Because of continuing accounting and disbursing irregularities, the Office of Management and Budget has identified the State Department's accounting and financial management as a high-risk area. Included in this area is the operation of regional administrative management centers (RAMCs). The Department of State currently operates three RAMCs, in Bangkok, Mexico City, and Paris. Using both the Overseas Financial Management System (OFMS) and the RAMC Paris Accounting System, the RAMCs serve as regional accounting and disbursing centers. They maintain numerous accounts and issue checks, such as local payrolls, for posts within their region. They account for, control, and report on the use of appropriated funds, and provide summary financial information for departmentwide use.(1)
However, the overseas systems are not standardized among the three RAMCs and do not operate on-line with the State Department's Central Financial Management System (CFMS) in the United States. Moreover, an earlier examination found that after 10 years of development, OFMS is obsolete. It described the system as "labor-intensive, difficult to use, and time-consuming."(2)
Over the years, the State Department has addressed system shortcomings by reducing the overseas system variations from four (one standard version and three local versions) to two. Also, long- term plans call for a worldwide standardized accounting system--the Integrated Financial Management System (IFMS)--by 1999.
The Department of State has also conducted a study that addresses all aspects of financial management. As part of an overall support strategy, the State Department has been analyzing what functions must be performed overseas. Many functions that have traditionally been performed overseas can, with new technologies, be done just as effectively and efficiently in the United States. The department's own State 2000 report refers to an acid test of whether support can "equally, effectively and more cheaply be provided from the United States."(3) Along these lines, the State Department has preliminary plans to relocate the Mexico City RAMC to the continental United States in the 1995-97 timeframe. Relocation costs are estimated at about $4 million with a five-year payback period.
RAMC locations will be of less importance when the IFMS and supporting communication systems are fully deployed. All the software used will be compatible, and information will be transferred electronically. As communication and transportation methods continue to improve, the quality of RAMC service will be less dependent on their location. However, consolidation of the three RAMCs at a single location in the United States is not specifically planned by the Department of State at this time.
Nonetheless, a consolidation project should be initiated immediately, beginning with the relocation of the Mexico City RAMC. The department should develop thorough plans and selection criteria for a future single administrative management center in the United States and relocate the Mexico City center to that site. Site selection for the single center and relocation of the Mexico City operation should be accelerated. Planning for the eventual move of functions from the Paris and Bangkok centers that can be effectively performed at the relocated center should also begin.
Consolidation of certain RAMC functions is a logical step given the movement toward a single integrated financial system. With electronic data transfer and rapid transportation services such as worldwide overnight express, some functions currently performed at geographically dispersed administrative centers can be performed in the U.S. Understanding that it is dependent upon an effective hardware, software, and communications structure, planning for these relocations should be made a priority.
Moving the Mexico City RAMC to a site in the United States would save money. The Department of State estimates that overseas support costs for each U.S. employee range from $50,000 to $150,000 per year, in addition to basic salary and benefits. The relocation of the Mexico City RAMC to the United States would produce savings each year on such avoided overseas support costs.
There may be some increased salary costs in consolidating the RAMCs. In some locations, a foreign national work force is cheaper than using all U.S. employees. Bangkok, with approximately 60 Foreign Service Nationals, is an example of an inexpensive, but very effective, foreign work force. However, Paris--with over 100 foreign national employees--is much more expensive. It is very difficult to judge the fiscal impact of replacing foreign nationals with U.S. employees because of the variations in pay scales, currency exchange rates, benefits, and other factors. However, any increased costs are offset to some degree by the return of jobs to the U.S. economy, a smaller overall work force, and the increased tax base created by a U.S. national payroll replacing a foreign national payroll.
1. The State Department should move the Mexico City RAMC to the United States.
In addition to the Mexico City operations, the following should also be performed by the new U.S. RAMC: all overseas American payroll operations currently performed at the three RAMCs; foreign service national payroll, accounting and disbursing services for the Western Hemisphere posts currently serviced by RAMC Paris; and information system security technical analysis and rule-writing functions currently performed at the three RAMCs. The site selected should be suitable for the absorption of many other RAMC functions and appropriate as the potential location of a consolidated center.
2. The State Department should begin planning for the timely relocation of those Bangkok and Paris RAMC functions that can be performed effectively at the new U.S. RAMC.
The planning for the transfer of functions should begin immediately so that the move can be made when implementation of IFMS removes some of the current impediments. Exploration of further consolidation should continue.
The cost of relocating the Mexico City RAMC should be recouped in five years. Additional savings, based on economies of scale, may be realized as other RAMCs' functions are transferred.
Full-time equivalent positions will not be reduced as a result of moving the Mexico City RAMC; in fact, total positions will be increased by 15 for approximately one year when parallel operation of the Mexico City RAMC and the new center will be required. The total costs of relocating the Mexico City center are estimated at $4 million. Payback is projected in five years. Savings would continue to grow after that time.
Budget Authority (BA) and Outlays (Dollars in Millions) 1994 1995 1996 1997 1998 1999 Total ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ BA n/a 2.6 0.5 -0.7 -1.1 -1.4 -0.1 Outlays n/a 2.6 0.5 -0.7 -1.1 -1.4 -0.1 Change in FTEs n/a 15 0 -15 0 0 0
1. U.S. General Accounting Office, Serious Deficiencies in State's Financial Systems Require Sustained Attention, AFMD-93-9 (Washington, D.C.: U.S. Genreral Accounting Office, November 1992), p. 17.
2. Ibid., p. 18.
3. U.S. Department of State, Management Task Force, State 2000: A New Model for Manageing Foreign Affairs (Washington, D.C., December 1992), p. 291.
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