State Department and Other Agencies Should Further Explore Opportunities to Save Administrative Costs Overseas

January 31, 2012

Agencies continue to provide potentially duplicative administrative services overseas despite slight increases in their participation in ICASS since 2004. When agencies had a choice to opt out of ICASS and provide services independently, they did so about one-third of the time, on average, in 2011. The U.S. Agency for International Development (USAID), however, has reduced duplicative administrative operations by increasing its participation in ICASS markedly since 2005. Agencies have cited several factors for opting out of ICASS, principally concerns about cost, but they do not usually provide any formal rationale to ICASS management and often have not conducted any cost analysis to justify their decisions. Some agencies also indicated that they cannot meet their mission requirements within ICASS. GAO's analysis of ICASS cost and workload data shows that significant economies of scale can be achieved through greater participation in ICASS. Thus, while agencies may opt out of ICASS because they believe they can obtain less costly services on their own, doing so may actually increase the overall cost to the U.S. government. ICASS management's ability to convince agencies that participating will save them or the U.S. government money is hampered by the lack of comparative cost data to demonstrate potential savings. In 2004, GAO recommended that the ICASS Executive Board—the highest level policy-making body in the ICASS system composed of customer agency representatives—encourage greater ICASS participation. However, experience has shown that board members do not necessarily have the incentive to require their agencies to participate in ICASS, especially if they are unconvinced that it is in their agencies' individual financial interest. In this context, Congressional action may be necessary to increase participation and achieve greater economies of scale. Separately, State has made limited progress improving the cost effectiveness of ICASS services in other ways, such as reducing the need for American staff overseas or using other qualified agencies, such as USAID, to provide some ICASS services. 

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