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CAPITAL BUDGETING PROPOSAL
The sheer size and complexity of the Building Program proposed in this Report represents a startling deviation from the workloads and priorities that have been previously applied to overseas building activities. Over 344 offices in as many as 130 countries may be involved in one way or another in this work effort over the coming decade or longer. As such, new methods are called for to assure that this program can be implemented effectively. New methods for budgeting and funding the process must be installed since the present method clearly would not suffice.
The current budgeting procedures used by the Department of State for its foreign buildings activities have several disadvantages. These procedures lead to delays and stretch-outs in the amount of time required to complete a building project. They can cause decisions on priorities and funding to be based on project costs rather than on security or other operational criteria. They can force building projects, which are essentially capital investments, to compete for funding against other non-investment programs in the budget. Finally, they do not permit flexible responses to short-term real estate opportunities that regularly arise overseas.
Given the indisputable requirement for these new facilities, and the magnitude of the resources and overall workload involved, the Panel believes that a new funding approach is needed to assure that these projects will be funded adequately and accomplished expeditiously. This new approach, termed the Capital Budgeting system, will permit significantly greater flexibility and will enable decisions on buildings to be made outside of a situation, such as the present one, that unjustly forces capital investments to compete for funding against day-to-day operations. The Department of State should seek the approval of Congress to implement this new Capital Budgeting system for planning and funding the office buildings required to minimize the security-related threats to our overseas facilities.
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