Department of State: Status of Achieving Key Outcomes and	 
Addressing Major Management Challenges (07-DEC-01, GAO-02-42).	 
								 
GAO reviewed the Department of State's fiscal year 2000 	 
performance report and its fiscal year 2002 performance plan.	 
Weaknesses in State's fiscal year 2000 performance report made it
difficult to determine the department's progress toward achieving
such key outcomes as eliminating the threat from weapons of mass 
destruction and expanding foreign markets for U.S. products and  
services. These weaknesses are rooted in performance goals and	 
indicators established in its performance plan for 2000, which	 
GAO criticized in an earlier report. State has taken a major step
toward implementing Government Performance and Results Act of	 
1993 requirements by producing a fiscal year 2002 plan that is	 
superior to earlier efforts.  GAO believes that  State will need 
to focus its efforts on reporting on all indicators in the plan  
and, if targets are not achieved, clearly explaining why and what
actions State plans to achieve the targets in the future.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-42						        
    ACCNO:   A02516						        
  TITLE:     Department of State: Status of Achieving Key Outcomes and
Addressing Major Management Challenges				 
     DATE:   12/07/2001 
  SUBJECT:   Agency missions					 
	     International agreements				 
	     International relations				 
	     International travel				 
	     Law enforcement					 
	     Performance measures				 
	     Reporting requirements				 
	     Strategic planning 				 
	     Terrorism						 
	     Weapons systems					 
	     Foreign trade policies				 
	     Drugs						 
	     Antiballistic Missile Defense Treaty		 
	     Strategic Arms Reduction Treaty			 
	     Theater Missile Defense Treaty			 

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GAO-02-42
     
Report to the Ranking Minority Member, Committee on Governmental Affairs, U.
S. Senate

United States General Accounting Office

GAO

December 2001 DEPARTMENT OF STATE

Status of Achieving Key Outcomes and Addressing Major Management Challenges

GAO- 02- 42

Page i GAO- 02- 42 State: Status of Achieving Key Outcomes Letter 1

Results in Brief 2 Background 6 Assessment of State?s Progress and
Strategies in Accomplishing

Selected Key Outcomes 7 Comparison of State?s Fiscal Year 2000 Performance
Report and

Fiscal Year 2002 Performance Plan With the Prior Year Report and Plan for
Selected Key Outcomes 21 State?s Efforts to Address Its Major Management
Challenges

Identified by GAO 25 Conclusions 26 Recommendations 26 Scope and Methodology
26 Agency Comments 27

Appendix I Observations on the Department of State?s Efforts to Address Its
Major Management Challenges 29

Appendix II Comments From the Department of State 38

Appendix III GAO Contact and Staff Acknowledgments 39 GAO Contact 39
Acknowledgments 39

Tables

Table 1: Major Management Challenges Confronting the Department of State 30

Abbreviations

GPRA Government Performance and Results Act of 1993 OIG Office of the
Inspector General OMB Office of Management and Budget Contents

Page 1 GAO- 02- 42 State: Status of Achieving Key Outcomes

December 7, 2001 The Honorable Fred Thompson Ranking Minority Member
Committee on Governmental Affairs United States Senate

Dear Senator Thompson: As you requested, we reviewed the Department of
State?s (State) fiscal year 2000 performance report and fiscal year 2002
performance plan required by the Government Performance and Results Act of
1993 (GPRA) 1 to assess the department?s progress in achieving selected key
outcomes that you identified as important mission areas. 2 Our review
includes a discussion of State?s past performance and future performance
targets for counterterrorism and other key foreign policy efforts, which
were developed prior to the terrorist attacks on New York City and
Washington, D. C., on September 11, 2001. We recognize the events of that
day and subsequent days may greatly alter State?s approach to its strategic
goals and objectives in many of the areas we examined for this review,
particularly those involving counterterrorism. We hope that this report
provides the department and others with insights that will assist them when
developing new efforts to counter terrorism and protect American citizens,
assets, and interests, both at home and abroad.

In this review, we focused on the same outcomes we addressed in our June
2000 review of the department?s fiscal year 1999 performance report and
fiscal year 2001 performance plan to provide a baseline by which to measure
the department?s performance from year to year. 3 These selected key
outcomes are as follows:

 eliminate the threat from weapons of mass destruction;

 expand foreign markets for U. S. products and services;

 enhance the ability of American citizens to travel and live abroad
securely; 1 P. L. 103- 62, 107 Stat. 285. 2 This report is one in a series
of reports on the annual GPRA documents required of the 24 agencies
enumerated in the Chief Financial Officers Act. 3 Observations on the
Department of State?s Fiscal Year 1999 Performance Report and Fiscal Year
2001 Performance Plan (GAO/ NSIAD- 00- 189R, June 30, 2000).

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 02- 42 State: Status of Achieving Key Outcomes

 reduce international crime and availability and/ or use of illegal drugs;
and

 reduce international terrorist attacks, especially against the United
States and its citizens.

As agreed, using the selected key outcomes for State as a framework, we (1)
assessed the progress State has made in achieving these outcomes and the
strategies the department has in place to achieve them and (2) compared
State?s fiscal year 2000 performance report and fiscal year 2002 performance
plan with the department?s prior year performance report and plan for these
outcomes. Additionally, we agreed to analyze how State addressed its major
management challenges, including the governmentwide high- risk areas of
human capital and information security, that we and State?s Inspector
General identified. Appendix I provides detailed information on how State
addressed these challenges.

State reported little progress in eliminating the threat from weapons of
mass destruction during fiscal year 2000; however, it reports substantial
progress toward achieving the other four key outcomes by meeting many of its
performance goals and targets. Based on our analysis, it is difficult to
determine the level of progress on the five outcomes because the performance
report does not always clearly describe what State sought to accomplish due
to a lack of linkages between activity based performance indicators and
outcomes and a failure to report on many performance indicators prescribed
in the performance plan for fiscal year 2000. The department provided little
discussion on why certain indicators were not reported, why others did not
meet expected performance, and what strategies would be used to achieve the
unmet (and unreported) performance targets. Finally, the report discussed
information technology as a strategy for achieving outcomes only for
assisting Americans traveling and living abroad, and it did not address
human capital issues in the context of achieving any outcome. State?s
performance plan for 2002 clearly linked the department?s strategies and
indicators to its key outcomes and discussed how it will address some of the
unmet and unreported indicators in both 2001 and 2002. 4 The plan?s
performance

4 Due to many inadequacies with its Performance Plan for Fiscal Year 2001,
many of which we highlighted in June 2000, State chose to revise its
performance goals and indicators. The Performance Plan for Fiscal Years
2001- 2002 will be the basis for State to judge both 2001 and 2002
performance. In this report, we refer to the 2001- 2002 plan simply as the
performance plan for 2002. Unless otherwise noted, references to State?s
fiscal year 2001 performance plan refer to its original plan for that fiscal
year issued in June 2000. Results in Brief

Page 3 GAO- 02- 42 State: Status of Achieving Key Outcomes

goals and indicators are objective and measurable, although many are
activity rather than outcome oriented.

Planned Outcome: Eliminate the Threat From Weapons of Mass Destruction -
State reported little progress in eliminating the threat from weapons of
mass destruction, particularly reflected in its inability to achieve the
targets for three performance indicators: (1) establishing nonproliferation
export controls in the 12 countries formerly comprising the Soviet Union
(the Newly Independent States), (2) ratifying the Strategic Arms Reduction
Treaty III, and (3) reaching agreement with Russia on antiballistic missile
defense and theater missile defense demarcation. The department presented
strategies for meeting these indicators in the future. Progress toward
achieving targets related to a third indicator- countries joining the
Chemical Weapons Convention- was unclear because State did not demonstrate
that the countries joining the convention during fiscal year 2000 were the
actual targeted nations. Finally, the department reported no progress
related to the Antiballistic Missile Defense and Theater Missile Defense
treaties. Although State?s performance plan for 2002 greatly reduced the
number of performance goals and indicators, many of the performance targets
lack valid measures of progress.

Planned Outcome: Expand Foreign Markets for U. S. Products and Services -
State reported successes in expanding foreign markets for U. S. products and
services, saying it fully or partially achieved performance targets for all
seven indicators. However, we disagree with State?s assessment on two of the
seven indicators- the number of Newly Independent States joining the World
Trade Organization and the number of countries maintaining a 90- day
petroleum stock. In addition, it is difficult to see the relationship
between the latter indicator and the goal of expanding foreign markets for
U. S. products and services. State?s 2002 performance goals and indicators
for its two major efforts- opening new markets and expanding trade- are
objective and measurable, and the department?s strategies clearly link
performance goals and indicators to outcomes; however, many of the measures
are activity based rather than outcome oriented.

Planned Outcome: Enhance the Ability of American Citizens to Travel and Live
Abroad Securely - State reported substantial progress in achieving this
outcome; however, we found that only one of the two current performance
targets was achieved. Furthermore, the department did not report on basic
services it provides. State dropped two performance indicators prescribed in
the 2000 performance plan- memoranda of

Page 4 GAO- 02- 42 State: Status of Achieving Key Outcomes

understanding between State and commercial airlines and status of Year 2000
compliance- because neither remained applicable during 2000. The department
achieved its primary targets associated with its indicator for disseminating
information via the Internet. However, success in achieving the performance
target for reducing the caseload of child abduction caseworkers was
overstated because the department did not achieve the actual levels of cases
per worker outlined in the performance plan for 2000. In addition, State did
not report on two of its most prominent activities- the issuance of
passports and the treatment of U. S. citizens in foreign prisons- although
the performance plan for 2000 did not list either as specific indicators for
these areas. The department stated it would address the partially met
indicator related to child abduction caseloads by developing a new case-
tracking system. In addition, in 2002, the department will continue using
its consular Web site; implement computerized tracking systems for
international adoptions and American citizens incarcerated abroad; and
report on other prominent services, such as passport services.

Planned Outcome: Reduce International Crime and the Availability and/ or Use
of Illegal Drugs - State reported success in achieving performance targets;
however, it is difficult to determine progress achieving the outcome because
State?s indicators were output rather than outcome oriented and presented no
data related to stemming the flow of illegal drugs. State presented data on
the number of people trained and the number of international law enforcement
academies established, but it did not report how this training affected the
levels of international crime and its impact on the United States and its
citizens. In 2002, State is to focus on new anticrime and antismuggling
operations; begin negotiating an anticorruption agreement; and take actions
to make progress on investigating, prosecuting, and convicting major
narcotics criminals. While some of the indicators associated with the
international crime performance goals are not easily measurable, they are
generally results oriented.

Planned Outcome: Reduce International Terrorist Attacks, Especially Against
the United States and Its Citizens - State reported it successfully achieved
its performance targets on all indicators; however, it is difficult to
determine progress toward achieving the outcome because linkages between the
outcome and its related activities and indicators were not clear. In
addition, indicators were output based, generally reporting the number of
people trained or training sessions held. Moreover, the department did not
report on the two basic measures that define the outcome- the number and
severity of terrorist attacks. In 2002, State?s

Page 5 GAO- 02- 42 State: Status of Achieving Key Outcomes

goals are to reduce the number of attacks, bring terrorists to justice,
reduce or eliminate state- sponsored terrorist acts, delegitimize the use of
terror as a political tool, enhance international response, and strengthen
international cooperation and operational capabilities to counter terrorism.
In addition, the department will report on the number of terrorist attacks
and the number of human casualties, as it did for fiscal year 1999.

The fiscal year 2000 performance report has not changed significantly from
the fiscal year 1999 report. Although State has improved the report?s
clarity and readability, the report has numerous weaknesses, many of which
we reported in June 2000, most notably:

 Indicators continue to measure outputs rather than outcomes.

 The relationship between some indicators and strategies is unclear, as is
the relationship between some strategies and outcomes.

 Baselines, results of past performance, and methodologies for measuring
indicators were changed without discussion.

In addition, State once again failed to report on many of the indicators
prescribed by the 2000 performance plan, did not discuss strategies for
addressing unmet and unreported goals, and provided no assessments of how
fiscal year 2000 performance could affect performance in fiscal year 2001.

State?s performance plan for 2002 is a significant improvement over its
earlier GPRA products. State used a more unified, agencywide approach rather
than the regional focus used in the fiscal year 2001 plan. This approach
resulted in more clarity and the elimination of redundant material. In
addition, the 2002 plan more clearly delineates the relationships among the
various key outcomes, performance goals, strategies, and performance
indicators. However, some weaknesses remain, such as the output orientation
of many indicators, vague performance targets, and a lack of clear
descriptions of how State?s efforts relate to efforts of other agencies and
where interagency activity is taking place.

State?s fiscal year 2000 performance report discussed progress in resolving
its major management challenges that we identified. The report discussed
seven major management challenges, including two governmentwide and five
others related specifically to the department. State?s performance plan has
performance goals and measures that are directly related to six of these
challenges and does not have performance goals, strategies, or

Page 6 GAO- 02- 42 State: Status of Achieving Key Outcomes

measures to address one of these challenges- rightsizing U. S. overseas
presence. However, State subsequently addressed its rightsizing plans in an
August 2001 report that assessed recommendations of the Overseas Presence
Advisory Panel. 5 Moreover, the President has announced the realignment of
overseas presence as 1 of 14 management priorities for fiscal year 2002. The
department also stated it successfully achieved all eight performance
targets under its strategic human capital management performance goals;
however, it failed to fully report on at least three of the eight
indicators.

In this report, we recommend that in future years the Secretary of State
report on fiscal year performance for all performance goals and indicators
outlined in corresponding performance plans, provide clear and specific
explanations for why performance goals and targets were not achieved, and
discuss actions the department will take to achieve the unmet goals. The
department indicated it would implement these recommendations in its 2001
performance report.

GPRA is intended to shift the focus of government decisionmaking,
management, and accountability from activities and processes to results and
outcomes achieved by federal programs. New and valuable information on the
plans, goals, and strategies of federal agencies has been provided since
federal agencies began implementing GPRA. Under GPRA, annual performance
plans are to clearly inform the Congress and the public of (1) the annual
performance goals for agencies? major programs and activities, (2) the
measures that will be used to gauge performance, (3) the strategies and
resources required to achieve the performance goals, and (4) the procedures
that will be used to verify and validate performance information. These
annual plans, issued after transmittal of the President?s budget, provide a
direct linkage between an agency?s longer- term goals and mission and day-
to- day activities. 6 Annual performance reports are to subsequently
describe the degree to which performance goals were met. The issuance of the
agencies? performance reports, due by March 31 of each year, represents a
new and potentially more substantive phase in the implementation of GPRA-
the opportunity to assess federal agencies? actual performance for the prior
fiscal year and

5 Final Report on Implementing the Recommendations of the Overseas Presence
Advisory Panel (OPAP), U. S. Department of State, August 2001. 6 The fiscal
year 2002 performance plan is the fourth of these annual plans under GPRA.
Background

Page 7 GAO- 02- 42 State: Status of Achieving Key Outcomes

to consider what steps are needed to improve performance and reduce costs in
the future. 7

The Department of State is the lead government agency representing U. S.
interests overseas. As such, it 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. The department,
among other things, monitors and reports political, economic, and other
developments in foreign countries; assists U. S. business overseas; provides
services to U. S. citizens abroad; issues passports and visas; participates
in international drug control programs; and manages facilities and provides
security for U. S. personnel stationed at embassies and consulates.

This section discusses our analysis of State?s performance in achieving its
selected key outcomes and the strategies the department has in place,
particularly regarding human capital 8 and information technology, for
accomplishing these outcomes. In discussing these outcomes, we have also
provided information drawn from our prior work on the extent to which State
verified and validated its performance data.

It is difficult to determine the level of progress toward achieving the five
key outcomes that are discussed in the performance report for fiscal year
2000. For some key outcomes, it is unclear what State was trying to
accomplish, due to a lack of linkages between activity- based performance
measures and outcomes and a failure to report on many of the performance
indicators outlined in the plan for 2000. The department provided little
discussion on why progress in meeting certain performance targets was not
reported, why other performance targets were not met, and what strategies
would be used to achieve the unmet (and unreported) performance targets.
State?s performance plan for 2002 discusses strategies to meet performance
goals and more clearly links the key

7 The fiscal year 2000 performance report is the second of these annual
reports under GPRA. 8 Key elements of modern human capital management
include strategic human capital planning and organizational alignment;
leadership continuity and succession planning; acquiring and developing
staffs whose size, skills, and deployment meet agency needs; and creating
results- oriented organizational cultures. Assessment of State?s

Progress and Strategies in Accomplishing Selected Key Outcomes

Page 8 GAO- 02- 42 State: Status of Achieving Key Outcomes

outcomes to strategies and performance indicators. In addition, the
department developed new performance indicators for some key outcomes.
However, as we reported in June 2000, many indicators continue to be output
rather than outcome oriented, and some indicators are not readily
measurable.

The performance report for 2000 and the performance plan for 2002 discussed
issues of data verification and validation for four of the five outcomes. In
the performance report, State discussed data sources and the unit
responsible for verifying data quality for four outcomes, but it did not
discuss the frequency of data collection and the efforts taken to validate
the data for three of those four outcomes (weapons of mass destruction,
Americans traveling and living abroad, and counterterrorism). The 2002 plan
discussed (1) the sources and management of performance data for four
outcomes (weapons of mass destruction, Americans traveling and living
abroad, international crime, and counterterrorism); (2) the frequency of
data collection for two outcomes (international crime and counterterrorism);
and (3) the validation of data for two outcomes (weapons of mass destruction
and Americans traveling and living abroad). The department did not discuss
how it will collect and validate performance data for the outcome of
expanding foreign markets for U. S. goods and services.

The performance report and performance plan provided detailed discussions of
departmentwide strategic human capital and information technology efforts
under the Diplomatic Readiness initiatives. However, other than for a few
instances- such as State?s efforts to use the Internet for disseminating
information on consular services and travel safety- the report generally did
not discuss these issues within the context of achieving the key outcomes.
The performance plan for 2002 listed the number of staff positions the
department requested for all five key outcomes, but it did not explain how
changes in the number of these positions would affect the achievement of the
outcomes. The performance plan included a detailed discussion of information
technology issues related to providing services to American citizens
traveling and living abroad, but it did not do so for the remaining four
outcomes.

State reported it achieved one of its four planned performance targets for
this outcome, made progress toward achieving a second, did not achieve a
third target, and made no progress toward its fourth target. However, for
the two indicators for which State reported progress, one performance target
was not achieved and progress toward the other was unclear The Threat From
Weapons

of Mass Destruction

Page 9 GAO- 02- 42 State: Status of Achieving Key Outcomes

because State did not provide a full description of its actual
accomplishment.

State?s strategic goal for this key outcome was to eliminate the threat to
the United States and its allies from weapons of mass destruction and
destabilizing conventional arms. State?s fiscal year 2000 performance plan
identified one performance goal regarding the negotiation and implementation
of nonproliferation treaties, agreements, and controls with Russia and the
other Newly Independent States. 9 To measure achievement of this goal, State
focused on four performance indicators: (1) establishment of
nonproliferation export controls in Russia and the other Newly Independent
States, (2) progress on the Strategic Arms Reduction Treaty III (START III)
with Russia, (3) accession of Newly Independent States to the Chemical
Weapons Convention, and (4) agreement between the United States and Russia
on antiballistic missile defense and theater missile defense demarcation.
Under nonproliferation activities, State?s target was to have export
controls in place in all 12 Newly Independent States, with a majority of
these countries enforcing them. Actual performance showed that five
countries (Belarus, Georgia, Moldova, Kazakhstan, and Ukraine) have the
controls in place, and one (Ukraine) enforces them. State did not explain
why the targets under this outcome were not met. For the second performance
indicator, State reported that the United States and Russia held preliminary
discussions about arms reductions under START III during 2000. While
important, the result does not meet the target for 2000 of having a treaty
signed by the United States and Russia. Under the third indicator, the
department stated that 12 additional countries ratified or acceded to the
Chemical Weapons Convention, but it is unclear whether this achievement
meets the planned target of 2 additional Newly Independent States joining
the convention because the department did not report the countries that
joined. Finally, State reported it made no progress related to antiballistic
missile defense and theater missile defense demarcation because Russia was
not willing to engage in formal discussions.

The performance report discussed strategies to achieve the unmet performance
goal of having all 12 Newly Independent States institute nonproliferation
export controls and having the majority enforce them. The department stated
that it has expanded into two distinct export control offices- one focused
on policy and the other on sanctions and

9 Russia and the 11 other Newly Independent States formerly comprised the
Soviet Union.

Page 10 GAO- 02- 42 State: Status of Achieving Key Outcomes

assistance. However, State did not report why the performance targets were
not met; thus it is difficult to determine how this strategy will help the
department achieve the unmet target in the future. The report did not
discuss why the START III negotiations were delayed or a likely time frame
for when the negotiations would be completed and the treaty signed, nor did
the report discuss the actions State will take to meet its targets for
theater and antiballistic missile defense demarcation.

Overall, the fiscal year 2002 plan provides a more clear definition of
State?s intended strategies and performance regarding weapons of mass
destruction by organizing the performance goals and indicators in a more
logical fashion. State?s unified approach eliminated many goals and
indicators that resulted from State?s prior year approach that was devolved
to the regional level. By focusing on agencywide, rather than regional,
objectives and limiting its planning to nonmandated activities, State
reduced the number of performance goals for this key outcome from 75 for
fiscal year 2001 to 7 for 2002 and the number of performance indicators from
64 to 15. In addition, State will continue to use two categories for judging
2002 performance for this outcome- successful and minimally successful- each
of which has specific associated levels of performance. However, some of the
performance indicators and targets identified continue to lack valid
measures of progress. For example, one new indicator measuring performance
toward missile defense defines

?successful? performance as ?undertak[ ing] appropriate actions to implement
U. S. Government decisions on missile defense.? As in prior plans, State
identified the agencies with which coordination is needed for each
performance goal, yet failed to discuss the nature and extent of the
coordination necessary or the new strategies that may be needed.

In the performance report, State addressed data verification by stating the
sources of data. The performance plan for 2002 provided the same information
on data verification, in addition to the units responsible for data
collection and management. However, the department did not indicate how it
would verify the data. In the 2002 plan, State requested an increase of 20
full- time staff for this outcome, but it did not say how the additional
positions would be allocated.

State reported it achieved performance targets for all seven indicators
outlined in the performance plan for 2000. However, for three indicators
that State reported as having been achieved, we found the department only
partially met its targets. Finally, the linkage between one of the Foreign
Markets for U. S.

Products and Services

Page 11 GAO- 02- 42 State: Status of Achieving Key Outcomes

performance indicators and the outcome was unclear. State has deleted that
indicator from its subsequent performance plan.

State has two strategic goals in the trade area that we treated as one key
outcome: (1) opening foreign markets to increase trade and free flow of
goods, services, and capital and (2) expanding U. S. exports to $1.2
trillion by early in the 21st century. Performance goals and indicators were
generally objective and measurable. Under the first of the selected
outcomes- opening markets- four of five indicators were results oriented.
However, it was difficult to see the relationship between one performance
indicator- number of countries maintaining a 90- day stock of petroleum- and
the outcome of opening markets to U. S. goods and services. Performance
indicators for the second selected outcome, expanding U. S. exports, were
also objective and measurable. Neither the performance report nor the
performance plan discussed data verification and validation for this
outcome.

The performance plan indicated the department will reduce the number of
staff positions by about 27 percent (256 positions), but it did not state
which functions within the 2 strategic goals would be affected.

State reported that it had fully achieved its targets for four of its five
performance indicators and partially met the fifth indicator. However, from
our assessment, State had successfully achieved only three targets- the
number of countries signing more liberal aviation agreements; the total
sales of U. S. telecommunication and information technology equipment; and
the total foreign operations revenues of U. S. telecommunications, including
satellite services. For another indicator, the number of Newly Independent
States and former Communist countries acceding to the World Trade
Organization, State targeted four countries- Georgia, Croatia, Lithuania,
and Moldova. State said it successfully met the target because three
countries joined the organization in 2000. However, only one of the targeted
countries, Georgia, joined the organization during fiscal year 2000, while
another joining country, Albania, was not on State?s initial list. Croatia
completed its entry requirement during fiscal year 2000, but did not
formally join until November 30, 2000. Lithuania and Moldova did not join
until well into fiscal year 2001. 10 On the final indicator, the number of
countries maintaining a 90- day petroleum stock reserve, we

10 Lithuania was voted as a member on December 8, 2000, and formally joined
on May 31, 2001. Moldova formally joined the organization on July 27, 2001.
Open Foreign Markets to

Increase Trade and the Free Flow of Goods, Services, and Capital

Page 12 GAO- 02- 42 State: Status of Achieving Key Outcomes

agree that State successfully met the target of having two target countries-
the Czech Republic and South Korea- maintain 90- day petroleum reserves.
However, the fact that seven other countries previously maintaining the
desired level of oil stocks fell out of compliance with the standard negates
this achievement. Regardless of whether State achieved the performance
target, as we reported in June 2000, it is difficult to see a linkage
between the number of countries maintaining a 90- day petroleum stock and
the goal of expanding foreign markets for U. S. products and services. As
such, State has dropped this indicator for both 2001 and 2002 performance.

Although State did not establish clear fiscal year 2002 performance goals
for this part of the key outcome, it did discuss the strategies to achieve
the outcome and the indicators and performance targets it will use to judge
progress. State will continue to work toward strengthening international
frameworks for open markets for goods, services, and investment; integrating
social policy goals into the international agenda for reforming economic
policies and rules; ensuring openness of international markets for e-
commerce and biotechnology; and integrating developing and transition
economies into the world economy. To monitor performance, State will focus
on 11 indicators. These indicators are generally objective and measurable
and linked to the outcome, but performance targets for three indicators are
not clearly defined: (1) needs met in Integrated Framework for Trade-
Related Capacity Building Roundtables, (2) status of bilateral investment
dialogues, and (3) status of multilateral policy dialogues.

State reported success in achieving both performance indicators outlined for
this outcome; however, the department did not report on one of the
performance targets prescribed by the plan. State?s one performance goal and
two reported indicators were objective and measurable. The performance goal
focused on U. S. government export promotion to the

?best international market prospects,? and State reported it successfully
achieved the targets for two performance indicators- the total level of U.
S. exports (goods only) and the attainment of bilateral investment treaties.
In developing the 2000 performance plan in 1998, State set 3 targets related
to bilateral investment treaties to be achieved in fiscal year 2000: (1)
sign 4 additional treaties with undetermined countries, (2) conduct 8
ongoing treaty negotiations, and (3) engage in preparatory discussions with
50 countries. The target for the number of treaties signed was actually
achieved during 1999, and State concentrated its efforts in 2000 ?on
obtaining advice and consent from the Senate on 10 previously signed
treaties and engag[ ing] in negotiations with 8 countries.? The Expand U. S.
Exports to $1.2

Trillion by Early in the 21st Century

Page 13 GAO- 02- 42 State: Status of Achieving Key Outcomes

department did not indicate whether it was preparing discussions with
additional countries. For the other indicator, State reported sales of $755
billion in total U. S. exports of goods, surpassing the 2000 target of $720
billion.

State?s performance goals, strategies, indicators, and performance targets
outlined in the performance plan for 2002 are more clearly linked to the key
outcome of expanding U. S. exports to $1.2 trillion than they were in the
2000 performance report. State?s two performance goals are to (1) provide
support to U. S. businesses competing worldwide and (2) increase exports of
oil and gas field equipment and services, telecommunications equipment and
services, and agricultural produce. Strategies include promoting business
and exports, supporting U. S. foreign direct investments, and promoting
corporate responsibility and best practices. State will assess progress
toward achieving the outcome using eight performance indicators that are
generally objective and measurable. Although all of the indicators have
specific baselines for 2000 and performance targets for 2002, most, such as
the number of presentations to business audiences, are activity based.
However, two indicators-( 1) telecommunications and information technology
equipment sales and (2) agricultural exports- are outcome oriented. A third
indicator- oil and gas sector exports- is also outcome oriented; however,
State provided no baseline for this indicator, and its performance target is
vague and not measurable.

State reported that it had fully met two of its performance targets for this
key outcome and explained that it did not report on the two other indicators
outlined by the 2000 performance plan because these indicators had become
obsolete. Based on our assessment, although State made great strides toward
achieving planned performance for one of the two indicators discussed, it
did not fully achieve the target prescribed by the 2000 plan.

State?s strategic goal for this key outcome was to protect the safety and
security of American citizens who travel and live abroad, and its
performance goal for 2000 was to deliver information and services needed to
travel and live abroad knowledgeably, efficiently, and courteously. This
performance goal was clearly defined, results oriented, and measurable.
Furthermore, State established four measurable and objective performance
indicators. However, one of the key services that State provides American
citizens traveling abroad- timely, effective passport issuance- is not an
indicator under this key outcome. Neither the The Ability of American

Citizens to Travel and Live Abroad Securely

Page 14 GAO- 02- 42 State: Status of Achieving Key Outcomes

performance plan for fiscal year 2000 nor the fiscal year 2000 performance
report provides performance information on this prominent activity, although
the 2000 report provides a narrative description of what State considers
improved passport service.

State dropped two of the four indicators prescribed by the performance plan
for fiscal year 2000. The department reported that one of the indicators,
status of the American Citizen Services system?s Year 2000 compliance, is no
longer applicable. For the other indicator, memoranda of understanding
between State and commercial airlines serving U. S. citizen passengers in
the event of an air disaster, State reported that specific memoranda are no
longer necessary because new legislation and regulations serve the same
purpose and that the target has been successfully achieved. In the report,
State did not specifically cite the relevant legislative and regulatory
changes.

For the performance indicator of Internet usage to disseminate information
on consular services and travel safety, State surpassed its target of
receiving 150,000 hits per day on its Web page, averaging 240,000 hits per
day. State also said it achieved its customer satisfaction targets for this
indicator. However, it is difficult to determine whether the 2000 target for
percent of users who found the information helpful was met. State reported
that user satisfaction with consular Web site information was 90 percent,
which was 5- percentage points below the target for 2000. State cited three
primary sources of user dissatisfaction: (1) inability to get questions
answered by telephone, (2) unwillingness or inability to call the passport
information 900 (toll) telephone number, and (3) no listing of the winners
of the Diversity Visa lottery. However, two of the reasons cited reflected
dissatisfaction with telephone- based customer service rather than Web site
content. Nonetheless, State said it met the target and therefore all aspects
of the indicator. Further complicating the issue, State did not provide data
on the relative influence the three sources of dissatisfaction had on the
overall user satisfaction rate. Thus, the explanations seem incomplete.

State also reported that it successfully met the final performance target,
reducing the case workload per officer to left- behind parents in child
abduction cases from 140 cases to 80, despite an actual reduction to 90
cases per worker. State officials told us they declared success for this
performance indicator because the reduction was significant. However, State
provided no explanation of why it was not successful in reducing the
workload to 80 cases per officer. The department stated that progress

Page 15 GAO- 02- 42 State: Status of Achieving Key Outcomes

toward achieving this target was due in large part to increasing the number
of full- time staff from 11 to 26.

In addition, State?s strategy for enhancing American citizen services under
the performance plan covering fiscal year 2000 indicated that the department
would work closely with foreign governments to improve treatment of U. S.
citizens incarcerated abroad, promote greater participation in multilateral
treaties to which the United States is a party, and help other agencies
provide efficient distribution of benefits overseas. Yet State provided no
indicators or targets to measure progress in these areas. The 2000
performance report does not include these activities as strategies State
used in fulfilling this goal. The plan also states that ratification of the
Hague Convention on International Adoptions was expected and that State must
make preparations for dealing with the increased workload the convention
would entail. But State did not report on what preparations, if any, had
been made for the convention?s ratification or a resulting increase in
workload.

Although one of the key services State provides American citizens traveling
abroad is the timely and effective issuance of passports, neither the 2000
performance plan nor the 2000 performance report provides performance
information on this service. However, the 2000 report said that a
governmentwide satisfaction survey showed that the service passport
customers received exceeded their expectations and that the majority of
customers were more satisfied than they were in 1998.

Under its performance plan for 2002, State replaced its past indicator for
child abductions- reducing the workload level of caseworkers- by focusing on
a new, automated case- tracking system. Performance targets for 2002 include
pilot testing and deploying systems that track international parental child
abduction cases and international adoption cases. In addition, the system
will track U. S. citizens who have been arrested overseas and instances of
their mistreatment. State also will report on two passport service
indicators: the number issued and the status of efforts to introduce digital
passport photos. Finally, State will continue to track consular information
activities through the use of the Consular Activities Web site. State will
continue to use two alternative levels of measure- successful and minimally
effective- for the indicators associated with this outcome. For each
performance indicator, the alternative levels of measure have specific
results- oriented targets.

In the performance report, State addressed data verification by stating the
sources of performance data and the units responsible for data collection

Page 16 GAO- 02- 42 State: Status of Achieving Key Outcomes

and management. The performance plan for 2002 also provided a brief
description of how and by whom the data will be verified and validated.

State reported success in achieving performance targets associated with
three indicators presented in the 2000 performance plan. However, overall
progress under this outcome is unclear because the department did not
discuss progress toward achieving the planned targets for three additional
indicators prescribed by the 2000 plan. In addition, the linkages between
the outcome and some of the strategies and indicators are unclear, and the
indicators on which the department reported were output rather than outcome
oriented.

State?s 2000 performance plan and prior GPRA products treated international
crime and drug trafficking as one strategic goal: to minimize the impact of
international crime on the United States and its citizens and reduce
significantly, from 1997 levels, the entry of illegal drugs into the United
States. State?s performance report for 2000 presented one performance goal
covering both key outcomes and addressed only the indicators related to
international law enforcement training programs outlined in the performance
plan for fiscal year 2000. The report did not discuss performance results
for its remaining three indicators outlined in the 2000 plan: (1) foreign
spending on and commitment to crime control efforts, (2) agreements to
counter international organized crime, and (3) antinarcotics awareness
campaigns. The report also did not present indicators related to the flow of
illegal drugs into the United States. No explanation was provided on why the
other indicators and measures were excluded.

For the international training program indicators, the performance plan for
fiscal year 2000 identified three performance targets; however, the
performance report for fiscal year 2000 addressed only two- the number of
academies established and the number of foreign officials trained. State
gave no explanation on why ?help[ ing] countries establish their own
national- level law enforcement training institutions? was not discussed.
Furthermore, the report did not demonstrate how establishing training
academies and training foreign officials help State combat international
crime and reduce the availability of illegal drugs.

State reported that targets for the two performance indicators related to
law enforcement training were successfully achieved. The department stated
that it completed development of two international law enforcement academies
but only cited one partnered country- Botswana. International Crime and

the Availability and/ or Use of Illegal Drugs

Page 17 GAO- 02- 42 State: Status of Achieving Key Outcomes

State also worked with the U. S. Agency for International Development and
the Department of Justice?s Office of Overseas Prosecutorial Development,
Assistance, and Training, as we reported in October 2000 and April 2001, 11
in addition to other U. S. agencies and host countries, to achieve its
target of training 10,500 foreign officials in law- related areas. Both of
these indicators were output oriented, and State did not demonstrate
tangible effects of training on reducing international crime.

The 2002 performance plan treats international crime and reducing entry of
illegal drugs into the United States as two separate strategic goals. This
approach provides more clarity and better linkages between State?s
performance goals and the outcomes than previous performance plans. To
minimize the impact of international crime on the United States and its
citizens, State has two general goals- strengthening international
cooperation against transnational crime and improving law enforcement and
criminal justice institutions in targeted countries. To achieve these goals,
State plans to continue using training- related items as strategies. In
addition, State plans to work with other countries to develop new anticrime
and antismuggling/ trafficking operations, begin negotiating an
international anticorruption agreement, and work with multilateral agencies
to implement the Transnational Organized Crime Convention and related
protocols. While some of the associated indicators are not easily
quantifiable, performance requirements are generally results oriented.

To achieve the objective related to reducing the entry of illegal drugs into
the United States, State plans to employ numerous strategies to reduce the
cultivation of illicit coca and opium poppy and foreign cultivation of
marijuana. These strategies are generally results oriented, and the
indicators tracking progress are objective, measurable, and directly related
to the performance goal and key outcome. Strategies related to a second
goal- criminal justice sectors of foreign governments break up major drug
trafficking organizations and effectively investigate, prosecute, and
convict major narcotics criminals- are aimed at diplomatic initiatives to
get foreign countries to approve and implement the 1988 United Nations Drug
Convention, as well as assist others with legislative, training, and law
enforcement activities. The two performance indicators- the number of
countries adhering to the convention and the number of foreign officers

11 Foreign Assistance: Any Further Aid to Haitian Justice System Should Be
Linked to Performance- Related Conditions, (GAO- 01- 24, Oct. 17, 2000) and
Former Soviet Union: U. S. Rule of Law Assistance Has Had Limited Impact,
(GAO- 01- 354, Apr. 17, 2001).

Page 18 GAO- 02- 42 State: Status of Achieving Key Outcomes

trained- are objective and measurable and clearly linked to the performance
goals and key outcome; however, they apply to only two of State?s many
planned activities.

In the performance report, State addressed data verification by discussing
the sources of performance data, the frequency of data collection, the units
responsible for data collection and management, and how the data were
validated. Although the performance plan for 2002 addressed the first three
items for data verification, it did not discuss how the data would be
validated.

The performance plan stated that the department will increase staffing for
its anticrime efforts by 18 percent (76 positions), but it did not provide
specifics on how these positions will be allocated. The plan also stated
that the number of positions for combating the illegal flow of drugs would
be reduced by about 22 percent (28 positions), but it did not state how this
would affect activities associated with this strategic goal.

The events of September 11, 2001, heightened the awareness and importance of
this outcome and could affect the strategies the department utilizes to
combat terrorism. While the events have no bearing on fiscal year 2000
results that the department presented in its performance report, they could
lead to changes to State?s fiscal year 2002 counterterrorism performance
goals, strategies, and indicators. The department?s 2002 performance goals,
strategies, and indicators were generally results oriented; however,
performance targets for the some of the indicators were not well defined.
Although the goals, strategies, and indicators remain relevant even after
the September 11 events, State officials said they plan to revise the
performance targets and may consider altering, replacing, and adding some
strategies and indicators.

State reported that it successfully achieved its performance targets on all
indicators prescribed by the performance plan for fiscal year 2000. However,
progress toward achieving the outcome is difficult to determine because
linkages between the outcome and its strategies and indicators were not
clear. In addition, indicators were output rather than outcome oriented.
Moreover, the department did not report on two basic measures associated
with the outcome- the number and severity of terrorist attacks.

State?s strategic goal for this key outcome was to reduce the incidence and
severity of international terrorist attacks, particularly against American
International Terrorist

Attacks

Page 19 GAO- 02- 42 State: Status of Achieving Key Outcomes

citizens and interests. For fiscal year 2000, State reduced the number and
type of performance goals (from two in 1999 to one in 2000) and performance
indicators (from seven in 1999 to five in 2000), as outlined in the
department?s performance plan for 2000. The outcome, performance goal, and
indicators were objective and measurable; however, the performance goal and
performance indicators were output rather than outcome oriented. The
department?s objective was to reduce the severity and incidence of
international terrorist attacks against American citizens and interests by
minimizing human casualties, physical destruction of property, and the
political effects of terrorism. To accomplish this, State focused
predominantly on training- altering the performance goal to

?train[ ing] foreign governments in methods and techniques of combating
terrorism.? All five of the indicators and performance targets involved
either holding conferences, coordinating interagency terrorism response
exercises and deployments, or training personnel. State reported it achieved
each of the performance targets. Although these measures are outputs, some
do operate as proxies for outcomes. For example, the 2000 performance
report?s number of exercises and deployments are outputs that serve as
proxies to outcomes- in this case, high readiness to respond to
international terrorist incidents.

The fiscal year 2000 report lacks the single most important and easily
quantifiable performance indicator for this performance goal: the number of
terrorist attacks, especially against American citizens. These figures are
readily available and published annually by the Department of State. 12 The
fiscal year 1999 report included ?level of terrorist attacks? as a
performance indicator, but it only discussed the trends in such attacks, not
the actual figures. The fiscal year 2000 report dropped the level or number
of attacks as a performance indicator.

For 2002, State?s performance goals are to reduce the number of attacks,
bring terrorists to justice, reduce or eliminate state sponsored terrorist
acts, delegitimize the use of terror as a political tool, enhance
international response, and strengthen international cooperation and
operational capabilities to counter terrorism. To achieve these goals, State
has developed strategies that strengthen international conventions and
resolutions and U. S. laws; isolate sources of support, including freezing

12 The Department of State annually publishes Patterns of Global Terrorism,
which provides extensive detail on the number of terrorist attacks, attacks
on Americans, types of attacks, attacks by region, number of casualties in
attacks, and number of facilities attacked.

Page 20 GAO- 02- 42 State: Status of Achieving Key Outcomes

financial assets; and train foreign officials in counterterrorism through
bilateral exercises. State will measure progress in 2002 using seven new
indicators. State said it will report on the number of terrorist attacks and
the rate of deaths and casualties against baseline data for fiscal year
2000, with performance targets to reduce the levels of each. The department
also established an indicator and baseline for the number of countries
signing and implementing international treaties on counterterrorism;
however, part of the performance target for this indicator is unclear,
focusing on ?increased effective recourse to treaties for extraditions and
renditions.? Two indicators- the level of cooperation and coordination among
friendly governments and the level of professionalism, training, and quality
of key equipment in key friendly countries- are not easily measurable. State
established baselines for each, stating the current level is fair or good,
but it does not explain what is meant by these categories, nor how one
measures ?increased professionalism? or ?improved

coordination.? State used a similar baseline for another indicator, the
successful collection of evidence and obtaining witness cooperation for
prosecutions under U. S. laws, but the performance target- increased use of
foreign collected evidence and witnesses in U. S. prosecutions- seems
quantifiable and, we believe, should have a consistent baseline.

Due to the sensitive nature of the information for the remaining two
indicators-( 1) identification of terrorist threats and prevention of
terrorist attacks and (2) the level of fund- raising activity on behalf of
terrorist groups- State reported no baseline data. Performance for the
former indicator will be measured by assessing the number and lethality of
attacks. The target for the latter indicator is a reduction in funds raised
through front organizations.

In the performance report, State addressed data verification by discussing
the sources of performance data and the units responsible for data
collection and management. The performance plan for 2002 also included a
statement of the frequency of data collection, but it did not discuss how
the data would be validated. The performance plan also stated that the
number of staff positions for this outcome would be reduced by 23 percent
(58 positions), but it did not state which areas would be affected by the
cuts.

Page 21 GAO- 02- 42 State: Status of Achieving Key Outcomes

For the selected key outcomes, this section describes major improvements or
remaining weaknesses in State?s (1) fiscal year 2000 performance report
compared with its fiscal year 1999 report and (2) fiscal year 2002
performance plan compared with its fiscal year 2001 plan. It also discusses
the degree to which State?s fiscal year 2000 report and fiscal year 2002
plan address concerns and recommendations by the Congress, GAO, and State?s
Inspector General.

Despite efforts to improve the clarity and readability of its performance
report, State?s report for 2000 suffered from many of the same weaknesses of
the 1999 report. Two major weaknesses are that (1) many indicators continue
to be activity based rather than outcome oriented and (2) relationships
between some key outcomes and strategies and indicators remain unclear. In
addition, State changed some indicators, or the methodologies for measuring
them, with little or no discussion on why it did so; and like 1999, the
department failed to report on many of the performance indicators defined by
its plan for 2000. Moreover, State did not discuss strategies for addressing
unmet (and unreported) performance targets and did not provide assessments
of how performance in fiscal year 2000 could affect estimated performance
levels for 2001.

The 2000 performance report continues to rely on activity- or output- based
indicators, rather than outcome- oriented indicators; and State did not
establish connections between its actions and the success or failure of key
outcomes. We recognize that the nature of State?s mission and operating
environment makes it difficult for the department to avoid either having
very broad key outcomes that are then not addressed sufficiently by the
indicators or broad indicators that make it difficult to assess State?s role
in the outcome. Given this difficulty, we find it commendable that most
reported indicators are quantifiable and that all reported indicators have
baselines and targets. Nevertheless, as we suggested in 1999, there are
opportunities to better describe State?s outputs and clarify how they affect
outcomes. For example, assessing whether terrorist attacks were reduced
requires either a comparison of the relative number of terrorist attacks or
a count of instances when specific attacks were prevented. In the 1999
Comparison of State?s

Fiscal Year 2000 Performance Report and Fiscal Year 2002 Performance Plan
With the Prior Year Report and Plan for Selected Key Outcomes

Comparison of Performance Reports for Fiscal Years 1999 and 2000

Little Connection Between State?s Actions and the Achievement of Key
Outcomes

Page 22 GAO- 02- 42 State: Status of Achieving Key Outcomes

report, one of the indicators for this issue was the ?level of terrorist
attacks against American citizens and interests.? This indicator provided a
direct measure of whether the goal was met (outcome), but it is unclear on
what action the United States took (output) to influence the outcome. Rather
than linking an action or strategy to the indicator, as noted above, in its
2000 report State did not report the number or severity of terrorist
attacks.

The relationships between some strategies and key outcomes were not always
apparent. For example, State does not clearly explain how some strategies,
such as establishing law enforcement academies in southern Africa and New
Mexico, related to the key outcome of minimizing the impact of international
crime and stemming the flow of illegal drugs. State also reported on some
indicators that were not clearly linked to key outcomes. For example, it is
not clear how a nation maintaining a 90- day stock of petroleum reserves
becomes a more open market for U. S. goods and services. In addition,
reducing the caseload of overseas childabduction investigators appears more
closely related to reducing the impact of international crime on American
citizens than providing efficient, knowledgeable, and courteous services to
Americans traveling and living abroad.

Furthermore, the relationship between performance indicators and strategies
were not always clear. In particular, it is unclear whether each strategy is
designed to pursue specific indicators under a performance goal or whether
the strategies are part of a more general effort. For example, three of the
five indicators for the key outcome, ?opening foreign markets? to U. S.
goods and services, related to a single strategy-

?advancing civil aviation, transport, telecommunications, and energy
initiatives?- while most of the remaining nine strategies had no readily
associated indicators.

Some indicators to measure performance in 1999 were changed in 2000 without
explanation, which makes it difficult to track performance from one year to
the next. For some indicators used in 1999, measurement methodologies were
altered with no discussion in either the performance plan or performance
report for 2000, resulting in orders of magnitude differences. For the
indicator ?sales of U. S. telecommunications and information technology
equipment,? State?s 1999 performance report showed a 1998 baseline of $18.9
billion in sales and a 1999 target of $20.6 billion, but it did not provide
actual performance for 1999. For the same indicator in 2000, State reported
a 1998 baseline of $111 billion in sales, a 1999 actual level of $123
billion, a 2000 target of $120 billion, and a 2000 Unclear Relationships
Among

Key Outcomes, Strategies, and Indicators

Little or No Explanation for Changes to Performance Indicators

Page 23 GAO- 02- 42 State: Status of Achieving Key Outcomes

actual level of $140 billion. It is apparent that State changed the
methodology for assessing this indicator, but the department did not explain
why it did so.

In addition, State changed past performance results for some indicators. For
example, regarding expansion of markets for U. S. products and services, the
actual level for the total exports of goods for 1999 cited in State?s 1999
performance report was $693 billion. However, the 2000 performance report
adjusted the 1999 actual level for the total exports of goods to $673
billion. State provided no explanation for this change. If the fiscal year
2000 report?s actual level for 1999 is correct, then State did not reach its
1999 performance target of $685 billion that it reported it had successfully
met in its 1999 performance report.

In contrast to the performance report, State?s 2002 plan represents a major
improvement over 2001 by (1) focusing more on the overall agency level,
rather than upon geographic regions; (2) eliminating redundant performance
goals and indicators, and goals and indicators that were not clearly linked
to outcomes; and (3) associating performance with necessary resources.
However, the plan still has certain weaknesses. Many performance goals and
indicators continue to be activity based rather than outcome oriented, and
some performance indicators remain vague and unmeasurable. Furthermore,
although State listed its partner agencies, offices, and bureaus; it did not
explain its roles and responsibilities in these partnerships.

State?s performance plan for 2002 uses a more unified, agencywide approach
than the regional focus used in the 2001 plan. This approach resulted in
more clarity and the elimination of redundant material. State agreed with
our 2000 assessment that the goals and objectives in the 2001 performance
plan were overly scattered. State formed key outcome teams that identified
performance goals for the department, rather than have the various bureaus
set their own goals. Using this approach, State achieved a drastic reduction
in the number of performance goals and indicators across all outcomes. For
example, in 2000, we reported that State?s plan for 2001 had 75 performance
goals and 64 performance measures over 5 regions for its efforts to reduce
threats from weapons of mass destruction. In the 2002 plan, State reduced
the number of performance goals and measures to 7 and 15, respectively. By
deleting redundancies, combining related or subsidiary goals and indicators,
and eliminating goals and indicators not clearly linked to key outcomes,
State devised a performance plan for 2002 that is more focused and is more
useful for understanding its intentions and for monitoring progress against
baselines. Comparison of

Performance Plans for Fiscal Years 2001 and 2002

Page 24 GAO- 02- 42 State: Status of Achieving Key Outcomes

Another improvement over the plan for fiscal year 2001 is the inclusion of a
resources summary for the selected outcomes. The performance plan for 2002
presented a summary chart showing the actual funding and number of positions
for fiscal year 2000 and the estimated funding and number of positions for
fiscal years 2001 and 2002 for each key outcome. However, the plan did not
indicate how these resources would be applied to the various goals and
strategies within the outcomes.

Nonetheless, some deficiencies remain with State?s 2002 plan. Many
indicators continue to be activity based rather than outcome oriented. For
example, regarding expansion of U. S. exports by $1.2 trillion, five of
eight indicators describe outputs of activities, four of which tallied the
number of meetings, conferences, and training opportunities, while the fifth
indicator measured the status of the launching of an intranet Web site. In
addition, a number of performance targets are vague and not measurable. For
example, the target for ?status of bilateral investment policy dialogues?
for the opening of foreign markets outcome is undefined (? measurable
progress on improvement of investment climates?). Similarly, it is unclear
how progress will be measured for the counterterrorism indicator ?level of
coordination among friendly governments? (? improved coordination in
countries, including close allies, countries with major terrorist presence,
and those receiving [antiterrorism and Foreign Emergency Support Team]
training?). In addition, it will be difficult to measure a ?[ d] eepening of
new energy investment. . . resulting in increased flows of energy equipment
and service exports from U. S. firms? for oil and gas exports, even assuming
a baseline for judging was provided. A better performance target would be
the total value of oil and gas sector exports.

Finally, although State provides a list of the agencies, offices, and
bureaus working together to achieve the outcomes, it does not explain how
the organizations interact or their respective roles. State?s role in
establishing international law enforcement academies and increasing the
technical capabilities of law enforcement and judicial institutions, for
example, is not as apparent as the roles played by some of its partnered
agencies, such as the Department of Justice. Although State may be involved
in negotiating agreements for establishing law enforcement academies and
other training institutions, other organizations, such as the Department of
Justice?s Office of Overseas Prosecutorial Development and Assistance
Training, actually provide the training services.

Page 25 GAO- 02- 42 State: Status of Achieving Key Outcomes

We have identified two governmentwide high- risk areas: strategic human
capital management and information security. Regarding human capital, we
found that State?s 2002 performance plan has performance goals and measures
related to human capital, and its 2000 performance report explained its
progress in resolving human capital challenges. The department reported that
one of its performance goals for 2002 is to be staffed with a fully skilled
workforce. State reported the number of employees in training and related
programs and other efforts to better prepare its existing workforce,
declaring these efforts to be successful. However, it did not address
efforts to recruit new staff, including possible incentives for information
technology and other hard- to- attract staff. Regarding information
security, we found that State?s performance plan has performance goals and
measures related to information security, and the department?s performance
report explained its progress in resolving its information security
challenges. State said that, primarily based on our recommendations, it has
undertaken efforts to improve information technology security to close
several material weaknesses. However, we have not determined the
effectiveness of these programs. Also, the independent auditor who reviewed
State?s 2000 principal financial statements said that implementing our
recommendations does not necessarily mean that the related material
weaknesses have been corrected.

In addition, we have identified five other major management challenges
facing State: (1) enhancing overseas communications, information technology,
and knowledge management; (2) rightsizing U. S. overseas presence; (3)
improving the security of overseas facilities and enhancing the management
of overseas security programs; (4) improving financial management
capabilities; and (5) improving visa processing and enhancing border
security. We found that the department?s performance report discussed its
progress in addressing all of these challenges. Of these major management
challenges, State developed performance goals and measures for 2002 that are
directly related to four of these challenges. State did not detail
performance goals, strategies, or measures to address one of these
challenges- rightsizing U. S. overseas presence- in the performance plan.
For that challenge, State reported it had been unable to achieve a consensus
with other agencies, which is essential since rightsizing is an interagency
effort. However, in August 2001, State reported on actions it plans to take
to address the recommendations of the Overseas Presence Advisory Panel.
Moreover, the President identified rightsizing overseas presence as 1 of 14
initiatives in his management agenda for fiscal year 2002. State?s Efforts
to

Address Its Major Management Challenges Identified by GAO

Page 26 GAO- 02- 42 State: Status of Achieving Key Outcomes

Appendix I provides detailed information on how State addressed these high-
risk areas and other major management challenges, as identified by both GAO
and State?s Office of the Inspector General.

Weaknesses in State?s fiscal year 2000 performance report made it difficult
to determine the department?s progress toward achieving the key outcomes.
These weaknesses are rooted in performance goals and indicators established
in its performance plan for 2000, which was prepared in 1998 and which we
have criticized in a prior report. State acknowledged flaws in its previous
GPRA products and sought to correct many of them in its performance plan for
2002. State has taken a major step toward implementing GPRA requirements by
producing a fiscal year 2002 plan that is superior to earlier efforts.
Although we identified several areas where improvements can be made, such as
developing indicators that are focused on results instead of outputs, we
believe that the improved plan lays the groundwork for State to provide a
more clear assessment of its performance and progress next year. In its
future performance report, State will need to focus its efforts on reporting
on all indicators in the plan and, if targets are not achieved, providing
clear explanations of the reasons why and what actions State plans to
achieve the targets in the future.

We recommend the Secretary of State ensure that performance reports for 2001
and subsequent years (1) address all performance goals and indicators
outlined in State?s performance plans, (2) provide clear and specific
explanations for why performance goals and performance targets were not met,
and (3) outline the actions the department will take to achieve unmet goals.

As agreed, our evaluation was generally based on (1) the requirements of
GPRA, (2) the Reports Consolidation Act of 2000, (3) guidance to agencies
from OMB for developing performance plans and reports (OMB Circular A- 11,
part 2), (4) previous reports and evaluations by us and others, (5) our
knowledge of State?s operations and programs, (6) our identification of best
practices concerning performance planning and reporting, and (7) our
observations on State?s other GPRA- related efforts. We discussed our review
with officials in the Office of Management Policy and Planning, which is
responsible for preparing the performance reports and plans required by
GPRA. We also discussed our work with State?s OIG. The department outcomes
that were used as the basis for our review were Conclusions

Recommendations Scope and Methodology

Page 27 GAO- 02- 42 State: Status of Achieving Key Outcomes

identified by the Ranking Minority Member of the Senate Committee on
Governmental Affairs as important mission areas for the department and
generally reflect the outcomes for all of State?s programs or activities.
The major management challenges confronting State, including the
governmentwide high- risk areas of strategic human capital management and
information security, were identified by us in our January 2001 performance
and accountability series and high- risk update and by State?s Office of the
Inspector General in December 2000. We did not independently verify the
information contained in the performance report and plan, although we did
draw from our other work in assessing the validity, reliability, and
timeliness of State?s performance data. We conducted our review from April
2001 through November 2001 in accordance with generally accepted government
auditing standards.

We obtained written comments on a draft of this report from the Department
of State (see app. II). The department indicated that it is taking action to
improve its GPRA processes and products and would implement our
recommendations in its fiscal year 2001 performance report. The department
also provided technical comments, which we have appropriately incorporated
into this report.

As arranged with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days after
the date of this letter. At that time, we will send copies to appropriate
congressional committees; the Secretary of State; and the Director, OMB.
Copies will also be made available to others upon request. Agency Comments

Page 28 GAO- 02- 42 State: Status of Achieving Key Outcomes

If you or your staff have any questions, please call me at (202) 512- 4128.
Sincerely yours,

Jess T. Ford Director International Affairs and Trade

Appendix I: Observations on the Department of State?s Efforts to Address Its
Major Management Challenges

Page 29 GAO- 02- 42 State: Status of Achieving Key Outcomes

The following table identifies the major management challenges confronting
the Department of State, including the governmentwide highrisk areas of
human capital and information security. The first column lists the
challenges identified by our office and State?s Office of the Inspector
General (OIG). The second column discusses what progress, as discussed in
its fiscal year 2000 performance report, State made in resolving its
challenges. The third column discusses the extent to which State?s fiscal
year 2002 performance plan includes performance goals and measures to
address the challenges that we and OIG identified. We found that State?s
performance report discussed State?s progress in resolving most of its
challenges, but it did not discuss State?s progress in resolving the
following two challenges: (1) enhancing emergency preparedness and
conducting crisis management exercises and (2) correcting weaknesses in
federal financial assistance management. Of the agency?s 10 major management
challenges, its performance plan for fiscal year 2002 included goals and
measures applicable to 5 of the challenges and partly applicable to 3
additional challenges. The plan does not address the remaining two
challenges and therefore does not include goals and measures for them.
Appendix I: Observations on the Department

of State?s Efforts to Address Its Major Management Challenges

Appendix I: Observations on the Department of State?s Efforts to Address Its
Major Management Challenges

Page 30 GAO- 02- 42 State: Status of Achieving Key Outcomes

Table 1: Major Management Challenges Confronting the Department of State
Major management challenge

Progress in resolving major management challenges discussed in State?s
fiscal year 2000 performance report

Applicable goals and measures in State?s fiscal year 2002 performance plan
GAO- designated governmentwide high- risk major management challenges:

Human Capital: GAO has identified shortcomings at multiple agencies
involving key elements of modern human capital management, including
strategic human capital planning and organizational alignment; leadership
continuity and succession planning; acquiring and developing staff whose
size, skills, and deployment meet agency needs; and creating resultsoriented
organizational cultures. (GAO identified this as a major management
challenge specific to State in January 2001. State?s Office of the Inspector
General (OIG) also identified this area as a major management challenge.)

State reported that it is developing a human resource strategy. The first
element of this strategy, the Diplomatic Readiness Plan, has been completed.
State plans to develop a domestic staffing model by early 2002. State said
the strategy would address recruitment, development, and retention problems.
In addition, State developed a recruitment plan emphasizing skills and
diversity needs. State also created a new School of Leadership and
Management at the Foreign Service Institute that offers numerous leadership
courses and seminars. It is also addressing retention issues, such as
overseas spousal employment, by negotiating 137 bilateral work agreements
with foreign countries to make it easier for spouses to seek employment
abroad. The OIG found that State has made significant progress in hiring
foreign service specialists, but since many months may elapse before
candidates for these positions are hired, some may tend to lose interest.

State has two Diplomatic Readiness performance goals addressing human
capital workforce issues. The first is to develop an integrated workforce
plan for determining the size, distribution, composition, and recruitment
needs of State?s American workforce through 2010. Two of the three
performance indicators deal with integrating the U. S. Information Agency?s
workforce into State and incorporating public diplomacy functions into
State?s overseas staffing model. State declared it had done both of these
and therefore was successful at meeting its targets. It also declared that
the third target, to seek funding to develop the domestic staffing model,
was successfully met. State reported that it sought funding to develop a
staffing model, but the report did not say whether State received this
funding or the types of activities it plans to fund. Further, State did not
address steps to meet its recruitment and retention needs, such as improving
the quality of life overseas and reforming evaluation and feedback systems.

The second performance goal is that State is staffed with a fully skilled
workforce and is ready to

The performance plan said that State needs to attract, train, promote, and
retain the best employees. The plan includes four performance goals with
specific and measurable indicators. The first goal is to hire and retain an
adequate number of talented and diverse employees. Although State did not
specify how many employees would be adequate, it did set three specific and
measurable indicators for (1) the number of registrants for Foreign Service
exams and specialist and student programs, (2) hiring levels, and (3)
resignation rates. Starting in fiscal year 2002, State expects to hire 1,
250 new employees to provide training float. Resignation rates are expected
to remain constant through 2002.

The second goal is to develop training and professional development programs
for full- time employees. The three indicators address the numbers of Civil
Service employees expected to be in career development programs, the percent
of language students who meet their training goal, and the number of Foreign
Service national employees receiving training. For language training,
State?s targets for fiscal year 2002 are to ?maintain and improve? on the
2000 rate of 66 percent, but no specific improvement target is given. Also,
the indicator for training Foreign Service nationals gives no indication of
what type or amount of training each employee should receive.

The third goal is to configure and equip the Foreign Service Institute to
provide the full range of distance- learning offerings and support via at
least two delivery systems to every post and facility worldwide by the end
of fiscal year 2002, and ensure that the National

Appendix I: Observations on the Department of State?s Efforts to Address Its
Major Management Challenges

Page 31 GAO- 02- 42 State: Status of Achieving Key Outcomes

Major management challenge Progress in resolving major management

challenges discussed in State?s fiscal year 2000 performance report

Applicable goals and measures in State?s fiscal year 2002 performance plan

handle the surge of ?baby boomer? retirements without major disruptions.
State has five performance indicators for this goal: (1) employee enrollment
in leadership and management courses, (2) implementation of leadership
competencies, (3) establishment of Civil Service overseas mobility
initiative positions, (4) development of programs to fulfill organizational
skill requirements, and (5) status of support for career development and
resource needs. The five targets are based on objective and measurable
indicators, and State has declared implementation of all five to be
successful. However, State did not address two of its targets. For the
target that 15 percent of State?s Civil Service employees will enroll in the
Leadership Competencies Development Initiative, State reports success
because 1,030 employees enrolled; but it does not say what percentage this
represents compared with the target. The target for new or current programs
to meet organizational skill requirements was to continue the Senior
Executive Service Candidate Development Program for five additional
participants. State declared that this target was successfully met, although
it said only that ?candidates were selected and enrolled,? not how many
candidates were actually in the program.

Foreign Affairs Training Center is adequate to support staff and student
needs. The two indicators are status of upgrade of analog multimedia
laboratories to digital multimedia laboratories and preparation of a formal
capacity review of the National Foreign Affairs Training Center. Targets are
that a second digital lab be made operational and that the recommendations
in the capacity review be made and reviewed.

State has one indicator for the fourth performance goal- to maintain current
work- life programs and introduce new ones to improve workplace quality for
all employees and improve quality of life for Foreign Service employees and
their dependents overseas to foster the recruitment, hiring, and retention
of talented personnel. The performance indicator for this goal is that
resignation rates remain constant- there is no specific retention indicator.
There are no indicators for the satisfaction of employees working overseas
or for specific programs, such as improving spousal employment, which would
be one indication of ability to retain employees. Information Security:
Efforts to strengthen information security have gained momentum and have
expanded both at individual agencies and at the governmentwide level.
However, recent audits continue to show that federal computer systems are
riddled with weaknesses that make them highly vulnerable to computerbased
attacks and place a broad range of critical operations and assets at risk
for fraud, misuse, and disruption. (GAO identified this as a major
management challenge specific to State in January 2001. State?s OIG also
identified this area as a major management challenge.)

State said it has undertaken initiatives designed to strengthen the security
of its information technology, closing a number of material weaknesses,
including mainframe and information systems security. State also said it has
developed an agencywide Systems Security Program Plan. State added that the
OIG concurred with the closure of material weaknesses concerning the
security of information systems networks for domestic operations, if there
first was independent validation that improvements would prevent
unauthorized access and abuse. However, the independent auditor who reviewed
State?s 2000 principal financial statements noted that closing these
weaknesses on paper does not necessarily mean that the weaknesses themselves
have been corrected. The independent auditor believes that State?s
information systems security networks for domestic operations remain
vulnerable to unauthorized access and that other systems, including State?s
financial management systems,

State?s performance plan indicated that protection of classified and
sensitive information is a continued priority. State set a fiscal year 2002
target that 100 percent of its network intrusion detection systems would be
installed abroad and domestically for OpenNet- its main network for storing
and processing sensitive but unclassified information. The plan does not
address the installation of detection systems for classified or other
department networks. State discussed plans for providing security awareness
training for its employees and testing software used on department networks
to reduce security risks. The plan did not provide performance goal
indicators or targets for these planned actions.

Appendix I: Observations on the Department of State?s Efforts to Address Its
Major Management Challenges

Page 32 GAO- 02- 42 State: Status of Achieving Key Outcomes

Major management challenge Progress in resolving major management

challenges discussed in State?s fiscal year 2000 performance report

Applicable goals and measures in State?s fiscal year 2002 performance plan

may also be vulnerable. State, working with the OIG and GAO, plans an
independent review of system security vulnerabilities in 2001.

State reported on two indicators related to keeping information technology
systems and the information processed and stored in them safe from
unauthorized access and abuse: (1) implementing GAO recommendations and (2)
performing information systems penetration testing, which included three
target levels for 2000. The department said it had addressed all eight GAO
recommendations in fiscal year 1999. We agree that State has made progress
in improving its information security program, but note that the extent and
effect of its improvements have not been determined.

State provided a narrative on its accomplishments but did not characterize
whether it was successful in meeting its targets. State indicated that it
modified its Foreign Affairs Manual to include critical computer security
policies to show it had made progress in establishing and enforcing these
policies. However, State did not address enforcement of these policies.

GAO- identified major management challenges:

Enhance overseas communication, information technology, and knowledge
management capabilities: U. S. agencies located overseas have great
difficulty communicating electronically with each other and sharing
available information with other agencies located domestically as well as
abroad.

State reported it is addressing two of its biggest information technology
problems- unreliable E- mail and antiquated computer equipment- by
continuing to connect its workforce to one network. To track progress
against this goal, State has three performance indicators:

 Complete the unclassified overseas modernization effort. State reported
success in meeting this indicator. However, it did not report whether the
modernization was fully implemented.

 Connect all unclassified users to the Internet. State reported partial
success in meeting this indicator because not all users have a desktop
connection.

 User satisfaction with the modernized equipment. State reported success in
meeting this indicator based on formal and informal assessments at a sample
of locations. However, it did not mention, for example, whether the sample
is representative of the entire user population.

State set a performance goal of providing secure, commercial- quality
information technology support for the full range of U. S. international
affairs activities. The plan identifies four measures for this goal:

 percentage of commercial networking facilities completed,

 percentage of desktop computers that are older than 4 years,

 reduction of overseas servers and progress toward eliminating the cable
system.

Performance targets for three of the measures were precisely defined:

 beginning deployment of a commercial- style network and infrastructure to
all domestic and overseas posts,

 reducing the number of overseas servers by 25 percent each year, and

 completing a comprehensive requirements analysis concerning

Appendix I: Observations on the Department of State?s Efforts to Address Its
Major Management Challenges

Page 33 GAO- 02- 42 State: Status of Achieving Key Outcomes

Major management challenge Progress in resolving major management

challenges discussed in State?s fiscal year 2000 performance report

Applicable goals and measures in State?s fiscal year 2002 performance plan

State?s fiscal year 2000 performance report does not address an important
initiative. State is leading an interagency effort to devise a system that
meets the collective knowledge management and collaboration needs of the
overseas foreign affairs community. State has begun to work with other
federal agencies that have a significant overseas presence and is in the
early stages of planning for this system. A system is scheduled to be
prototyped and piloted at two overseas locations. While State originally
planned to complete a prototype evaluation by April 2001 and pilot testing
by December 2001, these dates have slipped to April 2002 and September 2002,
respectively, because of funding restrictions.

elimination of the current cable system and processes. However, the
performance target for out- of- date computer technology is somewhat vague:
?the deployment of classified computers to a significant number of overseas
posts.? The plan might be enhanced if this target was more precise. For
example, instead of reporting a ?significant?

number of posts, it could provide a schedule of posts where classified
computers are to be deployed.

State?s plan has no specific performance goal addressing the interagency
effort to devise a system that meets the collective knowledge management and
collaboration needs of the overseas foreign affairs community. However, it
describes an ongoing activity to develop a prototype and pilot to enable
information access and sharing capabilities for the international affairs
community. Efforts needed to realign the U. S. workforce overseas with the
U. S. government?s mission: The U. S. presence at embassies and consulates
needs to be adjusted to reflect the emerging economic, political, security,
and technological requirements of the 21st century.

In response to numerous recommendations, State reported that it has begun a
process to evaluate the existing mix and size of agencies? overseas
staffing. In 2000, interagency teams assessed staffing at six missions. The
studies concluded that a centralized process to review overseas staffing, as
proposed by the Overseas Presence Advisory Panel, would not be effective or
workable. The studies did not result in a methodology for staffing
subsequent rightsizing reviews, nor did it identify opportunities to
significantly reduce staff.

State said there is agreement that the U. S. government footprint overseas
should be limited to that required to carry out the government?s key
outcomes. However, State noted that other agencies believe their staffing is
commensurate with the government?s interests. State also said it had limited
authority and influence over the staffing of other agencies operating
overseas.

State did not include performance goals or measures for rightsizing.

The plan does not include goals or measures that specifically address this
challenge. However, an agency objective is that State?s workforce be at an
optimum number, distribution, and configuration to respond to the foreign
policy priorities identified in the strategic plan. The related performance
goal is that State will hire and retain an adequate number of staff.
However, in our opinion, this agency objective and goal do not address
rightsizing the overall U. S. presence overseas.

Appendix I: Observations on the Department of State?s Efforts to Address Its
Major Management Challenges

Page 34 GAO- 02- 42 State: Status of Achieving Key Outcomes

Major management challenge Progress in resolving major management

challenges discussed in State?s fiscal year 2000 performance report

Applicable goals and measures in State?s fiscal year 2002 performance plan
GAO- and State OIG- identified major management challenges:

Improve the security and maintenance of U. S. facilities overseas and
enhance the management of overseas security programs: State faces many
challenges and risks in its program to replace its most vulnerable
facilities, improve security at all posts, and improve facility maintenance.

Although State?s performance report addressed efforts to replace its most
vulnerable posts worldwide, it did not address State?s ability to run a
large construction program or the need for longterm planning that could help
State effectively plan its resource use and control costs. According to the
OIG, the department could have difficulty managing its major overseas
construction projects over the next 5 years. The OIG also said that none of
the 42 embassies it evaluated met all of the government?s physical security
standards. The lack of a 30- meter setback was the most prevalent
deficiency.

State listed quantitative indicators for the status of new construction
projects. State said it was successful in fulfilling the three performance
indicators: acquire/ obtain options for sites, initiate/ design construction
projects, and complete construction. However, it did not meet the last
target since it completed only four of its seven planned projects. In
January 2001, we reported on State?s embassy construction program and
recommended that State develop a long- term capital plan to enhance program
decisionmaking and accountability. a

In August 2001, State completed a detailed longterm plan that establishes
performance targets for building new embassies and maintaining existing
buildings.

State also continued other security upgrade projects overseas under two
diplomatic readiness performance goals. These upgrades included (1)
deployment of additional security officers overseas, (2) provision of fully
and lightly armored vehicles, (3) provision of updated security equipment,
and (4) acquisition of additional facilities? setback. The report provided
fiscal year 2000 targets for these programs and for the number of physical
security upgrade projects started, funded, and completed. The targets for
all indicators were measurable, calling for either numbers of security
officers deployed, number of armored vehicles ordered or in process of
delivery, number of projects started and completed, number of posts with
added setback, or percentage of projects completed. The report declared that
all six indicators were successful, although State did not meet the target
levels for two of these indicators. The report stated that smaller

State?s plan has four performance goals that address security, maintenance,
and management of U. S. facilities overseas. These goals are (1) to continue
the worldwide security upgrade program; (2) to expeditiously relocate staff
into safe, secure, and functional facilities; (3) to extend, through
rehabilitation, the useful lives of facilities and enhance their
functionality; and (4) to heighten security for formerly lower- threat posts
to meet standards used at higher- threat posts. There are seven specific
performance indicators for these goals. One addresses the number of projects
completed and the number of posts with added security setback; however,
there is no indicator for the number of projects started, although there was
such an indicator provided in the fiscal year 2000 report. Two other
indicators are the status of new construction projects and major
rehabilitation projects. These indicators all have specific targets based on
numbers of projects addressed.

Performance indicators for the goal of heightening security at formerly
lowerthreat posts deal with the percentage of 38 projects that have been
completed, the percentage of posts with technical security equipment
upgrades, and the number of Foreign Service Nationals trained in crisis
management. The last indicator is that no Accountability Review Board will
find that a serious injury, loss of life, or destruction of a U. S.
government mission was due to inadequate security management or
countermeasures. The plan does not include specific indicators on number of
security officers deployed overseas and percentage of embassies/ consulates
with fully and lightly armored vehicles, as did the 2000 report.

Appendix I: Observations on the Department of State?s Efforts to Address Its
Major Management Challenges

Page 35 GAO- 02- 42 State: Status of Achieving Key Outcomes

Major management challenge Progress in resolving major management

challenges discussed in State?s fiscal year 2000 performance report

Applicable goals and measures in State?s fiscal year 2002 performance plan

projects were combined into larger ones in both instances, implying that the
targets were met.

The report does not address facility maintenance, although both GAO and
State?s OIG have identified it as a major long- standing management
challenge. State?s unfunded maintenance and repair requirement in 1999
exceeded $100 million for more than 650 buildings. The OIG stated that while
the department has made progress in maintaining its facilities, fundamental
challenges remain. State officials largely attributed cost- cutting over
several years as a reason for the poorly maintained properties. The OIG
agreed that funding is an issue but reported that State needs to do more to
address maintenance as a management concern. Improve financial management
capabilities: GAO and State?s OIG agree that State has long- standing
shortcomings related to the absence of an effective financial management
system.

Financial management continues to be a major management challenge for State.
However, according to the OIG, State has made significant improvements in
recent years. For the first time, State submitted its principal financial
statements (for fiscal year 2000) to the Office of Management and Budget by
the required March 1 deadline. These statements received an unqualified
opinion- the independent auditor said the statements were presented fairly
in all material aspects. The OIG and the independent auditor identified
several significant outstanding issues, including the security of
information systems networks for domestic operations and weaknesses in
managerial cost accounting and State?s financial and accounting systems. The
independent auditor?s report also stated that the department?s financial
management systems do not comply with at least five federal laws and
regulations, including the Chief Financial Officers Act of 1990.

State has one performance goal aimed at improving financial management
capabilities, with four performance indicators. State declared it was
successful in implementing two of these indicators and partially successful
in implementing the other two. The two partially successful targets dealt
with percentage of domestic and overseas financial services transactions
conducted electronically. State declared the domestic indicator partially
successful, although the department fell 9 percent below the target. It
declared the overseas indicator partially successful because it met one of
the two targets set for that indicator.

One performance goal is to obtain funding to achieve all of the department?s
foreign policy and diplomatic readiness goals and to effectively administer
the funds obtained. The second goal is to improve financial management
infrastructure and operating capacity responsive to departmental needs.
State established three performance indicators to fulfill the first goal:
(1) timeliness of budgets, (2) department?s resources allocated by GPRA Plan
goals; and (3) status of joint program planning with the national security
community. Only the last indicator that State and partner agencies negotiate
changes in programs and budgets, does not include a specific, measurable
target.

For the second goal, State established 12 performance indicators, which
include some of the following: the audit opinion on the previous year?s
financial statement, status of the yearly accountability report, quantity
and amount of debt collections, amount of credit- card collections, and
security orientation and training. While all but one indicator (data used
for effective decisionmaking) have specific and measurable targets, there is
no indication how these measures will help overcome State?s problems with
its financial management systems, such as

Appendix I: Observations on the Department of State?s Efforts to Address Its
Major Management Challenges

Page 36 GAO- 02- 42 State: Status of Achieving Key Outcomes

Major management challenge Progress in resolving major management

challenges discussed in State?s fiscal year 2000 performance report

Applicable goals and measures in State?s fiscal year 2002 performance plan

State said it was successful in complying with federal financial management
system requirements. However, since the department is still not in
compliance with federal financial laws and regulations, it appears State has
not successfully met this indicator.

noncompliance with federal financial laws and regulations.

Improve the visa processing system and enhance border security: Staffing
shortages, insufficient training, and other problems need to be addressed to
better prevent entry of those who are a threat to Americans at home or are
likely to remain in the United States illegally.

State reported that staffing shortages, inexperienced staff, and
insufficient training for consular line officers have had a negative impact
on visa processing operations and fraud prevention. According to the OIG, a
more fully integrated lookout system between State and the Immigration and
Naturalization Service would make visa fraud easier to deal with. State has
initiatives under way or completed to improve visa processing while
countering fraud, for example by issuing machinereadable visas, advising
overseas posts about fraudulent document problems, and upgrading consular
training.

Another challenge to controlling illegal immigration is timely
implementation of the border biometric crossing- card program. State said it
took several steps during fiscal year 2000 to address this issue, including
expanding its capacity to process applications in Mexico and along the U. S.
border. Since the Immigration and Naturalization Service does not have the
capacity to produce the number of cards required by statute, State has
developed a pilot program to produce cards in Mexico.

State discusses one performance goal, to replace 5.5 million border-
crossing cards by October 1, 2001, and 1 agency objective, that all persons
using border- crossing cards to enter the United States after October 1,
2001, will use a card issued after April 1, 1998. Both the goal and the
department objective are specific and measurable. However, the targets for
the 2 performance indicators address the number of applications received and
processed, but only at 2 of the 16 locations processing applications.
Furthermore, the report does not address whether enough cards can be made by
October 1, 2001, to satisfy existing law. The OIG does not believe these
targets can be met and that State and the Immigration and Naturalization
Service will need to pursue some legislative remedy to this deadline. In
addition, the report does not address visa fraud and other immigration
problems occurring outside Mexico.

State has one agency objective concerning border security: the travel and
immigration to the United States of legitimate visa applicants and denial of
visas to ineligible applicants. State has six performance goals to achieve
this outcome, including meeting anticipated workload increases, ensuring
training of consular personnel, sharing data with law enforcement and
intelligence agencies, and reducing the risk of illegitimate entry of
foreign terrorists, criminals, and others hostile to our interests. However,
there is no goal concerning issuance of border- crossing cards.

State has two performance indicators under this agency objective: the number
of immigrant and nonimmigrant visa applications to be processed. Although
the targets for these two indicators are specific and measurable, they only
address the first two performance goals dealing with increased workloads.
Also, they do not address how State will deal with increased workload,
saying only that it will have more visas to process. There are no targets
that address any of the other four performance goals.

Appendix I: Observations on the Department of State?s Efforts to Address Its
Major Management Challenges

Page 37 GAO- 02- 42 State: Status of Achieving Key Outcomes

Major management challenge Progress in resolving major management

challenges discussed in State?s fiscal year 2000 performance report

Applicable goals and measures in State?s fiscal year 2002 performance plan
State OIG- identified major management challenges:

More effectively oversee and monitor the drug eradication program in Plan
Colombia: State?s OIG designated more effective oversight and monitoring of
the drug eradication program in Plan Colombia as a management challenge for
State.

State reports that it continued to address the management challenge of drug
control during fiscal year 2000. The most significant development discussed
was U. S. involvement in Plan Colombia, which included providing equipment
and training for a new Colombian helicopter battalion.

State also addressed these efforts under the key outcome to reduce entry of
illegal drugs into the United States.

The plan addresses drug control under the key outcome of reducing entry of
illegal drugs into the United States. There are nine performance goals and
six measurable indicators under this goal, but none deals specifically with
overseeing, monitoring, or managing Plan Colombia.

Pay greater attention to enhancing emergency preparedness and conducting
crisis management exercises: State?s OIG designated paying more attention to
emergency preparedness and the importance of conducting crisis management
exercises overseas as a management challenge. The OIG found that most posts
are not conducting missionwide exercises of all required drills at all
facilities and recommended that State direct immediate attention to security
awareness and emergency preparedness training of domestic and overseas
personnel.

State did not report on this management challenge. The plan includes one
performance indicator that addresses this management challenge: the number
of Foreign Service Nationals trained in crisis management. The plan also
includes several strategies for improving emergency preparedness and crisis
management under the diplomatic readiness goal infrastructure and
operations. Proposed tactics include conducting crisis management exercises
at overseas posts, providing collaborative training with other foreign
affairs and national security personnel, and implementing a distance
learning component for crisis management training. Correct weaknesses in
federal financial assistance management: State?s OIG designated management
of the department?s billion- dollar federal financial assistance program as
a significant management challenge. It stated that the department does not
use standardized systems, policies, or procedures to manage programs funded
through grants, cooperative agreements, and transfers, resulting in
heightened potential for loss or fraud. It found examples of disputed and
undocumented claims under selected contracts concerning overhead and fringe
benefits that could result in substantial reimbursements to the government.

State did not report on this management challenge. The plan does not include
performance goals or indicators that specifically address this management
challenge. However, the plan does address improving financial management of
its grants management program as part of the diplomatic readiness goal
infrastructure and operations. Proposed tactics to improve grant management
include maximizing electronic fund transfer to grant recipients, reducing
the administrative burden on grantees, and developing measures for
determining the extent of improper payments.

a Embassy Construction: Better Long- Term Planning Will Enhance Program
Decisionsmaking,

(GAO- 01- 11, Jan. 22, 2001).

Appendix II: Comments From the Department of State

Page 38 GAO- 02- 42 State: Status of Achieving Key Outcomes

Appendix II: Comments From the Department of State

Appendix III: GAO Contact and Staff Acknowledgments

Page 39 GAO- 02- 42 State: Status of Achieving Key Outcomes

John Brummet (202) 512- 5260 In addition to Mr. Brummet, Claude Adrien,
David G. Bernet, Stephen Caldwell, Janey Cohen, Albert Huntington III,
Cynthia Jackson, Edward Kennedy, Beth Sirois, and Eve Weisberg made key
contributions to this report. Appendix III: GAO Contact and Staff

Acknowledgments GAO Contact Acknowledgments

(320037)

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GAO Building Room 1100, 700 4th Street, NW (corner of 4th and G Streets, NW)
Washington, D. C. 20013

Contact: Web site: www. gao. gov/ fraudnet/ fraudnet. htm, E- mail:
fraudnet@ gao. gov, or 1- 800- 424- 5454 (automated answering system).

Jeff Nelligan, Managing Director, NelliganJ@ gao. gov (202) 512- 4800 U. S.
General Accounting Office, 441 G. Street NW, Room 7149, Washington, D. C.
20548 GAO?s Mission

Obtaining Copies of GAO Reports and Testimony

Order by Mail or Phone Visit GAO?s Document Distribution Center

To Report Fraud, Waste, and Abuse in Federal Programs

Public Affairs
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