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U.S. Department of State

Diplomacy in Action

Management Performance and Challenges

FY 2006 Performance and Accountability Report
Bureau of Resource Management
November 2006


The Reports Consolidation Act of 2000 requires that the Department's Performance and Accountability Report include a statement by the Inspector General that summarizes the most serious management and performance challenges facing the Department and briefly assesses the progress in addressing those challenges. The Office of Inspector General (OIG) considers the most serious management and performance challenges to the Department to be in the following areas:

  • Protection of People and Facilities
  • Information Security
  • Financial Management
  • Human Resources
  • Counterterrorism and Border Security
  • Public Diplomacy
  • Post-Conflict Stabilization and Reconstruction


Protection of People and Facilities

The protection of people and facilities continues to be one of the Department's highest priorities. The Department has instituted many security countermeasures to terrorist attacks as an interim step toward constructing new embassy compounds with sufficient setback and blast resistant buildings. The challenge remains to complete these measures worldwide and to develop additional countermeasures to stem new innovations in terrorist attacks. Security inspections at 14 overseas missions noted some success in addressing compound security upgrades at existing facilities, but physical and technical security vulnerabilities still accounted for almost half of OIG recommendations, including the need to upgrade access control points at mission compounds. The Department will also need to obtain funding for security upgrades for planned American Presence Posts and Remote Visa Processing Centers.

The Department has made progress in strengthening its domestic protection program during FY 2006, implementing a substantially more robust, post-9/11 emergency preparedness program with regular drills, employee forums, and proactive guidance to improve employee preparedness at work and at home. However, many emergency preparedness efforts still require additional focus and work. A recent audit of domestic emergency preparedness found that 18 of the 40 Washington metropolitan facilities still lack a site-specific emergency action plan, many existing plans were outdated or incomplete, and many employees had not been briefed on their facility's plan and did not have ready access to the plan.


Information Security

The Department continues to make progress on strengthening its information security program and practices and recognizes that more must be done to effectively administer and manage its information security programs. Areas of improvement since OIG's FY 2005 Federal Information Security Management Act (FISMA) review include internal and external reporting of computer security incidents, and significant progress in addressing privacy requirements. A congressionally mandated review of the protection of classified information at Department headquarters and the storage and handling of sensitive compartmented information (SCI) found that the requirements of the directives for personnel and information security were being met, but opportunities still exist to improve management of the intelligence community security program.

During its FY 2006 FISMA reviews and information security inspections, OIG identified several areas that need to be addressed by the Department's Chief Information Officer. For example, the Department needs to maintain its initiative formalizing its Information Systems Security Officer (ISSO) program, including performance assessment and training, until completion. Other areas requiring more coordinated effort and support from Department officials include developing and implementing a system security program plan to administer information security Department-wide, completing inventories of IT assets and contractor systems, verifying security levels assigned to IT applications and systems, identifying the total number of employees requiring IT security awareness training, addressing fragmentation in the Department's certification and accreditation process, and including IT security findings identified by all sources in the Plan of Action and Milestones process.


Financial Management

Financial management continues to be a major management challenge within the Department. During FY 2005, the Department restated its FY 2004 financial statements to correct errors of unrecorded transactions for collections of passport fees ($117 million); receivables for value-added taxes ($20 million); and overseas disbursements ($26 million). The financial statement auditor issued a qualified opinion on the Department's FY 2005 financial statements because the Department's work had not been sufficiently completed to enable the auditor to satisfy itself as to the accuracy of the amounts reported as personal property in time to meet the financial statement deadline imposed by the Office of Management and Budget (OMB).

The Department thereafter completed its work on issues related to personal property and provided documentation to support the amounts reported on the financial statements, and the auditor issued its unqualified opinion on the FY 2005 financial statements. In addition to personal property, the auditor again noted concerns, including inadequate information system security and financial systems, inadequate management of undelivered orders and lack of a managerial cost accounting system. Finally, the auditor noted the Department continues to have difficulty producing year-end financial data in a timely manner.

During FY 2006, the Department has taken steps to address some of these weaknesses. For example, a committee that included OIG as a nonvoting member was created to address weaknesses related to personal property. The committee recommended improvements in the methods used to identify and report armored vehicles, property held by contractors, and Department-owned vehicles. Additionally, the Bureau of International Narcotics and Law Enforcement initiated a review of its aviation programs, structure, and responsibilities with a view toward more centralized management. The Department also implemented new capabilities to allow for automatic deobligation of undelivered orders, and has developed and begun implementing a project plan for a managerial cost accounting system.

Foreign assistance is another area in which the Department continues to face challenges, particularly with respect to the reliability of financial information. A March 2003 OIG audit of the State Department's management of foreign assistance concluded that the Department lacked comprehensive and reliable information on funding provided to nongovernmental organizations. No one office or system within the Department was responsible for or capable of capturing essential statistical data related to Department-wide financial assistance. Additionally, in FYs 2004 and 2005, the financial statement auditor's report stated that the Department's financial and accounting system was inadequate and that there was a risk of materially misstating financial information under the current conditions. In both years the auditor identified as an area of inadequacy that the Department's systems for the management of grants and other types of financial assistance lacked standard data classifications and common processes and were not integrated with the Department's centralized financial management system. Additionally, the Department could not produce reliable financial information that defined the universe of grants and other federal financial assistance.

In January 2006, as a means to better focus foreign assistance funding in support of U.S. interests, the Secretary established the Office of the Director of U.S. Foreign Assistance to create and direct consolidated policy, planning, budget, and implementation mechanisms for the Department and U.S. Agency for International Development (USAID) assistance programs. To address deficiencies in financial information related to foreign assistance, the Department also established a Department-wide steering committee, beginning in FY 2005, to oversee and coordinate the award, monitoring, and closure of Department Federal financial assistance of more than $5 billion; and to develop a management information system that would provide comprehensive and reliable information on Federal financial assistance. Under a mandate from OMB, the Department and USAID have been working to build an automated Joint Assistance Management System (JAMS), scheduled for domestic deployment in FY 2008, to streamline and simplify assistance-related business processes. When fully implemented, JAMS will provide consistency in assistance programs within and between the two organizations, improve reporting capabilities, and facilitate compliance with other U.S. government grants initiatives.

To further strengthen financial accountability, the Department has been receptive to OIG investigators and auditors providing fraud prevention and awareness training to Department personnel responsible for financial systems, contracts and grants, and procurement. The OIG fraud prevention and awareness program is presented to relevant bureau personnel and to all General Services Officer courses at the Foreign Service Institute.

Overseas, OIG found that the Department has done a good job of consolidating International Cooperative Administrative Support Services (ICASS) into a single administrative platform on new embassy construction projects, but additional steps are needed in combining ICASS services for those missions that are not scheduled for new construction. OIG inspection reports in FY 2005 and FY 2006 noted that agencies overseas continue to resist subscribing to the full range of administrative services offered by ICASS, instead developing duplicative administrative structures, which increase overall cost to the U.S. government. Without a requirement to subscribe more fully to ICASS, these conditions are unlikely to change.


Human Resources

In an effort to provide the highly skilled, diverse workforce needed to implement the Secretary's transformational diplomacy agenda, the Department has established the Global Repositioning Initiative and plans to shift hundreds of positions from across the world to critical emerging areas in Africa, South Asia, and elsewhere that will shape U.S. interests in the future. As part of this initiative, the Department continues to grapple with how to best meet new security, administrative support, specialized training, and program funding requirements for these positions.

The Department also faces significant challenges in staffing diplomatic missions in Iraq and Afghanistan and equipping employees with skills and administrative support to carry out new responsibilities in war-zones and hardship posts. Staffing and skills gaps at these critical posts undermine programs that are important to the Administration and at high risk for waste, fraud, and mismanagement. OIG found problems related to staffing gaps and personnel shortages in inspections of Embassies Kabul, Riyadh, and Islamabad and of Embassy Baghdad's rule-of-law program.

The Department has instituted significant changes to the promotion, assignments, and career development processes to emphasize service in Iraq and Afghanistan, but it remains to be seen whether these will be effective in meeting long-term needs in those places as well as other hardship posts. Additional steps such as directed assignments of personnel, enhanced benefits packages, and expanded use of contractors may have to be considered.

An OIG review of efforts to rightsize the U.S. government's overseas presence noted that the Department has taken limited but positive steps to address rightsizing issues of importance to the Administration and Congress. The Department is implementing significant rightsizing initiatives—including the Capital Security Cost-Sharing Program, the State-USAID Joint Management Council, periodic rightsizing reviews, expansion of regional service delivery, Foreign Service career development planning, and changes to resource planning processes—that should have positive effects over time.


Counterterrorism and Border Security

The Department continues to play a central role in combating international terrorism, including efforts to stop terrorists before they reach our shores. Posts abroad are encouraged to maintain vigilance in identifying, reporting on, and denying visas to persons engaged or likely to engage in terrorist activity or support. Counterterrorism and border security remain a management and performance challenge for the Department.

The Department continues to work with the intelligence and law enforcement communities to establish a first line of defense to stop or deter terrorists and transnational criminals before they reach U.S. shores. Key to this defense is the overseas adjudication of over 7 million visa applications annually, facilitating the travel of legitimate visitors to the United States while denying entry to non-bona fide travelers, especially those who pose a threat to national security. The Department has shown significant progress in enhancing the training of consular officers in advanced interview techniques and the use of sophisticated databases to improve the screening process. The Department has also made gains in sharing intelligence, particularly with the Department of Homeland Security.

Fraud prevention in both visa and passport processing continues to be a critical challenge. The Department has effectively reorganized and improved fraud prevention programs, resulting in better fraud trend analysis and field support, but personnel shortages have hampered the expansion of the data-mining of visa records for fraud and corruption investigations, and may have a negative effect on the detection of passport fraud at some of the larger regional passport centers. The Department has deployed additional law enforcement personnel to work with consular offices and foreign law enforcement to identify, target, and disrupt travel document vendors and facilitators.

The Bureau of Counterterrorism (S/CT) has too often been viewed as marginal to the global war on terror. Reasons identified during OIG's inspection of the office include a lack—until recently—of leadership, insufficient resources, and the difficulty of helping to coordinate the wide scope of counterterrorism efforts. This has eclipsed the hard work of dedicated employees. The new coordinator has recruited an experienced management team that has begun to reinvigorate S/CT and raise morale.

The Department's insufficient ability to monitor compliance or abuse by designated sponsors of exchange visitors within existing regulations, policies and procedures is a reportable condition with the Department's Management Control Steering Committee. The Bureau of Educational and Cultural Affairs, which administers the Exchange Visitors Program, has established a compliance unit to train staff and to provide oversight of this activity, and regulations and policies are being rewritten to provide better guidance and increase the government's enforcement capability.


Public Diplomacy

The Department, as a strategic goal, aims to increase understanding for American values, policies, and initiatives to create a receptive international environment. The Under Secretary for Public Diplomacy and Public Affairs has made clear the importance and urgency of this goal. Last year, OIG identified three areas needing attention: coordination of public diplomacy, performance measurement, and perceptions in the Muslim world. The Department has made progress in improving coordination and performance measurement. Improving the perceptions in the Muslim world still remains a performance challenge.

OIG and the Government Accountability Office (GAO) have previously indicated the need for greater public diplomacy interagency coordination, with the Department playing the lead role. The Department has made important strides forward in this area, establishing a policy coordinating committee, headed by the Under Secretary of Public Diplomacy and Public Affairs, to institutionalize interagency public diplomacy coordination and develop an overarching strategy.

OIG's review of implementation of the Middle East Partnership Initiative (MEPI) found persistent communications problems between the MEPI Office in the Bureau of Near Eastern Affairs and embassies having MEPI programs, which the Department is working diligently to improve. As an example of transformational diplomacy at work, there is general agreement that MEPI works and is a useful tool for diplomats. Its programs support overarching, strategic U.S. policy objectives such as the Administration's freedom strategy of promoting reform and democracy in the Middle East and North Africa, and the objective of addressing Islamic extremism.


Post-Conflict Stabilization and Reconstruction

Basic to the success of all U.S. hopes for democracy and good governance in Iraq is an effective anticorruption regime. Because of the connection between corruption and the insurgency in Iraq and because of corruption's threat to stability and reconstruction in Afghanistan, the U.S. Government has increased its anticorruption efforts in both countries. Following OIG assessments of rule-of-law and anticorruption programs in Iraq, Embassy Baghdad has strengthened and streamlined the management of its rule-of-law programs, expanded interaction with Iraqi agencies, and improved coordination among international donors. The Department has assigned a Foreign Service officer to serve as the embassy's senior rule-of-law coordinator and to increase collaboration with the military command, and a strategic rule-of-law plan has been incorporated into the embassy's Mission Performance Plan. As part of its multi-agency anticorruption program, Embassy Baghdad is working to establish advisors to the Board of Supreme Audit and to the Iraqi Inspectors General, to go along with the advisor to the Commission on Public Integrity, in recognition that these institutions must ultimately be effective in the discharge of their oversight responsibilities if rule of law is to prevail in Iraq. A joint OIG survey with Department of Defense OIG of another element in the rule of law—police forces— identified weaknesses in the Iraqi program for recruiting, vetting, and training candidates, while a similar joint survey in Afghanistan noted deficiencies in the police readiness level as well as in management controls over U.S.-provided equipment.

OIG surveys and assessments in both countries have observed that rule of law includes the entire legal complex of a modern state, from a constitution and a legislature to courts, judges, police, prisons, due process procedures, a commercial code, and anti-corruption mechanisms, and all elements need to progress nonsequentially for the functioning of a safe, secure, and democratic environment where rights and liberties of individuals are protected. In keeping with this viewpoint, Congress has continued to provide substantial funding for agency-operated rule-of-law and anti-corruption programs, including earmarked funds for OIG to continue and expand its work in both countries in FY 2006 and 2007.


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