Report Contents
What OIG Audited
The Creating Helpful Incentives To Produce Semiconductors Act (CHIPS Act) provided $500 million ($100 million per year over 5 years, starting in FY 2023) to the Secretary of State for international information and communications technology security and semiconductor supply chain activities. According to the CHIPS Act, these activities include supporting the development and adoption of secure and trusted telecommunications technologies, secure semiconductors, secure semiconductors supply chains, and other emerging technologies.
The Office of Inspector General conducted this audit to determine whether the Department of State (Department) applied program design principles as described in the Foreign Affairs Manual (FAM), 18 FAM 301.4, “Department of State Program and Project Design, Monitoring, and Evaluation,” to implement CHIPS Act-related activities.
What OIG Recommends
OIG made three recommendations to address the limitations identified in this report. On the basis of the Department’s response to a draft of this report, OIG considers the three recommendations unresolved. A synopsis of management’s response to the recommendation offered and OIG’s reply follow each recommendation in the Audit Results section of this report. The joint response received from the Bureau of Budget and Planning (BP) and the Office of Foreign Assistance is included in its entirety in Appendix B. OIG’s reply to general comments provided by BP and the Office of Foreign Assistance is presented in Appendix C.
What OIG Found
The Department generally applied four of the six program design principles described in 18 FAM 301.4-2 to plan CHIPS Act-related activities. Specifically, the five bureaus and offices involved in the CHIPS Act implementation did the following: (1) assessed the Act’s alignment to higher level strategies, (2) conducted a situational analysis, (3) developed goals and objectives, and (4) constructed a collaborative Department-level logic model. However, OIG identified two program design principles that, if applied, would assist the Department in better implementing CHIPS Act-related activities. First, the Department prepared logic models in lieu of a charter, as allowed by the FAM, to execute CHIPS Act-related activities. Although the FAM provides an option for a logic model or a project charter, OIG believes that the Department should include elements such as justification, scope, stakeholders, and key deliverables in the document, regardless of which option is used. Second, the Department had not established a detailed project schedule for CHIPS Act implementation.
One reason for the identified program design limitations is that the Department had not developed guidance on how to design and manage complex, globally focused programs across multiple bureaus, such as the CHIPS Act. In addition, Department officials stated that they believed that some components of 18 FAM 301 were not applicable, such as charters and schedules. Nonetheless, fully implementing program design principles prescribed in the FAM would be beneficial for project execution among the bureaus involved. Furthermore, although not required, the Department had not assigned a formal lead and management structure to orchestrate the Department’s implementation of CHIPS Act-related activities. Formally establishing a lead and structure would help promote efficiencies and coordination and further the Department’s ability to advance the goals of boosting American semiconductor research, development, and production, and supporting secure and trusted telecommunications technology.
Report Terms
Report Recommendations
OIG recommends that the Bureau of Budget and Planning, in coordination with the Office of Foreign Assistance, develop and distribute guidance related to designing and managing complex, globally focused programs and projects that are to be coordinated and implemented among multiple bureaus and offices within the Department of State.
OIG recommends that the Bureau of Budget and Planning, in coordination with the Office of Foreign Assistance, develop and implement a mechanism that bureaus and offices can use to document a justification supporting a decision not to fully implement requirements included in the Foreign Affairs Manual, 18 FAM 301.4-2, for a program or a project (e.g., project justification, scope, stakeholder information, key deliverables, and project schedule).
OIG recommends that the Deputy Secretary of State designate a formal lead and management structure to orchestrate the Department’s implementation of the Creating Helpful Incentives To Produce Semiconductors Act of 2022 for the purpose of promoting efficiencies and coordination; furthering the timely advancement of the goal of boosting American semiconductor research, development, and production; and supporting secure and trusted telecommunications technology development.