MISSION 

Create a more secure, democratic, and prosperous world

for the benefit of the American people and the

international community.

V ALUES 

Loyalty: Commitment to the United States and the American people.

Character: Maintenance of high ethical standards and integrity.

Service: Excellence in the formulation of policy and management

practices with room for creative dissent. Implementation of policy

and management practices, regardless of personal views.

Accountability: Responsibility for achieving United States foreign 

policy goals while meeting the highest performance standards.

Community: Dedication to teamwork, professionalism, and the 

customer perspective.

MISSION & VALUES 

United States Department of State
2

I am pleased to present the Department of State’s Performance and Accountability Report

for Fiscal Year 2003. The report presents our audited financial statements and measures

our performance against the major objectives we set for our agency.

The Department of State’s mission is to help President Bush shape a world of greater security,

freedom and prosperity for America’s sake and for the sake of people all around the globe

who seek a better future for themselves and their children.

The men and women of American diplomacy are playing an instrumental role in marshaling

and advancing international support for the worldwide campaign against terrorism. We serve

at the forefront of the international reconstruction efforts in Afghanistan and Iraq. We are

working to strengthen our alliances and partnerships in Europe, Asia and the Western

Hemisphere to meet 21st century security challenges. With faithful friends and former foes

alike we are working to stem the proliferation of weapons of mass destruction and bring an end to conflicts.

Our embassies and consulates assist U.S. citizens abroad who are victims of serious crime and during times of instability. We are

helping to build up the law enforcement capabilities of foreign governments to stop drug-traffickers and other criminals before

their poison reaches American soil. We are protecting our homeland by strengthening the process for identifying suspected

terrorists and preventing them from obtaining visas to enter the United States.

We promote respect for human rights and the growth of democracy in every region. American diplomacy is forging partnerships

with citizens’ groups, the private sector and governments all around the world to turn the tide of HIV/AIDS. Through our public

diplomacy, we are reaching out to foreign audiences to better acquaint them with our country and counter anti-Americanism

by establishing a foundation of information and understanding. And we are advancing a new international consensus on how

to help poor countries onto the path of development through good governance, sound economic, trade and environmental

policies, and wise investments in their people.

In conducting our vital mission, we have been effective and accountable stewards of the taxpayers’ money. For the seventh year

in a row, independent auditors have given our financial statements an unqualified (“clean”) opinion. I am also proud to certify

that for the second year in a row, the Department’s management control systems meet the requirements of the Federal Managers’

Financial Integrity Act (FMFIA). For financial systems, the Department of State’s one remaining material nonconformance was

closed in Fiscal Year 2003 and I am pleased to report that the Department’s financial systems are in substantial compliance with

the requirements of FMFIA. We have made every effort to verify the accuracy and ensure the completeness of the financial

and performance data presented in this report. In the few instances where information has not been provided, we give specific

reasons why.

With the support of President Bush and broad bipartisan backing from Congress, the Department of State has made significant

progress building capacity in three fundamental areas: human resources, information technology, and embassy construction and

security. We must keep the focus on these key areas in the demanding years ahead, so that the dedicated men and women of the

State Department have the training, tools and infrastructure they need to serve our country safely and successfully across the globe

on the frontlines of freedom.

Colin L. Powell

Secretary of State

UNITED STATES DEPARTMENT OF STATE

MESSAGE FROM THE SECRETARY
3

UNITED STATES DEPARTMENT OF STATE

The Performance and Accountability Report for Fiscal Year 2003 (Report) provides our most

important financial and program performance information for the United States Department

of State. It also is our principal publication and report to the President and the American people on

our stewardship, management, and leadership of the public funds to which we have been entrusted.

It has been an exceptional year. For the seventh consecutive year, the independent CPA firm

selected by our Inspector General, has issued an unqualified (“clean”) opinion on the Department’s

consolidated financial statements. This is the best possible audit result. With it the American people

can have confidence that the financial statement information presented here is both accurate and

reliable. Along with this opinion, the Department achieved a number of other key goals.

For the first time since the inception of the Chief Financial Officers (CFO) Act, the independent

CPA firm has reported no material weakness in internal control;

Also for the first time, the Secretary has been able to issue an unqualified Statement of

Assurance under the Federal Managers’ Financial Integrity Act (FMFIA) on both the Department’s management controls and its

financial systems;

For financial systems, the Department successfully replaced two obsolete financial systems with the new Regional Financial

Management System (RFMS) implemented at all overseas posts. RFMS provides the Department the ability to know the worldwide

status of accounts on a timely basis, something never before possible. In addition, the Department’s one remaining material

nonconformance under FMFIA was closed in 2003 and the independent CPA firm has reduced the previously reported material

weakness in information systems security to a reportable condition for FY 2003. After assessing the audit results as of September 30,

2003, and in consideration of the foregoing developments and additional improvements to our financial systems in the first quarter

of FY 2004, we believe that the Department’s financial management systems substantially comply with the requirements of the

Federal Financial Management Improvement Act of 1996 (FFMIA). The Department will continue its ongoing effort to enhance its

financial systems in FY 2004 and beyond;

Recognizing the quality of our reporting, for the second year in a row, the Department received the most prestigious award in Federal

government financial reporting, the Association of Government Accountants’ Certificate of Excellence in Accountability Reporting,

one of only three cabinet-level departments to win this award in 2003;

As part of the commitment to the very best financial operations, the Department has been consolidating and streamlining financial

operations worldwide. In 2003, we successfully relocated operations from the Paris Financial Service Center (FSC) to the new

Charleston, South Carolina FSC and Bangkok, Thailand FSC, and finalized plans for relocating work to Charleston from our

Washington, D.C. operations; and

With USAID, the Department developed the first-ever joint State-USAID Strategic Plan that will ensure better alignment between

foreign policy and development assistance, and to further improve operations, is implementing with USAID a common worldwide

financial systems platform.

For the past three years, President Bush has led the effort on management reform through his President’s Management Agenda

initiatives. Two of these are Improved Financial Performance, and Budget and Performance Integration. In support of this strategy, the

Department will continue integrating budgeting and planning into all aspects of our stewardship, and provide timely and accurate

financial and performance information that facilitates foreign policy decision-making.

While there are no material weaknesses or nonconformances reported under FMFIA, the Department continues to maintain a robust

system of management controls overseen by senior leadership. The Department’s Management Control Steering Committee (MCSC)

meets regularly to review pending concerns raised by the Inspector General, the independent CPA firm, GAO and others.

In addition to financial performance, this Report also covers policy and program performance — how well the Department implemented

the foreign policy goals of the President and Secretary of State. The reader can see our nation’s foreign policy strategic goals, along with

performance measures, performance trends, and results achieved. From the very first strategic objective, “Achieve Peace and Security,”

to “Strengthen Diplomatic and Program Capabilities,” we present to the American people a transparent assessment of results for the

prior fiscal year. Encompassing the war on terror, the struggle to end regional conflicts, to programs on the rule of law, and the fight

against HIV/AIDs and other diseases, the Performance Section of this Report describes our work. It also shows our effort to fulfill the

Department’s mission, “to create a more secure, democratic, and prosperous world, for the benefit of the American people and the

international community.”

Christopher B. Burnham

Assistant Secretary for Resource Management and Chief Financial Officer 

December 31, 2003 

MESSAGE FROM THE ASSISTANT SECRETARY AND CHIEF FINANCIAL OFFICER
4

UNITED STATES DEPARTMENT OF STATE

MISSION AND ORGANIZATION

American diplomacy in the 21st century is based on fundamental beliefs: our freedom is best protected by

ensuring that others are free; our prosperity depends on the prosperity of others; and our security relies on a

global effort to secure the rights of all. The history of the American people is the chronicle of our efforts to live

up to our ideals. In this moment in history, we recognize that the United States has an immense responsibility

to use its power constructively to advance security, democracy, and prosperity around the globe.

Diplomacy is an instrument of power. It is essential for maintaining effective and international relationships,

and a principal means by which the United States defends its interests, responds to crises and achieves its foreign

policy goals. The Department of State is the lead institution for the conduct of American diplomacy; its mission

is based on the Secretary of State’s role as the President’s principal foreign policy advisor.

MISSION

Create a more secure, democratic, and prosperous world for the benefit of 

the American people and the international community.

OUR ORGANIZATION

Established in 1789 to advise the President on formulating and conducting foreign relations, the Department is

the oldest and most senior cabinet agency. The Secretary of State heads the Department and serves as the

President’s principal advisor on the conduct of foreign relations. The Deputy Secretary and six Under Secretaries

aid the Secretary of State, serving as the Department’s board of directors on foreign policy (Appendix A).

Each specializes in one of the following areas: political affairs; economic, business and agricultural affairs; arms

control and international security; global affairs; public diplomacy and public affairs; and management.

Organizational Structure in Washington, DC

At its headquarters in Washington, D.C., the Department’s mission is carried out through six regional bureaus,

each of which are responsible for a specific geographic region of the world. The regional bureaus and the

overseas posts are supported by functional bureaus and management bureaus which provide policy guidance,

program management and administrative expertise in matters such as economics, intelligence, human rights,

counterterrorism, humanitarian assistance, and consular services.

Organizational Structure at Embassies

In each Embassy, the Chief of Mission (usually an Ambassador) is responsible for executing U.S. foreign policy

goals and coordinating and managing all U.S. Government functions in the host country. The President appoints

each Ambassador, whom the Senate confirms. Chiefs of Mission report directly to the President through the

Secretary. The Diplomatic Mission is also the primary U.S. Government contact for Americans overseas and foreign

nationals of the host country. The Mission serves the needs of Americans traveling and working abroad, and

supports Presidential and Congressional delegations visiting the country. The Department operates more than

260 embassies, consulates and other posts worldwide.
Summary of Full-time Permanent Employees

25,000

20,000

15,000

10,000

0

Foreign

Service

Nationals

Foreign

Service

Civil

Service

30,000

5,000

* Reflects integration of employees of the United States Information Agency (USIA) and the Arms Control Disarmament Agency (ACDA) .

FY 1997

7,872

7,724

4,977

20,573

FY 1996

8,212

7,994

5,021

21,227

FY 1998

7,637

7,769

5,165

20,571

FY 1999

7,192

8,169

5,498

20,859

FY 2000*

9,730

9,023

6,486

25,239

FY 2001

9,852

9,162

6,590

25,604

FY 2002

9,526

9,931

6,999

26,456

FY 2003

9,897

10,579

7,731

28,207

5

UNITED STATES DEPARTMENT OF STATE

Other Key Locations and Offices

The Department also operates national passport centers in Portsmouth, New Hampshire and Charleston, South

Carolina; national visa centers in Portsmouth, New Hampshire and Williamsburg, Kentucky; two foreign press

centers; one reception center; 13 passport agencies; five offices that provide logistics support for overseas

operations; 22 security offices; and two financial service centers.

OUR PEOPLE

The Department’s workforce consists of more than 28,000 employees in the Civil Service and Foreign Service,

and Foreign Service Nationals in the 162 countries where the United States is represented. The pie charts below

show the distribution of the workforce among these three categories and show what proportion of the workforce

is located overseas.

Since FY 1996, the total number of employees at the Department has increased by 33% with the greatest

increase manifested in the Department’s civil service staff which has increased by 54%. Over the past year, the

increases in staff reflect the Department’s increased emphasis in the areas of security, public diplomacy and

counterterrorism.

Workforce Composition Full-time Permanent Employees

As of September 30, 2003

Foreign

Service

38%

Foreign

Service

National

35%

Civil

Service

27%

Workforce Location

Full-time Permanent Employees

As of September 30, 2003

Domestic

41%

Overseas

59%

WHERE WE ARE LOCATED

As shown in Appendix A, the Department’s embassies, consulates, and passport/visa centers are located

throughout the world in support of America’s foreign policy goals and to assist Americans traveling abroad.
6

UNITED STATES DEPARTMENT OF STATE

During FY 2003 the Department of State has made substantial progress in advancing the nation’s foreign policy

agenda as set forth in the National Security Strategy. The Department’s work includes shaping the USG’s

response to immediate and urgent international security concerns such as the war on terrorism, curtailing the

spread of weapons of mass destruction, defusing regional conflicts, and managing ongoing operations in

Afghanistan and Iraq. In addition, the Department has implemented policies and programs that will bring longterm improvements in the security environment for all Americans while championing human dignity, democracy,

and economic prosperity throughout the world.

In 2003, the United States faced immediate challenges in the Middle East, South Asia and East Asia. With the

downfall of Saddam Hussein’s regime, the United States embarked on a historic mission to transform Iraq into a

prosperous, stable and peaceful democracy. We have created the Middle East Partnership Initiative (MEPI) to

support democratic, economic and educational reform efforts throughout the entire region. The Department

worked to implement the President’s vision of peace between Israel and the Palestinian people as outlined in a

performance-based roadmap to a negotiated Israeli-Palestinian settlement. The result of this shift has been

significant and beneficial pressure to reform the Palestinian Authority.

In South Asia, the Department has shaped ongoing operations in Afghanistan, including helping to build a new system

of governance and contributing to reconstruction projects.We have worked to promote cooperation with India, a state

with the potential to become one of the great democratic powers of the twenty-first century. Innovations in the USIndia relationship include our ongoing discussion about how best to improve ties in the high-tech, civilian nuclear,

and space sectors. With regard to Pakistan, the US undertook a long-term commitment to the people of Pakistan

centered around a proposed five-year, $3 billion assistance package to help build a stable and democratic Pakistan.

In East Asia, the Department worked to deepen its ties with China and strengthen its alliance with Japan.

The creation of Six Party Talks to deal with the North Korean nuclear problem has brought together all six states of

Northeast Asia in an effort to peacefully end North Korea’s program; it reflects the growing partnership between

the United States, its allies, China and Russia. This innovative approach may have implications for future relations

among the nations of this region. We continue to work closely with the nations of Southeast Asia to support

regional efforts to strengthen democratic rule, increase economic development and combat terrorism. As examples,

the years 2003-2004 will see an unprecedented number of elections for new governments within the region.

PERFORMANCE SUMMARY AND HIGHLIGHTS 

KEY FOREIGN POLICY ACHIEVEMENTS

"

The national interest of America involves more than eliminating aggressive threats

to our safety. We also stand for the values that defeat violence, and the hope that

overcomes hatred. We find our greatest security in the advance of human freedom."

President Bush

U.S. Coast Guard Academy, New London, Connecticut

May 21, 2003
In Europe, we have accelerated the Balkan’s integration into Euro-Atlantic institutions. We have supported

expanding NATO’s membership and accelerated its transformation by expanding NATO’s operations to

Afghanistan and Iraq. We have broadened our cooperation with the European Union, including advancing the

Global War on Terrorism. Through the Freedom Support Act, we have promoted economic reform throughout the

former Soviet Union and seen significant economic improvement throughout many countries in the region. We

also continue to drive home the importance of democratization and human rights in the region and have

supported numerous non-governmental organizations in this area.

The Department has strongly supported several peace processes in African states where the parties have

demonstrated a willingness to reach a final conclusion, particularly in Sudan. We have played a major role in

helping to bring peace and stability to Liberia and in supporting the efforts of the regional leaders to find a

lasting solution to the conflict in Burundi.

The Department continues to support efforts to advance economic development and democracy promotion in

Latin America. We also continue to cooperate with countries in the region against narco-terrorism, in particular in

implementing its security assistance program for Colombia. In the past year, the Department initiated programs

aimed at developing agendas for cooperative action with the other main centers of global power. At the United

Nations, the Department successfully achieved unanimous endorsement of the Administration’s broad approach

to Iraq with passage of UNSC Resolution 1511.

To increase efforts to curb the proliferation of WMD, the Department has implemented the President's

Proliferation Strategy Initiative (PSI) to interdict WMD activities. The United States and ten other countries

agreed to and published a "Statement of Interdiction Principles" and more than 50 additional countries have

indicated their support for the PSI. Following successful

at-sea exercises conducted in the Coral Sea and the

Mediterranean this year, the Department has scheduled a

series of intrerdiction training exercises.

The Department has worked in the past year to

implement the President’s HIV/AIDS and Millennium

Challenge Account (MCA) initiatives, both of which will

help develop the capacity of lesser developed countries

to address poverty and disease. The Department has also

undertaken important steps to combat trafficking in

persons. Congress approved the Free Trade Agreements

(FTAs) with Chile and Singapore, which were negotiated

by the Administration with help from State Department

bureaus. FTA negotiations were launched with five

Southern African Customs Union (SACU) countries

(Botswana, Lesotho, Namibia, South Africa and

Swaziland) as well as with the Central American

countries of Costa Rica, El Salvador, Guatemala,

Honduras, and Nicaragua (CAFTA). U.S. President George W. Bush addresses the

United Nations General Assembly at the UN

Headquarters in New York City. © AP Photo/Jason Szene

7

UNITED STATES DEPARTMENT OF STATE
8

UNITED STATES DEPARTMENT OF STATE

PERFORMANCE MANAGEMENT - A LEADERSHIP PRIORITY

The Department uses strategic and performance planning to ensure the organization achieves its objectives and

goals, and is committed to utilizing the funds it receives from the American people through the Congress to

produce successful results. Under the strong leadership of the Secretary and Deputy Secretary, the Department

also has implemented organizational innovations. For the first time, the State Department and USAID have

developed and issued a joint Strategic Plan that governs the planning efforts for both agencies for fiscal years

2004-2009. This historic new Strategic Plan utilizes a revised strategic goal framework that better captures and

articulates the Department's high priority goals and objectives, shortening the number of goals to better focus

policy and management direction. Guided by the new Strategic Plan, the planning and resource allocation

process receives the personal attention of the Deputy Secretary on an ongoing basis as he personally leads senior

level Policy, Performance and Resource Reviews of all bureau performance and resource plans. Another

significant organizational improvement has been the creation of joint State/USAID policy and management

councils as recommended in the Strategic Plan. The Secretary's leadership in establishing these councils is

ensuring the alignment of foreign policy and development assistance, and is improving the necessary

management and organizational coordination and collaboration between the two agencies.

The Department's ongoing performance management process is driven by senior leadership direction and

coordination. Each year, the Department's diplomatic missions and Washington-based bureaus submit Mission

Performance Plans (MPPs) and Bureau Performance Plans (BPPs)

respectively that describe their policy and program goals,

priorities and resource requirements, and evaluate

performance. During the past year, the Department has

improved the MPPs and BPPs, and fully automated

the process. Missions, bureaus and senior officials

now have the benefit of software applications

that better support decision-making. Based

on planning and performance information in

the MPPs and BPPs, as well as additional

budget information, the Department develops

its annual Performance Budget, which focuses

on the highest priority issues and is consistent

with the high-level Strategic Plan. The annual

Performance and Accountability Report

demonstrates how well the Department performed in

meeting the goals and targets described in the

Performance Budget.

The graphic at right shows the relationship between the key

components of the performance landscape.

The Department's planning documents available to the public can be found on the World Wide Web as follows:

FY 2003 Performance and Accountability Report: http://www.state.gov/m/rm/rls/perfrpt/

FY 2004-2009 State/USAID Strategic Plan: http://www.state.gov/m/rm/rls/dosstrat/2004/

FY 2004 Performance Plan: http://www.state.gov/m/rm/rls/perfplan/2004/
HOW WE ASSESS PERFORMANCE

Six-Tiered Methodology

The Department is committed to utilizing the funds it receives from taxpayers through the Congress to produce

successful results. To assess performance, the Department employs a performance management methodology

depicted in the pyramid below. Each of the six components of the pyramid is defined below:

Strategic Objectives High level, broad categories of action through which the Department will

achieve its strategies and performance goals.

Strategic Goals The Department’s long-term goals as detailed in the Strategic Plan.

Performance Goals The desired outcomes the Department is planning to achieve in order to attain

its strategic goals. The Department has thirty-eight performance goals.

Initiatives/Programs Specific functional and/or policy areas, including programs as defined by the

OMB Program Assessment Rating Tool (PART), to which the Department of

State devotes significant attention.

Performance Indicators Values or characteristics that the Department utilizes to measure progress

achieved towards stated annual performance goals. The indicators are drawn

from bureau and mission performance plans.

Performance Targets Expressions of desired performance levels or specific desired results targeted

for a given fiscal year. Achievement of targets defines success. Where

possible, targets are expressed in quantifiable terms. The FY 2003

Performance and Accountability Report reports on how well the Department

achieved its targets.

Performance Management Model

INITIATIVES/PROGRAMS

PERFORMANCE GOALS

STRATEGIC GOALS

PERFORMANCE TARGETS

PERFORMANCE INDICATORS

STRATEGIC

OBJECTIVES

MISSION

EXECUTION

PLANNING

9

UNITED STATES DEPARTMENT OF STATE
10

UNITED STATES DEPARTMENT OF STATE

STRATEGIC PLANNING FRAMEWORK

Strategic Objectives and Strategic Goals

Within the parameters of the performance management methodology shown on the previous page, the

Department focuses its work around twelve strategic goals that capture both the breadth of its mission and its

specific responsibilities. The Department’s twelve strategic goals are centered around four core strategic

objectives.

Promote

International

Understanding

Public

Diplomacy and

Public Affairs

Strengthen Diplomatic

and Program

Capabilities

Management and

Organizational

Excellence

Achieve Peace

and Security

Regional Stability

Counterterrorism

Homeland Security

Weapons of Mass

Destruction

International Crime

and Drugs

American Citizens

Advance Sustainable

Development and

Global Interests

Democracy and

Human Rights

Economic Prosperity

and Security

Social and

Environmental Issues

Humanitarian

Response

Mission

Create a More Secure, Democratic, and Prosperous

World for the Benefit of the American People

and the International Community

Strategic Goals

Legend

Strategic Objectives
Strategic Goal Title

STRATEGIC OBJECTIVE #1

- Achieve Peace and Security -

Strategic Goal Description

Regional Stability

Counterterrorism

Homeland Security

Weapons of Mass Destruction

International Crime and Drugs

American Citizens

Avert and resolve local and regional conflicts to preserve peace

and minimize harm to the national interests of the United States.

Prevent attacks against the United States, our allies, and our

friends, and strengthen alliances and international arrangements

to defeat global terrorism.

Protect the homeland by enhancing the security of our borders

and infrastructure.

Reduce the threat of weapons of mass destruction to the United

States, our allies, and our friends.

Minimize the impact of international crime and illegal drugs on

the United States and its citizens.

Assist American citizens to travel, conduct business, and live

abroad securely.

Strategic Goal Title

STRATEGIC OBJECTIVE #2

- Advance Sustainable Development and Global Interests -

Strategic Goal Description

Democracy and Human Rights

Economic Prosperity and Security

Social and Environmental Issues

Humanitarian Response

Advance the growth of democracy and good governance, including

civil society, the rule of law, respect for human rights, and

religious freedom.

Strengthen world economic growth, development, and stability,

while expanding opportunities for U.S. businesses and ensuring

economic security for the nation.

Improve health, education, environment, and other conditions

for the global population.

Minimize the human costs of displacement, conflicts, and

natural disasters.

Strategic Goal Title

STRATEGIC OBJECTIVE #3

- Promote International Und erstanding -

Strategic Goal Description

Public Diplomacy and Public Affairs Increase understanding for American values, policies, and

initiatives to create a receptive international environment.

Strategic Goal Title

STRATEGIC OBJECTIVE #4

- Strengthen Diplomatic and Program Capabilities -

Strategic Goal Description

Management and

Organizational Excellence

Ensure a high quality workforce supported by modern and secure

infrastructure and operational capabilities.

DEPARTMENT OF STATE STRATEGIC OBJECTIVES AND STRATEGIC GOALS

11

UNITED STATES DEPARTMENT OF STATE
12

UNITED STATES DEPARTMENT OF STATE

MOST IMPORTANT RESULTS AND CONTINUING CHALLENGES

During FY 2003, the Department responded on many levels to the many challenges the United States is facing.

Highlights of the most important results and continuing challenges are shown below by strategic goal:

Results Challenges

The U.S. led unprecedented international coalitions to remove

terrorist regimes in Afghanistan and Iraq.

Transformation of NATO through new capabilities, new members,

and new relationships to meet the challenges of the 21st century.

Participation by other countries in UN-sponsored and other

international peacekeeping operations.

China hosted and facilitated six-party talks between the U.S. and

North Korea. China’s ongoing efforts have been key to North

Korea agreeing to future rounds of discussion.

MOST IMPORTANT RESULTS AND CONTINUING CHALLENGES

REGIONAL STABILITY

Facilitate reconstruction and establishment of a democratic

political, social and economic system in Iraq.

Pursue the Road Map solution to the Israeli-Palestinian

problem.

Improve the status of relations between Pakistan and

India on Kashmir.

COUNTERTERRORISM

The Top Officials (TOPOFF II) exercise, the first major exercise for

the new Department of Homeland Security, was significantly

enhanced over TOPOFF I (May 2000) by emphasizing the vital

foreign policy implications of major domestic terrorist incidents.

The Technical Support Working Group (TSWG) completed work on

and fielded a number of products that substantially upgraded

operational capabilities of the first responder communities throughout

the U.S. as well as the security posture of USG departments and

agencies.

Further expand cooperative R&D work with existing foreign

partners (UK, Canada, Israel), and engage at least two

additional foreign partners in programs of cooperative

R&D that benefit all nations and support US objectives in

the Global War on Terrorism.

Program expansion can only be accomplished with

additional financial resources which can be used to leverage

additional funding from our U.S. and foreign partners.

HOMELAND SECURITY

Signed a Memorandum of Understanding with the Department of

Homeland Security setting the terms under which officers of the

two Departments will work together in the granting or refusal of

visas.

Greatly increased the percentage of nonimmigrant visa applicants

interviewed worldwide. New regulations implemented which limit

waiver of personal appearance for nonimmigrant visa applicants to

only a few categories of exceptions, such as diplomats, children,

and the elderly.

Mandated a special worldwide review of management controls in

September 2002 and again in August 2003. This is now being made

a required annual report for all consular sections.

Changed the basic consular training course to strengthen material

on fraud, malfeasance, ethics, and terrorism in addition to new

material on interviewing techniques, accountability and management

issues, and computer systems security. The time devoted to

interviewing skills training in the Basic Consular Course has increased

significantly, from the pre-9/11 6 hours to 16 hours.

Began collecting biometrics from non-immigrant visa applicants at

San Salvador, Brussels, Frankfurt and Guatemala City.

The USA Patriot Act requires that U.S. visas use biometric

identifiers by October 26, 2004. The Department began

phased implementation of biometric (fingerprint) collection

in September 2003. All posts will be collecting biometrics

by October 2004.

Continue to expand datashare opportunities with federal

agencies, maximizing the value of consular data to the

USG while developing procedures to ensure proper use of

this information.

Continue working on a number of programs with Canada

and Mexico as part of the U.S.-Canada Smart Border Action

Plan (30 point plan) and U.S.-Mexico Border Partnership

(22 point plan). As concerns the movement of people, we

are working on agreements to share Advance Passenger

Information/Passenger Name Records for airline passengers

entering the U.S., Canada, or Mexico. We are also working

with both these countries (NEXUS with Canada and SENTRI

with Mexico) to expand frequent traveler programs to

allow faster crossings for bona fide travelers.

1

2
13

UNITED STATES DEPARTMENT OF STATE

Results Challenges

The Department has led the interagency effort to implement the

Proliferation Security Initiative (PSI). The eleven PSI-participant

nations have agreed to move rapidly on direct measures to impede

trafficking in weapons of mass destruction, missiles and related

items and have agreed on a set of principles that can guide

interdiction efforts.

Entry into force of the Moscow Treaty, and initiation of U.S.-Russian

working groups to exchange information and foster transparency

regarding offensive nuclear forces and missile defense.

Significant recovery of the Organization for the Prohibition of

Chemical Weapons from financial and administrative crises of

previous years, giving strong hope that it will fully carry out its

responsibilities for implementing the Chemical Weapons Convention.

Impeded Iran’s nuclear weapons program by locking in

international consensus that Iran’s clandestine nuclear activities

are of great concern; Led the IAEA Board of Governors in September

2003 to adopt a resolution giving Iran an October 31 deadline

to fully cooperate with IAEA investigations and answer all

outstanding IAEA questions about its nuclear activities, as well

as to sign and implement an Additional Protocol and to suspend

enrichment related and reprocessing activity. Strengthened the

international consensus against cooperation with Iran until all

safeguards questions are resolved.

Biological Weapons Convention (BWC) States Parties need

to take actions to improve their legal structures and

enforcement against biological weapons activities, and

coordinate with other BWC States Parties in controlling the

biological weapons threat.

Agreement on a set of principles that can guide interdiction

efforts.

Meeting the IAEA Statute’s obligation to find Iran in

noncompliance to the UN security council.

Continuing to build international consensus that the

suspension of Iran’s enrichment and reprocessing activities

must transition into permanent abandonment of those

activities.

Maintaining intense IAEA and international scrutiny of Iran’s

nuclear activities.

Ensuring that Iran sees no “carrots” for ending its sensitive

nuclear pursuits until cessation of such activities can be fully

verified.

MOST IMPORTANT RESULTS AND CONTINUING CHALLENGES

WEAPONS OF MASS DESTRUCTION

INTERNATIONAL CRIME AND DRUGS

Projected reduction in coca cultivation in Colombia, for second

year in a row.

Completion of agreement, including new safety rules, with

Colombia to reestablish the Air Bridge Denial Program.

Negotiations opened with Peru to establish a similar program.

Colombian Government security presence extended more than

150 of 160 municipalities previously devoid of any law enforcement

presence. More than eighty Colombian nationals extradited to

U.S. on narcotics or money laundering charges.

UN Convention on Transnational Organized Crime and

Supplemental Protocol on Trafficking in Persons entered into

force. Agreement reached on UN Convention Against Corruption,

with signing ceremony set for December.

Assessments completed and assistance initiated or continued to

16 of 19 priority countries most vulnerable to terrorist financing.

The multilateral Financial Action Task Force “graduated” five

countries from its “blacklist” of Non-Cooperating Countries and

Territories because of improvements in their anti-money laundering

laws and practices.

Domestic – sometimes violent – opposition to coca

eradication programs in Peru and Bolivia threaten to undercut

government resolve in carrying out eradication programs

that have proved successful in the past.

The inability of the Afghan national government to extend

its security and law enforcement authority to outlying

provinces continues to undercut Afghan and international

efforts to curb opium poppy cultivation and heroin trafficking.

Lack of absorptive capacity and political will continue to

hamper and slow the development of viable moneylaundering regimes in many priority terrorist-financing

countries.

More generally, lack of institutional capacity in many key

countries – some of them havens for international crime –

means that strengthening justice sectors will be a long and

slow process.

Drug traffickers and other international crime groups continue

to be exceedingly adept at making use of the latest

technological advances and equipment to protect and

advance their operations.
14

UNITED STATES DEPARTMENT OF STATE

Results Challenges

The Passport Records Imaging System Management (PRISM)

database has been deployed at all domestic passport facilities.

Users can now immediately retrieve electronic records within

minutes of passport issuance.

Implemented Passport Information Electronic Retrieval System

(PIERS), an improved data management system that allows

approved users worldwide to access passport records (through

OpenNet). This system will also facilitate interagency data

sharing as proper data sharing agreements are formulated.

MOST IMPORTANT RESULTS AND CONTINUING CHALLENGES

AMERICAN CITIZENS

The web site for international travelers, travel.state.gov, recorded

198.5 million hits in FY 2003, averaging almost 544,000 hits per

day, compared to 128 million hits with a daily average of 347,254

in FY 2002. Enhancements to the web site include an automatic

date/time confirmation that travel safety information is current

and additional electronic forms.

Development/deployment of a new Intelligent Passport that contains

an embedded Integrated Circuit that will carry biometric data.

Implementation of the Intercountry Adoption Act.

Preparations for requirement that U.S. citizens have a U.S. passport

for all travel within the Western Hemisphere.

DEMOCRACY AND HUMAN RIGHTS

Achieved G-8 commitment to increase international

cooperation to combat corruption, deny safe haven to corrupt

officials, those who corrupt them, their dependents, and to

identify and repatriate funds stolen through acts of corruption.

Continued implementation of the Inter-American

Anticorruption Convention (IACAC) Follow-Up Mechanism.

The IACAC is one of the most important, and the largest of

the regional anticorruption mechanisms.

Completed negotiations of a comprehensive United Nations

Anticorruption Convention.

For the first time, comprehensive programs in China were

supported through DRL’s Human Rights and Democracy

Fund to press for structural reforms in the areas of rule of

law and democracy.

Public-private partnerships and voluntary codes of conduct

advanced respect for rule of law and worker rights. Worker

rights provisions were negotiated for free trade agreements.

Worker organizations multiplied in Middle East.

Community of Democracies established as viable multilateral

instrument for consolidating democracy. Advances in democracy

are now backed by institutions for mutual support, in several

regions, to cope with potential crises in democracy.

Accelerating the rate of implementation of global anticorruption

and transparency commitments such as those adopted in the

Global Forum on Fighting Corruption, regional mechanisms,

and treaty law.

Work continues in pressing for positive results in the make-up

of the UN Commission on Human Rights to enable serious

resolutions and effective measures addressing the worst human

rights violations.

Regional capacities to deal with recalcitrant regimes (e.g.,

Burma, Zimbabwe, Cuba) are still growing.

Additional steps to increase interagency coordination and

information sharing are necessary to sharpen global strategies

and individual program implementation.

Began the reconstruction of Iraq and Afghanistan.

Promoted regional and global economic growth through

enhanced growth of financial markets and international

cooperation on assistance programs.

Developed diversified, reliable supplies of energy to reduce

dependence on any one source.

Managed economic aspects of U.S. engagement with the

frontline states in the battle to defeat terrorism.

Protected and expanded transportation and communications

networks through international cooperation on cargo and

passenger security measures, Open Skies agreements, and

telecommunications negotiations.

Coordinated international efforts to block terrorists' funds

and terrorists' ability to use the global financial system.

Conclused and obtained ratification by Congress of Free

Trade Agreements (FTAs) with Singapore and Chile.

ECONOMIC PROSPERITY AND SECURITY

Managing a growing workload on an increasing number of

issues related to economic prosperity and security including

terrorist financing, post-conflict economic reconstruction and

trade negotiations.

Resolving differences with 33 hemispheric partners over desired

scope of Free Trade Area of the Americas Agreement by January

2005 deadline. Most difficult issues with Brazil, other Mercosur

members and Caricom countries.

Managing workload inherent in stepped up negotiation of

Bilateral Free Trade Agreements.

Resolving differences blocking resumption of Doha Round WTO

negotiations among WTO members regarding Singapore issues

(investment, services, etc), agricultural subsidies and other

issues.
15

UNITED STATES DEPARTMENT OF STATE

Results Challenges

MOST IMPORTANT RESULTS AND CONTINUING CHALLENGES

SOCIAL AND ENVIRONMENTAL ISSUES

Progress continues in the battle against HIV/AIDS. Diplomatic

outreach efforts have mobilized political leadership around the

world, a basic step in the fight.

Thanks to the Global Health Security Action Group and other

bioterrorism activities, countries can take more appropriate

action in case of a bioterrorism attack.

Key conservation management agreements were renegotiated

to include forward-looking provisions of current international

fisheries law and practice.

CSD reforms are a leading example of UN reform efforts and

are helping to catalyze a shift in emphasis from norm-setting

toward implementation of sustainable development.

A range of cooperative activities in the areas of climate change

and clean energy technologies initiated or advancedwith 13

bilateral partners and through multilateral initiatives.

The U.S. hosts ministerial-level Earth Observation Summit to

promote the development and financial support of an integrated

and sustained earth observation system, designed to link climate,

terrestrial and oceans observing datasets.

Significant progress is made through DOS-led White Water to

Blue Water Initiative to energize partnerships to address

integrated approaches to watershed and marine ecosystems

management in the Caribbean.

The worst of the AIDS epidemic lies ahead. Implementing

the President’s Emergency Plan will help alleviate the effects.

Most countries have inadequate systems to detect or respond

to either natural or deliberate (terrorist) outbreaks of disease

and climate forecasts which can influence such things as

the vulnerability of living resources and the likelihood of

disease outbreaks.

Illegal, unregulated, and unreported (IUU) fishing activities

and increasing or transferred fishing vessel capacity continues

to undermine efforts to manage fisheries resources.

Maintain focus on promoting good governance, economic

growth with emphasis on poverty reduction and investment

in people as best way to address social needs in the Western

Hemisphere. Ensure that these approaches form centerpiece

of January 2004 Special Summit of the Americas.

Science and Technology agreements need to better serve

the interagency and broader scientific community by

addressing such issues as intellectual property, liability, and

taxation issues in practical terms and in streamlining the

process for authorizing negotiations of agency-level

agreements.

Contingency planning and effective response averted a

humanitarian disaster in Iraq. The Department’s work and

participation in interagency efforts ensured that adequate food,

medical supplies and other humanitarian aid were provided to

populations in need.

The Department supported operations to assist refugees’ return

and reintegration to Afghanistan, and Angola among other

countries. Over 520,000 refugees returned to Afghanistan and

roughly 70,000 refugees returned to Angola in FY 2003.

The Department funded an expanded UNHCR capacity to identify

and refer refugees for resettlement to the United States, which

is expected to result in greater refugee admissions.

The World Food Program’s efficient and coordinated response

to the food crisis in southern Africa averted starvation.

HUMANITARIAN RESPONSE

Lack of security continues to put at risk refugees and those

who assist them.

Security challenges in overseas refugee processing locations

will continue to impede USG efforts to maintain a robust

resettlement program.

Information on refugee health remains difficult to collect and

analyze. The Department will continue to support collaborative

efforts to standardize methodology and improve collection

of data on mortality and nutrition in refugee situations,

humanitarian emergencies and other conflict settings.

Despite a strong U.S. commitment, contributions from other

donors perennially fall short of world food needs. The

Department will continue efforts to mobilize donor

contributions to the World Food Program, including

“twinning,” an approach that matches non-traditional

donors of cash with non-traditional donors of food.
16

UNITED STATES DEPARTMENT OF STATE

Results Challenges

MOST IMPORTANT RESULTS AND CONTINUING CHALLENGES

PUBLIC DIPLOMACY AND PUBLIC AFFAIRS

President Bush delivered the 213th State of the Union address

before the largest worldwide audience ever on January 28, 2003.

Tens of millions of people around the globe were able to have

access to the speech live on television, and on the Internet, in

multiple languages.

Since its inception in 2001, the Department’s Chinese-language

Internet service, Meiguo Cankao (MCGK), has firmly established

itself as the authoritative source on America and its policies and

a main source of world news for Chinese readers. MCGK gets

an average of 20,000 requests for pages daily and is read by

the major Chinese sites. MCGK’s material invariably appears

with attribution, notable given the tightly controlled nature of

the official Chinese news environment.

One hundred thirty one students from communities at risk in

countries of priority in the War on Terrorism are studying in U.S.

high schools under the Partnerships for Learning YES Youth

Exchange.

As of July 2003, the Department’s publication, A Responsible

Press Office: An Insider's Guide, has been distributed in 18

languages. Presidential/prime ministerial spokespersons have

reported using the publication with staffs, in seminars and in

organizing their offices. One prime minister began open

discussions with the press after reading the volume and a

presidential spokesperson in another reported the publication

"saved our lives."

A major effort is needed for more effective communication

with the Muslim and Arab worlds and to counter the impact

of hostile influences.

Anti-American editorial slants in much of the Arabic press

make it difficult to get out our message. Pan-Arab satellite

television has become the most important element in forming

Arab public opinion, but anti-American commentary

dominates many of the stations. We are placing greater

emphasis on placement of positive articles on the U.S. and

gaining more access for American speakers on the air in

order to give more objective exposure to the general public

on USG policies.

The Department needs to augment current public diplomacy

evaluation techniques, and rely more on expert professional

resources to help base our programs on solid public opinion

attitudes and information. A culture of measurement must

reach all public diplomacy structures.

Border and visa security issues, SARS and the War in Iraq

affected exchanges in 2003 and are expected to continue

as challenges to the exchange of persons in 2004.

The Department will continue to intensify its reach to

younger and wider audiences throughout the world.

Eighty percent of our diplomatic missions overseas that were

at low and medium threat security levels have been brought to

a high threat defensive posture thereby affording the

Department’s employees with greater protection.

The Department has tripled the number of background

re-investigations completed annually to ensure the integrity of

our workforce and protect national security information.

For the first time in several years the Department has reduced

hiring deficits in Foreign Service career tracks and has robust

pipelines for future hiring.

The Civil Service hiring process has been augmented with

creative pipeline type approaches that seek to minimize staffing

gaps in those skill areas that have frequent vacancies.

The Department’s network availability was increased to 98%,

providing more reliable communications to Department

employees worldwide than ever before.

The implementation of the OpenNetPlus program accomplished

the Secretary’s highest IT priority plus providing worldwide desktop

Internet access for over 43,000 Department users.

MANAGEMENT AND ORGANIZATIONAL EXCELLENCE

Sustain recent improvements and support the expansion of

critical security initiatives around the world.

The Department worked with OMB to develop a capital

replacement program that requires agencies with an overseas

presence to pay their fair share of urgent, security-driven

capital construction projects undertaken to replace embassy

and consulate compounds at the most vulnerable posts

thereby, 1) encouraging rightsizing, 2) accelerating construction.
SUMMARY OF FY 2003 PERFORMANCE RESULTS

Summary of All Results

The following pie chart shows the ratings distribution for all performance results reported in FY 2003.

As shown below, 77% of the results were “on target” or above, meaning performance results met or exceeded

performance targets. This represents an improvement over FY 2002, when 68% of results met or exceeded

performance targets.

Summary of Strategic Goal Results 

This table shows for each strategic goal the average of the performance ratings for all reported results.

Summary of FY 2003 Performance Results

Significantly Above Target

Slightly Above Target

On Target

Slightly Below Target

Significantly Below Target

Data Not Available

Total Number of Results

11

29

93

16

5

17

171

Significantly

Above Target

6%

Significantly

Below Target

3%

Slightly

Below Target

10%

On Target

54%

Slightly

Above Target

17%

Data Not

Available

10%

17

UNITED STATES DEPARTMENT OF STATE

Average Performance Rating1

Change From Last Year

Regional Stability

Counterterrorism

Homeland Security

Weapons of Mass Destruction

International Crime and Drugs

American Citizens

Democracy and Human Rights

Economic Prosperity and Security

Social and Environmental Issues

Humanitarian Response

Public Diplomacy and Public Affairs

Management and Organizational Excellence

FY 2002

Slightly Below Target

On Target

Slightly Below Target

On Target

Slightly Below Target

On Target

Slightly Below Target

Slightly Below Target

On Target

On Target

On Target

On Target

FY 2003

Slightly Below Target

On Target

On Target

On Target

On Target

Slightly Below Target

Slightly Below Target

On Target

On Target

On Target

On Target

On Target

 1 Based on the average of all performance result ratings within a strategic goal.

Strategic Goal

1

2

3

4

5

6

7

8

9

10

11

12
18

UNITED STATES DEPARTMENT OF STATE

Summary of Performance Goal Results

The table below provides performance results for each of the Department’s FY 2003 performance goals. The

inverted black triangle represents the average of all performance ratings assigned to results associated with the

Performance Goal. The numbers below the rating scale show how the ratings were distributed among the

reported FY 2003 results. In addition, for comparison purposes, the FY 2002 performance rating average is

represented by the inverted gray triangle.

Strategic Goal

Close, strong, and effective U.S. ties with

allies, friends, partners and regional

organizations.

4 Results

Existing and emergent regional conflicts

are contained or resolved.

4 Results

Coalition partners identify, deter, apprehend,

and prosecute terrorists.

4 Results

U.S. and foreign governments actively

combat terrorist financing. 2

5 Results

Coordinated international prevention and

response to terrorism, including

bioterrorism.2

4 Results

Stable political and economic conditions

that prevent terrorism from flourishing in

fragile or failing states.

Denial of visas to foreign citizens who

would abuse or threaten the U.S. while

facilitating entry of legitimate applicants.

4 Results

Implemented international agreements stop

the entry of goods that could harm the U.S.,

while ensuring the transfer of bona fide

materials.2

5 Results

Protection of critical physical and cyber

infrastructure networks through agreements

and enhanced cooperation. 2

1 Result

Average Performance Rating and Number of Reported Results

Significantly

Above Target

Significantly

Below Target

Slightly

Below Target On Target

Above

Target

Regional Stability

Counterterrorism

Homeland

Security

USAID addresses this performance goal. 3

Performance Goal1

(Total Number of Reported Results)

12 1 1

1 2 1

12 1

5

1 3

1 2 1

1 1 1 1

1

1 The chart depicts data for “reported results” (i.e., targets for which data were available). In some instances, for a given performance goal,

the number of reported results might be less than the number of targets because data was unavailable to produce a results rating. 

2 No gray triangle is shown for this performance goal because this goal was new for FY 2003.

3 Department of State and USAID share the same goal framework.
Strategic Goal

Bilateral measures, including the promotion

of new technologies, combat the proliferation of WMD and reduce stockpiles.

6 Results

Strengthened multilateral WMD agreements

and nuclear energy cooperation under

appropriate conditions.

6 Results

Verification integrated throughout the

negotiation and implementation of nonproliferation and arms control agreements

and commitments, and rigorous enforcement of compliance with implementation

and inspection regimes.

5 Results

International trafficking in drugs, persons,

and other illicit goods disrupted and criminal

organizations dismantled.

4 Results

States cooperate internationally to set and

implement anti-drug and anti-crime standards,

share financial and political burdens, and close

off safe-havens through justice systems and

related institution building.

4 Results

U.S.citizens have the consular information,

services, and protection they need to reside,

conduct business, or travel abroad.

3 Results

Effective and timely passport issuance,

with document integrity assured.

2 Results

Measures adopted to develop transparent

and accountable democratic institutions,

laws, and economic and political processes

and practices.

2 Results

Universal standards protect human rights,

including the rights of women and ethnic

minorities, religious freedom, worker rights,

and the reduction of child labor.

8 Results

Average Performance Rating and Number of Reported Results

Significantly

Above Target

Significantly

Below Target

Slightly

Below Target On Target

Above

Target

Weapons of Mass

Destruction

International

Crime and Drugs

American Citizens

Democracy and

Human Rights

Performance Goal

(Total Number of Reported Results)

2 6

1 1

2

1 2

2 2

2 1 1

1 4

1 3 2

4 2

19

UNITED STATES DEPARTMENT OF STATE
20

UNITED STATES DEPARTMENT OF STATE

Strategic Goal

Institutions, laws, and policies foster private

sector-led growth, macroeconomic stability,

and poverty reduction.

1 Result

Increased trade and investment achieved

through market-opening international

agreements and further integration of

developing countries into the trading system.

7 Results

Secure and stable financial and energy

markets. 1

2 Results

Enhanced food security and agricultural

development.

Improved global health, including child,

maternal, and reproductive health, and the

reduction of abortion and disease, especially

HIV/AIDS, malaria, and tuberculosis.

8 Results

Partnerships, initiatives, and implemented

international treaties and agreements that

protect the environment and promote efficient

energy use and resource management.

9 Results

Broader access to quality education with

emphasis on primary school completion.

Effective and humane international

migration policies and systems.

Effective protection, assistance, and durable

solutions for refugees, internally displaced

persons, and conflict victims.

7 Results

Improved capacity of host countries and

the international community to reduce

vulnerabilities to disasters and anticipate

and respond to humanitarian emergencies.

1 Result

Average Performance Rating and Number of Reported Results

Significantly

Above Target

Significantly

Below Target

Slightly

Below Target On Target

Above

Target

Economic

Prosperity and

Security

Social and

Environmental

Issues

Humanitarian

Response

At the time the Department was developing FY 2003 targets, this

performance goal did not exist and no targets were developed. Therefore,

for FY 2003 performance reporting purposes, no results are being reported.

Targets have been developed for FY 2004 and beyond. Results will be

reported in future performance reports.

USAID addresses this performance goal. 2

USAID addresses this performance goal. 2

1

5 2

1 1

1 6 1

7 2

1 3 3

1

Performance Goal

(Total Number of Reported Results)

1 No gray triangle is shown for this performance goal because this goal was new for FY 2003.

2 Department of State and USAID share the same goal framework.
Strategic Goal

Public diplomacy influences global public

opinion and decision-making consistent

with U.S national interests. 1

3 Results

International exchanges increase mutual

understanding and build trust between

Americans and people and institutions

around the world.

2 Results

Basic human values embraced by

Americans are respected and understood

by global publics and institutions. 1

1 Result

American understanding and support for

U.S. foreign policy, development programs,

the Department of State, and USAID. 1

4 Results

A high-performing, well-trained, and

diverse workforce aligned with mission

requirements.

11 Results

Modernized, secure, and high quality

information technology management and

infrastructure that meet critical business

requirements.

6 Results

Personnel are safe from physical harm and

national security information is safe from

compromise.

6 Results

Secure, safe, and functional facilities serving

domestic and overseas staff.

5 Results

Integrated budgeting, planning, and

performance management; effective

financial management; and demonstrated

financial accountability.

5 Results

Customer-oriented, innovative delivery of

administrative and information services,

acquisitions, and assistance.

5 Results

Average Performance Rating and Number of Reported Results

Significantly

Above Target

Significantly

Below Target

Slightly

Below Target On Target

Above

Target

Public Diplomacy

and Public Affairs

Management and

Organizational

Excellence

Performance Goal

(Total Number of Reported Results)

2 1

1 1

1

3 1

1 2 6 2

1 4 1

1 3 2

1 2 2

2 3

3 1 1

1 No gray triangle is shown for this performance goal because this goal was new for FY 2003.

21

UNITED STATES DEPARTMENT OF STATE
22

UNITED STATES DEPARTMENT OF STATE

ILLUSTRATIVE EXAMPLES OF SIGNIFICANT ACHIEVEMENTS

Philippine military officials ride on a combat boat during a demonstration in Manila Bay. The new boats are part of the Philippine

Navy’s modernization program to better fight terrorists, poachers, pirates and drug smugglers. The Philippines is one of 12

countries to partner with the United States in the Terrorist Interdiction Program. © AP Photo

STRATEGIC GOAL #1: REGIONAL STABILITY

Man-Portable Air-Defense Systems (MANPADS)

T

he State Department led the international effort to

prevent terrorists from acquiring MANPADS, more

commonly known as shoulder-fired missiles, that could

be used to shoot down civilian airliners and

government aircraft. Under U.S. leadership the G-8

agreed to: strengthen export controls (including

limiting transfers to those between governments);

research access controls for newly produced

MANPADS; strengthen security of government stocks;

and destroy those that are surplus to defense needs.

The Department is leading a similar effort in the

Wassenaar arrangement, which will affect most

producers of MANPADS. We are also working closely

with Russia to support their effort to gain control of

those MANPADS in the CIS. The State Department

secured commitments from six countries to destroy

almost 9,500 MANPADS (approximately 1% of the

MANPADS that have ever been produced). Almost

1,200 were destroyed by the end of FY 2003.

STRATEGIC GOAL #2: COUNTERTERRORISM

Terrorist Interdiction Program (TIP)

During FY 2003, 12 nations expanded their partnership

with the United States in the global fight against

terrorism by agreeing to accept TIP to strengthen control of

their air, land and sea ports of entry. By assisting these nations

to secure their borders, TIP has enhanced the security of all

Americans, including those who live and travel abroad. TIP has

broadened cooperation and strengthened a shared sense of

urgency between the United States and these nations in the

effort to defeat international terrorism, and in several cases,

has served as the cornerstone of an evolving comprehensive

mutual counterterrorism strategy. Finally, the information

provided by nations operating TIP has significantly broadened

our understanding of terrorist movements and methods.

A member of the NATO-led peacekeeping force in Bosnia

detonates a controlled explosion to destroy six shoulder launched

anti aircraft missiles in a remote mountain area near Sarajevo. The

United States has asked all of its friends to dispose of obsolete

MANPADS because they pose a serious threat to civil and military

aviation in the wrong hands. © AP Photo
STRATEGIC GOAL #3: HOMELAND SECURITY

Container Security Initiative

T

he Department spearheaded global

efforts to protect transportation

networks through stronger shipping and

aviation security rules. Nineteen of the 20

largest world ports committed to participate

in the Container Security Initiative (CSI). In

addition, the program expanded to other

strategic ports including Malaysia and South

Africa. CSI is now operational in sixteen

ports (as of September 30, 2003) and at least

two countries, Canada and Japan, have

utilized the reciprocal aspects of the program

to have their customs officials present at U.S.

ports to observe cargo bound for their

countries.

Department of State Photo

STRATEGIC GOAL #4: WEAPONS OF MASS DESTRUCTION

Cooperation with Russia on New Strategic Framework

I

n June 2003, the U.S.-Russian Treaty on Strategic Offensive

Reductions entered into force, reflecting the dramatic shift

from Cold War rivalry to partnership based on the principles

of mutual security, trust, openness, and cooperation. The

Treaty binds the U.S. and Russia to reduce the levels of

strategic nuclear warheads by the end of 2012 to between

1,700 and 2,200 - about one-third of current levels

© AP Photo

23

UNITED STATES DEPARTMENT OF STATE
24

UNITED STATES DEPARTMENT OF STATE

STRATEGIC GOAL #5: INTERNATIONAL CRIME AND DRUGS

Tr afficking in Persons

T

here are an estimated 800,000 to 4 million persons trafficked annually across and within international borders.

Approximately 20,000 victims of trafficking are brought into the United States each year. The Department and a

consortium of U.S. NGOs hosted an innovative international conference on best practices, bringing together 400 NGO and

government representatives who are on the frontlines of

the war to combat slavery. Since the conference, two

countries are now working collaboratively on trafficking

cases and participants from the Western Hemisphere have

formed a listserv on the Internet as a means of exchanging

information. The Department significantly strengthened

the annual Trafficking in Persons report by adding 26 new

countries, incorporating new law enforcement data, and

adding new features, such as victims stories and color

photographs, sections on best practices, areas for

improvement, and special cases, and a special matrix of

relevant international conventions. Department funding

facilitated the development of a regional action plan on

combating trafficking in persons that was adopted by the

member states of the Economic Community of West

African States (ECOWAS). ECOWAS countries are in the

process of developing national action plans, revising their

legislation and identifying national points of contact.

STRATEGIC GOAL #6: AMERICAN CITIZENS

International Child Abduction

I

n January, Assistant Secretary for Consular Affairs Harty

traveled to Saudi Arabia, Lebanon and Syria and raised

the issue of international parental child abduction with

senior government officials in each country. Since then

ten Americans involved in such situations have been able

to return to the United States from those countries. She

visited Saudi Arabia again in April to emphasize the same

concerns. Department officials meet regularly with Saudi

officials, both in Washington and Riyadh, to seek

solutions in specific cases and to find more systematic

ways to address the problem of international parental

child abduction. The Bureau of Consular Affairs hosted

"Town Hall" meetings in February and July that were

attended by over 75 left-behind parents. Parents identified

ways we can serve them better.

Secretary of State Colin Powell holds up the State

Department's third annual report on human trafficking during a

news conference in Washington. Fifteen countries, including

U.S. allies Greece and Turkey, have made no significant efforts

to stop trafficking in humans and may face sanctions, the State

Department report said. © AP Photo/Charles Dharapak

U.S. Assistant Secretary for Consular Affairs Maura Harty visits

American citizen children overseas (shown with their

grandmother), on behalf of their mother in the U.S., from whom the

children had been abducted at an early age by her foreign 

ex-husband. Department of State Photo
STRATEGIC GOAL #7: DEMOCRACY AND HUMAN RIGHTS

Anti-Semitism in Europe

T

he Department led the effort in the

Organization for Security and Cooperation

in Europe to hold a conference on antisemitism. The U.S. delegation was led by

Rudolph Giuliani and included members of

Congress and NGO leaders. The gathering

defined anti-Semitism as a human rights issue

and tasked the OSCE's Office for Democratic

Institutions and Human Rights (ODIHR) to serve

as a collection point for hate crime information

and statistics and to promote best practices in

the fight against intolerance. The German

government will host a follow-up meeting in

Berlin next April. No regional or international

organization had previously treated antisemitism as a human rights matter 

STRATEGIC GOAL #8: ECONOMIC PROSPERITY AND SECURITY

Terrorism Financing

State, Treasury, Justice, FBI, the Department of

Homeland Security and other agencies all work

together in the fight against terrorism finance. The U.S.

supported the submission by many countries of al-Qaidalinked names for inclusion in the UN asset-freeze list,

requiring all countries to act against these names. We

have taken action — including asset-freezing — against

charities supporting terrorism, creating an incentive for

charities worldwide to ensure their funds are not being

diverted to terrorist organizations. In addition many

essential complementary actions have also been taken.

These include the building of an international alliance

against terrorism, training and technical assistance to

help countries develop the capacity to fight terrorist

financing, the development of international standards,

and the exploitation of intelligence. All of these efforts

work together to protect the United States and our allies

from the scourge of terrorism now and in the future.

Former New York Mayor and Chairman of the U.S. delegation Rudolph

Giuliani, Federal Government Commissioner for Human rights, Policy and

Humanitarian Aid Claudia Roth from Germany and Head of the Albanian

Delegation Zef Mazi, from left, participate in a conference on anti-semitism

organized by the Organization for Security and Cooperation in Europe (OSCE)

at Vienna's Hofburg palace. © AP Photo/Ronald Zak

Jimmy Gurule, left, Under Secretary for Enforcement, U.S.

Department of the Treasury, testifies during a Senate Judiciary

Committee hearing on terrorism financing, in Washington. 

© AP Photo/Ken Lambert

25

UNITED STATES DEPARTMENT OF STATE
26

UNITED STATES DEPARTMENT OF STATE

STRATEGIC GOAL #9: SOCIAL AND ENVIRONMENTAL ISSUES

The President’s Emergency Plan for AIDS Relief

President Bush announced his Emergency Plan for AIDS Relief in January

2003. It will provide $15 billion, including nearly $10 billion in new

funding, to fight the HIV/AIDS pandemic over the next five years, focusing on

14 of the hardest-hit countries. The Emergency Plan pledges $1 billion to the

Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) over the next

5 years, increasing the total U.S. commitment to over $1.6 billion since the

Fund’s inception. The U.S. Leadership Against HIV/AIDS, Tuberculosis and

Malaria Act, authorizing the initiative, was passed in May 2003. Ambassador

Randall Tobias was confirmed in October as Global AIDS Coordinator to

administer the Emergency Plan.

STRATEGIC GOAL #10: HUMANITARIAN RESPONSE

Angola Repatriation

T

he end of civil war in Angola has

made it possible for hundreds of

thousands of refugees and internally

displaced persons (IDPs) to return

home, many of whom were displaced as long ago as 1965. In June

2003, the UN High Commissioner for

Refugees (UNHCR) launched a major

repatriation operation to facilitate

the return of some 400,000 Angolan

refugees from neighboring countries.

The Department contributed over

$12.6 million in support of

Angolan repatriation, which

includes return transportation and

reintegration assistance such as

identification and registration, transit centers, food aid, health services,

mine risk education and HIV/AIDS

awareness.

President Bush and Secretary Powell at a

State Department Bill signing ceremony for

the U.S. Leadership Against HIV/AIDS,

Tuberculosis and Malaria Act of 2003.

State Department photo by Michael Gross

Malnourished children in a refugee camp near Lobito, Angola, wait for a plate of corn

porridge, their only daily meal, supplied by Jesus Alive Ministeries, a South African

based Christian group. The children show signs of malnutrition such as thinning and

yellowing hair, flaking skin, and potbellies. 

© AP Photo/ Pieter Malan
27

UNITED STATES DEPARTMENT OF STATE

STRATEGIC GOAL #11: PUBLIC DIPLOMACY AND PUBLIC AFFAIRS 

Educating the Public About Terrorism

I

n an exciting new outreach initiative, the Bureau of Public Affairs

produced a high-quality historical video and curriculum package

on terrorism for use in high school classrooms around the country.

A War Without Borders was designed to give students a brief

overview of the history and impact of terrorism and help them

understand its relationship to their own lives. Distributed to nearly

13,000 social studies teachers, A War Without Borders reached more

American students than any other post-9/11 curriculum package,

according to an independent university study. Feedback has been

overwhelmingly positive, and many teachers have decided to re-use

the package annually. The video is the first in a series created

especially for students to help them understand both the

complexities and opportunities of the world in the 21st century.

STRATEGIC GOAL #12: MANAGEMENT AND ORGANIZATIONAL EXCELLENCE

Strengthening Embassy Compounds

T

he Bureau of Overseas Buildings Operations (OBO) completed seven

capital construction projects in FY 2003. These include new embassy

compounds (NECs) in Tunis, Dar es Salaam, Zagreb, Istanbul; the USAID

facility in Dar es Salaam; and the Bogota USAID/NAS Annex. These

facilities were accomplished on time and within budgets based on their

construction contracts. In addition, OBO had 17 capital projects under

construction and another 9 projects awarded at the end of FY 2003.

These, plus 81 new embassy compound (NEC) capital projects currently in

planning, will significantly strengthen embassy and consulate compounds

to provide secure, safe, and functional facilities for U.S. Government

employees serving the nation’s interests overseas. The Department’s

overseas buildings plan is in high gear as evidenced by the number of fine

new facilities being completed and those on the way.

In the Department-produced video and curriculum package Terrorism:

A War Without Borders (pictured at left), students around the country

were challenged to answer the question, “What do you think?” The

classroom-ready package fully supports the curriculum standards of the

National Council for the Social Studies. Department of State Photo

U.S. Marines raise the American flag during the inauguration of the new U.S.

Embassy in Nairobi, Kenya. Al-Qaida operatives planned to destroy the U.S.

Embassy in Nairobi in June with a truck bomb and a hijacked small plane

loaded with explosives. 

© AP Photo/ Khalil Senosi
28

UNITED STATES DEPARTMENT OF STATE

The Office of Management and Budget (OMB) uses the Program Assessment Rating Tool (PART) to assess

federal programs. Through the use of in-depth, diagnostic questions, the PART is employed to assess and

evaluate programs across a set of performance-related criteria. PART results are then used to help improve

program management and ensure that the American taxpayers receive the best value for their tax dollars.

In the fall of 2002 and summer of 2003, OMB reviewed approximately 40% of State's programs and plans to

review an additional 20% in the spring/summer of 2004. The results of these reviews are used to inform the

planning and budgeting process and are published in the annual President's Budget, which is submitted

to Congress. Information depicted in Table 1 shows that most of the Department’s initial PART programs

demonstrated improvement when reassessed in 2003. As shown in Table 1, all of the Department’s reassessed

PARTs are now rated Moderately Effective or above. Finally, the Department has created efficiency measures for

all PART programs reviewed to date.

The results from the PART reviews conducted by OMB are summarized on the following pages by strategic goal.

Information is provided describing how bureaus have addressed and implemented findings and

recommendations.

PROGRAM ASSESSMENT RATING TOOL (PART) STATUS

2003 RATINGS REFLECT IMPROVEMENT

2002 Results

0

4

2

3

9

3

6

0

0

9

2003 Results

Effective

Moderately Effective

Adequate

Results Not Demonstrated

Totals

Rating

0%

Percentage Rated

“Moderately Effective” or Better

20%

2002

66%

60%

40%

80%

100%

2003

100%

TABLE 1

STATUS OF RE-ASSESSED PARTs
STRATEGIC GOAL 1 REGIONAL STABILITY

Program Name

Score and Rating

Lead Bureau

Major Findings/

Recommendations

Actions Taken/Planned

Military Assistance to New NATO and NATO

 Aspirant Nations

FY 2004: Moderately Effective

FY 2005: Moderately Effective

European and Eurasian Affairs (EUR)

There is no regularly scheduled evaluation of program effectiveness by independent parties.

The Department of State and Defense differ on priorities and do not produce coinciding

budget schedules.

DoD goals are discussed in interagency meetings to balance DoD requirements with Department

goals. This will produce a single, agreed-upon recommendation.

Program Name Security Assistance to Sub-Saharan Africa

FY 2004: Results Not Demonstrated

FY 2005: Moderately Effective

African Affairs (AF)

Programs did not differentiate between annual and long-term goals, or include targets and

baseline information.

Performance goals are overly broad and dependent on numerous factors.

Information in performance reports is not linked to performance plan measures or compared

against baseline data.

Program managers not held accountable for program performance.

Provided proposed measures to OMB for review.

Provided performance data for use in Department's Performance and Accountability Report.

Incorporated responses to recommendations in FY 2005 BPP.

Score and Rating

Lead Bureau

Major Findings/

Recommendations

Actions Taken/Planned

Program Name Peacekeeping Operations OSCE

Score and Rating

Lead Bureau

Major Findings/

Recommendations

Actions Taken/Planned

FY 2004: Results Not Demonstrated

FY 2005: Moderately Effective

European and Eurasian Affairs (EUR)

Does not contain adequate annual targets or baseline information.

Performance goals are overly broad and dependent on numerous factors.

Information in performance reports is not linked to performance plan measures or compared against

baseline data.

Program managers not held accountable for program performance.

USOSCE, EUR and PM developed detailed performance indicators for PKO-funded OSCE Missions

and Activities.

Performance indicators developed for OSCE-brokered political settlements in Moldova, NagornoKarabakh conflict between Armenia and Azerbaijan and US initiatives to improve financial management

of the OSCE Secretariat.

FY 2005 USOSCE Mission Performance Plan (MPP) praised by OMB as a model for clarity of performancebased foreign policy objectives.

TABLE 2

PART SUMMARIES BY STRATEGIC GOAL

29

UNITED STATES DEPARTMENT OF STATE
30

UNITED STATES DEPARTMENT OF STATE

H O M ELAND SECURITY

V isa and Consular Services/ Border Security

FY 2004: Moderately Effective

FY 2005: Moderately Effective

Consular Affairs (CA)

Annual goals and targets do not adequately link to the long-term goals or provide relevant

performance data.

CA is making a concerted effort and working with OMB to ensure that annual goals and targets

link to the long-term goals and provide relevant performance data. Revised goals and targets

will be reflected in next year’s PART.

Program Name

STRATEGIC GOAL 3

Score and Rating

Lead Bureau

Major Findings/

Recommendations

Actions Taken/Planned

COUNTERTERRORISM

Anti-Terrorism Assistance

FY 2004: Moderately Effective

FY 2005: Effective

Diplomatic Security (DS)

Long-term goals do not have performance indicators or other long-term targets.

Program should establish measures to gauge progress toward long-term goals.

Establish long term goals and targets.

Establish measures to gauge progress toward long-term goals.

Program Name

STRATEGIC GOAL 2

Score and Rating

Lead Bureau

Major Findings/

Recommendations

Actions Taken/Planned

STRATEGIC GOAL 10

Program Name

HUMANITARIAN RESPONSE

Score and Rating

Lead Bureau

Major Findings/

Recommendations

Actions Taken/Planned

Refugee Admissions to the U.S.

FY 2004: Adequate

FY 2005: Moderately Effective

Population, Refugees and Migration (PRM)

Program managers at the Department closely collaborate with grantees and state governments

to ensure effective use of funds.

Management should focus on strategic planning. 2003 and prior performance plans had overly

broad goals that made it difficult to measure effectiveness.

Overlap was found between functions of DoS and HHS programs.

OMB will review the relationship between the Refugee Admissions program at the Department

of State and the Office of Refugee resettlement at HHS.

The Department will continue ongoing efforts to improve strategic planning and ensure that

goals are measurable and mission-related.

Humanitarian Migrants to Israel

FY 2004: Adequate

FY 2005: Moderately Effective

Population, Refugees and Migration (PRM)

Program needs continued focus on strategic planning; needs more ambitious targets.

PRM has been working with the United Israel Appeal (UIA) and the Jewish Agency for Israel

to create annual performance goals that meaningfully reflect program purpose.

The program is making some progress toward achieving its long-term and short-term goals.

In FY 2003, the Department and UIA developed an agreed upon set of long-term and short term

goals for UIA.

Program Name

Score and Rating

Lead Bureau

Major Findings/

Recommendations

Actions Taken/Planned
STRATEGIC GOAL 11

Program Name

PUBLIC DIPLOMACY AND PUBLIC AFFAIRS

Score and Rating

Lead Bureau

Major Findings/

Recommendations

Actions Taken/Planned

Educational Exchanges in Near East Asia

and South Asia

FY 2004: Results Not Demonstrated

FY 2005: Effective

Education and Cultural Affairs (ECA)

Interim FY 2004 Finding: Program needs to strengthen strategic planning by taking the

following actions:

1. Set long-term goals relative to baseline,

2. Clearly define targets and timeframes to measure annual progress,

3. Create regional long-term goals, and

4. Tailor its planning by regional/country to effectively reach target audiences.

Department provides proposed performance measures and goals as well as a proposed

planning process to OMB for review.

Long-term and annual goals are set to established baselines, targets and timeframes now

included in performance indicators.

Regional goals are established through coordination with regional bureaus.

Program planning tailored by region/country and target audience. Partnerships for Learning

(P4L) initiative launched.

A performance measurement system, based on PART recommendations in development,

FY 2003 pilot testing includes NEA and SA exchanges.

Hired an exchanges coordinator, started an exchange working group, and hired a Middle

East Initiatives evaluation officer.

STRATEGIC GOAL 12

Program Name

MANAGEMENT AND ORGANIZATIONAL EXCELLENCE

Score and Rating

Lead Bureau

Major Findings/

Recommendations

Actions Taken/Planned

Capital Security Construction

FY 2004: Moderately Effective

FY 2005: Effective

Overseas Buildings Operations (OBO)

At the time of the FY 2004 PART review, the effects of management changes undertaken in

OBO were not yet known. However, the effects of management changes were fully documented

in the FY 2005 PART and were shown to be highly successful as evidenced by outstanding

results demonstrated by the Capital Security Construction program.

The Department developed annual and long-range performance goals, which are closely

integrated with the budget – one of the positive results from management changes made

over the past two years in OBO.

31

UNITED STATES DEPARTMENT OF STATE
32

UNITED STATES DEPARTMENT OF STATE

THE PRESIDENT’S MANAGEMENT AGENDA

The Department has made substantial progress on each of the five President’s Management Agenda (PMA)

initiatives. Each quarter, The Office of Management and Budget (OMB) releases an executive scorecard which

rates progress and overall status in each of the President’s Management Agenda initiatives. The progress and

status ratings are based on a color-coded system that is based on criteria determined by OMB for all agencies.

As of December 2003, the Department achieved four “green” and one “yellow” score for progress on

implementation. With respect to overall status, the Department has made significant improvements in several

areas, with the status scores for Strategic Management of Human Capital, Improved Financial Performance, and

Budget and Performance Integration now at “yellow”. The following is a brief overview of the Department’s

overall PMA progress.

THE PRESIDENT’S MANAGEMENT AGENDA 

AND MANAGEMENT CHALLENGES

STRATEGIC MANAGEMENT OF HUMAN CAPITAL

GOAL

Build, sustain, and deploy effectively a skilled, knowledgeable, diverse, and high-performing workforce aligned

with mission objectives.

PROGRESS DURING FY 2003

Implemented the second year of the Diplomatic Readiness Initiative (DRI).

Integrated Human Capital elements in all Bureau Performance Plans (BPPs).

Enhanced Domestic Staffing Model (DSM). Implemented Civil Service succession model.

Developed new Foreign Service (FS) evaluation form.

Expanded use of Accountability System.

UPCOMING ACTION

Document Comprehensive Human Capital Plan.

Use enhanced workforce planning tools for budget preparation and financial plan implementation.

Evaluate enhanced Domestic Staffing Model (DSM) administrative function opportunities and report on management

decisions regarding next steps.

Finalize changes to Foreign Service performance evaluation process and prepare for pilot.

Expand Accountability System to cover additional management processes.

Report on results of third year of leadership & management training initiative and new class of Senior Executive

Service Candidates in OPM program.

Progress Status

COMPETITIVE SOURCING

GOAL

Use competition to determine the most effective method of providing commercial activities to the 

Department of State.

PROGRESS DURING FY 2003

Completed first streamlined competition. Secured $1.2 million to initiate program.

Contractor hired to conduct market analysis, benchmarking and organizational assessment for entire Multi-Media

Services organization.

Began program of expanded training including human resources, FAIR Act, and contracting staff.

Issued Competitive Sourcing guidance establishing a Competitive Sourcing Official, Competition Council, and

Steering Committee.

UPCOMING ACTION

Release FAIR Act inventory and complete challenge/appeals process.

Evaluate competition candidates and report on status of media services review.

Progress Status
33

UNITED STATES DEPARTMENT OF STATE

GOAL

Improve accountability through audited financial statements.

Increase accuracy of benefit and assistance payments, and strengthen management controls.

Implement financial systems that produce timely, accurate and useful financial information.

PROGRESS DURING FY 2003

New Regional Financial Management System (RFMS) implemented for all overseas posts.

The Department’s FY 2003 Financial Statements received an unqualified opinion, marking the seventh consecutive

unqualified opinion, and were issued five weeks earlier than FY 2002.

Received the prestigious Certification of Excellence for Accountability Reporting (CEAR) for the "FY 2002 Performance

and Accountability Report". State was also honored to receive the Platinum 2002 Vision Award for the "Performance

and Accountability Highlights" placing fourth overall from among over 900 entrants.

Resolved all material weaknesses and material nonconformances allowing the Secretary to issue an unqualified

Statement of Assurance for FY 2003.

Relocated the Department’s financial operations from the Paris Financial Service Center (FSC) to the Charleston,

South Carolina and Bangkok, Thailand FSCs.

UPCOMING ACTION

Ongoing consolidation of headquarters financial operations to the Charleston FSC.

Ongoing collaboration with USAID to establish a joint financial platform for the beginning of FY 2006.

Streamline processes to meet the accelerated financial reporting due date of November 15th for FY 2004 

and beyond.

IMPROVED FINANCIAL PERFORMANCE

Progress Status

EXPANDED ELECTRONIC GOVERNMENT

GOAL

Expand the federal government’s use of electronic technologies (such as e-procurements, e-grants,

and e-regulation), so that Americans can receive high-quality government service.

PROGRESS DURING FY 2003

Completed certification and accreditation (C&A) for 56 out of 139 systems.

Department and USAID completed a joint As-Is Enterprise Architecture.

Submitted the first Federal Information Security Management Act (FISMA) report.

Completed Classified Connectivity project ahead of schedule and under budget.

UPCOMING ACTION

The joint State/USAID Management Council agrees on an implementation plan for the joint “To-Be” Enterprise

Architecture with milestones for lines of business.

Report on percentage of systems certified and accredited.

OIG verifies that there is a Department-wide IT Security Plan of Action and Milestones.

The State Messaging and Archive Retrieval Toolset (SMART) Program Management Office (PMO) will coordinate

with the E-government initiatives to ensure the project is not redundant, or agency unique.

Progress Status

B UDGET AND PERFORMANCE INTEGRATION

GOAL

Improve performance and management by linking performance to budget decisions and improve performance

tracking and management.

PROGRESS DURING FY 2003

Developed first-ever joint State-USAID Strategic Plan.

Reduced Strategic Objectives by 55%, reduced strategic goals by 40%, and developed outcomeoriented performance goals that directly link to the strategic objectives and goals.

Allocated resources at both the strategic and performance goal levels for both State and non-State administered accounts.

Created efficiency measures for all completed PART programs.

Completed automation of Mission and Bureau Performance Plan Modules.

UPCOMING ACTION

Develop efficiency measures for all programs.

Develop Bureau Resource Management System CFPS Module.

Progress Status
34

UNITED STATES DEPARTMENT OF STATE

MANAGEMENT CHALLENGES

The General Accounting Office and the Department’s Office of Inspector General have identified several

“management challenges” that represent areas where the Department must improve operations. The table

below summarizes, by strategic goal, each of the challenges, their corresponding findings, recommendations,

actions being taken and expected results.

STRATEGIC GOAL

Challenge

HOMELAND SECURITY

Recommendations

Actions Being Taken

V isa Processing and Border Security

Develop a clear policy on the priority attached to addressing national security concerns connected

with the visa process; develop more comprehensive guidance on how posts should use the visa process

to screen against potential terrorists; assess staffing requirements for visa operations; and expand

consular training.

Ensure that appropriate units within INS and the FBI receive notification of visa revocations.

Visa process must be considered as part of a larger process of admitting and tracking visa recipients.

Issued a “visa roadmap” outlining new visa priorities and policies. Issued over 40 standard operating

procedures to ensure that consular officers abroad properly review visa applications, effectively fulfill

their critical national security responsibilities, and have a step-by-step, unambiguous guide for all

procedures.

Visa revocation problems were fixed. Written instructions provided in the Foreign Affairs Manual.

Notice of visa revocation is provided to the Department of Homeland Security and the FBI. Visa

revocation lookout code is shared between DOS and DHS lookout systems. (GAO Report 03-798)

Added staff, including a Senior Advisor for Strategic Planning, in the Visa Office and established

39 new overseas positions funded by visa fees and 51 new consular positions.

Introduced new training on interviewing techniques, with additional emphasis on ethics and terrorism

and expanded Chief of Mission, DCM and Principal Officer training.

INTERNATIONAL CRIME AND DRUGS

Recommendations

Actions Being Taken

Strategic Planning

Establish clear objectives, including developing specific performance measures, and estimate future

U.S. funding requirements for the programs with the Colombian Army and the Colombian National

Police.

Beginning with the FY 2005 budget cycle, the Department intends to establish clear objectives, develop

performance measures and estimate future funding requirements. This is now possible due to the

maturation of “Plan Colombia” over three years.

STRATEGIC GOAL

Challenge

STRATEGIC GOAL

Challenge

DEMOCRACY AND HUMAN RIGHTS

Interagency Coordination

The Department and other agencies should develop more comprehensive strategic plans at the regional

and country level to address cooperation among agencies and other major donors.

Establish a strategy for evaluating projects and a mechanism to share information among U.S. agencies

and project implementers.

Interagency discussions are now underway that will lead to increased USG cooperation in implementing

democracy assistance programs. The immediate objectives of interagency meetings will be to share

information, avoid duplication and ensure optimal use of available funds from all sources.

Recommendations

Actions Being Taken
35

UNITED STATES DEPARTMENT OF STATE

STRATEGIC GOAL

Challenge

MANAGEMENT AND ORGANIZATIONAL EXCELLENCE

Recommendations

Actions Being Taken

Financial Management

Address delinquencies before they reach the 90-day past due category by putting into place a process

to address delinquencies in the 60-day past due period before the cards are automatically suspended.

Provide program coordinators with clear written guidance on an Intranet site; provide adequate

formal training.

Improve oversight of travel card program by checking for multiple accounts and transferring/canceling

travel cards when an employee leaves a bureau.

Implementing a process to deal with travel card payment delinquencies in the 90- and 120-day past

due categories.

Launching a preliminary effort to detect and prevent misuse of travel cards.

Overseas Building Security

Because of the high costs and importance of the Capital Security Construction program, GAO believes

the program merits continued oversight.

Constructing perimeter walls, anti-ram barriers, and access controls at many facilities. Funding the

construction of new buildings and other such capital projects to improve overseas facilities.

Knowledge Management

Identify business requirements, such as core diplomatic functions, as a basis for shaping KM approach.

Implement KM through IT tools, commitment and support structures such as training.

Identify and counteract cultural barriers to KM.

Improving DOS intranet site to collect, integrate and share knowledge more efficiently. 

Exploitation of key technologies to improve the Department’s performance worldwide. 

Greater use of classified and unclassified government networks for information exchange.

The Department is developing a system to provide diplomats and managers with significantly enhanced

communications and knowledge management tools.

In FY 2002 and FY 2003, the Department completed a Business Process Reegineering (BPR) study,

determined requirements, assessed alternatives and completed and evaluated a prototype/proof of

concept for elimination of the legacy cable system.

In FY 2004, one vendor was selected to develop a solution for a design/demonstration. The solution

will be piloted involving over 4,000 users in domestic and overseas locations.

In FY 2005, the system known as State Messaging and Archive Retrieval Toolset (SMART) will be

deployed worldwide.

Recommendations

Actions Being Taken

Challenge

Challenge

Recommendations

Actions Being Taken
36

UNITED STATES DEPARTMENT OF STATE

FEDERAL MANAGERS’ FINANCIAL INTEGRITY ACT 

The Federal Managers’ Financial Integrity Act (FMFIA) requires agencies to establish management control

and financial systems that provide reasonable assurance that the integrity of federal programs and

operations are protected. It also requires that the head of the agency, based on an evaluation, provide

an annual Statement of Assurance on whether the agency has met this requirement.

The Secretary of State’s unqualified Statement of Assurance for FY 2003 is included in the Secretary’s letter at

the beginning of this report. The Department evaluated its management control systems and financial

management systems for the fiscal year ended September 30, 2003. This evaluation provided reasonable

assurance that the objectives of the FMFIA were achieved in FY 2003, and formed the basis for the Secretary’s

Statement of Assurance.

Management Control Program

The Management Control Steering

Committee (MCSC) oversees the

Department’s management control

program. The MCSC is chaired by the

Chief Financial Officer, and is

composed of nine other Assistant

Secretaries [including the Chief

Information Officer and the Inspector

General (non-voting)], the Deputy

Chief Financial Officer, and the Deputy

Legal Advisor. Individual assurance

statements from Ambassadors

assigned overseas and Assistant

Secretaries in Washington, D.C. serve as the primary basis for the Department’s assurance that management

controls are adequate or that material weaknesses exist. The assurance statements are based on information

gathered from various sources including the managers’ personal knowledge of day-to-day operations and

existing controls, management program reviews, and other management-initiated evaluations. In addition, the

Office of the Inspector General and/or the General Accounting Office conduct reviews, audits, inspections, and

investigations.

To be considered a material weakness in management control systems for FMFIA reporting purposes,

the problem should be significant enough that it meets one or more of the FMFIA material weakness criteria.

The chart above describes the criteria that the Department uses for the FMFIA review.

MANAGEMENT CONTROLS, SYSTEMS AND COMPLIANCE

WITH LAWS AND REGULATIONS

Significantly impairs the fulfillment of the

Department’s mission.

Deprives the public of needed services.

Significantly weakens established safeguards against

waste, loss, unauthorized use or misappropriation of

funds, property, other assets, or conflicts of interest.

Merits the attention of the Secretary, the President, or

a relevant Congressional oversight committee.

Is of a nature that omission from the report could reflect

adversely on the Department’s management integrity.

FMFIA MATERIAL WEAKNESS CRITERIA
Status of Management Controls 

During the last five years, the Department made significant progress reducing the number of material

weaknesses from 10 to zero with the addition of two new weaknesses and the closure of 12 weaknesses.

In addition, there are no items specific to the Department on the General Accounting Office’s High Risk List, and

there have not been any since 1995. The following tables show the Department’s progress during the past five

years with correcting and closing material weaknesses.

Status of Financial Systems

For financial systems, the MCSC voted to close in FY 2003 the Department’s one remaining material

nonconformance - Financial and Accounting Systems. This is the first time since the inception of the FMFIA that

the Department has no open material nonconformances – a significant accomplishment. A summary of actions

taken to correct and close the one previously reported material nonconformance is provided in the table below.

NUMBER OF MATERIAL WEAKNESSES BY FISCAL YEAR

* Reported by the Department of State as a result of the merger with the United States Information Agency.

Number at Beginning

of Fiscal Year

10

3

3

3

0

Number

Corrected

7

2

-

3

-

Number

Added

-

2

-

-

-

Number Remaining

at End of Fiscal Year

3

3

3

0

0

1999

2000

2001

2002

2003

Fiscal

Year

*

Material Nonconformance Corrective Actions Strategic

Goal

Financial and Accounting Systems

In 1983, the Department identified substantial

weaknesses in its financial management systems.

When first reported, the Department was burdened

with managing six financial management systems

worldwide, which support its domestic bureaus, overseas

posts, and other overseas agencies. The financial

management systems’ nonconformance includes the

following five weaknesses: deficiencies in data quality,

noncompliance with JFMIP core requirements,

ineffective interfaces, inadequate documentation and

audit trails, and inadequate support of mission

performance.

Significant progress has been made over the past few years

to improve financial management systems worldwide. The

Department has reduced the number of financial

management systems from six to two; reduced the number

of post-level financial systems from nine to two; and,

re-centralized disbursing offices from 22 to two.

Implementation of the new Regional Financial Management

System (RFMS) was completed September 2003 and is

operational in all overseas posts. The reengineered overseas

interface is operational, providing detailed (transaction

level) information. Continuity of Operations Plans have

been developed for Financial Service Centers in Charleston,

SC and Bangkok and for Washington headquarters

operations.

Management and

Organizational

Excellence

SUMMARY OF FMFIA MATERIAL NONCONFORMANCE CLOSED IN FY 2003

37

UNITED STATES DEPARTMENT OF STATE
38

UNITED STATES DEPARTMENT OF STATE

FEDERAL FINANCIAL MANAGEMENT IMPROVEMENT ACT

The Federal Financial Management Improvement Act of 1996 (FFMIA) is designed to improve Federal financial

management by requiring that financial management systems provide reliable, consistent disclosure of financial

data in accordance with generally accepted accounting principles and standards. Under FFMIA, agencies’

financial management systems must comply substantially with three requirements: (1) Federal financial

management system requirements; (2) applicable Federal accounting standards and (3) the U.S. Government

Standard General Ledger (SGL). FFMIA also requires that the Independent Auditor’s Report indicate whether the

agency’s financial management systems comply with these requirements.

Since enactment, the Department’s financial management systems have not been in substantial compliance with

FFMIA. As required by the law, the Department, in consultation with OMB, developed a remediation plan (the

Plan) that, if properly implemented, would result in substantial compliance with FFMIA and improved financial

management systems. The Department has made significant progress implementing the Plan. To date, eleven of

the twelve initiatives included in the Plan are complete and the twelfth initiative is substantially complete. This

progress, along with other information such as the independent auditor’s report, is evaluated when making a

determination about whether the Department’s financial management systems substantially comply with FFMIA.

The Department’s determination is included in the Assistant Secretary and Chief Financial Officer’s message at

the beginning of this report. The table below provides a summary of the three Plan initiatives that were

completed on schedule during FY 2003.

Initiatives Strategic Goal Description

Regional Financial

Management System

(RFMS)

Business Continuity

Plans

Central Financial

Planning System (CFPS)

Statement of Net Cost

Module

Management and

Organizational

Excellence

Management and

Organizational

Excellence

Management and

Organizational

Excellence

RFMS supports State’s goal to establish and maintain a single, integrated financial

management system. RFMS (1) replaces and reduces the number of overseas regional

systems from two to one; (2) incorporates State’s standard account code structure, and

(3) standardizes financial transactions between RFMS and CFMS, which will result in

consistent processing and recording of financial data worldwide.

State must always be prepared to deal with a broad range of crises, ranging from natural

disasters to political instability to terrorist attacks. Financial processes and financial

management systems must be safeguarded should any of our business centers be faced

with a crisis.

As presented in the Department’s updated FY 2004 OMB Exhibit-300 business case,

CFPS is the implementation of five distinct modules that together enable more timely

and accurate reporting on linking spending, costs, and budgeted resources to performance

information. Specific to improving financial management systems and performance, the

CFPS Statement of Net Cost Module provides the ability to: associate costs and revenues

to strategic goal by organization; produce the Statement of Net Cost; and substantially

comply with managerial cost accounting standards.

PLAN INITIATIVES COMPLETED IN FY 2003

The table on the following page describes progress made on the twelfth initiative, which is substantially (but not

entirely) complete. As of September 30, 2003, the independent auditor considered the Department’s corrective

actions sufficiently advanced to reduce this previously reported material weakness in information systems

security to a reportable condition.
Initiative Strategic

Goal Description

Information

Systems Network

Security

Management and

Organizational

Excellence

PLAN INITIATIVE SUBSTANTIALLY COMPLETED IN FY 2003

State is implementing a comprehensive framework and process for lifecycle management of IT

security. The framework and process will provide continual evaluation and improvement. A

significant portion of this initiative is now complete including the following: developed a Systems

Security Program Plan; adopted the National Institute of Standard Technology (NIST) Certification

and Accreditation Program (NISTCAP); established a Configuration Control Board; and implemented

an ongoing Certification & Accreditation program.

GOVERNMENT MANAGEMENT REFORM ACT - AUDITED FINANCIAL STATEMENTS

The Government Management Reform Act (GMRA) of 1994 amended the requirements of the Chief Financial

Officers (CFO) Act of 1990 by requiring an annual preparation and audit of agency-wide financial statements

from the 24 major executive departments and agencies. The statements are to be audited by the Inspector

General (IG), or an independent auditor at the direction of the IG. An audit report on the principal financial

statements, internal controls, and compliance with laws and regulations is prepared after the audit is completed.

The Department’s 2003 financial statements received an unqualified opinion — the best possible result of the

audit process. This year marks the seventh consecutive year that the Department’s financial statements have

achieved such an opinion. The Department significantly accelerated the preparation and audit of its 2003

financial statements — about five weeks earlier than last year. This marks important progress towards our goal

of providing more timely, accurate, and useful financial information.

In relation to internal control, the Independent Auditor’s Report cites four reportable conditions: (1) information

systems security for networks in domestic operations, (2) inadequacy of the Department’s financial management

systems, (3) management of unliquidated obligations, and (4) implementation of Managerial Cost Accounting

Standards. Reportable conditions are significant deficiencies, though not material, in the design or operation of

internal control that could adversely affect the Department’s ability to record, process, summarize and report

financial data consistent with the assertions of management in the financial statements. For each year since

1997, the Independent Auditor’s report cited the first matter above relating to information systems security as a

material weakness in internal control. The FY 2003 Independent Auditor’s Report acknowledges that the

Department’s work towards correcting this deficiency is sufficiently advanced to reduce this weakness to a

reportable condition. The Independent Auditor’s Report also states that the Department’s financial management

systems are non-compliant with laws and regulations, including the FFMIA.

The table on the following page summarizes the weaknesses in internal control and compliance with laws and

regulations cited in the FY 2003 Independent Auditor’s Report, as well as the actions taken to resolve the

problems.

39

UNITED STATES DEPARTMENT OF STATE
40

UNITED STATES DEPARTMENT OF STATE

Reportable Conditions Corrective Actions

Information System Network Security

Information system networks for domestic operations are

vulnerable to unauthorized access. Consequently, other systems,

including the Department’s financial management systems, which

process data using these networks, may also be vulnerable. This

weakness was first reported based on penetration tests performed

by the General Accounting Office (GAO) and was also cited in

the audit opinion on the 1997 financial statements. The auditor

reported this matter as a material weakness in internal control

each year since 1997. For 2003, the auditor considered the

Department’s corrective actions sufficiently advanced to reduce

this deficiency to a reportable condition.

SUMMARY OF INDEPENDENT AUDITOR’S REPORT FINDINGS 1

Over the past year, we have taken considerable measures to improve

our cyber security posture, to include:

Establishing a baseline inventory of applications

Developing and implementing a systems/sites authorization 

project and meeting the first goal of authorizing one-third of 

systems by August 2003

Developing and Implementing a Department-wide process to 

track corrective action in mitigating security weaknesses

Completing the Information Assurance role-based curriculum 

with the addition of courses for managers at different levels 

and a web-based security awareness briefing

Revising Department cyber security roles and responsibilities, 

and developing a draft cyber security program management 

plan

Maintaining a strong perimeter defense and incident response

In FY 2004, the Department plans to complete the authorization of the

remaining two-thirds of the systems.

Management of Unliquidated Obligations

The Department’s internal control process related to managing

undelivered orders is inadequate. It lacks a structured process

for reconciling and deobligating funds in a timely manner, which

may result in the loss of those funds.

Compliance with Managerial Cost Accounting Standards

While the Department complies with certain aspects of the

Statement of Federal Financial Accounting Standards #4, it does

not have an effective process to routinely collect managerial cost

accounting information, establish outputs for each responsibility

segment, or allocate all support costs.

Financial and Accounting Systems

In 1983, the Department identified serious weaknesses in its

financial management systems. When first reported, the

Department was burdened with overseeing six financial

management systems that support its domestic bureaus, overseas

posts and other overseas agencies. The financial management

systems nonconformance includes the following five weaknesses:

deficiencies in data quality; noncompliance with JFMIP core

requirements; ineffective interfaces; inadequate documentation

and audit trails; and inadequate support of mission performance.

As mentioned in the Independent Auditor’s Report, the Department

has made significant improvements in this area. The Unliquidated

Obligation System was implemented in 2000. The system is updated

periodically for detailed unliquidated obligation data and facilitates

the reconciliation, monitoring, reporting and oversight of unliquidated

obligations worldwide. Data in the system is analyzed to facilitate the

review and management of open items. For example, in 2001, instructions

and reports were issued to offices to review over $2.9 billion in

unliquidated obligations. We continue to develop reports and procedures

to improve the management of unliquidated obligations.

The Department is making progress in implementing Management Cost

Accounting Standards (MCAS). To address MCAS requirements the

Department developed a Statement of Net Cost methodology (described

in our FFMIA section of this report) that will enable timely and accurate

reporting of cost information by responsibility segment and strategic

goal.

Significant progress has been made over the past few years to improve

financial management systems worldwide. The Department has reduced

the number of financial systems from six to two; decreased the number

of post-level financial systems from nine to two; and re-centralized

disbursing offices from 22 to two. Implementation of the new Regional

Financial Management System (RFMS) was completed September 2003

and is operational in all overseas posts. The reengineered overseas

interface is operational, providing detailed (transaction level) information.

Continuity of Operations Plans have been developed for Financial

Service Centers in Charleston, SC and Bangkok and for Washington

headquarters operations. The Department will continue its ongoing

effort to enhance its financial systems in FY 2004.

Noncompliance with Laws and Regulations Corrective Actions

Financial and Accounting Systems

See discussion above. See description above.

1 Target date for correcting these reportable conditions is FY 2004. All issues relate to the Management and Organizational Excellence strategic goal.
Financial

Section

F ISCAL Y EAR 2003 P ERFORMANCE AND A CCOUNTABILITY R EPORT
42

UNITED STATES DEPARTMENT OF STATE

The Department’s financial statements received for the seventh straight year an unqualified audit opinion

issued by the independent accounting firm of Leonard G. Birnbaum and Company, LLP. Preparing these

statements is part of the Department’s goal to improve financial management and to provide accurate

and reliable information useful for assessing performance and allocating resources. Department management is

responsible for the integrity and objectivity of the financial information presented in the financial statements.

FINANCIAL HIGHLIGHTS

1

 The Department administers the operations of the Foreign Service Retirement and Disability Fund. This Fund

provides annuities to retired members of the Foreign Service (or their survivors).

%

(Dollars In Thousands) Change 2003 2002

Total Assets

30

28

26

24

in Millions

FY 2003 FY 2002

Total Liabilities

16

14

12

10

in Millions

FY 2003 FY 2002

Total Net Position

14

12

10

8

in Millions

FY 2003 FY 2002

Total Net Cost of Operations

10

8

6

4

in Millions

FY 2003 FY 2002

At End of Year:

Condensed Balance Sheet Data:

 Investments, Net +5% $ 12,301,173 $ 11,750,737

 Fund Balances With Treasury +11% 9,953,197 8,937,139

 Property and Equipment, Net +9% 5,996,493 5,499,850

 Other -1% 643,783 652,431

Total Assets +8% $ 28,894,646 $ 26,840,157

 Foreign Service Retirement Actuarial1

 +7% $ 13,093,800 $ 12,211,800

 Liability to International Organizations -14% 919,428 1,065,172

 Other +14% 1,767,908 1,547,431

Total Liabilities +6% 15,781,136 14,824,403

 Unexpended Appropriations +19% 8,536,307 7,154,023

 Cumulative Results of Operations -6% 4,577,203 4,861,731

Total Net Position +9% 13,113,510 12,015,754

Total Liabilities and Net Position +8% $ 28,894,646 $ 26,840,157

For the Year:

Condensed Statement of Net Cost:

Achieve Peace and Security -2% $ 3,176,918 $ 3,256,937

Advance Sustainable Development and

Global Interests +18% 2,479,256 2,093,813

Promote International Understanding -15% 1,352,929 1,596,964

Executive Direction and Other Costs

Not Assigned +47% 2,050,514 1,391,025

Total Net Cost of Operations +9% $ 9,059,617 $ 8,338,739

Total Cost +13% $ 12,222,640 $ 10,837,835

Total Earned Revenue +27% (3,163,023) (2,499,096)

Total Net Cost of Operations +9% $ 9,059,617 $ 8,338,739
43

UNITED STATES DEPARTMENT OF STATE

O VERVIEW OF FINANCIAL POSITION

Assets. The Department had

total assets of $28.9 billion at the

end of 2003. This represents an

increase of $2.1 billion (7.8%) over

the previous year’s total assets of

$26.8 billion. The increase is

primarily the result of increases of

$1.0 billion in Fund Balances with

Treasury, $496.6 million in property

and equipment, and $550.4 million

in investments in the Foreign

Service Retirement and Disability

Fund (FSRDF). The increase in Fund Balances with Treasury primarily resulted from a $1.4 billion increase in

unexpended appropriations.

Investments, Fund Balances with Treasury and Property and Equipment comprise 98% of total assets for 2003,

2002, and 2001. Investments consist almost entirely of U.S. Government Securities held in the FSRDF.

Liabilities. The Department had

total liabilities of $15.8 billion at

the end of 2003.

The Foreign Service Retirement

Actuarial (FSRA) Liability of

$13.1 billion and the Liability to

International Organizations of

$919.4 million comprise 89% of

the Department’s total liabilities at

the end of 2003.

Of the total liabilities, $1.96 billion were unfunded, i.e., budgetary resources were not available to cover these

liabilities. The $1.96 billion is primarily comprised of the $919.4 million Liability to International Organizations,

and the unfunded portion of the FSRA Liability of $653.8 million, which represents the amount by which the

$13.1 billion FSRA Liability exceeds the FSRDF’s net assets available to pay the liability. The $653.8 million

unfunded portion of the FSRA Liability is $329.1 million more than the $324.7 million unfunded FSRA Liability

at the end of 2002.

The $919.4 million Liability to International Organizations consists of $869.2 million in calendar year 2003

annual assessments, and $50.2 million in accumulated arrears assessed by the UN, its affiliated agencies and

other international organizations. These financial commitments mature into obligations only when funds are

authorized and appropriated by Congress.

As of September 30, 2003, a total of $926 million had been appropriated by Congress for payment of U.S.

arrearages. These amounts, however, were made available subject to certifications by the Secretary of State that

certain legislative requirements were met. A payment of $100 million in arrearages was made in FY 2000; a

payment of $475 million and a credit of $107 million were made in FY 2002; and payments totaling $242 million

were made in FY 2003. Thus, $2 million of appropriations for arrearage payments remain.

Assets by Type

20.8%

34.4%

42.6%

2.2%

Investments

Fund Balances with Treasury

Property and Equipment

Other Assets

Liabilities by Type

83.0%

11.2%

5.8%

FSRA Liability

Liability to International

Organizations

Other Liabilities
44

UNITED STATES DEPARTMENT OF STATE

Ending Net Position. The Department’s Net Position at the end of 2003 on the Consolidated Balance Sheet

and the Consolidated Statement of Changes in Net Position was $13.1 billion, a $1.1 billion (9.1%) increase from

the previous fiscal year. Net Position is the sum of the Unexpended Appropriations and Cumulative Results of

Operations.

The growth in Unexpended Appropriations was due principally to the continued increase in budget authority

received to rebuild the Department’s diplomatic platform.

The decrease in Cumulative Results of Operations resulted mainly from the $329.1 million increase during 2003

in the unfunded portion of the FSRA Liability described on the previous page. This increase resulted from a

change in economic assumptions used for valuing the FSRDF plan for consistency with similar Federal plans.

RESULTS OF OPERATIONS

The Department’s total net cost of

operations for 2003, after intradepartmental eliminations, was

$9.1 billion. The strategic objective to “Achieve Peace and

Security” represents the largest

investment for the Department at

35.1% of the Department’s net

cost of operations. The net cost of

operations for the remaining

strategic objectives varies from

14.9% to 27.4%.

B UDGETARY ISSUES 

The FY 2003 Department of State's budget of $7.660 billion included the appropriations that finance the

administration of foreign affairs ($6.002 billion); contributions to international organizations and activities

($1.530 billion); international commissions ($57 million); and other related appropriations ($71 million).

Two foreign assistance accounts authorized in the State act were also funded ($867 million). The administration

of foreign affairs appropriations primarily funds the operating budgets of the Department of State.

These appropriations fund the basic platform for conducting the U.S. Government's diplomatic activities around

the world as well as building and maintaining the infrastructure that supports most U.S. Government operations

overseas. In addition, the Department continues to rely on Machine Readable Visa (MRV), Expedited Passport,

and other user fee collections to enhance the nation's border security and help meet consular workload

demands, and to invest in modern, responsive information technology systems. These resources are essential to

accomplishing two overriding objectives of the President's foreign policy: to win the war on terrorism and to

protect Americans at home and abroad.

For our major operating appropriation - Diplomatic and Consular Programs (D&CP) - the Department was funded

at $3.911 billion and included the second year of a multi-year Diplomatic Readiness Initiative (DRI) strategy to

recruit, hire, train, and deploy additional professionals around the world. The appropriation and transfers, along

with increases in MRV fee spending, also supported hiring 584 new employees (above anticipated attrition)

including 399 new diplomatic readiness positions, 51 new consular positions to address border security workload

increases, and 134 new security professionals. With increased D&CP funding, the Department funded programs to

create a work environment to attract and retain talent within a highly competitive economy.

Where Funds Go - Net Program Costs (Dollars in Thousands)

2,050,514

1,352,929

2,479,256

Achieve Peace and Security

Advance Sustainable

Development and Global Interests

Promote International

Understanding

Executive Direction and other

Costs not Assigned

3,176,918
45

UNITED STATES DEPARTMENT OF STATE

The Department's FY 2003 funding

included $1.405 billion for

Embassy Security, Construction

and Maintenance to manage the

Department's real property assets

and provide U.S. diplomatic and

consular missions with secure,

safe, and functional facilities. This

funding included $750 million for

security capital construction and

compound security projects and

$505 million for ongoing

operations. The Department also

received $559 million for

Worldwide Security Upgrades

within the Diplomatic and Consular

Programs appropriations (including

$10 million from the Emergency

Wartime Supplemental Act) to

complete the perimeter security

enhancement program begun

under the 1999 Emergency

Supplemental Appropriation, to improve technical, counterintelligence and domestic security programs, and to

fund the 134 new security professionals. This funding also sustains security programs begun with the FY 1999

emergency supplemental such as worldwide guard protection, physical security equipment and technical

support, information/systems security, and personnel and training.

The Department's FY 2003 funding for the Capital Investment Fund included $182 million to provide modern

information technology to every Department employee, including secure access to the Internet for all of our

employees and modern classified systems. This included funding for completion of the OpenNet Plus initiative,

which provided complete web access for all State desktops in May 2003. This funding also went to the

Department’s goal of providing classified connectivity and email to every eligible post by FY 2004, thereby laying

the foundation for modernizing our outmoded cable system.

The Department's FY 2004 budget request [at this date still pending before the Congress] continues to support

the Department's priorities to support the War on Terrorism and build diplomatic readiness. The request includes

$1.5 billion for enhanced security and the War on Terrorism, including $861 million to design and/or construct

secure facilities, additional site acquisition, and compound security projects; and $647 million to upgrade

worldwide security readiness including increased guard protection, chem/bio defense, and facility protection

measures.

The request also includes funding to support hiring 552 additional Americans including 85 security professionals

and support staff; 399 new hires to meet the highest priority diplomatic readiness staffing needs; and 68 new

consular positions to enhance Border Security and ensure the security of U.S. visas and passports.

The Department's request of $157 million for the Capital Investment Fund allows for continued investment in

state-of-the-art IT systems worldwide, including extending classified connectivity to every post requiring it.

The Federal Government Dollar

11%

16%

18%

23%

1%

31%

Medicaid, Medicare, Other

Entitlements & Mandatory

Programs

International Affairs

Social Security

Non-Defense Discretionary

National Defense

Net Interest

America’s Best Guesses

Public Estimates on Foreign Policy Issues

Topic U.S. Perception Reality

Percentage of U.S. 20 percent

Budget going to

foreign aid

Reproduced with permission from FOREIGN POLICY # 126 (September/October 2001).

Copyright 2001 by the Carnegie Endowment for International Peace.

Less than

1 percent
46

UNITED STATES DEPARTMENT OF STATE

RESOURCE HIGHLIGHTS

FY 2003 Enacted Levels

Total: $31.3 billion

State Appropriations

Foreign Operations

FY 2003 State Appropriations: $7.6 billion

Appropriations for the Department of State fund the key components of the

Department's operations and infrastructure, as well as U.S. engagement abroad

through public diplomacy and international organizations.

Major Expenditure Categories

 Administration of Foreign Affairs and Other Appropriations: $6.1 billion

Diplomatic and consular programs, public diplomacy, information technology

investment, embassy security, construction and maintenance, educational

and cultural exchanges, international commissions, and diplomatic activities.

 International Organizations: $1.5 billion

Contributions to international organizations including assessed contributions

to the UN and other international organizations and the U.S. share of

expenses for UN peacekeeping operations.

FY 2003 Foreign Operations: $23.7 billion

Foreign Operations programs promote U.S. foreign policy interests that advance

the global fight against terrorism; provide economic, military, and democracy

assistance to key foreign partners and allies; promote international peace and

prosperity; curb the spread of weapons of mass destruction; interdict drugs; and

provide health and humanitarian assistance.

There are several categories of Foreign Operations funds that contribute to the

achievement of the foreign policy goals of the U.S. Some Foreign Operations

resources are administered by the Department and others by other agencies. In

addition, the Department provides foreign policy guidance to certain other agencies

whose resources are part of international affairs resources (Function 150).

Programs for Foreign Operations fall within four areas:

 Export and Investment Assistance: $369 million

 Funding for the Export-Import Bank, the Overseas Private Investment

Corporation, and the Trade and Development Agency. Funding sustains

and increases jobs in the United States by financing the exports of U.S.

goods and services and by providing U.S. companies with project financing

and funding for feasibility studies to level the international playing field

for U.S. businesses operating overseas.

 Bilateral Economic Assistance: $15.4 billion

 Funding for humanitarian and disaster assistance programs, including

demining, refugee, and migration assistance, and programs that support

famine, natural disasters, and other unanticipated occurrences.

Funding for programs that provide development and economic assistance

to U.S. allies and funding to support child survival and health concerns,

such as HIV/AIDS, and other infectious diseases.

 Funding for anti-terrorism and counterdrug programs.

 Military Assistance: $6.4 billion

 Funding for the improvement of the capabilities of U.S. allies for the

defense capabilities by financing the procurement of U.S. materiel and

services, including the training of about 10,000 foreign military and civilian

personnel in U.S. schools annually.

 Multilateral Assistance: $1.5 billion

Funding for contributions to multilateral development banks; debt

restructuring; and contributions to international organizations for sustainable

development efforts to protect the environment, human rights, democracy,

and the rule of law.

76%

24%

FY 2003 Funding

Total: $31.3 Billion
Appendices

F ISCAL Y EAR 2003 P ERFORMANCE AND A CCOUNTABILITY R EPORT
48

APPENDIX A

Arms Control and International Security Affairs

John R. Bolton - Under Secretary

Bureau of Arms Control – Stephen G. Rademaker

Bureau of Political-Military Affairs – Lincoln P. Bloomfield, Jr.

Bureau of Non-Proliferation – John Stern Wolf

Bureau of Verification and Compliance – Paula A. DeSutter

Economic, Business and Agricultural Affairs

Alan P. Larson - Under Secretary

Bureau of Economic and Business Affairs – E. Anthony Wayne

Global Affairs

Paula J. Dobriansky - Under Secretary

Bureau of Democracy, Human Rights and Labor – 

Lorne W. Craner

Bureau of International Narcotics and Law Enforcement – 

Robert B. Charles 

Bureau of Oceans and Environmental and Scientific Affairs – 

John F. Turner

Bureau of Population, Refugees and Migration – 

Arthur E. Dewey

Management

Grant S. Green - Under Secretary

Director General of Foreign Service and Director of Personnel – 

W. Robert Pearson 

Bureau of Administration – William A. Eaton

Bureau of Consular Affairs – Maura Harty

Bureau of Diplomatic Security – Francis X. Taylor

Overseas Buildings Operations – Charles E. Williams

Bureau of Information Resource Management, Chief 

Information Officer – Bruce Morrison, Acting

Foreign Service Institute – Katherine H. Peterson

Political Affairs

Marc Grossman - Under Secretary

Bureau of African Affairs – Charles R. Snyder, Acting 

Bureau of East Asian and Pacific Affairs –James A. Kelly

Bureau of European and Eurasian Affairs – A. Elizabeth Jones

Bureau of Near Eastern Affairs - William J. Burns

Bureau of South Asian Affairs – Christina B. Rocca

Bureau of Western Hemisphere Affairs – Roger F. Noriega

Bureau of International Organizational Affairs – 

Kim R. Holmes

Public Diplomacy and Public Affairs

Margaret Tutwiler - Under Secretary

Bureau of Public Affairs – Richard A. Boucher

Bureau of Educational and Cultural Affairs – 

Patricia De Stacy Harrison

Office of International Information Programs – Stuart Holliday

Other Senior Officials

Chief of Staff – Larry Wilkerson

Executive Secretariat – Karl W. Hofmann

Office of Policy Planning – Mitchell B. Reiss

Chief Financial Officer – Christopher B. Burnham

Legal Adviser – William H. Taft, IV

Inspector General – Anne W. Patterson, Acting

Office of Civil Rights – Barbara S. Pope

Bureau of Legislative Affairs – Paul V. Kelly 

Bureau of Intelligence and Research – 

Charles T. Fingar, Acting

Office of Protocol – Donald B. Ensenat 

Coordinator for Counterterrorism – J. Cofer Black

Office of War Crimes Issues – Pierre R. Prosper 

Counselor – Vacant

Colin L. Powell – Secretary of State

Richard L. Armitage – Deputy Secretary of State

John D. Negroponte – United States Permanent Representative to the United Nations

DIRECTORY OF KEY OFFICIALS AND 

SENIOR MANAGEMENT 
United States

Representative

to the United Nations

(USUN)

12/06/03

(S)

(D)

UNITED STATESDEPARTMENT

OF STATE

Inspector

General

(OIG)

Counselor

(C)

Population, Refugees

and Migration

(PRM)

Assistant Secretary

Oceans & International

Environmental &

Scientific Affairs

(OES)

Assistant Secretary

International

Narcotics and Law

Enforcement

(INL)

Assistant Secretary

Democracy, Human

Rights & Labor

(DRL)

Assistant Secretary

Under Secretary

for

Global Affairs

(G)

Information Resource

Management

(IRM)

Chief Information Officer

Foreign Service

Institute

(FSI)

Director

Overseas Buildings

Operations

(OBO)

Director

Human Resources

(HR)

Director General of

the Foreign Service

and Director of

Human Resources

Consular Affairs

(CA)

Assistant Secretary

Administration

(A)

Assistant Secretary

Diplomatic Security

(DS)

Assistant Secretary

Under Secretary

for

Management

(M)

International

Information

Programs (IIP)

Coordinator

Public Affairs

(PA)

Educational and

Assistant Secretary

Cultural Affairs

(ECA)

Assistant Secretary

Under Secretary for

Public Diplomacy

and Public Affairs

(R)

Executive

Secretariat

(S/ES)

Executive Secretary

Chief of Staff

(S/COS)

Deputy

Secretary of State

(D)

Secretary of State

(S)

United States

Agency for International

Development

(USAID)

Administrator

Medical Services

(M/MED)

Under Secretary for

 Arms Control and

International Security Affairs

(T)

Nonproliferation

(NP)

Assistant Secretary

Political-Military

Affairs

(PM)

Assistant Secretary

Verification and

Compliance

(VC)

Assistant Secretary

Arms Control

(AC)

Assistant Secretary

Under Secretary for

Economic, Business and

Agricultural Affairs

(E)

Under Secretary

for

Political Affairs

(P)

Economic and

Business Affairs

(EB)

Assistant Secretary

East Asian

and Pacific Affairs

(EAP)

Assistant Secretary

African Affairs

(AF)

Assistant Secretary

European and

Eurasian Affairs

(EUR)

Assistant Secretary

South Asian

Affairs

(SA)

Assistant Secretary

International

Organizations

(IO)

Assistant Secretary

Near Eastern

Affairs

(NEA)

Assistant Secretary

Western

Hemisphere Affairs

(WHA)

Assistant Secretary

Office of

Management

Policy (M/P)

Director

Counterterrorism

(S/CT)

Coordinator and

Ambassador at Large

Chief of Protocol

(S/CPR)

Ambassador

Resource

Management

(RM)

Assistant Secretary &

Chief Financial Officer

Intelligence and

Research

(INR)

Assistant Secretary

Legislative Affairs

(H)

Assistant Secretary

Legal Adviser

(L)

Office of

Civil Rights

(S/OCR)

Assistant Secretary

Policy Planning

Staff

(S/P)

Director

49

APPENDIX A
50

APPENDIX A
51

APPENDIX B

M ILESTONES OF A MERICAN D IPLOMACY

1778: Treaty of Alliance with France, engineered by Benjamin

Franklin, enabled the fledgling republic to continue its struggle

for independence.

1783: Treaty of Paris-Great Britain recognized American

independence and control over western lands as far as the

Mississippi.

1803: Louisiana Purchase removed foreign control of

Mississippi’s mouth and doubled U.S. territory.

1819: Adams-Onis Treaty with Spain, transferring Florida,

extended the U.S. to present boundaries in southeast.

1823: Monroe Doctrine established U.S. policy of opposing

European intervention or new colonization in Western

Hemisphere.

1846: Oregon Treaty with Great Britain extended U.S. sole

dominion to the Pacific.

1848: Treaty of Guadalupe-Hidalgo, ending 1846-48 war with

Mexico, confirmed U.S. claim to Texas and completed U.S.

expansion to Pacific.

1867: Alaska purchase ended Russian territorial presence and

completed U.S. expansion on North American mainland.

1918: Allies and Germany accepted Wilson’s 14 points as basis

for just and lasting peace ending World War I.

1945: U. S. and 50 other countries founded the United Nations.

1947: Truman Doctrine asserted U.S. policy of containing Soviet

expansion through economic and military aid to threatened

countries.

1947: Marshall plan of aid to Europe set foundation for

economic cooperation among industrial democracies.

1948: Ninth International Conference of American States

created the Organization of American States (OAS) to intensify

U.S. and Latin American collaboration in all fields.

1948: NATO, first U.S. alliance concluded in peacetime, provided

integrated force for defense of Western Europe and North

America.

1963: Limited Nuclear Test Ban Treaty, first major-power agreement regulating atomic weapons testing, banned explosions in

the atmosphere, in outer space and under water.

1967: Non-Proliferation Treaty, now signed by 110 governments, banned the spread of atomic weapons.

1972: Strategic Arms Limitation Talks (SALT) agreements with

U.S.S.R. prescribed mutual limitations on defensive and offensive

weapons and established SALT as a continuing process.

1972: President Nixon’s February visit to China followed

Secretary Kissinger’s earlier negotiations in Peking, marking

first important step in the process of normalizing relations with

the People’s Republic of China.

1979: U.S. established diplomatic relations with the People’s

Republic of China ending 30 years of nonrecognition.

1979: Israel-Egypt Peace Treaty (Camp David Accords) ended

30 years of conflict between the two countries and provided

possible framework for comprehensive peace in the Middle

East.

1986: The U.S. Congress implemented strong economic

sanctions against South Africa, which helped to bring an end

to apartheid in 1991.

1989-1991: As President George H.W. Bush stated a desire to

integrate the Soviet Union into the community of nations, the

Cold War ended when communist regimes collapsed across

Eastern Europe and the Soviet Union disintegrated.

1990-1991: In response to the Iraqi invasion of Kuwait, the

United States built an international coalition to defend Saudi

Arabia and, after United Nations approval, to eject Iraq from

Kuwait through Operation Desert Storm.

1994: The North American Free Trade Agreement (NAFTA)

between the United States, Canada, and Mexico took effect

and the United States joined another structure that promoted

global free trade, the World Trade Organization.

1995: The General Framework Agreement for Peace in Bosnia

and Herzegovina ended the Bosnian civil war by providing for

NATO troops to serve as peacekeepers.

2001: The United States led a global coalition that fought

a war against terrorism in the wake of the September 11

terrorist attacks in New York and Washington D.C.

2003: After Iraq’s repeated refusals to comply with UN resolutions, the United States led a coalition to depose the regime of

Saddam Hussein.
52

UNITED STATES DEPARTMENT OF STATE

This Performance and Accountability Highlights provides an overview of the “most important” performance and financial information

published in the Department of State’s Performance and Accountability Report for Fiscal Year 2003. The Performance and Accountability

Highlights and Performance and Accountability Report for Fiscal Year 2003 provide information that enables the public, Congress, and

the President the ability to assess the performance of the Department relative to its mission and for stewardship of the resources

entrusted to it.

The Performance and Accountability Highlights for Fiscal Year 2003 is published by the

U.S. Department of State

Bureau of Resource Management 

Office of Financial Policy, Reporting and Analysis

Office of Strategic and Performance Planning

An electronic version is available on the World Wide Web at

http://www.state.gov/m/rm/rls/perfrpt/

For additional copies please call (202) 261-8620 or (202) 647-0300

U.S. Department of State Publication 11112

Bureau of Public Affairs

December 2003

PHOTO CAPTIONS

PAGE 12: Deputy Secretary of State Richard Armitage, left, and Indian Prime Minister Atal Behari Vajpayee gesture during talks in New

Delhi, India. Armitage held talks with Indian leaders to encourage the unfolding peace initiative between nuclear-armed India and

Pakistan. © AP Photo/Ajit Kumar

PAGE 13: Dr. Vladimir Smirnov, General Director of Russian energy company TENEX, speaks at a Washington news conference to

announce a milestone in the effort to reduce the threat of nuclear proliferation through the elimination of weapons-grade uranium, and

its transformation into electricity-producing fuel. Sen. Richard Lugar, R-Ind., looks on at right. © AP Photo/John Harrington

PAGE 15: Members of the Ugandan Watoto Children's Choir, who are orphans of AIDS victims, perform for President Bush at the AIDS

Support Organization Center (TASO) in Entebbe, Uganda. President Bush wants Uganda's journey out of the dark scourge of AIDS to serve

as a model for his $15 billion global initiative to contain the pandemic. © AP Photo/J. Scott Applewhite

PAGE 16: The new American Embassy in Dar-es-Salaam, Tanzania, was completed in January 2003, and replaces the former embassy

that was destroyed in the 1998 terrorist bombing. The design and construction of this new embassy incorporate the newest safety

technology to ensure the security of embassy personnel. Department of State Photo
This Performance and Accountability Report was produced

with the energies and talents of Department staff in

Washington, D.C., and our offices and posts around the world.

To these dedicated individuals we would like to offer

our sincerest thanks and acknowledgement.

In particular, we would like to recognize the following

individuals for their contributions:

Nancy Babe, Kristin Byorick, Barbara Clark, Spring George,

Carol Gower, Stephanie Holmes, Don Hunter, Ayana Jackson,

Rick Keller, Matthew Johnson, Irwin Mazin, Cathy Roberts,

Jerry Sharp and Van Tran.

Bruce Crippin, Malcolm Lawrence, Richard Sassoon and John

Spears.

Ken Alms, John Bargeron, Marlene Baxter, Melanie Bixby,

Monica Bradley, Jan Brambilla, Patty Cake, Deryck Chase,

Paul Claussen, Kelly Clements, Nerissa Cook, Lynne Davidson,

John Dudley, Benedict J. Duffy, Eric Falls, Jonathan Farrar,

Brenda Ferry, Joel Fischman, Michael Foughty, Ron Gain,

Nicole Green, Ellyn Hagy, Laura Hall, Janie Hatcher, Susan

Holly, Jeffrey Jamison, Horace Johnson, Hattie Jones,

Bernadette Kilroy, Ted Kniker, Eliza Koch, Paula Lader, Duke

Locca, Carol MacCurdy, Tracy Mahaffey, Stephanie Miley,

Karen Mummaw, Tarik Obeidi, Wayne Oshima, Daniel Pappas,

Pat Patierno, Diane Perry-Elby, Tammy Pomerleau, Susan

Poulin, Lela Prophet, Wilna Ray, Janet Redfern, Catherine

Russell, Sylvester Ryan, Daniel Schaub, Eloise Shouse, Susan

Sikes, Karen Simpson, David G. Smith, Elizabeth Soyster, Larry

Sperling, Paul Sutphin, Rob Tappan, Lisbeth Thompson, Tom

Washburn, Karl Wycoff and Jamie Young.

Anthony Belliotti, Janet Brooks, Alvin Brown, Anne Cook,

Cee Cee Cooper, Nancy Durham, Cheryl Easley, Lorna Kivlehan,

Brian McCauley, Howard Renman, Lynette Richardson, Neila

Sheahan, Frank Sullivan, Wardell Wanza and Cameron Weber.

We would also like to acknowledge the Office of Inspector

General and Leonard G. Birnbaum and Company, LLP for the

professional manner in which they conducted the audit of the

Fiscal Year 2003 Financial Statements.

We offer our special thanks to The DesignPond, in particular

Michael James and Sheri Beauregard, for their outstanding

contributions to the design of this Report.

AcknowledgmentS