Center. The system was installed in 1959 and, after 25 years of service, requires enormous maintenance and expensive, specially fabricated replacement parts to remain operational.

3. $110,000 for development of Marine Safety Guard residence (12) in New Delhi, India-The present Marine Security Guard Residence was designed to accommodate eight marines but the current complement is twelve. The current residence is not only overcrowded, but has outdated kitchen facilities, as well. The current facility site suffers from being adjacent to recreational facilities, which adversely affects the privacy and tranquility needed by watchstanders who must rest during the day.

4. $140,000 for development of a warehouse and maintenance facility in New Delhi, India-These funds are requested for the construction of a central maintenance facility and warehouse. The Embassy presently has a small warehouse and various sheet metal sheds for materials storage and maintenance shops. Because the maintenance operations are dispersed among several locations, the maintenance program has not been as effective as it should be. An inefficient maintenance program has resulted in several million dollars worth of deferred work which will now have to be corrected through major rehabilitation projects.

5. $100,000 for development of single staff residences (6) in Lahore, PakistanThese funds are requested for the design of six residences in Lahore, Pakistan to provide acceptable, secure homes for the Embassy staff. Due to the religious nature of the city, the staff must depend on their homes for almost all entertainment since there are restrictions on the activities of women outside of their homes, few restaurants, no western type movies, no clubs, a very small expatriate community, and severe limitations on dress and daily life. Personal security is also a major consideration.

6. $250,000 for the Long-Term Lease of senior officer residences (2) in Rangoon, Burma-The funding requested represents rental payments for fifteen years on two desirable senior officer's residences that the Embassy in Rangoon has located. Long term leasehold is proposed because the overall cost will be less than if the same properties were held under short term leases.

Question. Which of these projects do you consider to be most important?
Answer. The projects are listed in order of importance.

1. India, New Delhi-IOB/Rehab, $1,500,000.

2. India, Calcutta-IOB/DEV, $750,000.

3. India, New Delhi-OTH/WHE/DEV, $140,000.

4. Burma, Rangoon-SOR-2/LTL, $250,000.

5. Indian, New Delhi-MSG-12/DEV, $110,000.

6. Pakistan, Lahore-SAR-6/DEV, $100,000.

FUNCTIONAL PROGRAMS

Question. On page 32-10 of the justifications there is listed a requested increase of $3,675,000 for Functional Programs. What would these funds be used for?

Answer. The $3,675,000 increase requested for the Functional Programs would be used for fire safety ($1,500,000), communications renovations ($2,000,000), and generators ($175,000).

The fire safety program was increased based on a fire risk analysis of our buildings and because we suffered about $16 million in fire losses in 1981 and $1 million in 1982. We are speeding up the installation of fire alarm and detection systems, protected egress and stairways, fire resistent walls and floors, and automatic fire suppression systems. The generator program will (1) replace generators that have served their useful life (generally twenty years), (2) provide generators to posts that do not have them and where local power is not available and (3) provide major repair and overall for generators that break down. Funds are also needed to renovate embassy and consulate post communication centers (PCCs) to provide enhanced security and support (e.g., greater load-bearing floors and air conditioning capacity).

Question. I see that $2 million of this increase is for communication renovations. Why is this item the responsibility of the Foreign Buildings Office rather than the Office of Communications?

Answer. The $2 million line item shown in the Foreign Buildings Office budget is for renovation and upgrading of existing communications facilities overseas in FBO owned or long term leased buildings. FBO previously funded these projects, when urgent, by reprograming from other projects. These costs are primarily design and construction costs which are the responsibility of FBO. Funding for the communications equipment is contained in the Office of Communications budget.

CAPITAL PROJECTS-REGULAR APPROPRIATION

Question. On page 32-10 of the justifications there is a requested increase of $11,840,000 for Capital Projects. Could you please summarize for the Committee just what these projects entail?

Answer. The projects are summarized as follows:

$2,400,000 for Lisbon Marine Security Guard (MSG) Residence-The lease for the MSG residence cannot be renewed and suitable alternative quarters have not been found. A house on the site of the Chancery will be rehabilitated to withstand earthquake damage, replace the plumbing, heating and electrical systems, and refinish the interior and exterior surfaces. In addition to being an MSG residence, the building will provide general service workshops and warehouse space.

$1,000,000 for development of Dhaka Chancery-The current Chancery is poorly located, particularly in the sense that security conforming to U.S. standards cannot be provided. Moreover, the facilities are inadequate for the mission size and are deteriorated to the point that increased maintenance or rehabilitation would be expensive and would not provide a complete remedy. A new site was recently obtained in the new diplomatic enclave and design should begin as soon as possible.

$90.000 for development of Marine Security Guard Residence in Dhaka-The Marine security guards live in a short term leased residence which is distant from the Chancery and is too small. The Embassy has negotiated with the Bangladeshi Government for an acceptable site in the new diplomatic enclave near the Chancery, which would be ideal in time of crisis since reaction time would be minimized and protection would correspondingly be improved.

$1,200,000 for development of Caracas Chancery-An engineering study confirmed an earlier inspection that the Chancery and annex were constructed below seismic standards and could collapse during an earthquake. The study found evidence of damage from a 1974 earthquake due to structural instability. Reinforcing the old buildings would not be economical and would not fully correct the deficiencies. There is a risk of extensive damage and possible loss of life from another earthquake since Caracas is in a seismically active area.

$700,000 for development of Georgetown Chancery-The present Chancery is located in a 100 year old wooden building which has become progressively dilapidated and, in particular, presents a serious fire threat. The consular section is located in a separate Government-owned building about a block away and USAID leases another old wooden struture across from the Consular Section. Funds were previously appropriated for this project; however, they were reprogramed in 1982, with the Committee's approval for rehabilitation of the fire-damaged Lagos Chancery.

$550,000 for partial redesign of Compound in Mogadishu-Construction of the compound (Chancery, Ambassador's Residence, DCM's residence, Marine Security Guard Quarters and 12 Staff Housing Units) was halted in 1967 when diplomatic relations were broken. The compound was about 40 percent completed. Formal approval has not been obtained from the Somali Government to complete the construction. Funds needed to inspect the partially completed buildings which have deteriorated over time since they were neither protected from the elements nor maintained. Funds would also go to re-engineer and update the design to include current seurity and communication standards.

$1,200,000 for design in Sofia of a Chancery, Marine Security Guard Quarters, service facilities and School-The current short term leased Chancery is inadequate for the present staff size and the post has been unable to locate an existing building which would meet our requirements and could be leased. Also, the Government of Bulgaria announced development plans for the area in which our Chancery is located and formally requested that we vacate the building. The Department has agreed to accept a site in the diplomatic enclave area. The requested funds will be used for development of those needed facilities.

$1,750,000 for Rehabilitation of Madrid Chancery-The Chancery is almost 30 years old and the building mechanical systems are at the end of their useful life. The requested funds will be used to replace or rehabilitate the mechanical and electrical systems, as appropriate, for safety and modern service.

$500,000 for development of a Chancery/School/Marine Security Guard Residence in Damascus-The present Chancery consists of a Government-owned apartment house and four leased apartments that were converted to office space. The present facility is susceptible to the car bomb type terrorist attack not uncommon in that region. Moreover, the current facility is too crowded for the mission staff. The requested funds will provide development of an adequate, efficient and relatively secure Chancery/school/Marine Security Guard quarters on a Government-owned site that is licensed for the use by the International School.

$100,000 for Development of Naples Consulate Office Building-The building's electrical system is unsafe and needs to be replaced and the facade of the building requires extensive repair and sealing to prevent further deterioration. The Consul General's residence in the same building needs extensive work done to modernize the kitchen and bathroom facilities.

$1,250,000 Site Acquisition and Development of Office Annex, Marine Guard Quarters and Warehouse in Tegucigalpa-The current short term leased annex has serious fire safety and security deficiencies which the landlord refuses to fix. Lease costs are expected to triple when the lease expires in 1985 and the post cannot find suitable alternative leased space. FBO proposes to purchase a site adjacent to the Chancery and design an annex that would incorporate current fire safety and security design and materials. By co-locating the Marine guard residence on the site, the security of the Chancery would be improved by a much faster reaction time.

$1,100,000 for Development of Kingston Chancery-Embassy personnel are located in short term leased space in a 11 story office building. Our offices are scattered over five floors and co-located with numerous Jamaican firms. Consular operations are in the first floor and basement one block away; other mission operations are located in three additional buildings. These buildings have serious fire safety problems and are not secure. Jamaican fire fighting equipment cannot reach three of the floors in the Embassy and there are inadequate escape routes in the event of a fire.

Question. Which of these projects do you consider the most important and why? Answer. Beyond the Riyadh project that is budgeted within the base program request, these projects address the Department's highest priority real property problems. The priority listing is as follows:

1. Mogadishu Compound for economic and security reasons;

2. Caracas Chancery for safety reasons;

3. Dhaka Chancery for security reasons;

4. Georgetown Chancery for safety and security reasons;

5. Dhaka Marine Guard Quarters for security reasons;

6. Sofia Chancery because we must move;

7. Damascus Chancery because of inadequate space and security reasons;

8. Tegucigalpa Annex because of inadequate space;

9. Lisbon Marine Security Guard Residence because adequate quarters must be obtained;

10. Naples Consulate Building for fire life safety reasons;

11. Madrid Chancery for fire life safety reasons;

12. Kingston Chancery because of inadequate space and fire life safety reasons.

RIYADH COMPLEX

Question. What is the current construction schedule for the Riyadh Complex? Answer. The Riyadh project will be completed in the following three separate construction phases.

1. Phase I: The designs for the Chancery Office Building, Marine Security Guard quarters and related support facilities are being finalized for presentation in March 1983 to the Government of Saudi Arabia. Award of contract is estimated to be in September 1983 with an estimated completion date of July 1986.

2. Phase II: The contract to construct the staff housing is estimated to be awarded in January 1984 with a construction completion date of July 1986.

3. Phase III: A recent decision was made by the Department to relocate the Ambassador's Residence to a new and separate site, rather than construct it on the Chancery site. We plan to purchase a new site and to redesign the residence. It is projected that the site purchase and redesign will be completed and a contract awarded by December 1984 with an estimated construction completion date of August 1986.

Question. How do current project costs compare to projections that were contained in the fiscal year 1983.

Answer. The total cost projection for the Riyadh project (including acquisition and design costs) is $96,280,000 and this total current estimate for 1984 is the same as in the fiscal year 1983 budget. However, since no construction contracts have as yet been awarded and the new site for the Ambassador's residence not yet purchased, no actual costs are known. Nevertheless, the cost projections of $4,480,000 for site acquisition and design, $51,800,000 for the Chancery compound and $40,000,000 for the housing construction are our best estimates to date.

CAIRO PROJECT

Question. Has the Cairo Project been started and what is the current construction schedule?

Answer. The contract was awarded to the Egyptian firm of KRAMICO on November 3, 1982 with a scheduled completion date of January 3, 1986. Actual work was started on December 4, 1982.

Question. What is the current cost estimate for the Cairo Project and how does that compare with your original estimate?

Answer. The current cost estimate for the Cairo Project is $30,000,000. On November 3, 1982 a construction contract was awarded in the amount of $27,599,791. The difference of approximately $2,400,000 between the contract amount and the $30,000,000 appropriated in fiscal year 1982 will be used to procure and install U.S. Government communication and security equipment and to fund other minor contingencies.

The current $30,000,000 cost estimate is greater than the initial $28,400,000 estimate in the fiscal year 1981 Congressional budget submission. The increased amount is attributable to construction costs in Egypt having increased since the first estimate, as well as project communications and security equipment becoming more sophisticated and expensive than originally planned.

Questions Submitted by Mr. Alexander

DEPARTMENT OF STATE

FOREIGN BUILDINGS CONSTRUCTION

Question. In recent years there has been a rising level of concern about opportunities for U.S. contractors to participate in overseas construction wholly or partially financed by U.S. funds. Another subcommittee of which I am a member, the Military Construction Subcommittee, has led efforts to insure that American contractors have a fair opportunity in this area. In addition, we have specifically developed an American preference system in the instance of some of the military construction that is wholly funded by U.S. money.

What is your understanding of the Department of State's position with regard to insuring that American contractors have first opportunity to successfully bid on design and/or construction of foreign buildings for State Department use?

Answer. The Department follows U.S. policy as stated in the Federal Procurement Regulations to award contracts based on full and fair competition and obtain the best price from responsive bidders.

We give non-financial preference to American contractors by requesting as many as possible such firms to submit proposals for our projects. This is done through advertisements in The International Construction Week, Brown's Letters Incorporated, The Commerce Business Daily, and The Dodge Report. We also write the Associated General Contractors and call or write contractors who have previously expressed an interest in projects of the appropriate scope and location.

Our construction contractors include Buy American preferences for finished materials. Thus, up to 80 percent of the materials are purchased in the United States. (Raw materials such as sand, gravel and cement are purchased locally.) American contractors' knowledge of the market for U.S. source materials and our bidding conditions already gives them a competitive edge for our projects.

For each project, we determine the competitive range of bidders liberally within general cost parameters to include qualified American contractors. When American firms are within the competitive range of the low bidder, we include them in the negotiation process to see if they could reduce their price in the best and final offer process and become the lowest responsive bidder.

Question. As I understand it, the State Department is involved in many of the negotiations associated with overseas military construction. Can you tell the subcommittee what the Department's position is on establishing and maintaining an American preference system in connection with design and construction of U.S. military-use buildings and of buildings under the Department of State's jurisdiction? Would you please supply for the record information indicating whether the State Department has had or now has a program of negotiations with other nations aimed at insuring that American contractors have an opportunity to participate on the same basis as both host nation and third-country contractors for construction contracts on military projects built with U.S. funds and those built with funds provided through bilateral or multilateral agreements which include U.S. funding or for which the U.S. will be the principal user?

Answer. Because the two questions above are so similar, they can be answered together.

Host governments are often interested in limiting the bidding on construction contracts involving military facilities overseas to host country contractors only. However, the Department has a worldwide policy of insuring that agreements on the use of military facilities overseas provide for construction contract award by the Department of Defense (DOD) in accordance with U.S. military standards. These standards generally require the maximum procurement of materials from U.S. sources. Construction contracts are also generally to be awarded to the lowest qualified bidder, whether U.S. or foreign.

Although the Agency for International Development (AID) funds many construction projects in less developed countries under bilateral and multilateral agreements, it does not ordinarily contract for construction projects directly. Rather, this is the responsibility of the host government. American contractors are always eligible to bid on these contracts.

Much like the Department of Defense, the Department of State calls for the maximum use of American materials for its construction projects overseas. Also, like the Department of Defense, the Department awards the construction contracts to the lowest capable bidder. The Department uses American architects and engineers almost exclusively to insure that the designs meet American standards. Further, by specifying maximum use of American materials and by notifying the American contracting community of our projects, we grant American contractors a substantial advantage over foreign competitors in bidding on the Department's projects.