Major Management Challenges and Program Risks: Department of State
(Letter Report, 01/01/99, GAO/OCG-99-12).

As part of its Performance and Accountability Series, GAO provided
information on the major management challenges and program risks facing
the Department of State.

GAO noted that: (1) in the wake of the bombing of the U.S. embassies in
Kenya and Tanzania, Congress provided State $1.45 billion in emergency
funding to enhance security around the world; (2) this includes funds
for an immediate response to the bombings, such as medical treatment,
counterterrorism programs and rewards, and economic assistance, as well
as funds to rebuild the embassies in Kenya and Tanzania; (3) State will
likely request several billion dollars in funds for new capital
construction in the upcoming years; (4) State will face several
management challenges in administering an expanded security construction
program, including whether it can bring on board the appropriate amount
of staff to plan and manage a large number of overseas construction
projects; (5) GAO has reported that State relied on outdated and
unsecured information and financial management systems that are
vulnerable to year 2000 problems and security breaches; (6) State
estimated in 1997 that it would need $2.7 billion over 5 years to
achieve a modernized global infrastructure; (7) State has since taken
steps to improve its information security and adopted an improved
approach to addressing its year 2000 problems; (8) it has also begun to
incorporate a comprehensive capital planning and investment process into
its information technology investments; (9) however, State needs to
ensure that it remediates on a timely basis its mission-critical
systems; (10) in the financial management area, State received, for the
first time, a clean opinion on its fiscal year 1997 financial
statements; (11) State processes more than 8 million immigrant and
nonimmigrant visa applications annually; (12) to reduce the program's
vulnerability to fraud, State has put a number of controls in place to
prevent unqualified individuals from receiving a visa, including a
special computerized logarithmic name-checking capability and an
anti-terrorism tipoff program; (13) in a major effort to improve the
efficiency and effectiveness of U.S. foreign affairs operations,
Congress directed the abolishment of the U.S. Information Agency and the
U.S. Arms Control and Disarmament Agency and the transfer of those
functions into State; (14) a key issue is whether State can integrate
these agencies in a manner that reduces overall costs while enhancing
capability; (15) State is making progress in addressing these issues;
and (16) State has also completed strategic and annual performance plans
under the Government Performance and Results Act.

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

 REPORTNUM:  OCG-99-12
     TITLE:  Major Management Challenges and Program Risks: Department 
             of State
      DATE:  01/01/99
   SUBJECT:  Information resources management
             Financial management
             Federal agency reorganization
             Facility security
             Internal controls
             Computer security
             Risk management
             Strategic planning
             Accountability
             Terrorism
IDENTIFIER:  Dept. of State International Cooperative Administrative 
             Support Services System
             Kenya
             Tanzania
             Y2K
             Performance and Accountability Series 1999
             
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Cover
================================================================ COVER


Performance and Accountability Series

January 1999

MAJOR MANAGEMENT CHALLENGES AND
PROGRAM RISKS - DEPARTMENT OF
STATE

GAO/OCG-99-12

Department of State Challenges


Abbreviations
=============================================================== ABBREV

  ACDA - Arms Control and Disarmament Agency
  CIO - Chief Information Officer
  ICASS - International Cooperative Administrative Support Services
  INS - Immigration and Naturalization Service
  IRM - information resource management
  IT - information technology
  OMB - Office of Management and Budget
  USIA - U.S.  Information Agency

Letter
=============================================================== LETTER



January 1999

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

This report addresses the major performance and management challenges
that have hampered the effectiveness of the Department of State in
carrying out its mission.  The key to meeting these challenges is for
State to adopt good management practices and correct the weaknesses
in its information and financial management systems.  GAO outlines
actions that State has taken or initiated to address the challenges
it faces and further actions that are needed. 

The Department has made progress in addressing many of the challenges
GAO has identified.  State is now devoting substantial resources to
developing a strategy to enhance its information technology capacity
and security as well as its financial management systems.  In fact,
State received an unqualified opinion on its most recent financial
statements.  It has also developed a plan and strategy to improve
embassy security.  This is important because the Department faces
significant challenges, particularly in (1) providing security for
its overseas operations and employees and (2) consolidating key
foreign affairs activities as directed by the Congress.  Sustained
top-level management attention to these challenges is critical. 
Given the nature and extent of the challenges facing the Department,
it will take time to assess the impact of these efforts. 

This report is part of a special series entitled the Performance and
Accountability Series:  Major Management Challenges and Program
Risks.  The series contains separate reports on 20 agencies--one on
each of the cabinet departments and on most major independent
agencies as well as the U.  S.  Postal Service.  The series also
includes a governmentwide report that draws from the agency-specific
reports to identify the performance and management challenges
requiring attention across the federal government.  As a companion
volume to this series, GAO is issuing an update to those government
operations and programs that its work has identified as "high risk"
because of their greater vulnerabilities to waste, fraud, abuse, and
mismanagement.  High-risk government operations are also identified
and discussed in detail in the appropriate performance and
accountability series agency reports. 

The performance and accountability series was done at the request of
the Majority Leader of the House of Representatives, Dick Armey; the
Chairman of the House Government Reform Committee, Dan Burton; the
Chairman of the House Budget Committee, John Kasich; the Chairman of
the Senate Committee on Governmental Affairs, Fred Thompson; the
Chairman of the Senate Budget Committee, Pete Domenici; and Senator
Larry Craig.  The series was subsequently cosponsored by the Ranking
Minority Member of the House Government Reform Committee, Henry A. 
Waxman; the Ranking Minority Member, Subcommittee on Government
Management, Information and Technology, House Government Reform
Committee, Dennis J.  Kucinich; Senator Joseph I.  Lieberman; and
Senator Carl Levin. 

Copies of this report series are being sent to the President, the
congressional leadership, all other Members of the Congress, the
Director of the Office of Management and Budget, the Secretary of
State, and the heads of other major departments and agencies. 

David M.  Walker
Comptroller General of
the United States


OVERVIEW
============================================================ Chapter 0

As the lead agency for the conduct of foreign affairs, the Department
of State has enormous responsibilities as it works to shape a more
secure, prosperous, and democratic world for the benefit of the
American people.  A substantial amount of State's nearly $2.7 billion
annual budget for the administration of foreign affairs is spent on
what could be called "business" functions that support its broad
mission.  The Department has a worldwide network of operations to
maintain its headquarters and more than 250 overseas posts, as well
as about 35 other U.S.  agencies that operate overseas.  State
provides security for thousands of U.S.  personnel and facilities
abroad.  In addition, State operates a network of communications
facilities around the globe that are critical to its foreign affairs
mission. 

In carrying out its important mission, the Department of State faces
a number of significant performance and management challenges that,
if not met, could affect its ability to function effectively in the
21st century.  These challenges are not simple:  They cover a wide
spectrum of State operations and responsibilities around the world. 

THE CHALLENGES


      ENHANCING THE MANAGEMENT OF
      SECURITY PROGRAMS FOR
      OVERSEAS PERSONNEL AND
      PROPERTY
-------------------------------------------------------- Chapter 0:0.1

In the wake of the bombing of the U.S.  embassies in Kenya and
Tanzania, the Congress provided State $1.45 billion in emergency
funding in the Omnibus Consolidated and Emergency Supplemental
Appropriations Act for Fiscal Year 1999
(P.L.  105-277) to enhance security around the world.  This includes
funds for an immediate response to the bombings such as medical
treatment, counterterrorism programs and rewards, and economic
assistance, as well as funds to rebuild the embassies in Kenya and
Tanzania.  In addition, State will likely request several billion
dollars in funds for new capital construction in the upcoming years. 
State will face several management challenges in administering an
expanded security construction program, including whether it can
bring on board the appropriate amount of staff to plan and manage a
large number of overseas construction projects. 


      IMPROVING INFORMATION AND
      FINANCIAL MANAGEMENT SYSTEMS
-------------------------------------------------------- Chapter 0:0.2

We have reported that the Department of State relied on outdated and
unsecured information and financial management systems that are
vulnerable to Year 2000 problems and security breaches.  State
estimated in 1997 that it would need $2.7 billion over 5 years to
achieve a modernized global infrastructure.  However, this estimate
was not prepared through the rigorous analytical process called for
in federal guidance designed to control costs and improve efficiency. 
State has since taken steps to improve its information security and
adopted an improved approach to addressing its Year 2000 problems. 
It has also begun to incorporate a comprehensive capital planning and
investment process into its information technology (IT) investments. 
However, State needs to ensure that it remediates on a timely basis
its mission-critical systems. 

In the financial management area, State received, for the first time,
an unqualified opinion on its fiscal year 1997 financial statements. 
This achievement provides State with a foundation from which it can
move toward being able to more routinely produce the timely and
reliable financial information that is critical to making sound
decisions that promote effective and efficient use of federal funds. 
To reach this goal, State needs to continue to bring its systems into
full compliance with federal accounting and information management
requirements.  State also must work on solving related internal
control weaknesses if it is to adequately protect its assets and have
timely, reliable data for cost-based decisionmaking, reporting, and
performance management. 


      EFFECTIVELY MANAGING THE
      VISA PROCESS
-------------------------------------------------------- Chapter 0:0.3

State processes more than 8 million immigrant and nonimmigrant visa
applications annually.  State's own internal assessments have
categorized this process as being materially deficient due to
unfilled computer systems needs, insufficient staffing overseas, and
inadequate interagency coordination, which have weakened management
controls.  To reduce the program's vulnerability to fraud, State has
put a number of controls in place to prevent unqualified individuals
from receiving a visa, including a special computerized logarithmic
name-checking capability and an anti-terrorism tip-off program. 


      EFFECTIVELY REORGANIZING
      FOREIGN AFFAIRS AGENCIES
-------------------------------------------------------- Chapter 0:0.4

In a major effort to improve the efficiency and effectiveness of U.S. 
foreign affairs operations, the Congress directed the abolishment of
the U.S.  Information Agency (USIA) and the U.S.  Arms Control and
Disarmament Agency (ACDA) and the transfer of those functions into
State.  A key issue is whether State can integrate these agencies in
a manner that reduces overall costs while enhancing capability. 

PROGRESS AND NEXT STEPS

State is making progress in addressing these issues.  For example, it
is devoting substantial resources toward formulating a strategy and
establishing priorities for enhancing overseas security.  It has
established a new Bureau of Information Resource Management to focus
exclusively on IT requirements and received an unqualified opinion on
its financial statements; implemented a new overseas support services
system to better allocate costs among various user agencies;
installed machine-readable visa systems to reduce the possibility of
fraud and abuse; and established a task force to address agency
consolidation issues.  State has also completed strategic and annual
performance plans under the Government Performance and Results Act of
1993.  In addition, State has assembled a new management team to
direct many of these initiatives. 

These are clearly steps in the right direction.  However, more needs
to be done to create a well-tuned platform for conducting foreign
affairs.  Achieving this goal will require the State Department to
make a strong commitment to management improvement, modernization,
and "cost-based" decisionmaking.  A prerequisite to management
improvement is a better financial management system that produces
accurate and more timely information.  The Results Act process can
serve as an important tool to help State overcome the problems and
issues we have cited and identify opportunities to improve the
efficiency of its business operations and measure performance. 


MAJOR PERFORMANCE AND MANAGEMENT
ISSUES
============================================================ Chapter 1

The Department of State is vested with a wide range of
responsibilities, including formulating U.S.  policy on diverse
international issues, coordinating and supporting U.S.  agencies'
programs and activities overseas, influencing other countries to
adopt policies and practices consistent with U.S.  interests,
assisting U.S.  businesses overseas, providing services to U.S. 
citizens abroad, and issuing passports and visas.  To carry out its
responsibilities, State has about 23,000 employees.  It also
maintains more than 13,000 overseas buildings and other facilities
that are used to support its operations and the operations of several
thousand employees of other U.S.  government agencies overseas. 
State's budget for the administration of foreign affairs totaled
$2.77 billion in fiscal year 1998 and is funded at $2.68 billion in
fiscal
year 1999.\1 State's annual budget for the administration of foreign
affairs supports its headquarters and other domestic offices,
embassies, and consulates at more than 250 overseas posts. 

In our past and ongoing work, we, have identified several problems
with State's management and performance.  This report summarizes our
recent and ongoing work concerning the challenges and issues State
faces in providing enhanced overseas security, upgrading its
information systems, strengthening financial and accounting controls,
enhancing controls over the issuance of visas, integrating other
foreign affairs agencies' functions into the Department, and
improving its strategic and performance planning. 


--------------------
\1 State also received $1.45 billion in emergency funds for overseas
security under the fiscal year 1999 omnibus appropriations act. 


   ENHANCING THE MANAGEMENT OF
   SECURITY PROGRAMS FOR OVERSEAS
   PERSONNEL AND PROPERTY
---------------------------------------------------------- Chapter 1:1

The need to adequately protect employees and their families overseas
may very well be the single most important management issue currently
facing the State Department.  The acts of terrorism in Kenya and
Tanzania claimed more than 260 lives and injured thousands in August
1998.  Worldwide, several embassies found themselves either shut down
or unable to provide normal services because of threatening
situations.  The monetary requirements for undertaking security
enhancements will be significant, as will the management and
technological challenges.  The $1.45 billion that State received in
emergency funding will be used to rebuild the embassies in Kenya and
Tanzania, relocate other embassies, and improve security for other
facilities serving U.S.  personnel worldwide.  State reports that it
has completed security surveys of over 200 posts and formulated 6
internal working groups to direct and track program implementation. 
One initiative will require the accounting system to accumulate
spending data on areas such as equipment acquisition and
construction.  State is also identifying the management
infrastructure upgrades and modifications that will be required,
including contract specifications, office space needed, and new
personnel recruitment. 

State is also assessing its longer term security enhancement needs,
and preliminary estimates indicate that several billion dollars may
be requested for additional embassy construction.  A key issue facing
State is whether it will have the capacity to implement a major
security construction program.  In the early 1990s, we reported that
State encountered several management problems in using the
$1.47 billion in funds that were applied to the diplomatic security
construction program during fiscal years 1986-95.  These management
problems were related to inadequate staffing, poor program planning,
difficulties in site acquisition, changes in security requirements,
and inadequate contractor performance.  All of these directly
contributed to significant delays and cost increases in the majority
of State's construction projects.  For example, inadequate
coordination within State in determining building requirements
contributed to millions of dollars in cost increases in a project in
Pretoria, South Africa.  A lack of agreement within State on
potential building sites delayed projects in Bogota, Colombia, and
Tunis, Tunisia, for several years and substantially increased costs. 
State has undertaken a number of efforts to improve construction
programs, including the development of a 5-year program planning
process laying out capital construction funding requirements and
programs to review design schemes in terms of cost-effectiveness and
to reduce the number of changes in project scope and schedule during
project execution.  Nevertheless, the scope of the problems
encountered indicated that State had systemic weaknesses in its
program management. 

In view of State's prior experiences and difficulties in implementing
the security construction program, several questions and issues need
to be addressed as part of today's efforts to formulate strategies
for enhancing security. 

  -- What would be the total costs to bring overseas posts into
     compliance with current security standards? 

  -- What actions would State need to take to ensure it has the
     management capability to implement a large-scale construction
     program? 

  -- Are there adequate control mechanisms to ensure efficient and
     effective use of emergency funds and any subsequent funding for
     overseas security? 

One issue that should be considered in addressing future security
requirements is the sheer number of U.S.  employees overseas.  The
security burden is directly associated with the size of the overseas
workforce.  In our work on overseas staffing issues in the mid-1990s,
we noted that the U.S.  government (excluding military operational
commands) employed a total of nearly 38,000 personnel overseas--split
evenly between U.S.  direct hire employees and foreign national
employees.  An important trend has been the increase in the number of
overseas U.S.  direct hires by the non-foreign affairs agencies.  A
broad examination of how the U.S.  government carries out its
overseas role and related missions may now be needed in view of the
increased security threats.  State needs to take the lead in working
with other agencies operating overseas to examine their overseas
staffing requirements and explore alternatives to stationing
Americans overseas. 


      KEY CONTACT
-------------------------------------------------------- Chapter 1:1.1

Benjamin F.  Nelson, Director
International Relations and Trade Issues
National Security and International
 Affairs Division
(202) 512-4128
[email protected]


   IMPROVING INFORMATION
   MANAGEMENT SYSTEMS
---------------------------------------------------------- Chapter 1:2

State's information resource management (IRM) infrastructure has
historically been inadequate to support the Department's core foreign
policy and administrative functions.  State officials have recognized
that deficiencies exist.  The Department is spending hundreds of
millions of dollars each year on information resource management,
including $100 million to $150 million to modernize its IT hardware
and software systems, remediate Year 2000 problems, implement a
comprehensive information security program, and upgrade its overall
IT capability.  These initiatives have received top-level management
support in recent months as evidenced by the appointment of a
permanent Chief Information Officer (CIO), and a deputy CIO for
architecture and planning, the creation of a Deputy CIO position for
the Year 2000 issue, and the assignment of information system
security issues to the Deputy CIO for Operations.  Safeguarding
State's IT investments will require sustained management commitment
and proper execution to provide adequate assurance that critical
operations and assets are protected from disruption, loss, and
inappropriate disclosure and that the sizable investments in
modernization will lead to effective information systems. 

In 1997, State introduced a long-range plan to upgrade and operate
its IT infrastructure at an estimated cost of $2.7 billion over
5 years.  This estimate was very speculative because not all costs
required to complete the plan were included, such as consular IT
operating costs, and some costs had changed, such as bandwidth
requirements and capital replacement needs.  Furthermore, these plans
were developed without the benefit of full implementation of the
planning and investment process called for by federal guidance.  This
guidance is found in law,\2 GAO documents,\3 and instructions from
the Office of Management and Budget (OMB)\4 that were developed to
help agencies avoid costly IT modernization mistakes. 

To address these shortcomings, we recommended that State make the
full implementation of an IT planning and investment process a top
priority.  This should include preparing a validated IT architecture
to help guide the modernization, establishing a fully functioning
technical review board, revising State's long-range plans and cost
estimates, and identifying potential cost savings and efficiencies
expected from the modernization effort.  State's CIO recently has
taken a number of steps to implement our recommendations.  These
include drafting an IRM vision paper that will serve as a basis for
revising the strategic and tactical plans, and related cost
estimates; finalizing a high-level IT architecture; implementing a
departmentwide capital planning process in conformance with new OMB
A-11 guidance; and reconstituting the technical review board. 

State has been slow in addressing Year 2000 issues.  Failure to
address Year 2000 deficiencies could have a significant impact on
State's ability to perform key functions, including identifying visa
applicants who may pose a threat to the nation's security; sending
and receiving vital communications; establishing secure information
systems; providing efficient, flexible, and timely national security
reporting; and promoting U.S.  business opportunities abroad. 

We reported in August 1998 that if State continued its current
approach, which lacked a mission-based perspective, it would risk
spending time and resources fixing systems that have little bearing
on its overall mission.  We recommended that State reassess its
systems using a mission-based approach and ensure that systems
identified as supporting critical business functions receive priority
attention and resources.  We also recommended that State ensure that
contingency planning efforts focus on core business functions and
supporting systems and that interfaces with other entities be
identified and corrected.  State generally agreed with these
recommendations and has since prioritized its mission-critical
applications and adopted an improved approach. 

In its November 1998 quarterly report, OMB categorized State as a
"tier 1" agency, meaning that State was not making sufficient
progress.  However, recent data suggests that State is beginning to
make progress in remediating systems that have been determined to be
mission-critical.  State had remediated 32 percent of its 38
noncompliant mission-critical applications as of January 1999.  It
expects that 92 percent will be implemented by March 31, 1999; two of
the remaining three systems are expected to be ready in April 1999
and the last system is expected in August 1999. 

Our 1997 evaluation of State's information security program showed
that it lacked key elements such as routine assessments of risk,
complete written policies, and procedures for testing system
controls.  Our tests showed that State's unclassified but sensitive
systems, and the information contained within them, are vulnerable to
unauthorized access.  Also, the Department's December 1997 report on
internal controls, prepared under the Federal Managers' Financial
Integrity Act of 1982, and the State Inspector General's audit report
on State's 1997 consolidated financial statements,\5 cited the
information system security as a material weakness.  Such
vulnerabilities could be exploited by individuals or organizations
seeking to damage State's operations, commit terrorism, or obtain
financial data. 

We recommended that State implement a number of corrective measures,
including establishing a central information security unit and
adopting risk- based IT security management techniques.  State
concurred with the majority of our recommendations and has taken
steps to improve information security, such as establishing a central
IT security unit and Department-level information systems security
officer, preparing new management guidance on IT security, and
increasing IT security awareness activities. 



--------------------
\2 The 1995 Paperwork Reduction Act (P.L.  104-13, 109 Stat.  163),
and the 1996 Clinger-Cohen Act (P.L.  104-106, 110 Stat.  679). 

\3 Assessing Risks and Returns:  A Guide for Evaluating Federal
Agencies' IT Investment Decisionmaking (GAO/AIMD-10.1.13,
February 1997). 

\4 Capital Programming Guide (Washington, D.C.:  OMB, July 1997).



\5 Audit of U.S.  Department of State's 1997 Consolidated Financial
Statements, Office of Inspector General Audit Report 99-FM-003
(Washington, D.C., Nov.  10, 1998). 


      KEY CONTACTS
-------------------------------------------------------- Chapter 1:2.1

Benjamin F.  Nelson, Director
International Relations and Trade Issues
National Security and International
 Affairs Division
(202) 512-4128
[email protected]

Jack L.  Brock, Jr., Director
Governmentwide and Defense Information
 Systems
Accounting and Information Management
 Division
(202) 512-6240
[email protected]


   IMPROVING FINANCIAL MANAGEMENT
   SYSTEMS
---------------------------------------------------------- Chapter 1:3

One of State's long-standing shortcomings has been the absence of an
effective financial management system that can assist managers in
making "cost-based" decisions.  Recently, and for the first time, the
Department of State received an unqualified audit opinion on its
Departmentwide financial statements for fiscal year 1997.  This
achievement represents a good step forward and provides the
Department a foundation on which to build the capacity to produce, on
a more routine basis, the accurate and timely financial management
information critical to making sound decisions that promote effective
and efficient use of federal funds.  However, State must fulfill the
expanded OMB governmentwide reporting requirements for fiscal year
1998 financial statements and provide audited statements to OMB by
March 1, 1999. 

In its efforts to improve the Department's overall financial
management operations to a point that accurate and timely information
is easily accessible, enabling managers to make "cost-based"
decisions on a routine basis, State must continue its efforts to
strengthen its financial management system.  For example, in the
recently issued audit report on State's fiscal year 1997 financial
statements, the Department's Inspector General disclosed that State's
systems were out of compliance with certain requirements, including
some requirements of the Federal Financial Management Improvement Act
of 1996.  The Inspector General reported that (1) the Department's
existing financial management systems did not substantially comply
with the financial management system requirements designed to ensure
that all automated information systems are appropriately safeguarded;
(2) the Department had not established a complete
contingency/business recovery plan for its financial system; and (3)
several inadequacies in the Department's internal controls, including
inaccurate unliquidated obligations, unreconciled general ledger
balances, and financial statement balances derived from other than
the general ledger, still needed to be corrected.  The Inspector
General concluded that the problems identified in the report reduced
the Department's ability to produce accurate, consistent, and timely
financial management information and therefore diminished its ability
to carry out its fiduciary responsibility. 

In response to the audit findings, State has indicated that it is in
the process of establishing a contract to study the level of
compliance with the Federal Financial Management Improvement Act. 
State will use the results of the study to prepare a remediation plan
as required by the act.  The Department also stated that additional
reports and procedures are being put into place to address the
internal control weaknesses identified during the most recent audit. 
State recently noted that it has efforts underway to improve its
financial management systems, including upgrading its central
financial management system, having one system for regional
disbursing and accounts reporting, and developing standard financial
capabilities for its overseas posts.  In its 1997 Federal Managers'
Financial Integrity Act report, State reported that it has corrected
material weaknesses in the areas of receivables and travel advances. 

To better manage and allocate overseas support costs, State has also
implemented the International Cooperative Administrative Support
Services (ICASS) system.  Under ICASS, greater responsibility and
authority for managing resources and making decisions about
administrative support services shared with other agencies located at
diplomatic missions have been delegated to the overseas posts.  The
stakes are high--initial ICASS reports indicate that shared
administrative costs are about $640 million annually.  ICASS has been
separately audited and received a clean opinion.  ICASS is now
generating new and more reliable cost data; the key question that
remains to be answered is whether State can effectively use the
system to consolidate resources and reduce overseas support costs. 



      KEY CONTACTS
-------------------------------------------------------- Chapter 1:3.1

Lisa G.  Jacobson
Director, Defense Financial Audits
Accounting and Information Management
 Division
(202) 512-9095
[email protected]

Benjamin F.  Nelson, Director
International Relations and Trade Issues
National Security and International
 Affairs Division
(202) 512-4128
[email protected]


   EFFECTIVELY MANAGING THE VISA
   PROCESS
---------------------------------------------------------- Chapter 1:4

The Immigration and Naturalization Service (INS) estimated that as of
October 1996, 5 million illegal aliens were residing in the United
States.  While not the primary source of illegal immigration, visa
fraud is a significant matter of concern.  State's consular officers
at overseas posts are responsible for providing expeditious visa
processing for qualified applicants.  At the same time, they must
prevent the entry of those who are a danger to U.S.  security
interests or are likely to remain in the United States illegally. 
Last year, over 7 million aliens applied for nonimmigrant visas, and
640,000 foreigners immigrated to the United States.  Visa processing
is a particular problem for some overseas locations where volume
and/or security concerns are high. 

State has introduced new technologies, equipment, and controls
designed to improve visa processing and reduce the incidence of
fraud.  State notes that progress has been made in several areas,
including installation of machine- readable visa systems at all
visa-issuing posts; online connectivity to Washington, D.C.,
databases; and implementation of a first phase of a State- INS
data-share program.  Many improvements were made possible through
State's temporary authority to retain fees charged foreigners
applying for nonimmigrant visas.  Those fees generated millions of
dollars, enabling the Department of State to invest in border
security technology and to pay the salaries of nearly 2,000
employees. 

State will need to remain vigilant in a number of areas to further
reduce the vulnerability of the visa system to fraud and abuse. 
These issues include (1) critical staffing gaps in overseas consular
positions; (2) limitations in consular automated systems; (3)
restrictions in the exchange of intelligence information with INS and
other law enforcement agencies; and (4) weaknesses in the integrity
of immigrant and nonimmigrant documentation, including the
computerized systems used to produce them.  The Department must also
continue its efforts to encourage consular sections to implement best
practices designed to streamline and rationalize the visa workload. 
Potential best practices include using travel agents for initial
processing, establishing appointment systems to control workload, and
allowing the payment of visa fees at a bank or other financial
institution.  In view of the increased international terrorist
threats, continued attention to State's progress in addressing these
issues will be needed. 


      KEY CONTACT
-------------------------------------------------------- Chapter 1:4.1

Benjamin F.  Nelson, Director
International Relations and Trade Issues
National Security and International
 Affairs Division
(202) 512-4128
[email protected]


   EFFECTIVELY REORGANIZING
   FOREIGN AFFAIRS AGENCIES
---------------------------------------------------------- Chapter 1:5

The long-planned reorganization of the government's foreign affairs
agencies is under way.  In April 1997, the White House announced a
plan to put matters of international arms control, public diplomacy,
and other functions within a "reinvented" State Department.  In
October 1998, the Congress authorized the reorganization, which
abolished USIA and ACDA and consolidated and integrated those
functions into State.  The reorganization is intended to reinvigorate
the foreign affairs functions of the United States within the State
Department.  About 3,000 employees of ACDA and USIA will be
integrated into State.  Potential areas identified for integration
among the three agencies include legal affairs, congressional
liaison, press and public affairs, and management.  Central
management functions that are to be integrated include IRM, overseas
facilities and operations, logistics, diplomatic security, financial
management, and human resources.  State has recently submitted a
report to the Congress describing its reorganization strategy. 

State has indicated that during the transition, costs would likely
increase because of the need to implement system conversions and
transfers; in the longer term, overall staffing and costs may
decrease.  State faces several challenges in achieving the objectives
of this reorganization.  One major challenge is the technological
difficulty of uniting the agencies, including integrating separate
electronic mail and computer systems.  Overall issues include whether
the reorganization will actually produce identifiable efficiencies
and improved performance in foreign affairs programming.  As our
prior work has indicated, many of the areas targeted for management
consolidation need substantial reform. 


      KEY CONTACT
-------------------------------------------------------- Chapter 1:5.1

Benjamin F.  Nelson, Director
International Relations and Trade Issues
National Security and International
 Affairs Division
(202) 512-4128
[email protected]


   STRENGTHENING STRATEGIC AND
   PERFORMANCE PLANNING
---------------------------------------------------------- Chapter 1:6

State needs to strengthen its strategic and performance planning as
part of its overall efforts to improve management.  In its first
strategic plan for foreign affairs, State formulated 16 foreign
policy goals that cover a wide spectrum of U.S.  national
interests--national security, economic prosperity, American citizens
and U.S.  borders, law enforcement, democracy, humanitarian response,
and global issues.  Our review of that plan and the Department's
annual performance plan for 1999 indicated that State's plans had
their strong points but often fell short of meeting the requirements
of the Results Act. 

One area of concern was that State's strategic plan addressed neither
the potential impact of the consolidation of the foreign affairs
agencies on its systems nor the potential for other agencies to have
functions duplicative of State's.  We have found that State's
functional bureaus share responsibility with multiple U.S.  agencies
on various overlapping issues, including trade and export policy and
international security functions.  The strategic plan also did not
address the deficiencies in State's financial accounting and
information systems, noting only in general terms that several years
will be required to develop performance measures and related
databases to provide sufficient information on the achievement of
goals. 

Our review of State's performance plan revealed similar deficiencies,
but also some encouraging points as well.  For example, State's
performance plan generally provided clear and reasonable strategies
and goals in the areas of improving U.S.  citizens' services and
border security, and promoting democracy.  In contrast, State's plan
did not present a clear picture of its methods to meet strategic and
performance goals in the areas of furthering economic prosperity,
preventing international crime, and enhancing humanitarian
assistance.  Overall, the performance plan did not clearly indicate
the Department's intended performance and was vague about how State
will coordinate with other agencies.  Further, State's performance
plan did not provide sufficient confidence that the Department's
performance information will be credible.  It did not address how the
known deficiencies in State's financial and information systems will
affect performance measurement.  In response to our work, State is
attempting to improve its planning by developing clearer and more
objective performance measures linked to performance goals and
identifying partnerships with other agencies or governments to
address crosscutting issues. 


      KEY CONTACT
-------------------------------------------------------- Chapter 1:6.1

Benjamin F.  Nelson, Director
International Relations and Trade Issues
National Security and International
 Affairs Division
(202) 512-4128
[email protected]


RELATED GAO PRODUCTS
=========================================================== Appendix 2

OVERSEAS SECURITY AND PRESENCE

Overseas Presence:  Staffing at U.S.  Diplomatic Posts
(GAO/NSIAD-95-50FS, Dec.  28, 1994). 

State Department:  Overseas Staffing Process Not Linked to Policy
Priorities (GAO/NSIAD-94-228, Sept.  20, 1994). 

State Department:  Management Weaknesses in the Security Construction
Program (GAO/NSIAD-92-2, Nov.  29, 1991). 

INFORMATION MANAGEMENT

Department of State IRM:  Modernization Program at Risk Absent Full
Implementation of Key Best Practices (GAO/NSIAD-98-242,
Sept.  29, 1998). 

Year 2000 Computing Crisis:  State Department Needs to Make
Fundamental Improvements to Its Year 2000 Program (GAO/AIMD-98-162,
Aug.  28, 1998). 

Computer Security:  Pervasive, Serious Weaknesses Jeopardize State
Department Operations (GAO/AIMD-98-145, May 18, 1998). 

VISA PROCESSING

State Department:  Tourist Visa Processing Backlogs Persist at U.S. 
Consulates (GAO/NSIAD-98-69, Mar.  13, 1998). 

State Department:  Efforts to Reduce Visa Fraud (GAO/T-NSIAD-97-167,
May 20, 1997). 

FOREIGN AFFAIRS ORGANIZATION AND
MANAGEMENT

Foreign Affairs Management:  Major Challenges Facing the Department
of State (GAO/T-NSIAD-98-251, Sept.  17, 1998). 

International Affairs:  Activities of Domestic Agencies
(GAO/T-NSIAD-98-174, June 4, 1998). 

International Affairs Budget:  Framework for Assessing Relevance,
Priority, and Efficiency (GAO/T-NSIAD-98-18, Oct.  30, 1997). 

Foreign Affairs:  Perspective on Foreign Affairs Programs and
Structures (GAO/NSIAD-97-6, Nov.  8, 1996). 

State Department:  Options for Addressing Possible Budget Reductions
(GAO/NSIAD-96-124, Aug.  29, 1996). 

STRATEGIC AND PERFORMANCE PLANNING

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


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


PERFORMANCE AND ACCOUNTABILITY
SERIES
=========================================================== Appendix 3

Major Management Challenges and Program Risks:  A Governmentwide
Perspective (GAO/OCG-99-1)

Major Management Challenges and Program Risks:  Department of
Agriculture (GAO/OCG-99-2)

Major Management Challenges and Program Risks:  Department of
Commerce (GAO/OCG-99-3)

Major Management Challenges and Program Risks:  Department of Defense
(GAO/OCG-99-4)

Major Management Challenges and Program Risks:  Department of
Education (GAO/OCG-99-5)

Major Management Challenges and Program Risks:  Department of Energy
(GAO/OCG-99-6)

Major Management Challenges and Program Risks:  Department of Health
and Human Services (GAO/OCG-99-7)

Major Management Challenges and Program Risks:  Department of Housing
and Urban Development (GAO/OCG-99-8)

Major Management Challenges and Program Risks:  Department of the
Interior (GAO/OCG-99-9)

Major Management Challenges and Program Risks:  Department of Justice
(GAO/OCG-99-10)

Major Management Challenges and Program Risks:  Department of Labor
(GAO/OCG-99-11)

Major Management Challenges and Program Risks:  Department of State
(GAO/OCG-99-12)

Major Management Challenges and Program Risks:  Department of
Transportation (GAO/OCG-99-13)

Major Management Challenges and Program Risks:  Department of the
Treasury (GAO/OCG-99-14)

Major Management Challenges and Program Risks:  Department of
Veterans Affairs (GAO/OCG-99-15)

Major Management Challenges and Program Risks:  Agency for
International Development (GAO/OCG-99-16)

Major Management Challenges and Program Risks:  Environmental
Protection Agency (GAO/OCG-99-17)

Major Management Challenges and Program Risks:  National Aeronautics
and Space Administration (GAO/OCG-99-18)

Major Management Challenges and Program Risks:  Nuclear Regulatory
Commission (GAO/OCG-99-19)

Major Management Challenges and Program Risks:  Social Security
Administration (GAO/OCG-99-20)

Major Management Challenges and Program Risks:  U.S.  Postal Service
(GAO/OCG-99-21)

High-Risk Series:  An Update (GAO/HR-99-1)



The entire series of 21 performance and accountability reports and
the high-risk series update can be ordered by using the order number
GAO/OCG-99-22SET. 


*** End of document. ***