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Testimony:

Before the House Committee on International Relations:

United States General Accounting Office:

GAO:

For Release on Delivery Expected at 10:30 a.m. EST:

Thursday, September 4, 2003:

Foreign Affairs:

Effective Stewardship of Resources Essential to Efficient Operations at 
State Department, USAID:

Statement of Jess T. Ford, Director International Affairs and Trade:

GAO-03-1009T:

GAO Highlights:

Highlights of GAO-03-1009T, testimony before the House Committee on 
International Relations 

Why GAO Did This Study:

In recent years, funding for the Department of State has increased 
dramatically, particularly for security upgrades at overseas 
facilities and a major hiring program. The U.S. Agency for 
International Development (USAID) has also received more funds, 
especially for programs in Afghanistan and Iraq and HIV/AIDS relief. 
Both State and USAID face significant management challenges in 
carrying out their respective missions, particularly in areas such as 
human capital management, performance measurement, and information 
technology management. Despite increased funding, resources are not 
unlimited. Thus, State, USAID, and all government agencies have an 
obligation to ensure that taxpayer resources are managed wisely. Long-
lasting improvements in performance will require continual vigilance 
and the identification of widespread opportunities to improve the 
economy, efficiency, and effectiveness of State’s and USAID’s existing 
goals and programs.

GAO was asked to summarize its findings from reports on State’s and 
USAID’s management of resources, actions taken in response to our 
reports, and recommendations to promote cost savings and more 
efficient and effective operations at the department and agency.

What GAO Found:

Overall, State has increased its attention to managing resources, and 
its efforts are starting to show results, including potential cost 
savings and improved operational effectiveness and efficiency. For 
example, 

* In 1996, GAO criticized State’s performance in disposing of its 
overseas property. Between fiscal years 1997 through 2002, State sold 
129 properties for more than $459 million with plans to sell 
additional properties between fiscal years 2003 through 2008 for 
approximately $300 million. Additional sales would help offset costs 
of replacing about 160 unsecure and deteriorating embassies. 

* State is now taking a more businesslike approach with its embassy 
construction program, which is estimated to cost an additional $17 
billion beginning in fiscal year 2004. Cost-cutting efforts allowed 
State to achieve $150 million in potential cost savings during fiscal 
year 2002. State should continue its reforms as it determines 
requirements for, designs, and builds new embassies.

* The costs of maintaining staff overseas are generally very high. In 
response to management weaknesses GAO identified, State has begun 
addressing workforce planning issues to ensure that the government has 
the right people in the right places at the right times. State should 
continue this work and adopt industry best practices that could reduce 
costs and streamline services overseas. 

* GAO and others have highlighted deficiencies in State’s information 
technology. State invested $236 million in fiscal year 2002 on 
modernization initiatives overseas and plans to spend $262 million 
over fiscal years 2003 and 2004. Ongoing oversight of this investment 
will be necessary to minimize the risks of spending large sums of 
money on systems that do not produce commensurate value.

* State has improved its strategic planning to better link staffing 
and budgetary requirements with policy priorities. Setting clear 
objectives and tying resources to them will make operations more 
efficient. 

GAO and others have also identified some management weaknesses at 
USAID, mainly in human capital management and workforce planning, 
program evaluation and performance measurement, information 
technology, and financial management. While USAID is taking corrective 
actions, better management of critical systems is essential to 
safeguard the agency’s funds. 

Given the added resources State and USAID must manage, current budget 
deficits, and new requirements since Sept. 11, 2001, oversight is 
needed to ensure continued progress toward effective management 
practices. This focus could result in cost savings or other 
efficiencies.

www.gao.gov/cgi-bin/getrpt?GAO-03-1009T.

To view the full product, including the scope and methodology, click 
on the link above. For more information, contact Jess Ford at (202) 
512-4128 or fordj@gao.gov.

[End of section]

Mr. Chairman and Members of the Committee:

I am pleased to be here today to discuss the Department of State's and 
the U.S. Agency for International Development's (USAID) stewardship of 
their resources and areas within their budgets where applying strong 
management practices has the potential to produce efficiencies that 
could result in cost savings. To put this in perspective, in fiscal 
year 2003, State was appropriated about $6 billion for the 
administration of foreign affairs and USAID received approximately $12 
billion in total program funding.

In carrying out its mission of forming, representing, and implementing 
U.S. foreign policy, State faces complex challenges, some of which have 
intensified since the terrorist attacks of September 11, 2001, 
including the provision of secure facilities overseas. Over the last 
several years, funding for State's operations has increased, 
particularly for security upgrades at embassies and consulates around 
the world and for a major hiring program to meet U.S. foreign policy 
needs. USAID has also received significant funding increases for 
foreign assistance programs, in Afghanistan and Iraq in particular, as 
well as for HIV/AIDS relief programs. However, resources are not 
unlimited, and sound management practices can affect the utilization of 
large sums of money.

Over the years, GAO, State's Office of the Inspector General (OIG), and 
various commissions and studies have identified numerous management 
weaknesses at State. In addition, GAO and others have identified 
management challenges and operational deficiencies at USAID that affect 
the agency's ability to implement its programs. Ongoing attention to 
resource management issues at both State and USAID will be needed to 
ensure that the department and the agency take advantage of 
opportunities for more efficient operations and achieve budget savings 
wherever possible.

My statement today is based on our work at State and USAID over the 
last several years. I will focus on our observations regarding State's 
management in the following five areas: (1) unneeded[Footnote 1] real 
estate; (2) embassy construction; (3) overseas presence and staffing, 
including rightsizing;[Footnote 2] (4) information technology; and (5) 
strategic planning. I will also discuss key areas where USAID has faced 
challenges, including (1) human capital management and workforce 
planning, (2) program evaluation and performance measurement, (3) 
information technology, and (4) financial management. A list of 
relevant GAO reports is attached to the end of my statement (see app. 
I).

Summary:

Overall, our work at the Department of State shows that it has paid 
more attention to managing resources, and this effort is starting to 
show results--including the potential for cost savings and improved 
operational effectiveness and efficiency. For example,

* In 1996, GAO was critical of State's disposal of unneeded facilities. 
We reported that State did not have an effective process for 
identifying and selling unneeded real estate, and that decisions 
concerning the sale of some properties valued at hundreds of millions 
of dollars had been delayed for years. In recent years, State has 
brought a more businesslike approach to managing its overseas real 
estate portfolio--valued at approximately $12 billion--and has 
accelerated the sale of unneeded property and generated revenue that 
can be used to replace unsafe, deteriorating facilities worldwide. In 
total, between fiscal years 1997 through 2002, State sold properties 
for more than $459 million. The proceeds from these sales will be used 
to construct new facilities in Germany, Angola, and other locations 
worldwide. State estimates proceeds from additional property sales 
valued at $300 million between fiscal years 2003 through 2008 that 
could be used for other priorities. If State continues to streamline 
its operations and dispose of additional facilities over the next 
several years, it can potentially avoid having to request additional 
funding from the Congress for other real property needs.

* In the past, we reported that State's embassy construction projects 
took longer and cost more than budgeted. Due to delays in State's 
construction program of the late 1980s, and subsequent funding 
cutbacks, facilities lacked adequate security and remained vulnerable 
to terrorist attack. State has also begun taking a more businesslike 
approach with its embassy construction program, which it expects will 
cost an additional $17 billion beginning in fiscal year 2004. For 
example, State has instituted reforms, such as using standard building 
designs and "fast-track" contracting, that could lower the cost of 
embassy construction and lessen the chances of cost overruns and 
schedule delays. We reported in January 2003 that cost-cutting efforts 
allowed State to achieve about $150 million in potential cost savings 
during fiscal year 2002. State should continue to promote a streamlined 
approach as it determines requirements for, designs, and constructs new 
embassies in an effort to find other opportunities to cut costs while 
continuing to provide safe and secure facilities.

* We have also reported that State and most other foreign affairs 
agencies lacked a systematic process for determining appropriate 
overseas staffing levels. As a result, there was no assurance that 
personnel stationed abroad represented the right number of people with 
the right skills. Since 2001, State has directed significant effort to 
improving the management of its overseas presence in an effort to 
address workforce planning and staffing issues. In response to 
management weaknesses that we have previously identified, State has 
begun addressing rightsizing options and staffing shortages at hardship 
posts. For example, the department has indicated that it is pursuing 
regionalization in Europe, as well as opportunities to relocate 
positions from overseas back to the United States, which should result 
in lower operating costs. State should continue to review its workforce 
planning policies to ensure that the U.S. government has the right 
people in the right places at the right times to support U.S. foreign 
policy goals. Moreover, in determining overseas staffing levels, State 
should adopt industry best practices, such as competitive sourcing of 
administrative and support functions, which could result in cost 
reductions and streamlined services overseas.

* Previous GAO and State's Office of Inspector General (OIG) reports 
cited weaknesses in the information technology system, including 
State's inability to collaborate with other foreign affairs agencies, 
as significant challenges for the department. State officials have 
recognized deficiencies in the department's management of information 
technology programs. The Secretary of State has made a major commitment 
to modernizing information technology and plans to spend $262 million 
over fiscal years 2003 and 2004 on information technology modernization 
initiatives overseas. For example, State is now working to replace its 
antiquated cable system with a new integrated messaging and retrieval 
system. According to State, its information technology is now in the 
best shape it has ever been, including improved Internet access and 
upgraded computer equipment. Due to the level of investment the 
department is making in information technology, continued oversight 
will be necessary to minimize the risks of spending large sums of money 
on systems that do not produce commensurate value.

* From 1998 through 2000, we found major weaknesses in State's 
strategic planning processes. The department had not developed overall 
priorities for achieving its strategic goals, and consequently, had no 
overall basis for allocating resources to priorities. Since 2001, State 
has made improvements both at headquarters and overseas that are 
intended to link staffing and budgetary requirements with policy 
priorities. State is now working to forge a stronger link between 
resources and performance, strategic plans, annual performance plans, 
and annual performance reports. This effort will enable State to show 
what is being accomplished with the money it is spending. Improvements 
in strategic planning will also ensure that State is setting clear 
objectives, tying resources to these objectives, and monitoring its 
progress in achieving them--all of which are key to efficient 
operations.

Our work at the U.S. Agency for International Development (USAID) 
indicates that the agency has begun taking corrective actions in areas 
that, over the years, GAO and others have identified as having weak 
management and operational deficiencies. These areas include human 
capital management and workforce planning, program evaluation and 
performance measurement, information technology, and financial 
management. Improved management of these critical systems is essential 
if USAID is to ensure that its foreign assistance objectives are being 
met and its funds and resources are effectively safeguarded. Our recent 
work on USAID's democracy and rule of law programs also revealed 
certain management weaknesses that, if corrected, would help ensure 
that these programs can be sustained in difficult overseas 
environments, are better coordinated with other U.S. agencies and 
international donors to maximize resources, and achieve their intended 
results.

Mr. Chairman, State, USAID, and all government agencies have an 
obligation to ensure that taxpayer resources are managed wisely. The 
programs and activities that I am covering today have benefited and 
will continue to benefit from sound management practices that could 
result in more savings and efficiencies.

Background:

Approximately 4 percent of discretionary spending in the United States' 
federal budget is appropriated for the conduct of foreign affairs 
activities. This includes funding for bilateral and multilateral 
assistance, military assistance, and State Department activities. 
Spending for State, taken from the "150 Account," makes up the largest 
share of foreign affairs spending. Funding for State's Diplomatic and 
Consular Programs--State's chief operating account, which supports the 
department's diplomatic activities and programs, including salaries and 
benefits--comprises the largest portion of its appropriations. Embassy 
security, construction, and maintenance funding comprises another large 
portion of State's appropriation. Funding for the administration of 
foreign affairs has risen dramatically in recent fiscal years, due, in 
part, to enhanced funding for security-related improvements worldwide, 
including personnel, construction, and equipment following the bombings 
of two U.S. embassies in 1998 and the events of September 11, 2001. For 
example, State received about $2.8 billion in fiscal year 1998, but by 
fiscal year 2003, State's appropriation was approximately $6 billion. 
For fiscal year 2004, State is seeking approximately $6.4 billion, 
which includes $4 billion for diplomatic and consular affairs and $1.5 
billion for embassy security, construction, and maintenance. In 
addition, State plans to spend $262 million over fiscal years 2003 and 
2004 on information technology modernization initiatives overseas.

Humanitarian and economic development assistance is an integral part of 
U.S. global security strategy, particularly as the United States seeks 
to diminish the underlying conditions of poverty and corruption that 
may be linked to instability and terrorism. USAID is charged with 
overseeing U.S. foreign economic and humanitarian assistance programs. 
In fiscal year 2003, Congress appropriated about $12 billion--including 
supplemental funding--to USAID, and the agency managed programs in 
about 160 countries, including 71 overseas missions with USAID direct-
hire presence. Fiscal year 2004 foreign aid spending is expected to 
increase due, in part, to substantial increases in HIV/AIDS funding and 
security-related economic aid.

Department of State:

I would like to discuss State's performance in managing its overseas 
real estate, overseeing major embassy construction projects, managing 
its overseas presence and staffing, modernizing its information 
technology, and developing and implementing strategic plans.

Management of Real Property:

State manages an overseas real property portfolio valued at 
approximately $12 billion. The management of real property is an area 
where State could achieve major cost savings and other operational 
efficiencies. In the past, we have been critical of State's management 
of its overseas property, including its slow disposal of unneeded 
facilities. Recently, officials at State's Bureau of Overseas Buildings 
Operations (OBO), which manages the government's real property 
overseas, have taken a more systematic approach to identifying unneeded 
properties and have significantly increased the sale of these 
properties. For example, in 2002, OBO completed sales of 26 properties 
totaling $64 million, with contracts in place for another $40 million 
in sales. But State needs to dispose of more facilities in the coming 
years as it embarks on an expensive plan to replace embassies and 
consulates that do not meet State's security requirements and/or are in 
poor condition.

Unneeded Property:

Unneeded property and deteriorating facilities present a real problem-
-but also an opportunity to improve U.S. operations abroad and achieve 
savings. We have reported that the management of overseas real estate 
has been a continuing challenge for State, although the department has 
made improvements in recent years. One of the key weaknesses we found 
was the lack of a systematic process to identify unneeded properties 
and to dispose of them in a timely manner. In 1996, we identified 
properties worth hundreds of millions of dollars potentially excess to 
State's needs or of questionable value and expensive to maintain that 
the department had not previously identified for potential 
sale.[Footnote 3] As a result of State's inability to resolve internal 
disputes and sell excess property in an expeditious manner, we 
recommended that the Secretary of State appoint an independent panel to 
decide which properties should be sold. The Secretary of State created 
this panel in 1997. As of April 2002, the Real Property Advisory Board 
had reviewed 41 disputed properties and recommended that 26 be sold. By 
that time, State had disposed of seven of these properties for about 
$21 million.

In 2002, we again reviewed State's processes for identifying and 
selling unneeded overseas real estate and found that it had taken steps 
to implement a more systematic approach that included asking posts to 
annually identify properties for disposal and increasing efforts by OBO 
and officials from State's OIG to identify such properties when they 
visit posts.[Footnote 4] For example, the director of OBO took steps to 
resolve disputes with posts that have delayed the sale of valuable 
property. OBO has also instituted monthly Project Performance Reviews 
to review all aspects of real estate management, such as the status of 
acquisitions and disposal of overseas property. However, we found that 
the department's ability to monitor property use and identify 
potentially unneeded properties was hampered by errors and omissions in 
its property inventory. Inaccurate inventory information can result in 
unneeded properties not being identified for potential sale. Therefore, 
we recommended that the department improve the accuracy of its real 
property inventory. In commenting on our report, OBO said that it had 
already taken action to improve its data collection. For example, State 
sent a cable to all overseas posts reminding them of their 
responsibilities to maintain accurate real estate records.

State has significantly improved its performance in selling unneeded 
property. In total, between fiscal years 1997 through 2002, State sold 
129 properties for more than $459 million. Funds generated from 
property sales are being used to help offset embassy construction costs 
in Berlin, Germany; Luanda, Angola; and elsewhere. State estimates it 
will sell additional properties between fiscal years 2003 and 2008 
valued at approximately $300 million. More recently, State has taken 
action to sell two properties (a 0.4 acre parking lot and an office 
building) in Paris identified in a GAO report as potentially 
unneeded.[Footnote 5] After initially resisting the sale of the parking 
lot, the department reversed its decision and sold both properties in 
June 2003 for a total of $63.1 million--a substantial benefit to the 
government. The parking lot alone was sold conditionally for $20.7 
million.[Footnote 6] Although this may be a unique case, it 
demonstrates how scrutiny of the property inventory could result in 
potential savings. The department should continue to look closely at 
property holdings to see if other opportunities exist. If State 
continues to streamline its operations and dispose of additional 
facilities over the next several years, it can use those funds to help 
offset the cost of replacing about 160 embassies and consulates for 
security reasons in the coming years.

Embassy Construction:

In the past, State has had difficulties ensuring that major embassy 
construction projects were completed on time and within budget. For 
example, in 1991 we reported that State's previous construction program 
suffered from delays and cost increases due to, among other things, 
poor program planning and inadequate contractor performance. In 1998, 
State embarked on the largest overseas embassy construction program in 
its history in response to the bombings of U.S. embassies in Africa. 
From fiscal years 1999 through 2003, State received approximately $2.7 
billion for its new construction program and began replacing 25 of 185 
posts identified as vulnerable by State. To better manage this program, 
OBO has undertaken several initiatives aimed at improving State's 
stewardship of its funds for embassy buildings, including cutting costs 
of planned construction projects, using standard designs, and reducing 
construction duration through a "fast track" process. Moreover, State 
hopes that additional management tools aimed at ensuring that new 
facilities are built in the most cost-effective manner, including 
improvements in how agencies determine requirements for new embassies, 
will help move the program forward. State is also pursuing a cost-
sharing plan that would charge other federal agencies for the cost of 
their overall overseas presence and provide additional funds to help 
accelerate the embassy construction program.

Replacing Vulnerable Facilities:

While State has begun replacing many facilities, OBO officials 
estimated that beginning in fiscal year 2004, it will cost an 
additional $17 billion to replace facilities at remaining posts. As of 
February 2003, State had begun replacing 25 of 185 posts identified by 
State as vulnerable after the 1998 embassy bombings. To avoid the 
problems that weakened the previous embassy construction program, we 
recommended that State develop a long-term capital construction plan 
that identifies (1) proposed construction projects' cost estimates and 
schedules and (2) estimated annual funding requirements for the overall 
program.[Footnote 7] Although State initially resisted implementing our 
recommendation, OBO's new leadership reconsidered this recommendation 
and has since produced two annual planning documents titled the "Long-
Range Overseas Building Plan." According to OBO, the long-range plan is 
the roadmap by which State, other departments and agencies, the Office 
of Management and Budget (OMB), the Congress, and others can focus on 
defining and resolving the needs of overseas facilities.

In addition to the long-range plan, OBO has undertaken several 
initiatives aimed at improving State's stewardship of its embassy 
construction funds. These measures have the potential to result in 
significant cost savings and other efficiencies. For example, OBO has:

* developed Standard Embassy Designs (SED) for use in most embassy 
construction projects. SEDs provide OBO with the ability to contract 
for shortened design and construction periods and control costs through 
standardization;

* shifted from "design-bid-build" contracting toward "design-build" 
contracts, which have the potential to reduce project costs and 
construction time frames;

* developed and implemented procedures to enforce cost planning during 
the design phase and ensure that the final designs are within budget; 
and:

* increased the number of contractors eligible to bid for construction 
projects, thereby increasing competition for contracts, which could 
potentially result in lower bids.

OBO has set a goal of a 2-year design and construction period for its 
mid-sized, standard embassy design buildings, which, if met, could 
reduce the amount of time spent in design and construction by almost 
one year. We reported in January 2003 that these cost-cutting efforts 
allowed OBO to achieve $150 million in potential cost savings during 
fiscal year 2002. These savings, according to OBO, resulted from the 
application of the SEDs and increased competition for the design and 
construction of these projects.

Despite these gains, State will face continuing hurdles throughout the 
life of the embassy construction program. These hurdles include meeting 
construction schedules within the estimated costs and ensuring that 
State has the capacity to manage a large number of projects 
simultaneously. Because of the high costs associated with this program 
and the importance of providing secure facilities overseas, we believe 
this program merits continuous oversight by State, GAO, and the 
Congress.

Staffing Requirements for New Embassy Compounds:

In addition to ensuring that individual construction projects meet cost 
and performance schedules, State must also ensure that new embassies 
are appropriately sized. Given that the size and cost of new facilities 
are directly related to agencies' anticipated staffing needs, it is 
imperative that future requirements be predicted as accurately as 
possible. Embassy buildings that are designed too small may require 
additional construction and funding in the future; buildings that are 
too large may have unused space--a waste of government funds. State's 
construction program in the late 1980s encountered lengthy delays and 
cost overruns in part because it lacked coordinated planning of post 
requirements prior to approval and budgeting for construction projects. 
As real needs were determined, changes in scope and increases in costs 
followed. OBO now requires that all staffing projections for new 
embassy compounds be finalized prior to submitting funding requests, 
which are sent to Congress as part of State's annual budget request 
each February.

In April 2003, we reported that U.S. agencies operating overseas, 
including State, were developing staffing projections without a 
systematic approach.[Footnote 8] We found that State's headquarters 
gave embassies little guidance on factors to consider when developing 
projections, and thus U.S. agencies did not take a consistent or 
systematic approach to determining long-term staffing needs. Based on 
our recommendations, State in May 2003 issued a "Guide to Developing 
Staffing Projections for New Embassy and Consulate Compound 
Construction," which requires a more serious, disciplined approach to 
developing staffing projections. When fully implemented, this approach 
should ensure that overseas staffing projections are more accurate and 
minimize the financial risks associated with building facilities that 
are designed for the wrong number of people.

Capital Security Cost Sharing:

Historically, State has paid all costs associated with the construction 
of overseas facilities.[Footnote 9] Following the embassy bombings, the 
Overseas Presence Advisory Panel (OPAP)[Footnote 10] noted a lack of 
cost sharing among agencies that use overseas facilities. As a result, 
OPAP recommended that agencies be required to pay rent in government-
owned buildings in foreign countries to cover operating and maintenance 
costs. In 2001, an interagency group put forth a proposal that would 
require agencies to pay rent based on the space they occupy in overseas 
facilities, but the plan was not enacted. In 2002, OMB began an effort 
to develop a mechanism that would require users of overseas facilities 
to share the construction costs associated with those facilities. The 
administration believes that if agencies were required to pay a greater 
portion of the total costs associated with operating overseas 
facilities, they would think more carefully before posting personnel 
overseas. As part of this effort, State has presented a capital 
security cost-sharing plan that would require agencies to help fund its 
capital construction program. State's proposal calls for each agency to 
fund a proportion of the total construction program cost based on its 
respective proportion of total overseas staffing. OBO has reported that 
its proposed cost-sharing program could result in additional funds, 
thereby reducing the duration of the overall program.

Overseas Presence and Staffing:

State maintains a network of approximately 260 diplomatic posts in 
about 170 countries worldwide and employs a direct-hire workforce of 
about 30,000 employees, about 60 percent of those overseas. The costs 
of maintaining staff overseas vary by agency but in general are 
extremely high. In 2002, the average annual cost of placing one full-
time direct-hire American family of four in a U.S. embassy was 
approximately $339,000.[Footnote 11] These costs make it critical that 
the U.S. overseas presence is sized appropriately to conduct its work. 
We have reported that State and most other federal agencies overseas 
have historically lacked a systematic process for determining the right 
number of personnel needed overseas--otherwise known as 
rightsizing.[Footnote 12] Moreover, in June 2002,[Footnote 13] we 
reported that State faces serious staffing shortfalls at hardship 
posts[Footnote 14]--in both the number of staff assigned to these posts 
and their experience, skills, and/or language proficiency. Thus, State 
has been unable to ensure that it has "the right people in the right 
place at the right time with the right skills to carry out America's 
foreign policy"--its definition of diplomatic readiness.[Footnote 15] 
However, since 2001, State has directed significant attention to 
improving weaknesses in the management of its workforce planning and 
staffing issues that we and others have noted.[Footnote 16] Because 
personnel salaries and benefits consume a huge portion of State's 
operating budget, it is important that the department exercise good 
stewardship of its human capital resources.

Overseas Staffing:

Around the time GAO designated strategic human capital management as a 
governmentwide high-risk area in 2001, State, as part of its Diplomatic 
Readiness Initiative (DRI), began directing significant attention to 
addressing its human capital needs, adding 1,158 employees over a 3-
year period (fiscal years 2002 through 2004). In fiscal year 2002, 
Congress allocated nearly $107 million for the DRI. State requested 
nearly $100 million annually in fiscal years 2003 and 2004 to hire 
approximately 400 new staff each year.

The DRI has enabled the department to boost recruitment. However, State 
has historically lacked a systematic approach to determine the 
appropriate size and location of its overseas staff. To move the 
rightsizing process forward, the August 2001 President's Management 
Agenda identified it as one of the administration's priorities. Given 
the high costs of maintaining the U.S. overseas presence, the 
administration has instructed U.S. agencies to reconfigure the number 
of overseas staff to the minimum necessary to meet U.S. foreign policy 
goals. This OMB-led initiative aims to develop cost-saving tools or 
models, such as increasing the use of regional centers, revising the 
Mission Performance Planning (MPP) process,[Footnote 17] increasing 
overseas administrative efficiency, and relocating functions to the 
United States.[Footnote 18] According to the OPAP, although the 
magnitude of savings from rightsizing the overseas presence cannot be 
known in advance, "significant savings" are achievable. For example, it 
said that reducing all agencies' staffing by 10 percent could yield 
governmentwide savings of almost $380 million a year.[Footnote 19]

GAO's Rightsizing Framework:

In May 2002, we testified on our development of a rightsizing 
framework.[Footnote 20] The framework is a series of questions linking 
staffing levels to three critical elements of overseas diplomatic 
operations: security of facilities, mission priorities and 
requirements, and cost of operations. It also addresses consideration 
of rightsizing options, such as relocating functions back to the United 
States or to regional centers, competitively sourcing functions, and 
streamlining operations. Rightsizing analyses could lead decision 
makers to increase, decrease, or change the mix of staff at a given 
post. For example, based on our work at the U.S. embassy in Paris, we 
identified positions that could potentially be relocated to regional 
centers or back to the United States. On the other hand, rightsizing 
analyses may indicate the need for increased staffing, particularly at 
hardship posts. In a follow-up report to our testimony,[Footnote 21] we 
recommended that the director of OMB ensure that our framework is used 
as a basis for assessing staffing levels in the administration's 
rightsizing initiative.[Footnote 22]

In commenting on our rightsizing reports, State endorsed our framework 
and said it plans to incorporate elements of our rightsizing questions 
into its future planning processes, including its MPPs. State also has 
begun to take further actions in managing its overseas presence--along 
the lines that we recommended in our June 2002 report on hardship 
posts--including revising its assignment system to improve staffing of 
hardship posts and addressing language shortfalls by providing more 
opportunities for language training. [Footnote 23] In addition, State 
has already taken some rightsizing actions to improve the cost 
effectiveness of its overseas operating practices. [Footnote 24] For 
example, State:

* plans to spend at least $80 million to purchase and renovate a 23-
acre, multi-building facility in Frankfurt, Germany--slated to open in 
mid-2005--for use as a regional hub to conduct and support diplomatic 
operations;[Footnote 25]

* has relocated more than 100 positions from the Paris embassy to the 
regional Financial Services Center in Charleston, South Carolina; and:

* is working with OMB on a cost-sharing mechanism, as previously 
mentioned, that will give all U.S. agencies an incentive to weigh the 
high costs to taxpayers associated with assigning staff overseas.

In addition to these rightsizing actions, there are other areas where 
the adoption of industry best practices could lead to cost reductions 
and streamlined services.[Footnote 26] For example, in 1997, we 
reported that State could significantly streamline its employee 
transfer and housing relocation processes. We also reported in 1998 
that State's overseas posts could potentially save millions of dollars 
by implementing best practices such as competitive sourcing.

In light of competing priorities as new needs emerge, particularly in 
Iraq and Afghanistan, State must be prepared to make difficult 
strategic decisions on which posts and positions it will fill and which 
positions it could remove, relocate, or regionalize. State will need to 
marshal and manage its human capital to facilitate the most efficient, 
effective allocation of these significant resources.

Information Technology:

Up-to-date information technology, along with adequate and modern 
office facilities, is an important part of diplomatic readiness. We 
have reported that State has long been plagued by poor information 
technology at its overseas posts, as well as weaknesses in its ability 
to manage information technology modernization programs.[Footnote 27] 
State's information technology capabilities provide the foundation of 
support for U.S. government operations around the world, yet many 
overseas posts have been equipped with obsolete information technology 
systems that prevented effective interagency information sharing.

The Secretary of State has made a major commitment to modernizing the 
department's information technology. In March 2003, we testified that 
the department invested $236 million in fiscal year 2002 on key 
modernization initiatives for overseas posts and plans to spend $262 
million over fiscal years 2003 and 2004.[Footnote 28] State reports 
that its information technology is now in the best shape it has ever 
been, including improved Internet access and upgraded computer 
equipment. The department is now working to replace its antiquated 
cable system with a new integrated messaging and retrieval system, 
which it acknowledges is an ambitious effort.

State's OIG and GAO have raised a number of concerns regarding the 
department's management of information technology programs. For 
example, in 2001,[Footnote 29] we reported that State was not following 
proven system acquisition and investment practices in attempting to 
deploy a common overseas knowledge management system. This system was 
intended to provide functionality ranging from basic Internet access 
and e-mail to mission-critical policy formulation and crisis management 
support. We recommended that State limit its investment in this system 
until it had secured stakeholder involvement and buy-in. State has 
since discontinued the project due to a lack of interagency buy-in and 
commitment, thereby avoiding additional costs of more than $200 
million.

Recognizing that interagency information sharing and collaboration can 
pay off in terms of greater efficiency and effectiveness of overseas 
operations, State's OIG reported that the department recently decided 
to merge some of the objectives associated with the interagency 
knowledge management system into its new messaging system. We believe 
that the department should try to eliminate the barriers that prevented 
implementation of this system. As State continues to modernize 
information technology at overseas posts, it is important that the 
department employ rigorous and disciplined management processes on each 
of its projects to minimize the risks that the department will spend 
large sums of money on systems that do not produce commensurate value.

Strategic Planning:

Linking performance and financial information is a key feature of sound 
management--reinforcing the connection between resources consumed and 
results achieved--and an important element in giving the public a 
useful and informative perspective on federal spending. A well-defined 
mission and clear, well understood strategic goals are essential in 
helping agencies make intelligent trade-offs among short-and long-term 
priorities and ensure that program and resource commitments are 
sustainable. In recent years, State has made improvements to its 
strategic planning process both at headquarters and overseas that are 
intended to link staffing and budgetary requirements with policy 
priorities. For instance, State has developed a new strategic plan for 
fiscal years 2004 through 2009, which, unlike previous strategic plans, 
was developed in conjunction with USAID and aligns diplomatic and 
development efforts. At the field level, State revised the MPP process 
so that posts are now required to identify key goals for a given fiscal 
year, and link staffing and budgetary requirements to fulfilling these 
priorities.

State's compliance with the Government Performance and Results Act of 
1993 (GPRA),[Footnote 30] which requires federal agencies to prepare 
annual performance plans covering the program activities set out in 
their budgets, has been mixed.[Footnote 31] While State's performance 
plans fell short of GPRA requirements from 1998 through 2000, the 
department has recently made strides in its planning and reporting 
processes. For example, in its performance plan for 2002, State took a 
major step toward implementing GPRA requirements, and it has continued 
to make improvements in its subsequent plans.[Footnote 32]

As we have previously reported,[Footnote 33] although connections 
between specific performance and funding levels can be difficult to 
make, efforts to infuse performance information into budget 
deliberations have the potential to change the terms of debate from 
simple outputs to outcomes. Continued improvements to strategic and 
performance planning will ensure that State is setting clear 
objectives, tying resources to these objectives, and monitoring its 
progress in achieving them--all of which are essential to efficient 
operations.

U.S. Agency for International Development:

Now I would like to discuss some of the challenges USAID faces in 
managing its human capital, evaluating its programs and measuring their 
performance, and managing its information technology and financial 
systems. I will also outline GAO's findings from our reviews of USAID's 
democracy and rule of law programs in Latin America and the former 
Soviet Union.

Human Capital Management:

Since the early 1990s, we have reported that USAID has made limited 
progress in addressing its human capital management issues and managing 
the changes in its overseas workforce. A major concern is that USAID 
has not established a comprehensive workforce plan that is integrated 
with the agency's strategic objectives and ensures that the agency has 
skills and competencies necessary to meet its emerging foreign 
assistance challenges. Developing such a plan is critical due to a 
reduction in the agency's workforce during the 1990s and continuing 
attrition--more than half of the agency's foreign service officers are 
eligible to retire by 2007. According to USAID's OIG, the steady 
decline in the number of foreign service and civil service employees 
with specialized technical expertise has resulted in insufficient staff 
with needed skills and experience and less experienced personnel 
managing increasingly complex programs.[Footnote 34] Meanwhile, 
USAID's program budget has increased from $7.3 billion in 2001 to about 
$12 billion in fiscal year 2003, due primarily to significant increases 
in HIV/AIDS funding and supplemental funding for emerging programs in 
Iraq and Afghanistan. The combination of continued attrition of 
experienced foreign service officers, increased program funding, and 
emerging foreign policy priorities raises concerns regarding USAID's 
ability to maintain effective oversight of its foreign assistance 
programs.

USAID's lack of progress in institutionalizing a workforce planning 
system has led to certain vulnerabilities. For example, as we reported 
in July 2002, USAID lacks a "surge capacity" that enables it to quickly 
hire the staff needed to respond to emerging demands and post-conflict 
or post-emergency reconstruction situations.[Footnote 35] We also 
reported that insufficient numbers of contract officers affected the 
agency's ability to deliver hurricane reconstruction assistance in 
Latin America in the program's early phases.

USAID is aware of its human capital management and workforce planning 
shortcomings and is now beginning to address some of them with targeted 
hiring and other actions.

Program Evaluation and Performance Measurement:

USAID continues to face difficulties in identifying and collecting the 
data it needs to develop reliable performance measures and accurately 
report the results of its programs. Our work and that of USAID's OIG 
have identified a number of problems with the annual results data that 
USAID's operating units have been reporting. USAID has acknowledged 
these concerns and has undertaken several initiatives to correct them. 
Although the agency has made a serious effort to develop improved 
performance measures, it continues to report numerical outputs that do 
not gauge the impact of its programs.

Without accurate and reliable performance data, USAID has little 
assurance that its programs achieve their objectives and related 
targets. In July 1999, we commented on USAID's fiscal year 2000 
performance plan and noted that because the agency depends on 
international organizations and thousands of partner institutions for 
data, it does not have full control over how data are collected, 
reported, or verified. In April 2002, we reported that USAID had 
evaluated few of its experiences in using various funding mechanisms 
and different types of organizations to achieve its 
objectives.[Footnote 36] We concluded that with better data on these 
aspects of the agency's operations, USAID managers and congressional 
overseers would be better equipped to analyze whether the agency's mix 
of approaches takes full advantage of nongovernmental organizations to 
achieve the agency's purposes.

Information Technology and Financial Management:

USAID's information systems do not provide managers with the accurate 
information they need to make sound and cost-effective decisions. 
USAID's OIG has reported that the agency's processes for procuring 
information technology have not followed established guidelines, which 
require executive agencies to implement a process that maximizes the 
value and assesses the risks of information technology investments. In 
addition, USAID's computer systems are vulnerable and need better 
security controls. USAID management has acknowledged these weaknesses 
and the agency is making efforts to correct them.

Effective financial systems and controls are necessary to ensure that 
USAID management has timely and reliable information to make effective, 
informed decisions and that assets are safeguarded. USAID has made 
progress in correcting some of its systems and internal control 
deficiencies and is in the process of revising its plan to remedy 
financial management weaknesses as required by the Federal Financial 
Management Improvement Act of 1996.[Footnote 37] To obtain its goal, 
however, USAID needs to continue efforts to resolve its internal 
control weaknesses and ensure that planned upgrades to its financial 
systems are in compliance with federal financial system requirements.

Democracy and Rule of Law Programs:

Our reviews of democracy and rule of law programs in Latin America and 
the former Soviet Union[Footnote 38] demonstrate that these programs 
have had limited results and suggest areas for improving the efficiency 
and impact of these efforts.[Footnote 39]

In Latin America, we found that U.S. assistance has helped bring about 
important criminal justice reforms in five countries. This assistance 
has also help improve transparency and accountability of some 
government functions, increase attention to human rights, and support 
elections that observation groups have considered free and fair. In 
several countries of the former Soviet Union, U.S. agencies have helped 
support a variety of legal system reforms and introduced some 
innovative legal concepts and practices in the areas of legislative and 
judicial reform, legal education, law enforcement, and civil society. 
In both regions, however, sustainability of these programs is 
questionable. Establishing democracy and rule of law in these countries 
is a complex undertaking that requires long-term host government 
commitment and consensus to succeed. However, host governments have not 
always provided the political support and financial and human capital 
needed to sustain these reforms. In other cases, U.S.-supported 
programs were limited, and countries did not adopt the reforms and 
programs on a national scale.

In both of our reviews, we found that several management issues shared 
by USAID and the other agencies have affected implementation of these 
programs. Poor coordination among the key U.S. agencies has been a 
long-standing management problem, and cooperation with other foreign 
donors has been limited. U.S. agencies' strategic plans do not outline 
how these agencies will overcome coordination problems and cooperate 
with other foreign donors on program planning and implementation to 
maximize scarce resources. Also, U.S. agencies, including USAID, have 
not consistently evaluated program results and have tended to stress 
output measures, such as the numbers of people trained, over indicators 
that measure program outcomes and results, such as reforming law 
enforcement practices. Further, U.S. agencies have not consistently 
shared lessons learned from completed projects, thus missing 
opportunities to enhance the outcomes of their programs.

Mr. Chairman, this completes my prepared statement. I would be happy to 
respond to any questions you or other members of the committee may have 
at this time.

Contacts and Acknowledgments:

For future contacts regarding this testimony, please call Jess Ford or 
John Brummet at (202) 512-4128. Individuals making key contributions to 
this testimony include Heather Barker, David Bernet, Janey Cohen, Diana 
Glod, Kathryn Hartsburg, Edward Kennedy, Joy Labez, Jessica Lundberg, 
and Audrey Solis.

[End of section]

Appendix I: GAO Reports on Resource Management:

Department of State:

Overseas Security, Presence, and Facilities:

Overseas Presence: Conditions of Overseas Diplomatic Facilities. GAO-
03-557T. Washington, D.C. March 20, 2003.

Overseas Presence: Rightsizing Framework Can Be Applied at U.S. 
Diplomatic Posts in Developing Countries. GAO-03-396. Washington, D.C. 
April 7, 2003.

Embassy Construction: Process for Determining Staffing Requirements 
Needs Improvement. GAO-03-411. Washington, D.C. April 7, 2003.

Overseas Presence: Framework for Assessing Embassy Staff Levels Can 
Support Rightsizing Initiatives. GAO-02-780. Washington, D.C. July 26, 
2002.

State Department: Sale of Unneeded Property Has Increased, but Further 
Improvements Are Necessary. GAO-02-590. Washington, D.C. June 11, 
2002.

Embassy Construction: Long-Term Planning Will Enhance Program Decision-
making. GAO-01-11. Washington, D.C. January 22, 2001.

State Department: Decision to Retain Embassy Parking Lot in Paris, 
France, Should Be Revisited. GAO-01-477. Washington, D.C. April 13, 
2001.

Staffing and Workforce Planning:

State Department: Staffing Shortfalls and Ineffective Assignment System 
Compromise Diplomatic Readiness at Hardship Posts. GAO-02-626. 
Washington, D.C. June 18, 2002.

Foreign Languages: Human Capital Approach Needed to Correct Staffing 
and Proficiency Shortfalls. GAO-02-375. Washington, D.C. January 31, 
2002.

Information Management:

Information Technology: State Department-Led Overseas Modernization 
Program Faces Management Challenges. GAO-02-41. Washington, D.C. 
November 16, 2001.

Foreign Affairs: Effort to Upgrade Information Technology Overseas 
Faces Formidable Challenges. GAO-T-AIMD/NSIAD-00-214. Washington, 
D.C. June 22, 2000.

Electronic Signature: Sanction of the Department of State's System. 
GAO/AIMD-00-227R. Washington, D.C. July 10, 2000.

Strategic and Performance Planning and Foreign Affairs Management:

Major Management Challenges and Program Risks: Department of State. 
GAO-03-107. Washington, D.C. January 2003.

Department of State: Status of Achieving Key Outcomes and Addressing 
Major Management Challenges. GAO-02-42. Washington, D.C. December 7, 
2001.

Observations on the Department of State's Fiscal Year 1999 Performance 
Report and Fiscal Year 2001 Performance Plan. GAO/NSIAD-00-189R. 
Washington, D.C. June 30, 2000.

Major Management Challenges and Program Risks: Department of State. 
GAO-01-252. Washington, D.C. January 2001.

U.S. Agency for International Development: Status of Achieving Key 
Outcomes and Addressing Major Management Challenges. GAO-01-721. 
Washington, D.C. August 17, 2001.

Observations on the Department of State's Fiscal Year 2000 Performance 
Plan. GAO/NSIAD-99-183R. Washington, D.C. July 20, 1999.

Major Management Challenges and Program Risks: Implementation Status of 
Open Recommendations. GAO/OCG-99-28. Washington, D.C. July 30, 1999.

The Results Act: Observations on the Department of State's Fiscal Year 
1999 Annual Performance Plan. GAO/NSIAD-98-210R. Washington, D.C. June 
17, 1998.

U.S. Agency for International Development:

Major Management Challenges and Program Risks: U.S. Agency for 
International Development. GAO-03-111. Washington, D.C. January 2003.

Foreign Assistance: Disaster Recovery Program Addressed Intended 
Purposes, but USAID Needs Greater Flexibility to Improve Its Response 
Capability. GAO-02-787. Washington, D.C. July 24, 2002.

Foreign Assistance: USAID Relies Heavily on Nongovernmental 
Organizations, but Better Data Needed to Evaluate Approaches. GAO-02-
471. Washington, D.C. April 25, 2002.

Major Management Challenges and Program Risks: U.S. Agency for 
International Development. GAO-01-256. Washington, D.C. January 2001.

FOOTNOTES

[1] We use the term "unneeded" property to encompass the terms "excess, 
underutilized, and obsolete" property used by the State Department.

[2] We define rightsizing as aligning the number and location of staff 
assigned overseas with foreign policy priorities and security and other 
constraints.

[3] U.S. General Accounting Office, Overseas Real Estate: Millions of 
Dollars Could Be Generated by Selling Unneeded Real Estate, GAO/
NSIAD-96-36 (Washington, D.C. Apr. 23, 1996). 

[4] U.S. General Accounting Office, State Department: Sale of Unneeded 
Property Has Increased, but Further Improvements Are Necessary, 
GAO-02-590 (Washington, D.C. June 11, 2002). 

[5] U.S. General Accounting Office, State Department: Decision to 
Retain Embassy Parking Lot in Paris, France, Should Be Revisited, 
GAO-01-477 (Washington, D.C. Apr. 13, 2001).

[6] The parking lot was sold on the condition that the purchasers could 
obtain within the next 2 years the zoning permits necessary to build on 
the property.

[7] U.S. General Accounting Office, Embassy Construction: Long-Term 
Planning Will Enhance Program Decision-making, GAO-01-11 (Washington, 
D.C. Jan. 22, 2001).

[8] U.S. General Accounting Office, Embassy Construction: Process for 
Determining Staffing Requirements Needs Improvement, GAO-03-411 
(Washington, D.C. Apr. 7, 2003).

[9] Agencies contribute funding to support the International 
Cooperative Administrative Support Services system, which funds common 
administrative support functions, such as travel, mail and messenger, 
vouchering, and telephone services, that all agencies at a post may 
use.

[10] Secretary of State Madeline Albright established OPAP following 
the 1998 embassy bombings in Africa to consider the organization of 
U.S. embassies and consulates. Department of State, America's Overseas 
Presence in the 21st Century, The Report of the Overseas Presence 
Advisory Panel (Washington, D.C. Nov. 1999).

[11] Testimony of Nancy Dorn, deputy director of the Office of 
Management and Budget, before the House Subcommittee on National 
Security, Veterans Affairs, and International Relations, House 
Committee on Government Reform, May 1, 2002.

[12] U.S. General Accounting Office, Overseas Presence: More Work 
Needed on Embassy Rightsizing, GAO-02-143 (Washington, D.C. Nov. 27, 
2001).

[13] U.S. General Accounting Office, State Department: Staffing 
Shortfalls and Ineffective Assignment System Compromise Diplomatic 
Readiness at Hardship Posts, GAO-02-626 (Washington, D.C. June 18, 
2002).

[14] Hardship posts are locations where the U.S. government offers 
additional pay incentives to compensate Foreign Service employees for 
adverse living and environmental conditions, such as poor schools, 
inadequate medical facilities, high levels of crime, and severe 
climates.

[15] GAO-02-626.

[16] U.S. General Accounting Office, Performance and Accountability 
Series, Major Management Challenges and Program Risks, Department of 
State, GAO-03-107 (Washington, D.C. Jan. 2003). 

[17] MPPs are annual plans that describe the performance goals and 
objectives for a given embassy.

[18] Office of Management and Budget, The President's Management 
Agenda, Fiscal Year 2002 (Washington, D.C. Aug. 2001).

[19] U.S. Department of State, America's Overseas Presence in the 21st 
Century, The Report of the Overseas Presence Advisory Panel 
(Washington, D.C. Nov. 1999).

[20] U.S. General Accounting Office, Overseas Presence: Observations on 
a Rightsizing Framework, GAO-02-659T (Washington, D.C. May 1, 2002).

[21] U.S. General Accounting Office, Overseas Presence: Framework for 
Assessing Embassy Staff Levels Can Support Rightsizing Initiatives, 
GAO-02-780 (Washington, D.C. July 2002).

[22] GAO subsequently applied the framework to developing countries and 
found that it was applicable. See U.S. General Accounting Office, 
Overseas Presence: Rightsizing Framework Can Be Applied at U.S. 
Diplomatic Posts in Developing Countries, GAO-03-396 (Washington, D.C. 
Apr. 2003).

[23] GAO-03-107.

[24] We will report further on State's recruitment of new Foreign 
Service officers in a report for the House Government Reform 
Committee's Subcommittee on National Security, Emerging Threats, and 
International Relations that we expect to issue this fall.

[25] This facility, called Creekbed, will be the largest U.S. 
diplomatic facility overseas. In July 2002, Creekbed was officially 
transferred from the German government to the State Department for 
$30.3 million. The design and renovation cost for the facility is 
estimated as $49.8 million, bringing total projected costs to $80.1 
million. See U.S. General Accounting Office, Overseas Presence: 
Rightsizing Is Key to Considering Relocation of Regional Staff to New 
Frankfurt Center, GAO-03-1061 (Washington, D.C. Sept. 2, 2003).

[26] U.S. General Accounting Office, State Department: Using Best 
Practices to Relocate Employees Could Reduce Costs and Improve Service, 
GAO/NSIAD-98-19 (Washington, D.C. Oct. 17, 1997); and State 
Department: Options for Reducing Overseas Housing and Furniture Costs, 
GAO/NSIAD-98-128 (Washington, D.C. July 31, 1998).

[27] U.S. General Accounting Office, Information Technology: State 
Department-Led Overseas Modernization Program Faces Management 
Challenges, GAO-02-41 (Washington, D.C. Nov. 16, 2001), and Foreign 
Affairs: Effort to Upgrade Information Technology Overseas Faces 
Formidable Challenges, GAO-T-AIMD/NSIAD-00-214 (Washington, D.C. June 
22, 2000).

[28] U.S. General Accounting Office, Overseas Presence: Conditions of 
Overseas Diplomatic Facilities, GAO-03-557T (Washington, D.C. Mar. 20, 
2003).

[29] GAO-02-41 and GAO-T-AIMD/NSIAD-00-214.

[30] P.L. 103-62, 107 Stat. 285, as amended.

[31] See U.S. General Accounting Office, The Results Act: Observations 
on the Department of State's Fiscal Year 1999 Annual Performance Plan, 
GAO/NSIAD-98-210R (Washington, D.C. June 17, 1998); Observations on 
the Department of State's Fiscal Year 2000 Performance Plan, GAO/
NSIAD-99-183R (Washington, D.C. July 20, 1999); Major Management 
Challenges and Program Risks: Implementation Status of Open 
Recommendations, GAO/OCG-99-28 (Washington, D.C. July 30, 1999); 
Observations on the Department of State's Fiscal Year 1999 Performance 
Report and Fiscal Year 2001 Performance Plan, GAO/NSIAD-00-189R 
(Washington, D.C. June 30, 2000); and Department of State: Status of 
Achieving Key Outcomes and Addressing Major Management Challenges, 
GAO-02-42 (Washington, D.C. Dec. 7, 2001).

[32] GAO-02-42.

[33] U.S. General Accounting Office, Results-Oriented Budget Practices 
in Federal Agencies, GAO-01-1084SP (Washington, D.C. Aug. 2001).

[34] USAID Office of the Inspector General, Semiannual Report to 
Congress (Washington, D.C. Oct. 31, 2001).

[35] U.S. General Accounting Office, Foreign Assistance: Disaster 
Recovery Program Addressed Intended Purposes, but USAID Needs Greater 
Flexibility to Improve Its Response Capability, GAO-02-787 (Washington, 
D.C. July 24, 2002).

[36] U.S. General Accounting Office, Foreign Assistance: USAID Relies 
Heavily on Nongovernmental Organizations, but Better Data Needed to 
Evaluate Approaches, GAO-02-471 (Washington, D.C. Apr. 25, 2002).

[37] 31 U.S.C. 3512 note.

[38] USAID is not the only U.S. actor promoting democratic institutions 
overseas; the Departments of Justice, State, and the Treasury also play 
significant roles.

[39] U.S. General Accounting Office, Foreign Assistance: U.S. Democracy 
Programs in Six Latin American Countries Have Yielded Modest Results, 
GAO-03-358 (Washington, D.C. Mar. 18, 2003); and Former Soviet Union: 
U.S. Rule of Law Assistance Has Had Limited Impact, GAO-01-354 
(Washington, D.C. Apr. 17, 2001).