Ajay_CASSO
I do not know the exact meaning of this error. However it looks like the initialization of AuthAzWebService itself failed and I believe you are seeing this error on server.log.
2016-06-08 11:10:38,481 ERROR [com.ca.soa.services.authaz.webservice.ServiceLogic] - SM_WSZ_00031 - Authentication web service is not configured. Be sure InitServlet runs.
Here are my thoughts....
Check in server.conf - if AuthAzWebService is enabled.
Check the host entry (FQDN) for AuthAzWebService, does it resolve. If not you may need to get a host entry in the host file as a Stop-Gap approach.
Enable WebAgent and WebAgentTrace log in SecureProxyServer ACO (not the AuthAzWebServices ACO). The WebAgentTrace log should print some useful information (mostly detailed processing of the request stream - however in our case it looks like initialilization itself failed).