Eastern Europe:

AID's Indefinite Contracts Assist Privatization Efforts but Lack Adequate Oversight

NSIAD-94-61: Published: Jan 19, 1994. Publicly Released: Feb 18, 1994.

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Pursuant to a congressional request, GAO reviewed the Agency for International Development's (AID) use of indefinite quantity contracts (IQC) to provide technical assistance to Poland and the Czech and Slovak Republics, focusing on: (1) whether host governments are satisfied with IQC assistance; (2) how IQC assistance compares with other major donors' programs; (3) the role of host governments and contractors in the development and approval of project task proposals; and (4) AID oversight of IQC.

GAO found that: (1) AID IQC have been effective in providing technical assistance and responding to the privatization needs of eastern Europe; (2) although host governments believe the work of IQC contractors is satisfactory and the advice and services they receive are valuable, they have raised concerns regarding the contracting process including assistance delays, the lack of flexibility, and the lack of detailed implementation plans and project documentation to measure contract performance; (3) IQC projects compare favorably with other donors' privatization programs in terms of their cost and responsiveness; (4) although host governments' relationships with IQC contractors in developing project task proposals have raised concerns over potential conflicts of interest, AID believes that conflicts of interest do not exist because its staff must review and approve all proposals; (5) AID oversight of IQC contractor performance has been inadequate to ensure that tasks are completed satisfactorily and project objectives are being met; and (6) although a 1993 review of the privatization project showed that AID staff are not able to adequately oversee all IQC project activities, AID has not taken full advantage of its field staff to monitor IQC contractor performance.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The contracting office now routinely distributes copies of delivery orders and contractors have been directed to distribute copies of the deliverables to AID/REP offices. Contractor invoices, once administratively approved by the project officers, are also being sent to AID/REP offices for use in project monitoring.

    Recommendation: The Administrator, AID, should take actions to improve the implementation and oversight of IQC project activities. Specifically, the Administrator should ensure that field staff receive the project documents they need for project monitoring, including progress and financial reports, delivery orders, implementation plans, and invoices.

    Agency Affected: United States Agency for International Development

  2. Status: Closed - Implemented

    Comments: The requirement for contractors to develop implementation plans is now formally included in the PIO/Ts and also in the delivery orders for contractors to show how they plan to implement the scope of work.

    Recommendation: The Administrator, AID, should take actions to improve the implementation and oversight of IQC project activities. Specifically, the Administrator should require contractors to develop implementation plans and provide them to AID and host government officials.

    Agency Affected: United States Agency for International Development

  3. Status: Closed - Implemented

    Comments: Under AID procedures, all documents and deliverables needed for project monitoring are provided to the AID representative's office. However, not all documents go to the host institution. The AID representative is making the decision as to whether some documents are too sensitive or contain proprietary information and should not be forwarded to host institutions.

    Recommendation: The Administrator, AID, should take actions to improve the implementation and oversight of IQC project activities. Specifically, the Administrator should direct contractors to provide host governments officials copies of their quarterly progress and financial reports, as well as delivery orders and invoices after deletion of any compensation rate information considered to be sensitive.

    Agency Affected: United States Agency for International Development

  4. Status: Closed - Implemented

    Comments: On August 23, 1995, the Bureau for Europe issued operating procedures on the Washington/field relationship. These procedures clarify and increase field responsibility and deal with the set of conditions needed to delegate further project design or implementation authority to field posts within the context of a field/Washington "team" concept.

    Recommendation: The Administrator, AID, should take actions to improve the implementation and oversight of IQC project activities. Specifically, the Administrator should delegate decisionmaking authority to field staff, as necessary, to improve the responsiveness of the privatization project.

    Agency Affected: United States Agency for International Development

  5. Status: Closed - Implemented

    Comments: AID has implemented a manual document control and tracking system for all Eastern Europe IQC contracts. It has dropped plans to develop a computerized database for quick reference to contractor and administrative information.

    Recommendation: The Administrator, AID, should take actions to improve the implementation and oversight of IQC project activities. Specifically, the Administrator should establish a record-keeping system to adequately document project activities.

    Agency Affected: United States Agency for International Development

 

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