U.S. Department of State Fiscal Year 2019 Agency Financial Report

H eritage A ssets The condition of the Department’s heritage assets is based on professional conservation standards. The Department performs periodic condition surveys to ensure heritage assets are documented and preserved for future generations. Once these objects are conserved, regular follow-up inspections and periodic maintenance treatments are essential for their preservation. The categories of condition are Poor, Good, and Excellent. CONDITION OF HERITAGE ASSETS As of September 30, 2019 Category Number of Assets Condition Diplomatic Reception Rooms Collection 1,821 Good to Excellent Art Bank Program 2,647 Poor to Excellent Art in Embassies Program 1,263 Good to Excellent Cultural Heritage Collection 18,587 Good to Excellent Library Rare & Special Book Collection 1,342 Poor to Good Secretary of State’s Register of Culturally Significant Property 37 Poor to Excellent U.S. Diplomacy Center 6,074 Good to Excellent Blair House 2,604 Good to Excellent International Boundary and Water Commission 140 Poor to Good D eferred M aintenance and R epairs Deferred Maintenance and Repairs (DM&R) are maintenance and repairs that were not performed when they should have been, that were scheduled and not performed, or that were delayed for a future period. Maintenance and repairs are activities directed towards keeping Property, Plant, and Equipment (PP&E) in acceptable operating condition. These activities include preventive maintenance, normal repairs, replacement of parts and structural components, and other activities needed to preserve the asset so that it can deliver acceptable performance and achieve its expected life. Maintenance and repairs exclude activities aimed at expanding the capacity of an asset or otherwise upgrading it to serve needs different from, or significantly greater, than those originally intended. The Department occupies more than 3,000 government- owned or long-term leased real properties at more than 270 overseas locations, numerous domestic locations, and at the IBWC. Deferred Maintenance and Repairs Policy – Measuring, Ranking and Prioritizing The Department’s process to identify deferred maintenance for Overseas Real Property begins with an Annual Facility Condition Survey (AFCS) of all properties whether capitalized or not or fully depreciated. The facility manager at each post conducts the AFCS, examining all facilities, building systems, and equipment to determine if their current condition and capacity achieves their intended function. Deficient facilities or systems are identified, specifics about the deficiencies are documented, and recommendations for addressing the deficiencies and corresponding cost estimates for labor and materials are included in the survey. The facility manager obtains cost estimates of the maintenance. These repair and improvement requests submitted by posts are reviewed by Area Management Officers and then evaluated using 14 factors to prioritize and assign the items a score based on life safety, security, functionality and business sense. An ensuing review is conducted by subject matter experts before they are included in the Repair & Improvement (R&I) spending plan, which is the first piece of the overall deferred maintenance calculation. If a requirement is not funded in the fiscal year in which it was originally scheduled, it becomes a “deferred maintenance requirement” and is rescheduled for remediation in a future year. Posts are also able to send maintenance requests at any point during the year in case of an emergency. In addition to funding repair projects from the R&I account, the Department allots each post an amount of “routine maintenance and repair” funding each year. This is to accomplish preventive maintenance activities, repairs due to normal wear and tear, and recurring maintenance (e.g., painting and weather stripping) for work that does not require a review and which is exempt from permitting requirements. These are bulk allotments for routine maintenance activities described above that are 108 | U nited S tates D epartment of S tate 2019 A gency F inancial R eport FINANCIAL SECTION | REQUIRED SUPPLEMENTARY INFORMATION