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FY 2007 Management and Performance Challenges


FY 2007 Financial Report
Bureau of Resource Management
November 2007
Report
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Photo of Howard J. Krongard, Inspector General

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 for 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 Reconstruction and Stabilization
PROTECTION OF PEOPLE AND FACILITIES

Making its people, facilities, and information more secure continues to be one of the Department's highest priorities and greatest challenges. In FY 2007, the Department had success in addressing security vulnerabilities at a number of overseas posts through its new construction and security upgrade programs. However, the Department remains challenged to identify and fund interim solutions to address security vulnerabilities at facilities awaiting long-term new construction or the completion of major security upgrades. Additionally, as the number of American Presence Posts increases, the Department will need funding to complete required security upgrades for these facilities.

The Department has continued to make progress in strengthening its domestic protection program during FY 2007, especially through its emergency preparedness program. As stated in the FY 2006 letter, the Department has strengthened its domestic emergency program through more frequent emergency drills, employee forums, and by providing proactive guidance to improve employee preparedness at work and home. In FY 2007, the Department opened a new Domestic Emergency Command Center to handle emergencies such as Hurricane Katrina and other events that threaten the safety of the people working at State Department facilities. Additionally, the Department implemented a new Warden Program. These wardens have been trained to assist employees in evacuating a building or to direct the employees to designated shelter-in-place areas or assembly points. While the Department has made significant progress in its domestic emergency program, more still needs to be done. The Department needs to continue the work it has started in developing new Facility Emergency Action Plans (FEAP) for all Washington area facilities. The Department also needs to finalize the development and implementation of domestic emergency policies and procedures.

INFORMATION SECURITY

The Department continues to make progress in strengthening its information security programs and practices, while realizing that more must be done to effectively administer and manage its information security programs per statutory requirements. Improvements have been made by the Department in its governance structures for information security over the last year with the creation of the Information Security Steering Committee, which has helped resolve differences between components involved in the information security process. Training and awareness, contingency planning, and incident response are among the strongest and most mature areas in terms of operational development within the Department. There has been high level support from the Secretary and Under Secretary for Management for the protection of privacy information with positive steps, such as the creation of the Privacy Protection Governance Board, already completed.

There are several areas that require additional attention from the Department in order to ensure an overall effective information security program. There is an ad hoc nature to the Department's program with operational elements stronger than the program planning elements. For example, the information security program plan for the Department, submitted to the Office of Management and Budget in late August, does not fully meet statutory requirements. Further, the Department's inventory management policy does not address roles and responsibilities for overall inventory management nor does it establish accountability for the maintenance of accurate inventory records. The Federal Enterprise Architecture, System Development Life Cycle, and Capital Planning and Investment Control processes are not integrated within the Department and, as a result, the ability to address information security through the planning process is hampered. Finally, the Office of Information Programs and Services' ability to implement privacy requirements has been limited due to insufficient funding to support a multitude of new tasks.

Given the increasing use and reliance on cellular telephones (both official and non-official) in the work place domestically, the Department is also faced with reevaluating its existing, but relatively unenforced, restrictive policies. The Department's challenge is balancing users' perceived needs against known threats and the cellular telephone's potential for being exploited as a means to clandestinely access sensitive or classified information.

FINANCIAL MANAGEMENT

Financial management continues to be a major challenge within the Department. During FY 2006, the Department became aware of potentially material amounts of real property that had not been properly reported in its financial statements. Because of the effort to address the real property issue, the Department was unable to provide complete financial statements or certain evidential material in a timely manner. Therefore, the independent external auditor was unable to express an opinion on the Department's financial statements by the November 15, 2006, deadline imposed by the Office of Management and Budget.

The Department thereafter completed its work on real property and restated the FY 2005 financial statements to correct the errors. The Department also restated its FY 2006 financial statements to correct an error related to funds provided to another agency. The Department provided completed financial statements and supporting documentation to the independent external auditor, who issued an unqualified opinion on the financial statements on December 12, 2006.

In its findings, the independent external auditor identified a weakness related to real property and again noted concerns that had been identified in prior reports relating to the recording of personal property and related depreciation expenses, information systems security, the adequacy of the financial and accounting systems, management of undelivered orders, and the lack of a managerial cost accounting system. The independent external auditor also again noted that the Department continues to have difficulty producing year-end financial data in a timely manner.

During FY 2007, the Department has taken steps to address some of these weaknesses. For example, the Department developed detailed guidance to ensure construction costs are properly capitalized, and implemented processes to monitor both project establishment and completion. The Department also created a committee to address weaknesses related to personal property. This committee has implemented improvements in the methods used to identify and report vehicle costs, aircraft, and property held by contractors. For computer security, the Department has made progress in its certification and accreditation processes, and is working to develop an accurate inventory of systems, address new security requirements, and improve patch management. The Department has also implemented a new domestic financial and accounting system, and is automatically deobligating certain undelivered orders. In addition, the Department is working to implement a managerial cost accounting system.

HUMAN RESOURCES

The Director General of the Foreign Service (DG) and the Bureau of Human Resources (HR) face significant challenges in implementing the Secretary of State's vision of transformational diplomacy and ensuring the availability of a dynamic diplomatic corps that has a broad range of knowledge, skills, and capabilities. In responding to these challenges, the DG and his team must balance high-stakes problems in international relations with a series of major personnel-related initiatives.

The bureau has redesigned the assignment system to fill key overseas positions, changed the Foreign Service examination process, taken steps to strengthen the retirement office, and launched a shared services structure for certain human resources functions.

A controversial new assignment system successfully met its short-term goal of filling Foreign Service vacancies in critical hardship posts. However, despite this, it is unclear whether the Department will continue to be able to staff Iraq on a voluntary basis or will have to move to directed reassignments.

The Department's efforts to establish shared services (Centers of Excellence) for certain HR functions must be put on a rational implementation schedule if it is to succeed. The Department should also explore consolidation of certain HR functions in a single center.

A Global Repositioning Program moved 200 Foreign Service jobs from Washington, Europe, and elsewhere to India, China and other countries to support transformational diplomacy. Before proceeding with additional rounds of this program, the Department should undertake more rigorous planning and analysis to lay out clear objectives and develop the most cost-effective means of achieving them.

A 15-percent deficit in mid-ranked Foreign Service positions due to decreased hiring in the 1990s continues to hamper staffing for key positions worldwide. The Department could only overcome this problem before 2010 through an extraordinary intervention in the hiring and promotion process for Foreign Service officers. The Civil Service fills some key policy jobs in Washington, provides crucial administrative support to the Department, and increasingly provides support in critical posts overseas, but it also faces increasing retirements and recruiting challenges.

Over 38,000 locally employed (LE) staff also work for the Department at overseas posts. The Department needs to codify and strengthen its commitment to LE staff.

The Department needs an effective program for returning to work those employees who have been injured on the job and are receiving benefits under the Federal Employees Compensation Act. A systematic effort to contact and encourage injured employees to return to work as soon as medically feasible is an industry and government best practice, and a key to reduced claimant fraud. However, although officials in HR had drafted a policy paper for such a program, no program has been established because HR said there were uncertainties regarding which bureau within the Department should develop and manage the program.

COUNTERTERRORISM AND BORDER SECURITY

Cross-border problems, which have a direct impact on U.S. business interests, environmental safety, quality of life, and border security, continue to challenge the Department. The U.S. Embassy in Mexico and the Bureau of Western Hemisphere Affairs emphasize border issues in their strategic plans. However, neither has dedicated sufficient staff or attention to the coordination of those issues. Border posts need additional positions to allow them to focus on solving the problems.

With looming increases in consular workload and in demands on consular resources over the next five years, there is also a need to address non-consular issues and their priority in the operations of the border posts. If non-consular issues are not properly managed now, it will be impossible to do so once the wave of U.S. passport and nonimmigrant visa applications hits the border. The decision to assign regional security officers to each border consulate has improved the security of the consulates and enhanced the coordination of cross-border law enforcement issues that in turn affect bilateral commercial development.

PUBLIC DIPLOMACY

The Under Secretary for Public Diplomacy and Public Affairs has made a personal priority of improving public diplomacy coordination within the Department and in the interagency process, and has made important progress in this area, including implementing recommendations of the OIG and the Government Accountability Office. Public diplomacy strategic planning has improved, but could be stronger, especially at the mission level.

The Department has also made important, promising progress in the difficult task of measuring the impact and outcomes of public diplomacy efforts rather than just totaling public diplomacy activities undertaken, as had primarily been done in the past. The prospects for further progress are encouraging. The need to increase public diplomacy officers' foreign language capabilities is a long-term challenge.

POST-CONFLICT STABILIZATION AND RECONSTRUCTION

Despite its broad mandate, the Office of the Coordinator for Reconstruction and Stabilization (S/CRS) has not yet carved out a leadership role in the management of reconstruction and stabilization crises. It has remained on the periphery in the interagency handling of such crises, playing only an incremental role.

At present, S/CRS has four central issues on its agenda that will determine whether it will expand significantly the parameters of its present responsibilities and establish for itself a viable institutional role. These issues are: a new relationship with the Director of Foreign Assistance, a major role in implementing the S/CRS charter in National Security Presidential Directive-44, a lead role in developing the Civilian Reserve Corps, and management of the Department of Defense's FY 2007 $100-million transfer authority.

Although S/CRS has not played the role its proponents had hoped, the S/CRS divisions have continued to develop doctrine, manage exercises, and provide useful, albeit limited, assistance to embassies through the Active Response Corps. S/CRS has excellent leadership, an able committed staff, and surprisingly high morale; however, it needs to restructure. Its current organizational pattern does not adequately reflect the actual delineation of responsibilities within the office and inhibits coordination and communication.

 


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