To provide safe and secure workplaces for overseas posts, the Dept. of State has built 64 new embassy compounds (NEC) and other facilities since 1999, has 31 ongoing projects, and plans to build at least 90 more. In 2007, State reported the U.S. contractor pool for building NECs had reached its limit and proposed legislation to amend the criteria to qualify for NEC awards. This report examined: (1) how contractor participation in the NEC program changed in recent years; (2) the degree to which State assessed the need for and potential outcomes of its proposed amendment; (3) factors contractors consider when deciding to participate in the program; and (4) actions State has taken to address reported declines in contractor participation. Illus.