This report is provided in accordance with the Reports Consolidation Act of 2000.1 Each year, the Office of Inspector General (OIG) for the Department of State (Department) identifies the most serious management and performance challenges facing the Department and provides a brief assessment of the Department’s progress in addressing those challenges.
We assess progress primarily through our compliance process, which relates to individual and often targeted recommendations. Our oversight work, however, gives us unique visibility into the most significant challenges facing the Department. We note that our work this year was affected by the lapse in appropriations that occurred from December 21, 2018, to January 25, 2019. Although this lapse affected all of OIG, it had particular consequences for our inspection work, as we were forced to cancel our winter inspection cycle. Nonetheless, we issued more than 105 reports in FY 2019, and based on a thorough review of that work and past work, we identify the following major management and performance challenges the Department faced in FY 2019:
Protection of people and facilities
Oversight of contracts, grants, and foreign assistance
Information security and management
Financial and property management
Operating in contingency and critical environments
Workforce management
Promoting accountability through internal coordination and clear lines of authority
We have included within this document examples of reports and findings that are particularly illustrative or noteworthy on certain points. In addition to publicly available work, OIG issues a number of Sensitive But Unclassified and Classified reports throughout the year. Many of the findings in those reports reinforce our assessment of these management challenges, particularly as they relate to protection of people and facilities and information security and management.
We note that these challenges often interact, overlapping and reinforcing one another. For example, protecting people and facilities is often a challenge in contingency and critical environments, and workforce management challenges are frequently found at the root of deficiencies related to contract and grant oversight. Likewise, weaknesses related to poor coordination and unclear lines of authority contribute to a range of concerns, including information security deficiencies.
Continued attention to the management challenges identified in this report will improve the Department’s capacity to fulfill its mission while exhibiting good stewardship of public resources. OIG encourages the Department to consider ways that specific recommendations might be applied broadly to make systemic improvements that will result in meaningful and permanent change. We hope that this report, accompanied by the oversight work we perform throughout the year, assists the Department in its efforts to improve the effectiveness and efficiency of its programs and operations.
1. Protection of People and Facilities
The Department properly prioritizes the safety and security of its personnel and facilities. Nonetheless, the global presence of the Department and the widespread threat of physical violence against U.S. diplomats and U.S. diplomatic facilities ensures that the protection of people and facilities remains a top management challenge.
Although naturally greater in conflict areas such as Iraq and Afghanistan, all U.S. diplomatic facilities face some level of risk. Additionally, natural disasters, environmental hazards, and ordinary crime continually pose risks to the health and safety of Department personnel and their families serving abroad. Much of OIG’s work identifies these types of risks to the protection of Department personnel and facilities and provides recommendations to address those risks.
Constructing and Maintaining Safe and Secure Diplomatic Facilities
Constructing and maintaining safe and secure diplomatic facilities has been an ongoing challenge, which is compounded in regions affected by conflict and humanitarian crises. OIG continues to recommend steps the Department can take to improve adherence to its own policies and procedures.
Construction projects at Embassy Kabul, Afghanistan, remain a focus. For example, in one FY 2019 audit, we found that, because OBO still has difficulty expediting physical security projects in Kabul, the mission has relied on the regional security office to manage large-scale construction projects. However, given that office’s relative lack of construction experience, some projects have faced deficiencies as a result.2 We discuss other facets of these findings below, as they also relate to the Department’s challenges to oversee contractor performance and to manage operations in contingency environments.
Beyond ensuring the initial construction of safe and secure facilities, the Department is responsible for comprehensive preventative and routine maintenance of its existing facilities. Our FY 2019 inspection work continued to identify problems related to facilities maintenance at several overseas posts. In Paramaribo, Suriname, the embassy’s leaky roof led to mold problems that created health hazards for employees, many of whom reported respiratory issues to OIG.3 Despite having been identified in March 2017, OBO had not yet addressed the problem at the time of our inspection. Furthermore, we encountered a poorly maintained chancery with numerous physical defects in Banjul, The Gambia,4 and we reported a potential workplace safety hazard at Embassy Port-au-Prince, Haiti, where the embassy’s two elevators continued in use despite the identification of 48 unaddressed deficiencies.5
Ensuring the Health and Safety of Personnel Abroad
Although our inspection work consistently finds that embassy leadership is engaged on health and safety issues, we also continue to identify instances where a lack of management oversight and failure to follow Department standards creates risks for Department personnel and their families. As in previous years, we note the following three areas for improvement: the operation of official vehicles, residential safety and security, and emergency preparedness.
Operation of Official Vehicles Overseas
Several FY 2019 inspection reports identified a lack of compliance with motor vehicle safety standards in the operation of official vehicles overseas. As in previous years, OIG found lapses in medical clearances for drivers, outdated or absent safety training for operators of official vehicles, and drivers working excessive hours, a practice that increases the risk of motor vehicle accidents caused by driver fatigue. In particular, Embassy Port-au-Prince, Haiti—a post that exhibited all the deficiencies noted above—had the highest number of motor vehicle mishaps among overseas missions. From FY 2012 to FY 2017, the embassy reported 311 mishaps, of which the Department deemed nearly 60 percent preventable.6
Residential Safety and Security
The Department also continued to exhibit deficiencies in the administration of its housing and related anti-crime program in FY 2019. Our inspection report findings show that many Department employees and their families continue to occupy residences abroad that do not or cannot be demonstrated to meet Department safety standards.
In Kigali, Rwanda, we found that 40 of the embassy’s 68 residencies had not been certified for occupancy.7 This was notable given the post had seen multiple hazardous electrical incidents, one of which led to injuries requiring medical treatment for a child who came in contact with an inadvertently electrified metal pipe. Additionally, we found the embassy in Haiti, site of the devastating 2010 earthquake, did not conduct seismic safety assessments of 25 leased residential units as required by Department standards.8
Emergency Preparedness
Department guidelines require U.S. embassies to maintain post-specific emergency action plans to respond to situations such as bombs, fires, civil disorder, or natural disasters. Although we frequently find substantial compliance with emergency planning standards, we continue to highlight deficiencies that we identify because of their significant implications for life and safety.
For example, some consular sections—which play a lead role in crisis preparedness—did not meet Department standards. In New Delhi, India, we found that many consular employees did not know what their roles might be in a crisis and that they were unfamiliar with the contents of a disaster assistance kit, which is vital to their ability to function off-site in an emergency.9 In Koror, Republic of Palau, the embassy did not have a disaster assistance kit, and other basic equipment, such as a satellite phone, had not been tested within the preceding year.10
2. Oversight of Contracts, Grants, and Foreign Assistance
The oversight of contracts, grants, and foreign assistance continues to be a significant challenge for the Department. Domestically and abroad, Department entities did not consistently and adequately monitor contractor performance, conduct thorough invoice reviews, and oversee grants and foreign assistance programs. A growing body of OIG work also illustrates the difficulty the Department faces in managing large, long-term construction contracts, particularly in contingency environments. Because of the substantial resources involved (more than $15 billion for contracted services and $15 billion for grants and fixed charges obligated in FY 201811), inadequate oversight and mismanagement pose considerable financial risk.
Monitoring and Documenting Contractor Performance
The Department continues to face challenges in properly overseeing contractor performance. Oversight personnel must monitor and document performance, confirm that work has been conducted in accordance with the terms of a contract, hold contractors accountable for nonperformance, and ensure that costs are effectively contained. Our FY 2019 work found several examples of deficiencies in the performance of these duties. Moreover, we often find that these issues overlap with another Department challenge: workforce management. Inexperienced and untrained oversight personnel, staff rotations that promote inefficiency, and complex programs and contracts that simply require more oversight are often at the root of contract oversight deficiencies.
For example, we found that officials from the Bureau of Near Eastern Affairs did not consistently nominate Contracting Officer’s Representatives (CORs) and other oversight personnel with the required certification level and technical expertise to oversee contracts in Iraq. Moreover, oversight personnel did not always possess sufficient technical expertise relative to the contract’s subject matter. Once appointed, the bureau also failed to effectively evaluate the performance of the CORs. On a related point, the same audit found that COR files on contracts in Iraq, with a total value of more than $3 billion, were often incomplete.12 Although the Department has recognized issues with its COR workforce, the challenge to nominate CORs with the requisite level of technical expertise persists.
Ensuring Proper Invoice Review and Approval Processes
Proper invoice review and approval processes help the Department ensure that it receives the benefit of its contracts and that it can take appropriate steps if contractors are not performing in accordance with the terms of a contract. When the Department has focused on this issue, it has been successful in improving the accuracy and efficiency of these important processes. For example, one report noted that the Department’s Bureau of Diplomatic Security (DS), Training Directorate, Office of Training and Performance Standards (TPS) had an effective system of internal controls in overseeing expenditures. Such oversight included contract monitoring; records management; and an automated system for review, approval, and timely payment of contractor invoices. Collectively, the internal controls TPS employed helped ensure funds expended to third-party contractors were done so in accordance with Federal regulations and guidance and therefore reduced the risk of unallowable or unsupported transactions.13
Nonetheless, room for improvement remains. In a review of four previous audit reports that assessed invoice review processes and procedures, we sought to determine common challenges faced by bureaus that rely heavily on contracted support to conduct their missions in Afghanistan and Iraq. Our review noted that none of the four bureaus had an internal quality control function to check the accuracy of CORs’ invoice reviews to ensure the Department paid for services it received. As a result, we recommended that the Bureau of Comptroller and Global Financial Services (CGFS) advise all relevant Department bureaus of the potential benefits of its invoice review quality control program. Taking advantage of this best practice could help the bureaus recover improper payments, address weaknesses, and improve the overall invoice review process.14
Overseeing Construction Contracts
The Department continues to experience problems with the oversight of construction contracts, which are often long-term, complex, and of high value. There are obvious financial consequences to inadequate management and oversight of these contracts, but more importantly, insufficient oversight of the building process can lead to the construction of substandard facilities, which sometimes has implications for the safety and security of personnel.
In a notable example of this concern, for a construction project at Camp Eggers in Afghanistan, the Department used a clause in a contract for protective services to facilitate construction, even though this type of contract vehicle had not previously been used for the type of extensive construction work planned at this location.15 As a result of the contract vehicle, Bureau of Diplomatic Security officials were assigned to oversee the work, and they acknowledged that DS had very little, if any, expertise related to construction or construction-related contracts.16 There were numerous subsequent problems, including a failure to take meaningful corrective action against the contractor even though it missed milestones and failed to comply with contract requirements. We found that the Department ultimately terminated the project for convenience after very little work had been accomplished at a cost of $103.2 million.17
Our FY 2019 work also examined the commissioning phase in construction contracts— the systematic process of assuring that all building systems perform interactively, in accordance with the design documentation and intent, and with the owner’s operational needs. Typically, all major systems should be commissioned before the Department declares new buildings substantially complete and, thus, allows for their occupancy by personnel. However, in a report that addressed the commissioning of two residential buildings at Embassy Kabul, we found that—in order to accommodate the Ambassador’s request to expedite occupancy as a result of security concerns—the Bureau of Overseas Buildings Operations (OBO) declared the buildings substantially complete even though 8 of 22 systems were not commissioned. We reported that the way in which OBO managed construction at Embassy Kabul—as a single project with one completion date for multiple buildings constructed over the course of many years—contributed to a situation where the Department essentially had to choose between moving staff into hardened structures and completing commissioning.18
We also identified weaknesses in how OBO maintains commissioning documentation, which serves as the historical record of key decisions made throughout the project planning and delivery process. In one review, we found some documents were completed in a hard-copy format and placed in binders. This practice is concerning because the commissioning process can take years to complete, and hard-copy tests cannot be easily and simultaneously accessed by stakeholders onsite and in Washington. Additionally, we found OBO uploads commissioning documentation only at the end of a construction project, which inhibits its visibility and increases the risk that documents could be inadvertently lost or not uploaded. We concluded that the Department should identify industry best practices for automating commissioning documentation, which would benefit OBO construction projects worldwide.19
Our inspections work has also identified issues related to oversight of construction contracts. For example, at Embassy Nairobi, Kenya, staff from the Bureau of International Narcotics and Law Enforcement Affairs (INL) accepted a renovated building in February 2017 without an adequate inspection of the construction. More than 15 months after acceptance, the building still could not be used as intended, and the bureau planned to execute a second phase of renovations, which would include repairing the deficiencies from the first phase of work. We found the bureau also failed to include a warranty in the contract terms and conditions for the renovation and repair of the building, thereby limiting its recourse against the contractor.20
Overseeing Grants and Foreign Assistance Programs
In FY 2019, OIG observed some improvements in the Department’s oversight of grants and foreign assistance program. For example, a recent audit in Iraq found substantial compliance with Federal requirements, Department guidance, and award terms and conditions in monitoring cooperative agreements supporting internally displaced persons in Iraq.21 In another report, OIG found that the Department halted security assistance to units of the Somali National Army because the Government of Somalia failed to ensure proper monitoring and control of those units. The Department told the Somali Government that assistance could not resume until transparency, accountability, and oversight of U.S. assistance improved. The mission’s use of third-party contracts to monitor foreign assistance programs also improved oversight in Somalia’s operating environment where the movement of Department personnel is limited because of security concerns.22
Even with these improvements, we continued to find deficiencies related to monitoring, site visits, program evaluation, and sustainability in our FY 2019 work. For example, in the inspection of the U.S. Mission to Somalia, we reported that several public diplomacy grants we reviewed contained no evidence of monitoring or any other correspondence after most of the award amounts had been dispersed to the grantees.23 That same inspection found that, despite the oversight improvements noted above, neither Mission Somalia nor the Department had fully assessed the risk that foreign assistance funding could benefit terrorists or their supporters.24 Similarly, among the issues cited in our inspection of Embassy Bogota, we determined that four of six INL grants totaling $50.2 million did not have initial monitoring plans or evidence of monitoring, and five of the grants did not contain all of the required reports needed to document recipient performance and financial expenditures.25
Additionally, we found the Bureau of Democracy, Human Rights, and Labor (DRL) failed to conduct and document site visits systematically in accordance with monitoring plans. Grants Officer’s Representatives (GORs) did not conduct all of the site visits set out in the monitoring plans for most of the grants that OIG reviewed, and most award files lacked any documentation of site visits, making it difficult to determine if a site visit actually took place and what was found.26
Furthermore, our work finds that INL continues to face challenges overseeing its large portfolio of grants. For example, in Haiti, the bureau did not conduct formal evaluation efforts to analyze the impact of its five key projects and to verify and measure performance in achieving goals.27 INL’s reports focused on the achievement of quantitative metrics, such as the number of new national police recruits and the completion of construction projects. While useful in tracking short-term outputs, the lack of formal project and program evaluations impeded INL’s ability to improve program design and implementation. We also highlighted concerns related to the sustainability of foreign assistance program investments. For example, also in Haiti, we found the completion of a $100 million hospital was at risk because the government had yet to contribute its $11 million share of the costs.
Related to foreign assistance programs, we continue to urge the Department to focus on planning and designing programs that meet policy goals and achieve intended objectives. In one of our FY 2019 audits, we could not affirm whether grants and cooperative agreements awarded to counter violent extremism were achieving desired results because the Bureau of Counterterrorism and Countering Violent Extremism (CT) had not ensured that the strategic plans and activities of Department bureaus aligned with the overall Department goals.28 The lack of alignment hinders the Department’s ability to measure the results of these awards, identify best practices that could be replicated, or abandon ineffective efforts that do not advance goals and objectives. Entities responsible for foreign assistance funds should focus on strategic planning that ensures programs are designed and resources are allocated to meet foreign policy goals.
Additionally, a special evaluation of the Antiterrorism Assistance Explosive Detection Canine Program highlighted issues with an overall lack of policies and standards governing this program. The Department routinely provides dogs to foreign partners without signed written agreements that outline standards for minimum care, retirement, and use of the canines, and the Department conducts health and welfare follow-ups infrequently and inconsistently. Specifically, OIG received reports of health and welfare concerns experienced by specific dogs in Jordan since an April 2016 site visit and report. One of the canines provided by DS/ATA died while working in Jordan in July 2017, and two others were returned to the U.S. in critically ill condition. One of those dogs was euthanized in March 2018, and the other had to be nourished back to health in April 2018 because it was severely underweight.29
3. Information Security and Management
The Department depends on information systems to function, and the security of these systems is vital to protecting national and economic security, public safety, and the flow of commerce. The Department acknowledges that its information systems and networks are subject to serious threats that can exploit and compromise sensitive information, and it has taken some steps to address these concerns. However, notwithstanding the expenditure of substantial resources by the Department, OIG continues to identify significant issues that put its information at risk.
Although the Department has taken steps to improve its information security program, as in prior years, OIG’s annual assessment of the Department’s information security program identified numerous control weaknesses that affected program effectiveness and increased the Department’s vulnerability to cyberattacks and threats.30 The lack of fully-implemented risk management strategy and dispersed authority contribute to many of OIG’s concerns regarding IT security and management at the Department.
As OIG has reported in previous years, the Chief Information Officer (CIO) is not well placed in the organization to be fully accountable for information security program issues. For example, DS, which also has information security responsibilities, does not report to the CIO. Additionally, OIG has identified concerns with the CIO’s ability to track and control IT investments, which affects the Department’s ability to obtain a clear picture of total IT spending. The Department took some steps to strengthen the delegation of authority to the CIO, and we continue to assess whether the Department’s IT security program has noticeably improved as a result.
Lapses in the performance of duties by Information Systems Security Officers (ISSOs)31 persisted in FY 2019. We first identified pervasive concerns in this area in 2017,32 but our overseas inspections work continued to find numerous posts where unclassified and classified ISSOs did not perform all information systems security duties as required.33 As a result, OIG found information security issues that could have been prevented with regular performance of these mandated duties. Moreover, without a systematic approach to monitoring networks and recording findings, Department networks could be breached, and information security compromised. Accordingly, OIG issued recommendations for individual posts to implement standard operating procedures to ensure performance of ISSO duties.
OIG also continued to find deficiencies related to developing, testing, and training employees on IT contingency planning at overseas posts.34 Department guidelines require every information system to have a contingency plan that is documented and tested annually. Incomplete and untested IT contingency plans increase the risk of ineffective responses to or loss of critical communication during an emergency. Embassies failed to show that they tested IT contingency plans annually, and initial and refresher IT contingency training for IT employees was lacking.
Another issue often noted in our inspection work pertains to local IT configuration control boards. Department policy requires any embassy that maintains its own IT systems to establish a local control board to ensure that the hardware, software, and network components installed on the local area network do not adversely affect the existing IT infrastructure. Nonetheless, we found multiple overseas posts that had not established a board to govern all systems equipment operated on the embassy’s network.35 Furthermore, in an audit on the Department’s local control boards, we reported that even where boards are operating, they are not consistently complying with all policies.36 For example, we found a lack of testing performed on change requests and weaknesses in maintaining documentation regarding board decisions on change requests.37
We also identified concerns with mechanisms used by the Department to assess its IT systems for deficiencies. For example, the Department created a team to assess IT networks and to provide recommendations and remediation strategies to enhance the Department’s IT posture. Although this effort had a positive effect on the IT posture at posts where the assessment had occurred, we identified improvements that could be made to the process. For example, bureaus and posts were not required to respond to recommendations made during the assessment, and the team did not ensure that all vulnerabilities identified had been remediated. In addition, some recommendations made by the assessment team were duplicative and of limited qualitative value. We also found that there was no mechanism in place to communicate identified vulnerabilities to the system owner if a vulnerability was considered significant or required additional resources to remediate.38
Finally, we note that some of our FY 2019 work highlighted the difficulties the Department faces acquiring and developing new IT systems. In the Office of Foreign Missions, we found that the lack of a fully implemented systems development lifecycle methodology hindered the development of the office’s IT system and significantly delayed its completion.39 As a result, staff had to manage its work on a system that had not had a valid authorization to operate since 2013. In the Bureau of Democracy, Human Rights, and Labor, we found the bureau did not prepare a project plan that included necessary budget and planning elements for a system intended to replace the current system on which Leahy vetting is conducted.40 The bureau also lacked a technically qualified project manager to oversee development of the new system. These deficiencies raised the risks of cost overruns and delays, which could ultimately compromise the Department’s ability to conduct Leahy vetting.
4. Financial and Property Management
Management of its financial resources and property remains a challenge for the Department. One significant aspect of this challenge relates to overall internal control issues—namely, the Department’s ability to identify internal control weaknesses in the first place and its subsequent compliance with relevant standards. This issue affects management of both the Department’s financial resources and its property. In addition, we identify weaknesses in the Department’s collection, use, and analysis of financial information. As with oversight of contracts and grants, attention to this challenge is particularly important to ensure that the Department appropriately oversees and uses public resources.
Internal Control Deficiencies
Department operations in FY 2019 suffered from a variety of internal control deficiencies, and an independent audit identified certain matters that were considered “significant.” OIG notes that weaknesses in property and equipment were initially reported in the audit of the Department’s FY 2005 consolidated financial statements and reiterated in subsequent audits. In FY 2018, the Department’s internal control structure continued to exhibit several deficiencies that hampered the Department’s ability to account for real and personal property in a complete, accurate, and timely manner. The auditor concluded that the combination of property-related control deficiencies was a significant deficiency.41
Internal control deficiencies were also identified during various OIG projects. For example, embassies in Gabon and Kenya failed to identify internal control deficiencies as a result of weak statement of assurance processes. Embassy Libreville did not prepare its 2018 Annual Chief of Mission Management Control Statement of Assurance in accordance with Department guidance, nor did it have an ongoing system of management controls.42 At Embassy Nairobi, the embassy followed the format required by the Statement of Assurance process but did not use the checklists to identify vulnerabilities.43
A lack of an annual acquisition plan for procurement was also a concern for several embassies. For example, in The Gambia, because the embassy did not have a plan for current and future contracting requirements, it had little knowledge of existing contracting requirements that were due to expire, ultimately resulting in several unauthorized commitments discovered by OIG.44 At Embassy Dakar, Senegal, we found that the existence of an annual acquisition plan for procuring supplies and services could have prevented the embassy from spending hundreds of thousands of dollars on excess and ultimately unused equipment.45
Several embassy inspections identified weaknesses in general property management controls involving warehouse access, inventory, spot checks, and related issues. At Nairobi, the embassy maintained more than $26 million in non-expendable inventory; of that amount, we found $14 million should be disposed of or replaced. For example, OIG found assets in the warehouse and residences that were due to be replaced in 1984 but were still in the inventory.46 At Consulate General Kolkata in India, staff did not track facilities management expendable supplies in the Department’s electronic inventory system. Instead, staff maintained a separate paper log to document inventory and issuance of expendable supplies, increasing the risk of theft. Also, Consulate General Mumbai’s on-compound warehouse lacked adequate access control.47
The proper documentation of property transfers to residences has also been an ongoing challenge. Data in the electronic inventory system at Embassy Port-au-Prince showed the embassy did not document more than 20 percent of nonexpendable property transfers to residences over nearly 2 years, increasing the risk of theft.48 Embassy New Delhi failed to consistently document such transfers for both FY 2016 and FY 2017.49
As in years past, several reports noted issues with embassy management of fuel, an asset that is particularly vulnerable to theft given its significant value. At Embassy Dakar, spot checks of residential fuel deliveries were not conducted, and local staff oversaw deliveries, contrary to Department standards.50 Similarly, at Embassy Port-au-Prince, INL did not adequately supervise its fuel, allowing Haitian Government personnel to accept deliveries, which risks waste, fraud, and mismanagement of the asset.51
Relatedly, we noted frequent internal control deficiencies affecting the Department’s fleet of official vehicles. For example, Embassy Bogota did not track motor pool expendable supplies, such as motor oil and oil filters, in the Department’s electronic inventory system.52 Also, neither Embassy Bogota nor Embassy Libreville monitored the operating costs of their official vehicles, and Embassy Libreville and Embassy Vienna did not control access to motor vehicle keys.53 In addition, Embassy Vienna did not establish adequate internal controls over the credit cards used to purchase fuel for its motor vehicle fleet.54 At Embassy Dakar, incidental American drivers garaged or parked official vehicles at their residences without prior specific authorization from the Chief of Mission. Without such approval, policy requires official vehicles to be parked overnight on an embassy compound for security, accountability, and safekeeping purposes.55
Further, although we found that Department purchase cardholders generally used their Government cards for purchases allowed by laws and regulations, we noted other internal control issues related to the Department’s purchase card program. For example, we found that purchase cardholders did not always record and document purchases or reconcile monthly statements in accordance with Department policy. We also found that 10 percent of bureaus and posts had not completed a required annual review of their purchase card programs.56
Collecting, Analyzing, and Applying Financial Information
Flaws in the Department’s collection, use, and analysis of financial information continue to be an aspect of this management challenge. These weaknesses are often attributable to the use of outdated or weak methods of collecting, analyzing, and applying financial and related data.
For example, we identified several concerns regarding the cost management of the Department’s Embassy Air program, which was established to provide aviation support for the U.S. missions in Afghanistan and Iraq.57 Beginning in 2012 in Afghanistan and 2011 in Iraq, the Department had incrementally increased ticket fees with the goal of covering a larger percentage of operational costs. In our assessment of these decisions, we found that when ticket fees increased, ridership declined and Embassy Air services became significantly underused. Ultimately, our audit concluded that when the Department set ticket fees, it did not use a documented methodology for doing so. Moreover, there was a lack of routine review and adjustment to align the frequency of Embassy Air flights and the number of aircraft in-country with demand. As a result, the Department continued to pay the significant costs associated with underused aviation operations over the course of several years.
Embassy Bogota also serves as an example of such shortcomings. During our inspection, we learned of a persistent shortfall in nonimmigrant visa application fees since at least 2014. The shortfall was determined to be approximately $1.6 million, and, according to the Bureau of Consular Affairs, Embassy Bogota is the only mission in the world with a shortfall. Despite an expert review of the issue, the bureau could not determine its cause, and we recommended a review of fee collections and reconciliations to identify the cause and correct the issue.58
5. Operating in Contingency and Critical Environments
Programs and posts operating in contingency and critical environments must adapt to constant change, pervasive security concerns, dramatic swings in personnel and funding, and widespread reliance on contractors and grantees. In addition to the overall challenge of protecting its people and facilities, the Department faces a much more specific challenge in managing contracts and foreign assistance programs in these locations.
We found the Department needs a process to prioritize and expedite procurement related to urgent physical security construction projects at high-threat posts. Our reports on construction projects at Embassy Kabul, Afghanistan, offer several illustrative examples. At the outset of construction projects in this location, the Department has experienced acquisition delays for physical security upgrades because of the absence of an adequate contract mechanism for procuring construction services. Specifically, we recommended Embassy Kabul establish a procurement mechanism such as an indefinite delivery, indefinite quantity contract. This is a type of contract that could improve security vetting and streamline the acquisition process by awarding task orders among preselected contractors.59 Indeed, the need to start work quickly was a factor in the Department’s decision to have the Bureau of Diplomatic Security manage the Camp Eggers project, a large-scale construction contract in Afghanistan. As noted previously, despite a lack of construction experience on the part of DS and the contractor, a sense of urgency led the Department to move forward with a project that ultimately cost more than $100 million and resulted in no discernible benefit.60
Contingency environments also affect Department operations in the area of invoice review. We found that the type of contract used was one factor that prolonged invoice review in bureaus that relied on contracted support to conduct their missions in Iraq and Afghanistan. Specifically, to account for price volatility in unstable environments, the Department is more likely to use cost-reimbursable contracts in contingency environments as opposed to firm-fixed-price contracts. We found these contracts result in complex and lengthy invoices, which had a significant effect on the workload of reviewers and increased the risk of error or delay in the process.61
More generally, in our inspection of Mission Somalia, we found that the country’s restrictive operating environment, dual locations in Nairobi and Mogadishu, and difficulties in staffing the mission impeded diplomatic activities, foreign assistance management, and internal controls. We made recommendations targeting these specific issues, and we also noted that, despite security constraints, the mission conducted useful reporting and media outreach.
6. Workforce Management
The Bureau of Human Resources rightly identifies staff as the Department’s greatest asset. The Department accordingly expends substantial resources on recruiting, training, and retaining a diverse, talented workforce capable of carrying out the Department’s foreign policy goals and priorities. However, OIG’s work finds that staffing gaps, frequent turnover, poor leadership, and inexperienced and undertrained staff frequently contribute to the Department’s other management challenges. Workforce management issues are pervasive, affecting programs and operations domestically and overseas and across functional areas and geographic regions.
Maintaining Adequate Staffing Levels to Meet Operational Needs
Many Department entities experience difficulty maintaining staffing levels, a problem that was compounded this year due to the Department-wide hiring freeze, which is discussed in more detail below.
Embassy Nassau, The Bahamas, was among those posts that faced significant operations challenges due to lengthy staffing gaps in three key leadership positions: ambassador, deputy chief of mission (DCM), and management officer. The embassy had been without a permanent, confirmed ambassador since November 2011.62 At the Office of Foreign Missions (OFM), the acting Director held three leadership positions, and employees described him as overburdened and overwhelmed.63 Meanwhile, OIG noted that shifts in workload were not accompanied by a commensurate realignment of personnel and redefinition of office functions. As a result, at the same time that some OFM employees did not have enough work, others had more work than they could complete.64
In another example, we found that staff morale at Embassy Nairobi suffered because of a heavy workload and long hours associated with the months-long Kenyan election process and post-election violence. With the end of election-related violence in mid-April 2018, the embassy returned to a more normal work-life balance, but officers were still recovering from the effects of the heavy workload and long hours.65
Providing Appropriate Training/Ensuring Staff Are Appropriately Qualified
Underqualified staff is an issue that frequently intersects with the Department’s difficulties managing and overseeing contracts. For example, in Iraq, a lack of qualified personnel to serve as CORs suggested a shortfall in human capital planning. The Department has previously recognized issues with its COR workforce, but we found that initiatives recommended by a working group that was created to address the issue were not considered after the group concluded its work.66 Inadequate training is also a problem. For example, in India, political officers responsible for human rights, trafficking in persons, political-military affairs, counterterrorism, and nonproliferation did not have functional training in these areas.67 The lack of a documented process for setting and funding training priorities also prevented Public Affairs Section leadership from maximizing available resources to meet training needs.68
Managing the Effects of the Department-wide Hiring Freeze
As previously noted, the hiring freeze had a particular effect on workforce management this year. On January 23, 2017, the President ordered a Government-wide freeze on the hiring of Federal civilian employees.69 The Office of Management and Budget (OMB) lifted the hiring freeze on April 12, 2017, when its director released a plan to reduce the size of the Federal Government workforce through attrition, fulfilling a Presidential requirement to develop such a plan before lifting the freeze.70 However, the Department continued the hiring freeze for another 13 months, until the Secretary lifted it on May 15, 2018.71 A review by OIG showed that the freeze had a broad and significant effect on overall Department operations.72
The hiring freeze particularly affected on-board staffing levels for the Department’s eligible family members and Civil Service employees, which declined by 20.7 percent for the former and by 7.1 percent for the latter from January 2017 to May 2018 when the freeze was lifted.73 Bureaus and offices consistently described the process of requesting exemptions to the hiring freeze as time-consuming, inefficient, and frustrating.74 Bureaus also reported that they were unable to approve training and other professional development during the hiring freeze because of heavy workloads and Department-wide restrictions on detail assignments, which affected their ability to develop their workforces.75
We also noted that its implementation was not guided by any strategic goals linked to a discrete, but related, exercise to prepare a plan to improve the economy and efficiency of Department operations, known as the organizational reform effort. This disconnect led to an inability to apply staffing reductions in a way that reflected the Department’s strategic goals.
Lastly, our review found that all the bureaus and offices (38) and 97 percent of the embassies and consulates (145) that responded to our survey reported that the hiring freeze had either a somewhat negative or very negative effect on employee morale and welfare. Employees told OIG that the hiring freeze contributed to excessive workloads, and the lack of transparency about the objectives intended to be achieved by the hiring freeze caused some to be concerned about losing their jobs.
Holding Leadership Accountable to Department Principles
Strong leadership that adheres to appropriate standards is vital to ensuring a successful workforce. The Department’s Leadership and Management Principles guide the management of its workforce.76 These principles state that the Department relies on all employees to represent the U.S. Government in the course of carrying out its mission. However, managers and supervisors within the Department have a special responsibility to ensure the mission is carried out by leading by example to foster the highest attainable degree of employee morale and productivity.
A report on leadership within the Bureau of International Organization Affairs revealed numerous complaints, including allegations of disrespectful and hostile treatment of employees, unmerited accusations of disloyalty, and retaliation based on conflicts of interest.77 Many leadership concerns associated with the National Passport Center in New Hampshire were also reported to OIG, prompting a targeted review. Employees reported widespread inappropriate behavior that included allegations of retaliation, such as denying awards, promotions, and special assignments and pursuing meritless disciplinary actions; multiple incidents of sexual and gender-based harassment; and multiple accounts of subtle or blunt intimidation.78
Additionally, our inspection of Embassy Libreville revealed a leadership team falling short of the Department’s own principles. We found that verbal outbursts on the part of a senior leader created anxiety and impeded communications.79 We also found one leader who may have violated anti-nepotism guidelines and supervisors who failed to address poor performance by some staff members in several embassy sections.80
7. Promoting Accountability Through Internal Coordination and Clear Lines of Authority
Promoting accountability through careful internal coordination and clear, well-defined lines of authority is still a challenge for the Department. OIG finds that poor coordination and vague or dispersed authority are at the root of some of the Department’s other deficiencies. This is a concern that affects a wide range of Department functions: it is often implicated in problems particular to certain Department programs or projects, and it is likewise relevant to some of the Department’s more longstanding and systemic difficulties, including ensuring physical and information security.
A lack of internal coordination was one of our findings in the audit of the Department’s Directorate of Defense Trade Controls, which is charged with controlling the export of defense articles and services. Specifically, we found that licensing officers, who adjudicate applications from prospective exporters, did not always work with other relevant bureaus and offices to gain valuable input before approving applications.81 In our inspection of DRL foreign assistance program management, we heard from employees of regional bureaus and embassies that DRL did not always share sufficient information about sensitive democracy and governance programs taking place in their region or country, which hampered their ability to direct and supervise the implementation of foreign assistance programs.82
Furthermore, we found instances where dispersed and unclear authority contributed to weaknesses in certain programs and operations. For example, we reported that we could not affirm whether grants and cooperative agreements awarded to counter violent extremism were achieving desired results because the Bureau of Counterterrorism (CT) had not ensured that the strategic plans and activities of Department bureaus aligned with the overall Department goals.83 We found that CT officials could not enforce compliance with Department goals because they did not have the authority to do so. Similarly, we found that the search for a resolution to improper passport seizures at Embassy Sana’a, Yemen, was prolonged in part because there was no single decisionmaker with clear authority to resolve differing viewpoints on legal questions.84
A lack of coordination also affects the Department’s overall difficulties in tracking and prioritizing physical security needs at overseas posts and its struggle to implement an effective information security program. On the former, we have long noted in past reports a lack of coordination between OBO and DS, both of which have responsibilities for physical security at diplomatic facilities.85 The creation of a database of physical security deficiencies reflects improved coordination between the bureaus, but the Department must develop and implement a process to prioritize physical security deficiencies at overseas posts to improve allocation of funding. Regarding information security, OIG remains concerned with the overlapping and poorly defined responsibilities between DS and IRM and the organizational placement of the CIO, which impedes the position’s ability to effectively implement an agency-wide information security program. In addition to addressing these structural and organizational concerns through its reports and recommendations, OIG has repeatedly emphasized these matters in testimony, presentations, and other communications with the Department and with Congress.
Conclusion
Effectively implementing U.S. foreign policy through diplomacy, advocacy, and assistance is essential to our nation’s security and prosperity. However, each of the management challenges described in this report has an outsized effect on the Department’s ability to perform its mission and to safeguard taxpayer resources while doing so.
OIG observes that where multiple challenges overlap, unique vulnerabilities emerge for the Department. OIG is particularly concerned with the Department’s information systems, which are relied on by all programs and operations for carrying out the Department’s mission. Longstanding information security weaknesses put every other function at risk.
Additionally, widespread workforce management issues hinder oversight of contracts and grants and weaken internal controls, exposing the Department to the risk of fraud and waste, particularly in critical and contingency environments. In fact, our growing body of work on the construction projects at Embassy Kabul illustrates the interplay of all these issues. Pressure to quickly complete construction projects coupled with poor coordination among stakeholders, a slow acquisitions process, and personnel without the necessary expertise can lead to contract management mistakes with financial and security implications for the Department.
The Department will benefit most if deficiencies are effectively addressed in programs and operations that are affected by multiple challenges. OIG accordingly encourages the Department to consider how these challenges interact and how it can address them systemically. OIG remains committed to assisting the Department as it works to improve the effectiveness and efficiency of its programs and operations.
1 The Reports Consolidation Act of 2000, § 3, Pub. L. 106-531 (amending 31 U.S.C. § 3516). (back to text)
2 OIG, Audit of the Execution of Security-Related Construction Projects at U.S. Embassy Kabul, Afghanistan (AUD-MERO-19-40, September 2019). (back to text)
3 OIG, Inspection of Embassy Paramaribo, Suriname (ISP-I-19-20, July 2019). (back to text)
4 OIG, Inspection of Embassy Banjul, The Gambia (ISP-I-19-04, November 2018). (back to text)
5 OIG, Inspection of Embassy Port-au-Prince, Haiti (ISP-I-19-18, June 2019). (back to text)
9 OIG, Inspection of Embassy New Delhi and Constituent Posts, India (ISP-I-19-10, December 2018). (back to text)
10 OIG, Inspection of Embassy Koror, Republic of Palau (ISP-I-19-06, February 2019). (back to text)
11 Department of State, Agency Financial Report, Fiscal Year 2018. (back to text)
12 OIG, Audit of the Bureau of Near Eastern Affairs Selection and Management of Contract Oversight Personnel in Iraq (AUD-MERO-19-10, November 2018). (back to text)
13 OIG, Audit of the Bureau of Diplomatic Security’s Expenditures for Third-Party Contractors and Personal Services Contractors Supporting the Office of Training and Performance Standards (AUD-SI-19-30, June 2019). (back to text)
14 OIG, Lessons Learned from Office of Inspector General Audits Concerning the Review and Payment of Contractor Invoices Supporting Overseas Contingency Operations (AUD-MERO-19-19, April 2019). (back to text)
15 OIG, Evaluation of the Bureau of Diplomatic Security’s Aegis Construction Contract at Camp Eggers, Afghanistan (ESP-19-04, July 2019). (back to text)
18 OIG, Audit of the Bureau of Overseas Buildings Operations Commissioning of Diplomatic Housing at U.S. Embassy Kabul, Afghanistan (AUD-MERO-19-37, August 2019). (back to text)
19 OIG, Management Assistance Report: Modernizing Processes To Maintain Overseas Building Operations Commissioning Documentation Is Needed (AUD-MERO-19-31, June 2019). (back to text)
20 OIG, Inspection of Embassy Nairobi, Kenya (ISP-I-19-08, October 2018). (back to text)
21 OIG, Audit of Humanitarian Assistance Cooperative Agreements Supporting Internally Displaced Persons in Iraq (AUD-MERO-19-20, March 2019). (back to text)
22 OIG, Inspection of U.S. Mission to Somalia (ISP-I-19-09, October 2018). (back to text)
25 OIG, Inspection of Embassy Bogota, Colombia (ISP-I-19-14, April 2019). (back to text)
26 OIG, Inspection of the Bureau of Democracy, Human Rights, and Labor’s Foreign Assistance Program Management (ISP-I-19-12, October 2018). (back to text)
28 OIG, Audit of the Department of State Implementation of Policies Intended to Counter Violent Extremism (AUD-MERO-19-27, June 2019). (back to text)
29 OIG, Evaluation of the Antiterrorism Assistance Explosive Detection Canine Program—Health and Welfare (ESP-19-06, September 2019). (back to text)
30 OIG, Audit of the Department of State Information Security Program (AUD-IT-19-08, October 2018). (back to text)
31 ISSOs are responsible for implementing the Department’s information systems security program and for working closely with system managers to ensure compliance with information systems security standards. (back to text)
32 OIG, Management Assistance Report: Non-Performance of Information Systems Security Officer Duties by Overseas Personnel (ISP-17-24, May 2017). (back to text)
33 ISP-I-19-20, July 2019; ISP-I-19-18, June 2019; OIG, Inspection of the Office of Foreign Missions (ISP-I-19-21, May 2019); ISP-I-19-14, April 2019; ISP-I-19-15, March 2019; OIG, Inspection of Embassy Majuro, Republic of the Marshall Islands (ISP-I-19-07, February 2019); ISP-I-19-06, February 2019; OIG, Inspection of Embassy Kolonia, Federated States of Micronesia (ISP-I-19-05, February 2019); ISP-I-19-04, November 2018; OIG, Inspection of Embassy Dakar, Senegal (ISP-I-19-03, November 2018); ISP-I-19-08, October 2018. (back to text)
34 ISP-I-19-20, July 2019; ISP-I-19-18, June 2019; ISP-I-19-14, April 2019; ISP-I-19-07, February 2019; ISP-I-19-06, February 2019; ISP-I-19-05, February 2019; ISP-I-19-10, December 2018; ISP-I-19-04, November 2018; ISP-I-19-03, November 2018. (back to text)
35 ISP-I-19-18, June 2019; OIG, Inspection of Embassy Libreville, Gabon (ISP-I-19-16, June 2019); ISP-I-19-14, April 2019; ISP-I-19-07, February 2019; ISP-I-19-06, February 2019; ISP-I-19-03, November 2018. (back to text)
36 OIG, Audit of the Department of State’s Local Configuration Control Boards (AUD-IT-19-36, July 2019). (back to text)
38Audit of Selected Post Efforts To Track and Remediate Vulnerabilities Identified During Blue Team Risk Assessments (AUD-IT-19-41, September 2019). (back to text)
53 ISP-I-19-14, April 2019; ISP-I-19-16, June 2019; OIG, Management Assistance Report: Embassy Vienna, Austria, Lacks Adequate Internal Controls Over Motor Vehicle Keys and Fuel Credit Cards (AUD-SI-19-42, September 2019). (back to text)
59 OIG, Management Assistance Report: Noncompliance with Federal and Department Procurement Policy at U.S. Embassy Kabul, Afghanistan, Needs Attention (AUD-MERO-19-25, April 2019). (back to text)
77 OIG, Review of Allegations of Politicized and Other Improper Personnel Practices in the Bureau of International Organization Affairs (ESP-19-05, August 2019). (back to text)
78 OIG, Targeted Review of Leadership and Management at the National Passport Center (ISP-I-19-13, November 2018). (back to text)
84 OIG, Review of Allegations of Improper Passport Seizures at Embassy Sana’a, Yemen (ESP-19-01, October 2018). (back to text)
85 OIG, Compliance Follow-up Audit of the Process To Request and Prioritize Physical-Security Related Activities at Overseas Posts (AUD-ACF-16-20, December 2015). (back to text)
In 2019, the Department of State’s Office of Inspector General (OIG) identified management and performance challenges in the areas of: protection of people and facilities; oversight of contracts, grants, and foreign assistance; information security and management; financial and property management; operating in contingency and critical environments; workforce management; and promoting accountability through internal coordination and clear lines of authority.
To address challenges such as the ones described above, in the summer of 2019 the Under Secretary for Management (M) worked across M family bureaus to define his “High Five” priorities: Talent; Security & Infrastructure; Excellence & Innovation; Data & Analytics; and Technology. Stemming from these thematic priorities, the Under Secretary worked with each Management bureau to establish action plans, key tasks, and metrics to monitor progress towards improvement in each High Five area.
The High Five, together with Management’s “Field First” focus that centers on responsiveness to post needs, provides a framework to plan strategically and work to promptly and efficiently take corrective actions in response to OIG findings and recommendations. Highlights are summarized below.
1. Protection of People and Facilities
The protection of people and facilities remains of utmost importance for the Department, exemplified by the High Five priority of Security & Infrastructure. Although protecting our people and assets is a constant challenge, this focus emphasizes the need for:
Providing safe and secure conditions for employees domestically and abroad; and
Mitigating risks of operating in high threat environments.
Below is additional information about specific issues raised by the OIG and improvements the Department has made in its systems for protecting people and facilities. However, there are some areas in which the Department would like to clarify some perceived weaknesses by the OIG.
Constructing and Maintaining Safe and Secure Diplomatic Facilities
The OIG highlighted problems related to facilities maintenance during their routine inspections of overseas posts. As part of the High Five priority of Security & Infrastructure, the Bureau of Overseas Buildings Operations (OBO) is undertaking a Facilities Maintenance and Upkeep initiative to enhance its operations and maintenance program with a focus on increasing the longevity of our facilities. This initiative aims to leverage industry standards to manage the life cycle of overseas facilities, identify performance indicators to measure improved design effects on operations and maintenance, improve the collection of facility conditions, and expand and enhance the facility management support to the field.
The Department has maximized the use of fully-qualified personal services and third-party contractors to fill critical facility manager vacancies at posts, and ramped up recruiting efforts over the past twelve months. Eight facility manager students currently are in tradecraft training at the Foreign Service Institute and expected to complete it in January 2020. The Department also has established several OBO Regional Support Centers (ORSC), with the latest one in the Bureau of African Affairs (AF). The AF ORSC will reach initial operational capability in 2020 and provide direct facility management support to AF posts.
Regarding specific OIG recommendations made on public water and mold issues from U.S. Embassy Paramaribo’s chancery roof, a Departmental team reviewed the roofing deficiencies and estimates that they will be corrected by the end of calendar year 2019. In addition, post mitigated the mold issues and worked with the embassy health unit and OBO’s Office of Safety Health and Environmental Management to confirm that there are no reports of occupants with health issues linked to mold in the buildings.
Regarding OIG’s Inspection of Embassy Banjul, The Gambia, OIG reported numerous physical defects in the chancery. OBO and the Embassy continue to negotiate with the landlord to undertake the repairs, but the parties have yet to determine a start date. For the Inspection of Embassy Port-au-Prince, Haiti, OIG reported potential workplace safety hazards, including issues with the elevator. The Embassy completed most of the required repairs, and is coordinating with OBO to issue a Certificate of Use for the two elevator issues.
Ensuring the Health and Safety of Personnel Abroad
The Department’s emphasis on fostering and sustaining a healthy, resilient, and engaged global workforce for optimal performance is incorporated into the Under Secretary for Management’s High Five action plan. The Department is working to expand resilience support and training activities through ongoing outreach and other efforts.
2. Oversight of Contracts, Grants, and Foreign Assistance
In response to the OIG recommendations, the Department took a number of actions to improve oversight of contracts and grants, including those that appear below. The Department will continue to take steps to address OIG’s recommendations.
Overseeing Construction Contracts
OIG’s audit of the commissioning of two residential buildings at the Embassy in Kabul found that, in order to accommodate the ambassador’s request to expedite occupancy, OBO declared the buildings substantially complete even though 8 of 22 systems were not commissioned. OBO maintains that as long as fire and life-safety systems are complete and a building can be used for its intended purpose, minor punch list items should not prevent the Department from moving people into safer, more secure facilities as quickly as possible, particularly in a critical-threat environment. OBO is in the process of updating its policies and procedures to allow for the necessary flexibilities required for overseas construction, especially in fluid environments such as Kabul.
During the same audit, OIG identified weaknesses in how OBO maintains commissioning documentation, which serves as the historical record of key decisions made throughout the project planning and delivery process. OBO maintains that the risks identified by OIG are minimal, although OBO concurs that an improved documentation process may mitigate these risks.
As part of the Under Secretary’s High Five priority of Excellence & Innovation, OBO aims to utilize technology to enhance capabilities across all phases of a facility’s lifecycle. OBO is piloting software currently utilized in the private sector to reduce the use of hard-copy commissioning documents. OBO has invited external experts to review capabilities, compatibility with other platforms, and technical security requirements. OBO also is updating the commissioning task order statement of work template to include language about routinely uploading hard-copy commissioning performance tests and related documentation.
Regarding the OIG’s review of the Camp Eggers construction project, the Department concurs with the OIG’s recommendation that it should develop a policy identifying the specific circumstances under which the construction clause in the Worldwide Protective Services should be used. The Department acknowledges that, when it embarks upon new construction projects to support embassy operations, close intra-Bureau coordination is required to ensure all considerations for housing and supporting infrastructure for a security program are met.
Overseeing Grants and Foreign Assistance Programs
In its report, the OIG referenced its special evaluation of the Antiterrorism Assistance Explosive Detection Canine Program, and the insufficient policies and standards governing this program. The Department has taken significant strides to address the deficiencies outlined in the report. Diplomatic Security’s Office of Antiterrorism Assistance has resolved the majority of the recommendations in the OIG’s report, addressing issues through written policy adjustments and new guidelines. For example, the Department is establishing planned health and welfare visits, and a new requirement for host nations to sign care guidelines before the canines are delivered. In addition, Diplomatic Security, in conjunction with the Bureau of Counterterrorism, is developing a sustainability plan for the dogs serving in Jordan.
3. Information Security and Management
Information Security and Management combines two of Management’s High Five priorities, Security & Infrastructure and Technology. Protecting the Department’s information and keeping up with technological advances go hand-in-hand.
The Security & Infrastructure priority focuses on enhancing and better connecting cybersecurity efforts, including enterprise cyber risk management, as well as leveraging IT and intelligence to improve safety and security of operations.
The Technology priority seeks to modernize the Department with a mission-first, field-first focus, including:
Working with bureaus to capture their strategic and operating intent in sufficient detail to drive IT decision making;
Aligning IT programs, staffing, and funding to deliver on prioritized roadmap;
Establishing common architecture to address common concerns; and
Ensuring systems are reliable, especially command and control circuits.
The Department has taken steps to address its information security program, as noted in the 2019 OIG Federal Information Security Management Act report. For example, the Department has taken steps to revise its Cybersecurity Risk Management Strategy in 2019, addressing recommendations issued in the Audit of the Department of State Information Security Program.
The Department also has progressed in addressing the role of the Chief Information Officer (CIO). The CIO has been delegated oversight authority over all IT investments, including cybersecurity. The CIO currently is evaluating the effectiveness of the Chief Information Security Officer and Diplomatic Security (DS) partnership to manage cybersecurity risk and threat.
However, DS also has responsibilities for certain aspects of information security, as delegated in memoranda and the Omnibus Diplomatic Security and Antiterrorism Act. These aspects include communications and computer-related security functions. Interdependent security disciplines enable DS to leverage technical, law enforcement, and counterintelligence capabilities in combatting threats to protect classified and sensitive information affecting foreign policy and national security. The Department has recognized this by splitting responsibilities for information and cybersecurity between the Bureau of Information Resource Management (IRM) and DS. The operational division of responsibilities between DS and IRM are parallel to the collaborative efforts between:
DS and OBO to secure diplomatic facilities globally;
Bureau of Intelligence and Research and the Bureau of Administration to secure intelligence information and Sensitive Compartmented Information Facilities and to ensure that classified information is safeguarded and securely shared; and
DS and HR to ensure a vetted and trusted workforce.
Although the OIG states, “there is no clear pictures of total IT spending by the Department,” the Department continues to report its total IT spending to the Office of Management and Budget annually. The CIO and the Director of Budget and Planning certify this information. The Department continues to review and improve IT investment oversight through the new IT Executive Council governing structure. This structure incorporates the requirements and participation of all regional bureau IT leadership. As a result, the IT acquisition procurement review has been brought under the office of the CIO.
The Department acknowledges that it continued to experience lapses in performance duties of ISSOs in 2019. This continues to be a struggle, as the current level of information resources staff overseas cannot sustain both regular duties and tasks of an ISSO. However, the Department has launched a new cyber incentive pay initiative. This program is re-evaluating positions and responsibilities and creating positions that have cybersecurity as a primary function of their job. This program is scheduled for implementation in 2020.
The OIG report also addresses overseas posts that did not establish a local control board to ensure that the hardware, software, and network components installed on the local area network do not adversely affect the existing IT infrastructure. The Department already has identified a solution to this with the modernization of the Department’s central Information Technology Configuration Control Board system. This system will be deployed in 2020 on a cloud platform, will incorporate local change controls efforts, and will be accessible to post, providing the Department with a comprehensive view of the configuration of all IT assets and systems in production.
The OIG addressed suggested improvements to the team the Department created to assess IT networks and to provide recommendations and remediation strategies to enhance the Department’s IT posture, such as requiring that bureaus and posts respond to recommendations made during assessments that the IT team ensures all vulnerabilities identified are remediated. This is being addressed by the IT Executive Council (ITEC), which incorporates the requirements and participation of all regional bureau IT leadership. The ITEC also will alleviate concerns such as the Bureau of Democracy, Human Rights, and Labor’s failure to prepare a project plan to replace its Leahy vetting system.
4. Financial and Property Management
The Department operates in a complex and challenging global environment and, as a result, manages one of the U.S. Government’s most complex financial operations. Operating around-the-clock in over 270 locations and 180 countries, the Department conducts business in over 138 currencies, accounts for $100 billion in assets, maintains 236 bank accounts around the world, executes over 6,100 annual foreign currency purchases and sales valued at over $6 billion, and manages real and personal property capital assets with historical costs of more than $34 billion.
As part of the High Five theme of Excellence and Innovation, the Bureau of the Comptroller and Global Financial Services is working to automate and streamline financial operations through process enhancements and technology innovations, including the increased use of Robotic Process Automation, or “bots.”
As part of the High Five theme of Security and Infrastructure, the Bureau of Administration is working to optimize the management of the Department’s domestic real property assets. Additionally, as part of Security and Infrastructure, the Bureau of Overseas Buildings Operations is working to improve the process to prioritize projects of varying scope and scale across the global portfolio to optimize safety, security, and functionality through the Embassy After Next initiative.
Department officials at all levels, both at home and abroad, are dedicated to ensuring effective management controls and oversight over the resources entrusted to the Department. In doing so, the Department has received seven consecutive unmodified opinions (FYs 2012-2018) from the external Independent Auditor on our annual Department-wide financial statements. In addition, the Department ended 2018 with no reported material weaknesses in internal controls over financial reporting.
The Management Challenges report notes the Department’s difficulty in tracking and reporting data. The Office of Management Policy, Rightsizing, and Innovation has taken significant strides to overcome these difficulties by setting up the Department’s Center for Analytics and establishment of the Chief Data Officer (CDO). Since its inception in November 2018, the Center for Analytics has had a significant impact by infusing analytics into agency-wide management and policy decision making, with over 30 projects complete and 60 queued. The Center for Analytics, led by the CDO, is enhancing its data management and governance activities by creating an enterprise data governance board and a data catalogue, and is working to improve data quality and accessibility issues through its master reference data and other efforts.
The Under Secretary for Management also addresses this in the High Five, stressing the importance of data-informed decisions, particularly:
Treating data as a strategic asset; increasing timeliness, usability, quality, and reliability of data while ensuring data security and integrity;
Improving decision making with evidence and analysis; and
Building and enhancing data analysis and literacy capabilities.
Internal Control Deficiencies
The OIG found purchase card users complied with laws and regulations but were deficient in documenting required reviews. Fiscal year 2018 was the first year that all bureaus and posts were required to complete their annual reviews in the Purchase Card Management and Reporting System. The Department has a clear and consistent policy that requires annual reviews and will continue to communicate reminders to enforce the policy through Department Notices, ALDACs, and email notifications.
Collecting, Analyzing, and Applying Financial Information
In the OIG’s report, the inspection of Embassy Bogota showed a shortfall in nonimmigrant visa application fees of approximately $1.6 million. Limitations of available analytical tools (Excel, Access, Tableau, etc.) create management challenges in the Department’s ability to perform in-depth and complex analysis of financial information. In the case of Colombia specifically, after six months of extensive and exhaustive review and analysis, the Bureau of Consular Affairs (CA) referred the matter to the OIG’s Office of Investigations for a forensic level review; the matter remains under investigation as of October 2019.
5. Operating in Contingency and Critical Environments
In some cases, the Department must operate in “critical” environments, or areas that experience various challenges in the form of conflict, instability, disease, or natural disasters. These pose their own set of problems and contribute to existing challenges.
Management’s High Five priority of Excellence & Innovation emphasizes agility, such as:
Improving intra- and interagency coordination and accountability to enhance service delivery and enable foreign policy objectives;
Implementing “Automation Ready” Process improvement methods;
Fostering innovative thinking and allowing calculated risk taking when considering new ways of doing things; and
Providing safe and secure conditions for employees abroad and mitigating the risks of operating in high-threat environments.
6. Workforce Management
The Secretary’s Professional Ethos gives a common foundation for the Department’s broad mission, one that cannot be accomplished without its workforce. Similarly, despite employing different categories of staff – Foreign Service, Civil Service, locally employed staff, and political appointees – the Secretary has emphasized the need for One Team, One Mission Ethos to achieve success.
The High Five Talent priority elucidates how the Department is striving to be the employer of choice and care for its people. To combat workforce management challenges, some of which the OIG describes in its report, the Under Secretary for Management is focusing on:
Accelerating onboarding and hiring to fill critical Civil Service vacancies;
Leadership development and succession planning;
Improving employee engagement and workforce flexibilities;
Enhancing the resiliency and well-being of employees; and
Promoting an inclusive and diverse workforce.
The Department will elaborate on these efforts in response to several of the OIG’s Management Challenges findings below.
Maintaining Adequate Staffing Levels to Meet Operational Needs
The OIG notes that many Department entities experience difficulty maintaining staffing levels, a problem compounded due to a 17-month Department-wide hiring freeze. The Department agrees that it is critically important to reach and maintain adequate staffing levels and has made significant progress in 2019. Under Secretary Pompeo’s leadership, currently the Department is just one percent shy of its goal to have over 13,000 Foreign Service (FS) employees by January 2020, with nearly 12,800 FS staff on board as of October 2019. In 2019, the Department hired 515 new FS employees (247 Specialists and 268 Generalists) and another 112 Limited Non-Career Appointments. There also are eight FS classes (four Generalist and four Specialist) planned for 2020. Although, unlike the FS, Civil Service (CS) hiring occurs on a case-by-case basis, the Department is pursuing hiring levels roughly 700 above current levels (currently at 10,300) – an increase of nearly seven percent.
The Department takes the impact of vacancies on staff morale very seriously, and remains committed to pursuing innovative strategies to attract and retain a highly-qualified workforce and expedite recruitment. At the same time, the Department is actively fostering a culture that is family-friendly and conducive to self-care by helping employees juggle the demands of work and family, including aging parents, childcare, and medical emergencies. Some recruitment and retention strategies include:
Recruitment:
Prioritizing hiring for vacant Human Resources (HR) Specialist positions (performing CS recruitment) at the Department’s largest HR Service Provider;
Signing a Memorandum of Understanding with the Defense Finance and Accounting Service (DFAS) to provide support for the recruitment and hiring of State CS employees. DFAS has agreed to process as many as 50 to 60 recruitment requests per month for at least the next year effective November 1, 2019;
Encouraging hiring managers to identify those positions that may be converted to a Domestic Employees Teleworking Overseas program (DETO) position;
Encouraging managers to allow “tandem couple” employees to fill domestic jobs with DETO positions where their spouses are assigned;
Offering the Consular Fellows and Information Management Specialists online tests globally at approximately 130 additional testing centers around the world to increase accessibility for applicants interested in these two tracks;
Reducing the Foreign Service Officer assessment timeline to attract candidates, enhance assessment capacity, and to make the Department more competitive with the private sector; and
Launching a pilot for expedited/increased veteran hiring for civil service IT positions.
Retention:
Developing flexibilities on leave without pay and creating a working group to explore flexibilities in existing policies to support families, particularly new parents;
Publishing an online “Director General of Human Resources Digest” that raises awareness about new and existing policies and services, and maintaining a dedicated resources page for the Department community on the HR intranet site about the family care resources currently available;
Establishing an innovation unit and an enhanced strategic communications unit, so employees now can propose directly those policies, approaches, and opportunities they need to be productive, engaged, and empowered; and
Reinstating a Global HR Workshop in Washington for Human Resources Officers.
In the meantime, the Department continues to employ strategies and programs, such as the Consular Fellows Program, staff details, the CS Hard-to-Fill program, retirees working on a reemployed annuitant basis, and the Expanded Professional Associates Program, to minimize the impact of staffing gaps and reduce vacancies.
Holding Leadership Accountable to Department Principles
The primary goals of the Department’s discipline process include accountability, fairness, and affirmation of core values for all employees, including those in leadership positions. The Department acknowledges that combatting a toxic workplace starts at the top; holding leadership accountable is key to maintaining a productive and mission-focused workplace. The Secretary’s One Team, One Mission Ethos for the Department promotes a culture of accountability at all levels. The Conduct, Suitability, and Discipline (CSD) division of the Office of Employee Relations manages the Department’s discipline program with the goal that employees throughout the ranks understand and adhere to the highest standards of conduct and professionalism.
To advance these goals, CSD continues to manage an average of 350 cases for possible action per year from investigative offices and bureaus. CSD works closely with the Bureau of Diplomatic Security, Office of Civil Rights, Office of the Inspector General, Office of the Legal Adviser’s Office of Employment Law, bureau executive offices, other HR offices, and the Drug Free Workplace administrator, in the management of the discipline program. CSD also works to educate and support managers and employees in preventing or addressing misconduct at all levels before it affects the efficiency of the Service, and to ensure that employees are free from harassment in the workplace.
The OIG’s Targeted Review of Leadership at the National Passport Center reported disrespect, hostility, and retaliation based on conflicts of interest and overall mismanagement. As a result of this report, CA and the Office of Civil Rights (OCR) investigated these allegations and forwarded their findings and recommendations to the Bureau of Human Resources for determination of appropriate disciplinary actions. CA also consulted several outside entities to provide staff with necessary information and support, including the Office of Medical Services, OCR, the Ombudsman, and the Employee Assistance Program. In addition, CA contracted the assistance of HHS’ Division of Federal Occupational Health Service to provide onsite managerial consultations. CA continues to work with leadership at the National Passport Center to ensure managerial accountability to Department Leadership principles.
7. Promoting Accountability Through Internal Coordination and Clear Lines of Authority
The Department acknowledges that clear lines of authority are necessary for ensuring that the Department is able to hold decision makers accountable. It also recognizes that an organization as diffuse and diverse in mission as the Department requires a great deal of coordination between internal and external partners.
In August 2019, the Department established the Enterprise Governance Board, a forum for senior leaders to provide executive-level direction, solicit input for decisions, and exercise oversight of major cross-cutting topics at the Department. All Under Secretaries serve as permanent board members and the group meets on a regular basis. The Enterprise Governance Board focuses on improved agility, enhanced alignment, strengthened accountability, risk, and data-informed decision making.
The OIG cited a lack of coordination between OBO and DS that affects the Department’s ability to track and prioritize physical security needs at overseas posts and implement an effective information security program. Following the release of the OIG report, Compliance Follow-up Audit of the Process to Request and Prioritize Physical-Security Related Activities at Overseas Posts, OBO and DS took the following steps to ensure better coordination:
Created a Security Requirements Working Group to review all new requests for urgent security upgrades or projects and to discuss the urgency and relative priority of these projects, as well as to ensure that security-related projects move forward as expeditiously as possible when obstacles are encountered.
Developed a worldwide physical security deficiencies database, tracking all deficiencies in OBO’s Building Management Integrated System. Currently, there are over 7,000 deficiencies, and OBO and DS are working on prioritization methodology.
Validated the current prioritization factors to include a peer review by the Army Corps of Engineers of the existing criteria. OBO is developing standard operating procedures to use the deficiency data to produce prioritized project lists for future execution.
Developed a process for tracking and aligning these physical security deficiencies to OBO projects and monitoring the deficiencies to resolution. Despite the efforts to identify and prioritize physical security deficiencies, there will still be an ongoing backlog due to changing physical security standards and a lack of funding.
The Assistant Secretary for Diplomatic Security and the Director of OBO meet bi-weekly to address issues of critical importance to the safety and security of overseas posts with an emphasis on creating collaborative and innovative solutions to emerging challenges.
CA also is working towards promoting accountability through a consolidated legal review of passport, Consular Report of Birth Abroad adjudication policy, and citizenship law into its Passport Services division. Prior to December 2017, decision making was split between Overseas Citizen Services and Passport Services. In addition, all CA lawyers will move to the Office of the Legal Adviser. The transition will occur in calendar year 2020.
In addition, as a result of the OIG’s Review of Allegations of Improper Passport Seizures at Embassy Sana’a, Yemen, CA is forming clear policy guidance and training to ensure passport seizures are appropriate and resolved in a timely manner. This includes a single point of contact to communicate with and receive direction on key legal issues when needed.
As described in this report’s section called Departmental Governance, the Department tracks audit material weaknesses as well as other requirements of the Federal Manager’s Financial Integrity Act of 1982 (FMFIA). Below is management’s summary of these matters as required by OMB Circular A-136, Financial Reporting Requirements, revised.
Summary of Financial Statement Audit
SUMMARY OF FINANCIAL STATEMENT AUDIT
Audit Opinion:
Unmodified
Restatement:
No
MATERIAL WEAKNESSES
BEGINNING
BALANCE
NEW
RESOLVED
CONSOLIDATED
ENDING
BALANCE
Total Material Weaknesses
0
0
0
0
0
Summary of Management Assurances
EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING (FMFIA § 2)
Statement of Assurance:
Unmodified
MATERIAL WEAKNESSES
BEGINNING
BALANCE
NEW
RESOLVED
CONSOLIDATED
REASSESSED
ENDING
BALANCE
Total Material Weaknesses
0
0
0
0
0
0
EFFECTIVENESS OF INTERNAL CONTROL OVER OPERATIONS (FMFIA § 2)
Statement of Assurance:
Unmodified
MATERIAL WEAKNESSES
BEGINNING
BALANCE
NEW
RESOLVED
CONSOLIDATED
REASSESSED
ENDING
BALANCE
Total Material Weaknesses
0
0
0
0
0
0
COMPLIANCE WITH FEDERAL FINANCIAL MANAGEMENT SYSTEM REQUIREMENTS (FMFIA § 4)
Statement of Assurance:
Federal systems conform to financial management system requirements
MATERIAL WEAKNESSES
BEGINNING
BALANCE
NEW
RESOLVED
CONSOLIDATED
REASSESSED
ENDING
BALANCE
Total Non-conformances
0
0
0
0
0
0
COMPLIANCE WITH SECTION 803(a) OF THE FEDERAL FINANCIAL MANAGEMENT IMPROVEMENT ACT (FFMIA)
AGENCY
AUDITOR
1. Federal Financial Management System Requirements
Compliance noted
Lack of compliance noted
2. Applicable Federal Accounting Standards
Compliance noted
Compliance noted
3. USSGL at Transaction Level
Compliance noted
Compliance noted
DEFINITION OF TERMS
Beginning Balance: The beginning balance must agree with the ending balance from the prior year.
New: The total number of material weaknesses/non-conformances identified during the current year.
Resolved: The total number of material weaknesses/non-conformances that dropped below the level of materiality in the current year.
Consolidated: The combining of two or more findings.
Reassessed: The removal of any finding not attributable to corrective actions (e.g., management has re-evaluated and determined that a finding does not meet the criteria for materiality or is redefined as more correctly classified under another heading).
Ending Balance: The year-end balance that will be the beginning balance next year.
Over the past decade, laws and regulations governing the identification and recovery of improper payments have evolved to strengthen improvements in payment accuracy and raise public confidence in Federal programs. The Improper Payments Information Act of 2002 (IPIA), as amended and expanded by other related laws, collectively requires agencies to periodically review all programs and activities to identify those susceptible to significant improper payments, to conduct payment recapture audits, and to leverage Government-wide Do Not Pay initiatives. In FY 2018, OMB issued memo M-18-20 – a revised OMB Circular A-123 Appendix C, Requirements for Payment Integrity Improvement, to transform the improper payment compliance framework to create a more unified, comprehensive, and less burdensome set of requirements.
IPIA defines significant improper payments as annual improper payments in a program that exceed both 1.5 percent of program annual payments and $10 million, or that exceed $100 million, regardless of the error rate. Once those highly susceptible programs and activities are identified, agencies are required to estimate and report the annual amount of improper payments. Generally, an improper payment is any payment that should not have been made or that was made in an incorrect amount under a statutory, contractual, and administrative or other legally applicable requirement.
Payment Integrity Reporting Details
The Department defines its programs and activities in alignment with the manner of funding received through appropriations, as further subdivided into funding for operations carried out around the world. Risk assessments over all programs are done every three years. In the interim years, risk assessments evaluating programs that experience any significant legislative changes and/or significant increase in funding will be done to determine if the Department continues to be at low risk for making significant improper payments at or above the threshold levels set by OMB. The Department conducted a risk assessment of all programs and activities in 2013, 2016, and again in 2019.
Risk assessments of Department programs and activities involve an evaluation of the risk factors described in OMB Circular A-123 Appendix C including whether the program or activity reviewed is new to the Department; the complexity of the program or activity reviewed, particularly with respect to determining correct payment amounts; the volume of payments made annually; whether payments or payment eligibility decisions are made outside of the Department; recent major changes in program funding, authorities, practices, or procedures; the level, experience, and quality of training for personnel responsible for making program eligibility determinations or certifying that payments are accurate; inherent risks of improper payments due to the nature of Department programs; significant deficiencies in the audit reports on the Department including OIG, GAO, and the Special Inspector General for Afghanistan Reconstruction audit report findings; results from the prior year improper payment recapture work; and the percentage increase in funding. Additional risk factors are considered as needed. Further, risks and results from the work performed in compliance with OMB Circular A-123 Appendix A, other internal Department reviews, and other relevant information are considered.
Based on this series of internal control review techniques performed in 2019, the Department determined that none of its programs were risk-susceptible for making significant improper payments at or above the threshold levels set by OMB. The 38 programs assessed were: American Compensation; Foreign Locally Employed Staff Compensation; Foreign Service Annuities; Voluntary Contributions; Assessed Contributions; Post-Assignment Travel; Temporary Duty Travel; Domestic Purchase Card Payments; National Endowment for Democracy; Economic Support Fund; Diplomatic and Support Programs; Overseas Programs; Diplomatic Policy and Support; Consular Information Technology and Security; Information Technology Central Fund; Worldwide Security Protection; Security- Afghanistan, Pakistan; Western Hemisphere Travel Surcharge; Diplomatic and Consular Terrorism Related Programs; Passport Generation and Related Programs; Diplomatic and Consular Other Operations Programs; Capital and Real Property Acquisitions Programs; Leaseholds and Functional Programs; International Security Programs; Population Refugees and Migration Programs; International Cooperative Administrative Support Services; Working Capital Fund Programs; Fulbright Program; Citizen Exchange Program; Educational Programs; Promote the Rule of Law; Physical Security Programs; Aviation, Anticrime, Interdiction and Related Programs; Embassy Operations Programs; Peacekeeping Operations; International Security and Nonproliferation Related Programs; Construction; and Project Construction – Major Rehabilitation.
Recapture of Improper Payments Reporting
A number of improper payment activities, both preventative and recovery, exist for domestic and overseas payments at the Department, Bureau, post, and program levels to support IPIA efforts and ensure the integrity and accuracy of Department payments. The Bureau of the Comptroller and Global Financial Services (CGFS) has a two-tiered improper payment monitoring and review program that consists of activities performed by the payment issuing office and secondly by the Office of Oversight and Management Analysis (OMA). As an integral part of our post-payment review process, improper payment reviews are performed initially by the payment issuing offices which include the Office of Claims (CGFS/F/C) and Office of Global Compensation (CGFS/GC). The subsequent review performed by OMA focuses on overpayments and utilizes data and risk analysis to drive the recapture work performed. While many agencies hire external recapture auditors to perform a secondary review, this function is performed more efficiently within the Department by OMA. Because the activity performed by CGFS/F/C and CGFS/GC is a post-payment (versus recapture payment) review process, those results are not considered recapture audits and are considered an activity outside of recapture audits. Because the OMA activity is secondary and consistent with a function that an external auditor would perform, for reporting purposes OMA’s activity is considered recapture as defined by IPIA.
Payment Recapture Audit Reporting
CGFS incorporates various manual and automated data analysis techniques and processes to identify, validate and collect improper payments, including use of data mining software, manual sampling of internal payment records, U.S. Treasury taxpayer identification number matching, and sampling of vendors. Monthly, as part of the Recapture Audit process, OMA conducts a query of domestic vendor payments. Domestic vendor payments represent the largest category of Department-made payments subject to IPIA recapture audit requirements, focusing on identifying potential improper and duplicate payments. Currently, these payments are reviewed on a monthly basis using IDEA – Data Analysis software to run matches of vendor invoice numbers and payment amounts against current payment data and payments dating back to 2007. The increased quality control processes by CGFS/F/C in both payments generation and internal post-payment review process have contributed to overall lower improper recapture audit amounts. In addition to the automated IDEA analysis, OMA performs a manual quarterly review of overseas and domestic payments. These manual recapture audits validate elements such as vendor, payment amount, and ensure proper documentation exists to support sampled payments. In 2019, OMA contract recapture audit efforts identified $255,711 contract overpayments. Of that amount, $190,928 was recovered and returned to the originating appropriations.
In addition, OMA performs a quarterly manual recapture audit of employee claim payments subject to the Department’s overall travel program. This recapture audit focuses on known identified issue areas as well as providing overall audit coverage of employee travel payments. As shown in the “Payment Recaptures Reporting” table, in 2019 OMA identified $51,481 in travel program recapture audit overpayments, and collected $80,183 which was returned to the originating appropriation. The collected amount includes $59,869 of prior year overpayments identified.
During 2019, OMA built on prior recapture audit activities by targeting additional payment aspects to ensure all document types are eligible for review. In addition, OMA reviewed grant payments within the universe of the domestic and overseas payment program. OMA systematic analysis and targeted payment reviews will continue to expand efforts in the vendor, travel, grants, and compensation recapture audit areas in future years.
The CGFS automated duplicate or erroneous payment program using the domestic payment file for recapture audit analysis has proven to be a cost effective tool. The additional inclusion of automated and manual recapture audit processes ensures the Department has coverage in required IPIA recapture audit areas. Prior to these efforts, in 2005 and 2006, the Department contracted with an external firm to perform recapture audit activities. However, after 2006, the contracted firm determined it was not cost-effective to continue this function. CGFS realizes that additional recapture audit opportunities may exist and continues to collectively assess areas of greater risk of improper payments and implement recapture audit measures deemed cost-effective.
Overpayments Recaptured Outside of Payment Recapture Audits
Improper payment identification and collection are essential functions of the Accounts Payable operations in CGFS/F/C. As such, CGFS/F/C has established an internal debt management unit, whose primary mission is to identify and collect improper payments and refer the debt to the Accounts Receivable Branch in CGFS/F/ARB if collections are not recovered within 30 days of the notice to the debtor. This Unit assists in identifying potential systemic issues leading to improper payments, which facilitates immediate implementation of corrective actions. Programs in which CGFS/F/C identified improper payments in 2019 include: Diplomatic and Consular Programs; Working Capital Fund Programs; Nonproliferation, Antiterrorism, Demining; Embassy Security, Construction, and Maintenance; and other State programs. Collectively, as shown in the “Payment Recaptures Reporting” table, during 2019, CGFS/F/C identified and confirmed transactions totaling $782,435 of actual duplicate/improper payments, of which we recovered $632,527 in addition to collecting $228,557 of the prior year unrecovered balance. Also, in 2019 the Department identified and confirmed employee claims overpayments totaling $30,621, of which we recovered $20,747. Additionally we recovered $1,422 from prior year identified travel overpayments. Total recovered travel amounts in 2019 of $22,169 were returned to the original appropriations.
CGFS/GC also leverages an overpayment processing unit whose purpose is to review, calculate, and notify employees of any salary or allowance overpayment debt. Salary overpayments can occur for various reasons in the Department’s complex global pay environment, much of which is dependent on timely notification of events impacting pay. For example, late receipt of a cable notifying CGFS that an employee has departed an overseas mission for official duty travel or on personal leave can result in an overpayment of allowances. The payroll systems have programmatic internal controls and system edits in place to assist in preventing overpayments. CGFS/GC continues to implement additional measures to prevent and identify overpayments. In 2019, the Department’s CGFS American Pay Processing Division identified and confirmed payroll overpayments totaling $6.25 million, of which $4 million has been recovered. Additionally $1.48 million of prior year payroll debts were recovered, bringing the total recovered in 2019 to $5.54 million. To date, CGFS/GC has collected 81 percent of prior year debts. This is notable because recovery of payroll debts can be delayed due to a debtor’s request for an administrative review or a waiver. Efforts to collect outstanding payroll debts are ongoing and attempts are made to use the most effective means to maximize collection, such as salary offsets, when possible.
In addition to salary overpayments, Global Compensation performs procedures to identify overpayments impacting Foreign Service annuities paid by the Department. In 2019, the CGFS/GC Annuitant Pay Processing (ANP) identified and confirmed overpayment transactions totaling $574,268 and recovered $129,842 of current and prior year debts. All amounts recovered were returned to the original appropriation. These overpayments occur for reasons such as annuity reductions due to divorce, annuitant re-employment, and untimely notification of death. CGFS continues the use of the Do Not Pay Death Master File (DMF) on a pre-payment basis to better identify when annuitant deaths occur. This and other internal controls greatly assist ANP in preventing and managing improper payments.
Additionally, the Office of Inspector General (OIG) conducted a number of audits, evaluations, inspections, and investigations to prevent and detect fraud, waste, abuse, and mismanagement in programs and operations of the Department. The OIG disclosed disallowed costs identified from their activities in the OIG’s FY 2019 Semiannual Reports to Congress that were presented in the “Payment Recaptures Reporting” table. Despite substantial efforts made to obtain actual collections data for OIG’s identified disallowed costs, we were unable to ascertain the exact status for all of the amounts owed. Multiple collection techniques are utilized by contracting and grants officers, which can include collecting cash, applying agreed-upon reductions of current billings due to the vendor, and other appropriate offsets which effectively serve to recover the funds for the government. OIG disallowed costs are occasionally related to matters that are referred to the Department of Justice for litigation. The OIG also disclosed disallowed costs associated with the Defense Contract Audit Agency and Single Audits within the OIG’s semiannual reports that are presented in the “Payment Recaptures Reporting” table as well. Detailed information and supporting documentation was readily available and obtained to support single audit activities. Given the majority of disallowed costs for OIG and Defense Contract Audit Agency are resolved by various means, we disclosed collections as equal to amounts identified as disallowed, which we believe are materially correct.
Payment Recaptures Reporting (Part 1 of 2) (dollars in thousands)
Program or Activity
(None of the below include funds recaptured from a High-Priority Program)
Overpayments Recaptured outside of Payment Recapture Audits
Overpayments Recaptured
through Payment Recapture Audits
Amount
Identified in
FY 2019
Amount
Recaptured in
FY 2019
Amount
Identified in
FY 2019
Amount
Recaptured in
FY 2019
Recapture
Rate in
FY 2019
FY 2020
Recapture
Rate Target
Travel Program
$30.6
$22.2
$51.5
$80.2
156%
95%
OBO Programs
39.7
34.1
106.6
44.4
42%
95%
Diplomatic and Consular Programs
521.1
414.6
149.1
146.5
98%
95%
Foreign Service Annuities
574.3
129.8
American Compensation
6,251.6
5,536.7
Working Capital Fund
118.5
113.4
Educational and Cultural Exchange Programs
9.0
13.8
Nonproliferation, Antiterrorism, Demining
14.5
243.1
Other Programs
79.6
73.6
Office of Inspector General Audits
1,694.0
1,694.0
Defense Contact Audit Agency Audits
68,104.0
68,104.0
Single Audits
92.0
92.0
Total
$77,528.9
$76,471.3
$307.2
$271.1
Payment Recaptures Reporting (Part 2 of 2) (dollars in thousands)
Program or Activity
(None of the below include funds recaptured from a High-Priority Program)
Disposition of Funds Recaptured through Payment Recapture Audit Programs
Aging of Outstanding Overpayments Identified
in the Payment Recapture Audit Programs
Original
Purpose
All Years
Remaining
Unrecovered
Amount
Outstanding
(0 – 6 months)
Amount
Outstanding
(6 months
to 1 year)
Amount
Outstanding
(over 1 year)
Amount
determined
to not be
collectable
Travel Program
$80.2
$177.3
$0.3
$23.8
$153.3
$—
OBO Programs
44.4
78.8
64.0
—
14.8
—
Diplomatic and Consular Programs
146.5
70.4
4.7
—
65.7
—
Foreign Service Annuities
48.8
—
—
48.8
—
American Compensation
Working Capital Fund
Educational and Cultural Exchange Programs
Nonproliferation, Antiterrorism, Demining
Other Programs
Office of Inspector General Audits
Defense Contact Audit Agency Audits
Single Audits
Total
$271.1
$375.3
$69.0
$23.8
$282.6
$—
Additional Department Payment Integrity (previously referred to as Improper Payments) information can be found at the following link: https://paymentaccuracy.gov/.
Agency Improvement of Payment Accuracy with the Do Not Pay Initiative
The Department reviewed potential improper payments provided by the Department of the Treasury (Treasury) generated as a result of submitting disbursed payments through the Do Not Pay (DNP) portal. In 2019, the Treasury reviewed and disbursed 1,428,638 payments totaling $13.4 billion paid by the Department through the DNP portal. Potential matches were provided on a daily basis, comparing payments to the public Death Master File (DMF) of the Social Security Administration and the General Services Administration’s Excluded Parties List System (EPLS). The Department has access to the private EPLS matching criteria, and as such, the DMF results were based on a social security number and name match of any payees who have been reported as deceased.
Through daily access via the Treasury DNP portal, the Department reviewed 498,963 unmatchable payments, totaling $2.3 billion, and adjudicated 3 potential erroneous payment matches as part of the post payment review process.
The Department continues to utilize the Do Not Pay portal’s DMF on a pre-payment continuous monitoring basis for all annuitant payments. At least twice each month the Department’s annuitant database is screened against the DMF to identify deceased annuitants. All matches are researched and if confirmed, payment to the annuitant is stopped prior to processing the monthly annuity payment run. In 2019, 199,814 annuitant payments totaling $976 million were reviewed against the DMF and 80 payments totaling $336,765 were stopped due to this initiative. This process has been successful in timely identifying deceased annuitants and ensuring improper payments are not made. In addition, all annuity manual payments processed through Treasury’s Secure Payment System are also reviewed through the Do Not Pay DMF online search prior to making payment. For each manual payment, the Department maintains supporting documentation to show that a DMF match did not occur.
For non-Treasury Disbursing Office payments made by the Department for disbursement overseas, payee information is checked against Treasury’s Office of Foreign Assets Control’s (OFAC) list of Specially Designated Nationals (SDN). During 2019, potential payment matches were reviewed and resulted in one stopped payment totaling $354.
In addition, in 2019 Department grants processed through HHS’ Payment Management System are included in a Do Not Pay review. The Health and Human Services Division of Payment Management incorporated a review of the Do Not Pay portal into their payment process to identify individuals or entities with delinquent Federal non-tax debt, a recipient that is listed as deceased on the DMF, and recipients excluded from doing business with the government. In 2019, the Department was notified of one recipient that appeared ineligible due to results of the Do Not Pay process. In addition, in 2019, one recipient payment was stopped as a result of the Treasury Offset Program (TOP). The TOP is a centralized offset program, administered by the Bureau of the Fiscal Service’s Debt Management Services, to collect delinquent debts owed to the Federal agencies and states (including past-due child support), in accordance with 26 U.S.C. 6402(d) (collection of debts owed to Federal agencies), 31 U.S.C. 3720A (reduction of tax refund by amount of the debts), and other applicable laws.
Premium Class Travel Reviews
The Department’s mission is conducted throughout the world and requires extensive travel, sometimes of a significant duration. Because of the high volume of travel, the Department has made concerted efforts to monitor if official travel has adhered to Government-wide and Department regulations for premium class travel.
For 2019, there were no instances identified where a business class travel payment was inappropriate and needed to be recovered, or where the travelers flying business class were found to be ineligible. However, there have been instances where proper and complete supporting documentation was not readily available. Those errors represent an error rate of 1 percent ($11,554) in 2019, 1 percent ($13,941) in 2018, 4 percent ($47,536) in 2017, and 4 percent ($32,242) in 2016. OMB requires agencies to report improper payment errors based on six categories of errors: program design or structural issue, inability to authenticate eligibility, failure to verify, administrative or process error, medical necessity, and insufficient documentation to determine. All Department errors found each year were attributable to documentation and administrative errors. The Department carefully considered these results in combination with results from other travel reviews, and will undertake efforts next year to correct the deficiencies noted during the 2019 review.
Debt Management
Outstanding debt from non-Federal sources (net of allowance) increased from $58.0 million at September 30, 2018 to $59.7 million at September 30, 2019. Civil Monetary Penalties, IBWC, and Administrative Loans increased by $2.3 million while Direct Loans and Passport non-sufficient funds decreased by $0.6 million at September 30, 2019, resulting in an increase overall to the non-Federal source figures.
Non-Federal receivables consist of debts owed to the International Boundary and Water Commission, Civil Monetary Fund, and amounts owed for repatriation loans, medical costs, travel advances, and other miscellaneous receivables.
The Department uses installment agreements, salary offset, and restrictions on passports as tools to collect its receivables. It also receives collections through its cross-servicing agreement with the Department of the Treasury (Treasury). In 1998, the Department entered into a cross-servicing agreement with Treasury for collections of delinquent receivables. In accordance with the agreement and the Debt Collection Improvement Act of 1996 (Public Law No. 104-134), the Department referred $2.7 million to Treasury for cross-servicing in 2019. Of the current and past debts referred to Treasury, $1.6 million was collected in 2019.
Receivables Referred to the Department of the Treasury for Cross-Servicing
2019
2018
2017
Number of Accounts
2,823
1,377
1,114
Amounts Referred (dollars in millions)
$2.7
$4.3
$3.3
Amounts Collected (dollars in millions)
$1.6
$1.6
$1.5
Electronic Payments
For 2019, the Department disbursed approximately 3.9 million payments and 99 percent of them were processed through Electronic Funds Transfer (EFT). For overseas operations, the EFT percentage increased from a 2018 percentage of 98.9 percent to a 2019 percentage of 99.01 which is a major accomplishment given the complexities of banking operations in some foreign countries. Domestic operations EFT percentage improved from 99.2 percent in 2018 to 99.3 percent in 2019.
Federal Civil Penalties Inflation Adjustment Act
The Federal Civil Penalties Inflation Adjustment Act of 1990 established annual reporting requirements for civil monetary penalties assessed and collected by Federal agencies. The Department assesses civil fines and penalties on individuals for such infractions as violating the terms of munitions licenses, exporting unauthorized defense articles and services, and valuation of manufacturing license agreements. In 2019, the Department assessed $13.4 million in penalties against two companies, and collected $6.1 million of outstanding penalties from three companies. The balance outstanding as of September 30, 2019 was $14.6 million. The following table lists the current penalty level for infractions governed by the Department.
Federal Civil Penalties Inflation Adjustments
Statutory Authority
Penalty
Year Enacted
Latest
Year of
Adjustment
Current Penalty Level ($ Amount or Range)
Location for Penalty Update Details
Arms Export Control Act of 1976, 22 U.S.C. 2778(e)
International Traffic in Arms Regulations Violations – Export of Defense Articles and Defense Service
1985
2019
$1,163,217
Federal Register 84
Arms Export Control Act of 1976, 22 U.S.C. 2779a
International Traffic in Arms Regulations Violations – Prohibition on Incentive Payments
1994
2019
$845,764
Federal Register 84
Arms Export Control Act of 1976, 22 U.S.C. 2780
International Traffic in Arms Regulations Violations – Transactions with Countries Supporting Acts of International Terrorism
1989
2019
$1,006,699
Federal Register 84
False Claims Act of 1986, 31 U.S.C. 3729-3733
Penalty imposed on persons and companies who defraud governmental programs
1986
2019
$11,463 – $343,903
Federal Register 84
Chemical Weapons Convention Act of 1998, 22 U.S.C. 6761(a)(1)(A)
Prohibited acts relating to inspections
1998
2019
$38,549
Federal Register 84
Chemical Weapons Convention Act of 1998, 22 U.S.C. 6761(a)(1)(B)
Recordkeeping violations
1998
2019
$7,710
Federal Register 84
31 U.S.C. 1352 – Limitation on use of appropriated funds
Penalties for both improper expenditures and failure to disclose. First time offenders
1989
2019
$19,809
Federal Register 84
31 U.S.C. 1352 – Limitation on use of appropriated funds
Penalties for both improper expenditures and failure to disclose. Other offenders
1989
2019
$20,134 – $201,340
Federal Register 84
Prompt Payment Act
Timeliness of Payments
The Prompt Payment Act (PPA) requires Federal agencies to pay their bills on time. PPA assesses an interest penalty against Federal agencies that do not pay their vendors timely as required by law. In 2019, the Department timely paid 98 percent of the 611,063 payments subject to PPA regulations. The “Timeliness of DOS Payments” bar chart reflects the timeliness of the Department’s payments from 2017 through 2019. During 2019, the Department paid $975,895 in interest penalties out of $10.8 billion in payments that were subject to PPA, compared to $407,685 in 2018.
Fraud Reduction Report
Government leaders are under increasing pressure, with limited resources and more public scrutiny, to reduce or eliminate fraud, waste, abuse, misconduct, and improper payments in Federal programs and operations. Fraud in the Federal Government is a serious problem that wastes taxpayer dollars, prevents Federal programs from carrying out their intended purpose and serving target populations, and creates potential national security risks. Congress and Federal agencies have been working to combat fraud and reduce improper payments by creating policies and legislation that will give agencies the tools that they need to target and prevent fraud.
The Fraud Reduction and Data Analytics Act (FRDAA) of 2015 (Public Law No. 114-186) required OMB to establish guidelines for Federal agencies to establish financial and administrative controls to identify and assess fraud risks and design and implement control activities in order to prevent, detect, and respond to fraud, including improper payments. Agencies are required to report on their progress to implement financial and administrative controls in compliance with the OMB guidelines, GAO’s Standards for Internal Control in the Federal Government (Green Book), and the OMB Circular A-123.
To help managers combat fraud and preserve integrity in government agencies and programs, GAO identified leading practices for managing fraud risks and organized them into the Framework for Managing Fraud Risk in Federal Programs. This framework, and other leading practice materials, provided a foundation for the Department’s fraud reduction program. In 2019, an Internal Controls Fraud Working Group continued to improve implementation efforts to develop a robust fraud program. The Department engaged industry experts to provide guidance in designing a new fraud risk exposure analysis methodology that comparatively scores bureaus throughout the Department, to effectively assist the Department in making informed fraud risk management decisions. Additionally, the Department completed a pilot of a new fraud risk assessment methodology on the Bureau of International Narcotics and Law Enforcement Affairs and is actively engaged in further refining and implementing this expanded fraud risk assessment methodology on a Department-wide basis. Beyond this new centralized and consistent approach to fraud risk assessment, bureaus and posts continued to engage in their existing fraud risk identification programs, as well as various data analytic techniques to identify and prevent fraud.
Progress in Implementing Financial and Administrative Controls
The Department has a strong management controls program in place, and performs extensive work to provide value beyond complying with the myriad of laws and regulations applicable to the Department. The following are examples and highlights from a few of our accomplishments in 2019.
The Department’s Bureau of Consular Affairs (CA) has historically analyzed financial and adjudicatory data pertaining to specific visa categories and passport applications to determine possible fraud trends or detect internal malfeasance. CA operates an advanced fraud analytics program to identify, combat, and prevent potential fraud through the fraud prevention units (FPUs) located at 220 embassies and consulates abroad, as well as 29 domestic passport agencies and centers. FPUs use the results of this analysis in combination with their knowledge of local conditions to train consular adjudicators to identify potentially fraudulent applicants. Visa and passport adjudicators are trained to identify counterfeit and fraudulently issued documents, as well as impostors, during their adjudicatory training and in advanced fraud prevention training at technologically equipped facilities. Additionally, CA’s Office of the Comptroller trains Fees Accountable Consular Officers and consular managers on how to spot the signs of potential financial fraud.
Other factors that serve to deter fraud include the requirement of applicants for consular services to pay a fee prior to receipt of service and undergo biometric verification of identity, whether facial recognition (visas and passports) and/or fingerprinting (visas). To proactively prevent fraud, CA provides external training to consular personnel on fraud trends, techniques and counter measures during adjudicative training and in advanced fraud prevention training throughout their careers. CA adjudicators have access to on-line databases that assist with verification of genuine identity and travel documents and to detect counterfeit and altered documents. CA’s Counterfeit Deterrence Laboratory contributes to the design and development of secure U.S. travel documents by sharing analysis and expertise with the interagency group. CA personnel receive malfeasance training annually, either through management or as part of consular-specific training courses. To prevent internal fraud, CA maintains technology and other internal control mechanisms to deter unauthorized access to consular records and uses Consular Management Assistance Team and OIG visits to posts and passport agencies, as well as mandatory Annual Management Control Certifications and other reporting, to actively monitor and deter internal fraud, including financial fraud.
Progress in Implementing the Fraud Risk Principle in the Green Book
The Department conducts an annual entity-level control assessment to comply with the GAO’s Green Book. The assessment includes Principle #8, which requires management to consider the potential for fraud when identifying, analyzing, and responding to risks. Overall, the Department’s assessment of fraud included tests of operating effectiveness and utilized other existing fraud programs conducted within our bureaus. Other programs that identified fraud were considered including the Statement of Assurance process, as well as work performed by external auditors such as the OIG, GAO, and the Special Inspector General for Afghanistan Reconstruction.
Progress in Identifying Risks and Vulnerabilities
Many Department managers have robust fraud preventive and detective measures, and fraud analytics programs that have operated for many years, while some areas have developed fraud prevention activities in response to the FRDAA Act. Below are examples and highlights from a few of our accomplishments in 2019.
Consular: CA liaised with management and consular adjudicators worldwide to refine their fraud prevention strategies and tactics to combat new and evolving threats. CA disseminated anti-fraud information to a wide variety of clients via the CA/FPP website, the Fraud Digest, webinars, and other publications. CA also liaised with the Bureau of Diplomatic Security (DS), the Department of Homeland Security (DHS) and other Federal agencies and organizations concerned with immigration fraud and alien smuggling. In addition, CA works to identify and combat internal fraud and provides assistance to DS in visa and passport fraud investigations, with special focus on those that involve employee malfeasance.
Property: During 2019, the Integrated Logistics Management System (ILMS) Analytics team discovered one individual at an overseas post who circumvented existing controls and manually entered 91 percent of the assets at the post as well as made $100,000 in manual cost adjustments to existing assets. By comparing fuel costs expended across post locations, one post was identified as spending three times as much as other posts in the same region.
Procurement: The ILMS Analytics team identified multiple cases of split purchases (where each transaction was below the micro-purchase threshold) which allowed posts to avoid the competitive bid process.
Beneficiary Payments: The use of Treasury’s Secure Payment System continues to assist with successful identification and prevention of fraudulent payments to beneficiaries. In 2019, 199,814 annuitant payments totaling $976 million were reviewed against the DMF and 80 payments totaling $336,765 were stopped due to this initiative.
Travel Card Program: The Department’s Travel Card Program office utilizes an automated Misuse tool that has yielded 100 percent compliance with the Government Charge Card Abuse Prevention Act, which reviews all credit card transactions and compares the data to travel orders to determine if the card was used in compliance with government mandates. In 2018, 121,892 transactions totaling more than $23 million were inspected by the Misuse tool. 898 transactions were confirmed as misuse totaling $112,150. Annual 2019 results are not yet compiled; however, improved results are expected based on monthly reporting results. Cardholders who were found to have misused their cards were counseled on the appropriate use of the card and required to re-take training. Any cardholders who are found to have misused their cards a second time are referred to Human Resources for discipline, as well as to the Office of Inspector General.
Progress on Establishing Strategies, Procedures, and Other Steps to Curb Fraud
The potential for fraud is investigated by the Office of Inspector General and other fraud investigations such as the Criminal Fraud Investigations office in DS. In addition, posts report on a semi-annual or annual basis the occurrences of fraud including the types of fraud, fraud risks and methods to mitigate those risks.
Fraud risk management is an important aspect of the Department’s strategy to achieve its mission and goals. During 2019, Bureaus collaborated with each other to advance an organizational culture to combat fraud across components, programs, and levels. The Department will continue to dedicate resources to this important initiative in 2020.
Secretary of State Dean Acheson signs the Treaty of Peace with Japan. The treaty officially ended World War II and set the terms of peace with Japan. Forty-nine nations signed the Treaty of Peace with Japan in San Francisco, California, September 8, 1951. Department of State
The financial activities of the Department of State (the Department or DOS) occur in approximately 270 locations in 180 countries. We conduct business transactions in over 135 currencies and even more languages and cultures. Hundreds of financial and management professionals around the globe allocate, disburse, and account for billions of dollars in annual appropriations, revenues, and assets. The Department is at the forefront of Federal Government efforts to achieve cost savings by engaging in shared services. Indeed, the Department’s resource management customers include 45 U.S. Government agencies in every corner of the world, served 24 hours a day, seven days a week. Another illustration of the Department’s commitment to shared services is its hosting at its Charleston, S.C. financial center of USAID’s core financial system. This system, known as Phoenix, makes use of the same commercial off-the-shelf (COTS) software as the Department’s core system, thereby promoting smooth interaction between the two agencies.
The Department’s financial management efforts are guided by three overarching goals: delivering world-class financial services and systems to our customers effectively and efficiently; establishing and administering an accountable, transparent, and prudent rigorous internal control, compliance and financial reporting environment; and facilitating inter-agency coordination and liaison activities that support Department operations.
The nonprofit independent firm that conducts the Department’s annual survey of overseas users of financial operations and systems is one of the leading proponents of benchmarking and best practices in business research. The firm noted that the Department’s Bureau of the Comptroller and Global Financial Services (CGFS) set its overall performance target for customer satisfaction at 80 percent for all services, a goal considerably higher than what many Government agencies and private sector financial institutions achieve. Not only has CGFS set such high goals, it has consistently surpassed these marks for overall satisfaction and satisfaction with the majority of its individual systems. In our most recent survey, for the first time all nine financial systems received a satisfaction rating of 80 or higher from overseas users. Such scores exceed benchmark averages from financial services customers of 64 for Federal Government agencies and 75 for private sector providers. CGFS viewed this improvement as particularly meaningful as it was driven by an increase in both the response rate and average satisfaction scores provided by financial management officers.
Continued standardization and consolidation of financial activities and leveraging investments in financial systems to improve our financial business processes will lead to greater efficiencies and effectiveness. This change is not always easy with the decentralized post-level financial services model that exists for the Department’s worldwide operations. In addition, over the next several years, we will need to leverage upgrades in our core financial system software, locally employed (LE) staff and American payroll and time and attendance (T&A) deployments, and integration with other Department corporate systems to improve our processes in ways that better support financial operations. Besides seeking greater linkages within our systems, we also are seeking additional opportunities to improve our shared service efficiencies in ways that help us serve our customer agencies and so lower overall costs to the U.S. Government.
We have made significant progress in modernizing and consolidating Department resource management systems. In response to cybersecurity concerns, our development efforts in all lines of business increasingly emphasize the need to reduce vulnerabilities within systems and to be mindful of potential threats to unauthorized access and to the integrity of data within our systems. This focus seeks to protect both the Department and its employees. CGFS’ financial systems development activities are now operated under Capability Maturity Model Integration (CMMI) industry standards.
We continue to make use of proven COTS software in delivering resource management systems to the Department and our serviced customers. We have pushed to consolidate these systems to the CGFS platform with the goals of meeting user requirements, sharing a common platform and architecture, reflecting rationalized standard business processes, and ensuring secure and compliant systems. A COTS solution is the platform for our Global Foreign Affairs Compensation Systems (GFACS). By managing the process in this manner, we can deliver products that are compliant, controlled, and secure. OMB continues its initiative to standardize Government-wide business processes to address the Federal Government’s long-term need to improve financial management. Also, over the next several years, a number of new Federal accounting and information technology standards, many driven by the Department of the Treasury, will become effective. These include Government-wide projects to standardize business requirements and processes, establish and implement a Government-wide accounting classification, and support the replacement of financial statement and budgetary reporting. The Department’s implementation of new standards and Government-wide reporting will strengthen both our financial and information technology management practices.
The Department uses financial management systems that are critical to effective agency-wide financial management, financial reporting, and financial control. These systems are included in various programs. An overview of these programs follows.
Financial Systems Program
The financial systems program includes the Global Financial Management System (GFMS), the Regional Financial Management System (RFMS), and the Consolidated Overseas Accountability Support Toolbox (COAST).
The Global Financial Management System. GFMS centrally accounts for billions of dollars recorded through over 5 million transactions annually, by more than 1,000 users and over 25 “handshakes” with other internal and external systems. GFMS is critical to the Department’s day-to-day operations. It supports the execution of the Department’s mission by effectively accounting for business activities and recording the associated financial information, including obligations and costs, performance, financial assets, and other data. It supports the Department’s domestic offices and serves as the agency’s repository of corporate data.
During 2019, the Department continued the rollout of the OMB mandated Invoice Processing Platform (IPP). IPP is a shared service provided by the Department of the Treasury. Use of this service allows DOS to streamline domestic invoice processing. The Department and vendors will have access to the IPP platform to exchange data on orders, invoices, and payments. Internal controls will ensure that invoices are reviewed and approved in IPP by using configurable standard workflows. During 2019, implementation was completed in three Department bureaus and implementation activities were underway in thirteen additional bureaus. Over 2,300 vendor invoice approvals were accomplished in IPP. Full deployment will continue into 2020.
DOS continued efforts to improve methods to track Buyer-side Interagency Agreements (IAAs) in GFMS, including providing the ability to create 7600A and 7600B forms directly from GFMS. Signed IAAs must be attached to the GFMS Agreement and Order documents providing for a central repository for all IAAs. During 2019, training was provided for all Department bureaus and the new business process was implemented for seven bureaus. Over 200 IAA transactions were processed in GFMS using the new process. The Department completed the development and system configuration of a new accounting model for the buyer-side IAA Advance Pay process. In 2020, implementation of the Advance Pay process will continue. This IAA implementation in GFMS introduces critical business process changes that will facilitate adoption of the Government-wide G-Invoicing platform by 2021.
The Regional Financial Management System. RFMS is the global accounting and payment system that has been implemented for posts around the world. RFMS includes a common accounting system for funds management and transaction processing. To improve the accuracy of the Department’s residential and operational leases, posts started using RFMS/M Property related Obligation and Payment (PrOPP) functionality. PrOPP provides an automated tool to set up recurring profiles for obligations and payments related to leases and other recurring payments and includes reports and queries for managing future lease transactions. Ninety-nine posts are currently live on PrOPP. Analysis of an interface between the Real Property Application and RFMS was conducted in 2019 and development will begin in 2020.
The Consolidated Overseas Accountability Support Toolbox. COAST is an application suite deployed to more than 180 posts around the world as well as to Department of State and other agency headquarters offices domestically. COAST captures and maintains accurate, meaningful financial information, and provides it to decision makers in a timely fashion. The current COAST suite consists of COAST Cashiering, COAST Reporting, and COAST Payroll Reporting. In 2019, the Department began working on COAST release 3.5.0.0 in order to upgrade COAST off of Microsoft SQL Server 2008. Since Microsoft will no longer be supporting Server 2008, COAST 3.5.0.0 will update COAST to a SQL Server version that is Microsoft supported. Implementation of COAST 3.5.0.0 is scheduled to begin in October 2019 with completion by December 31, 2019. In 2019, the Department continued with the RFMS/Cashiering (RFMS/C) project to replace COAST Cashiering with a centralized, web-based cashiering application installed in a single location. New functionality was designed to integrate transactions from RFMS/C to RFMS/M in real time. This will replace the existing COAST Cashiering process of sending transactions to RFMS/M through a batch file. Implementation of RFMS/C is slated to begin in January 2020. COAST Reporting and COAST Payroll Reporting capabilities will be discussed in more detail under the Business Intelligence Program.
Planning and Budget Systems Program
In 2019, the Budget System Modernization (BSM) project to standardize, consolidate, and simplify the budgeting systems of the Department achieved three significant milestones. First, all funding provided to obligating offices was initiated in the new Integrated Budget Intelligence System (IBIS) and interfaced to the Global Financial Management System (GFMS). Second, the planning function for the International Cooperative Administrative Support Services (ICASS) working capital fund was deployed and used to create the annual funding levels for 2020 for the overseas posts and domestic offices. Third, the ICASS funding allotment function was deployed, which will take the 2020 plans, add other information, and create allotment amounts to be approved by users. This completes the transition of those functions of the legacy Central Resource Management System (CRMS) to the new Integrated Budget Intelligence System (IBIS).
CRMS, a legacy custom system developed over many years, continues to provide foreign currency fluctuation impact projections for use in managing the overseas budgets for the current year. This last remaining function will be migrated to the Global Business Intelligence (BI) system in early 2020. During 2019, plans for the data in CRMS were created. End user data will be moved to Global BI for future accessibility. Moving both the foreign currency function and the legacy data to Global BI will allow the retirement of CRMS during quarter two of 2020.
WebRABIT is an application used by regional and other bureaus for program and public diplomacy execution year budgets at their posts. WebRABIT is in an operations and maintenance mode, with resources being aligned with this lower level of activity. Incorporating the current functionality of WebRABIT in the BSM project is part of the long-term strategy for planning and budget systems.
WebICASS is the principal means by which the U.S. Government shares the cost of common administrative support at its more than 270 diplomatic and consular posts overseas. The Department has statutory authority to serve as the primary overseas shared service provider to other agencies.
Travel Systems Program
In 2016, the Department successfully transitioned to the next generation of the E-Government Travel Services (ETS2) contract with Carlson Wagonlit Travel. In 2016, the Department also implemented the Local Travel module allowing for the submission of local travel claims for expenses incurred in and around the vicinity of a duty station. The Department expanded the use of the Local Travel feature to also accommodate non-travel employee claims previously submitted through an OF-1164. In the Local Travel module, approvers will electronically approve claims and provide reimbursement to the employee’s bank account via EFT. The Department has completed this implementation for 118 posts overseas.
The Department continues to work with our bureaus and posts to identify improvements that can be made to the travel system. The Department also participates with other agencies to prioritize travel system enhancements across the Federal Government landscape. The Department worked with Carlson Wagonlit Travel to enhance the functionality of the Local Travel feature to more closely align with the temporary duty travel functionality for foreign currency and approver expense reduction options. The Department continues to work with Carlson Wagonlit Travel on enhancements to support integration improvements with our financial systems. The Department continues to work with Carlson Wagonlit Travel on enhancements to support the implementation of the Local Payments module domestically and has initiated work to implement mobile capabilities for approvals and reservations.
Compensation Systems Program
The Department serves as one of five payroll shared service providers on behalf of Federal agencies. Shared service providers process payroll annually for some 2.3 million employees worldwide, or about 99 percent of the Federal civilian workforce.
The Department continued to execute a phased deployment strategy, replacing six legacy payroll systems with a single, COTS-based solution to address the widely diverse payroll requirements of the Foreign Service, Civil Service, LE staff, and retirees of the Department and the other 45 civilian agencies serviced. The “Compensation System Vision and Concept” diagram highlights how past and future changes involve simplifying and consolidating our systems. The Global Foreign Affairs Compensation System (GFACS) will leverage a rules-based, table-driven architecture to promote compliance with the complex statutes found across the Foreign and Civil Service Acts and local laws and practices applicable to all the countries in which civilian agencies operate.
The last pay module to be implemented in GFACS is American payroll. It is currently in final testing prior to full implementation. The web-based global time and attendance product, based on the same technology as GFACS, will follow the American payroll implementation. This product has the capability of electronic routing, electronic signature, and self-service features. As a result, it will bring a more efficient and modern process to the Department’s workforce.
Business Intelligence Program
The Department’s Business Intelligence program consists of the GFMS Data Warehouse (DW), COAST Reporting, COAST Payroll Reporting, and the Global BI Reporting. The GFMS DW enables users to access financial information from standard, prepared reports or customized queries. It also provides, on a daily basis, critical financial information to the Department’s enterprise data warehouse. During 2019, the GFMS DW was enhanced to implement new and updated reporting prior to the migration of all reporting content into the Global BI reporting tool in 2020. The GFMS DW will then be retired late in 2020.
In 2017, the Department implemented the Global BI application, building on the infrastructure being used for the DW, and adding an in-memory appliance and a new data analytics tool. In 2018, the Global BI application continued to be used to import, reconcile, and export data that meets the requirements of the DATA Act. The Global BI application was updated to complete the full suite of financial reports for overseas posts as well as a second set of analytics information spaces for posts to drill into their overseas transactional data. The Department continued through an agile-like process utilizing a collection of overseas posts, a regional bureau, and accounting support staff in Charleston, S.C. to finalize overseas report and information space requirements and report functionality. Training has been formally conducted for about 60 posts in all regions. Several domestic bureaus have also been trained. New functionality added to Global BI in 2019 included a Pipeline report to show spending by country and program, and new Foreign Currency Exchange Rate reporting for the Bureau of Budget and Planning. Improvements were also made to some of the overseas financial reports to address performance and data quality issues. Improvements were also made to Global BI’s external reporting module to improve the Department’s foreign assistance reporting process, as well as reporting for the DATA Act to meet new Treasury requirements. In 2020, the Global BI application will be updated to include versions of the Payroll reports from COAST. Global BI’s Business Objects infrastructure will also be upgraded in 2020 to support the implementation of a new Lumira reporting tool. The GFMS Data Warehouse report migration will also be completed in 2020. The rollout of Global BI to overseas posts will accelerate in 2020.
DID YOU KNOW?
Madeleine Albright, the 64th Secretary of State, served as Ambassador to the United Nations (1993-1996) under President Clinton until her appointment as the first woman to serve as Secretary of State (1997-2001).
The Department has collections of art objects, furnishings, books, and buildings that are considered heritage or multi-use heritage assets. These collections are housed in the Diplomatic Reception Rooms, senior staff offices in the Secretary’s suite, offices, reception areas, conference rooms, the cafeteria and related areas, and embassies throughout the world. The items have been acquired as donations, are on loan from the owners, or were purchased using gift and appropriated funds. The assets are classified into nine categories: the Diplomatic Reception Rooms Collection, the Art Bank Program, the Library Rare & Special Book Collection, the Cultural Heritage Collection, the Secretary of State’s Register of Culturally Significant Property, the U.S. Diplomacy Center, the Art in Embassies Program, the International Boundary and Water Commission, and the Blair House. Items in the Register of Culturally Significant Property category are classified as multi-use heritage assets due to their use in general government operations.
Diplomatic Reception Rooms Collection
In 1961, the State Department’s Office of Fine Arts began the privately-funded Americana Project to remodel and redecorate the 42 Diplomatic Reception Rooms – including the offices of the Secretary of State – on the seventh and eighth floors of the Harry S Truman Building. The Secretary of State, the President, and Senior Government Officials use the rooms for official functions promoting American values through diplomacy. The rooms reflect American art and architecture from the time of our country’s founding and its formative years, 1740 – 1840. The rooms also contain one of the most important collections of early Americana in the nation, with over 5,000 objects, including museum-quality furniture, rugs, paintings, and silver. These items have been acquired through donations or purchases funded through gifts from private citizens, foundations, and corporations. No tax dollars have been used to acquire or maintain the collection. There are three public tours each day.
“The Story Behind the State Department” comic, from True Comics #75, published February 1949. True Comics was an educational comic book for children that portrayed government and historical figures rather than superheroes. Department of State
Art Bank Program
A U.S. passport (1798) signed by Minister Rufus King and issued to David Hinckley. Department of StateA commemorative medal (1871) awarded to George F. Robinson for saving the life of Secretary of State Seward in 1865. Department of State
The Art Bank Program was established in 1984 to acquire artworks that could be displayed throughout the Department’s offices and annexes. The works of art are displayed in staff offices, reception areas, conference rooms, the cafeteria, and related public areas. The collection consists of original works on paper (watercolors and pastels) as well as limited edition prints, such as lithographs, woodcuts, intaglios, and silk-screens. These items are acquired through purchases funded by contributions from each participating bureau.
Rare & Special Book Collection
In recent years, the Ralph J. Bunche Library has identified books that require special care or preservation. Many of these publications have been placed in the Rare Books and Special Collections Room, which is located adjacent to the Reading Room. Among the treasures is a copy of the Nuremberg Chronicles, which was printed in 1493; volumes signed by Thomas Jefferson; and books written by Foreign Service authors.
Cultural Heritage Collection
The Cultural Heritage Collection, which is managed by the Bureau of Overseas Buildings Operations, Office of Residential Design and Cultural Heritage, is responsible for identifying and maintaining cultural objects owned by the Department in its properties abroad. The collections are identified based upon their historic importance, antiquity, or intrinsic value.
Secretary of State’s Register of Culturally Significant Property
The Secretary of State’s Register of Culturally Significant Property was established in January 2001 to recognize the Department’s owned properties overseas that have historical, architectural, or cultural significance. Properties in this category include chanceries, consulates, and residences. All of these properties are used predominantly in general government operations and are thus classified as multi-use heritage assets. Financial information for multi-use heritage assets is presented in the principal statements. The register is managed by the Bureau of Overseas Buildings Operations, Office of Residential Design and Cultural Heritage.
Diplomacy Center
The U.S. Diplomacy Center is a unique education and exhibition venue at the Department of State that explores the history, practice and challenges of U.S. diplomacy. It is a place that fosters a greater understanding of the role of U.S. diplomacy, past, present and future, and is an educational resource for students and teachers in the United States and around the globe. Exhibitions and programs inspire visitors to make diplomacy a part of their lives. The Diplomacy Center actively collects artifacts for exhibitions.
Art in Embassies Program
John Y. Mason wore this uniform during his tenure as U.S. Minister to France. He presented his credentials to Napoleon III on January 22, 1854, and served until 1859 when he died at post. Department of State
The Art in Embassies Program was established in 1964 to promote national pride and the distinct cultural identity of America’s arts and its artists. The program, which is managed by the Bureau of Overseas Buildings Operations, provides original U.S. works of art for the representational rooms of United States ambassadorial residences worldwide. The works of art were purchased or are on loan from individuals, organizations, or museums.
International Boundary and Water Commission
One of the IBWC’s primary mission requirements is the demarcation and preservation of the international boundary between the United States and Mexico (see Reporting Entity in Note 1.A). Roughly 1,300 miles of this border are demarcated by the Rio Grande and the Colorado River, and the other 700 miles of border are demarcated by 276 monuments along the land boundary, which extends from the Pacific Ocean to the Rio Grande. These monuments are jointly owned and maintained by the United States and Mexico. The United States is responsible for 138 monuments and considers them heritage assets. In addition, the IBWC is responsible for the Falcon International Storage Dam and Hydroelectric Power Plant. These were constructed jointly by the United States and Mexico pursuant to Water Treaty of 1944 for the mission purposes of flood control, water conservation, and hydroelectric power generation. Both were dedicated by U.S. President Dwight D. Eisenhower and President Adolfo Ruiz Cortines, of Mexico to the residents of both countries. Falcon is located about 75 miles downstream (southeast) of Laredo, Texas and about 150 miles above the mouth of the Rio Grande. They are considered multi-use heritage assets.
Blair House
Composed of four historic landmark buildings owned by GSA, Blair House, the President’s Guest House, operates under the stewardship of the Department of State’s Office of the Chief of Protocol and has accommodated official guests of the President of the United States since 1942. In 2012, these buildings were added to the Secretary’s Register of Culturally Significant Property for their important role in U.S. history and the conduct of diplomacy over time. Its many elegant rooms are furnished with collections of predominantly American and English fine and decorative arts, historical artifacts, other cultural objects, rare books, and archival materials documenting the Blair family and buildings history from 1824 to the present. Objects are acquired via purchase, donation or transfer through the private non-profit Blair House Restoration Fund; transfers may also be received through the State Department’s Office of Fine Arts and Office of the Chief of Protocol. Collections are managed by the Office of the Curator at Blair House, which operates under the Office of Fine Arts.
Consistent with Section 3 of the OMB Memorandum-12-12, Promoting Efficient Spending to Support Agency Operations, and OMB Management Procedures Memorandum 2013-02, the “Reduce the Footprint” policy implementing guidance, all CFO Act entities must set annual targets to reduce the total square footage of their domestic office and warehouse inventory compared to the 2015 baseline. As a result, OMB is working in partnership with the GSA and other Federal agencies to right-size the Federal real property inventory.
While some Department data is comparable to other agencies’ data, the Department functions as a service provider supporting U.S. Government agencies with overseas presence. This affects how the data is analyzed. Department service providers in domestic facilities provide overseas interagency support. Forty percent of U.S. direct-hire employees under Chief of Mission authority work for other agencies; most of them receive some direct service or management policy coordination from Department employees occupying domestic facilities. For example, the Department provides management services such as human resources, security, medical, diplomatic pouch and mail, financial management, real estate management, acquisition, information technology, contracting, and other services, to most agencies overseas.
The Department’s overall Reduce the Footprint plan shows a slight increase from the 2015 baseline to 2018. The Department’s current plans anticipate that the portfolio will remain at or close to the 2015 baseline in the immediate future and no significant acquisitions or disposals are planned for 2020. The Department continues to actively seek opportunities to maximize efficiencies and co-locate staff in order to reduce the costs of leased space, while also retaining the necessary resources to support the mission.
The Department strives for efficiency and best practices in its real estate program. The Department works closely with GSA on long-term strategic planning and housing for the Department’s domestic staff. Additionally, the Department has space allocation standards that reduce workstation sizes and limit the number of private offices, and is achieving improved utilization rates via increased densification.
As the Department’s real property needs are mission-driven, it must be prepared for real world events that may require changes in its physical footprint. Whether it is reacting to immediate threats to our nation’s security, responding to natural disasters and public health emergencies, or engaging long-term in coalition building and supporting U.S. citizens overseas, the Department must have the necessary personnel and facilities to respond rapidly to changing requirements. The Department commits however, to improving utilization rates and accommodating additional personnel within its current portfolio to the maximum extent possible.
The table “Reduce the Footprint Baseline Comparison” compares (1) the reported total square footage of Department-occupied assets and (2) the most recent annual operating costs associated with Department-owned assets to their respective 2015 baselines assigned by GSA. The operation and maintenance costs have been calculated from the 2015 Federal Real Property Profile data and include facilities other than office and warehouse space, such as data and training centers. The 2019 amounts are not available until after publication of the Agency Financial Report.
Reduce the Footprint Baseline Comparison (amounts in millions)