The following article by Nahal Toosi was posted on the Politico website April 5, 2018:
The cost-cutting former Secretary of State had grand ambitions for a department ‘redesign,’ but its clearest impact is a huge bill for consultants, some of whom charged more than $300 an hour.
It was one of Secretary of State Rex Tillerson’s core goals: radically reshaping the State Department to make it leaner, cheaper and modernized to the standards of a former private-sector CEO.
Now that Tillerson has been fired, the vaunted “Redesign” initiative he launched faces an uncertain future, but at least one clear legacy: around $12 million spent just for private consultants who in some cases charged the State Department more than $300 an hour.
The figures, included in materials obtained by POLITICO and confirmed in part by a State Department spokesperson, have not previously been reported. Most of the money has gone to the consulting firm Deloitte as part of a pre-existing federal contract whose ceiling was lifted to $265 million, an indication of the redesign’s ambitions.
As many as 90 consultants worked on the project, according to one document. Many of the consultants have spent extensive time at the State Department, meeting with top officials, collecting and analyzing data, creating PowerPoint presentations and leading group discussions with skeptical employees.
Tillerson initially set out to “transform” his department, according to one document, a goal that coincided with President Donald Trump’s attempts to slash by a third the nearly $60 billion a year the U.S. spends on the State Department and affiliated programs. In the face of fierce criticism from current and former department officials who saw the redesign as a secrecy-cloaked excuse for heavy-handed cuts, Tillerson eventually scaled back the plan to focus on modernized technology and better management practices. But he did not survive long enough to see much of it implemented: Trump fired Tillerson, with whom he never clicked, on March 13.
The fate of the redesign is likely to arise during a Senate confirmation hearing expected later this month for CIA Director Mike Pompeo, whom Trump has nominated to succeed Tillerson. Pompeo’s approach to the controversial plan could prove an early test for his relationship with State’s thousands of career staffers.
Congressional officials, some of whom had unsuccessfully tried for months to learn details of the redesign, expressed surprise when POLITICO disclosed the dollar figures to them and said the issue could be the subject of upcoming hearings.
“I believe we must look into how taxpayer money was spent on this botched project and will continue to call for the committee to examine these issues in open hearings in the near future,” New Jersey Sen. Robert Menendez, the top Democrat on the Senate Foreign Relations Committee, said in a statement. Menendez also blasted the State Department for a “lack of transparency” and refusal to share information with his panel.
Congressional aides and former State Department officials noted that, despite months of work, Tillerson’s redesign initiative has had few, if any, tangible accomplishments. Some pointed out that the spending on consultants happened amid cost-cutting measures at State, including efforts to downsize its staff. Some also said that rather than rely on an army of high-priced consultants, Tillerson could have turned to public sources that would cost taxpayers nothing. One, for example, was the Quadrennial Diplomacy and Development Review, launched under then-Secretary of State Hillary Clinton. It suggested, among other things, ways to streamline workloads and improve technology.
Tillerson and his top aides “had disdain for the professionals,” one former senior State Department official said. “You had years of blueprints for reform developed internally, two QDDR documents, and thousands of career officers and civil servants who crave change and reform and would’ve been thrilled to work on this effort at no added taxpayer expense.”
“Instead,” the former official added, “they chose to lavish money on contractors and consultants who knew nothing about the organization.”
Deloitte referred questions to the State Department. The department spokesperson said the redesign has addressed “long-needed efforts to improve the department’s IT infrastructure, enhance the use of data analytics to support decision making, and strengthen leadership at all levels in the organization.” Although meant as a defense of the effort, the statement actually was a recognition of how much Tillerson ultimately scaled back his aims.
Early in his tenure, Trump issued an executive order asking all agencies to look for ways to improve their efficiency. Tillerson, who had spent decades at ExxonMobil and knew the corporate world well, took to this task with gusto. In seeking out the consultants’ services, the materials obtained by POLITICO show, Tillerson had ambitious desires.
The goal was to “transform the Department of State and USAID,” one document states, explaining that the eventual objective was to “implement a plan to restructure bureaus and offices and their reporting chain to improve efficiency.” The structural changes could include “consolidation, streamlining, or elimination of offices or functions.” The contractors were expected to help stand up and support working groups consisting of State Department staffers that would tackle topics such as how to maximize the effect of foreign assistance or how best to deploy people overseas. One aim was to have a “high degree of employee engagement.”
One sign of the scope of change Tillerson envisioned was the decision to raise the cap of the existing State Department contract with Deloitte from nearly $140 million to $265 million, in large part to cover the redesign costs. (Experts warned that contract ceilings are more of a budgetary gimmick and are often not reached.)
Many State employees support the idea of reforming the department and hoped that Tillerson might implement a private-sector ethos of efficiency. In May, Tillerson surveyed State’s employees worldwide to gain input on what changes they’d like to see, and more than 35,000 staffers from State and USAID responded.
The survey was handled by Insigniam, a consulting firm that also has been a subcontractor of Deloitte’s. One document capped federal spending on the survey at $850,000, plus travel expenses. Other reports put the value of that contract at more than $1 million. Insigniam declined comment.
Tillerson did succeed in eliminating or leaving unstaffed the offices of more than two dozen “special envoys,” positions devoted to specific issues such as the imposition of sanctions or the war in Afghanistan. But those moves, which had much internal support, appear to have been unrelated to the Deloitte consultants’ work.
In one rare peek into the process, Tillerson told his employees in a September email that if all went well, the redesign could save State and USAID between $5 billion to $10 billion over five years.
But as 2017 progressed, there were signs that his plan was in trouble. Lawmakers from both parties expressed frustration that Tillerson and his aides were sharing few details and what information they did offer came in hard-to-decipher consultant-speak. Maliz Beams, a retirement services executive Tillerson brought in to oversee the project quit in November after just three months in the role.
By February, Tillerson effectively conceded that he had lowered his ambitions, for reasons he never fully clarified. He told staffers in a memo that the redesign was moving into a new phase called the “Impact Initiative.” Far from consolidating embassies or eliminating entire bureaus, the new approach would focus on improving the department’s technology, human resources procedures and management training.
Tillerson, whose last day as secretary was March 31, did not respond to requests for comment via an intermediary.
The materials obtained by POLITICO indicate that the consultants have helped State Department staffers come up with several specific ways to achieve the goals of the Impact Initiative. For instance, the department is trying to make more use of cloud technology and enabling more practical use of mobile devices. It is examining ways to streamline the security clearance process and improve the performance review system. In general, the consultants have helped organize and guide the overall process — essentially acting as support staff.
Former and current State Department officials, however, argue that many of these ideas are common-sense proposals that didn’t require private consultants.
Prior to Tillerson’s arrival, for example, State Department officials had already decided to adopt cloud services, including Microsoft Office 365. But a newly accelerated pace for that shift has some staffers concerned about security.
“There are people worried that [the redesign] has pushed too aggressive a schedule to adopt cloud services, and that it could cause service disruptions and raise the risk that the data could be compromised,” said a State Department staffer familiar with the issue.
State Department officials complain that an internal website meant to keep them updated on redesign efforts is too vague, and note that it appears not to mention Deloitte or Insigniam, leaving the impression that changes are being driven by department employees.
One State staffer on the redesign team complained about the Insigniam consultants in particular, saying they showed a poor grasp of how the State Department functions and little appreciation for diplomats’ training and experience. In one meeting with State Department employees last year, the staffer recalled, the Insigniam consultants puzzled their audience with an awkward attempt at explaining the importance of context in conversations.
“They would say something like, ‘If I said to you, ‘Get me some water,’ you’d know to get a cup and go to the sink and bring me back the water, but if you said that to someone in China, they might just scoop up some water from a puddle on the ground.’ And they said this to a room full of diplomats!” the staffer said. “It was painful. We were literally objecting to the way they were talking. We were trying to educate them on what we did so that they could actually help do the job they were hired to do.”
The State Department spokesperson said that at any given time, an average of 45 consultants worked on the redesign. The spokesperson indicated, however, that those numbers are heading downward as more of the tasks are delegated to career staffers. “Expenditure on contractors has decreased substantially in recent weeks, as leaders within our bureaus carry forward many of the key modernization projects,” the spokesperson said.
The redesign effort has also sparked tension between Tillerson and USAID, an independent agency that works closely with the State Department. A March USAID inspector general’s report found that many USAID staffers felt as if Tillerson and his top aides had not taken their interests into account. The overall redesign process was described by both State and USAID officials as “resource-intensive and ad hoc.” And the integrity of the data collected for the Redesign was questioned, in particular the projected cost savings of $5 billion to $10 billion.
USAID officials complained that they couldn’t get access to the raw data from the listening survey conducted by Insigniam last spring. And they, along with some State Department officials, questioned some of its findings.
For instance, according to the inspector general’s report, Insigniam recommended moving the State Department’s Bureau of Consular Affairs to the Department of Homeland Security. But the USAID and State Department officials who talked to the inspector general’s office said it was unlikely that their colleagues would have made such a recommendation during the listening survey, raising questions about where it originated.
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