The State Department has not adequately prepared for a revenue shortfall of at least $237 million caused by the U.S. Agency for International Development's withdrawal from the International Cooperative Administrative Support Services program, the department's Office of Inspector General found.
The ICASS program provides shared administrative support services at more than 200 overseas diplomatic and consular posts. USAID, the second-largest customer of the program, has withdrawn from it.
The Office of Inspector General found that the State Department failed to develop a comprehensive global strategy to manage the financial and operational impacts of USAID's withdrawal. Although the department developed strategies for some specific posts—such as reforming cost distribution procedures and transitioning service provider responsibilities where USAID had provided support—it did not establish a long-term plan for reducing program costs to address the expected loss of USAID funding and anticipated budget reductions.
The department also did not effectively communicate information about cost reduction efforts or execute the planned changes. Personnel at overseas posts were generally aware of some reform efforts, but the agency did not clearly assign roles and responsibilities for managing the transition.
The Office of Inspector General found that without a comprehensive strategy, "the Department may be unable to deliver effective administrative services, which could impact the advancement of U.S. foreign policy" at overseas diplomatic and consular posts.
The Office of Inspector General made four recommendations to improve management of USAID's withdrawal. The State Department's response indicates the recommendations are resolved pending further action.