almost unfettered ability of every agency to opt out of ICASS cost
centers, thereby robbing ICASS of the potential benefits of economies
of scale. Moreover, ICASS discourages the service provider from
initiating investments in labor-saving technology or equipment that
cannot be amortized over the course of one or, at most, two years.
Longer-team investments are problematic since service providers never
know with certainty, from one year to the next, whether its council
members/customers will be around to help pay off the investment or
whether agencies/customers might withdraw from the service before the
investment can be recouped. While the interagency architects of ICASS
may not have designed the current partisan, "cost shifting" approach on
purpose, we believe it is overly generous to describe them as
attempting to reduce overall government costs. In fact, were this put
before the ICASS Working Group as an amplification of the definition
in the Handbook, we are quite confident that State would find itself,
once again, in a very small minority.
Establish a simple, transparent and equitable cost distribution system:
While the Department agrees that ICASS is more transparent than FAAS,
it is an exaggeration to describe the current system as "simple." The
GAO audit team itself cites the new TDY policy (page 35) as an example
where the lack of simplicity detracts from equity because the policy's
complexity dissuades posts from using it. The Department also ranks
ICASS low in equity because of the many support-service expenses that
ICASS agencies are unwilling to share. GAO should have been much more
critical of the lack of success in achieving this goal.
Failure to Reduce After an Opt Out:
The GAO audit team criticized (page 12) Embassy Dakar for failing to
reduce vehicle-maintenance staff after USAID withdrew its 13 vehicles
from the ICASS fleet. However, Embassy Dakar reports that after USAID
withdrew 13 vehicles, other agencies at post added ten more. The GAO's
assertion that "...despite a reduction in the workload associated with
13 USAID vehicles, there was no change in the composition of ICASS
staff responsible for vehicle maintenance after USA ID withdrew from
the service" is misleading. The GAO should note that the ICASS serviced
vehicles increased by ten, leaving roughly the same number of vehicles
as it had before the USAID withdrawal. While the Dakar example does not
fully support GAO's criticism that service providers haven't reduced
staff when agencies opt out of services, we nevertheless endorse GAO's
assertion that duplication of services ultimately costs the taxpayers
money and should be eliminated wherever practical.
Almost half of the agencies on the ICASS Executive Board have less than
a one-percent stake in mission ICASS totals. These miniscule customers
failed to enroll fully in ICASS in the beginning and therefore have low
levels of consumption. When these agencies "opt out" of a service, they
often remove only minor amounts of ICASS funding. In addition, while
some agencies are reducing presence overseas, other agencies are adding
positions, so permanent reductions often prove problematic. The
Department had hoped that, as part of the "forward planning" process
instituted in 2002, ICASS customers would give the Department advance
knowledge about where, and to what degree, they would change their
presence overseas. However, ICASS customer agencies primarily use the
"forward planning" process as a one-way communications process to glean
information from the Department about its level of expected ICASS
support in the out-years without divulging their own future plans.
Lacking reliable information about future customer plans and
recognizing that customers regularly expect immediate service delivery
even to unanticipated staffmg increases, service providers must be
conservative in firing experienced staff who, in most cases, have years
of valuable knowledge and experience simply because a small funding
contributor opted out of a cost center.
Agencies Assert ICASS Costs Too High:
The figures cited on page 15 regarding the cost of labor are
interesting. ICASS customer agencies loudly assert their desire to
contain and reduce costs, but vote in a very different manner. The
report should note this disparity between words and actions. For
example, ICASS customer agencies routinely call for cost containment
but invest in information technology to improve systems related to
billing and cost distribution. The Department of State invested over
$100 million to improving information technology in support of
administrative services during a five-year period, while non-State
ICASS agencies contributed only $256,000 over the same period.
Experience in the private sector shows clearly that productivity
increases and cost reductions require effective investments in
technology. The non-State ICASS agencies, however, have not made those
investments. One ICASS Council Chair from a non-State agency told the
Chair of the ICASS Executive Board that his agency favored, "all the
innovation the Department of State can afford." Unfortunately, the GAO
did not call ICASS customer agencies to account for their failure to
invest in improving the systems. We cannot expect economies of scale
from ICASS while other agencies either opt out of services or expect
"customized" services tailored to their specific requirements (rather
than standardized service delivery). The non-State agencies have
overwhelming majorities on the ICASS Executive Committee, the
Washington ICASS Working Group and post ICASS councils. ICASS bills
itself as a "customer driven" system. The GAO should have highlighted
in its report the unwillingness of those "in the driver's seat" to
drive in the right direction or pay their share of the fuel and
maintenance costs.
ICASS Cost Increases:
The GAO cites on page 16 agency accusations that ICASS costs have
increased and that these increases have caused them to decrease
consumption of services. Two of the increases cited by the GAO strike
us as unsupported. GAO blames cost increases on increased State
Department hiring. However, the Department of State has paid through
its own increased ICASS bills for the additional staff hired to support
our nation's diplomatic efforts around the world. GAO does not
demonstrate that State's staffmg increases led to higher costs for
other agencies. Indeed, if there were any truth to this allegation, one
could only conclude that ICASS is not as equitable a system as claimed.
GAO should expunge this allegation until or unless its investigation
produced evidence to support the claim. Otherwise, GAO's silence on the
assertion could be misinterpreted as an endorsement or acquiescence.
The GAO report also claims that "new" services added to ICASS are a
source of increased costs. This is inaccurate. The vast majority of
these services weren't new nor are these cost "increases." The
Department of State, for example, proposed in 2001 the addition of the
"outward bound" Diplomatic Pouch to ICASS. The Department of State had
provided diplomatic pouch services to our overseas posts for decades.
The Department of State's Inspector General audited the service in the
late 1990s and found that a significant number of agencies were not
paying their fair share of shipping diplomatic pouches from the United
States to overseas posts. The US Agency for International Development
representative to the ICASS Working Group was the first to raise this
inequity and proposed adding the Diplomatic Pouch to ICASS so that all
agencies would be required to pay their fair share of the service.
After much discussion, controversy and analysis, ten members of the
ICASS Executive Board voted at its June 14, 2001, meeting to
incorporate the Diplomatic Pouch service into ICASS. Two members of
the Executive Board abstained. Diplomatic Pouch service is not "new."
Customer agencies had been paying, albeit not fully or accurately, for
this service for years before it was folded into the ICASS menu of
services. This is neither a "new" cost nor an ICASS "cost increase."
On the other hand, it certainly was an increased cost for those
agencies whose diplomatic-pouch service had previously been subsidized
by other agencies. However, overall diplomatic-pouch costs did not rise
one bit because the ICASS Executive Board incorporated the service in
ICASS.
There are other examples in which the total cost of ICASS increased
when new or increased services were added to the ICASS menu of
services. However, this does not mean the overall cost to the USG
necessarily increased. For example, the Department of State encourages
other agencies to join residential furniture pools, which eliminate
separate stocks of furniture, redundant management systems, and damage
to furniture due to unnecessary movement between residences. If
agencies join the residential furniture pools, their ICASS costs go up,
but their program costs and overall costs go down. Increased ICASS
costs, such as in this case, actually could represent more cost-
effective and rational USG operations overseas.
Business Cases for ICASS Agency Opt Outs:
GAO found (page 21) that agencies rarely support their decisions to opt
out of a service with a transparent business case based on analyses of
the alternatives. We enthusiastically endorse GAO's recommendation that
agencies prepare business cases and opt out of an ICASS service only
when there is a demonstrable economic advantage. However, without an
enforcement mechanism, we are pessimistic that agencies will prepare
compelling business cases. The Department, at the June 1999 inter-
agency ICASS Off Site, strongly argued in favor of requiring a business
case to justify all opt outs. The Off Site agenda called for
"procedures to ensure that any agency withdrawing from an ICASS service
or choosing to perform this service on its own has documented that this
choice is cost and quality beneficial and in the interest of the
taxpayer." (99 State 134581, para 6 U). The Off Site attendees,
however, were unable to agree on an enforcement mechanism. The majority
of ICASS customer agencies objected to this level of transparency. They
could only reach consensus on the current minimalist reporting
mechanism used by the GAO in preparing its audit. Without enforcement
mechanisms like an annual review of business case justifications by a
customer agency inspector general, the Office of Management and Budget
or the GAO, the Department is convinced that a future GAO team auditing
ICASS will find that agencies have continued to opt out without strong,
economically-clear business cases that document savings to the American
taxpayer.
The Department remains troubled that ICASS customer agencies failed to
"opt in" to ICASS when the system was created. We are equally
disappointed with GAO's mild reaction to this lack of interagency
support for ICASS at its outset. This lack of support and participation
deprived ICASS and the taxpayer of vital economies of scale. The GAO
report could have been stronger if it had highlighted the clear
conflict of interest in agencies castigating the service provider for
failure to contain costs while declining to allow the economies of
scale necessary to reduce unit costs; and for failure to support
investments in the kinds of information technology systems required to
improve productivity. Having failed to commit their agencies to provide
the strong support ICASS depends upon to improve performance, agencies
sometimes use alleged ICASS failures as the basis for future "opt
outs." The GAO weakens its audit by remaining silent on this clear
conflict of interest. ICASS will continue to fall short of its
potential until the customers governing the system act to strengthen,
not undermine, ICASS.
ICASS Structures Do Not Overcome Disincentives to Streamlining:
The Department is puzzled by the GAO's failure to mention what we
suspect is the largest disincentive to streamlining, i.e., satisfied
at-post customers. The GAO found (see page 32) that most overseas
customers appeared to be satisfied. Not illogically, we have found most
overseas customers, when satisfied, are resistant to change. "If it
isn't broke, don't fix it." The Department disagrees, as noted below,
that councils lack authority to promote positive change when they want
it badly enough (or even a little). For example, a customer agency in
Bern questioned the costs of maintenance for short-term leased
residences. The service provider investigated the costs and found that
the post had understated support to an annual conference and
inadvertently charged some conference expenses to residential
maintenance. The post service provider corrected the charges. The
Department also notes that this kind of analysis was possible because
Bern used the Post Administrative Software Suite (PASS), an application
in which the Department has invested $8.5 million compared to only
$136,000 over the same time period from our ICASS partner agencies. Had
other agencies matched the Department's investment at the same rate,
they would have contributed almost $2.5 million, providing additional
support necessary to add further functionality to the system.
More often, one or two members of a council want a specific change - -
often a change that benefits their particular agency. The rest of the
council members are satisfied with the status quo and are unwilling to
make a change, especially if the benefit to the vocal minority comes at
their expense. Rather than suggest a lack of council authority, the GAO
would do well to focus on the lack of incentives for the service
provider to streamline or otherwise rock the boat of a generally
satisfied at-post ICASS council. In a "customer driven" system, the
customers have little basis to blame the service provider for failing
to streamline if the customer representatives on the post council
oppose such streamlining. Often, agencies push for cost containment in
Washington while post ICASS council representatives of these same
agencies push for expanded services.
Councils Lack Authority:
While ICASS councils do not hire and fire ICASS employees, ICASS
councils do not lack authority. They pass, or reject, the post ICASS
budget. Unless the council approves a budget to cover both the
hypothetical out-sourced contract and all of the employees formerly
doing the work, the service provider will quickly run out of money to
pay employee salaries. Unless the GAO has an example where this
actually has occurred in practice, the Department requests dropping
this hypothetical example.
The GAO's text in page 39 directly relates to the finding that most
ICASS agencies do not provide training for their ICASS council
representatives and that too many agency representatives know very
little about their role as a post ICASS council member. The Department
questions whether having untrained, inexperienced amateurs set the
number of service provider employees, as GAO appears to support, would
really improve the quality of service or reduce cost. While the
Department understands the strong support among non-State ICASS
agencies for a "customer driven" system, the Department cannot
understand GAO's apparent support for putting customers behind the
wheel before they have completed drivers' education. The result on the
road is often tragic. It could be equally unfortunate at our overseas
posts if untrained ICASS council members are given this kind of hands-
on authority.
The Department again notes that customer agencies that desire personnel
reductions have not voted the way they talk. The Department has studied
the shared services industry extensively and remains unaware of any
shared services board that hires and fires service provider employees.
Private sector shared services boards agree with the service provider
on rates that will cover not only direct costs but also investments in
technology upgrades and depreciation. The service provider has the
authority to manage operations to meet the agreed cost and investment
goals. ICASS customer agencies want the benefits of greater
productivity without being willing to pay for the investments needed to
produce that outcome. GAO should identify this faulty logic or critique
it.
The GAO cites on page 26 that some council representatives from ICASS
customer agencies report their own agency program requirements demand
too much of their time to allow conducting analyses regarding more
cost-effective methods for delivering services. This contradiction
between one part of the audit report and another is confusing. If post
officials are already unable to find the time to conduct fairly
unsophisticated analyses, they do not have the time to set appropriate
staffing levels for service providers. Post councils now assert that
the service provider is responsible for outcomes and want to hold the
service provider accountable for those outcomes. If a council starts
deciding how many employees the service provider can have and who those
employees are the council would obviously acquire responsibility and
accountability for the outcomes. Who on the council could invest the
time required to ensure the outcomes are positive since council members
already lack time for training and find existing responsibilities
overwhelming? The Department cannot understand the GAO's positive tone
on the text when the solution they propose so significantly contradicts
multiple findings elsewhere in the report.
ICASS Tools Not Working As Envisioned:
It is not clear that the ICASS working capital fund ever envisioned
posts stockpiling significant amounts of money. The GAO makes several
questionable assumptions. First, that long-term planning and greater
autonomy in allocating resources are inhibited by alleged restraints on
rolling over funds. The audit has not demonstrated that any such
inhibition exists or that it is clearly correlated with any decreased
ability to plan or achieve efficiencies. Posts have accumulated and
successfully rolled over funds to plan for future capital investments.
Second, the text appears to imply that funds rolled over come from
increased efficiencies. In some cases this is true, and the ability to
rollover funds is an important incentive on decisions to improve
efficiencies. However, while some of the money rolled over stems from
increased efficiency, multiple cases were one-time windfalls beyond the
posts' control or funds simply not expended. The Department has always
voted to allow posts to roll over funding when: amounts were
appropriate; post could explain the source of the roll-overs and
articulated a plan for how it would invest the roll-over. The
Department voted to adjust post targets to take roll-overs into
consideration when: the amounts were unduly large; the post couldn't/
wouldn't explain the source and had no plan for how to invest the
money. This is prudent use of taxpayer money, which we would expect GAO
to support.
Efforts Underway to Consolidate and Streamline Services:
On page 28, the GAO describes "...State and USAID initiated four
efforts that could greatly affect ICASS service delivery and costs.
This is incorrect. USAID is a full partner in only one of the four
initiatives, i.e, our joint efforts to consolidate and streamline at
four posts. ISO 9000, for example, was initiated and run entirely and
solely by the Department's Center for Administrative Innovation. On
page 29, the GAO audit team asserts that ISO 9000 effort began in 2003
and is run by a program called, "Blue Skies." Both assertions are
factually inaccurate. Embassy London launched the first ISO 9000
program in FY-2001. Although "Blue Skies," an ICASS Working Group
"think piece," brazenly took credit for this State Department
initiative, ICASS in Washington provided absolutely no funding or
material support for ISO 9000. All of the Washington funds for ISO 9000
came from the Department's Center for Administrative Innovation. The
Center has led the program since Washington began providing support for
ISO 9000 in FY-2002. We are pleased the ICASS "Blue Skies" effort
recognized the value of ISO 9000, but Blue Skies deserves no credit for
any of the Department's work on ISO 9000.
Capital Security Cost-Sharing:
The Congress has not yet passed the Capital Security Cost Sharing
Program. The Department suggests that the GAO say, "The Administration
has included in the President's FY-05 Budget Proposal a plan that would
require all agencies..." Later, the text should state, "If enacted, the
Capital Security Cost Sharing Program, which would be implemented ...
2005, would require agencies...."
In addition:
1. The Capital Security Cost Sharing Program (CSCS) is an
Administration proposal, not the Department of State's. Also, the term
"Embassy construction program" should be "capital security program."
Therefore, the first sentence of the CSCS discussion on page 30 which
states, "State has recently developed a new requirement that agencies
with overseas staff help finance the cost of the embassy construction
program," should be changed to read: "The Administration has recently
developed and is seeking legislation for a new requirement that
agencies with overseas staff help finance the cost of the security
capital construction program."
2. "Table 1: Actual and Estimated Fees under the Capital Security Cost
Sharing Program, Fiscal Years 2005-2007" on pages 30 and 31 is based on
an out of date chart and as a result is subject to misinterpretation.
This needs to be corrected.
* The GAO informed OBO that in preparing the draft report, they used an
old Department of State chart that did not make clear that ICASS shares
were already included. As a result certain amounts in the draft report
were double counted.
* The GAO subsequently informed OBO that data from pages 14 and 16 of
the CSCS slide presentation from the March 2004 OBO web site will be
used in preparing the final report. This action should eliminate the
double counting.
3. The third sentence in the text on page 30 currently reflects only
the percentage increase of 20%, 40% and 60%. Two other factors
affecting the totals are rent credits and NEC adjustments. The sentence
should be rewritten to reflect this reality.
4. The last sentence at the bottom of page 30 of the narrative
("Another possibility is that agencies could withdraw from ICASS
services at increasing rates, as they have done since 2001, to
compensate for their increased costs") should be removed. Support
services will undoubtedly be more expensive across the board no matter
who provides it.
5. Because ICASS numbers are already included in the reported numbers,
the fourth sentence on page 30 should begin with "as a result" instead
of "moreover."
Ouantifying Levels of Satisfaction Difficult:
The Department agrees that ICASS can do a better job in quantifying
customer satisfaction. The Department proposed in April of 2003 that
ICASS adopt an electronic subscription system and a customer-
satisfaction survey system. The ICASS Working Group and ICASS
Information Technology Committee debated inconclusively for over a year
whether to adopt the Department's proposal. After completion of the GAO
team's audit, the Department made a separate proposal at the June 23,
2004 ICASS Executive Board meeting as noted earlier. The Board has now
-established a sub-committee on Accountability and Performance
Measurement. We look forward to working with the Board's sub-committee
to invest in and improve ICASS' performance measurement capabilities.
Svstemic Equity Problems Remain:
GAO cites an example on page 35 of a regional medical staff in Vienna,
Austria that provided regional service for agencies not present at
Embassy Vienna. The Department agrees that those agencies were unfairly
subsidizing agencies in the Balkans and elsewhere that were receiving
medical support. Embassies London, Vienna, Singapore and Pretoria
applied to the ICASS Working Group for status as regional medical
centers and it was approved on February 5, 2003. Therefore, the example
cited by the GAO is no longer valid.
ICASS Governance Structure Undermines Local Decision-Making (pg. 37):
The Department disagrees that the ICASS approved decision-making
structure undermines local decision-making. We found the GAO's
explanation baffling to understand, particularly because the example
offered was actually a situation where a Washington headquarters agency
sought to impose its preference on all overseas posts. In this
instance, agency representatives in Bangkok were in concert with post
management that their headquarters instructions were not practical in
the local situation. We believe GAO may have gotten only a portion of
the facts in this case. The Ambassador in Bangkok confirmed
longstanding practice of a combined furniture and housing pool, because
in the local housing market that decision was demonstrated to be both
efficient and economical. He only took that action after other attempts
to ensure equity and fair cost recovery had failed. In the Bangkok
case, only one agency's headquarters objected to continuing the
practice of a combined housing and furniture pool. Small wonder.
Bangkok found in 1995, i.e. before the start of ICASS, that the agency
in question had only paid for furniture for a small percentage of its
employees. This agency was, in effect, being subsidized by other
agencies at post. The embassy Management Counselor approached the head
of agency who then agreed to start paying for the furniture its
employees were using. The agency then paid for a few more sets of
furniture, but did not continue to meet its obligations under the
requirements of the housing/furniture program; as a result, 20
additional families were provided furniture paid for by other agencies
at post. When the Management Counselor attempted to get the agency to
fulfill its agreement and pay for the furniture it had been using for a
number of years, only then did the agency headquarters assert a "right"
to pull out of the pool and renege on its financial commitment.
The Ambassador then instructed post management to prepare a business
case analysis of the costs to the taxpayer of operations when the
housing pool and furniture pool were separate. The cost of a combined
housing and furniture pool was significantly lower than two separate
pools. The Ambassador therefore declined to impose an inefficient
bifurcated system at the post, but confirmed for the agency in question
their right to opt out of the combined pool if that was their desire.
If remaining in the pool, he required the agency pay up its arrears.
Citing his yearly responsibility to "certify to the Secretary of State
that management operations under my control are carried on in an
efficient and effective fashion, and that we are working to optimize
use of U.S. Government resources," the Ambassador wrote, "I believe
that separating our combined housing and furniture pool here in Bangkok
would not further those management goals. Should conditions in the
future develop in ways that would favor separating furniture from the
housing pool, I would certainly be ready to consider such a change. I
am always looking for ways to increase the morale of our staff,
consistent with optimum resource allocation." We are certain that GAO,
now knowing the full story, would not oppose a Chief of Mission
fulfilling his responsibilities to ensure that management operations
are carried on in an efficient and effective fashion and that the
Embassy is optimizing the use of all U.S. Government resources.
It would be ironic if GAO singled out for criticism one of that select
group of ambassadors who have insisted upon a disciplined business
case, preventing wasteful duplication, and prohibiting an agency from
continuing to use at no charge furniture purchased by all other
agencies at post. By singling out this ambassador, GAO would affect the
attitude of other chiefs of mission and management officers who work to
achieve the kind of streamlining and elimination of duplication that
GAO favors in other parts of the report. GAO failure to challenge
criticism of ambassadors and management officers who take seriously
their annual certification of management operations would send a
chilling message. The GAO should instead applaud an Ambassador and post
which made a difficult decision that resulted in greater economy and
fairness for all agencies.
The GAO must take a clear stand on what it recommends ICASS should do
when local empowerment and agency "opt outs" conflict with preventing
waste, fraud and mismanagement. The Department does believe that
ambassadors and agency headquarters should respect the local
empowerment prerogatives of a post ICASS council that do no harm to the
interests of the American taxpayer. When ICASS councils increase
duplication, the total cost of service or hurt the taxpayers'
interests, chiefs of mission must step in and exercise the authority
given them by the President.
The GAO, by repeating without comment or explanatory characterization
criticisms of the chief of mission's delegation of authority from the
President, confuses accountability. The GAO must support Chief of
Mission authority to carry out this mandate as a champion of
accountability and opposition to the waste and misuse of government
funds. GAO asserts that post management is unwilling to allow councils
to explore alternatives for service delivery. While the Department does
not dispute the one example that GAO provided in the report, an
accurate and balanced presentation must also note that ICASS councils
also have been unwilling to allow post management to explore
alternatives. For example, at least one ICASS council refused to allow
the service provider to replace labor-intensive on-site accommodation
exchange with a commercial ATM near the chancery. Dissatisfaction by
ICASS customers has also thwarted service provider efforts in some
cases. At one post, the management officer proposed direct-charging for
generator fuel so that costs were allocated to agencies according to
consumption as required by ICASS rules. The post ICASS council
vigorously opposed this measure and insisted that generator fuel costs
be distributed within ICASS.
At this same post, the management officer engaged the ICASS council in
discussion and planning for a new embassy compound, encouraging them to
reduce their space requirements and, consequently, their costs. The
council declined. A post management officer proposed to the ICASS
council that they hire some additional maintenance employees to reduce
approximately $100,000 in overtime required to respond to requests
filed by ICASS customers. The post ICASS council, ignoring the clear
business case and cost savings, refused to approve any additional
positions.
Another management officer approached his post ICASS council with a
request to hire additional positions to meet customer demands that had
risen because of a 30% increase in customer agency positions in recent
years. The ICASS council, led by the representative of an agency with
only a 4% stake in ICASS, fought post management's request. They
ultimately agreed to approve only the top three requests.
GAO suggests in its final paragraph on this topic that Washington
headquarters provide some limits on post local empowerment. They cited,
as one example, that the methodologies for determining how ICASS
services will be charged are decided at the Washington level. We are
aware of few instances where a headquarters organization in the private
sector, not-for-profit or public sector gives its field operations a
blank check. Undoubtedly, there are agencies in the executive branch of
the federal government that would be delighted if Congress would simply
appropriate money without any guidance, earmarks or restrictions. That,
however, is unlikely to happen in practice. Should one interpret the
GAO's text as support for unfettered field operations? How would
customer-agencies be able to predict, understand or pay their bills if
each post were free to develop and change its own methodology for
billing customers? It is not clear that this sort of chaos would be
conducive to improving ICASS. On the contrary, it would certainly
complicate the ability of ICASS to develop the kinds of performance
measurements that the GAO called for in other parts of the report.
Recommendations:
While the Department poses no objections to the GAO's recommendations,
we hope GAO could strengthen and supplement the recommendations it
made.
The following are GAO's comments on the Department of State's letter
dated July 6, 2004.
GAO Comments:
1. We have modified our report to cite these legislative authorities.
2. We disagree with State's assertion that ICASS goals do not include
the containment or reduction of overall governmental costs. The Foreign
Affairs Handbook clearly states that posts form interagency ICASS
councils "to eliminate waste, inefficiency and redundancy" (6 FAH-5 H-
102.1), and that "ICASS provides the tools and incentives to achieve
significant reductions in support costs under the concept of a U.S.
Government that 'works better and costs less'" (6 FAH-5 H-103.2). The
handbook also states that "all mission agencies participate in the
management and delivery of services, as well as achievement of
economies of scale and elimination of costly duplication" (6 FAH-5 H-
103.1 (a)), and that "Councils should not be reluctant to challenge
regulations which inhibit streamlining and cost reduction" (6 FAH-5 H-
103.1 (b)). The handbook further states that "the Council and providers
together share the responsibility and accountability for achieving the
most cost efficient and streamlined quality administrative services at
post" (6 FAH-5, H-307.1).
The principle of voluntary service subscription serves multiple
purposes, including ensuring that agencies receive and pay for only the
services they need and providing flexibility for agencies when they
need services they cannot conveniently receive through ICASS, among
others. In addition, the principle was designed as the mechanism
whereby agencies could use market forces to reduce ICASS costs and
improve services. Customers' ability to opt out of services would
provide the incentive for customers and providers alike to cooperate in
discovering the most cost-effective means for service delivery.
Moreover, competitive alternatives that are advantageous to all
agencies at a post were to be shared by the agency that discovered the
alternatives and reviewed by the ICASS Council and service providers
for their potential adoption postwide. The handbook states, "Rather
than simply withdrawing from an ICASS service to take advantage of
better or cheaper services, agencies should bring the alternative to
the attention of the full Council for consideration by all agencies.
Factors such as the effect on career staffs or economies of scale can
then be considered mission-wide" (6 FAH-5 H-307.6 (a)).
3. We said the system is simple enough that most customers understood
the basic structures and tenants of ICASS. We believe that if overseas
staff receive training appropriate to their role in ICASS, the current
system is simple enough for them to operate. We feel the complexity of
the system is appropriate for balancing the somewhat contradicting
principles of cost, equity, and simplicity. A less complex system may
be less costly to operate, but may also be less equitable because
customers may pay for services they don't actually use. A system more
closely resembling cost accounting would be more equitable in the sense
that customers pay only for the services they actually use, but it
would also be more costly because it would require higher workload
burdens and more specialized skills for the employees that operate the
system.
Our discussion of the new temporary duty personnel policy makes no
assertion why so few posts have chosen to adopt it. As of August 2004,
three of our eight case study posts have adopted the new policy,
including Embassies Cairo, Dar es Salaam, and Lima. Those that have not
adopted the policy stated that the number of long-term temporary duty
personnel they receive are so few that they do not create a burden.
4. On March 28, 2003, USAID notified the Dakar ICASS Council that
effective October 1, 2003, USAID would no longer receive vehicle
maintenance services. During our fieldwork in Dakar in December 2003,
post officials stated they were unaware whether a reassessment of
staffing needs related to changing workload requirements had been
conducted. In July 2004, a post official confirmed the other post
officials' earlier statements that no reassessment of staffing needs
was made at the time USAID notified the council of its intention to
withdraw, although one vehicle mechanic was temporarily reassigned to
service generators to fill an immediate need in facilities maintenance.
The official also confirmed that USAID has not yet disclosed to the
council the savings it expected to achieve or has actually realized
under its outsourcing arrangement. The official did confirm that 10
vehicles have been added to the vehicle maintenance service, but he did
not know when those vehicles were added in relation to USAID's
withdrawal. We believe that the addition of these 10 vehicles, whenever
they were added, does not detract from our argument that overall
government costs rose as a result of (1) the failure to reassess how
changing workload requirements affected staffing needs at the time
USAID announced it would withdraw from the service and (2) the failure
by all at post to assess whether USAID's competitive alternative could
result in reduced costs for all agencies at post.
5. We do not blame State for ICASS cost increases from 2001-2003.
According to data and officials from the ICASS Service Center, there
are three primary reasons why costs increased between 2001 and 2003:
State's hiring under the Diplomatic Readiness Initiative,
infrastructural improvements, and wage and price increases. Under
ICASS, salaries and benefits for State officers who administer ICASS at
overseas posts, such as those in the General Services Offices, are
shared among multiple agencies.
When services are added to ICASS, the participants in these services
share the associated costs. State is correct that there have been some
services added to ICASS for which State had previously paid, including
$20 million annually for mail pouching services and $15 million for
computer system and cabling upgrades. Adding these services to ICASS
resulted in increased cost to non-State agencies, although not
necessarily to the government as a whole. However, we did not intend to
imply these services were added without the consent of agencies on the
ICASS Executive Board.
6. We believe that there may be other legitimate reasons for not
enrolling in ICASS services, including logistical considerations (i.e.,
an agency's proximity to the service provider); whether an agency's
headquarters provides the service; or whether the agency even needs the
service, among others. We generally support the voluntary nature of
ICASS but believe that detailed, objective analyses are needed to
assess whether an agency should obtain services from ICASS.
7. Although customers at posts we visited indicated they were generally
satisfied with the overall quality of ICASS services, they were not
satisfied with the cost. Comments on a draft of this report from many
non-State agencies demonstrate that they are not satisfied with the
costs of ICASS services. (See apps. VI-XIII.):
8. We believe that the Foreign Affairs Handbook grants ICASS Councils
more authority over ICASS resources than simply approving annual ICASS
budgets. The handbook states the following:
"Customer agencies, as stakeholders with a greater voice in the
management of shared administrative services, are empowered to
collectively seek innovative ways to reduce costs and improve services.
To these ends, the Council may streamline administrative processes or
reshape the administrative workforce. Decisions might include
downsizing, delayering and flattening of the staff organization; use of
qualified local hire specialists in lieu of higher cost U.S. based
staff; and alternative agency or contract service providers. The
Councils may also consider use of the services of U.S. Embassies and
Agencies in other countries where costs are lower" (6 FAH-5 H-307.2
(a)).
The handbook further states these decisions should be made in close
consultation with service providers "in light of management or cost
studies developed by or at the request of the Council" and "to
facilitate this process, the service provider will be expected to
provide the Council financial breakdowns, staffing patterns, and
operational studies as requested" (6 FAH-5 H-307.2 (b)). We believe
these clauses provide customer agencies with the authority to review
how ICASS services are delivered, including whether services are
provided in-house or from an external source, and the number and type
of embassy staff needed. However, the handbook also states councils
"should avoid micromanagement of the service provider activities"
because the councils are not intended to serve as supervisors of "the
administrative service provider in the day-to-day details of
operations" (6 FAH-5 H-307.3 (b)). A State official with the ICASS
Service Center said micromanagement of service provider personnel is
strongly discouraged, and that councils generally can affect instances
only when new positions are being added. That is, examinations of how
and by whom services are provided are considered micromanagement on the
part of the council, and are discouraged, as we demonstrated with the
USAID Dakar proposal to pilot test a new method for providing
residential maintenance. Thus, based on the handbook, State
administrative officers' management practices, and illustrations such
as the one previously mentioned, we concluded that ICASS councils have
little ability to fully manage ICASS resources.
9. We agree with the principles behind the working capital fund and
would encourage posts to make greater use of it. Our purpose was only
to report the perceptions among post personnel that they would lose
funding in the long run if they made frequent use of the fund. We did
not conduct analyses to determine whether that belief was based on
verifiable evidence.
10. We modified the report text, where appropriate, to incorporate this
additional information and suggested wording.
11. We made no comments on the merits of moving to a unified housing
and furniture pool. We did not intend to criticize or challenge the
ambassador's authority as the Chief of Mission or as the President's
representative. We have revised the section to clarify that we are not
expressing an opinion on Chief of Mission authority; rather, we are
saying that differing authorities can overrule ICASS decisions and that
both customers and providers at posts reported that these instances can
negatively affect the morale of some ICASS participants.
12. We agree that centralization of certain functions is necessary to
instill order on the system. Our intended point is that some providers
and customers perceive centralization as limiting post flexibility,
and, as such, some post officials question the degree by which they are
truly empowered to operate the system in the best manner for the post.
[End of section]
Appendix VI: Comments from the U.S. Agency for International
Development:
United States Agency For International Development:
Assistant Administrator for Management:
JUN 28 2004:
Mr. Jess T. Ford:
Director:
International Affairs and Trade:
U.S. General Accounting 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) response to GAO's draft report entitled "Embassy Management:
Actions Needed to Increase Efficiency and Improve Delivery of
Administrative Support Structures" (June 2004).
USAID does not take issue with GAO's findings of duplication in service
provision or its conclusion that taxpayer costs could be reduced in
most cases by consolidating service delivery under a single provider.
However, we assert that the report over-emphasizes the issues of
duplication and consolidation at the expense of more fundamental
management deficiencies in ICASS that demand more immediate attention.
The report and briefings by the GAO project team to USAID and the ICASS
Executive Board (IEB) have pointed out that ICASS is a nearly $1
billion business activity that is not being managed in a business-like
way. Since ICASS' establishment in 1998, costs have increased faster
than inflation. The primary objectives behind ICASS' creation, reducing
costs and improving services to participating agencies, have not been
realized. According to the State Department's expert consulting team,
ICASS lags well behind leading shared services organizations in its use
of recognized best management practices. Specifically, ICASS lacks the
following key features of a mature, well-managed shared services
organization:
* Business-like Service Level Agreements that define prices, service
levels, customer commitments, and agreements for continuous
improvement;
* Management Information and regular reports of quantities, service
levels, costs of services provided and consumed;
* Two-way Accountability by both the shared services provider for
meeting its service level commitments and by customer organizations to
define their demand and costs of the products and services they
consume, with rewards and penalties defined for each party;
* Metrics for benchmarking the shared services provider against outside
vendors, with key product indicators identified, tracked and
communicated, external and internal benchmarks and best practices
routinely monitored, and for assessing outsourcing opportunities;
* Technology to streamline and push administrative activities to the
most cost-effective channels, and enable the shared services provider
to track and report relative to identified metrics and manage the
business activities; and:
* Customer Relationship Management practices, e.g., assignment of key
account executives, routine face-to-face discussions, customer
satisfaction surveys and CRM software for tracking customer feedback.
USAID fully supports the draft report's recommendations to reengineer
processes, establish accountability, improve training, and implement
related actions to improve the quality and control the costs of ICASS
services. The reform of ICASS into the most efficient delivery system
possible should be a priority initiative of the Administration's
overseas rightsizing agenda in light of plans to increasingly
centralize delivery of administrative services overseas, package them
as mandatory "line of business" solutions and operate them through
ICASS. We are encouraged by recent efforts of Assistant Secretary of
State for Administration, Bill Eaton, in his role as Chairman of the
IEB to re-energize the IEB into the strong governance board that is
needed to provide high level interagency oversight of ICASS and ensure
effective implementation of ICASS reforms. We urge GAO, State, and the
IEB to endorse the suggestion of State's consulting team that Activity
Based Costing be implemented to provide meaningful visibility into the
costs and identify streamlining opportunities in the delivery of ICASS
services.
We also fully support elimination of unnecessary duplication through
consolidation where management systems are in place to ensure cost
reduction, service improvement and "win-win" outcomes for both service
providers and customer agencies. However, we do not share GAO's
apparent view that duplication is always a bad thing. Voluntary
participation has been a central tenet of ICASS since its creation, and
serves as a surrogate for the check provided by a free market against a
monopoly service provider. Moreover, duplication is often a symptom of
ICASS performance problems and customer agencies "voting with their
feet" for a better or cheaper self-managed or out-sourced solution. The
report noted some 467 examples of agencies opting out of ICASS services
between 2000 and 2002. It is inconceivable that an exodus of that scale
would have happened had ICASS consistently provided high quality
services at reasonable costs, or shown improvement trends sufficient to
generate customer confidence that things were getting better.
More detailed comments to the draft report are contained in the
enclosed attachment to this letter. Thank you for the opportunity to
comment 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:
The following is GAO's comment on the U.S. Agency for International
Development's letter dated June 28, 2004. The agency also provided
technical comments that were incorporated into the text, as
appropriate.
GAO Comment:
1. We did not intend to suggest that duplication was the primary
contributor to inefficient operations. We have made several
modifications to the report to emphasize that improved business
practices and reduction in duplication are equally important. Our
recommendations address both the elimination of unnecessary duplication
and the reengineering of administrative processes to contain costs. We
acknowledge in the report that agencies have many reasons for self-
providing services and that some are justifiable.
[End of section]
Appendix VII: Comments from the Department of Agriculture:
JUL 9 2004:
United States Department of Agriculture:
Farm and Foreign Agricultural Services:
Foreign Agricultural Service:
Mr. Jess T. Ford:
Director, International Affairs and Trade:
U.S. General Accounting Office:
441 G Street, N. W.:
Washington, D.C. 20548:
Dear Mr. Ford:
Thank you for providing the U.S. Department of Agriculture (USDA) with
your draft report entitled "Embassy Management: Actions Needed to
Increase Efficiency and Improve Delivery of Administrative Support
Services." We would like to offer the following comments for your
consideration.
We concur with the U.S. General Accounting Office's (GAO) conclusion
that ICASS has not resulted in more efficient delivery of
administrative support services. While failure to systematically
streamline operations is certainly a factor, we believe that
"unnecessary duplication" of administrative services is a result rather
than a cause of ICASS' inefficiency.
As you point out in your report, ICASS is a performance-based cost
distribution system designed to provide quality administrative support
services at the lowest cost while attempting to ensure that each agency
pays the true cost of its overseas presence. ICASS was designed to
encourage agencies to make the most cost-effective service choices in
response to direct economic pressure. While your report discusses ICASS
costs-and accurately identifies these costs as the most often cited
reason for customer agencies opting out of specific ICASS cost centers-
it does not directly address ICASS' cost effectiveness or
competitiveness. The report concludes, without adequate basis, that
customer agencies opting out of ICASS cost centers is the primary
contributor to inefficiency and rising costs rather than ICASS' failure
to contain costs.
We disagree with the report's implication that opting out of ICASS
always results in higher overall costs for the U.S. government. The
motorpool scenario presented in the report attributes the adverse
economic impact of not reducing resources as demand for service
declines entirely to the customer agency's decision to obtain services
from the most cost-effective source, rather than the service provider's
decision not to reduce resources.
The report equates opting out of ICASS services with duplication of
services and/or duplication of administrative support structures.
However, not all agencies require the full range of ICASS services. We
do not believe that there was any expectation that agencies that were
efficiently providing services to themselves at headquarters would
subscribe to all post-provided services through ICASS. For example,
USDA maximizes use of the Government Purchase Card overseas and
administers this program through headquarters personnel who also
oversee headquarters use. USDA also centrally processes American
payroll and travel through the National Finance Center. These self-
provided services reduce or eliminate the need for ICASS services,
cost significantly less than ICASS services, and do not duplicate
administrative structures.
We agree that business case analyses would be useful both in making
effective and efficient management decisions and in communicating
information on service alternatives. We believe that USDA has done
sufficient business cases for its service withdrawals. The usefulness
of customer agency business case analyses would be enhanced by the
availability of a comparable business case analysis of the existing or
proposed ICASS service platform.
Cost efficiency is USDA's top priority in choosing among administrative
support alternatives. We have determined that our optimal overseas
model includes minimizing administrative personnel overseas, use of
foreign national staff in lieu of direct-hire American support staff,
and retaining and relocating the majority of administrative support
services at headquarters. This model also supports rightsizing and
provides a standardized, predictable quality of service.
We have a number of additional comments of a more technical nature.
They are enclosed as an attachment for your consideration.
In closing, I again want to thank you for allowing us to comment on
this draft report. Please let us know if you would like to discuss our
comments further.
Sincerely,
Signed by:
A. Ellen Terpstra:
Administrator:
The following are GAO's comments on the Department of Agriculture's
letter dated July 9, 2004. The agency also provided technical comments
that were incorporated into the text, as appropriate.
GAO Comments:
1. We agree that there is a relationship between the efficiency and
costs of ICASS services and the existence of duplicative administrative
services at some posts. This is why our recommendations address the
elimination of unnecessary duplication and the reengineering of
administrative processes. We believe that these actions together can
improve the efficiency of ICASS services and help contain costs.
We did not intend to suggest that duplication was the primary
contributor to inefficient operations. We have made several
modifications to the report to emphasize that improved business
practices and reduction in duplication are equally important.
2. We agree that opting out of a service does not always result in
higher overall costs to the government. However, when an agency opts
out and obtains a service outside of ICASS, there is potential for
unnecessary duplication, and opportunities to achieve economies of
scale may be lost. Moreover, when an agency opts out and ICASS does not
take action to adjust costs, such as reducing support staff to reflect
the reduced workload, the operation becomes less efficient and more
costly to the remaining users.
3. We generally support the voluntary nature of the ICASS program
because agencies' needs differ. Therefore, we did not intend to suggest
that agencies should be forced to use ICASS services. However, we
believe that there are opportunities to achieve more economies of
scale, and that there are instances of unnecessary and wasteful
duplication. Our recommendations are designed to reduce duplication
where this would be in the best interests of the government and to
encourage agencies to prepare business cases to support decisions to
obtain services from outside of ICASS. Such business cases could
demonstrate that there are financial and other benefits of obtaining
services outside of ICASS.
4. Individual agency decisions regarding participation in ICASS and how
to obtain support services may have a substantial impact on other
agencies at a post. Therefore, we believe that business cases should
address the overall impact on the U.S. government. Having each agency
fend for itself is contrary to the ICASS concept and will not lead to
cohesive and efficient operations within the executive branch. However,
we recognize that there may be trade-offs between what is best for an
individual agency and what is best for the government as a whole. We
believe that business cases that analyze all facets of financial and
other implications of decisions to opt out of ICASS services will
encourage better decision making.
[End of section]
Appendix VIII: Comments from the Department of Commerce:
UNITED STATES DEPARTMENT OF COMMERCE:
The Under Secretary for International Trade:
Washington. D.C. 20230:
Mr. John Brummet:
Assistant Director for International Affairs and Trade:
General Accounting Office:
4th and G, NW:
Washington, DC:
Dear Mr. Brummet,
Enclosed is the U.S. & Foreign Commercial Service, Department of
Commerce's response to the June, 2004 GAO draft ICASS report, entitled
Embassy Management: Actions Needed to Increase Efficiencies and Improve
Delivery of Administrative Support Structures (GAO-04-511).
As noted in our response, we believe the GAO study amply documents that
ICASS has failed to deliver on one of its core goals: to contain or
reduce costs. This is a critical failure in today's budget environment.
We are very concerned that while the draft report describes the
problems in the ICASS system, its summary and conclusions do not
seriously address this failure. In fact, they likely will exacerbate
the problem by solidifying the role of the State Department as the near
monopoly service provider - making it even more difficult for agencies
to utilize less costly solutions.
The US&FCS is committed to cost containment at every budget level, and
ICASS should not be the exception. If we can be of further assistance,
please contact Karen Zens, DAS/Office for International Operations at
202-482-3128.
Respectfully yours,
Carlos Poza:
Deputy Director General:
U.S. and Foreign Commercial Service:
US&FCS response to the June, 2004 GAO Report on ICASS:
The Commerce Department welcomes the opportunity to comment on the GAO
draft report as we welcomed the GAO study itself. As the report notes
this is the first review of the program and we applaud the GAO's
investigation of the ICASS system. It is critically important given the
constantly rising costs of ICASS and the budget constraints facing
federal agencies.
The Commerce Department, through its Foreign Commercial Service, has
operations at 150 offices in 78 countries outside of the United States
and has been an active participant in the ICASS system since its
inception. ICASS represents nearly 20% of our overseas budget. This
amount has grown in both absolute dollar terms and as per cent of our
budget since 1998 despite our best efforts to find less costly service
providers and curb demand for costly services. In recent years ICASS
charges have continued to grow even as we have reduced the number of
people that we have overseas.
We believe the GAO study documents that ICASS has failed to deliver on
one of its core goals: to contain or reduce costs. This is a critical
failure in today's budget environment. We are very concerned that while
the draft report describes the problems in the ICASS system, the
summary and conclusions do not seriously address the problems. In fact
solidifying the role of the State Department as the near monopoly
service provider and making it even more difficult for agencies to
utilize less costly solutions will likely exacerbate the problem.
We are already seeing evidence of this in State and ICASS Working Group
communications which have characterized the GAO Draft Report as
concluding that "ICASS delivers quality services but there is too much
duplication." ICASS will heed the call to aggressively "eliminate
duplication" by not allowing agencies to use their own personnel to
provide or procure services if State/ICASS already provides them. This
new approach is being piloted in Iraq. While it may make sense in the
dangerous conditions currently prevailing in that country, it is clear
that this approach could spread to other posts regardless of local
conditions by citing the GAO report's call for "elimination of
duplication".
The Draft Report states that duplication has grown under ICASS,
resulting in greater expense to the US Government as a whole. This is
true but it is a symptom of the problem - not the problem itself. The
basic problem is the failure of ICASS to systematically seek ways to
contain, or reduce costs. By stating that agencies have not presented
"business cases" for withdrawing from ICASS services the draft report
appears to lay the blame for the duplication on those agencies that
have withdrawn from ICASS services and found cheaper ways to procure
the services. In fact, as indicated by some excellent examples in the
report (e.g. page 12 USAID in Dakar), the duplication has arisen
because as agencies have found less costly alternatives and therefore
withdrawn from an ICASS service (or in other cases reduced their use of
a service). ICASS has not adjusted its cost structure. Rather it has
shifted its same level of costs to the remaining agencies in that or
other cost centers. No private sector service provider could pursue
this business strategy and stay in business - unless they were a
monopoly provider. The report appears to lay the groundwork for giving
State ICASS that monopoly status by stressing reduction of duplication
rather than cost containment.
The report implies that agencies do not have defensible "business
cases" for withdrawing from ICASS services. Yet it presents a typical
example of the business case for withdrawing from a service, in the
Dakar motor pool example (pg 12-13) and uses this one example to make
further generalizations which do not fit the example. The higher cost
to the taxpayer did not come from the agency finding a lower cost
provider but because ICASS did not adjust its costs to the loss of a
customer, let alone examine opportunities to reduce its costs. Commerce
can present similar examples where we have withdrawn from services. For
example, at an embassy in Central America the yearly charge to FCS for
computer services under ICASS was $18,000 for only partial service (as
State/IM could not service our Lotus Notes server). We withdrew and
contracted for a local provider who services all our equipment for
$2,600, for an annual savings of over $15,000. At the same Embassy the
warehouse charge was $10,000 per year. We had a storage unit built at
our rental property for $25 monthly - an annual savings of $9,000. We
do not withdraw from an ICASS services unless we can find a less costly
solution of equal or greater quality. The failure to present a
"business case" would seem to lie with the ICASS service provider that
continues to maintain the same level of staffing and, in many cases,
has increased ICASS staffing despite the withdrawal of customers from
its services. If a business case should be made for use of a specific
service provider the onus should fall on the higher cost provider
rather than on the agency that has found a cheaper solution.
The report implies that "duplication" is bad per se. But duplication
also is another word for competition. Without the discipline of
competition there is no incentive to provide quality services at low
costs. Any user of a monopoly service can attest to this. It is not
surprising that the highest costs and poorest quality are frequently
found in those services such as disbursement where there are no
alternatives to State for certain functions. As the draft report notes
the current ICASS system lacks the metrics and real benchmarks
necessary to identify quality services and cost efficiencies. Without
such metrics one cannot reach true conclusions about the quality and
effectiveness of ICASS services nor can ICASS go about intelligently
eliminating wasteful duplication and streamlining services. Otherwise
"elimination of duplication" becomes confirmation of a high cost
monopoly service provider.
Some supposed duplication simply reflects different needs and missions
of different agencies. This is particularly true in areas such as IT
and accounting, where agencies' needs vary. FCS provides cost-recovery
based services to non-classified business customers. We have developed
systems which enable our posts to respond rapidly to customer requests
and account accurately for fee-based services. These were not possible
with State Department systems. Commerce provides these services itself
or through commercial providers. Without this option it could not carry
out its mission. Requiring use of the State systems could prevent the
provision of Commerce services or raise the cost unacceptably to
Commerce's target client, the small and medium-size U.S. exporter.
The Report summary says "ICASS is a generally effective mechanism for
delivering quality administrative services." Yet at the same time the
report notes that there have been no systematic surveys or tracking of
customer satisfaction at posts and that ICASS "lacks indicators to
gauge progress". Consequently we do not see how the report can reach
that conclusion. Moreover the surveys which have taken place at post do
not measure satisfaction in terms of value for money.
The report also notes that the basic ICASS structure lacks authority to
manage resources. When cheaper alternatives are found there is neither
the authority nor incentive in the basic system to implement them and
reduce ICASS staffing and costs. In fact there are numerous examples
when cheaper alternatives have been ruled out or overruled by the DCM
or COM. This was evidenced at a European post when an ICASS council
denied the request to hire a nurse practitioner since there was an
excellent, cheaper medical facility across the street from the Embassy.
The COM overturned the ICASS board's decision and mandated the hiring.
There is a culture in ICASS which resists any reduction in ICASS
employment at post although customer agencies like Commerce routinely
reduce their staff to reflect programmatic and budget changes. Without
any control over ICASS staffing the ICASS Council cannot achieve
significant savings.
The problems with ICASS include:
- The failure of ICASS through its dominant service provider to embrace
cost containment and efficiency as a basic goal of ICASS;
- Lack of specific goals and performance indicators to achieve and
measure cost efficiencies;
- An ICASS governance structure:
* which precludes ICASS Councils at post or the IEB in Washington from
affecting the staffing levels of the main Service Provider,
* which relies on information and expertise of ICASS staff who are
dependent for evaluation and promotion on one Service Provider and who
reject "micromanagement" by the Council, and:
* which lacks real incentives to explore innovative alternatives.
While the draft report documents these basic problems its solutions do
not overcome these structural problems. Without real performance data,
a truly independent assessment team and the ability to affect ICASS
staffing levels it is hard to see how any local Council can or will
effectively determine and implement the lowest cost solution. Possibly,
the option for ICASS being a separate agency should be explored. The
unique position of the dominant service provider as major provider and
user of services and the ultimate manager at post (through the DCM and/
or Ambassador) ensures that the State Department solution will be
selected and ICASS costs will continue to rise.
Lacking a clear ICASS commitment to cost containment, agencies will
have no alternative but to use increasing portions of their program
funds on administrative fees, curtail their missions and ultimately
pull out of posts to the detriment of their missions and U.S. foreign
policy interests. We have already seen evidence of this during the mid
year ICASS budget review this year. When agencies such as Commerce
objected to higher than forecast budget increases late in the budget
year, some State Regional Bureaus instructed Embassy managements to
tell those agencies to withdraw from services or withdraw from posts if
they weren't willing to "pay their full share". While this directive
was later changed to directing posts to "begin a dialogue with all
agencies" on service reductions, it was made clear at posts which
agencies "were responsible" for painful reductions. This is not an
environment conducive to finding the best solutions.
The GAO draft report addresses its conclusions to the IEB. However, the
IEB itself is basically a customer board not a management board. At a
recent IEB offsite meeting many agencies expressed a willingness to
empower the IEB to more aggressively direct ICASS management decisions
but it still lacks any real authority over service provider decisions.
It is imperative that the GAO Report clearly address these fundamental
issues and direct ICASS to commit to achieving its original stated goal
of reducing or containing costs.
The following are GAO's comments on the Department of Commerce's letter
received June 29, 2004.
GAO Comments:
1. We believe both reduction in duplication and reengineering of
current ICASS services are needed to contain ICASS costs, and we
believe customer agencies and State need to work together to achieve
this. Since ICASS is a market-based approach to delivering services, we
also believe agencies should exercise their rights to consider
innovative alternatives for service delivery and to make the benefits
of cost-effective alternatives available to other agencies at post.
2. We did not intend to blame duplication on agencies that have
withdrawn from ICASS services. We presented the Dakar vehicle
maintenance example to illustrate how decisions by one agency can
affect all agencies at post. We faulted USAID neither for the reason
nor for the action of opting out of the service. We did note, however,
that USAID did not share detailed information (i.e., its business plan)
on the new means by which they would receive the service. We also noted
that neither the council nor the service provider requested that USAID
share this information. As a result, the Dakar ICASS Council missed an
opportunity to review whether the post could adopt the USAID approach
to the betterment of all agencies. We recommended that business cases
be made not only to help agencies determine whether an alternative
arrangement is better for themselves, but also to help local ICASS
Councils determine whether more cost-effective service arrangements
could be applied postwide.
3. We agree that there may be legitimate reasons for agencies to opt
out of ICASS services. It is for this reason we conclude and recommend
that agencies should work to reduce unnecessary duplication of
administrative structures.
4. Our determination that ICASS customers are generally satisfied with
the quality of services they receive was based on a global survey,
local customer satisfaction surveys at our case study posts, and more
than 100 interviews with ICASS customer and service provider personnel
at those posts. We do cite service cost as the main complaint with the
system.
5. We believe implementing our recommendations could result in a more
streamlined, cost-effective means for delivering necessary
administrative support services. We did not conduct an assessment of
the benefits and costs of creating an independent agency responsible
for delivering overseas administrative support services.
[End of section]
Appendix IX: Comments from the Department of Defense:
UNDER SECRETARY OF DEFENSE:
COMPTROLLER:
1100 DEFENSE PENTAGON:
WASHINGTON, DC 20301-1100:
JUL 2 2004:
Mr. Jess T. Ford:
Director, International Affairs and Trade:
U. S. General Accounting Office:
Washington, DC 20548:
Dear Mr. Ford:
This is the Department of Defense (DoD) response to the General
Accounting Office (GAO) draft report (04-511), "EMBASSY MANAGEMENT:
Actions Needed to Increase Efficiency and Improve Delivery of
Administrative Support Services," dated June 1, 2004 (GAO Code 320185).
We concur with the four recommendations presented in the subject draft
GAO audit report. Our primary concern with the draft report as written
is that it does not sufficiently address the cost control concerns of
the primary DoD customers, the Defense Security Cooperation Agency, and
the Defense Intelligence Agency. Enclosed are additional comments on
the draft report.
Signed by:
Lawrence J. Lanzillotta:
Acting:
Enclosure: As stated:
GAO DRAFT REPORT (04-511), dated JUNE 1, 2004 (GAO CODE 320185):
EMBASSY MANAGEMENT: Actions Needed to Increase Efficiency and Improve
Delivery of Administrative Support Services:
DEPARTMENT OF DEFENSE COMMENTS:
We concur with the four recommendations presented in the subject draft
GAO audit report. Our primary concern with the draft report as written
is that it does not sufficiently address the cost control concerns of
the primary DoD customers, the Defense Security Cooperation Agency
(DSCA) and the Defense Intelligence Agency (DIA). Additional comments
are as follows.
The International Cooperative Administrative Support Services (ICASS)
strategic goals lack indicators to gauge progress toward achieving
them.
* One of the recommendations includes developing measurable indicators
to track performance. Cost data can be used as a measurable indicator,
but the report does not address cost control.
* The report notes that the first of the four strategic goals is to
"contain or reduce costs." The report also notes that US direct-hire
personnel constitute 5% of ICASS employees and account for 30% of ICASS
labor costs at an annual cost of $346K. Elsewhere, the report notes
that State has been adding American personnel. In yet another portion
of the report, an example is given of how service requirements were
reduced at one post when an agency withdrew from a particular service,
but no reduction in service provider staffing resulted.
* The report fails to connect these dots. The biggest single
controllable cost factor is the number of American direct-hire ICASS
personnel. While "right-sizing" staffing is mentioned in the discussion
on the proposed Capital Security Cost-Sharing Program, nowhere does the
report address the issue of cost control or "right-sizing" ICASS
service provider staffing.
* In information provided to the GAO team, DSCA reported that the unit
costs of supporting a single overseas position had increased by almost
50% from fiscal year (FY) 1999 to FY 2003. No analysis of agency costs
appears in the report.
* ICASS regulations state that the Council should prepare an annual
evaluation of the service provider. The report notes that many Councils
do not do so. The principle of local empowerment leaves the choice of
doing an evaluation up to the local Council. If the Council does not
choose to do an evaluation, it does not mean that the system "lacks an
indicator."
Many agencies decided not to use ICASS.
* The statement is inaccurate. It should state that many agencies
decided not to subscribe to some ICASS services. All agencies with
personnel assigned to US Diplomatic Missions overseas subscribe to some
ICASS services.
There are limits to overseas staffs' decision-making. Methodologies for
charging for ICASS services are defined in Washington.
* The examples cited included Chief of Mission decisions, which are
outside the mandate of ICASS governance.
* ICASS methodologies are defined in Washington to maintain equity,
which the report indicates was missing from the earlier Foreign Affairs
Administrative Support (FAAS) system. The report is contradictory on
this point, as elsewhere examples are cited of authorities for change
and evaluation that Councils are not currently using. Rather than cite
Washington for exerting too much control, the report should emphasize
the many degrees of latitude that Councils have chosen not to exercise.
Distributing the costs generated by TDY personnel and regional ICASS
staff presents equity issues.
* The Interagency Working Group established policy that allows each
regional ICASS staff to decide how it will handle costs for services
provided to TDY personnel. The report notes that fewer than twenty
posts worldwide have adopted post TDY policies, implying that this
demonstrates that there is a problem in the system. However, the
worldwide policy was developed to enable posts to track all costs and
assign the charges to the appropriate agencies if the post chose to do
so. In many cases, posts decided that the fairest and simplest method
was to distribute costs to all agencies at post. The report should not
imply criticism of choices made in accordance with the ICASS principle
of local empowerment.
* The Interagency Working Group has examined the issue of distributing
the costs for regional ICASS staff several times in the past seven
years. Developing a methodology that appropriately distributes the
costs to regional posts and users has proved to be difficult without
adding an excessive degree of complexity to the software and posts'
record-keeping. The issue has not been forgotten, but it has been
tabled until someone comes up with a new proposal.
Agencies reported that their headquarters had directed them in some
cases to withdraw from services. Agencies also reported pressure to
reduce costs without explicitly telling them to withdraw from services.
* DSCA and DIA, the largest DoD users of ICASS, have never directed any
office to withdraw from any service. Our written policy is that each
office should subscribe to the services it needs to accomplish its
mission and take care of its people.
* DoD policy further states that our offices are responsible for
ensuring that they are charged only for the services they need, and
that workload measures and invoices are accurate. Steps to control
ICASS costs are the responsibility of the Headquarters, not the field.
Agency self-provision of support services can lead to duplicative
structures and higher costs to government.
* This statement can be misleading without a detailed analysis of why
agencies choose to provide services for themselves. In many instances
DSCA offices do not subscribe to Information Management Technology
services because warranty service is either available on the local Host
Nation economy or can be obtained effectively through mail service.
Some DSCA offices do not subscribe to Health Services because there is
a DoD medical activity located nearby to provide health services at no
cost.
* DSCA offices own vehicles and, therefore, do not usually use Direct
Vehicle Operations or Motor Pool services. The issue of control is as
important, as noted in the report. What the report does not state is
that control is often central to efficient and effective mission
accomplishment, which may outweigh issues of cost. In addition, control
of their own drivers allows our offices to ensure that the drivers'
time is effectively utilized in executing more tasks that simply
driving.
* DSCA offices do not subscribe to American Personnel services. DoD
offices provide personnel services for all our locally engaged US
civilian employees at no cost. In addition, a few offices do not employ
Foreign Service National (FSN) employees, and there is, therefore, no
requirement for FSN Personnel services. In the report, however, these
cases would be treated as "non-participation" in Appendix III.
* DSCA offices do not subscribe to Budget & Financial Planning or
Accounts & Records services, as DoD elements are required to maintain
their own fiscal records, and accounting is accomplished through the
Defense Finance & Accounting Service.
Councils seldom examine agencies' self-provided services for potential
ways to improve ICASS services. Agencies are not required to provide
cost-benefit analyses for withdrawal from services.
* DSCA policy states that an office withdrawing from a service shall
assist the Council in evaluating whether the agencies at post may
benefit from a switch to the alternate provider.
Training resources are underutilized. Only one agency requires its
officers receive ICASS training prior to arrival overseas.
* DSCA provides ICASS training for its personnel deploying to Embassy
assignments. It is included in the curriculum of the three-week course
required for all going overseas:
taught by the Defense Institute of Security Assistance Management
(DISAM), Wright-Patterson Air Force Base, Ohio. Unlike many of the
employees of other United States government agencies, DSCA personnel
are usually not stationed in or passing through Washington when they
receive assignment instructions. It is more cost-efficient to include
ICASS training in the required DISAM course, rather than bring
personnel through Washington for a separate course at the Foreign
Service Institute.
Appendix III lists Agency Participation Rates as "The participation
rate equals the percentage of the aggregate number of ICASS cost
centers at all posts to an agency subscribed."
* Without clarifying detail, the agency participation rates are
meaningless. For example, one of our offices has space provided in the
Host Nation Ministry of Defense. That office would have no charges for
Building Operating Expenses for Government-Owned/Long-Term Lease (GO/
LTL) Non-Residential, GO/LTL Residential, or Short-Term Lease Non-
Residential property. Similarly, there would be no ICASS charge for
Non-Residential Local Guard Program. The agency participation rate data
will show that this office does not "participate" in those four cost
centers.
* There are some cost centers that offices may subscribe to, but use
rarely. Reproduction services are an example. If an office has no
occasion to use reproduction services during a particular year, this
chart would show that the office did not "participate."
The report oversimplifies the issues of local empowerment, self-
provision of services, and training, while almost completely ignoring
the issue of cost control. Representatives from DSCA and DIA stated at
the in-briefing for the GAO team that cost control is our single
greatest concern about ICASS. Almost every other customer agency also
stated the need for cost control in separate in-briefing sessions.
Instead of being the focus of this review, as most of us had hoped, the
team chose not to highlight customer agencies' concerns about this
issue.
The following are GAO's comments on the Department of Defense's letter
dated July 2, 2004.
GAO Comments:
1. We did not intend to underemphasize cost control, and we modified
the report to add more emphasis to the importance of cost containment.
We stated that labor is the largest ICASS cost and that agencies cite
high labor costs associated with American direct-hire ICASS personnel
as a reason for self-providing services. Our recommendation to increase
the system's accountability by streamlining operations is designed to
encourage cost control and service provider rightsizing.
2. The Foreign Affairs Handbook requires ICASS Councils to (1) monitor
service performance and costs, concentrating on overall performance
against standards and (2) prepare an annual written assessment on the
quality and responsiveness of the services furnished by the service
provider based upon the agreed-upon performance standards (6 FAH-5 H-
301.4 (f) and (g)). We believe that councils that do not evaluate their
service providers miss important opportunities to measure service
provider performance and to address items that could make service
delivery more cost-effective.
3. We modified the text to clarify that many agencies decided not to
subscribe to some ICASS services.
4. We support Chief of Mission authority at post and did not mean to
imply that ICASS is outside of that authority. Our main point was that
ICASS authorities sometimes become subordinate to other authorities,
and we modified the text of the report to more clearly reflect this
observation.
5. We did not mean to imply that all ICASS decisions and policies
should be made or be negotiable at the post level. We intended to
highlight some ICASS customers' concern that ICASS lacks flexibility to
adapt to meet unique local needs, thus limiting the local council's
ability to make decisions that optimize service provision at post.
6. We agree with the department that individual posts have the
authority to determine whether they wish to implement the new policy
for long-term temporary duty personnel. Our discussion of the new
temporary duty personnel policy makes no assertion as to why few posts
have chosen to adopt it. Three of our eight case study posts have
adopted the new policy (Embassies Cairo, Dar es Salaam, and Lima).
Officials at those posts that have not adopted the policy stated that
temporary duty personnel do not result in an undue burden on their
respective posts.
7. We agree that there may be legitimate reasons for agencies to opt
out of ICASS services, and we reflect this throughout the report.
8. Several department field staff stated that they either had not had
ICASS training before arriving overseas or that training in their ICASS
roles and responsibilities was not sufficient.
[End of section]
Appendix X: Comments from the Department of Homeland Security:
U.S. Department of Homeland Security:
Washington, DC 20528:
June 29, 2004:
Mr. Jess Ford:
Director, International Affairs and Trade:
General Accounting Office:
Washington, DC 20548:
Re: "EMBASSY MANAGEMENT - Effectiveness and Equity of the International
Cooperative Administrative Support Services (ICASS) System", GAO-04-
511, June 2004, GAO Case 320185:
Dear Mr. Ford:
The Department of Homeland Security (DHS) appreciates the opportunity
to review and comment on the General Accounting Office (GAO) draft
report to the Honorable Christopher Shays, Chairman, Subcommittee on
National Security, Emerging Threats and International Relations,
Committee on Government Reform, House of Representatives, entitled
"EMBASSY MANAGEMENT - Effectiveness and Equity of the International
Cooperative Administrative Support Services (ICASS) System," GAO-04-
511, May 2004.
The draft report does not include any specific recommendations
regarding DHS. However, we submit the following comments for your
consideration:
DHS generally agrees with the recommendations that have been identified
regarding ICASS, particularly with the ones recommending reengineering
process and seeking innovative managerial approaches and developing
ICASS accountability. While DOS' Council Affairs staff has process
reengineering experience and monitors performance, DHS finds that the
rest of DOS, particularly the management/administrative side, has no
process reengineering experience and still does things they way they
were done years ago. In addition, they have little or no experience in
performance based management, i.e. base lining performance, measuring
performance to standards and goals, and creating incentives for
performance.
DHS has some concerns about the recommendation to eliminate duplicative
administrative support structures. For example, in many of our posts,
we do our own inventory and do not pay ICASS costs for this service. We
also make our own hotel reservations for visitors rather than paying
the Embassy Visitor's Unit to make them for us. We might be forced to
use these ICASS services and then have to pay for them depending on
how this recommendation is interpreted.
While the report finds that ICASS is transparent, we are not sure that
we agree with this conclusion. Also, some posts are more transparent
than other posts. Because the DOS Management Counselor at Post manages
all the service providers and resources, and DOS is the largest user of
ICASS services, services are managed to the benefit of and priorities
of the DOS. For example, while the ICASS Council theoretically has a
certain amount of authority over discretionary spending and resource
allocation, we do not feel that the Council is involved enough in these
key decisions.
There are certain expenses that have been driving up ICASS costs
substantially over the past few years - the local guard program, other
security enhancements and new office space costs. Since 9/11, there
have been in many locations over 100% increases in guard and security
costs which are billed to ICASS. Posts have not done enough to prepare
agencies for these tremendous increases and to look at ways to contain
costs. In addition, many posts have procured new office space - again
in response to security requirements. The same concerns apply.
In addition to cost increases, DHS feels ICASS costs are not fully and
equitably distributed among non-Department of State (DOS) agencies. DHS
believes that non-DOS agencies are in fact subsidizing DOS support
Foreign Service National (FSN) positions. By splitting DOS support FSN
costs (salaries, benefits, awards, and other allowances) among all
agencies, DOS has reduced their operating costs. For example, if DHS
hires an FSN, DHS will pay all salaries and benefits. If DOS has a
staff increase and feels the need to increase the FSN support staff,
all salaries and benefits associated with the additional FSN are
divided among all agencies (including DOS).
If an agency elects not to sign-up for a particular cost center or
service, the agency at times is penalized for not participating. For
example, at one post DHS has elected not to sign-up for the Information
Management Technical Support cost center because we have a direct hire
FSN to provide IT support. As a matter of routine, the DOS information
management department conducts software application training. This
training is open to any agency that has signed up to the cost center
and on a space available basis; the training is open to agency
dependents. Instances have occurred where training has been requested
for full time staff and has been denied, yet someone's spouse who is
not employed at post could attend because that agency has signed up to
the cost center.
Nonparticipation by agencies increases the costs for agencies that do
participate. Recently, a large agency at post questioned the cost of
the Regional Medical Officer (RMO). The agency conducted a cost
analysis of using the RMO versus seeking medical treatment on the local
economy and elected to discontinue the medical cost center. While the
fixed costs of the medical cost center will remain the same, dividing
the costs among fewer agencies/direct-hire employees will increase
agency participation in this already extremely high cost center.
Overall, ICASS is a much better system than the situation that existed
prior to the introduction of ICASS. Nonetheless, we believe that there
are many areas, as noted above, that require improvement.
Thank you again for the opportunity to provide comments on this draft
report. If you have questions or need clarification regarding our
comments, please contact Mr. Ryan Kociolek, (202) 692-4286, or e-mail:
Ryan.Kociolek@dhs.gov.
Sincerely,
Signed for:
Anna F. Dixon:
Director, Bankcard Programs and GAO/OIG Liaison:
The following are GAO's comments on the Department of Homeland
Security's letter dated June 29, 2004.
GAO Comments:
1. We generally support the voluntary nature of the ICASS program
because agencies' needs differ. Therefore, we did not intend to suggest
that agencies should be forced to use ICASS services. However, we
believe that there are opportunities to achieve more economies of
scale, and that there are instances of unnecessary and wasteful
duplication. Our recommendations are designed to reduce duplication
where this would be in the best interests of the government and to
encourage agencies to prepare business cases to support decisions to
obtain services outside of ICASS.
2. We agree that ICASS operations at some posts are more transparent
than at others, but we did not find evidence that services were being
managed to the benefit and priorities of State and the detriment of
other agencies at the posts we visited. However, we believe that our
recommendations regarding system accountability and training should
help address this concern.
3. The salary and benefit costs of State employees who provide support
services to all agencies are shared by all agencies that receive the
services. For example, costs to employ a foreign national driver are
charged to the agencies that receive services from the driver, while
costs to employ an American Financial Management Officer are divided
among the agencies that make use of financial services the manager
provides. We support this practice largely because it is consistent
with the overall rightsizing concept of agencies paying the full cost
associated with their overseas presence.
4. Agencies can choose whether to participate in an ICASS service. If
an agency does not participate and, therefore, does not pay for a
service, that agency should not receive the service. Otherwise, the
agencies that have chosen to participate in the service would
effectively be subsidizing the cost of providing the service to the
agency that did not participate but still wanted the service. There are
ICASS provisions for cases where an agency that wishes may receive
partial services for a reduced cost, as well as methods for an agency
to make direct payments for use of a service that benefits that
particular agency.
5. We agree. This is why decisions to not obtain services through ICASS
may not always be in the best interests of the government.
[End of section]
Appendix XI: Comments from the Department of Justice:
U.S. Department of Justice:
JUN 30 2004:
Washington, D.C. 20530:
Jess T. Ford:
Director, International Affairs and Trade:
U.S. General Accounting Office:
441 G. Street, NW:
Washington, DC 20548:
Dear Mr. Ford:
Thank you for the opportunity to review the final draft of the General
Accounting Office (GAO) report entitled "Embassy Management: Actions
Needed to Increase Efficiency and Improve Delivery of Administrative
Support Services, GAO-04-511." On June 28, 2004 the Department of
Justice (DOJ) provided the GAO technical comments to be incorporated in
the report as appropriate. This letter constitutes the formal comments
of the DOJ, and I request that it be included in the final report. We
note that the difficulties identified by the GAO concerning some of the
practices of the International Cooperative Administrative Support
Services (ICASS) system affect not only its operations but also those
of the individual agencies that use these services. We discuss both of
these issues below.
The DOJ generally agrees with the report recommendations but notes that
it is lacking in some areas and is not as penetrating in its analysis
as it might have been. Given the first statement of the report that
"ICASS has not resulted in more efficient delivery of administrative
support services because it has neither eliminated duplication not led
to efforts to systematically streamline operations," one would have
expected to find more in-depth analysis and more targeted
recommendations than the body of the report provides. Efficient and
cost effective delivery of support services is the very core of the
ICASS structure and failure to succeed on that function overshadows, in
many ways, other accomplishments of other goals. We would have
preferred for the report to be more forceful in its findings: ICASS
simply must demonstrate in very concrete measurements that it is
providing high quality services at a price that represents good value
for the participating agencies and the American taxpayer.
DOJ believes that on the issues of cost containment and good value, the
report should have given stronger attention to the need for metrics
that would provide a high level of ICASS accountability to the agencies
served. The report does not adequately address the reasons for
duplication and the ICASS inefficiencies that lead to agencies'
nonparticipation, including the fact that a potential ICASS service
provider may fail to offer competitive rates, equitable services or
superior quality. Nor does the GAO distinguish between agencies that
choose to self provide services and agencies that do not require the
particular service, regardless of cost. The GAO analysis of services
should only include agencies that require a service but specifically
choose not to use ICASS as a provider of that service.
With respect to budget issues, the DOJ notes that the draft report does
not address the position of ICASS in the Federal Budget process.
Currently there is no consolidated forward-looking review of the ICASS
budget request, on a timely basis, to include impact on each individual
agencies' requests. Individual agencies request an adjustment to base
for ICASS costs within internal budget process. As a result, when
Departments submit budget requests to OMB, various OMB Examiners review
the costs individually rather than as a total request. While one agency
may receive an increase, another agency may receive a reduction. As a
result, there is no review of total ICASS costs, overall cost to
government, or streamlining of services. Nor does the draft report
address the internal ICASS budget process and its relationship to the
development cycle of the President's budget. Because ICASS provides
services to individual agencies, each agency is billed for the use of
services. The current process sets initial budget targets at the
beginning of the fiscal year. Mid-way through the year, the targets are
reviewed and adjusted as needed. Often, the costs increase. This
process creates difficulty for agencies in developing an internal
budget. For example, ICASS recently finalized its FY 2004 budget
targets. Agencies, however, began the fiscal year back on October 1,
2003 with a fixed budget. If the targets are increased in the middle of
the year, the agency does not have an opportunity to seek additional
resources until the following fiscal year. This creates a serious
problem for the agency.
Individual DOJ components also expressed concerns related to their
inability to plan for ICASS costs due to the way that ICASS operates.
Individual agencies using ICASS noted that there is no mechanism to
ensure that agencies are funded at the proper level. Agencies are
unable to adequately plan for and manage future ICASS costs and there
are no planning policies in place to coordinate increased ICASS
reimbursable costs with the agency budget processes. The lack of
coordination can place an agency two years behind the actual costs of
the program. Nor does the ICASS system provide flexibility for
projected or known changes in staffing levels that some agencies are
able to reliably predict. This results in inequitable billing
distributions to such agencies. Agencies using ICASS also noted that
billings containing cost increases and decreases do not explain the
changes nor is their any warning of such changes. As an example, it was
noted that an important change to be implemented in FY 05 will require
agencies with overseas staff to contribute to Embassy construction
costs "based on the per capita proportion of total overseas staff and
the type of space (controlled access, non-controlled access, or non-
office) they need" through the Capital Security and Cost Sharing
program. This type of information must be fully conveyed by State and
ICASS to participating agencies timely and completely.
Individual user agencies also found wide disparities in ICASS billings
within a single region, including:
Posts in countries which are similarly situated. Consideration should
be given to implementing base line standards and policies in those
regions where there are groupings of host countries similarly situated
and billings should reflect the standards and rationales used locally
so that there is context for ICASS increases and decreases. Agencies
also reported difficulties in effectively appealing or otherwise
challenging ICASS costs/billings or service issues with which they were
dissatisfied; noting that challenges to an ICASS billing or other
complaint may be met with a local council citing headquarters policy
and headquarters citing local policy.
The draft report discusses the capital security cost sharing program
and the possible effect on services provided. The report cites the
belief of the Department of State and Office of Management and Budget
(OMB) that this program will serve as a financial incentive to
consolidate and streamline services. The result, however, may be
increased costs. In recent years ICASS costs have increased
dramatically due to additional security requirements. In response to
the increased costs, many agencies chose to reduce the level of ICASS
services. Because the Department of State has no incentive to reduce
ICASS costs or staffing levels, the total ICASS costs do not decrease.
Rather, the total service cost was spread to a smaller group of
agencies; resulting in higher bills. Other agencies responded to
increased ICASS costs by choosing to self-provide the services as a
cost saving mechanism. This results in duplicative services and an
overall increase to total spending. Based on past history, there is
little evidence to conclude that services will be consolidated as a
cost-saving measure.
It is the DOJ's belief that many of the individual user concerns can be
addressed and the ICASS system improved through proactive
implementation of the GAO recommendations. The report refers its
conclusions and recommendations to the ICASS Executive Board (IEB) as
the "highest policy-making body" of the organization. However the IEB
must actually function as described if ICASS is to make the
improvements envisioned in the reports' recommendations and wished for
by all agency participants.
Again, we appreciate the opportunity to comment on this report. If you
have any questions regarding our comments, please contact Vickie Sloan,
Director, Audit Liaison Office on 202-514-0469.
Sincerely,
Signed by:
Paul R. Corts:
Assistant Attorney General for Administration:
The following are GAO's comments on the Department of Justice's letter
dated June 30, 2004. The agency also provided technical comments that
were incorporated into the text, as appropriate.
GAO Comments:
1. We agree that there may be legitimate reasons for agencies to opt
out of ICASS services, and we reflect this throughout the report. We
also stated that agencies cited affordability of services as a reason
for not subscribing.
2. Our report focuses on the delivery and costs of support services,
and we do not examine in detail the annual ICASS budget process.
Nonetheless, several agencies reported that this process is problematic
because it requires that agencies predict costs and request funding
well before they know what their actual costs are likely to be, and
agencies have little flexibility in paying for cost increases resulting
from unforeseen events that occur subsequent to their funding requests.
Although we do not address this issue on our report, we believe it is
something the ICASS Executive Board could consider when implementing
our recommendations.
3. We agree that agencies should be notified in advance of changes in
policy and staffing that would affect their contributions. However,
implementation of the proposed Capital Security Cost-Sharing Program
would be separate from ICASS, and therefore we made no assessment of
its merits or governance structures. We included discussion of the
program only to show its potential impact on ICASS.
[End of section]
Appendix XII: Comments from the Department of the Treasury:
DEPARTMENT OF THE TREASURY:
WASHINGTON, D.C. 20220:
JUL 20 2004:
Jess T. Ford:
Director, International Affairs and Trade:
U.S. General Accounting Office:
441 G Street, N.W.:
Washington, D.C. 20548:
Dear Mr. Ford:
On behalf of the Department of the Treasury, I am pleased to provide
the following comments to the General Accounting Office's (GAO) draft
report entitled "Embassy Management: Actions Needed to Increase
Efficiency and Improve Delivery of Administrative Support Structures"
(June 2004):
- Treasury does not take issue with GAO's findings and recommendations
for executive action presented on page 42, particularly with respect to
aggressive pursuit by the ICASS Executive Board to eliminate duplicate
administrative support structures at U.S. overseas facilities and goal
of limiting each service to the one provider that local ICASS councils
have determined can provide the best quality service at the lowest
possible price. This recommendation provides that agencies not
subscribing to ICASS services be encouraged to submit detailed
explanations (business cases) of how they will fulfill these service
needs and at what cost so potential benefits can be shared by all ICASS
customers at post.
However, outcomes related to this recommendation are reliant upon
access to solid business case data; and the recommendation does not
provide an alternative strategy for assuring access for objective and
optimal problem resolution (i.e., in behalf of the agency, ICASS, and
the American taxpayer). An alternative strategy would be that agencies
not subscribing to ICASS services be required to submit the detailed
"business cases" with their funding requests to the Office of
Management and Budget.
- We share a concern that the report, by emphasizing the issues of
duplication and consolidation, may not focus on a need to address some
fundamental management inefficiencies in ICASS. We also want to
emphasize a need for ICASS to more effectively adopt established best-
business management practices to contain and reduce costs, streamline
services, and improve accountability.
- That service provider costs do not go down when the number of
agencies decrease remains a significant problem with the ICASS program
as well.
Overall, the GAO report well documents wide ranging and complex aspects
of ICASS program management and operations for multi-agency focus and a
strong basis for improved cooperation and a fuller realization of both
individual agency and established ICASS program goals.
Please feel free to call me at (202) 622-0500 if you have questions.
Signed by:
Carolyn Austin-Diggs:
Director, Office of Asset Management:
[End of section]
Appendix XIII: Comments from the U.S. Peace Corps:
Peace Corps:
June 25, 2004:
To: Jess T. Ford, Director, Int'l Affairs and Trade, US General
Accounting Office:
From: Gopal Khanna, Chief Financial Officer:
Re: Comment on GAO draft on ICASS services:
Peace Corps appreciates the opportunity to respond to GAO's draft
report Actions Needed to Increase Efficiency and Improve Delivery of
Administrative Support Services (GAO-04-511). The work your team has
done in preparing this report is commendable. Please find our comments
below:
Agency self-provision of support services can lead to duplicative
structures and higher costs to government (p.11):
First, while service duplication is a concern, the report seems to
overemphasize this at the expense of a frank discussion of the need for
more cost effective, well-executed service delivery. The report misses
the opportunity to underscore links between cost containment, service,
and subscription rates.
Second, funding for ICASS customers spans many appropriations. True, it
may be myopic for customers to aggressively seek lower cost services
that result in greater costs to the US Government as a whole, but the
report does not address the pressure customers face in running programs
with static or declining budgets. The report misses the boat with its
example from Dakar, where a customer turned to a lower cost private
vendor for vehicle maintenance services. Rather than highlighting the
reasons driving this choice and the failure of the provider to adjust
to a changing customer base/need, the report instead focused on the
outcome --a greater net cost to the US Government overall.
Agencies cite cost, program needs, and greater control as reasons for
self-providing services (p.15):
Peace Corps appreciates the recognition that opting out of a service
may be reasonable due to unique programmatic or logistical needs. The
ICASS framework provides the opportunity to tailor subscriptions to
such needs. Unfortunately Table 3, which tracks service participation,
does not differentiate between "supportable" and "unsupportable"
reasons for opting out. Some agencies may opt out simply because they
do not use a service at all. How is this captured in the table?
Furthermore, this discussion might be fleshed out by noting that the
requirements of all customers are not equal. The cost of supporting the
minimal "footprint" at overseas missions cannot be overlooked. Paying
for greater physical security, sophisticated IT systems, business-class
travel, and more American staff, for example, can be burdensome to
agencies which neither require the heightened support nor have a say in
service provider initiatives. The impact is most apparent at small
missions where only two or three customers share the cost.
Lack of business case for self-provided services hinders posts' ability
to maximize cost effectiveness (p.20):
Peace Corps agrees that a business case presentation outlining why
customers opt out of a service would be useful for both service
providers and Councils. Peace Corps has a standard set of ICASS
services to which its managers are authorized to subscribe. However,
the agency has a straightforward process for its Country Directors to
petition HQ when, in their estimation, local conditions warrant use of
other services. Thoughtful, reasoned requests are rarely denied.
ICASS structures do not overcome disincentives to streamlining (p.24):
Peace Corps strongly agrees that disincentives in the ICASS framework
impede advances in service delivery and cost containment. Providers -
both Americans and foreign nationals - walk a fine line between
servicing their home agency and other customers. As noted in the
report, they have few incentives to change the status quo: Local
Councils have no direct input into their appraisals, and excellence in
ICASS service delivery does not appear to be a major contributor to
their professional advancement.
ICASS customers generally satisfied with service quality, but
quantifying levels of satisfaction has proven difficult (p.32):
Peace Corps agrees that quantifying customer satisfaction is difficult.
The lack of consistent surveys across missions clearly contributes to
this. Peace Corps does not agree, however, with the characterization
that "customer complaints about ...substandard employee skill-level,
personality conflicts at post, or specific cultural circumstances
external to the ICASS design" are a non-ICASS issue. Successfully
managing such factors are part and parcel of service delivery,
especially for a service organization like ICASS and must be part of
the ethos of the organization.
Limitations to ICASS Council decision-making authority impede system's
effectiveness (p.37):
First, Peace Corps understands how individuals on the mission-level
might think that local empowerment is not adequate. Yet the example
used to illustrate this --methodologies for gathering workload --is not
entirely applicable. Standardization of basic processes within the
framework is essential in a system where American staff frequently move
between missions. Standardization greatly facilitates development of
applicable training materials and helps Council representative better
understand their roles and responsibilities.
Standardization can also help smooth inconsistencies in cost and
service delivery from mission-to-mission. Peace Corps has noted several
instances where its managers have been rebuffed when asking for
clarification regarding service provider actions. This seems
particularly true at small posts where only two or three customers are
present. Decisions are sometimes announced after the fact without
Council input. Peace Corps' recourse in such cases is for staff to use
the framework outlined in the Foreign Affairs Handbook and policy
statements on ICASS Service Center website to support their positions.
Second, reluctance of some Council members to take part in decision-
making probably relates to time constraints. When Councils are
supported by neutral facilitators from the provider staff who, for
example, provide a calendar of milestones for the year, regular updates
on financial position, and straightforward review of staffing needs,
progress can be made. While it sounds paradoxical, it seems that the
service provider who proactively acts as a neutral facilitator can
greatly assist Council's focus more on their tasks and be less
dependent on providers to "run the show." This does not absolve Council
members from understanding their roles and responsibilities, but it
relieves them of "keeping up" with the provider. Unfortunately, the
current framework offers no incentives for providers to take on such a
neutral role.
Training and Information Resources not being used to full advantage
(p.39):
Peace Corps currently provides an overview of ICASS to new Country
Directors and Administrative Officers during its Overseas Staff
Training. The agency ICASS Coordinator in Washington regularly
communicates with posts on issues of concern and reminds staff of
milestones upon which local Councils should be paying attention.
Security:
One issue not touched upon in the report centers on Security. It is an
anomaly in ICASS. Currently, Security Services are divided into two
categories: ICASS provided and non-ICASS provided. Both are usually
managed by mission Regional Security Officers. Customers often use at
least part of both services. This framework is not well suited to the
ICASS tenets of voluntary service selection, transparency, and
management efficiency. Service parameters are rarely open for
discussion. The duality of services is a source of confusion for
customers as well as service providers. The dual billing required is
inefficient. Furthermore, Security is clearly a key component of rising
ICASS costs. Its inclusion in ICASS is inefficient and can distort many
analyses. Perhaps serious consideration needs to be given to removing
Security from ICASS.
Summary (p.42):
In summary, Peace Corps agrees with the report's recommendations to:
* develop strategies to improve the system's accountability:
* ensure that personnel responsible for implementing ICASS receive
detailed training:
Peace Corps would prefer to see less of an emphasis on service
duplication unless linked with a more candid discussion on the need for
cost containment and greater provider accountability. This might be
coupled with concrete recommendations for ameliorating the
disincentives ICASS staff now face in being efficient, customer-
oriented service providers.
The following are GAO's comments on the U.S. Peace Corps' letter dated
June 25, 2004.
GAO Comments:
1. We did not intend to suggest that duplication was the primary
contributor to inefficient operations. This is why our recommendations
address the elimination of unnecessary duplication and the
reengineering of administrative processes. We believe that these
actions together can improve the efficiency of ICASS services and help
contain costs. We have made several modifications to the report to
emphasize that improved business practices and reduction in duplication
are equally important.
We presented the Dakar vehicle maintenance example to illustrate how
decisions by one agency can affect all agencies at post. We faulted
USAID neither for the reason nor for the action of opting out of the
service. We did note, however, that USAID did not share detailed
information (i.e., its business plan) on the new means by which they
would receive the service. We also noted that neither the council nor
the service provider requested that USAID share this information. As a
result, the Dakar ICASS Council missed an opportunity to review whether
the post could adopt the USAID approach to the betterment of all
agencies. We recommended that business cases be made not only to help
agencies determine whether an alternative arrangement is better for
themselves, but also to help local ICASS Councils determine whether
more cost-effective service arrangements could be applied postwide.
2. We agree that agencies have different administrative support service
requirements. This is why we generally support the voluntary
participation principle of ICASS.
3. We said these were non-ICASS issues because they would exist whether
or not ICASS was in place.
4. The Foreign Affairs Handbook states that ICASS Councils "assume the
responsibility and exercise the initiative to install the
infrastructure and administer the system the way they think is right
for their environment" (6 FAH-5 H-301). We did not intend to imply that
all ICASS decisions should be made locally; we agree that
centralization and standardization of some functions can eliminate
inconsistencies in ICASS implementation.
[End of section]
Appendix XIV: GAO Contact and Staff Acknowledgments:
GAO Contact:
John Brummet (202) 512-5260:
Staff Acknowledgments:
In addition to the individual named above, Jeffrey Baldwin-Bott, David
G. Bernet, Janey Cohen, Etana Finkler, Jane S. Kim, and Julia Kennon
made key contributions to this report.
(320185):
FOOTNOTES
[1] The Department of State's Inspector General reviewed the initial
implementation of ICASS in 1999, but because the system was so new, its
success in accomplishing its goals and objectives could not be
assessed. See U.S. Department of State and the Broadcasting Board of
Governors, Office of the Inspector General, Audit of the Selection of
Service Providers in the International Cooperative Administrative
Support Services (ICASS) System, 00-PP-005 (Washington, D.C.: March
2000).
[2] In Washington, we interviewed staff from the U.S. Departments of
Agriculture, Commerce, Defense, Homeland Security, Justice, State, and
the Treasury; the U.S. Peace Corps; and the U.S. Agency for
International Development.
[3] We conducted fieldwork at U.S. embassies in Bern, Switzerland;
Cairo, Egypt; Dakar, Senegal; Dar es Salaam, Tanzania; Lima, Peru; San
Jose, Costa Rica; and Vienna, Austria; and telephone interviews with
U.S. embassy staff in Conakry, Guinea. In Vienna, we also conducted
fieldwork at the U.S. missions to the International Organizations in
Vienna, and the Organization for Security and Cooperation in Europe.
[4] U.S. Department of State, Foreign Affairs Handbook, 6 FAH-5 H-501
(Washington, D.C.: April 1998).
[5] In the Omnibus Consolidated Appropriations Act, 1997 (Pub.L. No.
104-208), Congress mandated that "a system shall be in place that
allocates to each department and agency the full cost of its presence
outside of the United States." According to State, ICASS also operates
under various sections of the Department of State Basic Authorities
Act, including a provision establishing a working capital fund for the
Department of State (22 U.S.C. § 2684) and a provision authorizing
State to enter into agreements with other agencies under certain
conditions to consolidate administrative services (22 U.S.C. § 2695).
In addition, the ICASS councils operate under the general authority of
the Economy Act (31 U.S.C. § 1535), which authorizes under certain
conditions for the provision of goods and services on a reimbursable
basis from one agency to another.
[6] These goals are mutually supportive, and the order in which they
are presented does not imply their relative importance.
[7] U.S. Department of State, Foreign Affairs Handbook, 6 FAH-5 H-500
(Washington, D.C.: April 1998).
[8] According to the Foreign Service Act of 1980 (Pub.L. No. 96-465),
as amended, "chiefs of mission" are principal officers in charge of
diplomatic missions of the United States or of a U.S. office abroad,
such as U.S. ambassadors, who are responsible for the direction,
coordination, and supervision of all government executive branch
employees in a given foreign country (except employees under a military
commander).
[9] The range in participation rates is for all agencies that
subscribed to ICASS services at 10 or more posts.
[10] State Inspector General, 00-PP-005.
[11] USAID occupies office space in Ngor. USAID officials reported that
during business hours, a one-way trip from its offices to the embassy's
vehicle maintenance lot in Dakar could take more than 1 hour.
[12] Vehicle maintenance costs for 2003 and 2004 include those under
the USAID Operating Expenses, Regional Inspector General, and
Development Assistance accounts.
[13] According to State, after USAID withdrew its vehicles, other
agencies in Dakar added vehicles.
[14] Under State's Diplomatic Readiness Initiative, the department
plans to hire 1,158 staff above attrition during fiscal years 2002-
2005.
[15] See 22 U.S.C. § 4865.
[16] GAO, Embassy Construction: Process for Determining Staffing
Requirements Needs Improvement, GAO-02-411 (Washington, D.C.: Apr. 7,
2003).
[17] Staffing projections for new embassy compounds are usually
finalized 18 months prior to receiving funding for the project. In
January 2003, the ICASS Service Center sent a worldwide cable providing
guidance to posts on items for consideration when projecting ICASS
staffing needs at new embassy compounds. However, at the time the cable
was sent, construction for Embassies Dar es Salaam and Lima had long
since commenced and Embassy Conakry had completed its projection
process and was awaiting final funding approval.
[18] USAID provides ICASS services in nine posts and is the primary
provider for all services in Podgorica, Serbia-Montenegro.
[19] Memorandum of Understanding, "Department of State and U.S. Agency
for International Development Pilot Project for Combining Selected
Administrative Support Operations Under the International Cooperative
Administrative Support Services (ICASS) Program," signed November 21,
2003.
[20] Office of Management and Budget, The President's Management
Agenda, Fiscal Year 2002 (Washington, D.C.: August 2001).
[21] The only area where the survey found that the Service Center
consistently fell short of customer expectations was in promoting and
managing the ICASS awards program.
[22] U.S. Department of State, Foreign Affairs Handbook, 6 FAH-5 H-
301.4 (f) (Washington, D.C.: April 1998).
[23] U.S. Department of State, Foreign Affairs Handbook, 6 FAH-5 H-
301.4 (g) (Washington, D.C.: April 1998).
[24] Data based on analysis of the ICASS Global Database, which
contains information on the reasons agencies provide for service
withdrawals. Reasons for withdrawal cited by agencies are placed into
one of seven categories, including (1) agency found a more responsive
service provider, (2) agency found a less expensive service provider,
(3) agency was incorrectly paying for a service it was not utilizing,
(4) agency departure from post (end of mission), (5) agency's
Washington directive, (6) no reason was given by agency, and (7) reason
other than above. Our analysis excluded service withdrawals resulting
from an agency's departure from a post.
[25] Financial Management Officers receive the full training from the
"Working with ICASS" course, while other management officers receive
training on the basic principles of ICASS and the roles and
responsibilities of ICASS participants.
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