In 2013, an inquiry found the Government Communications Security Bureau riddled with problems. Last July, the commission's review of intelligence found problems across the New Zealand Intelligence Community, which includes the GCSB, Security Intelligence Service and the National Assessments Bureau.
It stated changes needed to be made with "urgency as there is a huge amount of change to be undertaken".
The latest report signalled positive change with the appointment of former police commissioner Howard Broad to the role of deputy chief executive of DPMC, in charge of intelligence services. It also said the department had yet to "dimension" work involved in making "necessary long-term changes" in the sector.
While Ms Jagose - the acting GCSB director - had been recently appointed to the role, "there was concern expressed that this necessary set of tasks is taking some time to initiate and resource".
There was concern about DPMC's work on the issue. "Current management reporting and project control processes are inadequate, with some reports incomplete, poorly focused and confusing."
There was also a need to improve DPMC systems, through which intelligence material passes.
"Issues arise in providing secure intelligence material or policy advice to the Prime Minister."
Leadership in the intelligence sector was DPMC's "biggest challenge" and "potentially the most fraught".
The report said the scale of the changes needed had yet to be properly understood, "prioritised or appropriately resourced".
The vetting delays by the SIS also featured in last week's annual report of the Inspector-General of Intelligence and Security, Cheryl Gwyn. Ms Gwyn said the problems at the SIS meant she was unable to get to work appointing key staff to carry out oversight on the agency.
A spokeswoman for Prime Minister John Key said: "The reports you refer to suggested these systems could be improved as a general rule and ... the Prime Minister agreed."
Finding fault
What has happened?
The State Services Commission has carried out a follow-up "health check" report into the Department of the Prime Minister and Cabinet. SSC is the oversight body for the public sector while DPMC collates and carries the most critical decision-making information to the Prime Minister and the Cabinet.
What does the report say?
It is critical of the systems that are meant to support a properly functioning intelligence network.
Does it matter?
Yes. The best intelligence is no good if it can't be communicated to those who can use it. There should be no "issues" getting intelligence material to the Prime Minister. Also, NZ has recently raised its security threat level. Improvements should not be held up because the SIS can't vet people quickly enough.
