    Major Management Challenges and Program Risks: Department of State
    (Letter Report, 01/01/2001, GAO/GAO-01-252).

    This report, part of GAO's high risk series, discusses the major
    management challenges and program risks facing the Department of State.
    GAO found that the most critical infrastructure need for State is to
    enhance the protection of U.S. embassies and other overseas facilities
    in response to the increased threat due to terrorism. Other significant
    challenges that State must address involve improving the management of
    drug control assistance to Colombia, providing expedited visa
    processing, and strengthening its strategic and performance goals.

    --------------------------- Indexing Terms -----------------------------

     REPORTNUM:  GAO-01-252
         TITLE:  Major Management Challenges and Program Risks: Department
    	     of State
          DATE:  01/01/2001
       SUBJECT:  Risk management
    	     Accountability
    	     Embassies
    	     Facility security
    	     Internal controls
    	     Drug trafficking
    IDENTIFIER:  High Risk Series 2001
    	     GAO High Risk Program
    	     Columbia

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    GAO-01-252

    Performance and Accountability Series

    January 2001 Major Management Challenges and Program Risks

    Department of State

    GAO- 01- 252

    Letter 3 Overview 6 Major

    11 Performance and Accountability Challenges

    Related GAO 33

    Products Performance

    36 and Accountability Series

    Lett er

    January 2001 The President of the Senate The Speaker of the House of
    Representatives

    This report addresses the major performance and accountability challenges
    facing the Department of State. As the lead agency representing U. S.
    interests

    overseas, the Department of State is vested with a wide range of
    responsibilities, including formulating U. S. policy on diverse
    international issues; coordinating and implementing U. S. government
    programs and activities overseas; and influencing other countries to adopt
    policies and practices consistent with U. S. interests. As

    such, the Department has responsibility for, among other things, assisting
    U. S. businesses overseas, providing services to U. S. citizens abroad,
    issuing passports and visas, participating in international drug control
    programs, and providing security to U. S. personnel and facilities overseas.
    This report includes a summary of actions that State has taken and that are
    under way to address these challenges. It also outlines further actions that
    GAO believes are needed. This analysis should help the new Congress and
    administration carry out their responsibilities and improve government for
    the benefit of the American people.

    This report is part of a special series, first issued in January 1999,
    entitled the Performance and Accountability Series: Major Management
    Challenges

    and Program Risks. In that series, GAO advised the Congress that it planned
    to reassess the methodologies and criteria used to determine which federal
    government operations and functions should be highlighted and which should
    be designated as “high risk.” GAO completed the assessment,
    considered

    comments provided on a publicly available exposure draft, and published its
    guidance document, Determining Performance and Accountability Challenges and
    High Risk (GAO- 01- 159SP), in November 2000. The full 2001 Performance and
    Accountability Series contains separate reports on 21 agencies- covering
    each cabinet department, most independent agencies, and the U. S. Postal
    Service. The series also includes a governmentwide perspective on
    performance and management challenges across the federal government. As a
    companion volume to this series, GAO is issuing an update on those
    government operations and programs

    that its work identified as “high risk” because of either their
    greater vulnerabilities to waste, fraud, abuse, and mismanagement or major
    challenges associated with their economy, efficiency, or effectiveness.
    David M. Walker Comptroller General

    of the United States

    Overview As the lead agency for the conduct of foreign affairs, the
    Department of State has enormous responsibilities. The successful practice
    of U. S. diplomacy is essential to ensuring security at home, laying the
    groundwork for better jobs and a higher standard of living, providing a
    healthier environment, and assuring safe travel and the ongoing conduct of
    business abroad. To help manage these responsibilities, State maintains a
    worldwide network of operations at almost 260 diplomatic and consular posts
    worldwide and supports the activities of about 30 other U. S. government
    agencies. As it pursues

    its international objectives, it must take into account the multiple and
    often competing intentions and interests of these agencies, other
    governments and organizations,

    public opinion, and the Congress, as well as available resources. In
    carrying out its mission, the Department faces a number of significant
    performance and accountability challenges, as our work has shown. These
    challenges cover a wide spectrum of U. S. government operations around the
    world affecting Americans at home and abroad.

    Improve the security and maintenance of U. S. facilities overseas

    ? Help decrease the level of illegal drugs entering the United States

    ? Address the threats illegal immigration continues to pose to Americans at
    home

    ? Address additional challenges to building a highperforming organization

    Embassy Security State's most critical infrastructure need is to enhance the
    protection of U. S. embassies and other overseas facilities in response to
    the increased threat due to terrorism. State has taken many steps to upgrade

    security at its diplomatic missions around the world since the 1998 bombings
    in Africa. These improvements include deploying hundreds of additional
    security agents overseas and enhancing physical security through a variety
    of means. In addition, State has begun replacing some of its most vulnerable
    embassies and consulates with more secure facilities. State estimates that
    it will

    cost $15 billion over 10 to 15 years for projects in more than 180
    locations. Our work has shown that State will face several challenges in
    administering this extensive security construction program, including
    improving long- term planning for the program and working with the Congress
    in charting the future course, priorities, and funding levels for the
    program. We recommended

    that State develop a long- term, capital construction plan to assist
    decisionmakers in reaching consensus on the

    program. Successful implementation of overseas security enhancements and
    construction activities will improve the safety and security of U. S.
    employees working abroad. Drug Control Illegal drugs, primarily cocaine and
    heroin, continue to threaten the health and well- being of American
    citizens.

    The principal source of cocaine and heroin entering the United States is
    South America, and specifically Colombia. In 1993, the United States
    developed a policy designed to reduce the production of illegal drugs in
    South America and stem their flow through Latin

    America and the Caribbean. Our work has shown that billions of dollars
    invested by the United States and foreign countries to carry out this policy
    have resulted in the arrest of major drug traffickers and the seizure of
    large amounts of drugs, but the availability of drugs in the United States
    has not been materially reduced. To continue to attack this problem, the
    Congress recently provided more than $1 billion in counternarcotics
    assistance to Colombia, which State will largely oversee. In October 2000,
    we reported that State had experienced difficulty effectively managing past
    assistance to Colombia and recommended that State develop implementation
    plans to ensure that the new assistance is well managed and used
    effectively. We also noted that a sustained long- term commitment will be
    necessary to notably reduce the level of illegal drugs entering the

    United States. Illegal Immigration State is responsible for providing
    expeditious visa processing overseas to qualified applicants. State, in
    conjunction with the U. S. Immigration and

    Naturalization Service, must also prevent the entry of those who are a
    danger to U. S. security or are likely to remain in the United States
    illegally. Over the years, State has introduced new technologies, equipment,
    and controls designed to improve visa processing and

    reduce the incidence of fraud. However, based on our work and that of
    State's Office of Inspector General (OIG), visa processing remains a
    significant challenge for the Department. The reasons for these problems
    include staffing shortages, inexperienced staff, insufficient staff
    training, and difficulties in managing visa antifraud programs. State
    recognizes that it must remain vigilant in these areas to further reduce the

    vulnerability of the visa system and has several initiatives underway or
    completed to counter visa fraud. Additional In addition to the specific
    performance challenges cited Challenges

    above, State faces several other agencywide performance and accountability
    challenges that hamper its ability to become a high- performing
    organization. These challenges are (1) better utilizing the 1993 Government
    Performance and Results Act process to help achieve its objectives, (2)
    enhancing communication and information technology and

    security, (3) improving financial management, (4) adopting modern human
    capital practices, and (5) restructuring the U. S. overseas presence to
    improve the efficiency and effectiveness of operations. State has recognized
    these challenges and has demonstrated a commitment to addressing them, as
    follows:

    ? State has improved its strategic and performance planning to better
    capture its goals and measures, but its performance reporting needs to
    better demonstrate progress toward meeting its goals. ? State has
    implemented many of our information

    technology and security recommendations; however, new challenges have
    emerged as State embarks on developing an interagency technology platform
    with its inherent security risks. ? State has made progress toward its goal
    of improving financial systems but still needs to bring its systems

    into full compliance with federal financial systems

    requirements and resolve internal control weaknesses. ? Consistent with GAO
    studies of best practices in high

    performance organizations, State's in- house studies highlighted the
    importance of developing a human resource strategy that is in line with its
    mission. ? Over the years, we have recommended that State reassess its
    overseas structure in light of changing political, economic, security, and
    technological requirements; and, this effort is currently underway. We
    believe that addressing these issues will be critical to the Department's
    ability to effectively carry out U. S. foreign policy.

    Major Performance and Accountability Challenges

    The Department of State is vested with a wide range of responsibilities,
    including formulating U. S. policy on diverse international issues;
    coordinating and implementing U. S. government programs and activities
    overseas; and influencing other countries to adopt policies and practices
    consistent with U. S. interests. As

    such, the Department has responsibility for, among other things, assisting
    U. S. businesses overseas, providing services to U. S. citizens abroad,
    issuing passports and visas, participating in international drug control
    programs, and providing security to U. S. government personnel and
    facilities overseas. State maintains a network of operations in 160
    countries, employs a staff of over 50, 000 U. S. and foreign nationals, and
    maintains thousands of facilities overseas to support U. S. activities.

    This report summarizes our recent and ongoing work and that of State's
    Office of Inspector General concerning the performance and management
    challenges and issues State faces in accomplishing some of its key strategic
    and diplomatic readiness goals and its overall mission. State has identified
    16 strategic goals it will pursue as it conducts diplomatic activities and
    public diplomacy overseas as part of its effort to represent the United
    States. Underlying the ability of the Department and other agencies to
    attain these goals

    internationally is diplomatic readiness, which captures the personnel,
    resources, and infrastructure the Department needs to carry out its own
    mission and

    support other U. S. agencies abroad in pursuing their missions. State's
    strategic and diplomatic readiness goals that we selected to review are (1)
    establishing and maintaining infrastructure and operating capacities that
    enable employees to pursue policy objectives and respond to crises- in
    particular, State's efforts to improving the security and maintenance of its
    overseas facilities; (2) reducing the levels of illegal drugs entering the
    United States; and (3) controlling how immigrants and nonimmigrants enter
    and remain in the United

    States. We also discuss additional management challenges in the diplomatic
    readiness area that State has been dealing with for years. These include the
    need to (1) improve strategic and performance planning consistent with the
    1993 Government Performance and

    Results Act (Results Act); (2) enhance information technology and security,
    specifically efforts to develop a common interagency communications
    platform; (3) improve financial management; (4) address human capital
    issues; and (5) restructure overseas operations consistent with U. S.
    foreign policy priorities.

    Improve the The need to adequately protect employees and their

    Security and families from threatened terrorist attacks overseas may
    Maintenance of U. S.

    very well be the single most important management Facilities Overseas issue
    currently facing the State Department. The August 1998 bombings of the U. S.
    embassies in Nairobi, Kenya, and Dar es Salaam, Tanzania, immediately
    brought into focus the seriousness of this security challenge. In response
    to those attacks, State determined that it not only needs to enhance
    security at all existing facilities

    but that in the long term it must replace over 180 facilities where existing
    facilities may be vulnerable to attack. To accomplish these security
    enhancements, State had to deal with challenges in hiring and training
    personnel to protect and replace its overseas infrastructure and in
    acquiring the necessary security equipment. Linked to these challenges are
    the ongoing efforts of the Department to work with other agencies to
    formulate a strategy for effectively addressing the U. S. overseas presence.
    Further, the Department continues

    to face long- standing difficulties in effectively maintaining its
    facilities to avoid premature and costly deterioration. Security Upgrades
    Since the bombings in Africa, State has taken many steps to upgrade security
    at its diplomatic missions around the world. These steps have included
    deploying

    hundreds of security agents overseas to augment posts' security; enhancing
    the physical security of facilities through several means, such as
    installing shatterresistant window film; establishing surveillance detection
    teams to identify hostile surveillance and monitoring; and purchasing
    additional property as buffer zones for facilities. State's OIG reported
    that the

    Department did many things well in administering the almost $1. 5 billion it
    received in emergency supplemental funding shortly after the bombings and
    that senior- level attention was instrumental in the Department's effective
    use of these funds. The OIG added that, for example, considerable progress
    had been made in hiring, assigning, and training new security personnel.

    Although State has made these improvements, it also realized that the funds
    originally allocated for major construction upgrades to improve the security
    of existing facilities would not be sufficient. After the bombings, State
    allocated $181 million for major security upgrades and electronic equipment
    installations. As surveys were conducted and more complete information
    became available, State determined it could potentially cost about $800
    million more to complete the security enhancements. State

    received about $200 million for fiscal year 2001 to address these
    requirements and may make future budget requests and/ or take other actions,
    such as realigning funds from other programs, to achieve major upgrade
    objectives intended to better protect employees and their families overseas.

    Embassy and Although the Department of State is making security Consulate

    enhancements at all U. S. embassies and consulates, Construction

    about 80 percent of overseas U. S. diplomatic facilities still do not have
    adequate security and may be vulnerable to terrorist attack until new
    facilities can be built. To begin replacing the most vulnerable embassies

    and consulates, the Congress appropriated about $1. 1 billion for fiscal
    years 1999, 2000, and 2001 for State's capital security construction
    program. State has estimated that $15 billion or more will be needed for
    replacement projects in over 180 locations around the world where existing
    facilities may be vulnerable. State has entered the construction phase on
    seven new embassy and consulate projects since the 1998

    bombings. It will take many years before the Department makes substantial
    headway in replacing all of its vulnerable facilities. Figure 1 shows the U.
    S. Embassy in Nairobi, Kenya, just after the August 1998 bombing and figure
    2 shows the architect's rendition of the new embassy currently under

    construction.

    Figure 1: The U. S. Embassy in Nairobi, Kenya, After the August 1998
    Bombings

    Source: State Department.

    Figure 2: Architect's Drawing of the New Embassy Now Under Construction in
    Nairobi

    Source: State Department.

    While State has identified a number of facilities as high priority for
    replacement and has several studies underway that should help it manage the
    overall program, it has not prepared a long- term capital construction plan.
    Long- term capital planning is a best practice that has proven useful to
    other organizations in the public and private sector for controlling capital
    costs

    and providing a rationale for allocating funding. We recommended that State
    develop a long- term plan that identifies proposed construction projects and
    estimated costs, and a timetable for completion. The plan would cover at
    least 5 years and be updated annually. The plan would enable State to better
    support its funding requests, support efforts to reach consensus by
    decisionmakers in the executive and legislative

    branches on the program's requirements, and help improve accountability for
    program results.

    Facility Maintenance Facility maintenance has been a long- standing
    infrastructure challenge for the Department. In the early 1990's, we put the
    Department's management of overseas real property on our high- risk list
    partly due to insufficient maintenance of facilities. The principal

    causes of State's maintenance problems were lack of funding, professional
    attention to maintenance needs at the post level, and programs for
    maintenance and repair. In 1995, we removed this function from the high-
    risk list because State had surveyed maintenance conditions overseas and
    made some improvements. In 1999, the OIG stated that while State has made
    some progress in maintaining its facilities, fundamental challenges remain.
    State's unfunded maintenance and repair requirements in 1999 exceeded $100
    million for more than 650 buildings overseas. About 230 of those facilities
    were categorized by State as being in unacceptable condition due to unfunded
    maintenance requirements exceeding $100,000 each.

    Department officials largely attributed cost- cutting over the past several
    years as a reason for the poorly maintained properties. State's OIG agreed
    that funding is an issue but has reported that the Department needs to do
    more to address its maintenance and repair problem as a management concern.
    Specifically, the Inspector

    General has said that the Department needs to better define what is an
    acceptable level for its backlog of maintenance requirements and to develop
    a baseline that will address the costs to reduce the backlog to an
    acceptable level.

    Key Contact Susan S. Westin, Managing Director International Affairs and
    Trade

    (202) 512- 4128 westins@ gao. gov Help Decrease the

    The U. S. international drug control strategy emphasizes Level of Illegal
    reducing the production and flow of cocaine and heroin

    Drugs Entering the before they reach the United States. The Department of
    United States

    State plays a key role in implementing the strategy, which is designed to
    reduce drug trafficking in the source countries of Colombia, Bolivia, and
    Peru and in transit areas within the Caribbean, Central America, and Mexico.
    In July 2000, the Congress provided State and other U. S. agencies more than
    $1 billion to help reduce illegal drug activities in the source and transit
    region.

    Figure 3 illustrates the rise in estimated potential cocaine production in
    Colombia, the primary source of cocaine shipped to the United States.

    Figure 3: Estimated Potential Colombian Cocaine Production 1995- 99

    600 Metric tons

    500 400 300 200 100

    0 1995 1996 1997 1998 1999

    Source: State Department.

    Since fiscal year 1996, hundreds of millions of dollars of assistance have
    been provided to Colombia. However, some of the assistance has been of
    limited utility because of inadequate planning and implementation by State
    and other U. S. agencies. For example, State provided helicopters to the
    Colombian National Police and military without sufficient spare parts or
    operational and maintenance support. The current U. S. assistance program,
    funded for 2 years, calls for additional equipment to be provided to the
    Colombian

    military and the National Police, yet State and other agencies have not
    developed an implementation plan ensuring that adequate logistical support,
    training, and infrastructure sustain the effort. To help ensure that

    problems in supporting U. S. provided equipment to Colombia do not recur, we
    recommended in October 2000 that the secretaries of State and Defense
    determine training and logistical support requirements and identify future
    funding requirements to support U. S.- provided

    equipment, and complete U. S. implementation plans and coordinate with
    Colombian officials to ensure that equipment provided as part of any future
    U. S. assistance is adequately supported.

    Key Contact Jess T. Ford, Director International Affairs and Trade (202)
    512- 4268 fordj@ gao. gov Address the Threats

    The State Department, through its overseas U. S. Illegal Immigration
    missions, processes about 9 million immigrant and Continues to Pose
    nonimmigrant visa applications annually. Attempts to to Americans at

    falsify, alter, or counterfeit U. S. visas or obtain genuine Home

    documents by fraudulent means are a constant problem. In our March 1999
    report on visas issued to religious workers, we reported that the State
    Department and the Immigration and Naturalization Service were concerned
    about visa fraud but could not establish the full extent of the problem.
    Their knowledge of visa fraud is based on

    information developed primarily from fraud investigations and the visa
    screening process. The Department of State has maintained a strong emphasis

    on the need to improve the security of our borders, but the immigrant and
    nonimmigrant visa processes remain a significant challenge. The Department
    has completed or has underway a number of initiatives to counter visa fraud.
    These efforts include setting up a machine- readable visa program at all
    visa- issuing posts, providing worldwide advisories to

    overseas posts regarding fraudulent documents,

    improving the effectiveness of the name checking system, and increasing
    efforts to counter document fraud. The Department also continues to refine
    its consular lookout systems in an effort to better identify individuals who
    should not receive visas. Further, State improved its computer- generated
    information made available to consular and border- crossing posts to help

    prevent visa fraud and illegal entry by terrorists, criminals, alien
    smugglers, or simply intending immigrants. State, however, still faces
    several challenges to preventing visa fraud. These include staffing
    shortages,

    inexperienced staff, and insufficient training for consular line officers.
    In addition, the OIG identified problems in State's management of antifraud
    programs such as insufficient analysis of fraud trends and inadequate
    supervision of overseas antifraud units. State is now working to correct
    these problems. While State's

    performance goals and indicators in its fiscal year 2001 Performance Plan
    address planned improvements to the visa process, they do not specifically
    address these and other management challenges we identified such as

    inadequate interagency coordination, and backlogs in visa processing.
    Another challenge to controlling illegal immigration is the timely
    implementation of the border crossing card program. Border crossing cards
    are issued in lieu of passports and visas to Mexican nationals who travel
    frequently across the border into the United States. State has issued over
    2. 5 million cards since April 1998 that contain the fingerprints and
    electronic photograph of the bearer. See figure 4 below for a sample of a
    border crossing card.

    Figure 4: Sample of a Border Crossing Card

    Source: State Department.

    The OIG identified numerous problems with this program. For example, the U.
    S. Immigration and Naturalization Service does not have the production
    capacity to produce the number of cards required by statute. The Department
    needs supplemental card production capability to overcome this problem.
    There

    is also an urgent need to expand and upgrade the criminal record databases
    used to adjudicate visas. The OIG concluded that a new, expanded biometric
    database

    would make it possible to begin implementing plans for issuing a new
    generation of biometric- based, 1 smart card- type nonimmigrant visas at all
    consulates abroad. Key Contact Jess T. Ford, Director

    International Affairs and Trade (202) 512- 4268 fordj@ gao. gov Address
    Additional

    State's management functions provide the foundation of Challenges to support
    for U. S. government operations around the

    Building a Highperforming world. Therefore, it is incumbent upon State to
    strive to become a high- performing organization. To do so, State
    Organization

    needs to choose the best strategies for integrating its organizational
    components, activities, core processes, and resources to support mission
    priorities. Consistent with concerns that we and State's OIG raised over the

    years, the Department is currently seeking ways to better utilize the
    Government Performance and Results Act process to improve its strategic and
    performance planning to better achieve overall mission, policy, and
    operational objectives. State is also enhancing its communications and
    information technology and computer systems security, including developing
    an interagency technology platform, and improving its

    financial management systems. Efforts are also underway to address human
    capital issues, including devising options for streamlining and rightsizing
    overseas operations. State's human capital problems can be seen as part of a
    broader pattern of human capital shortcomings that have eroded mission
    capabilities across the federal government. See our High- Risk Series: An
    Update 1 Biometric identifiers include fingerprints and handprints.

    (GAO- 01- 263, January 2001) for a discussion of human capital as a newly
    designated governmentwide high- risk area.

    Improving The Results Act provides a framework for resolving Performance
    management challenges and for providing greater Planning and accountability
    of State's programs and operations. As Reporting

    required by the Results Act, State has clearly articulated its strategic and
    diplomatic readiness goals of regional security, economic growth, and more.
    Our review of State's performance plans for fiscal years 1999 through 2001
    indicated that State continues to improve its planning but additional
    improvements are needed to measure and assess performance in a meaningful
    way. The Department's fiscal year 1999 Performance Report,

    the first one required under the Results Act, lists numerous foreign policy
    accomplishments from the signing of peace agreements to trade agreements,
    but it did not adequately demonstrate State's level of success or
    participation in achieving the desired outcomes. State's fiscal year 2001
    performance plan provides much more detail on its intended performance
    compared to prior years' plans. The fiscal year 2001 plan uses a new format
    that attempts to capture more of State's

    performance goals and measures. It also indicates a clear division of
    responsibility among State's various geographic and functional bureaus.
    However, State's approach of listing individual performance goals and
    measures by bureau does not lend itself to assessing the agency's
    performance as a whole. Further, the Department has not developed overall
    priorities for achieving its strategic goals, and, consequently, has no
    overall basis for allocating resources to priorities.

    State's fiscal year 1999 Performance Report did not adequately demonstrate
    State's level of success in achieving desired outcomes or the way in which
    State's actions actually led to the achievement of desired goals.

    The performance report generally provides a narrative list of
    accomplishments under each of the 16 strategic goals and an annex of
    information on the measures for

    selected goals. However, it does not provide a clear assessment of the
    progress made toward meeting the Department's goals. For example, under the
    goal to reduce illegal drugs entering the United States, State does not
    specify how establishing police training

    academies, which are a measure of performance, helps it combat the
    availability of illegal drugs. Additionally, it was unclear how much the
    Department contributed to some of the outcomes it discussed or how unmet
    goals would be achieved in the future. For example, under the

    regional stability strategic goal, the Performance Report states that
    “U. S. access to Persian Gulf oil resources continued
    uninterrupted” but does not identify how the Department contributed to
    that positive outcome. Under expanding foreign markets, State did not
    indicate how it would meet its unmet targets for completing bilateral

    investment treaties with target countries. State officials acknowledged that
    the performance plan needs to address the management challenges that the OIG
    and we have identified. Department officials stated that they intend to form
    strategic goal teams to produce a more focused fiscal year 2002 Performance
    Plan. The

    teams, led by senior managers, will identify and prioritize performance
    goals. Officials also plan to amend the fiscal year 2002 plan to make it
    more

    comprehensive, particularly in the areas of managing information technology
    modernization and security, financial management, and hiring and training
    staff, discussed below. Effective planning in these critical areas would
    help State to become a high- performing organization.

    Key Contact Susan S. Westin, Managing Director International Affairs and
    Trade

    (202) 512- 4128 westins@ gao. gov Enhancing

    State relies heavily on information technology to Overseas support its
    worldwide operations. While State has Communication, updated its systems
    infrastructure and improved system Information

    capabilities at overseas locations, the Department's Technology, and ability
    to collaborate with other foreign affairs agencies

    Computer Systems via modern technology capabilities needs to be Security
    enhanced. Adding to this modernization challenge are computer security
    concerns. Because of the size, complexity, and importance of State's
    information

    technology program, we will continue to monitor State's progress with
    implementing the common platform, modernizing its information systems, and
    improving computer security.

    State is leading an interagency effort, recommended by the Overseas Presence
    Advisory Panel, 2 to devise a system that meets the collective knowledge
    management and collaboration needs of the entire overseas foreign affairs
    community. State has already

    begun to take leadership in working with other federal agencies with an
    overseas presence and is in the early stages of planning for a common
    technology platform. It has established an interagency technology group that
    has begun defining system requirements for the

    platform. The group is establishing project milestones, developing cost
    estimates, and developing a project implementation plan. Pilot projects for
    two posts are

    currently under development. If the common platform is 2 The Overseas
    Presence Advisory Panel, an independent panel convened by the Secretary of
    State, was formed in 1999 to consider the size, composition, and management
    of the U. S. overseas presence. In the panel's November 1999 report, it
    recommended that the Department develop and implement a strategy for
    standardizing information and communications networks at all posts while
    providing all agencies with the connectivity they need.

    to become a reality, State will have to overcome cultural obstacles and get
    agreement from platform users on requirements. Further, it will have to do
    this while defining its own technical architecture and continuing to address
    pervasive computer security weaknesses that could increase with greater
    connectivity. State must continue to work hard to overcome technology
    management system weaknesses and security concerns. In 1998, we reported
    that State lacked disciplined information technology project management
    processes, investment controls, and an enterprise

    architecture. Because of these weaknesses, we concluded that State could not
    be assured that it was making the most cost- effective system investment
    decisions, that these systems would perform as expected, or that its cost
    estimates were sound. We recommended that State make the development of a
    fully implemented information technology planning and

    investment process a top priority, including the development of a
    comprehensive architecture. State agreed with our recommendations and has
    made progress in implementing them, but it needs to continue this effort.

    Previous GAO and OIG reports have cited information system security
    problems, including access control and security program management
    weaknesses, as significant challenges for the Department. For example,
    during computer security testing 2 years ago, we were able to access
    sensitive, unclassified information

    virtually undetected. In response, the Department worked hard to upgrade and
    secure its information technology and made real progress in implementing
    many of our recommendations, including clarifying roles and
    responsibilities, establishing a computer incident response team, and
    requiring the use of risk management by all project managers. State still
    needs to take steps to ensure that this progress is maintained, and that all
    audit recommendations and identified security

    vulnerabilities are addressed, that automated intrusion detection programs
    are expanded, and that agencywide security management responsibilities are
    further clarified. Absent these needed improvements, State's computer
    networks will remain vulnerable to exploitation and unauthorized access. Key
    Contact Joel Willemssen, Managing Director

    Information Technology (202) 512- 6408 willemssenj@ gao. gov Improving

    State has made progress toward resolving its Financial

    long- standing problems caused by the absence of an Management effective
    financial management system that can assist Capabilities managers in making
    “cost- based” decisions. Since fiscal year 1997, State has
    received unqualified opinions on its

    financial statements. While not meeting the statutory deadlines, State has
    steadily improved the timeliness of its reporting. State has also resolved a
    number of its

    internal control weaknesses and is proceeding with planned efforts to
    improve its systems and processes needed to protect its assets and routinely
    produce timely and reliable financial information.

    State needs to continue to bring its systems into full compliance with
    federal financial systems requirements. State also needs to resolve internal
    control weaknesses to ensure that timely and reliable financial information
    is available so Department officials can make sound

    decisions that promote effective and efficient use of federal funds.
    According to the independent auditor's report attached to State's
    Accountability Report for Fiscal Year 1999, State's financial management
    systems do not comply with certain laws and regulations, including the Chief
    Financial Officers Act of 1990. The act requires the development and
    maintenance of an

    integrated accounting and financial management system that, among other
    things, provides for complete, reliable, and timely information that meets
    the financial information needs of the agency's management and a systematic
    measurement of performance.

    Key Contact Gregory D. Kutz Director, Financial Management and Assurance
    (202) 512- 9095 kutzg@ gao. gov Human Capital

    Although State has traditionally attracted some of the Practices Need to
    nation's most talented people, a recent Department- wide Be Updated study 3
    concluded that an increasingly competitive job market and expanded private
    sector opportunities for

    geographic mobility have drawn potential Foreign Service Officers into other
    professions. According to the study, the challenges that State faces in
    recruiting and retaining top- quality employees fall into several areas.
    These include the need for State to (1) establish a strong link between
    current performance and promotions, (2) improve the quality of life at
    overseas posts, and (3) improve the quality of its management.

    The Overseas Presence Advisory Panel also concluded that State needed to
    reform its human resource practices because it does not currently have the
    flexibility, resources, or strategic organization required to support its
    mission. The panel visited 23 overseas posts in conducting its work and
    found that personnel matters topped the list of issues discussed. The panel
    reported that employees were dissatisfied with evaluation processes, career
    advancement

    3 The 1999 study, titled “The War for Talent,” was prepared by
    McKinsey and Company for State. It compared the views of State's employees
    and managers to those in top- performing companies.

    opportunities, sensitivity to lifestyle issues, the degree of autonomy and
    responsibility offered by their positions, and the quality of management.
    Employees wanted, among other things, more training in languages,
    leadership, management, and new issues. The panel recommended that State
    develop a comprehensive human resource strategy that is based on a detailed
    statement of its mission, definition of the work to be done, and
    identification of personnel requirements; and, that State develop and
    implement a recruitment strategy designed to fulfill these needs. This
    approach of strategically aligning human capital with organizational goals
    and objectives is consistent with our studies of best practices used by high
    performance organizations, and similar studies done by other organizations.

    According to State, it has begun to implement many of these recommendations.
    For example, it has started to develop a new, unified human resources
    strategy for the Department. The strategy will include a domestic and
    overseas staffing picture along with a 5- year projection based on State's
    overseas staffing model and bureau budget presentation documents. To improve
    the quality of life at its overseas posts, State has negotiated bilateral
    work agreements with 126 nations and is reviewing

    Department rules restricting employment opportunities for spouses of
    employees working overseas. It has also developed a pilot, 360- degree
    review process that will allow employees to give meaningful feedback on how
    their supervisors performed as leaders, managers, and mentors- in a
    nonthreatening and constructive fashion designed for personal and
    professional development. The Department also plans to expand leadership and
    management training, increase security training, reshape the reporting and
    policy functions, and examine ways of making the assignment process more
    responsive to management and employee needs.

    Key Contact Susan S. Westin, Managing Director International Affairs and
    Trade (202) 512- 4128 westins@ gao. gov Efforts to Realign A key challenge
    for the State Department and the other the Workforce With

    agencies operating overseas is how to adjust the U. S. Mission overseas
    presence to the new economic, political, security, and technological
    requirements of the 21st century. Presently more than 50, 000 American,
    foreign service national, and contract employees work at U. S. government
    locations. In recent years, we have raised concerns about the need to
    reexamine the U. S. overseas presence in light of increased threats of
    terrorist attacks

    and the billions of dollars in annual costs associated with overseas
    operations. We have recommended that State reexamine the way it conducts
    overseas administrative functions, such as relocating and housing employees.
    From our work, we also have suggested that State explore options for
    regionalizing certain functions and making greater use of technology and
    outsourcing to achieve efficiencies and improve performance. In March 2000,
    State established a high- level interagency committee to determine the right
    size and composition of overseas posts. The work of this committee is
    ongoing, with interagency pilot projects under way designed to determine if
    the U. S. government is doing the right things with the right people in the
    right places.

    Progress in addressing right- sizing issues faces several challenges,
    including State's limited authority and influence over the staffing
    decisions of other agencies operating overseas. Continued high- level
    commitment from all participating agencies will be needed to complete this
    effort.

    Key Contact Susan S. Westin, Managing Director International Affairs and
    Trade (202) 512- 4128 westins@ gao. gov

    Related GAO Products Overseas Security

    State Department: Overseas Emergency Security and Presence

    Program Progressing, but Costs Are Increasing (GAO/ NSIAD- 00- 83, Mar. 8,
    2000). Visa Issuance Visa Issuance: Observations on the Issuance of Visas
    for Religious Workers

    (GAO/ T- NSIAD- 00- 207, June 29, 2000). Visa Issuance: Issues Concerning
    the Religious Worker Visa Program (GAO/ NSIAD- 99- 67, Mar. 26, 1999).

    State Department: Tourist Visa Processing Backlogs Persist at U. S.
    Consulates (GAO/ NSIAD- 98- 69, Mar. 13, 1998). Drug Control Drug Control:
    U. S. Assistance to Colombia Will Take Years to Produce Results (GAO- 01-
    26, Oct. 17, 2000).

    Drug Control: U. S. Efforts in Latin America and the Caribbean (GAO/ NSIAD-
    00- 90R, Feb. 18, 2000). Drug Control: Narcotics Threat From Colombia
    Continues to Grow (GAO/ NSIAD- 99- 136, June 22, 1999). Drug Control: Update
    on U. S.- Mexican Counternarcotics Activities (GAO/ T- NSIAD- 99- 98, Mar.
    4, 1999). Drug Control: Observations on U. S. Counternarcotics Activities
    (GAO/ T- NSIAD- 98- 249, Sept. 16, 1998).

    Drug Control: An Overview of U. S. Counterdrug Intelligence Activities (GAO/
    NSIAD- 98- 142, June 25, 1998).

    Strategic and Observations on the Department of State's Fiscal Performance

    Year 1999 Performance Report and Fiscal Year 2001 Planning

    Performance Plan (GAO/ NSIAD- 00- 189R, June 30, 2000). Observations on the
    Department of State's Fiscal Year 2000 Performance Plan (GAO/ NSIAD- 99-
    183R, July 20, 1999).

    The Results Act: Observations on the Department of State's Fiscal Year 1999
    Performance Plan (GAO/ NSIAD- 98- 210R, June 17, 1998).

    Managing for Results: Agencies' Annual Performance Plans Can Help Address
    Strategic Planning Challenges (GAO/ GGD- 98- 44, Jan. 30, 1998). Information

    Foreign Affairs: Effort to Upgrade Information Management Technology
    Overseas Faces Formidable Challenges (GAO/ T- AIMD/ NSIAD- 00- 214, June 22,
    2000).

    Department of State IRM: Modernization Program at Risk Absent Full
    Implementation of Key Best Practices (GAO/ NSIAD- 98- 242, Sept. 29, 1998).
    Year 2000 Computing Crisis: State Department Needs to Make Fundamental
    Improvements to Its Year 2000 Program (GAO/ AIMD- 98- 162, Aug. 28, 1998).
    Computer Security: Pervasive, Serious Weaknesses Jeopardize State Department
    Operations (GAO/ AIMD- 98- 145, May 18, 1998).

    Foreign Affairs State Department: Progress and Challenges in Managing
    Organization and for Results (GAO/ T- NSIAD/ AIMD- 00- 254, July 19, 2000).

    Management State Department: Progress and Challenges in Addressing
    Management Issues

    (GAO/ T- NSIAD- 00- 124, Mar. 8, 2000). State Department: Major Management
    Challenges and Program Risks (GAO/ T- NSIAD/ AIMD- 99- 99, Mar. 4, 1999).

    Performance and Accountability Series: Major Management Challenges and
    Program Risks, Department of State (GAO/ OCG- 99- 12, Jan. 1999). Foreign
    Affairs Management: Major Challenges Facing the Department of State (GAO/ T-
    NSIAD- 98- 251, Sept. 17, 1998). State Department: Options for Reducing
    Overseas Housing and Furniture Costs (GAO/ NSIAD- 98- 128, July 31, 1998).
    International Affairs: Activities of Domestic Agencies (GAO/ T- NSIAD- 98-
    174, June 4, 1998).

    State Department: Using Best Practices to Relocate Employees Could Reduce
    Costs and Improve Service (GAO/ NSIAD- 98- 19, Oct. 17, 1997).

    Performance and Accountability Series

    Major Management Challenges and Program Risks: A Governmentwide Perspective
    (GAO- 01- 241)

    Major Management Challenges and Program Risks: Department of Agriculture
    (GAO- 01- 242)

    Major Management Challenges and Program Risks: Department of Commerce (GAO-
    01- 243)

    Major Management Challenges and Program Risks: Department of Defense (GAO-
    01- 244)

    Major Management Challenges and Program Risks: Department of Education (GAO-
    01- 245)

    Major Management Challenges and Program Risks: Department of Energy (GAO-
    01- 246)

    Major Management Challenges and Program Risks: Department of Health and
    Human Services (GAO- 01- 247)

    Major Management Challenges and Program Risks: Department of Housing and
    Urban Development (GAO- 01- 248)

    Major Management Challenges and Program Risks: Department of the Interior
    (GAO- 01- 249)

    Major Management Challenges and Program Risks: Department of Justice (GAO-
    01- 250)

    Major Management Challenges and Program Risks: Department of Labor (GAO- 01-
    251)

    Major Management Challenges and Program Risks: Department of State (GAO- 01-
    252)

    Major Management Challenges and Program Risks: Department of Transportation
    (GAO- 01- 253)

    Major Management Challenges and Program Risks: Department of the Treasury
    (GAO- 01- 254)

    Major Management Challenges and Program Risks: Department of Veterans
    Affairs (GAO- 01- 255)

    Major Management Challenges and Program Risks: Agency for International
    Development (GAO- 01- 256)

    Major Management Challenges and Program Risks: Environmental Protection
    Agency (GAO- 01- 257)

    Major Management Challenges and Program Risks: National Aeronautics and
    Space Administration (GAO- 01- 258)

    Major Management Challenges and Program Risks: Nuclear Regulatory Commission
    (GAO- 01- 259)

    Major Management Challenges and Program Risks: Small Business Administration
    (GAO- 01- 260)

    Major Management Challenges and Program Risks: Social Security
    Administration (GAO- 01- 261)

    Major Management Challenges and Program Risks: U. S. Postal Service (GAO-
    01- 262)

    High- Risk Series: An Update (GAO- 01- 263)

    GAO United States General Accounting Office

    Page 1 GAO- 01- 252 State Department Challenges

    Contents

    Page 2 GAO- 01- 252 State Department Challenges

    Comptroller General of the United States

    Page 3 GAO- 01- 252 State Department Challenges United States General
    Accounting Office

    Washington, D. C. 20548

    Page 4 GAO- 01- 252 State Department Challenges

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    Overview Page 7 GAO- 01- 252 State Department Challenges

    Overview Page 8 GAO- 01- 252 State Department Challenges

    Overview Page 9 GAO- 01- 252 State Department Challenges

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    Department Challenges

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    Related GAO Products Page 34 GAO- 01- 252 State Department Challenges

    Related GAO Products Page 35 GAO- 01- 252 State Department Challenges

    Page 36 GAO- 01- 252 State Department Challenges

    Performance and Accountability Series

    Page 37 GAO- 01- 252 State Department Challenges

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