Democracy Assistance:

State Should Improve Accountability Over Funding; USAID Should Assess Whether New Processes Have Improved Award Documentation

GAO-18-136: Published: Dec 14, 2017. Publicly Released: Dec 14, 2017.

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David B. Gootnick
(202) 512-3149
gootnickd@gao.gov

 

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Promoting democracy abroad has been a long-standing U.S. priority.

We examined how much money U.S. agencies pledged for democracy assistance in fiscal 2012-2016 and how they awarded the funds.

We found USAID obligated $5.5 billion, but we could not determine a total for the State Department because some of its bureaus could not provide reliable data. In addition, in our sample we found USAID seldom documented award-related decisions in a complete and timely manner.

We recommended that State improve data reliability and that USAID assess whether its new processes are improving award documentation.

Total Obligations and Number of Awards for USAID Democracy Assistance, by Award Type, for Fiscal Years 2012 through 2016

In FY12-16 USAID about evenly split $5.5 billion among contracts, grants and cooperative agreements.

In FY12-16 USAID about evenly split $5.5 billion among contracts, grants and cooperative agreements.

Additional Materials:

Contact:

David B. Gootnick
(202) 512-3149
gootnickd@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

What GAO Found

In fiscal years 2012–2016, the U.S. Agency for International Development (USAID) obligated $5.5 billion and the National Endowment for Democracy (NED) obligated $610.2 million in democracy assistance funding. The total funding the Department of State (State) obligated for democracy assistance could not be reliably determined. One-third of all USAID obligations were provided through public international organizations (PIOs), which under USAID guidance are composed principally of countries or other organizations designated by USAID; 94 percent of PIO obligations were provided to the World Bank for democracy assistance projects in Afghanistan. The remaining two-thirds of USAID obligations were provided through contracts, grants (excluding PIOs), and cooperative agreements. Of the 10 State bureaus providing democracy assistance, 3 were unable to provide reliable funding data for fiscal years 2012–2016. Data from these bureaus were incomplete, nonstandard, or inaccurate. Federal internal control standards call for agencies to use quality information from reliable sources to achieve intended objectives and to monitor activities. Without such data, State cannot effectively monitor its democracy assistance programming and report reliable data externally.

For the awards GAO sampled, USAID generally did not document decisions about whether to award a contract, grant, or cooperative agreement (known as award-type decisions) in a complete and timely manner. According to applicable USAID guidance, agency officials were required to (1) document the final award-type decision with their written determination, including a rationale based on the requirements of the Federal Grant and Cooperative Agreement Act, and (2) complete this documentation before award solicitation occurs or, for noncompetitive awards, before USAID initiated communications with a potential sole-source awardee. However, USAID provided both complete and timely documentation of the award-type decision for 5 of the 41 awards GAO sampled. For the remaining 36 awards, the documentation was either incomplete, not timely or timeliness was indeterminate, or both (see table). While USAID has taken steps to improve documentation for award-type decisions by updating its guidance and templates, it has not assessed whether these updates have resulted in complete and timely documentation. It is important that USAID document these decisions in advance of solicitation because the selection of an award type may affect requirements for administering the award, including competition and oversight requirements and whether or not profit is permissible.

Documentation and Timeliness of Award-Type Decision for Selected USAID Awards

Award type

Awards in sample

Awards lacking any documentation

Awards with partial or complete documentation

Timely

Not timely/ timeliness indeterminate

Contracts

13

3a

10

2

8

Grants

5

1

4

2

2

Cooperative agreements

23

6

17

2

15

Total

41

10

31

6b

25

Source: GAO analysis of U.S. Agency for International Development (USAID) information. | GAO-18-136

aThree of the contracts in the sample were base awards with task orders issued under them; GAO did not receive documentation of the award-type decision for the base awards.

bOne award that GAO deemed timely did not have complete documentation of the award-type decision.

Why GAO Did This Study

Supporting efforts to promote democracy has been a foreign policy priority for the U.S. government. In recent years, USAID and State have allocated about $2 billion per year toward democracy assistance overseas. Congress required USAID and State to each establish guidelines for and report on the use of contracts, grants, and cooperative agreements for certain democracy programs.

GAO was asked to review U.S. democracy assistance. This report (1) examines funding USAID, NED, and State obligated for democracy assistance primarily through contracts, grants, and cooperative agreements and (2) evaluates documentation of USAID award-type decisions, among other objectives.

GAO analyzed USAID, NED, and State democracy assistance award data for fiscal years 2012–2016. GAO also reviewed relevant regulation and agency policies and analyzed documentation for a nongeneralizable sample of USAID awards selected based on factors such as award type, program area, and country.

What GAO Recommends

State should improve the reliability and completeness of its democracy assistance funding data, and USAID should assess whether steps taken are resulting in complete and timely documentation of democracy assistance award-type decisions. State and USAID concurred with GAO's recommendations and described actions planned or under way to address them.

For more information, contact David B. Gootnick at (202) 512-3149 or gootnickd@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Priority recommendation

    Comments: Department of State concurred with this recommendation and said it would take steps to implement it. As of January 2020, State reported that its Bureau of the Comptroller and Global Financial Services and Bureau of Administration is expected to complete analysis in 2020 with an associated action plan to address the issues encountered by State's Bureau of International Narcotics and Law Enforcement Affairs (INL) and other bureaus understanding the importance of timely, accurate, complete, and quality data being reported to Federal Procurement Data System- Next Generation and USASpending.gov. State also provided GAO with an overview of its newly established processes in its accounting system to improve data reliability, including ensuring that current and future transactions would maintain coding integrity. State has taken a number of steps to identify and address factors that affect the reliability of its democracy assistance data, such as miscoded data. However, State needs to provide information on steps taken to identify and address other factors, in particular missing data, which affect the reliability of its democracy assistance data. When we confirm what further actions State has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of State should direct the Bureau of International Narcotics and Law Enforcement Affairs to identify and address factors that affect the reliability of its democracy assistance data, such as miscoded or missing data. (Recommendation 1)

    Agency Affected: Department of State

  2. Status: Open

    Comments: Department of State concurred with this recommendation and said it would take steps to implement it. In January 2020, State reported taking actions to implement the recommendation and we have requested documentation of these actions. In March 2019, Department of State reported that democracy assistance data for all bureaus, including the Bureaus of European and Eurasian Affair (EUR) and South and Central Asian Affairs (SCA), are being tracked and its quality is being improved through the Department's Foreign Assistance Data Review (FADR) process, an ongoing process chartered in September 2014 to understand and document the Department's challenges with capturing all foreign assistance activities from budget planning and allocation through obligation and disbursement in multiple State-owned budget, financial, and program management systems. State reported that through the FADR process, the Office of U.S. Foreign Assistance Resources (F) has been working with the Bureau of the Comptroller and Global Financial Services (CGFS), the Bureau of Administration (A), and bureaus that administer Foreign Assistance to better capture transaction data for all types of foreign assistance-including democracy, human rights, and governance data. State also reported that 13 U.S. Embassy Public Affairs Sections in EUR that receive assistance funding to carry out democracy programs and all 11 posts in SCA are recording their assistance funding awards in the centralized State Assistance Management System (SAMS), which is one of the Department's financial management systems that is used for reporting foreign assistance transactions to ForeignAssistance.gov.

    Recommendation: The Secretary of State should direct the Director of the Office of U.S. Foreign Assistance Resources to implement a process to improve the reliability, accessibility, and standardization of democracy assistance data across the geographic regions of the Bureaus of European and Eurasian Affairs and South and Central Asian Affairs, such as utilizing a centralized database for award data. (Recommendation 2)

    Agency Affected: Department of State

  3. Status: Closed - Implemented

    Comments: In April 2018, the United States Agency for International Development (USAID) stated that it was reviewing a representative sampling of fiscal year 2017 democracy awards; and in August 2018, USAID reported that it completed its review. USAID shared with GAO the list of democracy awards it sampled as well as which awards met the requirements for timeliness and documentation. Specifically, USAID reported that it selected a sample of the top 40 democracy awards based on total estimated cost. USAID noted that it determined that 32 of the 40 awards (80 percent) were issued in accordance with USAID guidance, of which 31 (96.8 percent) were timely. USAID also noted that while 8 of the 40 awards (20 percent) did not have a selection of instrument memorandum, the selection was documented in a negotiation memorandum. Additionally, in August 2018, USAID reported that it completed a policy and process to post selection of instrument determinations for democracy programs on a public website to increase transparency. USAID noted that it initiated the policy and process in response to GAO's findings and recommendation regarding selection of instrument determinations for democracy awards. Specifically, USAID issued a bulletin that applies to all Contracting Officers and Agreement Officers (COs/AOs) working on democracy awards. The bulletin informs the COs/AOs that USAID decided to make the selection of instrument determination for democracy programs available to the public for the transparency of these decisions, and reminded COs/AOs to follow mandatory selection of instrument guidance.

    Recommendation: The USAID Administrator should direct the Office of Acquisition and Assistance to assess whether current processes and procedures as outlined in revised guidance result in complete and timely documentation of award-type decisions for democracy assistance. (Recommendation 3)

    Agency Affected: United States Agency for International Development

 

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