Foreign Assistance:

Funds Obligated Remain Unspent for Years

NSIAD-91-123: Published: Apr 9, 1991. Publicly Released: Apr 9, 1991.

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Pursuant to a congressional request, GAO examined the Agency for International Development's (AID) economic assistance pipeline, focusing on the funds six AID missions obligated for development assistance and economic support but had not yet expended.

GAO found that: (1) 44 of the 103 sampled projects at the missions had excess funds totalling $296.2 million, with the percentage of excess funds at individual missions ranging from 5 to 21 percent; (2) excess funding in the pipeline could be higher than GAO estimated since funding calculations were based on mission estimates of planned spending; (3) 28 percent of other AID missions had over 3 years of funding in their pipelines, and about 9 percent of the funds in the pipelines was obligated in fiscal year 1984 or earlier; (4) $8 million at the 6 missions were obligated for projects that completed all funded activities by September 1989 or earlier; (5) unrealistic or overstated implementation plans were the primary reason that 22 of 44 projects had excess funds in the pipelines, totalling $823 million as of September 30, 1989; (6) circumstances that AID could not control, such as delays by host governments, contributed to excess funding; (7) some excess funds in the pipelines were caused primarily by problems in mission contracting and procurement; and (8) AID made limited use of its statutory authority to deobligate funds from slow or stalled projects, partly because host countries must agree to deobligation.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Most funds have been deobligated, and other funds are in the process of being deobligated. The Administrator sent new guidance to the field and a cable. The GAO review indicates that AID deobligated some funds identified as excess, and is taking the issue of excess pipeline more seriously.

    Recommendation: The Administrator, AID, should review the justifications for not deobligating funds in projects that have passed their terminal date and deobligate the funds that cannot be justified, beginning with the $8 million GAO identified.

    Agency Affected: United States Agency for International Development

  2. Status: Closed - Implemented

    Comments: Final guidance has been issued. As part of the guidance to the field, each regional bureau is having missions identify the excess and provide internal justifications for the excess.

    Recommendation: The Administrator, AID, should require all missions and offices to identify excess funds in the pipeline at the end of each fiscal year and provide the rationale as to why this excess exists, and if the rationale is not consistent with AID guidance take the necessary steps with the host government to deobligate the funds.

    Agency Affected: United States Agency for International Development

  3. Status: Closed - Implemented

    Comments: A standard provision is now included in AID grants or in the project agreement papers.

    Recommendation: The Administrator, AID, should require that future AID project and program agreements include a standard provision stating the conditions under which AID could unilaterally deobligate certain assistance funds (such as in the case of long delayed projects). U.S. national interests, political considerations, or constraints regarding the reprogramming of earmarked funds, may affect the extent to which AID actually uses this management tool; nevertheless, a standard provision in the agreements would provide leverage to get some projects or programs moving in the right direction.

    Agency Affected: United States Agency for International Development

 

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