State Department Quietly Reverses Course On Its $500 Million Mexican Embassy

The State Department is planning a new, sprawling embassy compound in Mexico City, but it has quietly scuttled how it was to select a construction firm for it.

The new complex will be erected on eight acres the U.S. purchased in the city’s Nuevo Polanco neighborhood, and cost $400 million to $500 million, State Department officials said. The main building will be about 515,000 square feet, making it one of the U.S.’s largest embassies. There also will be a 281,150 square-foot parking garage with space for 665 vehicles, a 70,900 square-foot warehouse and maintenance facility, a 13,850 square-foot residence for Marine Corps embassy security guards, and an 11,300 square-foot facility to securely allow vehicles and pedestrians to enter.

The new embassy will be built in a country in which drug cartels have operated with "near impunity" in recent years, according to newly declassified U.S. documents. They suggest the U.S. is extremely concerned about drug violence, in which more than 100,000 people have been killed or disappeared since 2006, when then-President Felipe Calderón vowed to take on the cartels.

U.S. personnel have come under fire in the process. In one example, two employees from the embassy in Mexico City were wounded about 35 miles south of the city in August 2012 after federal police opened fire on their vehicle. They were reportedly traveling to a Mexican navy base.

In June, the State Department’s Bureau of Overseas Building Operations announced that it wanted construction firms to submit qualifications for the new Mexico City embassy in order to pre-qualify them to be involved in the project. It has quietly reversed course, saying its initial solicitation to industry is "cancelled in its entirety" because plans have been altered. The State Department did not explain why in its announcement, but said a new, future solicitation to industry for the project "is under acquisition review.

The project is still moving forward, however. State Department leaders want it completed by 2019.  It’s part of a larger overhaul of embassy facilities across the globe spurred by the Secure Embassy Construction and Counterterror Act, which Congress passed in 1999 following the bombing of U.S. embassies in Tanzania and Kenya. The U.S. has opened 108 new diplomatic facilities since, and has an additional 31 projects in planning or under construction, said Christine Foushee, a department spokeswoman. In total, new embassies cost more than $10 billion as of 2010, according to Congress’ investigative body, the Government Accountability Office.

In the case of the Mexico City embassy, the State Department decided to swap gears in how it will select a construction firm. The design of the project already has been awarded, but the U.S. needs to determine who will do the construction, Foushee said.

"The Department explored options for utilizing early contractor involvement, but after a careful review determined that a traditional design-bid-build methodology would be better aligned with the timeline and goals for the new U.S. Embassy project in Mexico City," she said in an email to Foreign Policy.

The decision follows a 2009 GAO report that pointed out problems in involving contractors on projects before they were designed. The State Department has frequently used a two-phase "design-build" solicitation process in awarding contracts for new embassies in the past, it said. In the first phase, contractors submit documentation to show how they will meet all qualifications for the project. The department then commonly issues a list of companies allowed to bid on the contract, which awarded with a fixed price.

That has led to problems in which contractors don’t have limited time to meet construction deadlines because of the lengthy process to certify embassy design plans, the GAO found. The State Department said at the time that it would consider an alternative options, but continues to use the two-phase process on some projects. The State Department isn’t using the two-phase system in New Mexico, however: It’s using a three-step "design-bid-build" one, which will create more time for the construction firm selected to complete the work because the plans for it are more concrete.

The State Department also has struggled to find enough qualified contractors to carry out its slate of construction projects. That isn’t the case in Mexico, either, Foushee said.