Foreign Assistance:

Improvements Needed in AID's Oversight of Grants and Cooperative Agreements

NSIAD-93-202: Published: Sep 17, 1993. Publicly Released: Oct 19, 1993.

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Pursuant to a congressional request, GAO reviewed the Agency for International Development's (AID) policies and procedures for administering grants and cooperative agreements with private voluntary organizations, educational institutions, and other nonprofit organizations, focusing on whether AID has effective procedures to: (1) maximize competition in grant awards; (2) ensure the proper use of grant funds; and (3) monitor grantee performance.

GAO found that AID: (1) does not consistently implement key internal controls; (2) does not ensure maximized competition for grant awards, since project officers fail to prepare noncompetitive award justifications; (3) guidance does not specify what evidence is necessary to support competition exceptions; (4) does not ensure that applicants do not seek grants in order to avoid more stringent contract competition requirements; (5) does not ensure that grantees' budgets are reasonable and do not include excessive costs or unallowable expenses; (6) grant officers do not routinely document their determinations of grantees' management and financial capabilities or cite primary source data in support of their determinations; (7) has initiated an audit management and resolution program to improve its financial audits of U.S. grantees, and issued guidelines for financial audits contracted by foreign recipients; (8) grant monitoring is restricted because project officers often do not use measurable benchmarks and target dates and face time and travel constraints in conducting site visits; (9) headquarters often fails to delegate monitoring duties to field missions; and (10) Financial Integrity Act reviews fail to assess its compliance with its internal control procedures.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: AID has revised Handbook 13 to implement this recommendation.

    Recommendation: The Administrator, AID, should ensure that grant officers prepare memoranda of negotiation that include a: (1) rationale for instrument selection; (2) justification of all budget elements; and (3) determination of recipient responsibility.

    Agency Affected: United States Agency for International Development

  2. Status: Closed - Implemented

    Comments: AID has revised Handbook 13 to implement this recommendation.

    Recommendation: The Administrator, AID, should ensure that project officers: (1) prepare a written justification for noncompetitive award, when appropriate, in the form of an attachment to the project implementation order; (2) monitor grant recipients against measurable and time-specific benchmarks; and (3) request field assistance whenever possible for monitoring AID/Washington grants implemented overseas.

    Agency Affected: United States Agency for International Development

  3. Status: Closed - Implemented

    Comments: AID has revised Handbook 13 to implement this recommendation.

    Recommendation: The Administrator, AID, should revise handbook guidance to: (1) specify what kind of support is needed to adequately justify a noncompetitive award based on the recipient's capability or the nature of its proposal; (2) require that noncompetitive awards to registered private voluntary organizations for umbrella or field programs be supported by a written justification; and (3) indicate what information should be included in a budget justification.

    Agency Affected: United States Agency for International Development

  4. Status: Closed - Implemented

    Comments: AID's FMFIA process is currently being redesigned. AID officials have incorporated the recommendation in this effort.

    Recommendation: The Administrator, AID, should use the agency's Financial Integrity Act review process to annually assess AID/Washington and mission compliance with the various internal controls discussed in this report.

    Agency Affected: United States Agency for International Development

 

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