Statement of Patrick F. Kennedy

Assistant Secretary of State for Administration

Committee on International Relations

U.S. House of Representatives

May 17, 2000

Mr. Chairman:

I appreciate the opportunity to appear before your Committee. It is always a pleasure for me to be able to update you on the many accomplishments that the Department has made in improving our overseas security posture, facility infrastructure, and our worldwide facility operations. Obviously, since the tragic bombings of our embassies in East Africa, the issues concerning our infrastructure and the security of our missions overseas have received great attention within the Administration and the Congress. We very much appreciate the support of the Congress, and particularly of this Committee, for the Emergency Security Supplemental and the Administration’s proposals for physical security upgrades at our overseas posts. I would also like to say a few words today on the Overseas Presence Advisory Panel (OPAP) and its recommendations concerning our Office of Foreign Buildings Operations (A/FBO). Finally, I will give a brief report on what we are doing at the Main State headquarters building here in Washington and the issue of security clearances for custodial and operations and maintenance personnel.

As you know, the Overseas Presence Advisory Panel, which issued its report last November, described many of our facilities abroad as unacceptable in terms of security and condition. Fully 85% of our facilities do not meet optimum security standards. Some are in need of extensive renovation. Some are seriously overcrowded. Most, however, simply have to be replaced. To protect our employees overseas, our goal is to expeditiously locate into safe facilities more than 22,000 embassy staff in over 220 vulnerable buildings. This is a formidable task. Achievement of this task will require an enormous initial and sustained level of capital investment. Mr. Chairman, quite frankly, during the past ten years, we neither requested nor received sufficient funding to allow us to maintain our infrastructure base. Most recently, since the 1998 bombings, we are finally beginning to arrest that decline in resources, thanks to the support of the President and the Congress, and have taken the first steps toward rebuilding our facilities infrastructure. In FY 1999 alone, A/FBO obligated over $800 million, the most ever obligated in a fiscal year, to replace unsafe facilities and improve security at those posts whose facilities cannot be replaced for several years.

As part of OPAP's overall charter to evaluate the way the United States organizes its overseas activities, it made 44 recommendations in eight general areas. This morning, I would like to focus some of my remarks on the Panel's recommendation to establish an Overseas Facilities Authority (OFA).

The Panel advocated replacing the Bureau of Administration's Office of Foreign Buildings Operations with a federally chartered government corporation — an Overseas Facilities Authority. The issues that led to the Panel's proposal included the perception that A/FBO-managed construction projects took longer and cost more than comparable private sector projects, that timelines were not always met, and that staffing levels appeared to be too high for the number of properties and projects being handled. However, I believe that the staff work that underpins these perceptions is faulty, as it failed to give due consideration to security requirements and special overseas needs.

The Panel proposed creating a government-chartered corporation that would allow the use of management and financing techniques commonly found in the private sector. This new authority - OFA - would exercise responsibility for building, renovating, maintaining, and managing the Federal Government's civilian overseas facilities, including office and residential facilities. As envisaged by OPAP, the OFA, in addition to receiving annual appropriations from Congress, would have features not currently available to the Office of Foreign Buildings Operations, including receiving funds from other agencies, levying capital charges for new facilities, obtaining forward funding commitments from the Federal Budget and loans from the U.S. Treasury, as well as retaining service fees from sources approved by the Congress. The OFA, again, unlike the current A/FBO, would have the ability to apply management techniques commonly used in the private sector to include using financial incentives and performance-based compensation standards. The Panel reasoned that higher salaries and incentives would allow OFA to attract highly qualified real estate and other professionals and further motivate employees and contractors to better meet construction project schedules.

We are currently giving serious and careful consideration to the Panel's proposals to reinvent the method of funding and administration of our overseas facilities’ design and construction program. An interagency group headed by the Director of the Office of Foreign Buildings Operations, Patsy Thomasson, is reviewing all aspects of overseas facilities. Earlier this year, Ms. Thomasson formed six teams within A/FBO to look in to, and analyze in depth, five critical areas — organizational structure, financing alternatives, business process reengineering, customer focus, and communications. A sixth team manages the overall effort. Together, these teams will make recommendations on how the Panel's desired outcomes can best be achieved. We have also contracted with a leading consulting firm to examine various funding options and ways to make A/FBO a more performance-based organization. While these team efforts are still continuing, I believe that creating an independent OFA is not essential to accomplish the changes that OPAP laid out. Most of the proposed attributes of the OFA could be assigned either administratively or legislatively to A/FBO without disrupting and halting the very positive direction in which A/FBO is now headed.

Although we agree with the thrust of the Panel's recommendations, we question whether the creation of an independent, federally chartered organization, comprised of both the public and private sectors, is necessarily the best approach to meet our infrastructure challenges overseas. Principally, we are concerned that such an entity may compromise the vital link between foreign policy and facility decisions. For example, there are foreign policy issues, such as reciprocity, that are intricately intertwined with overseas facility programs. Such is the case with China, where we are seeking a site for a new embassy in Beijing and China is seeking, as a condition, a site in Washington. Such is also the case with the United Arab Emirates, where we are seeking to acquire a parcel of land adjacent to our embassy in Abu Dhabi, and they want a new residence for their ambassador here in Washington. These are classic examples where facility decisions are affected and sometimes driven by foreign policy considerations.

The Panel also urged that we continue to implement the Accountability Review Board's (ARB) proposals providing for security upgrades at our overseas posts throughout the world. We are doing that, and I am pleased to report that the Office of Foreign Buildings Operations has been particularly successful in responding to the mandates of the security supplemental that followed the 1998 bombings. Interim facilities are fully operational in Dar es Salaam and Nairobi, and we are moving smartly toward constructing permanent facilities in both locations. The Office of Foreign Buildings Operations conducted a competition for a fast-track design/build contract and awarded the contract last September. The designs of these projects have now reached the point where we anticipate giving the contractor the green light to mobilize on site at Dar and Nairobi next month. We have also opened a temporary office building in Doha and are fitting out three buildings in Pristina to serve as temporary facilities. We have permanent facilities under construction in Doha and Kampala.

Currently we have 14 new embassies or consulates in various stages of development: Dar es Salaam, Nairobi, Abu Dhabi, Abuja, Berlin, Doha, Istanbul, Kampala, Luanda, Rio de Janeiro, Sao Paulo, Seoul, Tunis, and Zagreb. We are also in the process of acquiring several additional new office building sites. Also, since the bombings, A/FBO has completed 15 major rehabilitation projects at overseas posts with another 46 major rehab projects ongoing at this time.

Since the bombings we have also relocated many overseas Department and other Agency personnel to more secure facilities. For example, AID personnel have been/are being relocated to more secure facilities in Almaty, Antananarivo, Asuncion, Ashgabat, Cairo, Kampala, Luanda, Manila, New Delhi, Rabat, Tel Aviv and other locations around the world.

Increasing setback from streets and other buildings is another way of reducing the threat to loss of life and injury. During the past year and a half A/FBO has been extremely active in acquiring 87 setback properties at 25 posts around the world to provide greater security to our personnel. Negotiations and investigations are continuing on another 31 properties at 14 posts.

Worldwide Security Upgrade funding appropriated by the Congress has enabled A/FBO to approve 1,051 security upgrade projects at overseas posts with 34% of these projects having been completed. Every project will further protect our employees overseas. The Worldwide Security Upgrade Program which includes security projects such as the installation of berms, bollards, and access controls, is being executed at each post by A/FBO, the post itself, and/or by an implementation contractor or basic ordering agreement contractor. Other components of this program include the installation of shatter resistant window film on all office windows and the installation of forced entry/ballistic resistant (FE/BR) doors and windows. The bombings in Africa demonstrated all too tragically that the greatest threat to life and injury from a bomb blast is from flying shards of glass. Since the bombings, we have purchased 5.5 million square feet of window film. Nearly half has been installed, with the remainder to be installed by the end of the summer. We have also installed or replaced over 500 FE/BR doors and windows.

A/FBO's Asset Management Program, which acquires essential property by using proceeds from the sales of excess or underutilized properties, has been very successful, purchasing 18 properties in FY 1999 and the first half of FY2000, while disposing of 17 properties.

These successes are the result of retorquing internal processes, applying new initiatives, and introducing innovative methodologies. These have all been key factors in achieving A/FBO’s high level of productivity over the past 18 months. Today’s Office of Foreign Buildings Operations is not the A/FBO of the late 80’s and early 90’s under the Inman program.

A 1991 General Accounting Office review of the management of the Security Construction Program revealed problems that A/FBO experienced during its efforts to meet the major challenges of the Inman buildup a decade ago. The most significant difficulties were linked to inadequate staffing, difficulties with overseas site acquisition, contractor performance, and the lack of an effective strategic focus. Since those years, however, A/FBO has implemented lessons learned throughout the organization and is now well prepared to undertake a large construction program.

A/FBO has developed an improved strategy for effectively executing a difficult, expanded construction program and has augmented its staff to handle the workload. The strategy is derived from A/FBO’s Inman experience with the simultaneous execution of large, multi-year projects, and from implementing construction industry best practices. Included in our strategy are a number of initiatives described below.

D/B contracts are being managed by integrated project management teams to provide effective controls and added expertise. From the start of a project, these cross-discipline teams are accelerating project execution; controlling costs; clarifying lines of authority; and carefully defining roles, responsibilities, procedures, project priorities, and milestones. Potential risks to project success are identified and mitigated early. Contract support has been increased, with Perini Corporation and Brown and Root assisting with security upgrade work, and with indefinite quantity contractors increasing A/FBO capabilities, especially in design-review services. All chanceries, consulates, and multi-tenant annex buildings have been evaluated for security vulnerability. The analysis assessed the soundness of each building’s structure and façade, the adequacy of the building compound’s perimeter security, the building’s setback from adjacent property, the post’s political violence security threat, and additional security considerations that included the capability and willingness of the host country to control its internal and border security relative to external terrorists; as well as other factors. The resulting ranking was reviewed by stakeholders, i.e., regional bureaus, other agencies, the Bureau of Diplomatic Security, Embassy Security Assessment Teams, and A/FBO managers. Projects were then planned for different fiscal years based on vulnerability, stakeholder input, and consideration of factors that will either inhibit or facilitate a project’s execution.

Let me turn now to the Department’s buildings and facilities in Washington and elsewhere in the United States and the issue of security clearances for custodial and operations and maintenance personnel.

The Department of State occupies 58 buildings located throughout the United States, totaling approximately 6 million square feet of space. The Main State building in Washington, the domestic building you are most interested in, comprises roughly 2.5 million gross square feet and houses more than 8,000 employees. Given that size and population, Main State is similar to a small city in the services that are required. As you can imagine services to such a large population must include electrical, heating, air conditioning, plumbing, painting, carpeting, furniture, communications, custodial services, and all other normal maintenance and repair specialties employed on a daily basis. There are two major contracts that supply the majority of services in Main State, custodial and operations and maintenance (O&M). Those contracts are competitively bid and the contractors have corporate clearances at the appropriate level for their work; the custodial contractor has a corporate top secret clearance while the maintenance contractor has a corporate secret clearance.

In addition each contractor has employees who are cleared at the appropriate level in order to perform their jobs within the building. For example, the custodial contractor has 20 custodial workers with top secret clearance to work in sensitive and classified areas. Ten more have top secret security clearances pending. If a maintenance or custodial worker must work in a classified area and the worker has no clearance, that person is escorted by cleared Department of State personnel. Furthermore, it is the responsibility of the occupant of any space classified or not, to watch over custodial and maintenance workers in their area and protect all material for which they are responsible.

The Department is currently undergoing extensive renovations to bring the building up to par. The overall Main State renovation project, primarily funded by GSA is a multi-million dollar project. That work, which is in its early stages, is being done with GSA contractors. GSA’s contractors have corporate clearances as well. In addition, with the Congressionally mandated reorganization of the Foreign Affairs agencies, State is in the process of absorbing the former USIA and ACDA staffs and functions. This has led to further renovation and construction work in the Main State building at a cost that will exceed $80 million and will involve probably 200 smaller construction projects, utilizing perhaps as many as 12 different contractors. Those contractors will all have corporate security clearances and most of the workers will also have clearances. The Bureau of Diplomatic Security (DS) is involved in those projects as well. DS is a member of each project team in this process and we work closely together to ensure that security requirements are met.

I would be pleased to answer any questions.