Key system capabilities are to include, among other things, interagency e-mail, post-specific news and information web-based links, crisis coordination support, policy formulation support, and various administrative functions (e.g., accounting, contract management, training, and travel). According to State, as the principal foreign affairs agency, its role is to provide administrative and management leadership and support for near- term prototype and pilot-testing activities, and it is the agent for bringing the foreign affairs agencies together. As noted earlier, given the stated purpose and scope of these near-term activities and State’s leadership role, this definition of roles is not currently a significant issue. According to modernization officials, preliminary plans provide for acquiring and investing in the overseas knowledge management system in three increments: pilot, full-scale implementation, and deferred. The working group has also begun surveying its agency partners to obtain general information on architectural requirements of overseas locations. We verified that State has been using one of these tools to track program- related tasks. Attempting to acquire the operational system solution without these controls risks not delivering needed system capabilities on time and within budget. Agency Comments and Our Evaluation

In written comments on a draft of this report (reprinted in appendix II), State’s Acting Chief Financial Officer agreed with our findings and conclusions that its management controls over near-term prototype and pilot-testing activities are adequate, but disagreed with our finding and conclusion that State’s existing controls are not adequate for effectively managing the more demanding next phase of the program—acquisition and deployment of the operational system. As a result, it is widely recognized that the level of management control to effectively put in place an operational system, particularly a system like the overseas knowledge-management system that involves multiple agencies, is greater than is needed to prototype or pilot test the system. Appendix II: Comments From the Department of State

	GAO Comments

1.
What GAO Found

To promote U.S. interests in the face of rapid economic, political, technological, and environmental change, 24 federal agencies are engaged in foreign affairs activities at 255 overseas locations in 162 countries. The Department of State is responsible for coordinating and supporting federal agencies' international activities and providing a means for effective interagency information sharing. State is leading a multiagency program to modernize the information technology (IT) environment supporting federal agencies' overseas operations. State is in the early, formative stage of a long-term plan to acquire and deploy a common knowledge management system for overseas-based agencies. This system is to provide basic Internet access and e-mail to mission-critical policy formulation and crisis management support. In the near-term, State is using informal management controls, which are adequate given the department's stated purposes and scope of these activities. However, acquiring and deploying system capabilities for operational use, particularly a system that involves multiple agencies and performs mission-critical functions, requires a much greater level of management discipline than that needed for system prototyping and pilot testing. It is appropriate that State has not yet established these rigorous management controls because its focus has been on evaluating system prototypes. Without these more rigorous controls, however, it is unlikely that State and its agency partners will deliver needed operational system capabilities on time and within budget.