In 1998, terrorists bombed two U.S. embassies in East Africa, killing over 220 people and injuring more than 4,000 others. In 1999, the State Department launched the Capital Security Construction Program (CSCP) with the primary goal of providing secure, safe, and functional workplaces, and the Bureau of Overseas Buildings Operations (OBO) adopted a streamlined, standard design for all new embassies. In 2011, OBO shifted to the Excellence approach for new embassies, where greater use of custom designs is intended to improve embassies’ functionality, quality, operating costs, and appearance.
The Government Accountability Office (GAO) was asked to review the performance of the CSCP. Its report, released Oct. 25, examines three key areas: First, the pace of the CSCP in constructing new embassies; second, the cost and schedule performance of OBO’s recent embassy construction projects; and finally, the primary factors that have affected State’s ability to deliver construction projects efficiently.
GAO found that OBO has constructed new embassies at a slower pace than forecast due in part to unexpected building requirements and inflation. In 1999, State identified a need to replace 180 embassies. In 2005, with about 30 projects underway, State planned to replace the other 150 embassies by 2018. Since 1999, OBO has built 77 embassies under CSCP, at a total cost of about $24 billion as of fiscal year 2017. CSCP’s pace has been affected by unexpected additional building requirements, such as office annexes and Marine quarters. Also, CSCP received only one program funding adjustment for inflation since 1999, and State does not intend to seek annual adjustments. Currently, OBO does not provide information on inflationary effects on CSCP or an estimated total capital investment or feasible time frames for the nearly 50 embassies identified for replacement beyond 2022. GAO says lack of such information may affect stakeholders’ ability to make informed budget decisions.
While cost growth occurred on a majority of completed embassy projects and durations averaged about 36 months, these were generally within budgeting and planning allowances. GAO could not assess performance of Excellence projects because none had been completed as of the end of fiscal year 2017.
The GAO report also found that staffing workload and contractor collaboration have affected OBO’s project delivery. Without an OBO-wide workforce analysis, it is unclear whether OBO’s staffing is commensurate with its workload needs. OBO maintains that its office overseeing project design reviews is understaffed, adversely affecting some of its critical functions. Contractors also expressed concerns about the quality of design reviews, which may be affected by a staffing shortage and the use of temporary contractors. Also, OBO and contractor officials acknowledged weaknesses in collaboration, particularly with regard to contractors less experienced with embassy construction. Of the five contractors GAO spoke with, three said they are unlikely to pursue future projects because of issues working with OBO. Formal construction partnering—an industry best practice—between OBO and its contractors could help avoid adversarial relationships that inhibit swift resolution of issues. OBO’s two long-standing contractors that have completed most of the CSCP embassy projects participated in early projects OBO identified as having used formal partnering.
GAO pointed to the embassy in Bishkek, Kyrgyzstan, as an example. Here, a poor working relationship between OBO and the contractor inhibited resolution of a variety of disagreements. These disagreements included responsibility for obtaining zoning approvals and building permits with the host government, and whether the contractor could remove a satellite dish in the construction zone. Issues regarding timeliness of decision-making by OBO headquarters and quality of contractor submissions were also raised on this project.
GAO recommends that State provides information on the estimated effects of inflation on planned projects; provides an analysis of estimated total costs and time frames to complete the CSCP; conducts an OBO-wide workforce analysis; and pilots formal construction partnering. State concurred with the GAO recommendations and also said it is now pursuing other initiatives beyond Excellence.