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Management and Performance Challenges


FY 2004 Performance and Accountability Report
Bureau of Resource Management
November 2004
Report
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The Reports Consolidation Act of 2000 requires that the Office of Inspector General identify the most serious management and performance challenges facing the Department. The OIG concludes that the most serious management and performance challenges to the Department are in the following areas:

  • Protection of People and Facilities
  • Information Security
  • Financial Management
  • Human Resources
  • Counterterrorism and Border Security
  • Strategic and Performance Planning

 

Protection of People and Facilities

In keeping with the Department's mission to create a more secure, democratic, and prosperous world for the benefit of the American people and the international community, the protection of people and facilities continues to be one of the Department's highest priorities. OIG contributed to this effort through various inspections and special reviews, including 28Read Footnote 11 reviews of the security programs of overseas missions. These ranged from security management reviews, which examine the chief of mission's oversight and management of the security program, to full-scope inspections, which review the full range of a mission's security program, i.e. its physical, technical, procedural, information management, and personnel security and its emergency preparedness. OIG also conducted six compliance follow-up reviews, which examine a mission's compliance with the recommendations of a previous inspection.

The majority of the findings and recommendations from these reviews were in the areas of physical security and emergency preparedness. The most common physical security findings were the lack of adequate setback and the existence of inadequate perimeter and anti-vehicle security. Although these have been recurring issues, there have been improvements. Increasingly, new construction is planned or underway to correct or mitigate the lack of setback, using such measures as the installation of temporary anti-vehicle barriers. The deficiencies most common in the area of emergency preparedness were inadequate emergency notification systems, failure to conduct all Department-required emergency drills, and out-of-date or incomplete emergency action plans.

Three special reviews also contributed to the protection of people and facilities: a review of the Department's implementation of lock-and-leave policies and procedures, a review of the security of the architectural and engineering contractors that are designing the Embassy Beijing New Embassy Compound, and a special inquiry concerning the Patterns of Global Terrorism - 2003 report. OIG concluded that improvements are needed in lock-and-leave policies and procedures at some lock-and-leave posts. The review of the Beijing New Embassy Compound construction focused on the adequacy of the Department's security oversight of the project's architectural and engineering firms. OIG found that the Department has provided vigorous security oversight at these firms' dedicated facilities and has implemented innovative approaches to information and communications security. Six U.S. Senators requested that OIG determine how inaccurate and incomplete data and statements were included in 2003 Patterns report. OIG concluded that these irregularities resulted from omissions and inconsistencies in the data provided to the Department. OIG recommended better coordination and additional personnel for developing the Patterns report. The Department agreed and is implementing the recommendations.

 

Information Security

The Department recognizes that much more must be done to develop fully and ensure the continuity of its information systems security program. As mandated by the Federal Information Security Management Act of 2002 (FISMA), OIG conducted an annual evaluation of the Department's information security program and noted significant improvements over last year's evaluation. For example, the Department has changed its certification and accreditation process, improved its plans of action and milestones (POA&M) process, and developed a Web-based training tool to support of its security awareness training. In response to one key recommendation, the Department is establishing an information governance structure that will include cross-bureau working-level teams, called Information Security Integrated Teams. These teams will deal with the information technology security vulnerabilities identified by the Vulnerability Assessment Reports, which also will be addressed in the Department's POAMs process. In addition, the Department's systems authorization plan has been succeeding. As of August 2004, 92 percent of its major applications and general support systems had been certified and accredited; up from five percent in August 2003. However, the delineation of information systems security roles and responsibilities continues to be a work-in-progress.

 

Financial Management

For the eighth year, the Department received an unqualified (clean) opinion on its agency-wide statements, indicating that the statements were free of material misstatements. For the past four years, the Department also met the mandated deadline. However, OIG's most recent audit of the Department's financial statement identified concerns consistent with previous years regarding information system security, the adequacy of the Department's financial systems, undelivered orders, and managerial cost accounting. Although the Department made significant improvements in the area of financial management, weaknesses persist in its financial management systems. Recently, the Department replaced two obsolete financial systems with a regional one and plans to continue enhancing all financial systems. The Department also is making progress in implementing the Managerial Cost Accounting Standards. However, additional work is needed to fully comply with these standards.

One of the Department's highest priority financial management goals is achieving a fully integrated worldwide financial management operation. In 1994, the Department decided to consolidate financial operations at its Charleston Financial Service Center (CFSC). Between 1994 and 2003, the Department incrementally transferred many of its overseas financial operations, American payroll, and retirement functions to CFSC. During 2004, the Department began transferring additional domestic financial services from Washington, DC, to CFSC. OIG reviewed the internal controls for minimizing risks associated with this transfer. As a result, the Department incorporated OIG's recommendations for strengthening controls into its transition plans. The transition occurred without major incident or disruption of service.

While the Department has improved its management of undelivered orders, and has established a database to track them, the balance of such orders is high and has grown over the past few years. For instance, undelivered orders increased from over $5 billion at the end of FY 2002 to $6.7 billion at the end of FY 2003. In addition, the annual audits of the financial statements have consistently found that a large portion of these obligations is unnecessary. During the FY 2003 audit, an independent accounting firm estimated that at least $334 million should have been de-obligated. The Department has initiatives underway that it believes will improve the management and oversight of unliquidated obligations.

OIG pursued a hotline complaint regarding a contract's troubled history of financial irregularities and control weaknesses. This contract provided protective services for the President of Afghanistan and key embassy personnel in Kabul. OIG's initial audit of the contract's first six months of operations found that for 31 separately funded line items, 25 were significantly under or over-billed, which included double billing for a rent charge for $55,000. OIG concluded that this contractor's accounting and billing procedures were unacceptable. A subsequent review found that this contractor erroneously claimed that all financial and control deficiencies were corrected. Moreover, OIG identified additional accounting errors and duplicate or erroneous billings of about $950,000 that were charged to the contract. Compounding these problems were the lack of adequate oversight by Department officials. The contractor later reviewed more of its contract invoices and found additional errors and omissions resulting in a total refund to the Department of about $1.4 million. The Department has agreed to hire specially trained financial personnel to monitor the contract.

OIG also conducted several investigations involving financial matters. Most significant among them was a joint investigation that was conducted with the Federal Bureau of Investigation, involving the theft of $2.7 million in post assignment travel funds by a former Foreign Service National (FSN) employed at Embassy Lusaka, Zambia. This resulted in the arrest and indictment of three Zambian nationals involved in the scheme. On February 24, 2004, the Zambian Police Service charged the former FSN and two Zambian nationals in a 114-count criminal indictment. Since then, the total was reduced to 72 counts against the three defendants. As a follow-up to the investigation, OIG reviewed whether overseas missions were monitoring charges made against Washington-held allotments for post assignment travel expenses, a $160 million account. OIG recommended that overseas missions be advised in writing on methods to ensure that all such invoices were valid, approved by their shipping section, and paid only once. The Department agrees with the recommendation and action is pending.

 

Human Resources

OIG systematically reviewed rightsizing issues faced by overseas missions and domestic bureaus. Where appropriate, OIG recommended improvements to mission effectiveness through increases or decreases in staffing. For example, OIG evaluated and summarized leadership and staffing issues facing hardship posts, based on several inspections of U.S. missions in Africa. Recent inspections showed that, to a great extent, these posts lacked qualified American officers at all levels, a situation exacerbated by the overuse of stretch assignments, inadequate supervision, overwhelming backlogs of work, excessive staff overtime, and low morale. To address staffing shortcomings, OIG recommended that the Department reconvene the Hardship Incentives Working Group to review and recommend improvements for staffing hardship posts, including a formal program for temporary-duty personnel and procedures to retain Civil Service personnel performing well at African hardship posts.

OIG found that rightsizing was a major issue at Embassy Bangkok, one of the largest U.S. diplomatic presences. At the embassy, there is pressure for further staff increases, due to a congenial host-country environment, apparent political stability, ease of transportation and communications, and reasonable costs of operation. However, the haphazard accretion in staff did not fit with any overall plan.

U.S. missions in the Middle East, including embassies in Kuwait, Doha, Muscat, and Abu Dhabi, have experienced brisk growth in their numbers of American and locally hired employees. OIG generally found that staffing increases at these posts were warranted by policy imperatives related to counterterrorism and activities in Iraq. However, staffing growth was not tightly linked to the Mission Performance Plan process and the ICASS mechanism was only marginally effective in managing demands for additional staffing resources.

Domestically, OIG found that the Bureau of Near Eastern Affairs is seriously understaffed relative to its ever-growing responsibilities. That bureau traditionally had preferred a staffing structure with fewer, but carefully selected, officers in its embassies and in the Department, an approach that worked well in normal circumstances but left the bureau with little surge capacity for dealing with crises. Officers were coping with the extra work by staying longer hours but were approaching exhaustion to complete their requirements. The bureau had few officers for some of its most important desks.

In response to an OIG recommendation to prepare a revised staffing projection that identified nonessential positions and functions, Embassy Mexico made important progress by establishing a 17-member rightsizing committee that drew from a cross-section of the mission's more than 30 agencies and sections. The committee produced a report with recommendations that tied rightsizing to the seven major Mission Performance Plan goals.

 

Counterterrorism and Border Security

OIG reviewed the Department's consular operations, both domestic and overseas, focusing on border and homeland security to identify weaknesses that might allow visas, passports, and other types of immigration documentation to be issued to members of terrorist organizations and their supporters. For instance, OIG reviewed the Consular Lookout and Support System (CLASS), a sophisticated, real-time, decision support system used to perform name checks of visa and passport applicants and of foreign visitors entering the United States. CLASS is a critical U.S. government asset that is regarded by many as the best of the security community's enterprise systems. OIG determined that the Department has been an innovative user and effective advocate for open data exchanges with CLASS, representing a major link between the Department and other key agencies. OIG recommended improvements such as better management of systems development, closer cooperation with other bureaus, and tighter management controls.

In the Overseas Passport Issuance Program review, OIG found that decisions on claims to American citizenship for first-time passport applicants overseas were inconsistent, and that over 80 percent of the adjudications reviewed had moderate to serious problems. As well, the overseas passport program lacked clear internal communication and guidance. OIG recommended that the Department develop and implement a plan to address oversight concerns, implement a quality assurance program, and create a mentoring program designed specifically to address the unique passport-decision challenges facing junior officers assigned to missions where there is little or no consular expertise readily available.

Inspections of U.S. missions overseas found the missions were successful in ensuring that even countries having political differences with the United States actively assisted with the war on terrorism. In general, OIG determined that posts were carrying out reporting and representation responsibilities concerning counterterrorism and that host governments were generally cooperative. Posts had given this issue a high priority since the terrorist attacks of September 11, 2001. In particular, missions in the Middle East have made counterterrorism efforts a key goal in their Mission Performance Plans.

OIG also undertook the initial part of a two-phase review focused on the management of the Anti-Terrorism Assistance (ATA) Program. The program has grown substantially in recent years and has been very successful in meeting increased ATA training demands. In the review's initial phase, OIG is assessing the implementation of program management responsibilities, the organizational staffing structure of the Office of ATA in the Bureau of Diplomatic Security (DS), and the management controls for weapons acquired for the Department's in-country ATA training programs abroad. The review's second phase will focus on the program's overseas and domestic training activities and the planned significance for the program of the DS Center for Anti-terrorism and Security Training, which is under development.

 

Strategic and Performance Planning

With strong support from senior leadership, the Department made considerable progress in addressing its strategic and performance planning challenges. Improved electronic tools for budgeting and planning helped to streamline the development of plans and performance reports as well as to improve linkage of goals and resources. The Deputy Secretary reviews bureau performance plans and resource requests, challenging bureau leaders to account for organizational performance. Information from the Program Assessment Rating Tool (PART) evaluations was integrated into the Department's budget planning tool, allowing it to be linked to goals and resources. Subsequent to the end of the fiscal year, the Department was notified by OMB that is has met all of the criteria for success required to achieve a "green" rating on the President's Management Agenda initiative to integrate budget and performance. As a result, OIG has removed strategic and performance planning from the Department's list of major management challenges.

 


 

FOOTNOTES:

  1. These 28 inspections were published in 26 reports. The inspections of Embassy Brussels, the U.S. Mission to the North Atlantic Treaty Organization, and the U.S. Mission to the European Union were published in one report. (back to text)

 

 


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