Archive

Department of State and U.S. Information Agency

Recommendations and Actions

DOS05: Reduce Mission Operating Costs

Background

United States diplomatic posts abroad have grown significantly since the late 1970s. From 1981 to 1986, according to the Department of State, the size of U.S. overseas missions grew by 20 percent, with most of the increase coming from agencies other than the State Department.(1) In the last few years, there has been considerable discussion of ways to stem that growth and achieve greater efficiency in overseas operations--including the implementation of altogether new forms of overseas representation. Where geographically and politically appropriate, new kinds of representation could include regional embassies (sometimes called the Mothership Concept, where one large embassy would support several smaller ones) and the expanded use of multiple accreditation (where one diplomat represents U.S. interests in more than one country).

A first step toward these new models is to bring closer together some basic logistical functions of overseas posts--namely, the provision of administrative support services. Most of these services are used by U.S. and foreign nationals working at the posts, but missions also provide some limited services for host countries and travellers. Many of the administrative support services used by mission employees should be reexamined for consolidation or possible elimination. The goal should be to enable the posts to move toward a new, leaner model of representation. In addition, missions should reexamine the need for certain services they provide to host country nationals, particularly library and research services.

Administrative Support Services. Administrative support services include storage, transportation, housing, security, and the fulfillment of many other similar needs for those working at overseas posts. The Department of State provides many of these services both for its own employees and for employees of other agencies working at the post. These agencies then reimburse the department for the administrative support services received through the Foreign Affairs Administrative Support (FAAS) system, which bills other agencies for their share of the total costs.

Over the years, numerous agencies have complained that the State Department's provision of support services has been inadequate, inefficient, and/or inequitable to other agencies. They cite inefficiencies in the department's FAAS system and claim they do not receive fair value for their contributions. Although most agencies (especially those with small overseas representation) continue to acquire services from the State Department, some others--notably the Agency for International Development (AID)--routinely acquire their own services separately.

The result, of course, is duplication of services. According to a 1988 General Accounting Office (GAO) report, for example, four of seven agencies visited by GAO representatives in Bangkok duplicated State Department services. All seven operated their own motor pools.(2) Recently, officials at the Cairo embassy told the State Department's Office of Inspector General that the embassy operated inadequate warehousing facilities. However, instead of resolving the warehousing problem for the embassy as a whole, the State Department and AID were obtaining new facilities separately.(3) Similar examples of service duplication abound at diplomatic posts worldwide.

Some consolidation of service provision could be achieved in order to reduce support expenditures. While maintaining customer options and avoiding an overseas monopoly, agencies should decide on a post-by- post basis how to administer services most efficiently. They should then implement standardized support service provision. This practice could reduce paperwork and staffing, eliminate excess capacity, and save money. Customers should find that the services are more uniform and equitable across agencies, and--if they are properly administered--there should be no reduction in service quality.

Security Provision. One service currently provided by the posts that deserves specific consideration is security. Two areas of security are particularly in need of reform: the Marine Security Guard (MSG) program and current local guard contracting requirements. According to the State Department's Bureau of Diplomatic Security, 136 U.S. posts (about 51 percent of the total) have Marine detachments of at least six and as many as 30 MSGs. Under the terms of the joint State Department-U.S. Marine Corps Memorandum of Agreement on this issue, these Marines provide information security for all levels of classified material and equipment and certain physical security services for the posts.(4) About 1,225 Marines now serve in these MSG detachments worldwide at a cost of about $27 million to the State Department.(5)

State Department policy requires 24-hour cleared physical presence at posts where Top Secret (TS) material is stored. But some posts house only small numbers of TS documents, which could be easily transferred to other missions. Furthermore, the physical security provided by the MSGs can sometimes be provided at lower cost by upgrading the physical security system itself or by investigating other alternatives where appropriate. Deactivating MSG detachments, where possible, would save money and free up these guards for posts where they are more urgently needed.

In a 1992 study, the Bureau of Diplomatic Security identified 11 posts whose MSG detachments could be deactivated over the next several years. One post on this list (Casablanca) has already deactivated its detachment. Another post on the list (Alexandria) is scheduled for closure in September 1993. The bureau faces stiff resistance from some ambassadors and officials from other federal agencies who want to keep their posts' Marine detachments. Therefore, deactivating the remaining nine detachments--and setting up regular review procedures to validate the need for such detachments at all posts--requires a specific mandate from the Secretary of State. It will also require recognition that deactivating these detachments will necessitate some spending on security enhancements to make up for the MSGs.

The second security issue is related to Congress' local guard contracting requirements. The Foreign Relations Authorization Act requires the Secretary of State to give preference to U.S. contractors in fulfilling local security guard needs overseas.(6) This preference increases security costs because U.S. firms normally propose higher prices due to higher overhead costs than the local firms. Proposed language in the State Department's 1994-95 authorization would institute an even greater preference for U.S. contractors by altering the point system on which proposals are evaluated and contracts are awarded. Allowing posts to contract based solely on price and ability to meet security standards would clearly save money.

Information Services. In addition to providing services to U.S. personnel overseas, these posts provide certain services to host countries. Library and research services are one prominent example. Taxpayers finance the operating costs for in-country libraries and reference centers, which are managed by the overseas arm of the U.S. Information Agency (USIA). According to USIA, these libraries support U.S. foreign policy interests by providing host country government officials, scholars, and opinion makers with information about the United States; information to which, USIA contends, these countries would otherwise not have access.

These arguments make sense in developing nations, in the Newly Independent States, and in certain other areas where information about the United States may be limited and the need to promote U.S. interests is clear. In these places, there is a need for such libraries. In other countries the need is much less apparent. Furthermore, many libraries are actually closed to the general public. Few people are actually allowed to walk into these libraries, and most business is conducted by phone or mail.(7)

Although USIA has cut $2 million from library operations in its fiscal year 1994 budget, further cost-saving measures in this regard can be applied while continuing to ensure access to information. Inquiries by phone or mail can be answered from the United States.

The collections housed in the libraries--mostly reference books, works of American scholarship, and current periodicals--can be transferred, at host country expense, to host country libraries and other institutions (including the many major research universities found in these countries). Finally, with data increasingly available over electronic highways, information not transferred to host country institutions can be acquired directly from the United States.

Standards and Accountability. Consolidation of administrative and service support functions will require that the service provider meet high standards of quality and customer service. Clear performance standards for the goods and services delivered must be set and the supplier must be held accountable. In the past, a lack of customer satisfaction drove many agencies to develop their own channels for support. Consolidated services will work only when recipients of those services are convinced they are receiving the best possible service.

Actions

1. All agencies with overseas representation should consolidate administrative support services where appropriate.

A standard set of agency requirements and regulations governing all personnel receiving support services overseas should be developed. The end result should be standardized requirements for all support functions (e.g., personnel, budget and fiscal matters, procurement, communications, and data processing); this will make service consolidation a more feasible alternative. Posts should consolidate those functions where a centralized operation can best meet customer requirements, given fiscal constraints. Budgeting for support costs should be unified to the maximum extent possible. Since individual agencies and congressional committees will still want to monitor support costs by agency, a reporting function similar to the present FAAS accounting system should be maintained, including submission of an annual report to Congress and all participating agencies breaking down the costs by agency.

2. The State Department should review all Marine Security Guard detachments and deactivate them where possible.

Wherever Marine Guards are not truly needed, they should be returned to the Marine Corps or reassigned to posts that do require their services. The Department of State should begin by deactivating the remaining nine security detachments. Priority should be given to those detachments identified in the 1992 Bureau of Diplomatic Security report. They are as follows: Bangui, Bujumbura, Luxembourg, Nouakchott, Ouagadougou, Port Louis, Reykjavik, the Vatican, and Wellington.

3. Legislation should be enacted to amend the Foreign Relations Authorization Act to reduce costs of local security provision.

Posts should base contract awards for overseas guard services on cost and ability to meet security standards. Technical elements and cost should be more equitably weighted in bid evaluation.

4. USIA should take steps to close selected USIA library and reference centers.

In countries that have the capacity to store the library collections in their own facilities, and where other U.S. interests are not compromised, the United States should not fund separate reference centers. The Director of USIA should designate the facilities for closure.

5. The State Department should explore alternative models of representation abroad.

The State Department should explore alternatives, including regional embassies, multiple accreditation, and the Special Embassy Program (SEP), as a means of further reducing the cost of operations abroad. Consolidating support services and streamlinig overseas operations generally are the first steps in helping make these ideas feasible. Once agencies have brought together their administrative support, shifting to regional embassies or expanding the SEP program may become easier.

Implications

Standardizing procedural requirements across the different agencies functioning abroad would allow for increased consolidation--in data processing, communications, budget and fiscal services, leasing office and housing space, and other support services.

Reassigning Marine Security Guards from posts where they are not needed would require minimal effort and free up resources for other areas (such as the former Soviet Union, the Balkans, and others) where their presence is essential. Deactivating Marine detachments would, however, require that posts upgrade their physical security (including alarms and vaults) to compensate for the lost protection services of the guards; the posts would then be granted so called lock-and-leave status.

Refining security contract requirements should allow posts to acquire security directly at a lower cost. This, of course, should not be done by sacrificing post security.

Finally, closing libraries and reference centers would save money without making U.S. government and cultural materials totally inaccessible. Those materials would be transferred to local libraries, and the users of the USIA libraries could be directed either to the proper host country institutions or given instructions for telephone retrieval.

Eventually, taking these steps could move the U.S. foreign policy community closer to new models for U.S. foreign policy operations overseas. Closing some posts and consolidating others should be considered, although obviously resources alone should not determine where posts are located. At a basic level, the United States needs to articulate the mission to be performed by its posts abroad--and how these objectives can be achieved most efficiently. Standardizing all agencies' requirements for their overseas employees, consolidating support services, and eliminating unnecessary services are all steps that will result in more effective overseas operations and will make new models possible in the future.

The consolidation of support services and the other efficiency measures recommended above are closely tied to the Chief of Mission's (COM's) authority. As detailed in an earlier section of this report, the authority of the COM should be strengthened so that the country team can be structured in the most effective and efficient manner. If the COM is given the fiscal and management authority and responsibility to allocate all assets in a given country, consolidation of support services will be a much easier process.

Fiscal Impact

The shortcomings of the FAAS system make an accurate estimate of the savings associated with consolidating support services impossible. However, a great deal could be saved by consolidation. Specific savings from deactivating the nine remaining MSG detachments identified by the Bureau of Diplomatic Security can be gauged. A net savings of $6.3 million is predicted over a five-year period, and those savings would continue in later years. The savings connected with security contract changes must be calculated on a contract-by- contract basis. Although significant savings are probable, specific amounts are not claimed below. The savings from closing USIA libraries and reference centers includes both dollars and full-time equivalent positions. After some initial closing costs, annual savings are estimated at $9.1 million annually. Combined savings, shown by year and agency, are as follows:

Budget Authority (BA) and Outlays (Dollars in Millions) 

Fiscal Year
           1994     1995     1996     1997     1998     1999     Tot.
           ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
BA 
(State)    -0.6     -0.9     -1.2        -1.2       -1.2     -1.2       -6.3

Outlays
(State)    -0.6     -0.9     -1.2        -1.2       -1.2     -1.2       -6.3

Change
in FTEs
(State)       0         0          0            0           0          0          0

BA
(USIA)     -6.0     -9.1     -9.1        -9.1       -9.1     -9.1     -51.5

Outlays
(USIA)     -5.0      -8.5     -9.1       -9.1       -9.1     -9.1     -49.9

Change
in 
FTEs 
(USIA)     -100    -100     -100     -100     -100     -100    -100

Endnotes

1. Tuthill, John W., "U.S. Foreign Policy, the State Department, and U.S. Missions Abroad," The Atlantic Community Quarterly, vol. 26 (Spring 1988), p. 34.

2. U.S. General Accounting Office, Overseas Support: Current U.S. Administrative Support System Is Too Complicated, GAO/NSIAD-88-84 (Washington, D.C.: U.S. General Accounting Office, March 1988), p. 31.

3. U.S. Department of State, Office of Inspector General, Joint State/U.S. Agency for International Development OIG Review of Administrative Operations in Cairo, Report of Audit 3-FM-002 (Washington, D.C., January 1993), p. 2. N.B. The State Department reports that one of the warehouses in question is "essentially an Egyptian Government-owned facility."

4. "Marine Security Guard Program: Memorandum of Agreement Between the U.S. Department of State and the United States Marine Corps for the Operational and Administrative Supervision of the Marine Security Guard Program in Support of the U.S. Department of State's Overseas Security Program," signed by Ambassador S.J.

Krys, Assistant Secretary for Diplomatic Security, and H.C. Stackpole III, Lieutenant General, USMC, Deputy Chief of Staff for Plans, Policies, and Operations; November 25, 1991, pp. 8-10.

5. According to Special Agent George W. Goodrich, Chief of the MSG Branch at the Bureau of Diplomatic Security, each Marine guard costs the Department of State an average of $22,000 per year in travel costs, clothing allowances, and post expenditures, which include lease costs, Basic Allowance for Subsistence, Cost of Living Allowance, and other expenses. (Under the terms of the joint State Department-U.S. Marine Corps Memorandum of Agreement on this issue, the Corps finances the other costs, including salaries and training.) The $27 million figure comes from multiplying the total number of MSGs (1,225) by $22,000.

6. Section 136(e), Public Law 101-256.

7. U.S. Congress, House, Representative Fortney Pete Stark speaking for an amendment to USIA Salaries and Expenses authorization, 102nd Cong., 2nd sess., July 30, 1992, Congressional Record, p. H7034. Rep. Stark reported, for example, that in fiscal year 1991, libraries in Canada drew only 568 walk-in visitors.

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