GAO Reviews @StateDept’s Hardship and Danger Pay Allowances

Posted: 4:21 am ET
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Back in February 2015, we blogged about the State Department then considering changes to its danger pay allowance (see Danger Danger, Bang Bang — State Department Eyes Changes in Danger Pay). In September 2015, we updated that post as new danger pay designation came into effect (see New Danger Pay Differential Posts: See Gainers, Plus Losers Include One Post on Evacuation Status.)

More recently, the Government Accountability Office was asked by the House Oversight and Government Reform (HOGR) Committee to review the State Department’s administration of hardship and danger pay for its employees. The GAO report examines the following:

(1) State’s spending at overseas posts for hardship and danger pay in fiscal years 2011-2016
(2) the extent to which State has followed its process for determining hardship and danger pay rates at overseas posts
(3) the procedures State uses to implement its policies for stopping and starting hardship and danger pay when employees temporarily leave their assigned overseas posts
(4) the extent to which State has identified improper payments related to hardship and danger pay.

The GAO made the following conclusions:

  • State mostly followed the new processes it established in 2015 for determining hardship and danger pay rates and locations, in a few cases it awarded Director Points that increased hardship pay for posts without clearly explaining in its documentation how the conditions at these posts met State’s criteria. Without clearer documentation, State cannot provide assurances that it is applying Director Points consistently across posts and tenures of ALS Directors, potentially leading to increased spending on hardship pay not otherwise justified under State’s current process for determining rates.  (The report notes that 12 of the 15 memos did not clearly document how the posts met State’s criteria for awarding Director Points.  State approved hardship rates for these posts that were 5 percent higher than the rate they would have received in the absence of Director Points. State policies note that Director Points may be awarded for extreme conditions not adequately captured in State’s written standards).
  • State has not assessed the cost- effectiveness of its policies and procedures for stopping and starting hardship pay when employees temporarily leave their overseas posts. State officials noted that these policies and procedures are resource intensive to implement and contribute to improper payments, which are costly to recover. Without reviewing the cost-effectiveness of these policies and procedures, State does not know whether they are effective, efficient, and economical.
  • By not analyzing available data compiled by CGFS, State may be missing an opportunity to identify, recover, and prevent improper payments related to hardship pay with the potential to produce cost savings for the U.S. government. Our independent analysis of State data identified overseas posts accounting for millions of dollars in hardship spending in fiscal years 2015 and 2016 that may be at high risk for improper payments.

It also offers the following recommendations for the following offices:

Director of Allowance/ALS — should clearly document how the conditions at relevant posts meet the criteria for Director Points to ensure that hardship pay rates for overseas posts are consistently determined across posts and tenures of ALS Directors.

Undersecretary of Management — should assess the cost- effectiveness of State’s policies and procedures for stopping and starting hardship pay for employees who temporarily leave their assigned overseas posts. (Recommendation 2)

Department’s Comptroller/CGFS — should analyze available diplomatic cable data from overseas posts to identify posts at risk of improper payments for hardship pay, identify any improper payments, and take steps to recover and prevent them. (Recommendation 3)

Other details:

FOUR POSTS: The GAO conducted fieldwork at four posts that receive hardship or danger pay: Islamabad, Pakistan; Mexico City, Mexico; New Delhi, India; and Tunis, Tunisia.

THREE-QUARTERS OF FS WORKFORCE:  According to State data, about three-quarters of the department’s Foreign Service overseas work force, as of September 30, 2016, was based at a post designated for hardship pay.

HARDSHIP PAY: As of February 5, 2017, State offered hardship pay at 188 of its 273 overseas posts (about 69 percent).

DANGER PAY: As of February 5, 2017, State had provided danger pay at 25 of its 273 overseas posts (about 9 percent).

SIX POSTS: As of February 5, 2017, 21 overseas posts were eligible for both hardship and danger allowances, and 6 posts were receiving the maximum 70 percent combined rate for hardship and danger pay: Bangui, Central African Republic; Basrah, Iraq; Kabul, Afghanistan; Mogadishu, Somalia; Peshawar, Pakistan; and Tripoli, Libya.

AFGHANISTAN AND IRAQ: State spent about $138 million on hardship pay in Afghanistan and Iraq in fiscal years 2011 through 2016— about 19 percent of its total spending on hardship pay. State spent about $125 million on danger pay in these two countries over the same period, almost half of its worldwide danger pay spending.

1 BILLION (FY2011-2015) :  State spent about $1 billion for hardship and danger pay in fiscal years 2011 through 2016, including $732 million for State employees serving in locations designated for hardship pay and $266 million for employees serving in locations designated for danger pay.

STOP/START PAYMENTS: According to CGFS data, overseas posts sent diplomatic cables requiring CGFS to make more than 10,000 manual adjustments to temporarily stop and start employees’ hardship pay in both 2015 and 2016.

IMPROPER PAYMENTS: CGFS identified a total of about $2.9 million in improper payments for hardship and danger pay in fiscal years 2015 and 2016.  As of March 2017, CGFS had recovered almost $2.7 million, or about 92 percent, of the improper payments it identified in 2015 and 2016 related to hardship and danger pay. According to CGFS officials, the bureau was continuing efforts to recover the remaining 8 percent.

The full report is available to read here: GAO OVERSEAS ALLOWANCES 9-2017.
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Tillerson Updates @StateDept Employees on Reorganization, He’s Got One Glaring Problem

Posted: 2:07 am ET
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On Wednesday, Secretary Tillerson sent out a message to State Department employees with an update on the progress of his redesign effort. The message talks about modernizing an outdated IT system, flexible work programs, and increasing “the level of EFMs.”

“This week we are submitting to the Office of Management and Budget an Agency Reform Plan with specific recommendations for improving our respective organizations. For example, we know a priority for us is to modernize an outdated IT system, so we’re taking major steps toward putting our systems on the cloud. We know you have families, so we’re also exploring options for flexible work programs. In addition, Eligible Family Members are an important part of supporting efficient delivery on our mission, so we’re making provisions in some cases to increase the level of EFMs. Our working groups have also identified areas where we can improve our human resource functions, empower leadership at all levels, and improve management support services to reduce redundancies while ensuring you have the tools you need to do your job.”

Wait, does Tillerson  really mean “increase the level of EFMs” … because this should be interesting for single folks?  Or does he mean the level of EFM “jobs” but avoids actually mentioning the magic word?

It’s vague enough, it makes one both perplexed and excited!

His message also talks about “ambitious proposals” with “a minimum deliverable of 10 percent ($5B) in efficiencies relative to current (FY2017) spending over the next five years.” And get this — “an aspirational general interest target of up to 20 percent ($10B).” Wow! What does that look like? We’re definitely interested.

“Our redesign plan seeks to align State and USAID foreign assistance and policy strategies, capabilities, and resources to execute foreign policy priorities more effectively. It includes seven ambitious proposals with investments that will generate a minimum deliverable of 10 percent ($5B) in efficiencies relative to current (FY2017) spending over the next five years, with an aspirational general interest target of up to 20 percent ($10B). These efficiencies enabled by modernized systems and work processes will adjust the current historically high spending level by reducing duplications and unnecessary overhead for State, USAID, and other agencies. Adopting these recommendations that you expressed your hope for in the listening sessions will allow us to better focus on our core policy priorities and programs. It will also lay the groundwork for additional efficiencies and improvements in later years.”

This past week, we’ve seen the Senate Appropriations bill that includes mandatory notifications and consultations with the subcommittee on the proposed changes at the State Department. That same bill also requires the Government Accountability Office and Department of State and USAID Inspectors General (IG) to review the redesign plans (see Senate Appropriations Subcommittee Approves FY2018 State & Foreign Ops Appropriations Bill). On September 12, the House Foreign Affairs Committee wrote to OMB specifically asking OMB Director Mick Mulvaney for a briefing on the role he intend to play in the redesign at the State Department.  We have these in mind when Secretary Tillerson says this in his message to employees:

“In the weeks ahead, we will continue to develop and advance other recommendations. Some will require Congressional approval or a change in law, some will require OMB support, but there are a number of actions we can begin to undertake internally. Some examples that we’ve already started on include integrating certain Special Envoy offices into the bureau structures and efforts to increase diversity in our workforce. You should expect to see results unveiled on a rolling basis. Once a solution is ready to go, we are going to put it to work as soon as we can. We will continue to ask for input and consult with you and other stakeholders – including Congress – as we move forward.”

Also this:

“Your participation is essential to a successful redesign. As the process continues there will be more opportunities to give your input and be a part of the various execution teams as we move toward implementation. We will be asking for volunteers through the portal, and I encourage you to sign up to add your skills and talents to our effort.”

Tillerson has a problem, and it goes to the heart of his redesign efforts.  Since employee participation is “essential” to a successful redesign, it is particularly troubling that he has not directly engaged with his employees during the redesign effort in the most transparent way. He gave a couple of speeches but took no questions.  The Sounding Board, the Secretary’s Employee Forum was shut down in August 31. Employees can still submit ideas reportedly through the “redesign portal” but the secretary of state who is the chief sponsor of this reorganization has not given employees the opportunity to ask him questions.

Folks are talking – in the cafeteria, in water coolers, in rest rooms, in online forums, etc. etc. but they have not had the opportunity for an honest, two-way conversation about this reorganization with Secretary Tillerson . His paid consultants forgot to advise him that “if honest conversation stays private, the public conversation will be unreal, and ultimately discouraging.”

That’s from management consultant, Peter Block which seems appropriate as the State Department prepares for the implementation phase of its redesign. Here’s one more:

“There will be no forward movement until the staff in turn has the opportunity to challenge management. Providing public space for this to happen is the first step in shifting a culture, in implementing a change.”

 

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