Administrative costs at overseas outposts up sharply

The cost of administrative support services for U.S. embassies jumped 30 percent from 2001 to 2003, to a total of $1 billion, according to a new Government Accountability Office report. A system set up to eliminate duplication of services has not achieved its goal of containing costs, GAO auditors concluded.

The International Cooperative Administrative Support Services system, created in 1998, is supposed to manage support services, such as building maintenance, vehicle fleet management, and travel to and from the United States' 250 overseas posts. But according to the report (GAO-04-511), agencies frequently choose not to use the system, leading to waste and inefficiency.

ICASS has not eliminated duplication of services, because the benefits for overseas posts of using shared services do not overcome the obstacles, the report found.

The report noted that in Cairo, for instance, the State Department and the Agency for International Development operate separate warehouses standing right next to each other. Workers there told GAO that if consolidated, the staffs of the warehouses could easily work together.

GAO made five recommendations for increasing efficiency in delivering administrative support services:

• ICASS should aggressively eliminate duplicative structures in overseas facilities, with the goal of having one provider per service.
• Managers should use competitive sourcing techniques and other creative approaches to contain costs.
• Independent teams should review ICASS operations at overseas posts to eliminate identical administrative structures.
• The international service should define goals, evaluate provider and customer satisfaction, develop performance standards, and annually certify its attempts to streamline and consolidate services.
• Those responsible for delivering services should receive training on their roles and responsibilities.

GAO auditors said the ICASS system was "simple and transparent enough for customers to understand the basic structures that govern service provision." Still, agencies frequently choose not to use it, citing, among other reasons, cost factors. But GAO found agencies rarely made effective business cases for not using ICASS services.

Overseas service providers and agency customers did not use the ICASS Service Center Web site because they were not familiar with it, despite significant promotion, the report stated.

For the report, GAO gathered comments from ICASS' executive board and the nine primary agencies participating in the system (State, Defense, Justice, Agriculture, Commerce, Homeland Security, and Treasury departments, AID and the Peace Corps), agreed with the GAO's findings but emphasized different areas where costs could be contained.