oversight

Major Management Challenges and Program Risks: Department of State

Published by the Government Accountability Office on 1999-01-01.

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

                United States General Accounting Office

GAO             Performance and Accountability
                Series




January 1999
                Major Management
                Challenges and Program
                Risks
                Department of State




GAO/OCG-99-12
GAO   United States
      General Accounting Office
      Washington, D.C. 20548

      Comptroller General
      of the United States



      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



            Page 2   GAO/OCG-99-12 Department of State Challenges
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




            Page 3   GAO/OCG-99-12 Department of State Challenges
Contents



Overview                                                             6

Major                                                               12
Performance and
Management
Issues
Related GAO                                                         34
Products
Performance and                                                     37
Accountability
Series




                  Page 4   GAO/OCG-99-12 Department of State Challenges
Page 5   GAO/OCG-99-12 Department of State Challenges
Overview



           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.



           Page 6   GAO/OCG-99-12 Department of State Challenges
                    Overview




The Challenges

Enhancing the       In the wake of the bombing of the U.S.
Management of       embassies in Kenya and Tanzania, the
Security Programs   Congress provided State $1.45 billion in
for Overseas        emergency funding in the Omnibus
Personnel and
                    Consolidated and Emergency Supplemental
Property
                    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           We have reported that the Department of
Information and     State relied on outdated and unsecured
Financial           information and financial management
Management          systems that are vulnerable to Year 2000
Systems

                    Page 7     GAO/OCG-99-12 Department of State Challenges
Overview




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.


Page 8     GAO/OCG-99-12 Department of State Challenges
                       Overview




                       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   State processes more than 8 million
the Visa Process       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            In a major effort to improve the efficiency
Reorganizing           and effectiveness of U.S. foreign affairs
Foreign Affairs        operations, the Congress directed the
Agencies               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


                       Page 9     GAO/OCG-99-12 Department of State Challenges
               Overview




               whether State can integrate these agencies in
               a manner that reduces overall costs while
               enhancing capability.


Progress and   State is making progress in addressing these
Next Steps     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


               Page 10    GAO/OCG-99-12 Department of State Challenges
Overview




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.




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Major Performance and Management
Issues


            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

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

            Page 12       GAO/OCG-99-12 Department of State Challenges
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                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.


Enhancing the   The need to adequately protect employees
Management of   and their families overseas may very well be
Security        the single most important management issue
Programs for    currently facing the State Department. The
Overseas        acts of terrorism in Kenya and Tanzania
                claimed more than 260 lives and injured
Personnel and
                thousands in August 1998. Worldwide,
Property        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


                Page 13   GAO/OCG-99-12 Department of State Challenges
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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


Page 14   GAO/OCG-99-12 Department of State Challenges
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Issues




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.


Page 15   GAO/OCG-99-12 Department of State Challenges
    Major Performance and Management
    Issues




•   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


    Page 16   GAO/OCG-99-12 Department of State Challenges
              Major Performance and Management
              Issues




              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   Benjamin F. Nelson, Director
              International Relations and Trade Issues
              National Security and International
                Affairs Division
              (202) 512-4128
              nelsonb.nsiad@gao.gov


Improving     State’s information resource management
Information   (IRM) infrastructure has historically been
Management    inadequate to support the Department’s core
Systems       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


              Page 17   GAO/OCG-99-12 Department of State Challenges
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Issues




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




Page 18   GAO/OCG-99-12 Department of State Challenges
Major Performance and Management
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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;

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).


Page 19      GAO/OCG-99-12 Department of State Challenges
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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


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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


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Issues




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.




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).

Page 22      GAO/OCG-99-12 Department of State Challenges
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               Issues




Key Contacts   Benjamin F. Nelson, Director
               International Relations and Trade Issues
               National Security and International
                 Affairs Division
               (202) 512-4128
               nelsonb.nsiad@gao.gov

               Jack L. Brock, Jr., Director
               Governmentwide and Defense Information
                 Systems
               Accounting and Information Management
                 Division
               (202) 512-6240
               brockj.aimd@gao.gov


Improving      One of State’s long-standing shortcomings
Financial      has been the absence of an effective
Management     financial management system that can assist
Systems        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


               Page 23   GAO/OCG-99-12 Department of State Challenges
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Issues




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


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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


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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.




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                     Major Performance and Management
                     Issues




Key Contacts         Lisa G. Jacobson
                     Director, Defense Financial Audits
                     Accounting and Information Management
                       Division
                     (202) 512-9095
                     jacobsonl.aimd@gao.gov

                     Benjamin F. Nelson, Director
                     International Relations and Trade Issues
                     National Security and International
                       Affairs Division
                     (202) 512-4128
                     nelsonb.nsiad@gao.gov


Effectively       The Immigration and Naturalization Service
Managing the Visa (INS) estimated that as of October 1996,
Process           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


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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


Page 28   GAO/OCG-99-12 Department of State Challenges
                  Major Performance and Management
                  Issues




                  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       Benjamin F. Nelson, Director
                  International Relations and Trade Issues
                  National Security and International
                    Affairs Division
                  (202) 512-4128
                  nelsonb.nsiad@gao.gov


Effectively       The long-planned reorganization of the
Reorganizing      government’s foreign affairs agencies is
Foreign Affairs   under way. In April 1997, the White House
Agencies          announced a plan to put matters of
                  international arms control, public diplomacy,
                  and other functions within a “reinvented”
                  State Department. In October 1998, the


                  Page 29   GAO/OCG-99-12 Department of State Challenges
Major Performance and Management
Issues




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


Page 30   GAO/OCG-99-12 Department of State Challenges
                Major Performance and Management
                Issues




                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     Benjamin F. Nelson, Director
                International Relations and Trade Issues
                National Security and International
                  Affairs Division
                (202) 512-4128
                nelsonb.nsiad@gao.gov


Strengthening   State needs to strengthen its strategic and
Strategic and   performance planning as part of its overall
Performance     efforts to improve management. In its first
Planning        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.


                Page 31   GAO/OCG-99-12 Department of State Challenges
Major Performance and Management
Issues




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


Page 32   GAO/OCG-99-12 Department of State Challenges
              Major Performance and Management
              Issues




              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   Benjamin F. Nelson, Director
              International Relations and Trade Issues
              National Security and International
                Affairs Division
              (202) 512-4128
              nelsonb.nsiad@gao.gov




              Page 33   GAO/OCG-99-12 Department of State Challenges
Related GAO Products



Overseas Security Overseas Presence: Staffing at U.S.
and Presence      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           Department of State IRM: Modernization
Management            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).


                      Page 34   GAO/OCG-99-12 Department of State Challenges
                   Related GAO Products




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


Foreign Affairs    Foreign Affairs Management: Major
Organization and   Challenges Facing the Department of State
Management         (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      The Results Act: Observations on the
Performance        Department of State’s Fiscal Year 1999
Planning           Annual Performance Plan (GAO/NSIAD-98-210R,
                   June 17, 1998).




                   Page 35    GAO/OCG-99-12 Department of State Challenges
Related GAO Products




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




Page 36    GAO/OCG-99-12 Department of State Challenges
Performance and Accountability Series



             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)




             Page 37   GAO/OCG-99-12 Department of State Challenges
Performance and Accountability Series




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)




Page 38    GAO/OCG-99-12 Department of State Challenges
Performance and Accountability Series




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.


Page 39    GAO/OCG-99-12 Department of State Challenges
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