Management Challenges Identified by the Inspector General

OIG concludes the most serious management and performance challenges to the Department are the following areas:

  • Protection of our people and facilities,
  • Information security,
  • Financial management,
  • Human resources,
  • Counterterrorism and border security, and
  • Strategic and performance planning.

Protection of Our People and Facilities

As noted in OIG's assessment of management and performance challenges in 2001, and in the aftermath of the September 11, 2001 attacks, protection of its facilities and people from terrorist threat remains one of the highest priorities for the Department. The Department has embarked upon an ambitious effort, the largest in its history, to construct or upgrade diplomatic missions that are inadequate and, in some cases, unsafe. This fiscal year, the Department's Office of Overseas Buildings Operations is constructing 23 new embassy compounds and upgrading security at existing missions at a cost of approximately $400,000,000. Despite the Department's aggressive efforts, many embassies cannot expect new and safer buildings in the short term, and they must upgrade their current facility using existing resources. To this end, OIG continued its security inspections throughout last year to identify physical security problems at embassies and propose ways to resolve or mitigate them. The September 11, 2001 attacks also highlighted the need to improve security at U.S. domestic installations, and the Department has initiated efforts to improve security at the Harry S Truman, or "Main State," headquarters building.

Funding has been requested and partially granted for the Department's comprehensive building plan and OIG is currently reviewing the Department's progress in the plan's implementation. OIG has also established an ongoing review of the Department's construction of a new embassy in China. To date, the project is on schedule and has had interagency coordination and concurrence on building design and construction.

OIG completed 49 full and limited scope security oversight inspections in 2002. The Department has made the most progress in physical security, with increased or strengthened setback at many posts. In addition, Department and post-initiated projects have resulted in improved compound access controls, internal security barriers, guard patrols, and screening procedures. Emergency preparedness, while generally improved, needs more attention. OIG found not all required emergency reaction drills are being conducted at all diplomatic facilities, and some emergency preparedness plans are out of date or incomplete. As noted by survivors of the most recent large vehicle bomb attack against the U.S. Consulate in Karachi, Pakistan, the lack of personnel injury was attributed to the instinctive response by staff as a result of frequent emergency procedure drills.

OIG's review of security at the Harry S.Truman building found the need for permanent setback and improved access controls. The Department has responded positively and is working with the National Capital Planning Commission to install permanent barriers to increase setback.

Information Security

The dramatic expansion in computer interconnectivity and the rapid increase in the use of the Internet are changing the way the government, the nation, and much of the world communicate and conduct business. However, without proper safeguards, these developments pose enormous risks that make it easier for people and groups with malicious intent to intrude into inadequately protected systems and use such access to obtain sensitive information, commit fraud, disrupt operations, or launch attacks against other computer networks and systems. Computer-supported Department operations are at risk. Previous General Accounting Office, OIG, and Bureau of Diplomatic Security reports have identified persistent computer security weaknesses that place a variety of critical and mission-essential Department operations at risk of disruption, fraud, and unauthorized disclosure.

The Department recognizes that much more must be done to develop fully and ensure continuity of its systems security program. In its September 2002 report on the Department's information security program, OIG identified several key areas of information security that still require management attention. Specifically, the Department has made slow progress in addressing information security weaknesses identified in OIG's 2001 review of the Department's implementation of the Government Information Security Reform Act. In response to the report, the Department developed a strategy to address a key deficiency, the lack of certification and accreditation of its information systems. However, the Department has not developed a timetable for certification and accreditation of all systems, and as of August 2002, only four percent of its systems had been certified and accredited. Further, although 72 percent of the Department's 358 systems are reported to have security-level determinations, only 15 percent are reported to have security plans.

OIG also focused on the overall protection of classified information at home and abroad. Domestically, OIG is examining the role of the unit security officers assigned to the regional bureaus and whether these people are properly trained and equipped to accomplish their tasks. Overseas, additional resources (specifically technical security engineers and specialists) are needed to maintain and repair technical security countermeasures that protect classified information abroad. The Bureau of Diplomatic Security's FY 2003 budget request has identified the technical security positions necessary for conducting required testing, preventive maintenance, and repair of these countermeasures.

Financial Management

One of the major challenges the Department faces is complying with the requirements of the Federal Financial Management Improvement Act (FFMIA). The Department continues to make significant strides in this area. It is ahead of schedule in moving the services provided by the Paris Financial Service Center to its operations in Charleston, South Carolina. On November 1, 2001, the new Regional Financial Management System became operational at Charleston, and as of September 30, 2002, 44 posts had been converted to the new system. Nevertheless, the Department continues to expend significant manual efforts and costs in preparing its financial statements, and has been unable to provide timely information for the audit process.

Recently, at the joint recommendation of the Department of State OIG and the USAID OIG, the two agencies embarked on a study of their accounting and other business processes to determine what could be altered or restructured to maximize the options for integration. Both organizations have selected the same commercial software as their corporate worldwide accounting systems.

The Department is also making progress in achieving substantial compliance with federal financial management systems requirements. The Department has completed 50 percent of its FFMIA remediation plan projects, and expects to complete all but one of the remaining projects by September 2003. The Central Financial Planning project has been restructured and the Department does not expect to complete the project until December 2004, and substantial additional funding will be required to do so.

Managing federal assistance funds -- including grants, cooperative agreements, and fund transfers for cultural and educational exchange programs, refugee programs, and law enforcement programs - also remains a major challenge. Management of federal assistance programs is decentralized within the Department, and the responsible bureaus do not use standardized accounting systems, policies, or procedures for this purpose, although the Department has adopted a standard payment system in compliance with the Financial Assistance Management Improvement Act of 1999. Presently, the Department lacks comprehensive and reliable information on funding provided to nongovernmental organizations.

Human Resources

Congress, the General Accounting Office, and the OIG have expressed concerns about the human resource issues that have faced the Department for several years. Among the challenges is the need to develop a workforce plan for the Foreign Service and Civil Service that reflects both the overseas and domestic staffing needs of the Department. The Department has made significant strides in recruiting new Foreign Service officers through the "Diplomatic Readiness Initiative," although staffing gaps remain. The Department is also committed to reducing the time it takes to bring on board qualified Foreign Service officers and to ensure that training extends in a rational way throughout officers' careers. It has also focused more attention on developing its Civil Service and to providing adequate training and support to its foreign service national employees (FSNs).

OIG has found that many overseas posts do not have sufficient consular personnel. As a result of the attacks of September 11, 2001, new visa policies and procedures were implemented to screen visa applicants more carefully. Consular sections are frequently understaffed or not appropriately staffed with experienced consular officers to carry out these new procedures. Another human resource challenge includes a perceived division between Foreign Service and Civil Service. The Department has initiated a leadership program for its Civil Service employees to attempt to address this concern. The initiative is ongoing and will require a serious commitment of resources and attention from the Department's senior managers to succeed. OIG applauds the Department's determination to resolve the problems related to FSN pensions in many countries and fully supports its continuing efforts to resolve this longstanding issue.

"Rightsizing" the staffs at our diplomatic mission remains a major challenge. OIG continued to review rightsizing issues during each post inspection in fiscal year 2002. At many posts, OIG recommended, where appropriate, either reductions or increases in staffing related to rightsizing considerations.

Counterterrorism and Border Security

Counterterrorism and border security remain among the Department's most important programs and greatest challenges. The September 11, 2001, attacks heightened awareness and scrutiny of these programs. Vulnerabilities in the visa and passport processes are the focus of significant Department attention. Resources needed to accommodate the new consular processes and procedures will require a careful review by the Department.

The Consular Lookout and Support System (CLASS) remains the principal mechanism for screening out terrorists and criminals attempting to obtain visas or U.S. passports. The number of names in the system has increased fourfold in the past year. The Bureau of Intelligence and Research (INR) evaluates data regarding suspected terrorists and criminals and decides what names should be entered into CLASS.

The Department is conducting ongoing reviews to identify and address areas of vulnerability in the visa and passport processes since they directly affect border security. To improve information sharing, the Department accelerated several projects that provide officers overseas as much available data as possible such as the Passport Lookout Tracking System and expansion of the Consular Lost and Stolen Passports database. These systems provide missions with access to several consular databases in real time. Access by FSNs to all consular databases, a concern last year, is now more restricted.

The Department has also moved to place additional controls on visa processing. The name clearance process now provides a secondary check for several categories of visa applicants. The number of personal appearance waivers has been reduced, and policy decisions presently in the final clearance process will further restrict such waivers. The use of third parties such as travel agents, banks, and courier services as a means of delivering visa applications to posts for issuance is being re-evaluated.

OIG applauds the above improvements, but concerns about consular staffing, training, and facilities, heightened by the events of September 11, caused OIG to recommend that the Department establish a material weakness in the area of visa processing. The Department needs an appropriate level of adequately trained staff and adequate secure and efficient office space to minimize vulnerabilities in the consular area. Despite OIG's recommendation, the Department established visa processing as a reportable condition.

Strategic and Performance Planning

A major challenge for the Department is to establish strategic goals that provide clarity and direction for long-range planning and resource allocation and performance goals and indicators to serve as metrics of success in achieving those goals. The Department continues to improve its plans, and the Bureau of Resource Management, Office of Strategic and Performance Planning, is currently drafting a five-year strategic plan for the Department and working with other offices and bureaus to improve their performance plans. The Department is now emphasizing that all funding requests by bureaus and offices must be related to items reflected in the strategic plan.