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Diplomacy in Action

Inspector General's Assessment of Management and Performance Challenges


FY 2008 Financial Report
Bureau of Resource Management
December 2008
Report
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Photo of Harold W. Geisel, Acting Inspector General
Acting Inspector General,
Harold W. Geisel.

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. For FY 2008, the Office of Inspector General (OIG) considers the most serious management and performance challenges for the Department to be in the following areas:

  1. Protection of People and Facilities
  2. Information Security
  3. Financial Management
  4. Contracting and Procurement
  5. Human Resources
  6. Counterterrorism and Border Security
  7. Public Diplomacy
  8. Coordinating Foreign Assistance

1. 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. The Department has been successful in addressing security vulnerabilities at a number of overseas posts through its new construction and security upgrade programs. Recently, terrorist attacks have been thwarted and loss of life has been limited to those assigned to protect the perimeter of overseas diplomatic facilities, as most recently experienced in Istanbul and Sanaa.

Interim Solutions Challenge. 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. Providing security for a large diplomatic corps in a war zone, where diplomats move in convoys as they conduct official business, places an inordinate amount of strain on security resources. Managing protective security details that operate both on the ground and in the air create new management challenges to find people with both these needed skills. Additionally, plans for evacuating thousands of American citizens either for government collapse or natural disaster require updates to an emergency action plan and a sound method for safely transporting people.

Emergency Action Plans. These plans often do not have updated evacuation routes and communication procedures. The Department has been making progress in this area with the implementation of a computer-based application and in requiring tripwires as part of a sophisticated plan for draw-downs and ordered departures.

NSDD-38 Agency Cost. Increasing approvals to NSDD-38 requests from other agencies desiring to become part of an overseas mission usually means additional security expenses and sometimes the need for additional security personnel and equipment. Some of these agencies have special activities off embassy compounds, which greatly increase the challenge for the diplomatic mission.

2. Information Security

PIERS System Controls. The protection of personally identifiable information is a significant information security challenge for the Department.

As of April 2008, the Department’s Passport Information Electronic Records System (PIERS) contained records on about 192 million passports for about 127 million passport holders. Bureau of Consular Affairs officials said that there were about 20,500 users with active PIERS accounts as of May 2008 and that about 12,200 of these users were employees or contractors of the Department. PIERS is also accessed by users at other federal departments and agencies to assist in conducting investigations, security assessments, and analyses.

Based on the results of a 2008 OIG review, there are many control weaknesses—including a general lack of policies, procedures, guidance, and training—relating to the prevention and detection of unauthorized access to passport and applicant information and the subsequent response and disciplinary processes when a potential unauthorized access is substantiated.

In some cases, Department officials stated that the lack of resources contributed to the lack of controls and to the Department’s ability to assess vulnerabilities and risk. In response, the Bureaus of Consular Affairs and Administration took a number of corrective actions. These actions included issuing interim guidance on the various steps to be followed and decisions to be made in response to a potential incident of unauthorized access to passport records and applicant personally identifiable information and issuing a Department-wide personally identifiable information breach response policy. Additional actions to address the 22 recommendations made by OIG are underway by the Department, including conducting vulnerability and risk assessments of all passport systems.

Use of Laptops. Another challenge is the proliferation of and reliance on mobile computers, including laptops, personal digital assistants, and telephones, in the work place domestically and abroad. These devices present challenges for protecting sensitive personal and program-specific information that could be exploited if obtained in an unauthorized manner. The Department is challenged with balancing the operational need to use these mobile devices while protecting the information they contain and with developing security controls, policies, and procedures that keep pace with the emerging technologies.

3. Financial Management

Financial management continues to be a major challenge within the Department. During FY 2007, the Department was unable to respond to requests for evidential material during the annual audit of the financial statements in a timely manner. As a result, the independent external auditor was unable to express an opinion on the financial statements by the November 15, 2007, deadline imposed by the Office of Management and Budget.

Personal Property and Undelivered Orders. In its findings, the independent external auditor identified two material weaknesses: one related to personal property and another related to undelivered orders. The external auditor again noted significant deficiencies that had been identified in prior reports related to the adequacy of the financial and accounting systems and the lack of a managerial cost accounting system. Also, the auditor identified the Department’s inability to determine the extent of the unfunded actuarial liability accruing from supplemental pension plans for locally employed staff.

A continuing challenge has been evident for years. There are a number of the identified weaknesses had been reported for several years without being corrected by the Department. The independent external auditor again noted that the Department continues to have difficulty producing year-end financial data in a timely manner.

Several Improvements. During FY 2007, the Department took steps to improve some of these weaknesses. Its efforts allowed two significant deficiencies, related to information technology security and accounting for real property, to be downgraded. In addition, the Department implemented a new financial management system, which was part of its efforts to establish a single global financial system. The Department also installed an integrated acquisition and fixed assets module and a cost allocation module. The Department has made some improvements related to personal property, including implementing a tool to manage the vehicle fleet and developing better guidance. The Department is also working to expand the ability at post to record acquisitions and dispositions and is focusing additional efforts on undelivered orders and plans to automatically de-obligate certain of these items.

In addition, the Department is distributing aging reports to bureaus for review and is working to improve the contract close-out process. The Department has developed an initial cost model for bureaus and plans to incorporate cost allocations into the model. In addition, the Department plans to develop an inventory of supplemental pension plans.

4. Contracting and Procurement

Concern about the procurement process is a government-wide problem and the Department of State is no exception. In report Bureau of Administration’s Office of the Procurement Executive, Office of Acquisition Management and Office Small and Disadvantaged Business Utilization (# ISP-I-07-12 of December 2006), the OIG stated that the Department’s procurement function was “approaching a crisis situation.” State Department contracting, like many federal agencies in recent years, has grown dramatically, but procurement force staffing has not followed suit. For example, from fiscal years 2000 to 2005, Department contract spending increased 213 percent while procurement staffing increased from 130 to 150 FTEs – a 16% increase.

OIG has examined procurement operations in a number of inspections and reports and made numerous recommendations to Bureaus and offices responsible for procurement, including the Bureau of Administration, Office of the Procurement Executive (A/OPE provides advice and support on contracting) and the Office of Acquisitions Management (AQM conducts contract operations in support of activities worldwide). Some recommendations have yielded positive action on the part of responsible parties, while others have not.

For example, OIG recommended A/OPE conduct a comprehensive review of AQM management using a Government Accountability Office (GAO) framework for assessing the acquisition function at federal agencies. A/OPE reported in November 2006 that the review identified potential process improvements as well as some areas of regulatory non-compliance.

Local Guard Contracting. OIG also recommended that A, in coordination with the Bureau of Diplomatic Security (DS), establish a plan to progressively consolidate into AQM local guard contracting, a longstanding problem area overseas. In February 2008, AQM announced that under its new “procurement shared services” system, it will assess a 1 percent surcharge on all acquisitions it performs for the Department. This surcharge will enable AQM, with the support of DS, to gradually assume responsibility for the local guard contracting program. These are positive developments that should result in more efficient procurement and use of financial and human resources.

Overseas Building Operations (OBO). On the other hand, other problems identified by OIG remain. The Department’s Construction Security Program to construct safe and secure embassies is ambitious (construction of 150 new embassy buildings and office annexes between 2001 and 2018) and expensive (costing some $17.5 billion by current estimates). In 2006, OIG determined that awards for new embassy construction were made too late in the fiscal year, resulting in a compressed award schedule that caused inefficiency and other procurement problems. This was largely due to the late arrival at AQM of OBO’s complete technical requirements packages for new construction projects. OIG then recommended that A, in coordination with OBO, establish written timelines for the submission of technical requirements packages. This was not done and the compressed award schedule problem remained when OIG inspected OBO in 2008.

OIG noted in 2006 that AQM will face challenges in acquiring additional procurement staff as the existing procurement workforce retires. To meet the work surge, AQM has recently hired approximately 30 contract employees to assist in procurements. As contract employees, these personnel cannot act as contracting officers, who perform inherently governmental duties, which contract employees must avoid. However, these contract employees will assist contracting officers and perform only allowable duties in the procurement process. It remains to be seen if AQM’s efforts in this regard will pay dividends as Department contracting expenditures increase.

5. 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.

Global Repositioning. The Secretary’s Global Repositioning Program (GRP) was designed to increase U.S. diplomatic engagement with high-priority countries around the world. The GRP achieved results quickly by breaking through various constraints to reallocate positions across regional and bureau lines. If repositioning becomes regularized, however, it needs to take greater account of the Department’s strategic planning mechanisms and prioritize posts in terms of overall U.S. interests and assessments of relative workload. Given ongoing budget and staffing shortfalls, the scale of repositioning may have to be smaller. More attention should be given to the impact on the “losing” posts and bureaus, and the “gaining” posts must receive sufficient resources to enable additional personnel to carry out their GRP functions.

Locally Employed Staff. The Department employs a workforce of almost 38,000 locally employed staff (LES). At many posts, the adequacy and transparency of the local employee compensation and benefits packages are perennial and complex issues that affect LES morale and retention. In countries plagued by fraud or instability, local retirement accounts and pension plans are unreliable at best. The complexities of local labor laws have thus far thwarted the Department’s efforts to create a universal, off-shore plan, which would help ensure the future security of LES employees. The Department needs to strive to resolve these issues.

Human Capital Planning. Like other federal agencies, the Department is facing a wave of retirements within the next several years as the baby boom population ages. At least 35 percent of Department employees will be eligible to retire within the next five years. The Department is working to implement a human capital plan to ensure the continuous recruitment, training, deployment, and retention of qualified foreign service and civil service employees whose skills and experience are aligned with the goals of transformational diplomacy and evolving strategic objectives. Workforce planning and HR resource management are one of the Department’s top management priorities.

HR Services Delivery. Currently, HR services in the Department are fragmented, duplicative, and inconsistent. Customers are often confused and frustrated. In an effort to correct these longstanding weaknesses, the Secretary announced an initiative with the goal of creating a single, integrated, tiered-service delivery system to improve, streamline, and automate HR services. This delivery model is based on best practices of private industry and other government agencies. The Bureau of Diplomatic Security will lead the effort by launching a pilot program in November 2008. During the first phase, approximately 30 routine transactional services will be transferred to a new office located at the Department’s Charleston services center. The Department will pursue a phased approach to rolling out the new model, with the ultimate goal of centralizing all routine Department-wide HR services in Charleston and consolidating more complex processes among selected bureaus in Washington. This is an ambitious undertaking that has the potential to result in significant improvements. However, in order to succeed, there must be sustained support from the highest levels of the Department and a willingness among the bureaus and Department employees to accept new ways of doing business.

Retiree Services. Over the past year, the Department has taken steps to strengthen the HR Office of Retirement (HR/RET). With a history of sub par performance and outdated IT systems, OIG recommended in 2007 that the Department take immediate efforts to improve office operations or consider transferring the function to an outside provider. In October 2008, HR/RET will deploy the Employee Benefits Information System (EBIS), which will streamline and accelerate the system for submitting Civil Service retirement packages. HR/RET hopes to implement the first Foreign Service modules of EBIS in early 2009.

It remains to be seen if EBIS will be a success story. Further, high staff turnover continues to plague the office. HR/RET appears headed in the right direction, but much remains to be accomplished, especially in light of the exponential increase in retirements expected over the next 5-10 years.

6. 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. In its strategic plan, the Bureau of Consular Affairs projects significant changes to the Border Security Program. Expansion of the Visa Waiver Program to Korea and other countries is likely to reduce visa demand in some places, but will also reduce revenue retained in the Department.

Demand for passports and passport cards, while flat in FY 2008, is expected to surge in FY 2009 when Western Hemisphere Travel Initiative (WHTI) compliant travel documents are required for all land, sea and air travelers. Border crossing card replacement is expected to add significantly to demand for visa adjudications in Mexico.

The effect of globalization on travel patterns in India, China, and Brazil will also add significantly to demand for services. The Department will require flexibility to add new staff and redeploy existing positions to meet shift and increases in demand. To meet the projected demand, more than 275 new positions will be needed in Mexico alone.

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.

7. Public Diplomacy

The Department has made important progress in ensuring that public diplomacy is seen as a part of a total diplomatic effort rather than as something that is added as an after thought to a particular policy, but further integration within the Department and interagency still remains. There should be more mission-level integration of public diplomacy objections in all mission goals. Particularly in areas such as foreign assistance and countering violent extremism, the Department should work closely with other agencies to coordinate and evaluate strategic communication plans and messages.

The Diplomatic Readiness Initiative and expanded training have helped address shortfalls in the ranks of public diplomacy officers, but gaps in staffing still remain. As a result, too many public diplomacy positions are occupied by officers without sufficient language skills or public diplomacy experience. This situation is particularly acute in smaller missions where adequate supervision or mentoring may not always be available to first-time public affairs officers.

In recent years, several Caribbean basin posts have had to cut their public affairs officer (PAO) positions at the same time that public diplomacy is becoming an increasingly important part of embassy operations requiring professional guidance. While resources are not available to recreate all of the PAO positions that have been cut, a regional position could support multiple posts at a fraction of the cost. Inspectors in Georgetown recommended the establishment of a regional public diplomacy officer position that could support the several Caribbean basin posts that have lost their PAO positions.

Although there have been notable improvements in obtaining the human and program resources needed to implement an effective public diplomacy effort, these efforts started from a low post-consolidation baseline. Resource gains in some areas and regions have come at the cost of neglecting other competing regions and issues; short-term benefits have sometimes come at the cost of neglecting long-term strategies. The Department needs not only to measure the effectiveness of efforts in countering violent extremism, it should evaluate and develop plans for addressing other pressing economic and political challenges to U.S. foreign policy objectives and marshal the program resources required to implement them.

8. Coordinating Foreign Assistance

The Office of the Director of Foreign Assistance is developing its coordinating role for overseas foreign assistance activities. However, several of the inspections conducted during FY 2008 indicate separate USAID and Department entities are supplying redundant assistance programs in a number of countries. These redundancies, while difficult to address on a country-by-country basis, could be resolved by senior decision makers at post and in Washington reviewing both in-country and regional support.

In Brasilia, for example, inspectors recommended the Embassy establish a foreign assistance coordinating group to get a mission-wide understanding of the scope of all U.S. assistance to the country. Inspections in Africa and Afghanistan have noted the same lack of clarity on total assistance to a country or region and inspection teams encourage the work of the Office of the Director of Foreign Assistance in leading a global effort to identify sources and amounts of assistance. Similarly, as functional bureaus continue to support transformational diplomacy by offering grants through embassies, several inspections have identified as a common problem the inadequate training of officers asked to manage grants. OIG recommended increased training for officers managing foreign assistance awards and for financial management officers certifying award payments. Inspection teams have also found missions are not always aware of ongoing assistance programs funded and managed by the functional bureaus.

 


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