Major Management Challenges and Program Risks: Department of State

Published by the Government Accountability Office on 2003-01-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

               United States General Accounting Office

GAO            Performance and Accountability Series

January 2003
               Major Management
               Challenges and
               Program Risks
               Department of State

A Glance at the Agency Covered in This Report
To carry out U.S. foreign policy, the Department of State
●       formulates U.S. policy on numerous international issues and influences other
        countries to adopt policies and practices consistent with U.S. interests;
●       conducts negotiations and concludes international agreements and treaties;
●       leads interagency coordination and supports the international activities of other
        U.S. agencies;
●       issues passports and visas and provides services to U.S. citizens living and
        traveling abroad;
●       operates and provides security for embassy and consular facilities; and
●       provides funding for international organizations and peacekeeping activities, the
        Andean counterdrug initiative, international narcotics control and law
        enforcement, and migration and refugee assistance.

The Department of State’s Budgetary and Staff Resources

Budgetary Resources a, b                                            Staff Resources b, c
Dollars in billions                                                 FTEs in thousands

20                                                                  40
                                       14                                                                           29
15                           13                                     30                                  28
                                                                           26       27        27

10         9                                                        20

    5                                                               10

    0                                                                 0
         1998     1999     2000       2001        2002                    1998     1999      2000      2001         2002
         Fiscal year                                                      Fiscal year

Source: Budget of the United States Government.

a Budgetary resources include new budget authority (BA) and unobligated balances of previous BA.

b Budget and staff resources are actuals for FY 1998-2001. FY 2002 are estimates from the FY 2003 budget, which
  are the latest publicly available figures on a consistent basis as of January 2003. Actuals for FY 2002 will be
  contained in the President’s FY 2004 budget to be released in February 2003.
c U.S. foreign service national employees are included.

This Series
This report is part of a special GAO series, first issued in 1999 and updated in
2001, entitled the Performance and Accountability Series: Major Management
Challenges and Program Risks. The 2003 Performance and Accountability Series
contains separate reports covering each cabinet department, most major
independent agencies, and the U.S. Postal Service. The series also includes a
governmentwide perspective on transforming the way the government does
business in order to meet 21st century challenges and address long-term fiscal
needs. The companion 2003 High-Risk Series: An Update identifies areas at high risk
due to either their greater vulnerabilities to waste, fraud, abuse, and
mismanagement or major challenges associated with their economy, efficiency, or
effectiveness. A list of all of the reports in this series is included at the end of
this report.
                                                        January 2003

                                                        PERFORMANCE AND ACCOUNTABILITY SERIES

                                                        Department of State
Highlights of GAO-03-107, a report to
Congress included as part of GAO’s
Performance and Accountability Series

In its 2001 performance and                             In carrying out its missions of forming, representing, and implementing U.S.
accountability report on the                            foreign policy, the State Department faces complex challenges, some of
Department of State, GAO                                which have intensified since the terrorist attacks on September 11, 2001.
identified important issues                             State has made progress in addressing its management challenges over the
concerning the security of U.S.
                                                        last 2 years, but further improvements are needed in the following areas:
facilities and personnel overseas,
visa issuance, illicit drugs entering
the United States, information                          •   Improving the security and maintenance of U.S. facilities
security, and other issues facing                           overseas. State has enhanced security at existing facilities but needs to
the department. The information                             continue to replace many embassies and consulates that are not set back
GAO presents in this report is                              far enough from busy city streets and/or are not sufficiently blast
intended to sustain congressional                           resistant.
attention and a departmental focus
on continuing to make progress in                       •   Strengthening the visa process as an antiterrorism tool. Visa
addressing these challenges and                             policy and procedures are inconsistent among overseas consular posts,
ultimately overcoming them. This                            and staff at many posts are inadequately trained. Eliminating the Visa
report is part of a special series of
                                                            Waiver Program could require increased overseas staffing and facilities.
reports on governmentwide and
agency-specific issues.
                                                        •   Continuing to rightsize embassy staffing levels. Assessing staffing
                                                            needs is essential for State to ensure the security and effectiveness of
                                                            overseas missions and determine the appropriate size and cost of new
GAO believes that State should                              facilities. To help achieve a rightsized overseas presence, State and the
                                                            Office of Management and Budget are using a framework proposed by
•      continue to improve security                         GAO that addresses the mission, security, and costs of overseas posts as
       at overseas posts, primarily by                      well as staffing alternatives.
       replacing about 180 facilities
       where security is inadequate;                    •   Better managing human capital. Although State has made progress in
                                                            recruiting new hires, providing leadership and management skills
•      strengthen the visa process by,                      training, planning its workforce needs, correcting foreign language
       among other things, developing                       shortfalls, and staffing hardship posts, further improvements are needed.
       clear guidance and policy;
                                                        •   Help to reduce illegal drugs
•      address staffing shortages at                        entering the United States.
       hardship posts; and                                  Despite arrests of drug traffickers
                                                            and seizures of large amounts of
•      continue to work on other                            drugs, the availability of illicit drugs
       challenges involving rightsizing                     in the United States has not been
       the U.S. presence overseas, U.S.                     materially reduced.
       drug eradication assistance,
       financial management,                            •   Addressing additional
       information technology and                           challenges to building a high-
       performance planning.                                performing organization. State
                                                            has worked to enhance information
    www.gao.gov/cgi-bin/getrpt?GAO-03-107.                  technology and security, strengthen
                                                            financial management, and improve            Source: Department of State.
    To view the full report, click on the link above.
    For more information, contact Jess T. Ford at           performance planning. However,
                                                                                                         The U.S. embassy in Nairobi,
    (202) 512-4268 or fordj@gao.gov.                        challenges remain.                           Kenya, after the 1998 bombing

Transmittal Letter                                                                                                1

Major Performance                                                                                                 2

and Accountability

GAO Contacts                                                                                                      27

Related GAO Products                                                                                              28

Performance and                                                                                                   31

Accountability and
High-Risk Series

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                       Page i                                           GAO-03-107 State Department Challenges
United States General Accounting Office
Washington, D.C. 20548
                                                                                            Comptroller General
                                                                                            of the United States

           January 2003                                                                                             Transm
                                                                                                                          L lter

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

           This report addresses the major management challenges and program risks facing the Department of
           State as it works to carry out its multiple and highly diverse missions. The report discusses the
           actions State has taken and that are under way to address the challenges GAO identified in its
           Performance and Accountability Series 2 years ago, and major events that have occurred that
           significantly influence the environment in which the department carries out its mission. Also, GAO
           summarizes the challenges that remain and further actions that GAO believes are needed.

           This analysis should help the new Congress and the administration carry out their responsibilities and
           improve government for the benefit of the American people. For additional information about this
           report, please contact Jess T. Ford, Director, International Affairs and Trade, at
           (202) 512-4268 or fordj@gao.gov.

           David M. Walker
           Comptroller General
           of the United States

                                     Page 1                                    GAO-03-107 State Department Challenges
Major Performance and Accountability

              In our January 2001 report,1 we reported that the Department of State faced
              three major performance and accountability challenges: (1) enhancing
              embassy security, (2) providing expeditious visa processing while
              preventing the entry of those who threaten U.S. security or who are likely
              to remain in the United States illegally, and (3) helping reduce the flow of
              illegal drugs into the United States. We also reported that State was facing
              a number of additional challenges that hamper its ability to become a high-
              performing organization. Specifically, State needed to better use the
              Government Performance and Results Act (Results Act) process to help
              fulfill the agency’s overall mission, policy, and operational objectives;
              enhance its communications and information technology and computer
              systems security; improve financial management capabilities; address
              human capital issues such as workforce planning; and determine the
              optimal size and composition of overseas posts (a process known as

              Since our January 2001 report, one major event occurred—the September
              11, 2001, terrorist attacks—that affected the conduct of State’s multiple
              functions and activities. The September 11 attacks and the subsequent
              attacks and threats against U.S. facilities overseas have had an impact on
              such areas as the visa issuance process, the security provided to U.S.
              facilities and personnel overseas, and the language training offered State
              Department officials. Because all 19 of the September 11 terrorist
              hijackers had been issued visas, State and other agencies have introduced
              changes to strengthen the visa process, including adding to its name-check
              system more names and information on persons who should not receive a
              visa. State also has increased its worldwide efforts to keep its facilities and
              personnel safe from terrorist attack and has increased efforts to improve
              staff skills in languages such as Arabic.

              Furthermore, since our January 2001 report, State has taken other steps to
              address some of the specific performance and management challenges that
              we previously reported. For example, State has developed a long-range
              overseas building plan to guide its effort to replace about 180 facilities
              overseas that have inadequate security. State also has begun, in
              conjunction with the Office of Management and Budget (OMB), a process
              to rightsize the U.S. presence overseas, particularly at its new facilities.
              While this report does not include new management challenges, it does

               U.S. General Accounting Office, Major Management Challenges and Program Risks:
              Department of State, GAO-01-252 (Washington, D.C.: January 2001).

              Page 2                                        GAO-03-107 State Department Challenges
                           Major Performance and Accountability

                           address important major issues with the challenges we previously
                           identified. Specifically, the performance and accountability challenges that
                           State continues to face are as follows:

Improve the Security       Protecting U.S. embassies and consulates, especially the employees and
                           their families, from terrorist attacks continues to be a critical management
and Maintenance of         issue; as we reported in 2001, it may be the most important management
U.S. Facilities Overseas   issue that State faces. The August 1998 bombings of the U.S. embassies in
                           Nairobi, Kenya, and Dar es Salaam, Tanzania, followed by the September 11
                           attacks and subsequent threats to U.S. interests overseas, have brought
                           into focus the seriousness of this continuing security challenge. Shortly
                           after the 1998 embassy bombings, State determined that it needed not only

                           Page 3                                   GAO-03-107 State Department Challenges
                        Major Performance and Accountability

                        to enhance security at all existing facilities but, in the long term, that it
                        needed to replace more than 180 embassies and consulates to improve
                        security, a program it has begun. State also has better identified its facility
                        maintenance requirements and has begun to address these needs.

Security Enhancements   State has continued its efforts, begun immediately after the 1998 embassy
                        bombings, to upgrade security at U.S. embassies and consulates around the
                        world. Actions to improve security have included additional guards, hostile
                        surveillance detection programs, the use of bomb detection equipment and
                        metal detectors, enhanced camera surveillance, fully armored vehicles,
                        improved computer technology, and in-country security training. In
                        addition, a number of perimeter security enhancements have been
                        installed, including antiram exterior walls that are designed to prevent
                        vehicle penetration, compound access and public access control facilities
                        at the perimeter wall and building entrance, bollards, shatter-resistant
                        window film, forced-entry doors and windows, and exterior lighting.
                        Figure 1 shows perimeter security enhancements built since the 1998
                        bombings at the U.S. Embassy in the Republic of Djibouti. The entrance
                        building, where visitors are admitted; the vehicle gate; and the concrete
                        barriers were all added as part of this program.

                        Page 4                                     GAO-03-107 State Department Challenges
                        Major Performance and Accountability

                        Figure 1: Security Enhancements at the Front Entrance to the U.S. Embassy in the
                        Republic of Djibouti

                        Although State has made these improvements and is continually seeking
                        new ways to enhance security, fundamental challenges remain. The major
                        challenge is that many diplomatic facilities do not provide sufficient
                        setback from busy city streets and/or are not sufficiently blast-resistant.
                        Therefore, they do not meet U.S. government security standards. State’s
                        Inspector General has determined that at most of the overseas embassies it
                        has inspected since September 11, security could easily become a problem.
                        In many cases, the only option for providing adequate security is to replace
                        the facilities. This will require significant additional resources and
                        successful implementation of key management initiatives.

Embassy and Consulate   Since the 1998 embassy bombings, State has embarked on the largest
Construction            overseas embassy construction program in its history. State estimated that
                        $16 billion or more might eventually be needed for facility replacement

                        Page 5                                      GAO-03-107 State Department Challenges
Major Performance and Accountability

To guide decision-making and implementation of this building program,
State prepared a long-range overseas building plan in mid-2001 and issued
an updated plan in 2002 that covers the first part of this replacement
program.2 State is using the plan, which covers fiscal years 2002–07, as a
tool to inform those involved in the budget decision-making process.
According to State, the plan provides the department’s most
comprehensive listing of the U.S. government’s most urgent overseas
diplomatic and consular facility needs. The plan encompasses more than
70 security capital projects, valued at more than $6.2 billion, and other
regular capital, rehabilitation, and maintenance and repair needs totaling
more than $2.5 billion. Each year the plan will be rolled forward to reflect
changes in requirements.

State further noted that it has instituted fundamental reforms and
operational changes in its construction program, including cutting costs of
planned construction projects, using standard designs, and reducing
construction duration through a “fast track” process. For example, State’s
cost-cutting efforts in 4 of its initial projects allowed it to avoid about $90
million in costs. In addition, State has established an industry advisory
panel to assist in planning and designing new diplomatic facilities.
Industries represented on the panel include construction, architecture and
engineering, facilities operations and maintenance, and environmental

As of December 2002, State had completed 3 embassy security
construction projects. Two more, in Nairobi, Kenya, and Dar es Salaam,
Tanzania, which were the targets of the 1998 bombings, are scheduled to be
opened in January 2003 with one additional embassy and one consulate
scheduled to open in April 2003. State’s Bureau of Overseas Buildings
Operations (OBO) has awarded design/build contracts for 14 additional
projects. Figure 2 shows the new embassy in Doha, Qatar. Figure 3 shows
the embassy, in Tunis, Tunisia, which was opened in November 2002, and
figure 4 shows the consulate building in Istanbul, Turkey, which is under

State expects to release the next updated plan in February 2003.

Page 6                                           GAO-03-107 State Department Challenges
Major Performance and Accountability

Figure 2: New U.S. Embassy Building in Doha, Qatar

Page 7                                     GAO-03-107 State Department Challenges
Major Performance and Accountability

Figure 3: Recently Completed Embassy Building in Tunis, Tunisia

Page 8                                      GAO-03-107 State Department Challenges
                       Major Performance and Accountability

                       Figure 4: Consulate Building under Construction in Istanbul, Turkey

                       State will face three continuing challenges throughout the life of this
                       construction program. These challenges are determining the appropriate
                       size of each new facility, meeting construction schedules within estimated
                       costs, and ensuring that State has the internal capacity to manage a large
                       number of projects.

Facility Maintenance   Our work, as well as that of State's Inspector General, has shown that
                       facility maintenance has presented a long-standing infrastructure challenge
                       for the department. In the early 1990s, we put State’s management of
                       overseas real property on the high-risk list, partly because facilities had not
                       been sufficiently maintained. The principal causes of these problems were
                       lack of funding, lack of professional attention to maintenance needs at the
                       post level, and lack of programs for maintenance and repair. We removed
                       this function from the high-risk list in 1995 because State had surveyed
                       maintenance conditions overseas and made some improvements. The
                       Inspector General had stated in 1999 that funding was part of the problem,
                       but it also reported that the department needed to do more to address its
                       maintenance and repair problems as a management concern.

                       OBO has made a concerted effort over the last 2 years to identify and
                       reduce the maintenance backlog. To identify its maintenance
                       requirements, State is performing global condition surveys (conducted
                       about every 5 years); annual facility inspections conducted by each post;
                       and fire safety, roof, environmental health and safety, and other specialized

                       Page 9                                       GAO-03-107 State Department Challenges
                      Major Performance and Accountability

                      inspections as well as considering recommendations made by the posts. In
                      addition, State is using a computerized database that tracks maintenance
                      requirements by post, the type of work needed, and projected funding.

                      As of May 2002, OBO had identified a backlog of more than $735 million in
                      maintenance and repair requirements. OBO has begun funding more than
                      $184 million in projects to reduce this backlog (the projects included
                      electrical upgrades, roof replacements, and fire safety improvements such
                      as sprinkler installation and fire alarm system installation), leaving more
                      than $550 million in unfunded requirements. About 55 percent of the
                      backlog is for general maintenance and repair requirements, and 35 percent
                      is for fire prevention and safety requirements; the remainder is for energy
                      retrofitting, installing generators and providing uninterrupted power
                      sources, and other projects. Given the deteriorated condition of many of
                      its facilities, reducing the maintenance backlog will be a continuing
                      challenge. OBO hopes to receive sufficient funding over the next several
                      years to eliminate the backlog.

Strengthen the Visa   Because all 19 of the September 11, 2001, terrorist hijackers were issued
                      visas, strengthening the visa function as an antiterrorism tool has taken on
Process as an         great significance. In deciding who should and should not receive a visa,3
Antiterrorism Tool    State must balance the need to facilitate legitimate travel with the need to
                      protect the United States against potential terrorists and to deter others
                      whose entry is considered likely to threaten U.S. national interests.4 Prior
                      to the terrorist attacks of September 11, State’s visa operations focused
                      primarily on screening applicants to determine whether they intended to
                      work or reside illegally in the United States. Consular officers were
                      encouraged to facilitate legitimate travel and, at some posts, faced
                      pressures to issue visas. State acknowledges the need to strengthen the
                      visa process.

                       State issued 7.6 million nonimmigrant visas in fiscal year 2001; another 1.1 million people
                      were granted immigrant status. In addition, during each of the last 3 fiscal years, there were
                      more than 16 million admissions (this figure does not include Canada) into the United States
                      of citizens from visa waiver countries for which a visa was not required.
                       A primary role of the Immigration and Naturalization Service is to determine at the port of
                      entry whether the visa holder is to be admitted to the United States and, if so, how long he
                      or she may remain in the country.

                      Page 10                                            GAO-03-107 State Department Challenges
Major Performance and Accountability

Since the September 11 attacks, the U.S. government has introduced some
changes to strengthen the visa process. For example, State has, with the
help of other agencies, almost doubled the names and information on
persons in the lookout system.5 In addition, State began seeking new or
additional interagency clearances on selected applicants to screen out
terrorists, although checks were not always being completed in a thorough
or timely manner. Although these actions have strengthened the visa
process, opinions and practices among and within overseas posts continue
to diverge regarding the authority of consular officers to deny questionable
applicants a visa and the role of the visa process in ensuring national
security. Similarly, opinions and practices differ regarding the appropriate
changes to individual posts’ visa policies and procedures that need to be
made given the need for heightened border security. Figure 5 shows an
example of a U.S. visa.

 In deciding who should receive a visa, State relies on its consular “lookout” system, a name-
check system that incorporates information from many agencies, as the primary basis for
identifying potential terrorists.

Page 11                                            GAO-03-107 State Department Challenges
Major Performance and Accountability

Figure 5: Example of a U.S. Visa

Although we recognize in our October 2002 report6 that the establishment
of the proposed Department of Homeland Security could affect the roles
and responsibilities of various entities involved in visa processing, we
recommended that State take actions to strengthen this process because it
is currently responsible for visa operations. These recommendations focus
on urgent and fundamental operational issues. We recommended that the
Secretary (1) develop a clear policy on the priority attached to addressing
national security concerns connected with the visa process, (2) develop
more comprehensive guidance on how posts should use the visa process to
screen against potential terrorists, (3) assess staffing requirements for visa
operations, and (4) expand consular training. To address visa issues
requiring coordination and actions across several agencies, we also
recommended that the Assistant to the President for Homeland Security
coordinate with State and other appropriate agencies to (1) establish a

 U.S. General Accounting Office, Border Security: Visa Process Should Be Strengthened as
an Antiterrorism Tool, GAO-03-132NI (Washington, D.C.: Oct. 21, 2002).

Page 12                                         GAO-03-107 State Department Challenges
Major Performance and Accountability

governmentwide policy on the level of evidence needed to deny a visa on
terrorism grounds, (2) reassess the various agency security checks on visa
applicants performed at their headquarters to verify that all are necessary
and are carried out promptly, (3) reexamine visa operations on a regular
basis to ensure that the operations are effectively contributing to the
overall national strategy for homeland security, (4) ensure that intelligence
and law enforcement agencies share information with State on persons
who should not receive visas, and (5) consider reassessing previously
issued visas for selected categories of applicants who may pose security
risks. State indicated that it would use our recommendations as a
roadmap for improvement within the Bureau of Consular Affairs as well as
in consular sections around the world. It stated it has taken steps to
implement a number of these recommendations, including the first two
addressed to the Secretary of State, and plans to work closely with the
Department of Homeland Security, once established, and other security
agencies to implement other recommendations. For example, State is
preparing new guidance for visa processing that the department believes
will provide greater worldwide uniformity in the visa process. In addition,
State said it added new consular positions in fiscal year 2002 and has
improved its consular officer training by adding components on counter-
terrorism trends and visa fraud and malfeasance.

As part of its efforts to strengthen the visa process, the administration is
reviewing the use of the Visa Waiver Program7 because some have
expressed concern that terrorists or other criminals may exploit it to enter
the United States. If countries are removed from this program or if it is
terminated, State would face a number of management challenges
concerning how to handle the increased visa processing workload. State
estimated that if the program were eliminated, it could take 2 to 4 years to
put the necessary people in place to handle the increased workload. We
estimated that the initial costs of this effort would likely range between
$739 million and $1.28 billion, depending on the percentage of the visa
applicants interviewed.8 Furthermore, the decision to eliminate the
program could negatively effect U.S. relations with participating countries
and U.S. tourism and business.

 Under the Visa Waiver Program, citizens of 28 countries are not required to obtain a visa to
enter the United States for visits of less than 90 days.
 U.S. General Accounting Office, Border Security: Implications of Eliminating the Visa
Waiver Program, GAO-03-38 (Washington, D.C.: Nov. 22, 2002).

Page 13                                            GAO-03-107 State Department Challenges
                       Major Performance and Accountability

Continue and Enhance   Since the 1998 terrorist bombings of two U.S. embassies in Africa, which
                       resulted in more than 220 deaths and 4,000 injuries, there have been
the Process of         recurring calls to rightsize the number and location of staff at U.S.
Rightsizing Embassy    diplomatic facilities. The administration showed its support for such
                       efforts in the August 2001 President’s Management Agenda by directing all
Staffing Levels        agencies overseas to rightsize their presence. OMB and State, in
                       coordination with other U.S. agencies operating overseas, are working to
                       develop a process for the rightsizing of U.S. embassies. Given the high
                       costs of maintaining more than 60,000 Americans and foreign nationals
                       overseas and the continuing security vulnerabilities of Americans
                       worldwide, the administration’s rightsizing initiatives aim to reconfigure
                       U.S. overseas staff to the minimum number necessary to meet U.S. foreign
                       policy goals.

                       In July 2002, we issued a report9 recommending the adoption of a general
                       framework for rightsizing that addresses security, agency mission, and cost
                       considerations, and we have recommended that this framework be used in
                       formulating the government’s approach to rightsizing (see fig. 6). Our
                       framework provides a systematic approach for assessing overseas
                       workforce size and identifying rightsizing options at the embassy level and
                       for making related decisions worldwide. By systematically developing
                       information on security, agency mission, and cost factors at embassies and
                       consulates, decision-makers could then better determine if rightsizing
                       actions are needed either to add or reduce staff or to change the staff mix
                       at an embassy or consulate.

                        U.S. General Accounting Office, Overseas Presence: Framework for Assessing Embassy
                       Staff Levels Can Support Rightsizing Initiatives, GAO-02-780 (Washington, D.C.: July 26,

                       Page 14                                          GAO-03-107 State Department Challenges
                                        Major Performance and Accountability

Figure 6: Framework for Embassy Rightsizing

                                        Options for reducing staff overseas could include relocating functions to
                                        the United States or to regional centers and outsourcing functions. Our
                                        analysis of the U.S. embassy in Paris demonstrated the framework’s
                                        viability by highlighting security concerns that may warrant staff
                                        reductions and by identifying options for relocating some staff to the
                                        United States and other locations in Europe.

                                        Rightsizing is directly related to embassy security and construction. If
                                        there are opportunities to reduce the number of people stationed overseas
                                        in vulnerable facilities, the number of people at risk can be reduced.
                                        Rightsizing also affects the size and cost of new, secure diplomatic facilities
                                        to be constructed. Therefore, it is critical that State and other agencies
                                        comprehensively consider rightsizing elements and options in determining
                                        overseas staffing requirements.

                                        State and OMB testified in May 2002 that they support the development of a
                                        rightsizing framework, and they outlined their plans to proceed with the
                                        rightsizing initiative. Both agencies are working together to establish a

                                        Page 15                                    GAO-03-107 State Department Challenges
                      Major Performance and Accountability

                      rightsized, regional presence in Frankfurt. In addition, the agencies are
                      undertaking an examination of overseas posts in Europe and Eurasia. To
                      aid both efforts, OMB, in coordination with State, recently sent
                      questionnaires to all chiefs of mission and agency heads at posts within this
                      bureau to obtain information on each post's mission priorities and
                      requirements, operational costs, mission security, and real estate. OMB's
                      questionnaire reflects the use of our framework.

Better Manage Human   In January 2001, we designated strategic human capital management as a
                      governmentwide high-risk area. We stated that this area needs urgent
Capital               attention to ensure that our national government functions in the most
                      economical, efficient, and effective manner possible to ensure maximum
                      performance and accountability for the benefit of the American public.
                      Since January 2001, State has directed significant attention to managing its
                      human capital in an effort to address the workforce and staffing issues that
                      have been noted in numerous reports and studies. State’s human capital
                      efforts have focused on three main areas: recruitment, training in
                      leadership and management skills, and workforce planning. In addition, in
                      response to management challenges that we and State’s Inspector General
                      identified, State has begun to address the staffing shortages at hardship
                      posts and correct foreign language shortfalls. However, State’s objective to
                      effectively manage its human capital remains a significant challenge.

                      In June 2002, we reported10 that because State is understaffed relative to its
                      permanent positions, it is difficult for the department to ensure that it has
                      the right people in the right place at the right time. Moreover, State’s
                      assignment system is not effectively meeting the staffing needs of hardship
                      posts, including some of strategic importance to the United States.
                      Because few employees bid on positions at some hardship posts, State has
                      difficulty filling these positions. As a result, diplomatic programs and
                      management controls at hardship posts could be vulnerable and posts’
                      ability to carry out U.S. foreign policy objectives effectively could be
                      weakened. We recommended that the Secretary of State improve State’s
                      human resources data, determine staffing priorities, consider a targeted
                      hiring strategy, and develop incentives and implement actions to steer
                      Foreign Service employees toward serving in hardship posts. Figure 7

                       U.S. General Accounting Office, State Department: Staffing Shortfalls and Ineffective
                      Assignment System Compromise Diplomatic Readiness at Hardship Posts, GAO-02-626
                      (Washington, D.C.: June 18, 2002).

                      Page 16                                         GAO-03-107 State Department Challenges
                                        Major Performance and Accountability

                                        identifies the countries for which the most and fewest employees bid on

Figure 7: Countries with the Most and Fewest Bids on Assignments

                                        Note: GAO analysis of State Department data.

                                        Page 17                                        GAO-03-107 State Department Challenges
Major Performance and Accountability

State believes that the Diplomatic Readiness Initiative—a plan to hire 1,158
people above attrition over 3 years, which is a major thrust of State’s
human capital efforts—will address the department’s staffing shortfalls.
Underpinning the 3-year initiative is a workforce planning system that
estimates State’s staffing requirements.11 In the first year of the initiative,
the department met its hiring goals, doubling the number of junior officers
that it had hired the previous year. Handling the influx of newly hired
Foreign Service officers could pose assignment, training, and mentoring
challenges as State seeks to offer these employees challenging, rewarding
careers while meeting critical service needs. State also has placed
increased emphasis on developing the leadership and management skills of
its workforce, producing a comprehensive curriculum to develop these
skills throughout a typical career.

In addition, State has begun to take actions—along the lines that we
recommended in our June 2002 report—that focus on meeting the staffing
needs of hardship posts. These actions include revising its assignment
system in an effort to ensure adequate staffing at hardship posts. The
revised system will assign employees to hardship posts first, effectively
prioritizing those posts by ensuring that most nonhardship posts and
domestic offices will not be able to compete with hardship posts for
employees. Moreover, the department continues to see positive results
from its Service Need Differential Program, which provides a financial
incentive for longer tours of service at hardship posts. More than half of
the eligible positions are filled with employees who signed up for a 3-year
tour, rather than the minimum 2-year tour. The department also is
exploring other incentives to entice more employees to bid on assignments
at hardship posts.

In a January 2002 report,12 we described State’s need to better address
current and projected shortages in foreign language skills. To address its
foreign language shortfalls, State plans to provide more opportunities for
language training as it hires more people. According to State, language
training hours rose about 12 percent, reflecting efforts since the terrorist
attacks on September 11, 2001, to develop staff language skills, particularly

 This workforce planning system, developed by State, includes an overseas staffing model
(already in use) to predict post staffing requirements and a domestic staffing model that is
nearing completion.
 U.S. General Accounting Office, Foreign Languages: Human Capital Approach Needed to
Correct Staffing and Proficiency Shortfalls, GAO-02-375 (Washington, D.C.: Jan. 31, 2002).

Page 18                                            GAO-03-107 State Department Challenges
                         Major Performance and Accountability

                         in Arabic, Pashtu, Farsi, and Urdu. Currently, more than 400 employees
                         receive language incentive pay through a program designed to encourage
                         employees to acquire, maintain, and use language skills that are in short
                         supply. In previous reports, we noted that State had difficulty generating a
                         consistent global aggregate measure of its actual language shortfalls
                         because of inadequate departmentwide data on the number of positions
                         filled with qualified staff. State is in the process of correcting this

Help to Reduce Illegal   Illicit drugs, primarily cocaine and heroin, continue to threaten the health
                         and well-being of American citizens. The principal source of cocaine and
Drugs Entering the       heroin entering the United States is South America—especially Colombia.
United States            In 1993, the United States developed a policy designed to reduce the
                         production of illicit drugs in South America and stem the flow of drugs
                         through Central America and the Caribbean before they reach the United
                         States. Our work has shown that the billions of dollars invested by the
                         United States and foreign countries to carry out this policy have resulted in
                         the arrest of major drug traffickers and the seizure of large amounts of
                         drugs. However, the availability of drugs in the United States has not been
                         materially reduced.

                         To continue to attack this problem, in July 2000, the United States agreed to
                         provide about $860 million to Colombia for fiscal years 2000-01. This
                         amount includes more than $640 million, largely administered by the State
                         Department, for helicopters and other equipment and for training
                         Colombia’s military and national police. Figure 8 shows one of the
                         helicopters operating in Colombia that was provided by the U.S.

                         Page 19                                   GAO-03-107 State Department Challenges
Major Performance and Accountability

Figure 8: Helicopter provided to Colombia by the U.S. Government

State’s Office of Aviation oversees the department’s contract to provide
support services for State’s counternarcotics program in the Andean
region. Although the Office of Aviation ensured that its contractor-run
aviation program operates safely and is physically secure, we reported that
it can do more.13 We noted several matters of concern that had not been
resolved, including forward operating locations in Colombia do not have
emergency vehicles; manuals for certain eradication aircraft do not reflect

 U.S. General Accounting Office, Drug Control: State Department Provides Required
Aviation Program Oversight, but Safety and Security Should Be Enhanced, GAO-01-1021
(Washington, D.C.: Sept. 14, 2001).

Page 20                                       GAO-03-107 State Department Challenges
Major Performance and Accountability

modifications to the aircraft; and the airfield at one forward operating
location and the Office of Aviation’s headquarters office in Colombia were
not secure. To improve the safety and security of its aviation program, we
recommended that the Secretary of State ensure that the Bureau for
International Narcotics and Law Enforcement Affairs follows up on the
concerns identified in recent reviews and either complete action to address
them or document why it should not.

In a closely allied effort, the U.S. Agency for International Development
(USAID) has provided assistance to help growers of illicit crops find legal
means of earning a living. In recent years, these activities—termed
alternative development—together with U.S.-supported interdiction and
eradication programs greatly reduced the amount of coca grown in Bolivia
and Peru. Meanwhile, coca cultivation and cocaine production increased
substantially in Colombia, making it the world’s leader in both areas.
USAID began targeting Colombia’s poppy-growing areas in 2000 and
expanded its program to include coca-growing areas in 2001. However, we
reported that USAID faced serious obstacles to achieving progress in
Colombia, and the experiences in Bolivia and Peru strongly suggested that
alternative development in Colombia would not succeed unless the
obstacles are overcome.14 Among them, the Colombian government does
not control many coca-growing areas, it has limited capacity to carry out
sustained interdiction operations, and its ability to effectively coordinate
eradication and alternative development activities remains uncertain.
Because of these serious obstacles, we recommended that the
Administrator, USAID, update USAID’s alternative development project
plans and spending proposals for Colombia to take into the account the
extreme difficulty of gaining access to the coca-growing regions. Since
then, USAID has revamped its alternative development in coordination
with State, the Bogotá Embassy, and the Colombian government to focus
its efforts on smaller communities and areas of the country that are more

Although most of this assistance has been delivered, illicit narcotics
production and trafficking continue largely unabated. In addition,
insurgents and paramilitary groups continue to control large parts of
Colombia. In fiscal year 2002, it received more than $380 million in U.S.

 U.S. General Accounting Office, Drug Control: Efforts to Develop Alternatives to
Cultivating Illicit Crops in Colombia Have Made Little Progress and Face Serious
Challenges, GAO-02-291 (Washington, D.C.: Feb. 8, 2002).

Page 21                                         GAO-03-107 State Department Challenges
                          Major Performance and Accountability

                          assistance for counternarcotics. For fiscal year 2003, the administration
                          has requested from Congress more than $530 million in additional
                          assistance—which State will continue to oversee—to address many of
                          these same purposes. In recent years, we have reported that State has had
                          difficulty effectively managing this assistance and demonstrating
                          measurable progress in reducing illicit drug activities in Colombia. We also
                          have continued to note that a sustained long-term commitment will be
                          necessary to notably reduce the level of illicit drugs entering the United

Address Additional        Because State’s management functions provide the foundation of support
                          for U.S. government operations around the world, it is incumbent on the
Challenges to Building    department to strive to become a high-performing organization. To do so, it
a High-Performing         needs to choose the best strategies for integrating its organizational
                          components, activities, core processes, and resources to support mission
Organization              priorities. In response to concerns that we and the Inspector General have
                          raised over the years, State has taken steps to (1) enhance its
                          communications and information technology and security, including
                          developing a common communications and knowledge-sharing system; (2)
                          improve its financial management systems; and (3) better utilize its
                          performance planning and reporting in accordance with the Results Act.

Enhance Overseas          While State continues to upgrade its information technology infrastructure
Communication,            and improve its system capabilities, it lacks the ability to share information
                          among agencies at overseas locations. Adding to this challenge are
Information Technology,   computer security concerns identified by us and by the independent
and Information Systems   auditor who reviewed State’s financial statements.
                          To improve communications and knowledge management15 and sharing
                          among agencies overseas, State has developed a long-term plan to acquire
                          and deploy a common knowledge management system that is intended to
                          get the right information to the right people at the right time. As part of the
                          early phase of this program, State deployed a pilot interagency
                          collaboration system to all U.S. diplomatic posts in Mexico. It has
                          completed pilot testing this system and will now evaluate the results to

                            Knowledge management involves the use of business processes and intellectual and
                          technological assets to promote and provide for collaboration and information exchange.

                          Page 22                                         GAO-03-107 State Department Challenges
Major Performance and Accountability

determine how well the system supports day-to-day operations and to
identify needed modifications. State expects to begin acquiring, deploying,
and implementing an operational system worldwide when additional
funding is available.

In November 2001, we reported16 that State’s informal management
controls would not be sufficient for acquiring and deploying the
operational system that will perform mission-critical functions. We
therefore recommended that State establish more rigorous management
controls, such as a multiagency process for acquiring and deploying the
operational system. State has not yet implemented our recommendations,
but it indicated that it plans to do so after completing the pilot and before
acquiring and deploying the system worldwide. Such controls are
necessary to ensure that the operational system will deliver needed
capabilities on time and within budget.

We reported departmentwide computer security as a management
challenge in 200117 because information systems security problems that we
identified in 1998, including access control and security program
management weaknesses, persisted and posed significant challenges for
the department. State’s fiscal year 2001 independent auditor’s report,18
completed in early 2002, stated that information systems security was a
material weakness that could be exploited, possibly compromising the
information State uses to prepare its financial statements. The auditor’s
report identified significant information system security weaknesses that
made the department’s systems networks for domestic operations
vulnerable to unauthorized access. It added that although State had
implemented the recommendations we made in 1998 in fiscal year 2000,
this did not demonstrate that the material weakness in this area had
necessarily been corrected.

 U.S. General Accounting Office, Information Technology: State Department Led Overseas
Modernization Program Faces Management Challenges, GAO-02-41 (Washington, D.C.:
Nov. 16, 2001).
 U.S. Department of State, Accountability Report Fiscal Year 2001 (Washington, D.C.:
February 2002). The independent auditor’s report is included in State’s Accountability

Page 23                                          GAO-03-107 State Department Challenges
                             Major Performance and Accountability

                             State subsequently performed additional access control tests that also
                             identified significant weaknesses. State also has initiated a program to
                             assess its information systems security on a comprehensive basis.
                             However, the independent auditor noted in its fiscal year 2001 report that
                             State had not tested the systems access control sufficiently before
                             completing its work to ensure that this weakness no longer existed. Given
                             the auditor’s opinion and the weaknesses that State identified, we continue
                             to regard information systems security as a management challenge that
                             State must continue to address.

Improve Financial            State continued to make progress toward resolving its long-standing
Management Capabilities      problems caused by the absence of an effective financial management
                             system that can assist managers in making “cost-based” decisions. Since
                             fiscal year 1997, State has received unqualified opinions on its financial
                             statements. State has steadily improved the timeliness of its reporting and,
                             starting with the fiscal year 2000 statements, has met the mandated
                             deadlines for submitting its annual financial statements. Having also
                             resolved a number of its internal control weaknesses, State is proceeding
                             with planned efforts to improve the systems and processes it needs to
                             protect its assets and routinely produce timely and reliable financial

                             State needs to continue to bring its systems into full compliance with
                             federal financial systems requirements. To enhance the ability of its
                             officials to make sound decisions that promote effective and efficient use
                             of federal funds, State also needs to resolve internal control weaknesses to
                             ensure the availability of timely and reliable financial information.
                             According to the independent auditor’s report attached to State’s
                             Accountability Report for fiscal year 2001, State’s financial management
                             systems do not comply with certain laws and regulations, including the
                             Chief Financial Officers Act of 1990. The act requires the development and
                             maintenance of an integrated accounting and financial management
                             system. According to the act, the system should provide complete, reliable,
                             and timely information that meets the financial information needs of an
                             agency’s management, and it should provide a systematic measurement of

Better Utilize Performance   The Results Act provides a framework for resolving management
Planning and Reporting       challenges and for providing greater accountability of State’s programs and
                             operations. As required by the Results Act, State has clearly articulated its

                             Page 24                                   GAO-03-107 State Department Challenges
Major Performance and Accountability

strategic and diplomatic readiness goals of regional security, economic
growth, and more. Our review of State’s performance plan for 2002 showed
a significant improvement over its plan for the previous fiscal year.
However, State’s annual performance report for fiscal year 2000 showed
many of the weaknesses that we noted in our review of State’s 1999
performance report, particularly a failure to show clear progress toward
accomplishing performance goals.

State’s fiscal year 2002 performance plan was a significant improvement
over previous Results Act products. For the 2002 plan, State developed a
unified, agencywide approach to replace the regional focus it had used in
the previous year’s plan. This approach resulted in more clarity and the
elimination of redundant material, and the report more clearly linked the
various desired outcomes, performance goals, strategies, and performance
indicators. However, some weaknesses remain, such as the output (rather
than outcome) orientation of many indicators, vague performance targets,
and a lack of clear descriptions of how State’s efforts relate to the efforts of
other agencies and of where interagency activity is taking place. State
Department officials commented that they are making further
improvements to the performance planning process, including making the
performance indicators more outcome-oriented and the targets more
explicit and outlining the resources the department anticipates spending on
each strategic goal. Some of these improvements are reflected in a recently
issued performance plan for fiscal year 2003. State said it would be making
additional improvements in a performance plan and report to be issued in
early 2003.

Page 25                                     GAO-03-107 State Department Challenges
Major Performance and Accountability

From our analysis of State’s fiscal year 2000 performance report, it was
difficult to determine the level of progress toward accomplishing
performance goals. Because of a lack of linkages between activity-based
performance indicators and desired outcomes, the 2000 performance
report did not always clearly describe what State sought to accomplish.
Also, as in past years, it failed to report on many indicators prescribed by
the performance plan for 2000. However, the department stated that in the
2002 performance report it would report on every indicator. Furthermore,
the report did not adequately explain why it did not address certain
indicators, why expectations were not met on others, and what strategies
would be used to achieve the unmet and unreported targets. As a result, we
recommended19 that in future years, State report on all performance goals
and indicators outlined in corresponding performance plans, explain
clearly and specifically why it did not achieve goals and targets, and
discuss actions that it will take to achieve the unmet goals.

State agreed with our assessment and has since made strides in addressing
our recommendation. For its 2001 performance report, State made a
greater effort to report on all indicators for the performance goals outlined
in its 2001 performance plan. In addition, State made a greater effort to
discuss the reasons why it did not meet some performance targets and the
strategies it would use to reach these goals. Probably because of the vague
performance goals and targets set in the performance plan for 2001, the
information that State reported for some targets is still insufficient to
assess its progress toward achieving its goals.

 U.S. General Accounting Office, Department of State: Status of Achieving Key Outcomes
and Addressing Major Management Challenges, GAO-02-42 (Washington, D.C.: Dec. 7,

Page 26                                        GAO-03-107 State Department Challenges
GAO Contacts

               Subject(s) covered in this report                        Contact person
               Improve the security and maintenance of U.S.             Jess T. Ford, Director
               facilities overseas                                      International Affairs and Trade
                                                                        (202) 512-4268
               Strengthen the visa process as an antiterrorism tool     fordj@gao.gov

               Continue and enhance the process of rightsizing
               embassy staffing levels

               Better manage human capital

               Help reduce illegal drugs entering the United States

               Better utilize performance planning and reporting
               Enhance overseas communication and information           Joel C. Willemssen, Managing
               technology                                               Director
                                                                        Information Technology
                                                                        (202) 512-6408
               Enhance information systems security                     Robert F. Dacey, Director
                                                                        Information Technology
                                                                        (202) 512-3317
               Improve financial management capabilities                Gregory D. Kutz, Director
                                                                        Financial Management and
                                                                        (202) 512-9095

               Page 27                                             GAO-03-107 State Department Challenges
Related GAO Products

Overseas Security,         Overseas Presence: Framework for Assessing Embassy Staff Levels Can
Presence, and Facilities   Support Rightsizing Initiatives. GAO-02-780. Washington, D.C.: July 26,

                           Current Law Limits the State Department’s Authority to Manage Certain
                           Overseas Properties Cost Effectively. GAO-02-790R. Washington, D.C.: July
                           11, 2002.

                           State Department: Sale of Unneeded Overseas Property Has Increased,
                           but Further Improvements Are Necessary. GAO-02-590. Washington, D.C.:
                           June 11, 2002.

                           Overseas Presence: Observations on a Rightsizing Framework.
                           GAO-02-659T. Washington, D.C.: May 1, 2002.

                           Overseas Presence: More Work Needed on Embassy Rightsizing.
                           GAO-02-143. Washington, D.C.: November 27, 2001.

                           State Department: Decision to Retain Embassy Parking Lot in Paris,
                           France, Should Be Revisited. GAO-01-477. Washington, D.C.: April 13, 2001.

                           Embassy Construction: Better Long-Term Planning Will Enhance
                           Program Decision-making. GAO-01-11. Washington, D.C.: January 22,

                           State Department: Overseas Emergency Security Program Progressing,
                           but Costs Are Increasing. GAO/NSIAD-00-83. Washington, D.C.: March 8,

Visa Issuance              Border Security: Implications of Eliminating the Visa Waiver Program.
                           GAO-03-38. Washington, D.C.: November 22, 2002.

                           Border Security: Visa Process Should Be Strengthened as an
                           Antiterrorism Tool. GAO-03-132NI. Washington, D.C.: October 21, 2002.

                           Visa Issuance: Observations on the Issuance of Visas for Religious
                           Workers. GAO/T-NSIAD-00-207. Washington, D.C.: June 29, 2000.

                           Page 28                                 GAO-03-107 State Department Challenges
                           Related GAO Products

Drug Control               Drug Control: Efforts to Develop Alternatives to Cultivating Illicit Crops
                           in Colombia Have Made Little Progress and Face Serious Obstacles.
                           GAO-02-291. Washington, D.C.: February 8, 2002.

                           Drug Control: State Department Provides Required Aviation Program
                           Oversight, but Safety and Security Should Be Enhanced. GAO-01-1021.
                           Washington, D.C.: September 14, 2001.

                           Drug Control: U.S. Assistance to Colombia Will Take Years to Produce
                           Results. GAO-01-26. Washington, D.C.: October 17, 2000.

                           Drug Control: Challenges in Implementing Plan Colombia. GAO-01-76T.
                           Washington, D.C.: October 12, 2000.

                           Drug Control: U.S. Efforts in Latin America and the Caribbean.
                           GAO/NSIAD-00-90R. Washington, D.C.: February 18, 2000.

Human Capital Management   State Department: Staffing Shortfalls and Ineffective Assignment System
                           Compromise Diplomatic Readiness at Hardship Posts. GAO-02-626.
                           Washington, D.C.: June 18, 2002.

                           Foreign Languages: Human Capital Approach Needed to Correct Staffing
                           and Proficiency Shortfalls. GAO-02-375. Washington, D.C.: January 31,

Information Management     Information Technology: State Department Led Overseas Modernization
                           Program Faces Management Challenges. GAO-02-41. Washington, D.C.:
                           November 16, 2001.

                           Electronic Signature: Sanction of the Department of State’s System.
                           GAO/AIMD-00-227R. Washington, D.C.: July 10, 2000.

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

                           Page 29                                  GAO-03-107 State Department Challenges
                            Related GAO Products

Strategic and Performance   Department of State: Status of Achieving Key Outcomes and Addressing
Planning and Foreign        Major Management Challenges. GAO-02-42. Washington, D.C.: December
                            7, 2001.
Affairs Management
                            Performance and Accountability Series: Major Management Challenges
                            and Program Risks, Department of State. GAO-01-252. Washington, D.C.:
                            January 2001.

                            Observations on the Department of State's Fiscal Year 1999 Performance
                            Report and Fiscal Year 2001 Performance Plan. GAO/NSIAD-00-189R.
                            Washington, D.C.: June 30, 2000.

                            Page 30                               GAO-03-107 State Department Challenges
Performance and Accountability and High-
Risk Series

              Major Management Challenges and Program Risks: A Governmentwide
              Perspective. GAO-03-95.

              Major Management Challenges and Program Risks: Department of
              Agriculture. GAO-03-96.

              Major Management Challenges and Program Risks: Department of
              Commerce. GAO-03-97.

              Major Management Challenges and Program Risks: Department of
              Defense. GAO-03-98.

              Major Management Challenges and Program Risks: Department of
              Education. GAO-03-99.

              Major Management Challenges and Program Risks: Department of
              Energy. GAO-03-100.

              Major Management Challenges and Program Risks: Department of
              Health and Human Services. GAO-03-101.

              Major Management Challenges and Program Risks: Department of
              Homeland Security. GAO-03-102.

              Major Management Challenges and Program Risks: Department of
              Housing and Urban Development. GAO-03-103.

              Major Management Challenges and Program Risks: Department of the
              Interior. GAO-03-104.

              Major Management Challenges and Program Risks: Department of
              Justice. GAO-03-105.

              Major Management Challenges and Program Risks: Department of
              Labor. GAO-03-106.

              Major Management Challenges and Program Risks: Department of State.

              Major Management Challenges and Program Risks: Department of
              Transportation. GAO-03-108.

              Page 31                              GAO-03-107 State Department Challenges
Performance and Accountability and High-
Risk Series

Major Management Challenges and Program Risks: Department of the
Treasury. GAO-03-109.

Major Management Challenges and Program Risks: Department of
Veterans Affairs. GAO-03-110.

Major Management Challenges and Program Risks: U.S. Agency for
International Development. GAO-03-111.

Major Management Challenges and Program Risks: Environmental
Protection Agency. GAO-03-112.

Major Management Challenges and Program Risks: Federal Emergency
Management Agency. GAO-03-113.

Major Management Challenges and Program Risks: National
Aeronautics and Space Administration. GAO-03-114.

Major Management Challenges and Program Risks: Office of Personnel
Management. GAO-03-115.

Major Management Challenges and Program Risks: Small Business
Administration. GAO-03-116.

Major Management Challenges and Program Risks: Social Security
Administration. GAO-03-117.

Major Management Challenges and Program Risks: U.S. Postal Service.

High-Risk Series: An Update. GAO-03-119.

High-Risk Series: Strategic Human Capital Management. GAO-03-120.

High-Risk Series: Protecting Information Systems Supporting the
Federal Government and the Nation’s Critical Infrastructures. GAO-03-

High-Risk Series: Federal Real Property. GAO-03-122.

Page 32                                    GAO-03-107 State Department Challenges
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