State Department: Leadership Focus Needed to Guide Agency Reform Efforts
Released: 2019-08-01T00:00:00

Letter

Background

GAO’s Questions for Assessing Reform Efforts

In developing our June 2018 report to assist the Congress, OMB, and agencies in assessing agency reform plans, we reviewed our prior work and leading practices on organizational transformations; collaboration; government streamlining and efficiency; fragmentation, overlap, and duplication; and high-risk and other long-standing agency management challenges. The resulting June 2018 report includes 58 key questions to aid in assessing reform efforts. These questions are organized into four broad categories and 12 subcategories. We determined that the questions most relevant to the current implementation stage of State’s reform efforts are found in two subcategories: (1) Leadership Focus and Attention and (2) Managing and Monitoring. Table 1 lists the key questions in these subcategories.

State’s 17 Reform Projects

In response to the March 2017 Executive Order 13781 and the ensuing OMB memo, State launched a “listening tour” intended to gather ideas and feedback from State and USAID employees. As a key component of this outreach effort, State hired a contractor to design and administer a confidential online survey, which was sent to all State and USAID employees in May 2017. According to the contractor’s report, the survey had a 43 percent response rate, with 27,837 State employees and 6,142 USAID employees responding to the survey. The contractor also conducted in-person interviews with a randomly selected cross section of personnel, which included 175 employees from State and 94 from USAID.

The contractor’s report on the results of the survey and the interviews highlighted five areas for State reforms. In July 2017, the Deputy Secretary of State created five planning teams to develop multiple projects in those five areas. The Deputy Secretary also established an Executive Steering Committee composed of senior State and USAID officials to guide the five planning teams and provide direction during the reform process. Led jointly by State and USAID, each planning team comprised participants from a cross section of overseas and domestic workforces. The planning teams were tasked with gathering information and conducting analysis as described below:

Foreign Assistance Programs: Analyze current foreign assistance programs at State and USAID to develop a future vision, ensuring alignment with national priorities.

Overseas Alignment and Approach: Assess key diplomatic activities and identify required platforms, including the balance of work between headquarters and the field.

Human Capital Planning: Identify ways to promote an agile and empowered workforce as part of an overarching talent map.

Management Support: Identify opportunities to streamline administrative support functions at the bureau and agency levels to ensure front line effectiveness.

Information Technology (IT) Platform Planning: Focus on improving the employee experience through increased use of cutting- edge technology and streamlining duplicative systems and processes.

Figure 1 shows a timeline of key events in State’s initial reform efforts.

The planning teams developed specific reform projects, listed below in table 2, which State described in the fiscal year 2019 budget justification it submitted to Congress in February 2018. According to implementing officials, all these projects predated the Executive Order and OMB memo issued in the spring of 2017. They also noted, however, that the administration’s reform-related directives helped advance State’s preexisting efforts by focusing management attention and agency resources on these projects.

As of April 2019, State Had One Completed and 13 Continuing Reform Projects; Two Other Projects Had Stalled and One Project Was Discontinued

As of April 2019, according to State officials and status reports, State had completed one of its 17 reform projects; 13 projects were continuing; two projects were stalled pending future decisions or actions; and one project was discontinued. Table 3 provides additional details on each project and a summary of the results of our analysis.

Loss of Leadership Focus Contributed to Staff Uncertainty about Some Reform Efforts, Although Bureaus and Offices Have Taken Steps to Manage and Monitor Continuing Projects

Leadership Focus and Attention

As State shifted into the implementation phase of its reform efforts in early 2018, multiple transitions within the agency contributed to a loss of leadership focus on the efforts, resulting in uncertainty about leadership’s support for some reform projects. In February 2018, State reported to Congress in its fiscal year 2019 budget justification that it was pursuing the reform projects we described above. In March 2018, the first transition affecting the implementation of those projects occurred when the President removed the then Secretary of State and nominated the then CIA director to replace him; in April 2018, the Senate confirmed the current Secretary. According to senior State officials, when the new Secretary took office, his top priority was ending the hiring freeze and restarting a concerted recruitment effort because vacancies in key positions and a general staffing shortfall would otherwise have led to what one senior official described as a “cataclysmic failure” at State. These senior officials noted that the new Secretary decided some of the existing reform projects were not well designed and that he wanted greater emphasis on cybersecurity and data analytics. They said he also wanted to pursue other initiatives, including a new proposal to create a Global Public Affairs Bureau by merging two existing bureaus. The senior officials told us that the Secretary authorized responsible bureaus and offices to determine whether to continue, revise, or terminate existing reform efforts or launch new initiatives. However, State did not formally communicate other changes in its reform priorities to Congress, such as its plan to no longer combine State and USAID’s real property offices.

State initiated another transition in leadership of the reform efforts in April 2018 when it disbanded the dedicated planning teams overseeing the reform efforts and delegated responsibility for implementing the reform projects to relevant bureaus and offices. As the planning teams finished working on their particular reform efforts and prepared to transfer these projects to the bureaus, some planning teams provided memos and reports on the status of their efforts and offered recommendations for the bureaus to consider when determining next steps in implementing the projects. Some implementing officials, however, reported that they received little or no direction regarding their projects or any other indication of continued interest in their project from department or bureau leadership aside from the initial notification that the project had been assigned to them. For example, in separate discussions with implementing officials responsible for three different projects, the officials reported that they had not received any direction or other guidance related to their assigned project since it was delegated to them in April 2018. In one case, this lack of communication continued for nearly a year. In addition, although implementing officials said that they have managed to incorporate reform-related work into their daily responsibilities, they noted that there were multiple benefits from having had dedicated planning teams to lead earlier phases of State’s reform efforts. For example, they said that the dedicated teams included senior officials and the regular involvement of high-level leadership facilitated by these teams had helped advance the reform efforts. These dedicated teams also required staff to set aside time to focus on reform initiatives, which allowed them to develop holistic solutions to reform-related challenges. Conversely, implementing officials reported negative implications of not having dedicated teams. For example, one implementing official described how positive work initiated under the leadership of these dedicated teams—including efforts to eliminate redundancies and identify opportunities for consolidation—ended when the teams were disbanded because the staff and resources needed to continue these efforts were no longer available.

Various State officials noted that the prolonged absence of Senate- confirmed leadership in key positions posed additional challenges. We have previously testified that it is more difficult to obtain buy-in on long- term plans and efforts that are underway when an agency has leaders in acting positions because federal employees are historically skeptical of whether the latest efforts to make improvements are going to be sustained over a period of time. For example, State did not have a Senate-confirmed Under Secretary for Management from January 2017 to May 2019. In November 2018, the Deputy Secretary of State told us that the lack of a confirmed Under Secretary for Management was hindering State’s ability to conduct business and implement reforms. The bureaus and offices responsible for 12 of State’s 13 continuing reform projects reported directly to an Acting Undersecretary for Management from January 2017 through May 2019. Moreover, State officials told us that both projects that we determined to be stalled were, among other things, awaiting the confirmation of an Under Secretary for Management to make key decisions. Furthermore, some implementing officials told us that the lack of confirmed officials in leadership positions within the bureaus responsible for implementing the projects added to a lack of leadership focus on implementing some of State’s reform projects.

According to State officials, as of April 2019, although 13 of the reform projects described in the fiscal year 2019 Congressional Budget Justification were considered by State to be continuing, some had been scaled back, slowed down, or both as a result of senior leadership’s shifting priorities and attention. For example, one of State’s initial reform projects was related to better management of real property. However, State ultimately scaled back this project, effectively splitting it into two projects: One project focused on real property process improvements is continuing, but State has discontinued the other project to consolidate its and USAID’s real property function. Implementing officials told us in November 2018 that they were still pursuing the internal real property process improvements. They said then that they expected this reform project would likely progress at a slower pace without the dedicated team that previously had provided direct access and frequent interaction with senior department leadership. However, these officials recently informed us that the pace of progress on this project actually increased under the leadership of the bureau’s Senate-confirmed Director. The bureau was led by acting directors from January 2017 through September 2018.

We have identified leadership focus and attention as practices vital to successfully implementing reform efforts. These practices include communicating clear and compelling reasons for the reforms, having a dedicated implementation team to manage the transformation process, and designating leaders responsible for implementing reforms and holding them accountable. Dedicating a strong and stable implementation team responsible for a transformation’s day-to-day management is important to ensuring that reforms receive the focused, full-time attention needed to be sustained and successful. One of the key responsibilities of a dedicated team is communication, particularly answering questions about the reform process from employees and other stakeholders. An implementation team is also important to ensuring that reform efforts are implemented in a coherent and integrated way. Because an agency’s transformation process is a large undertaking, we have found that an implementation team must have direct access to and be accountable to top leadership. In turn, top leadership must vest the team with the necessary authority and resources to set priorities, make timely decisions, and move quickly to implement top leadership’s decisions regarding the transformation.

In addition, we previously reported that the single most important element of successful improvement initiatives is the demonstrated commitment of top leaders. This commitment is most prominently demonstrated through top leaders’ personal involvement in developing and directing reform efforts. Federal standards for internal control in the federal government also emphasize the importance of maintaining leadership continuity in order to achieve agency objectives. As a result, in other reports, we have recognized that agency reform efforts can take years to implement and that the time frame required for change typically takes longer than the tenures of political leaders. Similarly, the time it takes to nominate and confirm officials for senior management positions can also hamper efforts to initiate reforms or sustain momentum needed to successfully implement reform initiatives. For these reasons, and others, we have highlighted the need to ensure that top leadership drives the transformation and establishes dedicated teams to manage the transformation process.

Taken together, the leadership transitions at State had two significant effects on State’s reform efforts. First, the transition of departmental leadership and lack of direction and communication about subsequent changes in leadership’s priorities contributed to uncertainty among implementing officials about the future of individual reform projects. Second, according to implementing officials, the transition of project responsibility from dedicated teams to bureau-level implementing officials resulted in fewer resources and a lack of senior leadership involvement and attention for some projects. Absent leadership decisions, implementing officials will continue to struggle with understanding leadership priorities with regard to State’s reform efforts. Similarly, for any projects that are determined to be leadership priorities, day-to-day implementation activities will continue to be hampered by the lack of a dedicated team to guide and manage the agency’s overall reform effort.

Managing and Monitoring

Although uncertainty exists about the leadership priorities regarding reform efforts, the bureaus and offices responsible for implementing State’s reform projects have taken steps to manage and monitor their reform projects. Our previous work has identified monitoring as another important practice when implementing reform efforts, including, among other things, developing implementation plans and ensuring transparency by publicly reporting on progress toward milestones. These practices are also incorporated into State’s Foreign Affairs Manual and other department policies.

We found that the relevant bureaus and offices responsible for implementing reform projects had developed implementation plans and that these plans identified milestones and deliverables for the projects. For example the Human Resources Services Delivery project had an implementation plan with milestones and deliverables, such as identifying programs and functions for consolidation in 2019 and reducing human resource delivery costs by 14 percent by 2022. Similarly, we found that the implementation plan for the IT Modernization project incorporated milestones that including, among other things, implementing a comprehensive enterprise IT risk management program by fiscal year 2020; reducing average deployment time for new IT capabilities by 10 percent annually from fiscal year 2019 through fiscal year 2021; and increasing workforce access to cloud-based email and business data from 10 percent to 100 percent by September 30, 2019.

With regard to monitoring, while there is no centralized mechanism for reporting progress on all projects, we found that each of the ongoing projects currently has some form of progress reporting. For example, State reports progress on projects with IT components—such as Real- Time Collaboration and Work Anytime, Anywhere and Improve Enterprise-Wide Data Accessibility—as part of its quarterly reporting on IT Modernization under the Government Performance and Results Modernization Act of 2010. As a result, these projects have continued within a formal monitoring structure that involves regular web-based status updates and progress reporting. Other reform efforts—such as human capital and real property projects—are monitored against milestones established in State’s Joint Strategic Plan and progress is reported in State’s Annual Performance Reports. Progress for certain projects is also monitored and reported in other reports, such as State’s joint strategic plan, IT strategy, or human capital plan. Finally, other reform projects, such as State’s acquisition reform efforts, are reported at the government-wide level as part of the Cross-Agency Priority Goals outlined in the President’s Management Agenda.

State collects data and evidence in order to measure progress in achieving outcome-oriented goals it sets for these projects. State reports these goals and relevant performance data in its annual performance plans and reports. For example, State uses the U.S. General Services Administration’s Customer Satisfaction Survey to measure and report the performance of its Human Capital Delivery Services reform efforts. State also uses data collected through the Office of Personnel Management’s Federal Employee Viewpoint Survey to measure employee satisfaction, which State established as a performance indicator for this project.

Conclusions

Effectively implementing major reforms can span several years and must be closely managed. In 2017, State began a reform effort that led to 17 reform projects, most of which are unimplemented but still continuing. State notified both OMB and the Congress of these projects. Nevertheless, State leadership has not provided the focus necessary to support the officials responsible for implementing all these reform projects. When a new Secretary of State took charge in March 2018, he transferred responsibility for implementing the reform efforts from dedicated teams led by senior department leadership to bureaus and offices. In addition, key political appointee positions remained filled by officials in an acting capacity until only recently. These transitions at State have had an effect on its reform efforts. Without explicit direction from senior leadership, some implementing officials involved in the reform efforts remain unclear about whether their projects are an agency priority. Further, for the reform efforts that remain an agency priority, a dedicated team to oversee implementation could help accelerate State’s efforts to improve the efficiency and effectiveness of its operations.

Recommendations for Executive Action

We are making the following two recommendations to State: The Secretary of State should determine which of the unimplemented reform projects included in its fiscal year 2019 Congressional Budget Justification, if any, should be implemented and communicate this determination to Congress and appropriate State personnel. (Recommendation 1)

The Secretary of State should establish a single dedicated team to manage the implementation of all reform efforts that the Secretary decides to pursue. (Recommendation 2)

Agency Comments

We provided a draft of this report to State, USAID, and OMB for review and comment. We received comments from State and USAID, which are reprinted in appendixes II and III, respectively. In response to our recommendation that State determine which reform projects should be implemented and communicate that information to Congress and appropriate State personnel, State indicated that it concurred but suggested it should inform OMB instead of Congress. While we agree that it is important for State to share information regarding its reform efforts with OMB, we remain concerned about State’s lack of communication with Congress regarding the status of the projects State initially reported in its fiscal year 2019 Congressional Budget Justification.

Congress is a key stakeholder in State’s reform efforts and should be informed of changes in State’s priorities and the status of these projects to help ensure successful implementation.

In response to our recommendation that State establish a dedicated team to manage the implementation of all reform projects, State suggested that leadership of its reform projects should be decided on a case-by-case basis with the latitude to determine whether projects will be assigned to a higher level or within individual bureaus. We stand by our recommendation that State should establish a single dedicated team to manage the implementation of all its reform efforts. This is a key practice for implementing agency reforms identified in previous GAO reports, as well as in State’s Foreign Affairs Manual (1 FAM 014.2), which calls for State to “dedicate an implementation team to manage the transformation process” for major reorganizations of bureaus or offices. Because reform efforts can span several years, dedicating a strong and stable team is important to ensure that the transformation receives the needed attention to be sustained and successful.

In its comments, USAID expressed several concerns about the leadership of State’s reform efforts and State’s coordination with USAID. OMB did not provide written comments on the report. We also received technical comments from State and USAID, which we incorporated throughout our report as appropriate.

We are sending copies of this report to the appropriate congressional committees, the Secretary of State, the Administrator of USAID, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.

If you or your staffs have any questions about this report, please contact me at (202) 512-6881 or BairJ@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.

Appendix I: Objectives, Scope, and Methodology

We prepared this report under the authority of the Comptroller General to conduct work to assist Congress with its oversight responsibilities. This report examines (1) the status of the reform efforts that the Department of State (State) reported to Congress in its fiscal year 2019 Congressional Budget Justification and (2) the extent to which State addressed key practices we previously identified as critical to the successful implementation of agency reform efforts. For the purposes of this review, we use the term “reform efforts” to refer to all reform-related projects, proposals, plans, activities, and documents related to the 16 projects identified in State’s fiscal year 2019 Congressional Budget Justification. The term “projects” refers specifically to the 16 reform projects identified in State’s fiscal year 2019 Congressional Budget Justification. State subsequently split one of these 16 projects into two separate projects; thus, we refer to 17 reform projects throughout the report.

For both objectives, we reviewed State’s reform plans, proposals, and related documents. We also interviewed four senior officials—generally at or above the assistant secretary level—that had responsibility for the reform efforts as a whole, as well as all implementing officials responsible for each of the continuing reform projects. To determine the status of State’s reform efforts, we reviewed documents and reports related to each of the reform projects described in State’s fiscal year 2019 Congressional Budget Justification.

To determine the extent to which State addressed key practices for implementing agency reforms, we assessed State’s reform efforts against key questions identified in the implementation category of our June 2018 report. Specifically, we assessed State’s implementation efforts against key questions from the two implementation-related subcategories of our 2018 report: (1) Leadership Focus and Attention and (2) Managing and Monitoring. We considered the nature of each of State’s reform projects and the efforts taken to implement them, reviewed project-specific reports and other relevant State documents, interviewed State officials responsible for implementing each project, and then made qualitative determinations about the extent to which State’s overall reform efforts addressed these criteria. A second analyst then independently reviewed and validated each determination. Subsequently, other GAO staff reviewed and concurred with these determinations.

We only applied criteria from our June 2018 report that we determined were relevant to the scope of our review, which was limited to the implementation phase of State’s reform efforts—from April 2018 to the present—to avoid duplicating the reviews of earlier phases of State’s reform efforts conducted by State’s and the U.S. Agency for International Development’s Offices of Inspector General (OIG). Because State’s OIG was also reviewing State’s reform efforts, we coordinated regularly with State’s OIG to avoid duplication. We did not consider criteria from the first two categories of our June 2018 report—(1) Goals and Outcomes and (2) Process for Developing Reforms—because these applied to the initial phases of State’s reform efforts, which were outside the scope of our work and central to the broader historical review that State’s OIG was conducting at the time of our review. We also did not apply criteria from the final category of our June 2018 report—Strategically Managing the Federal Workforce—to avoid duplicating work State’s OIG recently conducted on State’s workforce management. For the two sub- categories that we selected, we considered the key questions in the report in light of their relevance to State reforms efforts, and also employed other relevant criteria, where appropriate, most notably criteria for leadership from federal internal control standards.

We conducted this performance audit from October 2018 to August 2019 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix II: Comments from the Department of State

Appendix III: Comments from the U.S. Agency for International Development

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contact

Jason Bair, (202) 512-6881, or bairj@gao.gov.

Staff Acknowledgments

In addition to the contact named above, Thomas Costa (Assistant Director), Joshua Akery (Analyst in Charge), Peter Beck, David Dayton, Martin de Alteriis, Emily Gupta, Patrick Hickey, Chris Keblitis, Sarah Veale, and Alex Welsh made key contributions to this report.