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Diplomacy in Action

Inspector General's Assessment of Management and Performance Challenges

Bureau of Resource Management
November 15, 2010


Photo of Harold W. Geisel, Deputy Inspector General.

Deputy 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 them. The Office of Inspector General (OIG) considers the most serious management and performance challenges for the Department to be in the following areas:

  1. Contracting and Procurement
  2. Coordinating and Overseeing Foreign Assistance
  3. Human Resources
  4. Public Diplomacy
  5. Protection of People and Facilities
  6. Information Security
  7. Financial Management
  8. Counterterrorism and Border Security
  9. Iraq Transition from Military to Civilian Presence

1. Contracting and Procurement

For FY 2009, the Department spent about $6.8 billion on formal contracts and simplified acquisitions,1 mainly on procurement activities that support overseas programs and operations. During the past decade, the Department’s primary acquisition organization, the Bureau of Administration’s Office of Acquisitions Management (AQM), experienced a dramatic increase in the number of procurement transactions processed and a significant rise in the dollar value of procurement actions issued, without a corresponding increase in AQM contracting office personnel to handle the heavier workload. In addition, grants actions have also increased, with $7.7 billion disbursed during FY 2009.

OIG found several examples in which contract administration and oversight were inadequate, including overpayments to contractors and insufficient internal controls for government- purchased property held by contractors. Poor property management and accountability by contractors were especially prevalent in Iraq and Afghanistan.2 Other procurement issues the Department must focus on include ample planning and transparency in the procurement process. Failure to plan and properly administer the construction contract for the New Embassy Compound in Baghdad, Iraq, resulted in more than $100 million in construction defects that the Department was required to repair or replace.3 With its multi-year plan to upgrade or build new overseas facilities at about $1 billion annually, the Department must ensure that contractors are properly chosen, work is properly conducted, and costs are contained.

2. Coordinating and Overseeing Foreign Assistance

According to the Office of Management and Budget (OMB) the FY 2010 foreign assistance budget for the whole government is more than $32.9 billion (not including a pending FY 2010 supplemental budget request). Foreign assistance funding and the Department’s role in coordinating and managing assistance programs have grown considerably during the past several years. While the Department has made a number infrastructure changes to support these programs, it continues to face significant challenges.

The U.S. Government delivers foreign assistance through grants, contracts, cooperative agreements, voluntary contributions, direct loans, or insurance. OIG has found insufficient numbers of contract and grant workforce personnel in the Department to handle all of its programs. Additionally, OIG continues to find that some grants officers, grant officer representatives, and contract officer representatives do not have enough training or travel funds to perform their oversight responsibilities, which result in uneven assistance oversight.

OIG has noted that some assistance programs need closer monitoring after award to ensure performance goals are met and that management controls are in place and working. This was especially true in conflict environments where security risks impeded proper performance monitoring during site visits. The absence of such oversight increases the risk of fraud.4 Inadequate performance evaluation has also resulted in the allotment and obligation of assistance funds repeatedly during several years that produced only meager results.5

In its embassy inspections, OIG has found that chiefs of mission—especially those with high value assistance programs—need to provide more active leadership and coordination. They need to ensure that assistance programs complement each other, integrate with the mission and bureau’s overall strategy,6 and that the agency best suited to oversee each program is given responsibility to do so.

3. Human Resources

Workforce planning is a continuing challenge for the Department due to the high cost of assigning Department and other agency employees to secure locations overseas and the difficulty of responding quickly to changing priorities. The Department estimates that, on average, each overseas position costs the Department $500,000. While the Department has made progress through required mission rightsizing reviews, better National Security Decision Directive 38 tools, the capital security cost sharing program, and required leadership and management training, OIG has found that the Department continues to have difficulty ensuring that the right number and mix of personnel staff our embassies and domestic bureaus.

During several recent post and domestic bureau inspections,7 OIG identified deficiencies in senior leadership indicating a failure to assign officers with strong interpersonal and team-building skills to senior positions. The deficiencies include the inability to address poor performance issues, establishing an atmosphere of intimidation, a failure to set priorities, and micromanagement. In many cases, problems have caused valuable mission employees to curtail from their assignments.

OIG has also identified training gaps at a number of overseas locations. At one mission, of the 23 locally employed staff in the political section, only four had more than a year’s experience and only two had received Foreign Service Institute training. At other locations, American and local staff needed training on regional political and economic issues, political reporting and analysis, and foreign assistance program oversight.8 Overuse of language waivers that allow officers to start assignments before obtaining the required language proficiency has also had an impact.9

Although the Office of Management Policy, Rightsizing, and Innovation requires that missions conduct regular rightsizing reviews, OIG has found some missions do not conduct reviews on time and that others treat the reviews as paperwork exercises rather than opportunities to reassess staffing needs based on changing mission priorities. The National Security Decision Directive (NSDD)-38 process also promotes rightsizing in that it gives chiefs of mission authority to approve or disapprove new full time overseas positions. While some missions use this process to fully consider the security, space, and administrative support ramifications, others do not. Shortcomings in rightsizing reviews and use of the NSDD-38 process have allowed haphazard growth at some missions.10

Additionally, more agencies and bureaus are sending staff on long-term temporary duty assignments either through year-long assignments or “rolling” temporary duty assignments. Although these assignments essentially equate to a full time presence, the staff do not fill direct hire positions and are therefore not subject to the NSDD-38 process. These assignments have left some missions with space, funding, and administrative support problems.

4. Public Diplomacy

Public perceptions of the United States directly affect our ability to achieve our foreign policy and development assistance objectives. Through engagement, assistance, and dialogue, the Department fosters a two-way flow of people, ideas, and information. Although the Department saw a significant expansion in the number of public diplomacy officers after consolidation with the United States Information Agency in 1999, many of the Department’s newer officers have spent their first tours in consular or other out-of-cone assignments.11 While their ability and enthusiasm are high, many of these officers are now serving in public diplomacy leadership positions in smaller missions without ever having had assignments in their specialties. Some bureaus have discussed the possibility of creating a formal mentoring program and at least one is considering employing retired foreign service officers to assist first time public affairs officers (PAO) by visiting the embassies. This has not yet become institutionalized and there are resource questions that need to be resolved. Mentoring and providing guidance for these officers is a challenge for the Department.12

The Department has made good progress in ensuring that public diplomacy is incorporated into every part of the Mission Strategic Resource Plans (MSRP). However, many public diplomacy sections have been less effective in developing a strategic communications plan. There is a greater need for a more careful analysis of audience, message, and media13 that will lead to the development of a communication plan that draws on the program resources available to a PAO. Although the Office of the Undersecretary of State for Public Affairs and Public Diplomacy has been working with regional bureaus in developing tools for assisting overseas missions to develop and implement more effective strategic communication strategies, these efforts are still a work in progress.

Despite staffing and financial constraints, embassies are increasingly using social media as a public diplomacy tool to reach a younger audience, some with notable success. These efforts received useful guidance in June, 2010, when the Department issued a new sub-section of the Foreign Affairs Manual (FAM) dealing with social media. However, bringing the plethora of Department social media sites into conformance with the new FAM provisions and enhancing the sites’ effectiveness at promoting engagement presents the next challenge.

5. Protection of People and Facilities

Protecting people, which continues to be Department’s highest priority and its greatest challenge, is becoming even more challenging as an increasing number of U.S. diplomatic facilities are being established and maintained in areas of armed conflict or super-high threat, which in prior years would have been closed due to the threat to personnel and facilities. In response, the Department has instituted more high-threat training for post personnel, more rigorous security procedures at these posts, and at some facilities physical security measures far in excess of those required for other diplomatic missions worldwide. The challenge to the Department will be the establishment and maintenance of appropriate security measures in these areas, a substantively different and relatively new area in the Department’s security program.

Although the Department has undertaken a vigorous program to replace those U.S. diplomatic facilities that do not meet the Department’s security standards, many missions are still operating in sub-standard facilities, with projected dates for the construction of new facilities years in the offing, the highest priority being given to missions with the highest risk. Nevertheless, as the recent events in Bangkok, Thailand demonstrated, localities viewed as low risk can turn violent very quickly. At those facilities that do not meet security standards, the Department needs to continue to identify and implement necessary interim security measures to protect people, facilities, and information until such time as permanent, secure facilities can be constructed. An unfortunate trend seen at some posts has been for the Department to delay the implementation of interim measures because of the planned near-term construction of new facilities, which is then continuously postponed.

The Department needs to put more focus on the memorandum of agreement (MOA) between the chief of mission (COM) and the geographic combatant commander (COCOM), which specifies either the COM or COCOM as having security responsibility for every Department of Defense element in country. Office of Inspector General inspections conducted in FY 2010 found several missions with MOAs that were either inaccurate or out-of-date. Adequately protecting U.S. overseas personnel requires clearly defined security responsibility.

In an audit of maintenance and improvements (M&I) of overseas property, OIG found that posts’ M&I needs were not met, primarily because the funding that the Department received was not sufficient to enable the Bureau of Overseas Buildings Operations (OBO) to fund all needed M&I. OBO had established processes to use its limited funds to address the most critical needs worldwide. These processes provided routine maintenance and repair (M&R) funds to posts in a more equitable manner than had been done in past years and funding for the highest priority repair and improvement (R&I) requirements. However, inconsistencies in the priority scores assigned to some R&I requirements bring into question the reliability of the prioritization process. The lack of sufficient funds to address M&I needs has resulted in deteriorating facilities at posts. In fact, OBO reported that 25 percent of its facilities were in poor condition.

6. Information Security

The Department continues working to satisfy the requirements of the Federal Information Security Management Act of 2002. During FY 2010, the Department modified its systems inventory management approach and its certification and accreditation (C&A) toolkits, while updating its contingency plan policy. However, the Department continues to face challenges in implementing a fully effective information security management program. The plans of action and milestones process must be strengthened by: working with system owners to ensure timely reporting of security weaknesses during the C&A process; testing contingency plans; developing detailed standard operating procedures for addressing each information technology security weakness and/or finding; and actively monitoring, validating, and implementing remediation steps to correct all security weaknesses within a reasonable timeframe. Security awareness also must be strengthened. Specifically, the processes to identify the number of users with access to the network and the number of users who have taken cyber security awareness training have not been fully defined.

7. Financial Management

Financial management continues to be a major challenge in the Department. In each of the past four years, the Department could not respond in a timely manner to requests for evidential material during the audit of the financial statements. As a result, for each of these years, the independent external auditor was unable to express an opinion on the overall financial statements by the mandated deadline. Specifically, for the audit of the FY 2009 financial statements,14 the independent auditor indicated that it could not express an opinion on the Statement of Budgetary Resources; and, because of concerns related to property and equipment, the auditor issued a qualified opinion on the Balance Sheet and Statement of Net Position. The auditor also identified significant internal control deficiencies related to property and equipment, and to oversight of information obtained from an independent commission related to environmental liabilities, financial reporting, accounts payable accruals, unliquidated obligations, and information technology.

The Department continues to take steps to improve internal controls over financial management. The Department reported it is taking a number of steps to improve controls over property and equipment, including expanding its process to analyze leases, performing a reconciliation of the real property information included in the property management and financial management systems, and improving accounting for personal property. The Department is also modifying its financial reporting process. In addition, the Department is working to improve the estimation process for overseas and domestic accounts payable and establish a process for intra-governmental accounts payable. The Department is also working to address the weaknesses related to unliquidated obligations, including distributing aging reports to users.

8. Counterterrorism and Border Security

Cross-border issues including illegal immigration, alien smuggling, environmental issues, and U.S. business interests, continue to either directly or indirectly challenge the Department. With the implementation of the western Hemisphere Travel Initiative, the Department has added passport agencies and a new passport card in order to meet demand for the required documents.

The Bureau of Consular Affairs has deployed an online visa application form, mandatory for every applicant worldwide, designed to share information and prevent identity fraud in the visa application process.

President Obama Announces Exchange Programs Focused on Entrepreneurship, Innovation, and Science

Promoting education globally is a vital element of the Administration’s foreign economic and development policy — an initiative that fosters economic growth, promotes civil society, and provides new economic opportunities for U.S. business and investors. The State Department’s Bureau of Educational and Cultural Affairs (ECA) will highlight the importance of entrepreneurship, economic opportunity, and community development. ECA is forging partnerships with organizations such as Business for Diplomatic Action (BDA) and Entrepreneurs’ Organization (EO), to offer educational seminars, mentorship, and first-hand experience in the American business place with leading entrepreneurs.

  • ECA will bring 25 entrepreneurs to the United States per year over the next four years through the International Visitor Leadership Program, “New Beginning: Entrepreneurship and Business Innovation.”
  • ECA will work with private sector partners to send at least 100 American entrepreneurs abroad over the next four years.
  • ECA’s new pilot program, TechWomen, is designed to provide professional peer mentorships for approximately 25 women from eligible countries working in the field of technology with their counterparts in the United States.
  • ECA’s “Science and Technology Education” exchange will bring 25 science teachers from countries with significant Muslim populations to the United States to examine effective methods of teaching science at the primary and secondary school levels.
  • At least 30 Fellows from eligible countries will participate in a new “Education to Employment” initiative within the Young Entrepreneurs Program (YEP). Fellows will include family-run business owners, women artisans, representatives of the disabled community, and NGO professionals. They will undergo internship and mentoring experiences for approximately 3-8 weeks in the United States. After the Fellows return to their home countries, they may receive continued support through YEP’s follow-on programs.

9. Iraq Transition from Military to Civilian Presence

Significant challenges face the Department during the transition from military to civilian presence in Iraq, including the effects of the delays in forming a new government in Iraq; securing people and facilities; budget adequacy and long-term cost sustainability.15

The U.S. has not been able to complete negotiations on future posts or programs due to delays in Iraq’s formation of a new government. These delays, in turn, have affected the United States’ ability to complete detailed plans and budgets.

Diplomatic Security (DS) does not currently have the capacity to fully secure the facilities and movement of people for a large civilian presence, depending on security conditions and the availability of resources. As troops draw down, DS will be required to expand its security responsibilities in a dangerous environment and where, at previous diplomatic posts, State might have closed the post and evacuated all personnel.16 DS must provide security17 for this presence, which will require DS to expand already large operations in Iraq and replace the military’s protection services. The Department is requesting $1.9 billion to provide for this security. In addition, pending approval from the Government of Iraq, State and the Department of Defense (DOD) are considering options and potential funding sources for a large U.S. Office of Security Cooperation. The office could employ about 350 personnel in Baghdad and other locations and would continue DOD’s mission of supporting Iraq’s military development.

The Department requested $4.7 billion in the FY 2010 supplemental and FY 2011 budget to fund its plans for a large civilian presence in Iraq during and after the drawdown of U.S. forces. These budget requests may not reflect the actual costs of its future civilian presence. These requests were based on staffing estimates that continue to change and affect cost estimates for security and construction. FY 2012 costs for Iraq are likely to rise: the FY 2011 request only funds the final months of FY 2011 when State assumes responsibility for these posts and programs from DOD. For example, State only requested 3 months’ worth of operations costs, $294.6 million, for police training in FY 2011, to cover the transition from DOD. Full year costs are expected to be more than $1 billion.

In the long term, the Department plans to maintain a robust presence that will include its largest embassy in the world and an extensive field presence of four branch offices with thousands of personnel.18 Further, the Department plans to operate a costly police development program, involving more than 200 hundred police advisors and hundreds of support contractors. And, the Department may need to absorb hundreds of support roles or activities currently undertaken by the military, such as working with the Government of Iraq to ensure its aviation system is compliant with international standards.

1 A simplified acquisition is a purchase made from a private commercial business source totaling $100,000 or less (or $5.5 million for commercial items). (back to text)

2 Accounting for Government-Owned Personal Property Held by Selected Contractors in Afghanistan - AUD/IQO-07-48 (back to text)

3 Audit of the Design and Construction of the New Embassy Compound in Baghdad, Iraq - AUD/IQO-09-25 (back to text)

4 Humanitarian Mine Action Programs in Iraq - ISP/I-10-41; Inspection of Embassy Kabul, Afghanistan - ISP-I-10-32A; Inspection of the Bureau of African Affairs - ISP-I-09-63; Compliance Follow-Up Review of the Bureau of Administration’s Office of the Procurement Executive, Office of Acquisitions Management, and Office of Small and Disadvantaged Business Utilization - ISP-C-10-23; Inspection of Embassy Kinshasa, The Congo - ISP/I-09-36A (back to text)

5 Inspection of Embassy Freetown, Sierra Leone - ISP-08-18A; Inspection of Embassy Guatemala City, Guatemala - ISP-I-09-11A; Inspection of Embassy Managua, Nicaragua - ISP-I-08-54A; Inspection of Embassy Mexico City, Mexico - ISP-I-09-21A (back to text)

6 Inspection of the Exercise of COM Authority in Managing the PEPFAR Program Overseas - ISP-I-10-01; Inspection of Embassy Cairo, Egypt - ISP-I-10-02A (back to text)

7 The Bureau of Public Affairs - ISP-I-10-39; The Bureau of African Affairs - ISP-I-09-63; Embassy Banjul, The Gambia - ISP-I-09-15A; Compliance Follow-Up Review of Embassy Podgorica, Montenegro - ISP-C-10-46 (back to text)

8 Embassy Belgrade, Serbia - ISP-I-10-09A; Embassy Kabul - ISP-I-10-32A (back to text)

9 Embassy Islamabad and Constituent Posts, Pakistan - ISP-I-10-64; Embassy Rome, Italy, Its Constituent Posts, and the Republic of San Marino - ISP-I-10-59A; Embassy Maseru, Lesotho - ISP-I-10-58A (back to text)

10 Embassy Podgorica, Montenegro - ISP-C-10-46; Embassy Islamabad and Constituent Posts, Pakistan - ISP-I-10-64; Embassy Kuwait City, Kuwait - ISP-I-10-33A; Compliance Follow-Up Review of Embassy Dar es Salaam, Tanzania - ISP-C-10-31A (back to text)

11 Embassy Kabul - ISP-I-10-32A; Embassy Islamabad and Constituent Posts, Pakistan - ISP-I-10-64; Embassy Amman, Jordan - ISP-I-10-35A; Embassy Djibouti, Djibouti - ISP-I-10-50A; Embassy Mbabane, Swaziland - ISP-I-10-57A (back to text)

12 Embassy Maseru, Lesotho - ISP-I-10-58A (back to text)

13 Embassy Amman, Jordan - ISP-I-10-35A, pp. 68, 75; Embassy Kabul - ISP-I-10-32A, p. 108; Embassy Riyadh - ISP-I-10-19A, pp. 22, 79; Embassy Rome - ISP-I-10-59A, p. 19; Embassy Lilongwe - ISP-I-10-60A, p. 15; Embassy Addis Ababa - ISP-I-10-51A, p.34; Embassy Islamabad and Constituent Posts, Pakistan - ISP-I-10-64, p. 34; Embassy Abu Dhabi - ISP-I-62A, p. 17; Embassy Sana’a - ISP-I-10-63A, pp. 16-17 (back to text)

14 Independent Auditor Report on U.S. Department of State 2009 and 2008 Financial Statements - AUD/FM-10-03 (back to text)

15 Performance Audit of Embassy Baghdad’s Transition Planning for a Reduced United States Military Presence in Iraq – MERO-A-09-10 (back to text)

16 Ibid. (back to text)

17 The Bureau of Diplomatic Security Baghdad Embassy Security Force – MERO-A-10-05 (back to text)

18 Review of the Roles, Staffing, and Effectiveness of Regional Embassy Offices in Iraq – MERO –IQO-09-09 (back to text)

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