STATE DEPARTMENT REORGANIZATION

TUESDAY, APRIL 4, 1995

HOUSE OF REPRESENTATIVES, COMMITTEE ON INTERNATIONAL RELATIONS, Washington, DC.

The committee met, pursuant to call, at 10:02 a.m., in room 2172, Rayburn House Office Building, Hon. Benjamin A. Gilman (chairman of the committee) presiding.

Chairman GILMAN. The committee will please come to order. We welcome a panel to the hearing this morning on consolidation of our foreign affairs agencies, and with us today are Undersecretary of State Richard Moose, Director Joseph Duffey of the U.S. Information Agency, Administrator Brian Atwood of the Agency for International Development, and Director John Holum of the Arms Control and Disarmament Agency.

Gentlemen, we appreciate your willingness to come before our committee to discuss this important issue. Our friend and colleague, Senator Helms, has presented a very serious proposal, and we do commend him for his efforts to achieve some meaningful reforms in the structure of our foreign affairs agencies.

These agencies currently reflect the requirements of a bygone era with different challenges, different goals and certainly, different polemics. It was an era that stretched from the end of World War II until the demise of the Soviet Union just a few years ago.

To meet these new challenges that we now face and to take advantage of the new opportunities, our Secretary of State must have all the resources represented by your agencies to formulate a foreign policy that will effectively garner a nation into the next century.

The Budget Committee has advised our committee to plan on reductions for international affairs activities below fiscal year 1995 that will ultimately total $11 billion over the next 5 years. In the face of spending reductions to this degree, we must consolidate activities in order to give the Secretary of State the flexibility to find these priorities where our Nation must lead.

Our committee must also lead, and after the recess, we expect to be considering a consolidation plan that will incorporate significant savings. I hope that my colleagues will agree that changes in the international affairs budget are required, and our committee must do that kind of work. The members of our committee are the most knowledgeable about these programs and can provide the best judgment as to how to fashion reductions that will still provide the resources necessary to preserve U.S. leadership abroad. Considering the consolidation of the foreign affairs agencies, we should be

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guided by three general principles. First, that we must revise our foreign affairs agencies to better integrate our foreign policy tools and functions in light of a new world.

Second, that we secure cost savings through consolidation of various functions in matching of resources to national interest priorities.

Finally, that our foreign affairs structure supports our U.S. presence overseas and implements and coordinates policies developed in our own national interest.

I recognize that Secretary Christopher is moving to address some of these concerns. That is certainly laudable and necessary. But, we are going to have to do more than simply tinker with the mechanisms that we now have. They must be transformed so that we eliminate the duplication and overlap and sometimes confusion, by establishing the Secretary of State as a true manager of our foreign policy and all its component parts.

Housing the responsibility and tools of foreign policy within one agency will allow these functions to be an integral part of policy development. That is particularly important as our diplomatic corps formulates new strategies for meeting new challenges and opportunity in this new era.

I would hope that we could work together on this consolidation, so that we can utilize the expertise that is now available in each agency, and build on the good work already underway. Before we hear from each member of the panel, do any of our colleagues have a statement they wish to make? Mr. Bereuter? Mr. Smith? If not, our panelists may proceed in any order you choose. Please proceed, gentlemen.

STATEMENT OF THE HONORABLE RICHARD M. MOOSE, UNDER SECRETARY OF STATE FOR MANAGEMENT

Mr. Moose. Good morning, Mr. Chairman and members of the committee. I have summarized my remarks for delivery here, but I would request that full text be inserted in the record, if it please the committee.

On behalf of Secretary Christopher, I welcome the opportunity to appear before the committee to present our views on how the State Department, in cooperation with the other foreign affairs agencies, should be organized to serve the interests of the American people. In light of the importance of this issue, I do request on my own behalf and that of my colleagues that when the committee does introduce a legislative proposal, a consolidation plan as you had mentioned, Mr. Chairman, that each of us be given an opportunity to appear before the committee again to address the specific legislative proposal.

Chairman GILMAN. We will try our best to accommodate you on

that.

Mr. MOOSE. Thank you, Mr. Chairman. A fundamental premise of the Clinton administration's foreign policy is that America must remain engaged in the world in order to advance America's enduring interest.

With the end of the cold war, we have a remarkable chance to shape a world conducive to American interest and consistent with American values. But, the post cold war world has also presented

us with a vast array of formidable new challenges from nuclear smuggling to massive trans-border migrations, challenges which our Government must be able to respond to with speed, flexibility, and adequate resources.

Our ability to maintain our leadership and to respond to events in this fast changing international environment rests on two pillars. The first is a capacity for effective policy formulation and coordination, led by the Secretary of State. Second, the experienced personnel and tested infrastructure of the Department of State, USAID, USIA, and ACDA. Here is what we have done to enhance the Secretary's leadership capacity and I hope that you will agree that it goes beyond tinkering at the edges.

In the last 2 years, we have streamlined and increased our productivity in very significant ways. We have reduced significantly the number of deputy assistant secretaries and senior officers. We closed 17 unneeded posts overseas. At the same time, we are operating 29 new embassies with no new increase in budget, actually, a decrease.

We have 1,100 fewer positions at stake now than in 1993, and we plan to continue streamlining both our organization and our processes. Only 2 weeks ago, Secretary Christopher introduced his ideas for restructuring the Department of State. Begun last September, the Secretary's strategic management initiative is, in his words, our process for forging a comprehensive strategy for change. Here are the major areas which Secretary Christopher has targeted for change.

First, the team concept will become the basis for strengthening coordination and interaction within the State Department and among the foreign policy agencies.

Second, while placing greater reliance on teams, the Secretary intends to push greater responsibility downward in the organization, further reduce the number of layers between himself and our front line experts, and eliminate overlap between functional and geographic bureaus.

Third, we will strengthen our overseas missions in order to enable them better to anticipate and respond to world events.

The Secretary has asked me, as the Department's manager, to accelerate the reengineering of administrative support activities, in order to reallocate more resources to diplomatic readiness, including the care and protection of our people and the modernization of our information technology.

Finally, our reporting and analysis, one of State's core strengths, will be retargeted and reoriented to take better account of the information revolution and the needs of decision makers, including the Congress. Seven employee working groups in the Department, headed by some of our most distinguished senior officials, both civil service and foreign service, are developing specific implementation plans for the strategy I have just described. They will complete their work on April 15, and implementation will follow immediately.

The second pillar, Mr. Chairman, of America's foreign policy leadership rests on the infrastructure and specialized skills of the Department of State, USAID, USIA and ACDA. Each of these for

eign affairs agencies is proceeding vigorously with its own streamlining efforts and my colleagues will describe those to you.

But, while we work to strengthen the individual agencies, we are also working closely with one another to eliminate duplicative administrative activities, and to share one another's strengths and best practices.

As a result, we have already combined or agreed to combine 24 administrative operations. We are continually expanding the list. I will submit more material about these changes in coming weeks. In a broader context, Mr. Chairman, under the auspices of the President's Management Council, all of the foreign affairs agencies, including the Foreign Commercial Service, Defense, and the Intelligence and Law Enforcement Communities, are currently designing the overhaul of the Foreign Affairs Administrative Support System, known as FAAS.

Our 266 overseas posts are the operating platforms for more than 50 U.S. Government agencies. Embassies today must be effective platforms for tasks as diverse as tracing the overseas sources of crime which afflict our streets, and of creating new American jobs.

Placing these platforms on an efficiently operating, soundly financed footing, is essential to maintaining America's ability to respond to challenges. Having reviewed the steps that we are taking to enhance the foundations of our diplomacy, I wish to address directly the consolidation concepts, Mr. Chairman, in which you and other committee members have expressed an interest.

As currently understood, these proposals would radically reduce or eliminate some agencies and consolidate residual functions into the Department of State. The National Performance Review, led by the Vice President, requires the leaders of all executive branch departments and agencies to subject their operations to the closest scrutiny and to search for better and more efficient ways to perform their missions. To that end, Secretary Christopher and his staff explored a wide range of organizational concepts, including the possibility of consolidating agencies and functions.

In that context, the Secretary's staff, like that of the other foreign affairs agencies, shared with the Vice President and the NPR team a range of ideas, including the consolidation concept. But, in the course of that review, the Secretary, himself, never endorsed any specific plan nor did he seek any preconceived outcome.

Following the examination of various alternatives, including consolidation, the Vice President concluded, as the committee is aware, that the core functions of the four foreign affairs agencies are as important in the cold war period as they were before, and expressed his belief that they can be most effectively carried out by independent agencies working closely with the State Department offices.

Mr. Chairman, the Secretary of State fully agrees with and supports that conclusion. Consolidation and reform, in our view, are not synonymous. We are for reform, but we believe that encouraging sustainable development, providing humanitarian assistance, advancing public diplomacy, and promoting arms control, continue to be essential components of our foreign policy.