@StateDept’s Deferred Maintenance Backlog For Overseas Properties Estimated at $3Billion

 

The GAO recently released its review of the State Department’s overseas real property assets:
State’s Bureau of Overseas Buildings Operations operates and maintains over 8,500 owned and leased real property assets, including both buildings and structures. According to State, at least 60 percent of a building’s total lifecycle cost stems from operations and maintenance costs. GAO has reported that deferring maintenance and repairs can lead to higher costs in the long term and pose risks to agencies’ missions.
GAO was asked to review State’s efforts to manage its operations and maintenance needs. This report examines (1) how operations and maintenance funding for overseas assets changed from fiscal years 2016 through 2020, (2) the condition and maintenance needs of State’s overseas assets, and (3) the extent to which State has followed leading practices to address its deferred maintenance backlog.
Officials said they had not found it necessary to specifically request such funding because they only determined that the backlog had substantially increased from $96 million in fiscal year 2019 to $3 billion in fiscal year 2020 after using a new methodology for estimating deferred maintenance and repair. In addition, State does not have a plan to address the backlog, but officials estimated it could take 30 to 40 years to eliminate the backlog with current funding levels.
Dear, lord! What is this going to be like by 2050?

Excerpts from the report:

Assets/Operations Up, Maintenance Funding Nearly Unchanged

–The Department of State’s portfolio of overseas assets and expenditures to operate them have grown, but State-allocated funding for maintenance has stayed nearly the same. For fiscal years 2015 through 2019, both the number and square footage of State’s assets increased 11 percent and operations expenditures grew 24 percent. However, maintenance and repair funding has remained nearly unchanged.

— State’s allocation for Maintenance Cost Sharing—for projects collectively funded by State and tenant agencies overseas—was $399 million in fiscal year 2016 and $400 million in 2020.

From fiscal years 2016 through 2020, building operating expenditures for State and other agencies that work at overseas assets increased by 24
percent, from $530 million to $656 million annually. State’s allocated funding for maintenance and repairs for overseas assets has remained about the same in recent years, averaging $505 million from fiscal years 2016 through 2020.

That $3 Billion Could be Higher

— State set a single acceptable condition standard of “fair” for all assets and did not consider whether some assets, like chancery office buildings, were more critical to State’s mission when estimating its $3 billion deferred maintenance backlog. Had State set a higher condition standard for critical assets, its backlog would be higher.

It All Adds Up Over Time

Older chancery office buildings tend to be in poor condition and are a challenge to maintain. As shown earlier in table 4, we found that 72 of
216 (or 33 percent) chancery buildings—that OBO identifies as mission
condition due to a large amount of deferred maintenance that has built up
over time.

Ambassadorial Residences Take Note

In discussing the condition of ambassadorial residences with State, OBO officials said they have taken steps to evaluate and rank State’s
ambassadorial residences that are in need of major rehabs. OBO officials told us that State has preliminarily identified the need to rehabilitate or
replace ambassadors’ residences in Beijing, China; Kathmandu, Nepal; Nairobi, Kenya; Ottawa, Canada; Paris, France; Sarajevo, Bosnia and
Herzegovina; and Tegucigalpa, Honduras. However, OBO officials said there is no formal schedule for rehabilitating ambassadorial residences
because there is no predictable annual funding for rehabilitating State-only occupied assets.

More than a Quarter of Properties in “Poor Condition”

— More than a quarter of the State Department’s overseas buildings and other real properties are in poor condition by State’s condition standards, including almost 400 buildings and other assets that State considers critical to its mission.

FY21 $100 Million Request: Specific But Not Really

According to OBO officials, they outlined specific funding requested for maintenance and repair, including minor construction and improvement, in an appendix to State’s congressional budget requests. State’s fiscal year 2021 budget requested $100 million to address DM&R for State’s non–cost shared facilities. However, OBO officials noted that this funding was for the minor construction and improvement program (or modernization
budget), which does not specifically address the DM&R backlog.

GAO made five recommendations to the State Department:

The Secretary of State should ensure that that the Director of OBO reassess State’s acceptable condition standard for all asset types and
mission dependencies, to include whether mission criticality justifies a different standard among assets. (Recommendation 1)

The Secretary of State should ensure that the Director of OBO incorporates the mission criticality of its assets when deciding how to target maintenance and repair investments. (Recommendation 2)

The Secretary of State should ensure that the Director of OBO monitors posts’ completion of annual condition assessments that use a standardized inspection methodology, so that State has complete and consistent data to address its deferred maintenance and repair backlog. (Recommendation 3)

The Secretary of State should ensure that the Director of OBO develops a plan to address State’s deferred maintenance and repair backlog, and specifically identifies the funding and time frames needed to reduce it in congressional budget requests, related reports to decision makers, or
both. (Recommendation 4)

The Secretary of State should ensure that the Director of OBO employs models for predicting the outcome of investments, analyzing tradeoffs,
and optimizing among competing investments. (Recommendation 5)

 

Click to access gao-21-497.pdf

Amb Brian Nichols Assumes Charge as Asst Secretary For WHA