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STATE DEPARTMENT AND USAID MANAGEMENT 

CHALLENGES AND OPPORTUNITIES FOR THE 

NEXT ADMINISTRATION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON STATE DEPARTMENT 

AND USAID MANAGEMENT, 

INTERNATIONAL OPERATIONS, AND 

BILATERAL INTERNATIONAL DEVELOPMENT 

OF THE

COMMITTEE ON FOREIGN RELATIONS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

DECEMBER 8, 2016 

Printed for the use of the Committee on Foreign Relations 

( 

Available via the World Wide Web: 

http://www.fdsys.gpo.gov 

FOREI-42327 with DISTILLER

COMMITTEE ON FOREIGN RELATIONS

BOB CORKER, TENNESSEE, Chairman

JAMES E. RISCH, Idaho 

MARCO RUBIO, Florida 

RON JOHNSON, Wisconsin 

JEFF FLAKE, Arizona 

CORY GARDNER, Colorado 

DAVID PERDUE, Georgia 

JOHNNY ISAKSON, Georgia 

RAND PAUL, Kentucky 

JOHN BARRASSO, Wyoming 

BENJAMIN L. CARDIN, Maryland 

BARBARA BOXER, California 

ROBERT MENENDEZ, New Jersey 

JEANNE SHAHEEN, New Hampshire 

CHRISTOPHER A. COONS, Delaware 

TOM UDALL, New Mexico 

CHRISTOPHER MURPHY, Connecticut 

TIM KAINE, Virginia 

EDWARD J. MARKEY, Massachusetts 

TODD WOMACK, Staff Director

JESSICA LEWIS, Democratic Staff Director

ROB STRAYER, Majority Chief Counsel

MARGARET TAYLOR, Minority Chief Counsel

JOHN DUTTON, Chief Clerk

SUBCOMMITTEE ON STATE DEPARTMENT AND USAID

MANAGEMENT, INTERNATIONAL OPERATIONS, AND

BILATERAL INTERNATIONAL DEVELOPMENT

DAVID PERDUE, GEORGIA, Chairman

JAMES E. RISCH, Idaho 

JOHNNY ISAKSON, Georgia 

RON JOHNSON, Wisconsin 

RAND PAUL, Kentucky 

TIM KAINE, Virginia 

BARBARA BOXER, California 

CHRISTOPHER A. COONS, Delaware 

CHRISTOPHER MURPHY, Connecticut 

(II)

FOREI-42327 with DISTILLER

C O N T E N T S 

Page 

Perdue, Hon. David, U.S. Senator from Georgia ................................................... 1 

Kaine, Hon. Tim, U.S. Senator from Virginia ....................................................... 2 

Linick, Hon. Steve A., Inspector General, U.S. Department of State, Washington, DC ............................................................................................................. 3 

Prepared statement .......................................................................................... 23 

Responses to Additional Questions ................................................................. 28 

Calvaresi Barr, Hon. Ann, Inspector General, U.S. Agency for International 

Development, Washington, DC ........................................................................... 5 

Prepared statement .......................................................................................... 34 

Responses to Additional Questions ................................................................. 42 

(III)

FOREI-42327 with DISTILLER

FOREI-42327 with DISTILLER

(1) 

STATE DEPARTMENT AND USAID MANAGEMENT CHALLENGES AND OPPORTUNITIES 

FOR THE NEXT ADMINISTRATION 

THURSDAY, DECEMBER 8, 2016 

U.S. SENATE, 

SUBCOMMITTEE ON STATE DEPARTMENT AND USAID 

MANAGEMENT, INTERNATIONAL OPERATIONS, AND

BILATERAL INTERNATIONAL DEVELOPMENT, 

COMMITTEE ON FOREIGN RELATIONS, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 10:15 a.m., in 

Room SD–419, Dirksen Senate Office Building, Hon. David Perdue, 

chairman of the subcommittee, presiding. 

Present: Senators Perdue [presiding] and Kaine. 

OPENING STATEMENT OF HON. DAVID PERDUE, 

U.S. SENATOR FROM GEORGIA 

Senator PERDUE. The committee will come to order. 

This hearing of the Subcommittee of the State Department and 

USAID Management, International Operations, and Bilateral 

International Development—only in Washington can we come up 

with names like that—is titled State Department and USAID Management Challenges and Opportunities for the Next Administration. 

I would like to begin by welcoming our distinguished guests and 

witnesses: Inspector General of the State Department and Broadcasting Board of Governors, Steve Linick, and Inspector General of 

the U.S. Agency for International Development, USAID, Ann 

Calvaresi Barr. Welcome. Thank you both so much for taking your 

time today and to be back before us. And welcome back. 

The Inspectors General before us here today are charged with 

evaluating and assessing State and USAID’s programs and operations and making recommendations to strengthen their integrity, 

effectiveness, and accountability. As such, the Inspectors General 

are dedicated to detecting and preventing waste, fraud, abuse, and 

mismanagement. As we move forward into a new administration 

which will have new leadership and fresh ideas, I wanted to take 

the opportunity to bring you up—to really focus—to visit with us 

again, to focus again on the management piece of this mandate. 

We understand that you have both put out recent reports on 

major management and performance challenges for each of your respective agencies, and these contained key recommendations for 

what the next administration should prioritize. We have a lot of 

FOREI-42327 with DISTILLER

2 

ground we can cover today, but there are some core things you 

have identified as challenges that I want to mention first: protecting our people and facilities overseas, No. 1; No. 2, managing 

posts and programs in conflict areas; No. 3, information security 

and management; No. 4, oversight of contracts and grants; and, 

lastly, meeting transparency and reporting requirements. We have 

got a lot to do today if we cover all of that. 

These challenges impact our ability to operate in conflict zones, 

keep those serving our Nation safe, ensure that our aid is doing 

what is intended, and that congressionally mandated transparency 

requirements are being met, and to protect the integrity of the IT 

systems these agencies rely on. We look forward to and welcome 

your suggestions on how these challenges should be addressed by 

State and USAID, and how the incoming Trump administration 

should prioritize and tackle these issues. 

Before we get started, I would also like to welcome back our 

ranking member today, Senator Kaine. Senator Kaine has been a 

stalwart on the Foreign Relations Committee in reaching bipartisan consensus here. I respect him greatly and appreciate his leadership, mentoring, and participation. 

And, with that, I would like to thank and recognize our ranking 

member, Senator Tim Kaine. 

STATEMENT OF HON. TIM KAINE, 

U.S. SENATOR FROM VIRGINIA 

Senator KAINE. Thank you, Mr. Chair. And I echo those comments. It has been a treat to be the ranking member on this subcommittee with you for 2 years, and to be at this last meeting of 

our subcommittee. And it is a very important topic. 

And I welcome both of you and thank you for your service. 

I understand, Mr. Linick, you are feeling a little under the 

weather today, and so we will—we will not stint on our tough questions—— 

[Laughter.] 

Senator KAINE [continuing]. But we will understand if the answers are abbreviated. 

IGs have a difficult mission, challenging mission, important mission, regardless what agencies they serve. But, given the overseas 

nature of the work that is done in USAID and State, the challenges 

that you each face in your roles, I think, are significantly advanced. 

And I thank you for the good work that you do. 

This hearing is meant to dig into your recent reports and talk 

about performance and management challenges for State and 

USAID as we move into the next administration. Obviously, top 

priority is responsibly spending taxpayer dollars. And that is a key 

function of what the IGs are charged with. As we continue to expand our presence around the globe, and we have expanded it 

greatly in the last 15 years, many programs can be susceptible to 

fraud, waste, abuse, if not just poor implementation challenges. 

And we see that in testimony before the Armed Services Committee, and we deal with the same issue there with DOD all the 

time. And this is, I know, something that you focus significantly on. 

Senator Perdue mentioned that an important piece of what we 

do is try to establish performance and management metrics. This 

FOREI-42327 with DISTILLER

3 

is one of the reasons that he and I get along so well. We—we are 

into the management by data, management by results. If you do 

not measure, you do not really know how you are doing. But, you 

have to measure the right things to give your organizations the 

right incentives to be effective. And we want to talk about that. 

Managing these overseas complexes, managing the safety of our 

folks overseas, having the right tools in place for that are critically 

important. 

And, as we have concluded an election, where there has been a 

lot of discussion about cyber hacking of institutions, even electoral 

institutions, and State has been the subject of cyber hacks in the 

past, knowing what we ought to be doing to protect our infrastructure—cyber infrastructure is a key interest that I think we both 

share and I know that you will address. 

So, I am eager for your recommendations. I appreciate your service. I am glad that we are doing this hearing this morning. 

Thanks, Mr. Chair. 

Senator PERDUE. Thank you, Senator Kaine. 

We will introduce our witnesses now. I would ask you to keep 

your opening remarks to 5 minutes; of course your written testimony will be submitted in the record. 

First, we have The Honorable Steve Linick, Inspector General of 

the U.S. Department of State, Broadcasting Board of Governors. 

Mr. Linick began his tenure as Inspector General for the State Department in September 2013. Prior to his appointment, he served 

for 3 years as, first, Inspector General of the Federal Housing 

Agency. Mr. Linick was an Assistant Attorney in California and 

Virginia. He also served as both Executive Director of the Department of Justice’s National Procurement Fraud Task Force and Deputy Chief of its Fraud Section, Criminal Division. 

During his tenure at the DOJ, he supervised and participated in 

white collar criminal fraud cases involving, among other things, 

corruption in contract fraud against the U.S. in Iraq and Afghanistan. In his current capacity, Inspector General Linick is the senior 

official responsible for audits, inspections, evaluations, investigations, and other law enforcement efforts to combat fraud, waste, 

and abuse within, or affecting the operations of, the Department of 

State, Broadcasting Board of Governors. 

Mr. Linick, welcome. 

STATEMENT OF HON. STEVE A. LINICK, INSPECTOR GENERAL, 

U.S. DEPARTMENT OF STATE, WASHINGTON, D.C. 

Mr. LINICK. Thank you. And I apologize for my voice. I am delighted to testify before you today and talk about the work of the 

Office of Inspector General for the Department of State. So, I would 

like to thank you for the opportunity. 

I also want to thank this committee for its interest in, and support of, our work; in particular, for sponsoring the legislation intended to expand our hiring authority and to obtain information regarding misconduct by senior Department personnel. This legislation is critical to our work, and we really appreciate that. 

By way of background, our office oversees the operations and programs of the State Department, and the Broadcasting Board of 

Governors, which include more than 70,000 employees and over 

FOREI-42327 with DISTILLER

4 

270 overseas missions and domestic entities. And, aside from the 

sheer breadth of the work we have to oversee, the Department of 

State’s OIG is unique, because, unlike other Inspectors General, we 

are statutorily required to inspect all overseas posts and bureaus 

in the Department. So, let me turn to some of the more important 

aspects of our recent work. 

First, as I testified previously, one of our top priorities is helping 

to protect the people who work for the Department around the 

world. And, although the Department has continued to make improvements in overseas safety and security over the last 18 

months, challenges still remain. And, through our inspections and 

our audits, we continue to find deficiencies that put personnel at 

risk. Since I last testified, we have particularly focused on health 

and safety issues overseas, emergency action plans, and maintaining physical security at overseas posts. 

Second, the security of information system remains a focus. The 

Department has spent a substantial amount of money over the past 

few years, but we are still concerned about the protection of the 

Department’s IT infrastructure. For example, in recent months, we 

have reported significant weaknesses in the Department’s Cybersecurity Incident Response Program. At the same time, I am pleased 

to report one important area of improvement, and that is our own 

IT systems. When I last testified here, I described our IT network 

as a major challenge. At the time, our network was connected to 

the Department’s systems, and vulnerabilities in the Department’s 

unclassified network directly affected our own system. In August, 

we migrated to our own independent IT system. 

Finally, the Department does face continuing challenges managing contracts and grants. To date, we have issued numerous reports and management assistance reports related to these topics, 

and we have opened numerous investigations on contract and procurement fraud. And we are concentrating our efforts on the Department’s weaknesses in managing high-value critical contracts, 

including those in the conflict zones. 

I now turn to our initiatives. When I testified last time, I described several new initiatives. These programs are no longer new, 

but they are now an integral part of our day-to-day work processes. 

We have continued to use management assistance reports and 

management alerts to bring specific issues to the attention of senior management quickly, without waiting for the conclusion of 

longer-term audits and inspections. 

Second, our Office of Evaluations and Special Projects, which was 

established in 2014, is now well established and continues to focus 

on systemic issues, special assignments, and whistleblower protections. 

And finally, our work in connection with overseas contingency 

operations is well integrated into our overall mission, and our staff 

is working closely with DOD and USAID OIGs to oversee those operations. 

Next, I would like to address our primary ongoing challenge, 

which is what I discussed the last time I testified before you. Unlike other IGs, our office is not consistently given the opportunity 

to investigate allegations of criminal or serious administrative misconduct by the Department’s employees. Department components, 

FOREI-42327 with DISTILLER

5 

including the Bureau of Diplomatic Security, are not required to 

notify us of allegations that come to their attention. Accordingly, 

we cannot undertake effective independent assessments and investigations of these matters as envisioned by the Inspector General 

Act. We have been negotiating with the Department to address 

these limitations on our ability to conduct oversight for about 2 

years, but the problem persists. Clearly, your legislation is needed 

to address this serious limitation, and I welcome your continued 

support as this Congress ends and the new one begins. 

Finally, I would like to discuss the significant impact of our 

work. In my written testimony, I included some financial metrics 

that demonstrate the way we help return money to the American 

taxpayers. But, these measurements do not fully reflect our most 

critically important work, which is helping to safeguard the lives 

of people who work in or visit our posts abroad, and protecting the 

Department’s information reputation and the integrity of programs. 

Chairman Perdue, Ranking Member Kaine, I want to thank you 

for this opportunity, again. And I want to emphasize that our accomplishments are a credit to the talented and committed staff 

that I have had the privilege to lead. And I want to publicly thank 

them for their relentless pursuit of excellence. 

I look forward to your questions. 

[Mr. Linick’s prepared statement is located at the end of this 

hearing on page 23. ] 

Senator PERDUE. Thank you, Mr. Linick. 

Now we will turn to Ms. Calvaresi Barr. 

Previously, Mrs. Calvaresi Barr served as Deputy Inspector General at the U.S. Department of Transportation. She also spent 25 

years at the U.S. Government Accountability Office, where she 

served as Director of the Acquisition and Sourcing Management 

Team, and earlier worked overseas to evaluate defense, national security, and foreign disaster assistance programs. In her role as 

USAID Inspector General, Ms. Calvaresi Barr oversees more than 

$20 billion in U.S. foreign assistance and development programs 

worldwide. 

I think you were just confirmed before this committee just a little 

over a year ago, so we welcome your comments today and thank 

you for coming again. 

STATEMENT OF HON. ANN CALVARESI BARR, INSPECTOR GENERAL, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT, 

WASHINGTON, D.C. 

Ms. CALVARESI BARR. Chairman Perdue, Ranking Member Kaine, 

and members of the subcommittee, thank you for inviting me to 

take part in this important hearing. As you know, I am charged 

with overseeing up to $15 billion spent annually on foreign assistance provided by USAID, MCC, USADF, IAF, and OPIC. Today, I 

will focus on the major management challenges USAID faces in 

carrying out its missions—its mission, and the reforms my office 

has taken to create a model OIG. 

We identified five USAID challenges that need particular attention in fiscal year 2017. These challenges stem from the inherent 

complexities in coordinating and implementing foreign assistance: 

poor project design, monitoring, and a lack of capacity to execute 

FOREI-42327 with DISTILLER

6 

and oversee USAID-funded projects, and weak internal controls. 

Managing the complexities of working in areas beset by conflict, instability, or natural disaster is a longstanding challenge for 

USAID. According to the agency, these environments require flexible responses. We agree that some flexibility is needed to adapt to 

country contexts, but it must be tempered with discipline. 

Our investigations related to responses in Syria and other countries expose fraud schemes involving collusion, product substitution, inflated billing, and false claims. These schemes demonstrate the extent to which ad hoc approaches can leave USAID 

programs vulnerable to abuse and raise serious concerns about implementers’ contracting processes and USAID’s oversight. 

Reconciling priorities in operations that involve multiple U.S. 

agencies also present significant challenges. Our work in Pakistan 

and the Middle East found that USAID employees often struggle 

to balance USAID’s development priorities with other agencies’ 

aims. In response, USAID’s administrator recently engaged State 

Department leadership to discuss solutions. 

Another challenge relates to program design and monitoring. 

Poor design has limited the impact of USAID projects, or disrupted 

them before they began. Monitoring has been constrained by unreliable data as well as insufficient guidance, staffing shortages, and 

a lack of employee training. Such weaknesses derailed USAID’s 

plans to use a multi-tiered approach to monitor activities in Afghanistan. Ultimately, only one of 127 awards made between 2013 

and 2014 used multi-tiered monitoring. 

Program sustainability also remains a challenge, particularly as 

it relates to securing host-country commitment and assessing local 

capacity. For example, a project in Haiti lacked a plan to transfer 

responsibility for paying healthcare workers’ salaries at 80 facilities after USAID’s role ended and the Haitian Government could 

not pay them. In addition, five U.S.-funded roads in the West Bank 

are deteriorating because the Palestinian Authority did not allocate 

funds to support road maintenance. 

Finally, longstanding internal control weaknesses have limited 

USAID’s ability to meet Federal financial management requirements, including reconciling transactions between USAID and 

other agencies. 

Complying with the government’s complex information security 

requirements has also proved challenging. While USAID has made 

great strides in implementing FISMA and removing significant deficiencies, concerns remain about the CIO’s ability to exercise appropriate authority and the independence of USAID’s FISMA compliance reviews. 

To provide the oversight needed to help USAID address these 

complex challenges, I have seized opportunities to improve our own 

operations. It begins with a vision for how we scope our work and 

how we execute that work, moving away from auditing and investigating individual programs and projects to targeting weaknesses 

that cut across all the entities that we oversee. This crosscutting 

work will provide solutions that link Washington-based strategies 

to field-level implementation. 

To better position my staff to carry out this work, I have initiated a number of reforms. First, I added more rigor to how we 

FOREI-42327 with DISTILLER

7 

prioritize our work. Second, I called for matrix teams comprised of 

audit, investigations, and technical staff from headquarters and the 

field, and consolidated 11 overseas offices into four regional hubs. 

Third, I have taken steps to revitalize our workforce by recruiting 

new leaders, elevating performance standards, setting expectations 

for inclusivity and leadership, and identifying the training and resources all staff need to succeed. Finally, I have solidified our independence by establishing a cooperation memo with the USAID Administrator to formalize OIG’s authority. We are also working to 

reclaim responsibility for closing out our recommendations. 

OIG remains committed to providing reliable and meaningful 

oversight and ensuring that we, as well as entities we oversee, 

achieve the highest return on taxpayer dollars. Given the risks in 

providing foreign assistance, this is no easy task, but it makes our 

work, and this subcommittee’s sustained interest, critical to ensure 

we get it right. 

This concludes my prepared statement, I am happy to take any 

questions you might have. 

Thank you. 

[Ms. Calvaresi Barr’s prepared statement is located at the end of 

this hearing on page 34.] 

Senator PERDUE. Thank you, Ms. Calvaresi Barr. 

And thank you both for your statements and for your submissions to the record. 

We will start our questioning. And, just to manage the time, 

there is a Democratic Caucus meeting at 11:15, and Senator Kaine 

will probably have to excuse himself. If I have another question or 

two, we will continue with those questions in his absence; we are 

allowed to do that. But, I think we should be able to manage the 

questions in that time. 

We will start with Ranking Member Kaine. 

Senator KAINE. Thank you, Mr. Chair. 

And thanks, to the witnesses. 

I want to start, Mr. Linick, on the cyber issue. My understanding 

is that there are two bureaus at State that have responsibility for 

cyber and IT security, the Information Resource Management IRM) 

and Diplomatic Security (DS), and both have responsibility. Talk to 

me a little bit about the stovepiping issue of having two different 

branches responsible for this, the degree of duplication or gaps, the 

degree of current coordination and recommendations that you 

might have with respect to making State more effective in this 

area. We were all aware of the stories about foreign intrusion into 

the State Department networks in March of 2015. Please talk a little bit about how you are trying to tackle that challenge. 

Mr. LINICK. Thank you, Ranking Member Kaine. 

The issue of dispersion of authority between DS and IRM is a serious issue. As I just testified, we have seen a number of significant 

recurring deficiencies in their IT system over the last 5 years. We 

think a number of them are created by a lack of coordination. 

Let me give you a specific example: 

One of the issues we have seen is employees who do not use their 

email accounts for a period of 90 days, those accounts are supposed 

to be disabled, because hackers can get in, or anybody can get in 

and use those emails for nefarious purposes. The Department has 

FOREI-42327 with DISTILLER

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not disabled many of those accounts. And that is a coordination 

issue. 

We have seen other deficiencies occur as a result of this coordination issue. And it goes to a larger recommendation, which we have 

made to the Department, which is, the CIO, who works for IRM, 

currently reports to the Under Secretary for Management, and so 

does DS. We do not believe that the CIO is properly positioned to 

control IT security at the Department. It is not clear that the CIO 

gets information about security risks from other bureaus. We have 

asked the Department to take a look at that. 

The other thing is, the CIO—one of our key recommendations to 

address the deficiencies we have found in their IT system has to 

do with the fact—while the Department’s working on it, they do 

not—they have not implemented an IT risk-management structure 

which identifies risk, assesses risk, monitors risk, and so forth. And 

the CIO has got to do that. I know they have been working on it. 

But, we believe that is key in order for the Department to get its 

hands around this problem. 

So, with that kind of risk-management system, the Department 

would be able to figure where it currently stands, from an IT perspective, where it needs to be, what the opportunities for improvement are, and how to communicate their risk to the Department. 

Senator KAINE. You gave me two different examples, and, in the 

second one, you indicate that there is effort underway at the State 

Department to grapple with the recommendation you made. How 

about on the first one, the notion of a CIO being placed differently 

in the organization, to have a more comprehensive oversight of 

these cybersecurity matters? What is the response that you have 

gotten from State on that? Please explain that to us. 

Mr. LINICK. Well, our recommendations with the Department 

consider the positioning of the CIO. And the Department has come 

back and said that they have considered the position, and he will 

remain where he is. That is my understanding of it. However, this 

risk-management plan that I have discussed can identify the roles 

and responsibilities of various players and give the CIO the power 

and authority and the clear guidance that he needs in order to 

have the kind of control in order to implement, you know, an IT 

system, a security system. 

Senator KAINE. Let me ask about another aspect of cyber. I am 

on the Armed Services Committee, and we spend a lot of time in 

dealing with DOD about the same issues. Within DOD, there are 

some interesting projects and programs to deal with cyber issues. 

There is a program called Hack the Pentagon, which gives incentives to hackers to find and report vulnerabilities in DOD networks. And then the Air Force has something called an IT Swat 

Team, which is private-sector IT professionals that have agreed to 

come in and help the Air Force rapidly, if there are intrusions, deal 

with those. Are there similar projects or efforts underway at State 

to quickly deal with cyber intrusions or even encourage hackers to 

report vulnerabilities so that they can then be fixed? 

Mr. LINICK. Yeah. I do think—I mean, they have spent several 

billion dollars over the last few years on trying to improve the system. I know they have been working hard to do it. I know they are 

partners with other agencies to help them—including DHS—to 

FOREI-42327 with DISTILLER

9 

help them detect hackers and so forth. I know they have provided 

more tools to staff, and they have been working hard at training, 

as well. So, I know they have taken a lot of steps. We really think 

a lot of this has to do with just having a better handle on all the 

risks and being able to see the entire organization and prioritize 

those risks. 

Senator KAINE. I want to go to the State Department folks and 

say, ‘‘Hey, now you tell us what you are doing in response to these 

recommendations.’’ And so, I appreciate that testimony. Maybe we 

will have the opportunity to do that with State Department folks, 

especially on the two points that you mentioned. 

I want to ask Ms. Calvaresi Barr this question. I understand 

that USAID is rolling out changes to its policy guidance. I see that 

it is called ADS201—I do not know that that is—but, basically, it 

is policy guidance about increasing the ability of implementing 

partners to be adaptive and creative in their execution of aid programs. So much of the great work of USAID is through implementing partners. 

Talk to us a little bit about that effort. What guidance would you 

give to us so we can both support but then also assess the degree 

to which the relations between USAID and its implementing partners are as effective as they can be? 

Ms. CALVARESI BARR. Senator Kaine, thank you for that question. I think it is probably one of the more important questions that 

could be asked. 

USAID relies on implementing partners to deliver foreign assistance, right? So, right off the bat, you have to have assurance that 

those implementers have strong internal controls; you have to ensure that they are going to report, they are going to monitor, they 

are going to check, they are going to get back to us and know 

whether the goods (the services and the foreign assistance) are getting where they need to go. 

One thing that we have pointed out, time and time again in our 

work across the board, is a culture within USAID which views its 

implementers more as partners. So, as a result, we are seeing sort 

of a lack of the kind of rigorous oversight we would like to see from 

USAID to its implementing partners. And I think the best way to 

point that out is that you look at our work that our special agents 

have done in investigations. That is the effect. That is the effect 

of those weak internal controls. That is the effect of the 

vulnerabilities, not really knowing what is being shipped, what is 

reaching the desired entities. And in the case of Syria, in our crossborder operations from Turkey and Jordan, we found rings of corruption on product substitution, false claims, a whole host of 

issues. And we have put tremendous, tremendous pressure on 

USAID, as well as its implementing partners, to stand up and to 

have a better grasp on that. We stood up a Syria Investigations 

Working Group, where we pull the bilaterals together in that area. 

We work with State, we work with other entities to talk about 

where we have cracked down on fraud. Who are these partners? 

Who are the vendors? Who are the implementors? Because much 

of this money is going to other entities, and they may be using the 

same bad apples. So, there needs to be that kind of rigorous oversight put in place. 

FOREI-42327 with DISTILLER

10 

My point here is, we are doing it, as the Office of the Inspector 

General, from our investigations standpoint. We would like to see 

AID do more of that. So, the design of the programs, the monitoring, the evaluation, it certainly does need to be addressed. 

Particular concern—and I will just end on this point—is, almost 

half of USAID’s money goes through U.N. agencies. We do not have 

oversight over those public international organizations. That is a 

vulnerability. So, we have partnered very, very closely with them. 

In fact, I just got a call yesterday from the World Food Programme 

IG, and we are going to meet next week, actually, to talk about 

what needs to be put in place. We have suggested to USAID, ‘‘You 

just do not turn over the money. Put conditions on that money, 

even if it is going to the PIs. Half of that money is going to them. 

You should put strings attached, conditions on the transfer of that 

money.’’ That is beginning to happen. It has not happened before. 

Hence, what we see in Syria. Hence, what we see in Afghanistan. 

Hence, what we see in Africa, when it comes to global health. I 

could go on and on. 

Senator KAINE. So, even though you do not have the ability to 

exercise your function with respect to monies going to these U.N. 

agencies, you can put pressure on USAID to put strings on the 

money and make sure that they are trying to get the U.N.-related 

agencies to up their own internal controls. 

Ms. CALVARESI BARR. Absolutely. It goes to the heart of your 

question, What about monitoring and evaluation? What can they 

do? They need to look at these implementors, not so much as partners. They have to know what their internal control processes are. 

They need to know what they know about the vendors and the subcontractors they are going to be working with. What are their internal controls? And they have to put risk-mitigation factors in 

place to account for that. That is risk management. 

Senator KAINE. Let me ask both of you this question. Both State 

and USAID work in environments that are permissive and also in 

environments that are nonpermissive. I think I can intuit the answer to this question, but I think it is an important one to get on 

the record and for folks to understand. Talk about how the work 

of each of these agencies in nonpermissive environments—how does 

being in a nonpermissive environment change the work that an 

IG’s office needs to do? 

Ms. CALVARESI BARR. Okay, I would be happy to start. 

Certainly, it makes it more difficult because in a nonpermissive 

environment you cannot be out there. The reliance becomes even 

greater. You are looking to others to go in-country for you. That is 

why these U.N. agencies are so critical to USAID because they are 

the ears and the eyes, and that is the footprint on the ground. That 

is the importance of having implementors that have our best interests in mind, that are interested in getting the return on every taxpayer dollar possible. 

So, these issues that we have found in our top management challenges, these cut across permissive and nonpermissive environments. What I would say to this is, when you are in a nonpermissive environment, you cannot be there on the front line. 

One example where I think USAID could do better. I mentioned 

the Syria program. We cannot go into Syria. But, our U.N. partners 

FOREI-42327 with DISTILLER

11 

can go in. OFDA sent out a DART team to assess where the need 

was and make sure the supplies get there. It was our agents, not 

that DART team, that actually went to the warehouse and looked 

at what was supposed to go across border, Is this what it should 

be? Is it up to the quality it should be? So, we asked the question 

‘‘We are there, why is USAID not there?’’ So, those are some of the 

things where we are pulling out, we are recommending, we are 

pushing in our reports. You need to have levels of review. Their 

multi-tiered monitoring approach, which they have been talking 

about for many, many years as the end-all/be-all for those situations, I think I mentioned here in my opening statement, one of 

127 awards used that approach. And what that approach is—we 

know we cannot get in there, so we have got to work with the governments, we have got to work with our NGOs.—We have got to 

work with the other implementors. We have to have creative strategies for documenting the actual receipt of these goods. We need 

reports that come back.—In Afghanistan, one of 127 awards used 

it. Our recommendations are targeted at getting that much better 

than that kind of estimate. 

Senator KAINE. Mr. Linick, on the same issue about permissive 

versus nonpermissive environments, and then I have one workforce 

question before I hand it back to the Chair. 

Mr. LINICK. The State Department is clearly working in providing foreign aid in nonpermissive environments, lots of it, you 

know, in governance programs, nonlethal aid working in Syria and 

Iraq and so forth. And it is a serious limitation, these nonpermissive environments, to monitor whether or not the goods or the services are being delivered as they should be. 

The State Department has sort of a mixed record on this. Some 

bureaus are using alternate means to compensate for that: use of 

third-party contractors, use of GPS, use of teleconferencing, talking 

to grantees in third countries. There are quite a few ways to get 

around this. And we are actually looking at those ways to see how 

effective they are. 

In other bureaus, they are not using these methods. And part of 

it is because there is no directive that provides a minimum standard for monitoring and evaluation. That is something we are looking at. 

Senator KAINE. I want to ask one workforce question and then 

just an observation about workforce. Within the DOD—again, from 

my Armed Services experience—the senior executive service personnel, senior officers often attend very extensive planning curriculum to focus on things like contract management, et cetera. 

And my observation is that State and USAID Foreign Service Officers usually have a shorter rotation, with fairly limited training in 

planning and contract management, even though they are expected 

to do similar work. So, as I compare the kind of training on planning and contract management on the DOD side, versus the State 

side and the USAID side, I think State and USAID do not get the 

same amount. What can we do to foster more of a planning and 

training culture within the organizations? 

Ms. CALVARESI BARR. Okay, this is certainly an issue that we 

have highlighted. The lack of training for the folks that are actually in charge of determining the programs following from a counFOREI-42327 with DISTILLER

12 

try development strategy, what the program should be, what the 

vehicle should be. And I think what we have found, across the 

board, is that, No. 1, the training is not there that is needed. This 

is huge project management. We might start with a $1 million 

grant. That can amp up very, very quickly because of changing situations. And then, when you are in a contingency operation where 

the need is tremendous, you have the staff actually overseeing 11 

projects in that area. If they are not trained, if the right number 

of folks are not there, if there are not alternative strategies for how 

to monitor it—not a one-size-fits-all approach to this—then you are 

going to see the effect that we see, time and time again. It sounds 

like a broken record.—They are not achieving the goals that they 

established; the data is unreliable; we are not sure they are meeting where they need to be. So, training is absolutely at the heart 

of this. 

You mentioned Foreign Service. I think, you know, a complicating factor with this, because of the nature of that personnel system, folks are in, they are in for, you know, 2 years—in contingency settings, 1 year—and they are out. So, you overlay that with 

the continual change that goes on, and I think it is certainly a recipe for tremendous, tremendous vulnerability in achieving the program. 

Senator KAINE. Mr. Linick? 

Mr. LINICK. Senator Kaine, you raise what I think is one of the 

most important issues for the new administration to look at. In the 

State Department,—there is little emphasis on project management. They are working on it. And they have been working on it 

for a while. But, really, people go to the State Department because 

they want to be diplomats, and they do not want to have to manage 

contracts and grants and do all these things. It is a collateral duty 

for many. As you mentioned, Foreign Service Officers are rotating 

in and out of these posts—1, 2, 3 years. You know, they will serve 

as grant officer representatives, and then they move on to another 

post. So, you know, many grants have one, two, three grant officer 

representatives. They do not have the training, they do not have 

the staffing. Grant officers and contract officers are really not held 

accountable for oversight. You have got RSOs, regional security officers, who are also designated as contracting officers at posts, who 

are supposed to be managing the local guard contracts, but also 

making sure that the posts are secure from attack. This is a real 

problem, and we have made a number of recommendations to the 

Department to enhance accountability. It needs a better system for 

inventory and contracts and grants. It needs more training; it 

needs more resources. and it needs to be given the kind of priority 

that other topics do. Because, ultimately, in our view, effective 

management means effective diplomacy. And at the end of the day, 

this should be an organization which is also focused on the taxpayers. 

Senator KAINE. Let me offer—let me just offer one last—- not a 

question, just an observation, and then—and I appreciate the Chair 

letting me just drone on with 15 minutes of questions. And I am 

anxious to hear his questions. 

When I travel on CODELs, usually I combine travel for Armed 

Services and Foreign Relations purposes. And I have embarked on 

FOREI-42327 with DISTILLER

13 

a habit I really love, which is, wherever I am, I go to the Embassy 

and I ask to meet with first- and second-tour FSOs, often people 

from USAID, and other folks that are connected with the Embassy. 

I just want to hear what their life is like. And I am always so impressed with the qualifications of people, and their experiences. We 

are doing a better and better job of thanking the military for their 

service. I do not think we often thank nonmilitary American employees enough, especially those who are deployed into high-risk 

settings around the world. But, I always ask them this question, 

‘‘You have a job that is very competitive to get. I mean, especially 

anybody who has passed the Foreign Service exam—extremely 

competitive to get, so you are to be congratulated for that. Tell me 

what will be the difference between you staying and making this 

a career and you leaving to do something else.’’ I ask that question, 

and then I just listen, usually for about an hour. One of the things 

I hear a lot is this,—and it is in your wheelhouse as you are making recommendations to State or USAID and kind of seeing how 

they implement those recommendations. Foreign Service Officers 

tell me that they had to go through such an intense security vetting to get this job, but, for them to get a few dollars to go to a 

conference they have to fill out things in triplicate, as if they could 

not be trusted. They wonder how they were allowed to get through 

the vetting process if they could not be trusted. They understand 

that there needs to be a check against fraud and abuse, but they 

are still frustrated at being treated as if they could not be trusted, 

often for minor expenditures. 

Obviously, we have to have a balance, in terms of putting mechanisms in place to appropriately manage and protect the taxpayer 

dollar at the same time. When we put people through the—you 

know, one of the most intense vettings that anybody gets in our operation, then there ought to be a degree of respect and trust that 

comes with that. 

So, I just wanted—you do not need to comment—but I just wanted to tell you that is something that I hear as I travel around the 

world and try to say thank you to the people doing these important 

jobs. And you might want to consider that. 

And I will now hand it back to the Chair. 

Thank you. 

Senator PERDUE. You know, I can relate to that when I am going 

through security at the airport, myself. [Laughter.] 

Senator PERDUE. Thank you for those insightful questions. 

You know, let me follow up on that line of thought. You know, 

one of the great things about this job is, we do get to travel, and 

we do get to see our men and women in uniform and our State Department personnel around the world. And it really is an unbelievable thing to realize that the best of America is in uniform in our 

military, and the best of America is in our Embassy and diplomatic 

efforts around the world. I mean, it really is a very encouraging realization to come to as a new member. And I am worried about the 

continued safety and their careers. You know, I think Senator 

Kaine just talked about that. I mean, we talk about that in here 

a lot. The retention of really good people in any enterprise is a key 

success factor. 

FOREI-42327 with DISTILLER

14 

I am worried about their safety, Mr. Linick, and I know you have 

talked about that before. And when I look at both your reports, 

they are so insightful. And if we could just implement everything 

in your reports, we would all be much better off. But, I am a little 

concerned when I see repeat recommendations, and there are a 

number in here. And the one that I want to call out and get you 

to speak to it very quickly. This is about Embassy security. Past 

events have proven that these embassies are, indeed, in danger at 

times. And so, we have to take this very seriously for the security 

of our people. But, in your testimony, you stated that Until the Department fully implements the IG’s recommendations intended to 

improve the process to request and prioritize physical security 

needs, it will be unable to identify and address all physical security-related deficiencies. And then you said that without taking 

such steps, the Department will be unable to make informed funding decisions. 

We had a meeting here earlier this year talking about how expensive it is to build the embassies, and the overruns and so forth. 

That is not what I am looking for here. What I am really looking 

for are the hindrances going on in State, and why is this a repeat 

recommendation? And, looking forward to the next year, how receptive has State been to your recommendations, and how would you 

advise us to continue to look at that? If safety of our diplomatic 

corps is one of the top priorities, it seems to me that we need to 

make sure that these recommendations are taken seriously. 

Mr. LINICK. Senator, I think the issue of why do deficiencies continue to appear is a complex question. There are posts all over the 

world. There is lots of ground to cover. The world is a dangerous 

place. And there are probably lots of reasons why we continue to 

find issues. One thing we think would be a simple fix and would 

contribute to the Department’s ability to address these issues is 

just having a database of all the security needs, the deficiencies 

around the world, so the Department knows how much money it 

needs to spend, where the highest-priority security issues are, and 

so forth. The Department has made progress. We made this recommendation in 2014. They have a database. They have not populated the database. They just need to do that. But it has been a 

couple of years. So, again, it is a planning function. You do not 

know what you have unless you understand what the universe of 

needs are. 

The other thing I would say is—and this is another issue I think 

the new administration ought to look at that relates to the issue 

of dispersion of authority in the IT context—it is the issue of the 

need to enhance our mechanisms for accountability, particularly in 

the security area. Two key recommendations came from the 

Benghazi Accountability Review Board, one had to do with making 

sure that risk management is conducted at the highest levels of the 

Department. And that is very important for the new administration 

to undertake, particularly where we are sending folks in harm’s 

way and we cannot mitigate risk. It ought to be done at the highest 

levels. 

The other issue is in terms of security. You know, we have had 

12 Accountability Review Boards, from Dar-es-Salaam to Benghazi. 

And in Benghazi, we found that 40 percent of the recommendations 

FOREI-42327 with DISTILLER

15 

made by the Benghazi Accountability Review Board were repeat 

recommendations—training, information-sharing, et cetera. Why is 

that? Largely because it did not have leadership pushing down 

those recommendations. With changes of administrations a lot of 

these issues get delegated to the bureaus. That needs to be implemented from the top, as well. And they have actually put something in the FAN to require that the Deputy Secretary make sure 

that they oversee the implementation of those recommendations. 

Those are the primary reasons. We continue to find deficiencies 

all over the world, whether it is, not having the right setback or 

not having hardened doors, et cetera. Those are the root causes, 

and leadership needs to be on top of this. 

Senator PERDUE. I notice, in London, in Singapore, and in 

Islamabad, that some of those recommendations have been incorporated into new construction—setback rules, et cetera. Is that correct, in terms of these priority embassies? 

Mr. LINICK. Yes. After the Benghazi Accountability Board, the 

Department implemented many of those recommendations, and 

that has improved security at posts all over the world by sending 

more Marine security guards and enhancing training. So, the answer is yes, they have progressed. 

Senator PERDUE. We had the privilege of visiting, in Melon, 

Spain, a Marine contingent, and one of their primary missions is 

to be there as the first call for embassies in Africa. And I know 

Senator Kaine has a son, a young Marine who is out there in 

harm’s way; so we want to make sure those guys are well funded. 

Mrs. Calvaresi Barr, you noted in your testimony—this is a specific question, but you called it out, that you are seeking to align 

the USAID IG system of pay for Foreign Service investigators with 

that of the rest of the Federal law enforcement community, just to 

create a level playing field. Can you speak to that just a minute, 

about the deficiency and what we need to think about here in Congress to help get that rectified? 

Ms. CALVARESI BARR. Thank you, Senator Perdue, very much for 

that question. Of the many challenges I confronted when I took 

over as IG, this is probably been one of the more disruptive to my 

organization internally. 

Senator KAINE. Has it—excuse me—has it affected retention 

since you have been there, in the last year? 

Ms. CALVARESI BARR. It will if we do not have a fix soon, so let 

me try to take a very complicated issue and make this simple. 

I oversee two personnel systems. One is Civil Service, one is Foreign Service. When it comes to our criminal investigators on the 

Civil Service side of the house, our criminal investigators get a law 

enforcement availability pay, known as LEAP, and it allows them 

to receive 25 percent more over their base salary, up to a GS–15 

step 10. And what that pay is for is to ask them to work for a minimum of 50 hours and be available anytime, going forward. 

For commissioned Foreign Service Officers, LEAP does not exist. 

So, my predecessors, many before me, in wanting to bring parity 

to the system, instituted special differential. So, the special differential was instituted to essentially bring the salaries to about 

the same because these are the Foreign Service criminal investigators that are in Syria, are in Afghanistan; and certainly, they 

FOREI-42327 with DISTILLER

16 

should at least be entitled to the same pay, not only within my organization, but across government. Right? LEAP. So, they put a 

special differential in place for them. What they also did, though, 

is they put a cap on that differential. Recently, there was a challenge to the IG’s ability to put a cap on that special differential. 

We are seeking legislation that would allow us to set the pay 

rate similar to the rate of the Civil Service, because if I do not, 

every imaginable scenario will directly affect what you asked me— 

recruitment and retention—or disparity. If I do not put a cap on 

those salaries, those criminal investigators will receive $40,000 

more than their counterparts, in excess of $200,000 a year in their 

salary. If I take it away—they are going to fall way below that. I 

am not going to be able to retain or recruit. 

Folks at that level, at the FSO 1—level, are our special agents 

in charge. They run the operations regionally. This has been one 

of the more difficult things that I have had to deal with in our organization. So, we appreciate that we have worked very closely 

with your staff and other committees’ staff to get a legislative fix 

to this so that we can just bring parity into the mix. And it would 

go a long way. 

Senator PERDUE. Well, we are working with you. We really hope 

that we can create that level playing field. This is something that 

is obvious to those of us who see it from the outside. 

Ms. CALVARESI BARR. Thank you. 

Senator PERDUE. Let me ask both of you this. This is something 

that we see. We have a new President coming in, in January, who 

has outside business interests and so forth. So, the conflict-of-interest issue is now front and center at the highest level—inside the 

State Department, inside USAID,—as in all of government. But I 

want to talk specifically here about someone who might moonlight 

with a second job, what are the procedures, going forward, that we 

need to look at to ensure that there is no conflict of interest with 

their day job? 

Mr. Linick? 

Mr. LINICK. Well, Senator, there are ethics rules and criminal 

rules which prohibit conflicts of interest—financial conflict of interest, in particular. We get allegations, in the investigations area, of 

conflicts of interest. We get them routinely, and they are pretty 

common. 

Senator PERDUE. Are there training processes inside both institutions to educate people—— 

Mr. LINICK. Well, there is required ethics training, and we looked 

at the Department’s ethics,—how they conducted ethics training. 

And I would have to get back to you for specifics about that. We 

have it within our own office; we take it very seriously. This is 

something that we deal with more on an allegation-by-allegation 

space. 

Senator PERDUE. But, from a proactive standpoint, are there 

things that the IG Department does, interacting with people? Ms. 

Calvaresi Barr, do you want to speak to that? 

Ms. CALVARESI BARR. I would be happy to, and I agree completely with what Mr. Linick said here about the rules and the regulations. There is ethics training across the board. 

FOREI-42327 with DISTILLER

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One thing that our Office of Investigations did was put together 

an integrity working group within USAID. We have USAID’s general counsel; we have people from civil rights there; we have people 

from the management bureau there; we have people from security 

there, and we are there. And we talk about employee integrity matters, conflicts of interest obviously being one of them. 

I can tell you that we are not, certainly, missing in terms of getting requests for us to do investigations. It is a best practice to set 

something like that up to make it clear that this all needs to come 

to the Office of the Inspector General. These meetings that we have 

on a monthly basis, all those matters are discussed. One thing I 

will say very, very strongly about USAID on this matter, they refer 

those things to us, the most egregious ones; we talk about all of 

them, and they let us have at them. 

So, I think that this is a good model, a best practice. And again, 

I am very proud of my staff for coming up with the idea that we 

have got to pull this together and pull the right stakeholders just 

to have discussions such as this. 

Senator PERDUE. Thank you. 

Mr. Linick, I want to go to the IT area. This was a top topic last 

year, and it seems to be a strong part of your report again this 

year. You brought to light some serious issues that the State Department and the IG face preventing your office from being as effective as you would like. Can you provide an update on the issue 

of independence of the State Department and OIG, and the integrity of those investigations? And what about the independence of 

your IT network? I know we talked about that last year, as well. 

Mr. LINICK. Well, fortunately, we have migrated to our own independent network. And last year when I testified, I expressed concern about the integrity of the information on our network—investigative information, audit information, grand jury information— 

and access to that information by folks. We have no evidence that 

the Department, just to clarify, actually has access to that. The 

problem is, we did not have firewalls and controls between our 

agencies to prevent that. So, we have moved to our own independent IT system, and our work now is secure. 

Senator PERDUE. Well, that is great news. I know Senator Kaine 

has to leave. And we thank you so much for being with us. 

Ms. Calvaresi Barr, can I get you to comment on the same thing? 

You have only been there a year. Have you seen the same sort of 

thing. What are your comments on the IT function inside USAID? 

Ms. CALVARESI BARR. Yes. So, first, I would just start off—from 

an independent standpoint, one of the first things I did within the 

first month was establish a memorandum of understanding about 

the IG’s authorities and independence, and the need for that, that 

Administrator Gail Smith sent out to all folks within USAID. And 

that has gone a long way to stress the role, the responsibility, and 

the authorities we have. And that has played out extraordinarily 

well. 

With regard to IT systems, we do maintain our own servers, but 

there are certainly opportunities, if there is somebody nefarious 

within USAID proper that would want to try to hack in, whether 

it be through email accounts or other things, those walls and those 

structures are not as effectively built. We—some of the new leaderFOREI-42327 with DISTILLER

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ship I talked about, that I have brought in—one individual, in particular, very, very strong in our Office of Management, along with 

our great staff—our Director of IT and her staff—are working on 

ways to build in more security to those systems. 

But, we do have our own servers. I think we need to go a little 

bit further, because I would not be truthful if I said that it is completely foolproof and nobody can get into these systems. We have 

work to do on that—in that regard. 

Senator PERDUE. I think that is fair. 

Mr. Linick, in your testimony, you stated that your office was— 

you may have given me this thing. I hope not. [Laughter.] 

Mr. LINICK. I hope not. 

Senator PERDUE. I am kidding. I am actually on the down side 

of the same thing. 

I am concerned about the absence of mitigating action plans for 

high-risk areas concerning oversight of contractor operations. That 

is an issue your office has raised before. You have issued four reports in the last years identifying these problems. Give us an update, if you will, on how State has gone about implementing your 

recommendations. Are you satisfied with the progress of those recommendations? And I know you just talked about, last year, that 

they made dramatic progress. Give us an update through this year. 

And also, you have made recommendations repeatedly. Some of 

those come back. And so, this, again, speaks to the fact that the 

issue shows up again this year. Can you just speak to that again, 

please? 

Mr. LINICK. Well, we do make a lot of recommendations, and 

some of them are implemented, and others are not implemented. 

And we try very hard to follow up and follow through in terms of 

compliance once we issue a recommendation. In some instances, if 

it is a serious recommendation or if we are not seeing compliance, 

we will actually go back out and do a compliance follow-up review. 

It is a whole new team that goes out to check to see whether or 

not recommendations are accepted—you know, are complied with 

and so forth. We do not have the ability to require the Department 

to follow our recommendations. All we can do is make recommendations and hope they implement them. 

The one thing that has really been a help for us, though, we have 

made a number of recommendations that Congress has actually 

latched onto and incorporated into legislation. So, for example, our 

recommendations and some of our management alerts are in our 

contracting. The Department is required, through legislation, to report to Congress on its implementation of those recommendations. 

Some of the most critical recommendations in the contracting area, 

including basic stuff like setting up an inventory for contracts and 

grants, holding contractors and—excuse me—contracting officers, 

contracting officers’ representatives accountable, things like that. 

So, that is the most helpful way that we can ensure that the Department follows up on our recommendations. But the bottom line 

is a mixed bag, and we try to identify the most significant recommendations and bring them to the attention of the Department. 

Senator PERDUE. Well, going down the contractor issue that you 

raised, Ms. Calvaresi Barr, you note in your testimony that contract design flaws led to complications in Haiti in the implementaFOREI-42327 with DISTILLER

19 

tion of an $88 million grant. But, there was about $12 million in 

question; —I think it was in an anti-malarial program, if I am not 

mistaken. Can you speak to that and then speak to what you have 

done to prioritize controls around that to avoid those in the future? 

Ms. CALVARESI BARR. Yes. Design is absolutely crucial to get it 

right. That is the foundation for any sort of development assistance 

going right. And I think what we are finding is, within USAID, 

when they develop their country development strategy, specific 

projects follow from that. A number of things have to be looked at. 

You have to put the best practices in place with regard to delivering the aid, whatever that aid is that you are delivering there. 

Your goals have to be reasonable, and they have to be reasonable 

based on the environment in which you are working. So, USAID’s 

emphasis is a lot on local solutions to provide sustainability, going 

forward. Let us invest in those local entities to make sure that the 

aid sticks. So, we talk ourselves out of business. We go in, and they 

can keep things working. But, you just cannot throw money at it 

and hope that it works. You have to assess capacity. You have to 

say, ‘‘Do these entities that the money is going to even know what 

internal controls are?’’ If they do not know what they are, does the 

money need to go more towards technical assistance to get them 

amped up to be able to receive this kind of money? 

So, in the examples that we provided, time and time again, with 

that being one, we had a less than rigorous look at the best practices, an assessment of the capacity, a reporting back of what we 

are getting. 

One thing that I will say that OFDA has recently done—and we 

have seen this in Afghanistan, which I think is another best practice—is, rather than throwing all of the money out, especially if you 

have weak monitoring and reporting coming back or data that is 

less than reliable, which we found across the board on our monitoring work, how about incremental funding? So, it makes the 

AORs, the CORs, those monitoring, say, ‘‘Okay, here is the first 

tranche. What did we accomplish? Hey, if we are not getting where 

we need to be, what is it? Did we pick the wrong vehicle? Was the 

cost-share arrangements that we hoped we would get back from the 

government or the other entities, are they not standing up to their 

commitment?’’ And then, recalibrate and change to get it right. 

But, we see, too often, the design on those principles that I mentioned as flawed in the beginning, and that is just going to have 

ramifications, going forward. That was just one example of many. 

Senator PERDUE. Thank you. 

My last question really has to do with the reforms that you guys 

have both brought to your respective responsibilities. Can you just 

bring us up quickly on what reforms in the past year you have 

been able to implement? And then, the parting question here is, 

Are there other reforms that we need to be a partner with here legislatively or the things that—to help improve your oversight capability—the things that we need to do in changing the law to help 

you? I would like a brief answer here, but if you would like to submit an answer in writing to that, we would welcome that for the 

record, as well. 

Mr. Linick? 

FOREI-42327 with DISTILLER

20 

Mr. LINICK. Okay. So, Senator, to answer your first questions, in 

terms of reforms, I would divide it up into two baskets of reforms. 

One is internally, and externally. Internally, our people are our 

most important asset. We want to make sure that they have the 

proper work environment, they have the systems, and so forth. We 

have worked hard, and this is something that is continuing to improve—management systems, the quality assurance of our work, 

internal controls, workflow, and so forth, making sure the people 

have adequate space, that the culture in the office is right. And 

these are things that we have been working on consistently for the 

last few years. 

Externally, we are trying to be more effective at what we do. We 

are trying to aim at the highest risks to the Department, trying to 

be more efficient and effective. A few things we have done: our inspections division now operates on a risk-based system, so we are 

trying to be very smart about how we inspect, where we inspect. 

We look at a number of factors: how much money a post has, the 

complexity, the size, and so forth. And we might have different 

kinds of inspections, depending on the risk factor. We might send 

bigger teams to higher-risk places, smaller teams to lower-risk 

places. We may look at one function, like security, or we may look 

at all of the functions. We may look at just morale and leadership. 

So, those are the kinds of things. 

In addition, we created the Evaluation Special Projects Unit to 

be a rapid-response unit to handle whistleblower claims, administrative misconduct, and other special assignments, our management alerts and management assistance reports to get information 

to the highest levels of the Department quickly about urgent issues 

or systemic issues, and data analytics is something we are really 

trying to use in an integrated way throughout OIG. 

Senator PERDUE. Ms. Calvaresi Barr? 

Ms. CALVARESI BARR. I remember, Senator Perdue, you asked 

me, during my confirmation hearing, what was I going to do to get 

my arms around the organization and move it forward? So, let me 

come back to that. I mentioned three things: work, process, and 

people. And it is something I have lived by in every leadership position that I have been through. 

On the work front, we have done tremendous, tremendous work 

in the past, but what we have done is, we have targeted individual 

programs across all the countries that we are in—and we had that 

structure that had 11 offices, and I can tell you, it was like having 

11 different IG offices—transformed that into four regional hubs. 

Our work now is going to be more crosscutting. In addition to my 

oversight responsibility for USAID, I have those additional other 

entities that I oversee. So, work that we can do that is crosscutting, 

work that we can do that follows, as Mr. Linick said, high-priority 

areas of the Hill, high-priorities areas within the entities that we 

are overseeing, high priorities from work that we have identified. 

We have got to hit those things where there are big programs. 

For example, if we do an audit of Power Africa, Power Africa is 

getting at USAID’s investment, it is getting at MCC’s, it is getting 

at OPIC’s, it is getting at ADF. We have to do that. The recommendations in our reports, then, that I can bring forward talk 

about systemic issues and lends itself to the kind of oversight hearFOREI-42327 with DISTILLER

21 

ings you could have with those officials about what their responsibility is to get this right. So, work clearly, you know, is number 

one. 

Processes, just very quickly, we needed to bring ourselves up to 

date with the best practices for how we do things within audit, 

things within investigations—new prioritizations, new audit planning guides, new templates and guidance—so that we are providing 

streamlined efforts so that our reports to you are as timely as they 

can be. Because if they are not timely, they are not relevant, and 

you cannot use them. So, I would highlight that. 

I have established an Office of Quality Assurance and Review 

that did not exist before. I am hiring a business process engineer 

to totally rebaseline our processes and bring some best practices 

into it. Communications officer, training director—none of that was 

in our office before, and that speaks to the people part of it. We 

have tremendous people at this agency, that have been with my office for a very, very long time. 

As I said, I have a pretty high standard on expectations, and I 

would like to think I hold myself to those, as well. And I set those 

standards. And I had the opportunity to bring in a fairly new 

bench of senior executive leaders along with all the existing leaders 

that have really proven already that they have the chops to get this 

done the way I want it done, with leadership, engagement, coaching, and inclusivity. And we are investing in our folks to do that. 

Finally, on the notion of what else we can do, going forward, 

thank you very much for the question on the pay issue. That is 

first and foremost—LEAP is one. A separate issue for me has to 

do with our authority with regard to OPIC, oversight of OPIC. The 

Foreign Assistance Act only gave limited authority, does not allow 

us to do financial statements. In short, the appropriations bill says, 

‘‘USAID, OIG, coordinate with OPIC’s president, board, and come 

up with a MOU on the work that you are going to do.’’ So, when 

I think about an IG’s role—and I have been in this business for 32 

years now—the fact that I have to negotiate what my oversight is 

going to be, and then I have to get it locked and loaded, and, if 

there is another issue that comes up that I want to look at, oops, 

it was not in the plan that was agreed to, the MOU—it is not working for me, it has not worked for the agency for a long time, so I 

think that that one is most important to me, as well. 

Senator PERDUE. I am concerned about that, as well. I see that 

in your report. And, in my business career, that is the one that always jumped off the page at me, as well. 

Ms. CALVARESI BARR. Okay. 

Senator PERDUE. I am very sensitive to that. 

Thank you both for your testimony, and thank you for your tireless effort. I know providing oversight and accountability sometimes can be a thankless job, but I want to tell you, it is very much 

appreciated by this subcommittee and the committee at large. I 

want you to know your work is really making a difference. And informing us here in the Senate is so important that we get an objective look at these departments. I mean, these are tremendous departments. We are spending $54 billion, all in, between State and 

USAID today, and it is up from 20 billion under the Clinton administration. So, under the last two Presidents, this thing has really 

FOREI-42327 with DISTILLER

22 

kind of exploded to be a major investment around the world, and 

yet we see the needs around the world, both from our own internal 

security of State Department, but also the help that aid is giving 

around the world today is tremendous, relative to what we are trying to accomplish from a foreign policy standpoint. So, that is why 

these hearings are so important, to get this information on the 

record and to see the ball move down the field accordingly. 

It is through our diplomatic and foreign assistance agencies that 

we have been able to bring hope and opportunity to those most in 

need while also furthering peace and U.S. interests around the 

world. We cannot forget that oftentimes the meal a Syrian child receives, or the HIV/AIDS medication a mother in Africa receives, 

may be the first and only thing they learn about America. And so, 

we must ensure that the aid we provide is helpful, safe, and accountable, and that our people delivering that are safe. 

Most importantly, we cannot continue to help others if we do not 

maintain the trust of those who make this aid possible—the American taxpayer—which is why these hearings are so insightful and 

important to maintain trust in that accountability. 

We will close now, but the record will remain open until Friday, 

close of business, for those wishing to submit additional questions. 

We may have a question or two, as we just mentioned. And also, 

I want to take the privilege here, sitting in the Chair. I want to 

thank and make a quick—just take a quick moment to thank Major 

Jim Purekal, of the United States Marine Corps, who is here with 

us today. He happens to be my congressional military fellow for the 

past year. Major Purekal has been invaluable in advising me personally, and our team, about the inner workings of military and national security. He moves now to the Senate legislative liaison. But, 

the thing I want to call out about his career, he was a helicopter 

pilot for Air Force 1, and so he brings a distinguished career to the 

Senate, and we look forward to working with him over the next 

year. 

So, Major, thank you very much. [Applause.] 

Senator PERDUE. Thank you. 

Thank you again for your work and your testimony. 

This meeting stands adjourned. 

[Whereupon, at 11:30 a.m., the hearing was adjourned.] 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT OF STEVE A. LINICK

Chairman Perdue, Ranking Member Kaine, and members of the subcommittee, 

thank you for inviting me to testify today regarding the work of the Office of Inspector General (OIG) for the Department of State (Department) and the Broadcasting 

Board of Governors (BBG). I will highlight some of our recent oversight work, our 

continuing initiatives, and the challenges we face in performing efficient and effective oversight. I will also address the results and impact of our work. At the outset, 

I would also like to thank this Subcommittee for its interest in and support of OIG’s 

work. In particular, I would like to take this opportunity to thank Members of this 

Subcommittee for sponsoring legislation intended to expand our hiring authority 

and our ability to obtain information regarding misconduct by senior Department 

personnel. This legislation is critical to our operation. 

FOREI-42327 with DISTILLER

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1Department of State, Bureau of Diplomatic Security Year in Review 2015 (June 2016). 

2OIG, Inspection of Embassy Tashkent (ISP-I-16-12A, March 2016); OIG, Inspection of Embassy Ashgabat (ISP-I-16-13A, March 2016). 3OIG, Inspection of Embassy Kinshasa (ISP-I-16-19A, June 2016). 

4OIG, Management Alert: Hazardous Electrical Current in Office and Residential Buildings 

Presents Life, Health, and Safety Risks at U.S. Embassy Kabul, Afghanistan (MA-16-01, April 

2016). 5OIG, Inspection of Embassy Ashgabat (ISP-I-16-13A, March 2016). 

6OIG, Management Assistance Report: Armored Vehicle Training (ISP-16-17, July 2016). 

I. STATE OIG’S MISSION AND OVERSIGHT EFFORTS

It is my honor to have led the State OIG for the last three years, and I am 

pleased to have this chance to update you on the work we have performed since I 

last testified before this Subcommittee in April 2015. 

As I explained at that time, OIG’s mandate is extensive and requires us to oversee both Department and BBG programs and operations, which include more than 

70,000 employees and over 270 overseas missions and domestic entities. These agencies are funded through combined annual appropriations, fees, and other income of 

approximately $43 billion. Moreover, one important difference between State OIG 

and most other OIGs is that we are statutorily required to periodically inspect and 

audit every domestic and overseas operating unit around the world. 

In recent reports, we have identified some of the top challenges that the Department faces. Today, I will focus particularly on the protection of people and facilities, 

the security of sensitive information around the world, and the management of contracts and grants. These three issues represent a significant part of the work that 

we have done over the past eighteen months. 

Protecting people and facilities 

As testified previously, one of OIG’s top priorities is protecting those who work 

for the Department around the world. OIG has always inspected physical security 

at overseas posts, but, since the September 2012 attacks on U.S. diplomatic facilities 

and personnel in Benghazi, Libya, we are now expending additional resources on 

this critical issue. In 2015 alone, personnel and property experienced attacks in 

Bangladesh, Burundi, Canada, Central African Republic, Iraq, Mali, the Philippines, 

South Korea, Timor-Leste, Turkey, and Yemen.1 These incidents included grenade 

attacks at embassy residences, car bombs detonated in front of consulate facilities, 

and the non-fatal stabbing of the U.S. Ambassador to South Korea at an official 

event. 

Although the Department has continued to make improvements in overseas safety 

and security over the past 18 months, challenges remain. Through our inspection 

and audit work, OIG continues to find deficiencies that put our people at risk. Given 

the sensitive nature of OIG’s work in this area, many of the reports related to safety 

and security are classified, and my testimony today will be based solely on information that is publicly available. 

Health and safety concerns were a recurring theme in OIG’s FY 2016 reports. Our 

work in these areas covered a wide range of risks. For example, OIG found deficiencies in seismic risk mitigation in embassy residences 2 and a lack of occupational 

safety and health approvals to ensure that hazards are addressed before overseas 

housing is occupied.3 OIG also identified life, health, and safety risks to building 

occupants due to hazardous spikes in electrical current in both the office and apartment complexes at Embassy Kabul.4 In another report, OIG identified inconsistencies in motor vehicle policies that resulted in a lack of proper training for personnel serving in countries with an elevated risk of car accidents and fatalities.5

The Bureau of Overseas Buildings Operations (OBO) statistics show that of the 773 

armored vehicle mishaps that have occurred at overseas posts within the last 5 

years, 469 (about 60 percent) were deemed preventable. Although the Department 

has acknowledged that driver behavior contributes to vehicle fatalities and that solutions must center on training, OIG recommended that the Department take additional action to address the issue by establishing a mandatory training requirement 

on armored vehicle safe-driving techniques for all overseas professional chauffeurs 

and incidental drivers who operate such vehicles.6

Another area of focus has been emergency action plans. These plans and associated processes are important because planning and preparation can make the difference between life and death in a crisis situation. During FY 2016, OIG identified 

several issues with the Department’s emergency action planning and preparedness. 

For example, in a report published in February 2016, OIG found that chiefs of mission were unaware of the U.S. military assets available during emergency situaFOREI-42327 with DISTILLER

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7OIG, Inspection of Bureau of Diplomatic Security, Directorate of International Programs 

(ISP-I-16-07, February 2016). 8OIG, Inspection of Embassy Kinshasa (ISP-I-16-19A, June 2016); OIG, Inspection of Embassy Cairo (ISP-I-16-15A, April 2016). 9OIG, Inspection of Embassy Cairo (ISP-I-16-15A, April 2016); OIG, Inspection of Embassy 

Kinshasa (ISP-I-16-19A, June 2016); OIG, Inspection of Bureau of Energy Resources (ISP-I-16- 

06, February 2016). 10OIG, Compliance Follow-up Audit of the Process to Request and Prioritize Physical Security-Related Activities at Overseas Posts (AUD-ACF-16-20, December 2015). 11 Ibid. 12OIG, Audit of the Department of State Information Security Program (AUD-IT-16-16, November 2015). 13OIG, Management Assistance Report: Department of State Incident Response and Reporting 

Program (AUD-IT-16-26, February 2016). 14OIG, Management Assistance Report: Inactive Accounts within the Department of State’s 

Active Directory (AUD-IT-16-37, June 2016). 

tions.7 Without this information, embassies and consulates cannot properly plan for 

emergencies and may be hindered in their responses to actual crises. OIG also found 

that consular sections in several posts that it inspected in 2016 were unfamiliar 

with their roles and responsibilities leading up to and during a crisis.8 OIG also 

found that emergency action plans were out of date, lacked key information, included erroneous points of contact, or were improperly certified by leadership.9

Without adequate staff training and a properly documented and tested emergency 

action plan, embassies and consulates cannot effectively mitigate the risks that a 

disaster or unforeseen incident poses to its operations. 

Finally, maintaining sufficient physical security at overseas facilities is an important aspect of protecting U.S. Government employees. Physical security relates to 

physical measures—such as locked doors, perimeter fences, and other barriers—to 

protect against unauthorized access (including attackers or intruders) and to safeguard personnel working in those facilities.10 In recent years, the Department has 

developed new tools to identify and track physical security deficiencies overseas; 

however, the Department needs to take additional action. For example, OIG concluded in a December 2015 report that, until the Department fully implements 

OIG’s recommendations intended to improve the process to request and prioritize 

physical security needs, it will be unable to identify and address all physical security-related deficiencies. Further, without taking such steps, the Department will be 

unable to make informed funding decisions based on a comprehensive list of physical security needs.11

Conducting oversight to protect people and facilities is one of our most important 

functions. Consequently, we will continue to coordinate with the Department to 

bring security deficiencies and areas for improvement to its attention and offer recommendations to address these critical vulnerabilities. By conducting both our 

statutorily mandated inspections and targeted audits and evaluations, OIG helps 

safeguard the lives of people who work in or visit our posts abroad. 

Information security and management 

The Department depends on information systems and electronic data to carry out 

essential functions that are critical to its mission. The Department is entrusted with 

sensitive information, both classified and unclassified. The security of these systems 

is vital to protecting national and economic security, public safety, and the flow of 

commerce.12 According to the Office of Management and Budget, the Department 

has spent several billion dollars in the past 5 years on software tools, IT equipment, 

and professional expertise. However, given the complexity and sensitivity of the Department’s IT apparatus and the security breaches it has experienced, IT security 

and management continues to be a significant management challenge. 

In FY 2016, OIG reported significant weaknesses in the Department’s cybersecurity incident response and reporting program.13 The Department’s efforts to respond 

to incidents (including denial-of-service, malicious code, and unauthorized access) 

showed that it had not complied with its own information security policies in more 

than 55 percent of the incidents that OIG reviewed. 

OIG also found network user account management to be another cybersecurity 

vulnerability. In its management assistance report on the Department’s Active Directory (AD), OIG determined that 74 percent of more than 2,500 inactive accounts 

were inactive for more than 1 year, and the remaining accounts were inactive for 

greater than 90 days.14 This is a critical issue because, if an unneeded account remains active, an intruder could gain access to sensitive information that could compromise the integrity of the Department’s network and cause widespread damage 

across its IT infrastructure. This problem exists, in part, because the Department 

does not have a centralized process for AD account management. This issue is exacFOREI-42327 with DISTILLER

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15OIG, Audit of the Department of State Information Security Program (AUD-IT-16-16, November 2015). 16OIG, Inspection of the Bureau of Information Resource Management, Operations, Vendor 

Management Office (ISP- I-16-03, October 2015). 17 USASpending, <www.usaspending.gov>, accessed on November 21, 2016. 18OIG, Audit of Task Orders for the Union III Compound Awarded Under the Operations and 

Maintenance Support Services (AUD-MERO-16-41, July 2016). 

erbated by the fact that, as we also reported, the Department’s Chief Information 

Officer, the head of the Bureau of Information Resource Management (IRM), is not 

properly positioned within the organization to ensure that the Department’s information security program is effective. 

As in prior years, OIG’s annual assessment of the Department’s Information Security Program identified numerous control weaknesses that significantly affected program effectiveness and increased the Department’s vulnerability to cyberattacks and 

threats.15 OIG has reported that the Department lacks effective risk management 

for all phases of the system development lifecycle.16 These problems persist. For example, in the October 2015 inspection of IRM’s Vendor Management Office (VMO), 

OIG found that VMO did not consistently implement the system that provides the 

framework for integrating IT project schedules. This inconsistency led to inadequate 

bureau coordination, incomplete project data, and limited visibility on projects, activities, and risk. 

Finally, on a related point, the last time I testified before this Subcommittee, I 

described OIG’s vulnerable IT network as a major challenge. Vulnerabilities in the 

Department’s unclassified network directly affected OIG’s IT infrastructure, which 

was part of the same network. I testified that the fact that the contents of our unclassified network could be easily accessed and potentially compromised placed our 

independence at unnecessary risk and did not reflect best practices within the IG 

community. I am pleased to report that OIG recently established its own independent IT network to mitigate these risks. 

Oversight of contracts and grants 

OIG has focused on oversight of contracts and grants, an area where the Department spends substantial resources. The Department’s obligations in FY 2016 included approximately $15.4 billion for contracted services and $18.4 billion in grants 

and fixed charges.17 As it did the last time I testified, the Department faces continuing challenges managing its contracts, grants, and cooperative agreements, particularly as these vehicles become increasingly complex. The Department needs to 

ensure that contractors and grantees are properly selected, work is properly conducted and monitored, objectives of the grant or contract are achieved, and costs are 

effectively contained. As with ensuring the safety of its personnel, management of 

grants and contracts is especially challenging in conflict areas, which present 

unique obstacles to effective oversight. 

Although the Department has addressed some problems, weaknesses continue to 

occur in other areas. In FY 2016, OIG issued several management assistance reports addressing the Department’s oversight of contracts and grants, and OIG’s Office of Investigations opened more than 30 cases related to contract and procurement fraud. 

During FY 2016, OIG identified issues with effective management of high-value, 

critical contracts. In several reviews, inspectors and auditors noted that routine contract management tasks, such as validating performance metrics to assess contractor performance, maintaining complete and accurate procurement files, conducting proper invoice review, and modifying contracts, failed to comply with Department guidance and Federal regulations. 

Audits of contracts in Iraq revealed millions of dollars in questioned and unsupported costs and unallowable fees. For example, an audit of task orders awarded 

under the Operations and Maintenance Support Services contract found that Department officials did not prepare comprehensive planning documents, formally assign oversight personnel, or ensure that oversight personnel adequately documented 

the contractor’s performance. As a result, the Department had no basis to hold the 

contractor accountable for identified weak performance. In addition, the Department 

did not comply with statutory and Department requirements for timely agreement 

on contract terms, specifications, and the price of the task orders, resulting in the 

contractor being paid more than $500,000 in unallowable fees.18

With regard to grants, OIG audits and inspections identified the need for improved management and monitoring of grantees. For example, in an audit of the BuFOREI-42327 with DISTILLER

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19OIG, Audit of the Bureau of Political-Military Affairs Federal Assistance Awards (AUD-SI16-49, September 2016). 20OIG, Evaluation of Bureau of Democracy, Human Rights, and Labor Iraq Programs in Support of Line of Effort 1 of the President’s Counter-ISIL Strategy (ISP-16-09, March 2016). 21OIG, Management Alert: Hazardous Electrical Current in Office and Residential Buildings 

Presents Life, Health, and Safety Risks at U.S. Embassy Kabul, Afghanistan (MA-16-01, April 

2016); OIG, Management Alert: Evacuation of Embassy Tripoli (MA-15-02, July 2015); OIG, 

Management Alert: Broadcasting Board of Governors Significant Management Weaknesses (MA15-01, May 2015); OIG, Management Alert: Information Security in the Worldwide Refugee Admissions Processing System (MA-17-03, December 2016). 22See, e.g., OIG, Management Assistance Report: Mandatory Disclosure Language in Department of State Grants and Assistance Agreements (INV-15-02, December 2015); OIG, Management Assistance Report: Contract Management—Lessons Learned From Embassy Kabul, Afghanistan, Operations and Maintenance Contract (AUD-MERO-17-04, October 2016). 

reau of Political-Military Affairs (PM) grantees,19 OIG reported that $2.8 million of 

$15.8 million in grant expenditures were unsupported or unallowable, as defined by 

Federal policies. OIG reported that these questioned costs occurred, in part, because 

PM’s grant monitoring process was not designed to prevent or detect unallowable 

and unsupported costs. In particular, PM did not independently verify that all 

award recipients had sufficient financial management controls in place to prevent 

unsupported and unallowable costs. 

Finally, OIG’s inspection of the Bureau of Democracy, Human Rights, and Labor 

(DRL) programs in Iraq noted the challenges the Department faces in managing 

grants in conflict areas. All 12 grants that were active between October and November 2015 (with a total award value of more than $42 million) had the necessary 

monitoring plans, performance indicators, and risk assessment or contingency 

plans.20 However, given security restrictions, neither DRL employees nor Embassy 

Baghdad employees had conducted site visits to Iraq grant recipients since 2013. Instead, DRL relied on local contractors to visit grant recipient sites. 

II. CONTINUING INITIATIVES

Nineteen months ago, I described several new initiatives. These initiatives are no 

longer ‘‘new’’; rather, they are an integral part of our day-to-day work processes. 

First, I earlier testified that OIG had begun making use of management assistance reports and management alerts to bring specific issues to the attention of Department and BBG management quickly and without waiting for the conclusion of 

longer-term audits or inspections. Since I last spoke with you, OIG has issued four 

management alerts,21 which I personally sign, and twenty-five management assistance reports.22 These reports are an important part of our oversight efforts. 

Next, in April 2015, I discussed the role of the Office of Evaluations and Special 

Projects (ESP), which was established in 2014. I am pleased to report that ESP has 

issued nine reports and two management alerts and continues to focus on systemic 

issues. In addition, this office has continued to expand our efforts to meet the requirements of the Whistleblower Protection Enhancement Act of 2012 and related 

statutes. In particular, the office’s whistleblower ombudsman has expanded our outreach and provided extensive information to Department and BBG employees, 

grantees, and contractors. ESP also is responsible for conducting investigations of 

allegations of administrative misconduct, as well as retaliation, under the pilot program for contractor and grantee employee whistleblowers and has issued eight reports under this program. 

Finally, our work in connection with overseas contingency operations is now an 

established, well-integrated part of OIG’s overall work. I am the Associate Inspector 

General for the overseas contingency operations in Afghanistan (Operation Freedom 

Sentinel) and Iraq (Operation Inherent Resolve), and our staff is working closely 

with the Department of Defense and USAID OIGs to oversee those operations. Since 

I last spoke before this Subcommittee, I have appointed an assistant inspector general who is responsible for overseeing the work of our OCO staff. 

Besides working with the other agencies with oversight responsibility, this staff 

coordinates closely with OIG’s offices of audit and inspections to make the most effective and efficient use of resources. To date, our major oversight efforts have focused on auditing and evaluating bureaus and embassies that engage or support 

counter-ISIL activities. We have also emphasized contract and grant monitoring in 

contingency and high-threat environments. In addition, we issued a ‘‘Lessons 

Learned’’ guide for program managers at the Department of State operating in critical and high-threat environments. During FY 2016, OIG issued 31 oversight products related to OCOs, and we currently have more than 30 ongoing projects. 

FOREI-42327 with DISTILLER

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23Foreign Affairs Manual 4322.2. 24 Improving Department of State Oversight Act of 2015, S.1527, 114th Congress (2015). 

III. CHALLENGES

Unlike other OIGs, my office is not always afforded the opportunity to investigate 

allegations of criminal or serious administrative misconduct by Department employees. Department components, including the Bureau of Diplomatic Security (DS), are 

not required to notify OIG of such allegations that come to their attention. For example, current Department rules provide that certain allegations against chiefs of 

mission shall be referred for investigation to OIG or DS. That guidance further 

states that ‘‘[in] exceptional circumstances, the Under Secretary for Management 

may designate an individual or individuals to conduct the investigation.’’ 23 Thus, 

DS or the Under Secretary may initiate an investigation without notifying us or providing us with the opportunity to evaluate the matter independently and become involved, if appropriate. 

Accordingly, OIG cannot undertake effective, independent assessments and investigations of these matters as envisioned by the IG Act. 

We have been negotiating with the Department for at least two years to address 

these limitations on our ability to conduct oversight, but the problem persists. Although the Department has begun providing OIG with some information, the process for doing so has not been formalized, and the information is provided to us selectively. That being said, I want to acknowledge and thank both Chairman Perdue 

and Ranking Member Kaine for sponsoring legislation that would address this limitation.24 Unfortunately, the need for a legislative fix remains. I welcome your continued support as this Congress ends and the new Congress begins next year. 

IV. IMPACT

OIG embraces our mission to protect people and information, although these efforts rarely result in a monetary return on investment. At the same time, through 

our audits, evaluations, inspections, and investigations, OIG returns real value to 

U.S. taxpayers. Since my arrival three years ago, we have issued 317 reports, which 

included audits of annual financial statements, procurement activities, and funds 

management. During this same period, we identified more than $300 million in taxpayer funds that could be put to better use and questioned costs. 

Additionally, our criminal, civil, and administrative investigations resulted in the imposition or identification of more than $82 million in fines, restitution, recoveries, 

and other monetary results. 

OIG also provides important non-financial benefits. By helping the Department 

improve its security, OIG’s work helps safeguard the lives of people who work in 

or visit our posts abroad. Success in this area is not reflected in our financial statistics, but our security work is a source of immense pride because its employees are, 

of course, the Department’s most valuable assets. 

Our oversight provides other non-monetary benefits as well. These include our 

health and safety work, our investigations that help ensure that Department employees conduct themselves appropriately, and our work to strengthen the integrity 

of the programs, operations, and resources that are at the foundation of the Department’s ability to help preserve our national security. Indeed, the work of our talented staff in reviewing security and leadership at our overseas and domestic posts 

has significant and positive effects on the lives and well-being of employees throughout the Department. That is what motivates our employees, many of whom are on 

the road or serve overseas for extended periods, sometimes at high-threat posts. 

In conclusion, I want to thank Chairman Perdue, Ranking Member Kaine, and 

the other members of the subcommittee here today for the opportunity to testify. 

I also want to emphasize that OIG’s accomplishments are a credit to the talented 

and committed staff that I have had the privilege to lead, and I also want to take 

this moment to thank them for their hard work. I take my statutory requirement 

to keep the Congress fully and currently informed seriously, and I appreciate your 

interest in our work and for providing me the opportunity to articulate the challenges faced by my office. I look forward to your questions. 

RESPONSES TO ADDITIONAL QUESTIONS FOR THE RECORD SUBMITTED

TO STEVE A. LINICK BY SENATOR PERDUE

Question. Thank you again for your recent report on major management and performance challenges for the State Department, and for briefly outlining a few of the 

FOREI-42327 with DISTILLER

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highlights in your testimony. Though we discussed a few of these challenges and 

recommendations during the hearing, please outline your top three issues in more 

detail. 

Answer. The three most significant issues are protection of personnel and property overseas, information security, and management of grants and contracts. 

With respect to protection of personnel and property, we have focused particularly 

on physical security deficiencies and health and safety matters. We have found that 

systemic issues in the Department of State (Department) contribute to these concerns. In particular, we have emphasized the Department’s inability to track physical security deficiencies and a lack of coordination between the Bureau of Overseas 

Buildings Operations and the Bureau of Diplomatic Security. 

With respect to information security, although the Department has spent billions 

of dollars in this area, we have found a number of recurring weaknesses. For example, the Department has not consistently disabled inactive email accounts; it also 

has unreliable inventories of systems that include personally identifiable information, ineffective incident reporting, and duplicative IT investments. As a general 

matter, these issues are associated with the lack of a holistic management approach 

and the failure to adopt a risk management strategy to identify, assess, respond to, 

and monitor risks. More specifically, these particular technology issues are associated with the Department’s failure to position its Chief Information Officer to effectively oversee implementation of information security programs. 

Finally, with respect to management of contracts and grants, we have also found 

persistent problems. In our reviews of contracting issues, we have found incomplete 

files, a lack of invoice review, acceptance of goods and services that do not meet 

standards, and ineffective planning. 

As to grants, we particularly see insufficient performance monitoring and insufficient focus on sustainability. Like the other challenges, these problems are connected to a lack of emphasis on program management and accountability. These 

particular problems are also caused by inadequate staffing and training, especially 

with respect to oversight of complex, high-value contracts and grants. 

We note that all three of these problems are amplified in overseas contingency 

operations (OCO) and other conflict environments because of the Department’s 

heavy reliance on high-cost, contracted support; the constant turnover of personnel 

in those locations; and unique oversight difficulties caused by heightened safety and 

security concerns. 

Question. Outside of your reports, what hindrances do you see to better management and operations? 

Answer. As a general matter, the Department needs to place more emphasis on 

overall program management. In addition, the Department needs to improve mechanisms for accountability. For example, as described in my written testimony and in 

response to the previous question, the Department’s Chief Information Officer is not 

properly positioned to ensure that the Department’s information security program 

is effective. 

Question. Are there inherent cultural challenges that lead to these management 

issues? 

Answer. The Department’s overall organization and assignment processes are not 

structured to promote effective project management. For example, many Foreign 

Service personnel are assigned management of contracts and grants as a collateral 

duty and do not receive training necessary for effective performance of their duties. 

In addition, most Foreign Service employees rotate in and out of posts frequently, 

and some assignments are as short as one year. As a result, many large grants and 

contracts have multiple employees overseeing them, which leads to a lack of both 

continuity and accountability. 

Question. You have been in your post for about 3 years now. Could you discuss 

in further detail how you have reformed your office since being confirmed? 

Answer. Internally, I have ensured that the office is focused on our people-making 

sure that our personnel have a proper work environment and appropriate systems 

to work effectively. For example, as I testified, as of August 2016, OIG migrated to 

an independent IT system that is separate from the Department’s network. I have 

also worked to improve our management systems, especially with respect to supporting technology; quality assurance processes; and office culture. In addition, I implemented leadership training beyond that required by the Department, and we 

have provided ‘‘360’’ feedback for supervisors. 

Externally, we are working to identify and address the highest risks to the Department, while, at the same time, maintaining our own independence and effectiveFOREI-42327 with DISTILLER

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1 Until recently, we were also limited in our ability to hire employees from the Special Inspector General for Iraq Reconstruction (SIGIR), even though these individuals have unique expertise conducting oversight in conflict zones, which is the subject of much of our work. The Department of State Authorities Act, Fiscal Year 2017 addressed this issue by granting competitive 

hiring status to certain SIGIR employees. This language has already been beneficial. 2 In addition, because OIG lacks the ability to enforce compliance with its recommendations, 

it is helpful when Congress addresses the need to implement particular recommendations 

through legislation or similar action. See, e.g., H.R. Rep. 114-154, at 12-13 (2016) (recommending deferral of funding for the Bureau of Conflict and Stabilization Operations ‘‘until such 

time as the OIG confirms that the Bureau has resolved all fundamental issues involving the 

Bureau’s mission, the extent of its overlap with other bureaus, and interagency partners, and 

staff size and organization identified in both the OIG’s March 2014 inspection report of the Bureau and the subsequent compliance follow-up review’’); 161 Cong. Rec. H10413 (Dec. 17, 2015) 

(statement of Rep. Rogers) (directing Secretary of State to submit a report to the ‘‘Committees 

on Appropriations describing the actions taken by the Department to address the findings detailed in the Office of Inspector General’s Report ISP-1-15-35A’’). 

ness. For example, we use management assistance reports and management alerts 

to bring specific issues to the Department’s attention quickly, without waiting for 

the conclusion of longer-term audits or inspections. We have also shifted to a riskbased system for our inspections to ensure that we target our limited resources for 

the greatest effect. Similarly, we have adopted a strategic planning initiative to help 

us prioritize our work so that we use our resources efficiently. Finally, we created 

the Office of Evaluations and Special Projects in 2014 to address congressional requests, special assignments, whistleblower claims, and administrative misconduct. 

In efforts closely tied to these external reforms, I have ensured that our OCO 

oversight work is fully integrated into OIG’s overall mission. In particular, in collaboration with the inspectors general of the Department of Defense and the U.S. 

Agency for International Development, I have added personnel to fulfill our obligations under the Lead Inspector General for Overseas Contingency Operations (LIGOCO) oversight structure required by 2013 amendments to the Inspector General 

Act. Through these coordinated efforts, we provide LIG-OCO oversight of Operation 

Inherent Resolve in Iraq and Syria and Operation Freedom’s Sentinel in Afghanistan. 

Question. What challenges did you face in ensuring proper oversight of your respective agencies, and how have you worked to address those challenges? 

Answer. We have faced two primary challenges in ensuring proper oversight. 

First, my office has not been consistently afforded the opportunity to investigate 

allegations of criminal or serious administrative misconduct by Department employees. This occurred because Department components were not required to refer such 

allegations to OIG. This issue was addressed through recent legislation sponsored 

by Chairman Perdue and Ranking Member Kaine and signed by the President in 

December 2016. 

Second, our own hiring authorities do not adequately address the unique needs 

of this OIG and do not allow us to use some of the individuals we hire most effectively.1 Specifically, our office is required to inspect every embassy and post around 

the world and to assess, among other issues, how our ambassadors and other senior 

officials advance U.S. foreign policy goals. To accomplish this unique mission, we 

rely heavily on retired Foreign Service annuitants who have subject matter expertise necessary to conduct such inspections. In practical terms, however, Foreign 

Service annuitants generally cannot work more than 1,040 hours during each service year without incurring a reduction in their annuities. This, in turn, limits OIG’s 

ability to adequately staff its inspections, train its Foreign Service annuitants, and 

maintain continuity of operations. 

Question. How can we help you improve your oversight? Are there any reforms 

you are seeking that need a change in law to achieve? Please include any that we 

may have discussed during the hearing as well as any we did not have a chance 

to discuss. 

Congress can amend the Foreign Service Act so that OIG itself has the authority 

to waive a reduction in a retired Foreign Service officer’s annuity if OIG hires such 

an annuitant on a full-time basis. (Currently, OIG must request such a waiver from 

the Secretary, who must make certain determinations specified in the Act.) This 

would address the limitations described in the response to question 2(a) above.2

Question. In your testimony before this committee in one of our first hearings last 

year, you brought to light some serious issues and challenges the State Department 

Office of the Inspector General (OIG) faces, preventing your office from being as effective as you’d like to be. 

FOREI-42327 with DISTILLER

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♦ Can you provide a more in depth update on the issue of independence of the 

State Department OIG and integrity of investigations? 

Answer. With respect to independence, in last year’s testimony, I described OIG’s 

IT system as a major challenge. Previously, our network was connected to the Department’s systems, and vulnerabilities in the Department’s unclassified network directly affected us. In August 2016, we migrated to our own IT system. This improves 

both our independence and the integrity of our investigations by ensuring that Department personnel cannot access our documents and materials. 

With respect to integrity of investigations, as noted in response to question 2(a), 

we have not consistently been able to oversee misconduct cases effectively. This is 

because Department components were not required to refer allegations of misconduct by senior officials to OIG, an approach that was inconsistent with the practices of other agencies and inspectors general. However, as also noted in response 

to the previous question, legislation passed and signed by the President in December 2016 addresses this important issue. 

Question. During our hearing, we discussed some serious problems with management weaknesses at the State Department pertaining to keeping of all federal 

records—including personal emails—to meet both Department policy and federal 

regulations. 

♦ Could you discuss some of the recommendations you’ve made to the State Department on this front? 

Answer. In our May 2016 report addressing email records management and cybersecurity requirements, we made eight recommendations. Seven of these recommendations are resolved but remain open. This means that the Department has 

agreed with the recommendations but has not fully implemented corrective action. 

Two notable resolved but open recommendations are that the Department should: 

(1) continue to issue periodic, regular notices reminding employees that use of personal email accounts is discouraged and that these reminders should include examples of the limited circumstances where such use is appropriate and instruct employees how to preserve records when using personal email accounts; and (2) develop an administrative penalty framework for violations of the Department’s guidance on recordkeeping and use of authorized information systems. We also recommended that the Department develop a quality assurance plan to identify and 

address vulnerabilities in the records preservation process, including lack of oversight and broad inaccessibility of electronic records. The quality assurance plan was 

issued in December, and this recommendation has been closed. 

♦ Do you think it would be wise for the next administration to avoid the use of 

personal email accounts for official business? 

Answer. As we explained in our May 2016 report, Department guidance that has 

been in place since 2014 discourages employees from using personal email for official business except in ‘‘very limited circumstances when it becomes necessary to do 

so.’’ The Department further instructs employees that, in those limited circumstances, messages covering official business sent from or received in a personal 

account must be forwarded to the employee’s official Department email account so 

that they can be retained in accordance with the Department’s policies. Our report 

recommended that the Department clarify and give specific examples of the types 

of limited circumstances in which such use would be permissible. 

Question. You also recently published findings and recommendations on the State 

Department’s classification policies and compliance with Executive Order 13526, the 

executive order pertaining to the handling of classified national security information. You found that most of the State Department employees have not taken the 

training required by EO 13526 on how to handle classified information. 

♦ What are your priority findings and recommendations from this report? 

Answer. In addition to finding that employees had not taken training, we found 

that the Department had not implemented the sanction provision in the Executive 

Order that suspends an individual’s classification authority until training is completed. We recommended that the Department develop and disseminate guidance explaining how bureaus should monitor and enforce the mandatory classification 

training requirements for Department employees. We also recommended that the 

Department develop guidance explaining when contractors should take the relevant 

course. 

♦ How should the new leadership at the State Department prioritize this issue? 

Answer. These recommendations are resolved but remain open, meaning that the 

Department has agreed with the recommendation but has not fully implemented 

corrective action. It will be important for new leadership to ensure that all DepartFOREI-42327 with DISTILLER

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ment components follow through on these recommendations and comply with the 

classification requirements set forth in Executive Order 13526. 

Question. We also discussed how to best address potential conflicts of interest at 

the State Department going forward. As I mentioned during the hearing, I am particularly concerned by the use of the Special Government Employee (SGE) status, 

which allows these employees to collect salaries from public and private entities that 

operate in the same domain simultaneously. We have seen examples in the press 

over the past year of how State employees were able to work at organizations funded by governments receiving foreign aid from the United States while maintaining 

their role at our own State Department. 

♦ While I know your office has not done any direct work on this issue of conflict 

of interest and use of special government employees at State to date, are there 

other investigations currently ongoing on this issue that you are aware of? 

♦ Did you consider conducting an investigation into interactions between the Clinton Foundation and State Department employees? 

Answer. Our Office of Investigations handles matters involving Department employees with alleged conflicts of interest, but I cannot appropriately discuss whether 

we have contemplated or initiated any particular investigation. 

Question. You included in your testimony that the State Department still has 

major shortcomings on implementing your recommendations regarding physical security requirements, emergency planning, and health and safety hazards. That 

seems like a very serious issue to me, and yet it appears that many of the physical 

security issues are repeat recommendations. 

♦ How receptive has State been to your recommendations on physical security and 

keeping those serving at posts abroad safe? 

Answer. The Department has taken substantial steps to improve the physical security of its employees and has accepted many of our recommendations in this area. 

However, there are still weaknesses to be addressed, and, over the years, many of 

the physical security issues have led to repeat recommendations. To give one example, as I noted during my testimony, we concluded that 40 percent of the recommendations made by the Benghazi Accountability Review Board (ARB) were repeat recommendations that spanned decades and multiple administrations. Those 

recommendations had not been implemented because of a lack of involvement by 

high-level Department leadership; instead, many decisions were pushed down to the 

bureau level. To the Department’s credit, it recently amended the Foreign Affairs 

Manual to ensure that responsibility for implementation of ARB recommendations 

resides at the Deputy Secretary level. It will be important for new leadership to ensure that the most senior officials in the Department follow through on implementation of ARB recommendations and address repeat recommendations. 

OIG has also found that weaknesses in the Department’s efforts to address physical security are exacerbated by its failure to implement critical recommendations 

issued in a March 2014 OIG report. In that report, OIG recommended, among other 

things, that the Department complete physical security surveys and construct a security deficiency database, both of which are intended to improve the Department’s 

processes to request resolution of physical security needs and to prioritize those 

needs. OIG concluded in a December 2015 compliance follow-up report that, until 

the Department fully implements the March 2014 recommendations, it will be unable to identify and address all physical security-related deficiencies. Further, without taking such steps, the Department will be unable to make informed funding decisions based on a comprehensive, prioritized list of physical security needs. 

♦ What barriers have been identified to implementing these recommendations? 

Answer. In March 2014, we issued recommendations to improve the process to request funds for physical security. In response, the Department has developed new 

tools, including a new physical security survey instrument and a deficiencies database, to identify and track physical security deficiencies. However, our December 

2015 compliance follow-up report found that the Department had not fully implemented these tools. For example, only 143 physical surveys (covering about 10 percent of the Department’s facilities) had been completed, and none had been entered 

into the deficiencies database that the Department established in April 2015. The 

Department reported that all surveys would be completed and entered into the database by the end of fiscal year 2016, in line with its 3-year reporting cycle. However, 

in response to the follow-up report, the Department reported that, as of September 

30, 2016, it had completed only 50 percent of the required physical security surveys 

within that reporting cycle. OIG has requested that the Department provide the 

date it expects the remaining surveys to be completed and the actions it has taken 

FOREI-42327 with DISTILLER

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and will take to ensure that all survey reports are completed as soon as possible. 

Without a populated database, the Department cannot take action on two other recommendations related to prioritizing all deficiencies and developing and issuing a 

Long-Range Physical Security Plan. 

Question. Last year, we discussed the issue of the five-year inspection requirement for embassies. 

♦ Are you seeing any improvements in your ability to inspect embassies closer to 

their required schedule? 

Answer. The new risk-based model, tested in fiscal year 2016, is being fully implemented this year. In fiscal year 2017, we expect to shift resources to higher-risk inspections. As we work through implementation of this new model, we hope to conduct our inspections more quickly, efficiently, and effectively. 

We expect that an inspection of a low-risk post may be 4-5 days shorter than a 

medium- or high-risk post and conducted with a smaller team. However, we plan 

to inspect only one or two low-risk posts per cycle; the other posts will be mediumor high-risk posts or our large missions. The risk model will allow us to re-direct 

resources—both time and personnel—to those higher-risk posts that warrant increased oversight. We also plan on conducting subject-specific inspections in fiscal 

year 2017, which will focus on a single high-risk area (e.g., security) or program. 

Such inspections are not new, but we anticipate making them a more routine part 

of the inspection schedule. 

♦ Do you have the resources you need to inspect all posts overseas in addition to 

the rest of your very important oversight mandate? 

Answer. Use of a risk-based model will help us direct more resources to higherrisk posts, but, even with that model, we continue to lack the necessary resources 

to meet the mandated five-year schedule. 

Question. A common theme among both of your reports and testimonies was the 

challenges we face in administering aid and programs in non-permissive environments—places like Iraq, Syria, and Afghanistan. 

♦ What challenges do you face? Do you have to rely on partners to gain access 

to certain sites? 

Answer. The challenges that we face in overseeing aid and programs in non-permissive environments are similar to the challenges the Department itself faces. Security issues in those areas make it difficult, if not impossible, to travel and conduct 

oversight or monitoring. OIG does not generally rely on non-governmental partners 

to obtain access to those sites, but we sometimes require assistance from U.S. Government law enforcement personnel, military personnel, and post personnel or from 

host country partners. In addition, we sometimes compensate for our inability to 

travel to particular locations by meeting with grantees in third countries or by 

meeting with contractors at an embassy. OIG has auditors and special agents on 

the ground in Kabul, Islamabad, and Baghdad, in close proximity to contracting officer representatives, contractors, and program managers. 

♦ Are you seeing greater access issues for investigation, as well as greater oversight challenges at State, as our forces draw down in Afghanistan? 

Answer. Generally, in unstable areas with security concerns, it is more difficult 

for us to conduct oversight work because our movement is limited. This is an issue 

in Afghanistan, but it is not unique to Afghanistan. 

Question. You’ve highlighted in your testimony the challenge of providing adequate oversight of contracts and grants overseas. In your testimony, you state that 

while State has focused efforts on improving management of contracts and grants, 

that the Department is still forced to rely heavily on contractors and grantees, especially in conflict areas, and that your office continues to find instances of insufficient 

oversight. In particular, your office continues to find that State partners fail to do 

risk assessment, especially in conflict areas. 

♦ As State and USAID continue to prioritize the local ownership and involvement 

that comes with contracts and grants, what recommendations do you have for 

them to improve the design, management, and oversight of these programs? 

Answer. As a general matter, we have identified oversight deficiencies related to 

a lack of performance monitoring. In particular, we have identified a lack of site visits, inadequate internal controls, and over-reliance on easily measured ‘‘outputs’’ to 

measure program success. We have also identified problems in ensuring that these 

programs are sustainable in the long-term. Our recommendations have focused on 

specific flaws (such as a lack of on-site monitoring) as well as the need to improve 

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3 Additional Actions Are Needed To Fully Comply with Section 846 Of The National Defense 

Authorization Act for Fiscal Year 2013 Concerning Critical Environment Contracting (AUDMERO-16-50, Sept. 2016). 

performance measurements and coordination with other entities, both inside and 

outside the Department. 

♦ How receptive has State been to these recommendations? 

Answer. The Department has made efforts to improve contracts and grants monitoring, but we continue to identify deficiencies, particularly with respect to program 

management. As noted previously, some of these flaws relate to systemic issues 

within the Department, namely, the lack of contracting and grant expertise, short 

rotations, and a general lack of focus on accountability for grant and contract oversight and performance. 

Question. In your testimony, you state that your office was particularly concerned 

with the absence of mitigating action plans for high-risk areas concerning oversight 

of contractor operations, and that this is an issue your office has raised repeatedly 

having issued four reports in the last two years identifying these problems. 

♦ Can you give us a more detailed update on how State has gone about implementing these recommendations? 

Answer. Our September 2016 audit report3 specifically addressed this issue. We 

recommended that the Department develop a process to ensure that risk mitigation 

plans for each high-risk area identified in a risk assessment has a specific mitigation action; we also recommended that the Department develop controls to ensure 

that each risk mitigation plan includes measurable milestones for implementation 

and a process for monitoring, measuring, and documenting progress in mitigating 

or reducing risk. The Department concurred with both recommendations and stated 

that it is in the process of implementing them. We will continue to monitor that 

implementation. 

♦ What’s hindering State from implementing your repeated recommendations? 

Answer. The issues that have hindered the Department’s effective oversight of 

contractor risk in high-risk areas relate to the same issues noted previously. In particular, there is often insufficient staffing; inadequate training, particularly for highvalue contracts; and little emphasis on program management and accountability. 

♦ How would you recommend changing the design of State’s management and 

oversight plan for these high risk areas? 

Answer. Our recommendations regarding risk mitigation plans for contractors operating in critical environments provided specific recommendations to assist the Department in monitoring and measuring risk mitigation. 

Question. We discussed briefly GAO’s report from July of this year which highlighted the fact that of those implementers sampled, less than half had not performed a risk assessment for fraud and loss in Syrian assistance projects. This same 

report also discussed the finding that U.S.-funded humanitarian assistance projects 

in Syria are prone to more elevated risks than programs funded by other nations. 

♦ Given this information, and given that fraud and loss are the two categories for 

which you have the highest numbers of reported complaints, do you feel that 

a risk assessment for fraud and loss should be a requirement for any implementer distributing U.S. foreign aid? Why or why not? 

Answer. Our primary recommendation with respect to foreign assistance is that 

the Department establish a system to track and manage that assistance. Risk assessments for fraud and loss may be helpful, and we believe that consistent application of existing risk assessment processes would improve outcomes. However, we 

also believe that an important preliminary step is ensuring that the Department 

can accurately identify the amount of taxpayer funds that are being provided in foreign assistance. Without this basic information, the Department cannot effectively 

coordinate with other agencies and organizations, cannot provide accurate information to the Office of Management and Budget, and cannot ensure that foreign assistance is appropriately monitored and accounted for. 

PREPARED STATEMENT OF HON. ANN CALVARESI BARR

Chairman Perdue, Ranking Member Kaine, and members of the subcommittee, 

thank you for inviting me to take part in this important hearing to help inform the 

next administration and the incoming Congress on the current challenges in proFOREI-42327 with DISTILLER

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1 Created in 2004, MCC competitively selects countries that demonstrate commitment to good 

governance, economic freedom, and investment in citizens, and provides them with large-scale 

grants to fund projects that promote sustainable economic growth, open markets, and improved 

living standards. 2 Created in 1980, USADF provides small development grants to underserved and 

marginalized populations in conflict and post-conflict areas in Africa. 3 Created in 1969, IAF provides small development grants directly to grassroots and nongovernment organizations in Latin America and the Caribbean. 4 Created in 1971 as the U.S. Government’s development finance institution, OPIC mobilizes 

private capital to help solve critical development challenges abroad. 

viding U.S. foreign assistance. As you know, since the U.S. Agency for International 

Development (USAID) was established in 1961, successive Congresses and administrations have consistently supported the United States’ continued leadership in 

international engagement, reinforcing financial and security interests and building 

and strengthening ties around the world. 

As Inspector General, I am charged with leading the independent oversight of up 

to $15 billion spent annually on foreign assistance provided through USAID, the 

Millennium Challenge Corporation (MCC),1 the U.S. African Development Foundation (USADF),3 the Inter-American Foundation (IAF),3 and the Overseas Private Investment Corporation (OPIC).4 Today, I will focus on USAID and the major management challenges the Agency faces in carrying out its mission. I will also highlight 

OIG’s numerous initiatives and reforms for advancing my vision for a high-performing organization—one that provides comprehensive, timely, and risk-based assessments of USAID programs and operations, and keeps Congress informed of our 

work on USAID and the other foreign assistance entities we oversee. 

SUMMARY

The complex and frequently inhospitable environments USAID works in create 

major challenges for the Agency in carrying out its mission. Among these challenges, we identified five that need particular attention in fiscal year 2017. These 

challenges stem largely from the complexities in coordinating and implementing foreign assistance efforts jointly with multiple and diverse stakeholders; a lack of local 

capacity and qualified personnel to execute USAID-funded projects; and weak 

project design, monitoring, and internal controls. Weaknesses in these areas limit 

the impact of USAID projects or derail them before they began; leave programs vulnerable to fraud, waste, and abuse; or both. The magnitude of our investigations related to humanitarian assistance programs in Syria demonstrate the extent to 

which USAID programs can be vulnerable to exploitation. Our investigations exposed fraud schemes involving collusion between vendors and implementers, product 

substitution, inflated billing, and false claims. While USAID has suspended several 

implementing partner programs, vendors, and individuals, these abuses raise serious concerns about implementers’ contracting processes and USAID’s oversight of 

them. 

To provide the level of oversight needed to help USAID address these complex 

challenges, OIG has capitalized on opportunities I identified to improve our operations—with independence as our grounding principle. Since I was sworn in a year 

ago, OIG has significantly advanced my vision for a high-performing organization. 

That vision begins with how we scope and execute our work. In addition to auditing 

and investigating individual USAID programs and projects, we are now targeting 

weaknesses that cut across USAID and the other entities we oversee in areas such 

as human capital management and training; vetting implementers of USAID programs; coordination among U. S. Government agencies; and efforts to strengthen financial and information technology management. This crosscutting work will provide solutions that link headquarters-based strategies to field-level implementation. 

To better position my staff to carry out this work, I have launched a number of initiatives, some of which have already been completed. 

♦ First, I added more rigor to how we prioritize our work and coordinate with 

oversight partners. Our new audit and investigation plans assess risk, follow 

high-dollar initiatives, and account for stakeholders’ informational and decisionmaking needs, while providing the flexibility to pivot to emerging oversight 

needs. 

♦ Second, I called for multidiscipline teams comprising audit and investigations 

staff from headquarters and the field, as well as technical experts such as methodologists, writers, and information technology specialists. To provide for controlled engagement of these cross-cutting teams, I consolidated 11 overseas ofFOREI-42327 with DISTILLER

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5Public Law 87–195, September 1961. 

6 In addition to base appropriations, OIG draws on other sources of funding, which include 

supplemental appropriations, prior year balances, and reimbursements from the agencies we 

oversee to fully support our work. 7 Reports Consolidation Act of 2000, Public Law 106–531. 

fices to 4 hub offices, with heads of audit, investigation, and management involved in every aspect of their units. 

♦ Third, I have taken steps to revitalize our workforce. Notably, I recruited new 

leaders to strengthen OIG’s executive team, elevated performance standards, 

and commissioned a review to identify the training and resources staff need to 

succeed. To help ensure these steps take root, I am holding OIG executives, 

managers, and supervisors accountable for workplace inclusivity and excellence. 

♦ Finally, I have taken action to solidify our independence. Within weeks after my 

confirmation, I established a cooperation memorandum with the USAID Administrator to formalize OIG’s authority, and we are working to take back responsibility for assessing actions taken to address our recommendations. We continue 

to develop and implement major reforms, including revisiting audit and investigation policies and procedures, to provide reliable and meaningful oversight, 

while being good stewards of taxpayer dollars. 

BACKGROUND

With the passage of the Foreign Assistance Act and the establishment of USAID 

55 years ago, the United States solidified its bipartisan commitment to address 

basic human needs and advance the rights of the world’s most disenfranchised people, and thereby encourage adoption of our Nation’s core values.5 While U.S. foreign 

assistance remains rooted in humanitarianism, it has evolved over the decades to 

emphasize development, economic stability, and sustainability. Today, professionals 

work around the world to help promote democracy and free markets, while aiding 

individuals and nations struggling to recover from natural disasters and health crises, rebuild after years of conflict and war, and achieve freedom and dignity. 

USAID is the principal U.S. agency for providing development assistance to countries around the world: USAID programs aim to support economic growth, combat 

the spread of disease, promote democratic reform, and address food insecurity. The 

agency also provides assistance to countries working to alleviate poverty, and recovering from disaster or periods of conflict. USAID undertakes development and humanitarian assistance activities to expand stable, free societies and create markets 

and trade partners for the United States. Headquartered in Washington, D.C., with 

missions around the world, USAID works with private voluntary organizations, indigenous organizations, universities, the private sector, international agencies, foreign governments, and other U.S. Government agencies. 

My office provides independent oversight of USAID operations and programs, as 

well those of MCC, USADF, IAF, and OPIC. With an amendment to the Inspector 

General Act in 2013, my OIG also provides joint oversight of overseas contingency 

operations. Currently, we partner with the Departments of State and Defense OIGs 

on Operation Inherent Resolve (OIR), the operation dedicated to countering the terrorist threat posed by the Islamic State of Iraq and the Levant in Iraq, Syria, and 

the surrounding region. 

We currently have 275 staff working at headquarters in Washington, D.C., and throughout the world. Our fiscal year 2016 base appropriation was $66 million.6

TOP MANAGEMENT CHALLENGES USAID CONFRONTS IN

IMPLEMENTING ITS PROGRAMS AND OPERATIONS

USAID frequently works in environments affected by conflict or civil unrest, natural disasters, or disease. These inhospitable environments create major challenges, 

including protecting overseas agency personnel and accessing project locales for 

monitoring. Local laws and restrictions, political repression, corruption, and travel 

constraints create additional challenges, including coordinating and communicating 

with implementing partners and other stakeholders to formulate and execute 

projects. 

Given the dollars and programs that are at stake, our office provides continued 

oversight of USAID and other U.S. foreign assistance operations to identify opportunities and make recommendations for improvement. As required by law, we report 

each November on the top management challenges facing the agencies we oversee.7

USAID has taken many actions to respond to our recommendations, as well as other 

constructive actions to achieve its mission. However, we identified five top management challenges for USAID in fiscal year 2017. These challenges stem largely from 

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8Office of Transition Initiatives, ‘‘Lessons Learned: Monitoring and Evaluation in Complex, 

High-Threat Environments,’’ April 2010. 9 ‘‘Audit of USAID/Afghanistan’s Strategy for Monitoring and Evaluating Programs Throughout Afghanistan,’’ Report No. F-30616-001-P, December 10, 2015. 10Statement before the Committee on Foreign Affairs Subcommittee on the Middle East and 

North Africa, United States House of Representatives, ‘‘Fraud Investigations Expose Weaknesses in Syria Humanitarian Aid Programs,’’ July 14, 2016. 

the complexities in coordinating and implementing foreign assistance efforts jointly 

with multiple and diverse stakeholders; a lack of local capacity and qualified personnel to execute USAID-funded projects; and weak project design, monitoring, and 

internal controls. 

Developing strategies to work effectively in nonpermissive and contingency environments 

USAID acknowledges that working in nonpermissive and overseas contingency environments— environments characterized by conflict, government instability, or cataclysmic natural events—is one of its longest-standing operational challenges. Challenges include finding qualified contractors and grantees willing to work in dangerous environments, protecting overseas agency personnel, and gaining access to 

project locales for appropriate monitoring. 

USAID’s Office of Transition Initiatives notes that the ‘‘nature of these environments requires flexible responses and iterative processes adapted to specific country 

contexts.’’ 8 For example, to compensate for the drawdown of U.S. Armed Forces and 

reductions in USAID staff in Afghanistan, USAID planned to use multitiered monitoring to leverage data and observations from U.S. and Afghan Government sources, 

other donors, USAID partners, beneficiaries, and contractors hired to monitor activities. However, as we reported in December 2015, USAID/Afghanistan could only 

demonstrate that 1 of the 127 awards made between January 2013 and September 

2014 used multitiered monitoring.9 The mission’s limited use of multitiered monitoring was largely due to insufficient guidance and monitoring plans, as well as a 

lack of systems for collecting and using data. 

Moreover, relying on ad hoc approaches to design, implement, and monitor programs in environments designated as nonpermissive can leave programs vulnerable 

to fraud, waste, and abuse. For example, in Afghanistan, we found cases of contract 

steering, contractor overbilling and overcharging, bribe solicitation, fraudulent hiring practices by contractors, and embezzlement by a contractor employee. Our investigations in Nigeria similarly demonstrate program risks in nonpermissive environments. One investigation and subsequent OIG audit determined that more than a 

third of a $17 million award for an AIDS-related health-care program was diverted 

for personal use or misdirected from the project. The magnitude of our investigations related to humanitarian assistance programs in Syria provide a case study of 

the extent to which USAID programs can be vulnerable to exploitation. As we testified in July, our investigations exposed fraud schemes involving collusion between 

vendors and implementers’ procurement and logistics staff.10 We also identified 

product substitution schemes (food and nonfood items), inflated billing, and false 

claims. While USAID has suspended several implementing partner programs, vendors, and individuals, these abuses raise serious concerns about implementers’ contracting processes, including using less than full and open competition; the rigor and 

timeliness of their responses to allegations of fraud; and their logistics, quality control, and monitoring procedures. They also raise questions about USAID’s oversight 

of implementers and their progress. 

To help USAID and its implementing partners combat fraud in nonpermissive environments, our Office of Investigations developed a quick reference guide that covers internal control deficiencies, fraud indicators, and best practices for preventing 

fraud. The guide was designed for the Middle East humanitarian response but is 

useful for USAID programs in other regions. While the guide has already proven 

to be an effective tool, assuring stakeholders that programs are not susceptible to 

fraud and waste will remain a challenge for USAID until oversight gaps have been 

identified and closed. 

Strengthening local capacity and sustainability while ensuring adequate oversight of 

USAID funds 

To better ensure local partners can sustain USAID-supported development 

projects, the Agency calls for investing in communities that have a stake in continuing activities and services after USAID involvement ends, building the skills of 

local stakeholders, and ensuring public- or private-sector participation and financial 

backing. While sustainability has been a precept of development programs since the 

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11 In 2010, USAID launched USAID Forward, a series of reforms to focus on results, promote 

sustainable development, and scale up innovative solutions. 12 U.S. Government Accountability Office, FOREIGN AID: USAID Has Increased Funding to 

Partner-Country Organizations but Could Better Track Progress (GAO-14-355), April 16, 2014. 13Department of State, ‘‘2010 Quadrennial Diplomacy and Development Review: Leading 

Through Civilian Power.’’ 

enactment of the Foreign Assistance Act in 1961, the ability of some host countries 

to sustain USAID programs remains uncertain. Consider the following examples: 

♦ As we reported in 2016, 5 of 19 USAID-funded road construction projects in the 

West Bank show signs of deterioration. A mission-commissioned study found 

that due to competing budget priorities, the Palestinian Authority did not allocate funds from fuel-tax revenue to support road maintenance. Consequently, 

USAID-funded road projects will not be fully sustainable until the authority 

dedicates tax revenue to maintain these critical civic resources. 

♦ Under the terms of its contract with USAID, Haiti’s health ministry was expected to assume some costs for a health services project. However, the project 

lacked a plan to transfer responsibility for paying health worker salaries at 80 

health-care facilities from USAID to other sources after the project ends. Contractor officials assumed that because the Haitian Government could not pay 

the salaries, USAID or other donors would continue to pay them. 

USAID’s Local Solutions initiative, a reform strategy under USAID Forward, has 

not always met expectations.11 The Local Solutions initiative aims to promote country ownership and sustainability of development outcomes by providing program 

funding directly to partner governments and local organizations. However, securing 

host country commitment to sustain USAID’s investment, vetting local capacity to 

manage funds in accordance with U.S. regulations, and planning and monitoring 

have presented major challenges in missions’ implementation of the initiative. Take 

the following examples: 

♦ USAID/Paraguay implemented a program through a local organization to 

strengthen the internal management and government systems of select public 

institutions. However, the mission failed to ascertain in its preaward survey 

that the organization lacked sufficient financial and managerial capacity to 

manage USAID funds, assess results, or track program progress—ultimately 

putting $24.4 million at risk. 

♦ Our investigations of local implementers revealed risks consistent with our 

audit findings. Most of the cases we surveyed involved allegations of inappropriate or fraudulent actions taken by senior or key staff, pointing to a propensity for weak corporate governance. We also found that local implementers typically failed to self-disclose fraud to the Agency or OIG. 

The U.S. Government Accountability Office (GAO) pointed out that USAID relied 

primarily on a single indicator—funds obligated—to measure Local Solutions’ 

progress, not what these investments yielded.12 Without more robust indicators, 

such as risk assessments and program monitoring, GAO found that USAID cannot 

determine the status of activities prior to and following the obligation of funds. Further, while USAID has laid some groundwork for evaluating the Local Solutions initiative, the Agency has not demonstrated it has the means to determine the extent 

to which missions are conducting performance evaluations to assess the effectiveness of programs implemented through local organizations. 

Reconciling interagency priorities to advance international development 

In carrying out contingency and other operations that require coordination with 

multiple U.S. Government agencies, USAID employees are sometimes unclear as to 

how to balance USAID’s development priorities with other agencies’ priorities and 

to manage additional layers of review. 

This was the case with the implementation of the Enhanced Partnership with 

Pakistan Act (EPPA) of 2009, which authorized $7.5 billion over 5 years for civilian 

assistance. The State Department has the lead role in assistance activities in Pakistan, giving it responsibility for budget and project decisions.13 As we reported in 

September 2016, USAID/Pakistan has struggled to reconcile its long-term development objectives with State’s diplomatic aims. At the outset, USAID/Pakistan followed State’s strategy, which lacked long-term development goals. In 2013, the mission implemented a formal strategy that linked activities to a long-term development goal but lacked indicators to measure progress. The strategy also focused on 

repairing and upgrading Pakistan’s energy infrastructure—mirroring State’s focus 

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on energy as key to long-term growth—but not on other priority areas, such as 

health, education, and economic growth. 

The difficulties USAID and State have confronted in implementing EPPA revealed 

a trend. For a previous audit of USAID and State’s response to the protest movements across the Middle East, known as the Arab Spring, we surveyed 70 USAID 

employees working on programs in Egypt, Tunisia, Libya, and Yemen to identify the 

challenges they faced. According to surveyed staff, the State Department’s increased 

influence over USAID programs after the Arab Spring added a layer of review that 

slowed operations and strained USAID resources, as employees had to dedicate additional time to building consensus and gaining external parties’ approval. 

As a result of our EPPA audit, we recommended that USAID institute an interagency forum to better ensure its development goals are taken into account in countries where State takes the lead. In response, USAID’s Administrator has engaged 

State Department leadership to discuss solutions, including better reconciling any 

conflicting interests at the beginning of planning and programming, to help USAID 

and State pursue their respective objectives simultaneously. We also recommended 

that USAID formalize its policy to clearly define its roles and responsibilities for designing and implementing development programs when it is subject to State Department control in critical priority countries. 

Improving program design and contractor and grantee monitoring 

Poor design can limit the impact of USAID projects or derailed them before they 

begin. For example, contract flaws, such as a lack of clear deliverables, complicated 

the implementation of an $88 million agricultural program in Haiti. In addition, a 

procurement design issue resulted in a lengthy award approval process and difficulties in implementing emergency programs to address food shortages caused by quarantines, border closures, and a depleted farm workforce delayed USAID’s Ebola response in Guinea, Liberia, and Sierra Leone— the countries most affected by the 

outbreak in West Africa. In both cases, insufficient or inexperienced staff contributed to the programs’ poor designs. 

Performance monitoring of contractors and grantees has been undermined by persistent weaknesses in collected and reported data. For example, in September 2016, 

we reported that our prior audits of USAID missions in Egypt, Jordan, and West 

Bank and Gaza between fiscal years 2011 and 2013 consistently found instances of 

unreliable data. We also reported that these missions did not adequately develop or 

use internal controls—policies, procedures, systems, or other tools—to ensure quality data, monitoring, and evaluation. The weaknesses stemmed from staffing shortages, lack of employee training, and managers’ lack of enforcement, as well as from 

frequently shifting budgets and priorities. 

Our audit and investigation work also points to a need for USAID to provide more 

rigorous monitoring to identify contractors and grantees who take advantage of 

weak internal controls to commit fraud, waste, or abuse. For example, our investigations uncovered fraud in two USAID health programs. In one case, a West African 

was charged with defrauding a USAID-supported antimalaria program of more than 

$12 million in funds intended for insecticide-treated nets. To curb such fraud, our 

office set up malaria hotline campaigns in three countries, which have led to joint 

operations with the host nations’ law enforcement and seizures, arrests, and prosecutions. In the second case, a USAID employee shared sensitive procurement information with a favored candidate for a $55 million cooperative agreement. As a result of our investigation, USAID stopped the procurement process that prevented 

the agreement from being improperly awarded. 

Meeting governmentwide financial and information management requirements 

Longstanding internal control weaknesses have limited USAID’s ability to meet 

some of the Federal Government’s financial management requirements—established 

to better ensure agencies are effective stewards of Government resources. Some reported weaknesses relate to reconciling transactions between USAID and other Federal agencies—which are typically recorded in different accounting periods or use 

different methodologies. Treasury reported that as of September 30, 2016, USAID 

had more than $3 billion in unreconciled transactions with other agencies. Although 

USAID has increased its efforts and continually researches intragovernmental activity to resolve unreconciled amounts, differences persist. Reconciling differences between USAID’s Fund Balance with Treasury account and the Department of Treasury’s records has also been problematic. As of September 30, 2016, the net difference 

between USAID’s general ledger and the amount in Treasury’s records was approximately $195 million— $141 million of which cannot be explained. 

USAID has taken great strides in implementing the complex requirements of the 

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14The Federal Information Security Modernization Act of 2014 (Public Law No. 113-283) updated and largely supersedes the Federal Information Security Management Act of 2002 (Public 

Law No. 107-347, Title III) but retains many of the requirements for Federal agencies’ information security programs previously set by the 2002 law. 15 Executive Order 13526 (2009). 

nificant deficiencies.14 However, concerns remain. Notably, the USAID chief information officer (CIO) reported to the assistant administrator for the Bureau of Management—not directly to the agency Administrator or Deputy Administrator, as required. As a result, the CIO may have limited authority in ensuring information 

technology projects and actions are funded, tracked, and prioritized at a level commensurate with the direction and goals of the Agency as a whole. In addition, 

USAID did not maintain the appropriate segregation of duties. Specifically, one staff 

member carries out the roles of both the deputy CIO and the chief information security officer. As a result, the individual not only performs security control activities 

but reviews those activities for compliance with FISMA, calling into question the 

independence of USAID’s FISMA compliance reviews. 

Finally, USAID’s classification policy does not meet Federal requirements for establishing a uniform system for classifying, safeguarding, and declassifying national 

security information.15 We found systemic noncompliance related to security education and training, classification markings and guidance, and reporting of program 

activities and results. 

OIG REFORMS AND INITIATIVES FOR ACHIEVING GREATER IMPACT

OIG’s portfolio of work helps ensure USAID and the other entities we oversee not 

only meet their mission objectives but achieve the highest return on taxpayer investment—a standard our office continues to model. For every dollar we spent in 

fiscal year 2016, we identified more than 3 dollars in questioned costs, funds put 

to better use, and investigative savings and recoveries. While I am proud of these 

accomplishments, we can improve our operations to achieve greater returns on investment, have a more profound impact on agency outcomes, and keep Congress and 

other stakeholders fully informed. 

Since I was sworn in as Inspector General a year ago, I have taken a comprehensive and critical look at our operations and identified opportunities to improve how 

we work—with independence as our grounding principle. In just 1 year, OIG has 

significantly advanced my vision for a high-performing organization. 

That vision begins with how we scope and execute our work. While auditing and 

investigating individual USAID programs and projects around the world can yield 

findings that demand action and help individual missions improve their operations, 

this approach does not always get at the systemic causes of the problems we uncover. Therefore, we are targeting our work to identify weaknesses that cut across 

USAID, MCC, USADF, IAF, and OPIC in areas such as human capital management 

and training and vetting implementers of USAID programs; coordination among implementers; and efforts to strengthen financial and information technology management. By looking across programs and projects and all the agencies we oversee, our 

work will have greater impact at the agency level and provide solutions that link 

headquarters-based strategies to field-level implementation. 

A number of completed and ongoing initiatives that I have launched will better 

position OIG staff to carry out this oversight. First, we have added more rigor to 

how we prioritize our work and coordinate with oversight partners. Our new audit 

and investigation plans assess risk, follow high-dollar and crosscutting initiatives, 

and account for stakeholders’ informational and decision-making needs. For example, our ongoing audit of the Power Africa program will determine whether projects 

in this complex program—which requires extensive coordination among USAID, 

MCC, OPIC, USADF, and other Federal components; multiple African governments; 

and private industry—are on track to achieve the program’s goal to greatly expand 

access to electricity in sub-Saharan Africa by providing at least 60 million new 

households and businesses with on- and off-grid power solutions. 

At the same time, our plans provide the flexibility to pivot to emerging oversight 

needs. Our global health work provides examples. Notably, we have identified lessons learned from USAID’s response to the Ebola outbreak to help inform and readily assess USAID’s preparedness to respond to future public health emergencies, 

such as the Zika virus in Central and South America. Similarly, to provide comprehensive oversight of USAID’s recent award of a $9.5 billion global health supply 

chain program for purchasing and distributing life-saving medicine and health supplies, we continued our ‘‘Make a Difference’’ campaign, establishing confidential hotlines for reporting fraud; joined an interagency Malaria Drug Theft Task Force; and 

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16Our agents have provided fraud awareness training to 142 prime implementer and subcontractor staff in Washington, D.C., and approximately 160 procurement and supply management 

project staff in Nigeria, and conducted risk analysis meetings, addressing vulnerabilities in financial and operational accountability, with USAID and the prime implementer. 17 USAID Office of Foreign Disaster Assistance. 18 USAID OIG and State OIG have provided 5 joint fraud awareness presentations to 83 implementer staff in Jordan to help combat fraud in Syria. 19 Central/South America, Eastern Europe/Middle East, Asia, and Africa. 

conducted targeted outreach.16 These initiatives have yielded significant results. For 

example, our investigations led to the seizure of stolen USAID-funded antimalarial 

medications from 8 of the 17 locations in Malawi that were searched, and the arrest, 

conviction, and sentencing of 6 individuals. Our investigations work has also 

brought to light vulnerabilities in the security of other supplies, including HIV/AIDS 

test kits. 

Joint oversight of initiatives such as OIR also demands upfront planning and ongoing coordination. Therefore, in stepping up our scrutiny of OIR and other initiatives that involve multiple agencies, we continue to expand collaborative efforts with 

our oversight partners. Over a third of one USAID office’s implementers responding 

to the Syria crisis also receive State Department funding,17 so we are working with 

State OIG to provide fraud awareness briefings to implementers18 and are currently 

conducting three joint investigations. We are also collaborating with our oversight 

counterparts at other bilateral donors and public international organizations 

through the Syria Investigations Working Group, which OIG stood up in October 

2015. Programmatic and budgetary overlaps of USAID, U.N. agencies, and public 

international organizations are associated with potential vulnerabilities and are investigative interests. Public international organizations, such as the United Nations 

World Food Programme, collectively receive about 40 percent of USAID’s budget for 

the humanitarian response in Syria. To date, we have sent 32 referrals to group 

members and foreign law enforcement offices. 

Second, OIG teams now include staff from across our organization to facilitate and 

encourage coordination between audit and investigation as well as headquarters and 

the field. To support these cross-cutting teams, I reorganized our office, consolidating 11 largely independent overseas offices to 4 strategically located hub offices,19 which allows for controlled engagement, with heads of audit, investigation, 

and management involved in every aspect of their units. I also realigned our management structure to enable us to better target our oversight on foreign assistance 

activities susceptible to fraud, waste, and abuse, and on programs and functions 

that present the most challenges to plan and implement. For example, our investigations raised questions about USAID’s oversight of funds provided to public international organizations, prompting us to conduct an audit looking at how USAID assesses risks prior to award, mitigates any risks during implementation, and monitors public international organization programs. The realignment also builds in 

inclusivity and employee engagement in decision making and obtain buy in. 

Third, I have instituted a number of actions to revitalize our greatest asset— 

human capital. Within the first few months of my tenure as Inspector General, I 

recruited new leaders to strengthen OIG’s executive team and established high 

standards for myself and our leaders, providing them the training and tools they 

need to succeed, including 360 feedback and coaching. To make the most of our investment in employee development, we started a top-down review of staff skill levels 

and capabilities. OIG is also elevating performance standards across the board and 

holding OIG executives, managers, and supervisors accountable for workplace 

inclusivity, civility, and improved performance. These measures have paid quick 

dividends, as our leaders and front-line staff have already proven that they have 

the capacity and drive to meet the standards. Ensuring our staff receive fair and 

reasonable compensation for their work is also paramount. To that end, I am seeking to align our system of pay for Foreign Service investigators with that of the rest 

of the Federal law enforcement community to provide for a level playing field in recruiting and retaining these dedicated professionals. 

I am also standing up a Quality Assurance Team to continuously monitor the execution of our work and ensure it and our corresponding policies and procedures meet 

the highest standards set by law and regulations, the accountability community, 

and our office. To further build quality into our work, I hired a communication manager to establish a writing team that fully participates in audit engagements, bringing unique critical thinking skills in developing high-impact reports; a training director to improve employee development processes; and a business process engineer 

to analyze and revise as needed our policies, processes, and procedures. We have 

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1Statement on Top Management Challenges for USAID and MCC Fiscal Year 2017 (Nov. 15, 

2016). 

already begun to institute new streamlined processes for developing more robust 

and responsive audit reports and cleared a backlog of our investigative cases. 

Finally, our work and the processes we employ must be completely independent. 

Within weeks after my confirmation, I established a cooperation memorandum with 

the USAID Administrator to formalize OIG’s authority to have full access to the documentation and people our auditors and investigators need to carry out our mission. 

To further solidify our independence, we have plans under way to reverse a longstanding practice and take back responsibility for assessing actions taken to address 

our recommendations and determining whether these actions are timely and meet 

our intent. I am also seeking clarification regarding our audit authority over OPIC. 

Because OIG does not have full authority to oversee OPIC programs and operations, 

we currently conduct audit and other activities under an annual agreement that has 

been subject to negotiation, limitations, and delays. This middle ground is untenable. Therefore, we are looking to engage with Congress and other stakeholders to 

find a more permanent solution that aligns with the Inspector General Act. 

Our ongoing and planned audits and investigations will help USAID address the 

challenges we identified and link the Agency’s strategic goals with their tactical implementation. During fiscal year 2017, we will continue to develop and implement 

major reforms to ensure our dedicated workforce at headquarters and around the 

world have the policies, processes, training, technologies, and other tools needed to 

provide reliable and meaningful oversight and, more importantly, to be good stewards of taxpayer dollars. I am confident that we will enter the next fiscal year in 

a position to make these reforms standard business practices that will last for years 

to come. 

I am as passionate about our oversight role today as I was when I first began 

working in the accountability community 3 decades ago. I remain committed to ensuring that USAID and the other foreign assistance entities we oversee prudently 

use every dollar they get. Given the environment and risk that foreign assistance 

programs work in, this is no easy task, but it makes our work—along with this Subcommittee’s oversight and commitment—even more compelling and needed to ensure we get it right. 

This concludes my prepared statement. I will be happy to answer any questions 

you may have for me at this time. 

RESPONSES TO ADDITIONAL QUESTIONS FOR THE RECORD SUBMITTED

TO ANN CALVARESI BARR BY SENATOR PERDUE

Question. Thank you again for your recent report on major management and performance challenges for USAID, and for briefly outlining a few of the highlights in 

your testimony. Though we discussed a few of these challenges and recommendations during the hearing, please outline your top three issues in more detail. 

♦ Outside of your reports, what hindrances do you see to better management and 

operations? 

♦ Are there inherent cultural challenges that lead to these management issues? 

What will the incoming administration need to be aware of/take on in that regard? 

Answer. Our November 15, 2016, report identified five top management challenges for USAID.1 Foremost among these are (1) improving program design and 

contractor and grantee monitoring; (2) strengthening local capacity and sustainability while ensuring adequate oversight of USAID funds, and (3) reconciling interagency priorities to advance international development. These challenges are exacerbated by nonpermissive environments and lack of effective information technology 

and financial management systems. 

• Sound design, monitoring, and evaluation are critical to the successful implementation of foreign assistance programs. Effective design helps ensure programs have the resources needed to achieve objectives, while program monitoring and evaluation help implementers and missions identify and address 

fraud and other risks that prevent programs from achieving desired results. 

Our audit work revealed persistent weaknesses in design in Egypt, Jordan, and 

the West Bank. Similarly, our investigations revealed widespread corruption in 

cross-border programs in Syria and other parts of the world, which point to lack 

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cant shortcomings in internal controls around procurements and aid distribution by WFP in the Syria program bring into question whether USAID is doing 

enough to ensure U.S. taxpayer funds being spent through Public International 

Organizations (PIOs) are adequately protected. Ultimately, shortcomings in 

USAID’s program design and monitoring have weakened its ability to ensure 

programs have the resources needed to achieve objectives and identify and address fraud and other program risks. 

• USAID invests in development projects that it expects can be supported locally 

and have a lasting impact. However, our work consistently points to concerns 

about the level of assurance USAID has in achieving sustainability in its programs. Efforts under USAID’s Local Solutions initiative, a reform strategy 

under USAID Forward, have similarly fallen short of expectations. Our reports 

have identified challenges in missions’ implementation of the initiative. Until 

the Agency fully assesses the capacity of host countries or government and local 

entities and enhances oversight, USAID funds will remain at risk. 

• Contingency operations and other foreign assistance efforts require coordination 

with multiple U.S. Government agencies. However, USAID’s development priorities do not always align with other agencies’ priorities, making it difficult for 

USAID to achieve its core development mission. In particular, coordination with 

the State Department, which leads multiagency operations that respond to diplomatic and security crises, has presented challenges to USAID’s project planning and execution. Despite broad interagency guidance on State’s role in politically sensitive environments, USAID employees are sometimes unclear as to 

how to manage additional layers of review, respond to changing priorities, and 

balance short-term and long-term priorities. Our work in countries such as 

Egypt, Tunisia, Libya, Yemen, and Pakistan underscore the need for reconciliation of competing priorities. 

USAID’s culture is a major barrier to addressing these challenges—notably, the 

Agency’s reliance on its implementing partners, which has, in some cases, extended 

to program oversight. This practice ignores the most basic internal control and sets 

USAID up for unsatisfactory outcomes. We have made numerous recommendations 

that call for more robust monitoring and oversight, including conducting more frequent site visits to vendors and warehouses to verify product quality before crossborder shipment, greater use of pre-award assessments of implementers, greater use 

of approval thresholds and condition precedents prior to release of funds, and assessments of implementer’s accounting and procurement systems. 

Question. You have only been in your post for about one year now, but I know 

you have done significant work to begin to implement reforms in your office. Could 

you discuss in further detail how you have reformed your office since being confirmed? 

♦What challenges did you face in ensuring proper oversight of your respective 

agencies, and how have you worked to address those challenges? 

♦How can we help you improve your oversight? Are there any reforms you’re 

seeking that need a change in law to achieve? Please include any that we may 

have discussed during the hearing as well as any we did not have a chance to 

discuss. 

Answer. The reforms I have implemented—which were grounded in my 30 years 

of working in the accountability community—cut across our entire operations and 

encompasses our people, processes, and work. My assessment included individual 

meetings with all overseas staff, both U.S. direct hire staff and Foreign Service Nationals, as well as meetings with staff in Washington. Through these meetings, I 

gained a stronger appreciation for the challenges they face, particularly as it relates 

to foreign work environments. The actions that I have taken and the reforms that 

have been implemented, are under way, or planned will better position OIG staff 

to address these challenges. For example: 

• To strengthen my leadership bench, I filled five Senior Executive Service positions with the talent and expertise needed to lead our core functions—audit, investigations, and management. We are now working to develop new strategic 

plans and performance measures. 

• I called for more transparency and open communication to strengthen leadership engagement with staff and encourage more robust dialogue on our work, 

especially in areas where there is professional disagreement. 

• To prioritize, add rigor to, and achieve efficiencies in our work, I called for 

cross-cutting teams that would leverage staff knowledge and skills across our 

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2OIG’s hub offices currently oversee one of the following regions each: Latin American and 

the Caribbean, Eastern Europe, Eurasia, and the Middle East, Africa, and Asia. Satellite offices 

in these regions provide targeted oversight in targeted countries and/or programs: Haiti, Senegal, Uganda, Egypt, West Bank and Gaza program, and Pakistan. 3 USAID Top Management Challenges and OIG Initiatives, Statement of the Honorable Ann 

Calvaresi Barr before the Senate Committee on Foreign Relations, Subcommittee on State Department and USAID International Operations, and Bilateral International Development (December 8, 2016. 

pendent overseas offices to 4 strategically located hub offices,2 breaking down 

OIG’s historically stove-piped organization. The new structure, coupled with 

more centralized planning, has already improved collaboration by bringing together key players, and facilitating leadership and staff buy-in at the start of 

an audit or investigation and the messaging of the results. Moreover, the hub 

structure will result in work that links USAID headquarters-based strategies 

to field-level implementation. 

• To further help staff excel under this new model, I hired a Quality Assurance 

Director charged with continuously assessing our policies to ensure they thoroughly reflect oversight accountability standards and best practices and support 

the highest quality of work. I also hired a Communications Officer to enhance 

the quality of all of our written communications and set the course for developing audit and investigation messages. I am currently working to bring on 

board a Process Improvement Director, who will continually assess our business 

operations and policies, and recommend changes that reflect the practices of 

leading professional service organizations. 

• To ensure staff have the knowledge and skills needed to effectively conduct 

their work and combat program fraud, waste, and abuse, I hired a Training Director to design a disciplined professional development program—a program 

that aligns core training to each job series and position, and supports individual 

development plans. I have also initiated a comprehensive review of our performance standards to ensure that they promote and hold staff accountable for performance and results and accurately reflect key mission goals and key work impacts. 

• In addition to formal training, I am providing staff other development opportunities. For example, in January, we will launch a Communities of Practice—information sharing sessions on topics of interest to staff and that align with our 

work, mission and goals. Also in January, I will begin hosting regular Leadership Brown Bags for GS-14s and above and Foreign Service equivalents, and 

Leadership Development Exchanges for GS-13s and below and Foreign Service 

equivalents to discuss organizational topics including performance, leadership, 

and professional development. These forums not only provide additional opportunities for me to engage with my staff on topics they identify as key to their 

roles, development, and overall career, they will further cultivate a strong community within OIG. 

I have also taken action to ensure our full independence—the foundation of any 

OIG. Shortly after my confirmation, I took action to develop a cooperation memorandum with the USAID Administrator to reaffirm OIG’s authority to have full access to the documentation and people our auditors and investigators need to carry 

out our mission. The memorandum was signed by USAID Administrator Gayle 

Smith in February 2016 which she released to all USAID staff, underscoring our 

authority and access rights. In addition, I tasked a team to change the way we track 

audit recommendations. Historically, the agencies we audit have been responsible 

for closing out our recommendations. We are taking back this responsibility. By 

independently determining what actions meet the intent of our recommendations 

and when those actions satisfy our recommendations, we can keep agencies on track 

and, most importantly, ensure the problems we identified have been addressed. 

Finally, as I briefly mentioned during my testimony,3 one challenge that I face 

concerns my oversight responsibility for the Overseas Private Investment Corporation (OPIC). Each year during appropriations deliberations, OIG and OPIC negotiate and sign an interagency agreement to identify the types of oversight to be performed in the upcoming fiscal year. This situation is untenable. Effective oversight 

of OPIC demands a fully independent IG with full IG Act authorities, including 

audit rights and a funding mechanism that supports OIG oversight activities and 

is not subject to negotiation with OPIC management. Several options have been proposed in recent years, and I encourage Committee members to work toward a perFOREI-42327 with DISTILLER

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4 Both of these amounts are expected to increase in the coming weeks in line with an anticipated government-wide pay increase in early January 2017. 5 USAID Has Implemented Controls in Support of FISMA, but Improvements are Needed; Report No. A-000-17-001-C (Oct. 27, 2016). 6 USAID’s Implementation of Executive Order 13526, Classified National Security Information, 

Needs Significant Improvement; Report No. 9-000-16-001-P (Sept. 30, 2016). 

manent solution for OPIC oversight that provides the full authorities that should 

be vested in an OIG. 

Question. You noted in your testimony and during the hearing that aligning 

USAID IG’s system of pay for Foreign Service investigators with that of the rest 

of the Federal law enforcement community is your top legislative priority. 

♦Could you discuss further the current discrepancy, why it exists, and what we 

need to do to fix it? 

Answer. Providing compensation to OIG’s Foreign Service criminal investigators 

that is consistent with Law Enforcement Availability Pay (LEAP)—compensation 

provided to Civil Service criminal investigators across the Federal Government—has 

been one of our greatest personnel-related challenges. In particular, LEAP provides 

a premium for additional hours worked, allowing Civil Service criminal investigators 

to earn up to $160,300 per year while assigned domestically and up to $155,489 per 

year while assigned overseas. 4 Because LEAP does not apply to Foreign Service 

criminal investigators, my predecessors have relied on a special differential to compensate these employees for additional time worked and extra availability to work. 

However, the IG’s authority to cap these special differentials at an amount commensurate with LEAP pay caps recently came under question. Absent such authority, 

some of our most senior Foreign Service criminal investigators would have earned 

in excess of $200,000 per year. 

With the recent enactment of the Department of State Authorities Act, Fiscal 

Year 2017 (Public Law 114-323), this longstanding issue is now resolved. Without 

this authority, my ability to attract, hire, and retain a stable, well-qualified investigative workforce would have been impaired. I sincerely appreciate the Subcommittee’s attention to this matter, as well as the full Committee’s continuing support. 

Question. During the hearing, we briefly discussed how you have begun to work 

on USAID’s policies and compliance with Executive Order 13526, the executive 

order pertaining to the handling of classified national security information. 

♦Can you discuss at greater length what your office has done to investigate IT 

security and handling of classified information at USAID? 

♦How should the new leadership at USAID prioritize this issue? 

Answer. Our most recent audit of USAID’s compliance with the Federal Information Security Modernization Act (FISMA) determined that the agency has taken appropriate steps to resolve a longstanding deficiency related to inadequate security 

plans and control testing for its enterprise risk management system process.5

Despite this progress, we reported earlier this year that USAID’s organizational 

structure continues to put its information systems at risk. Specifically, we found 

that the USAID chief information officer (CIO) reported to the assistant administrator for the Bureau of Management—not directly to the agency Administrator or 

Deputy Administrator, as required by law. As a result, the CIO may have limited 

authority in ensuring information technology projects and actions are funded, 

tracked, and prioritized at a level commensurate with the direction and goals of the 

Agency as a whole. In addition, one officer performs security control activities and 

reviews activities for complying with FISMA—roles and responsibilities typically associated with a chief information security officer and a deputy CIO, respectively-calling into question the independence of USAID’s FISMA compliance reviews. 

Given the increasingly sophisticated and widespread hacking of Federal systems, 

USAID must be ever-vigilant in promoting effective cyber security, particularly 

when it comes to protecting classified information. In the wrong hands, such information can be used to threaten U.S. interests, personnel, or activities. Earlier this 

year, we reported on deficiencies in USAID’s compliance with Executive Order 

13526, Classified National Security Information, and related National Archives and 

Records Administration (NARA) regulations.6 Overall, we found that agencywide attention was needed to correct deficiencies related to program management, security 

training, classification, and reporting program activities and results to NARA’s Information Security Oversight Office. To address these weaknesses, USAID committed to developing and implementing a comprehensive corrective action plan. 

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Completing this action plan should be a major focus area for incoming USAID leadership. 

Question. I was glad to have the opportunity to discuss the challenges we face in 

administering aid and programs in non-permissive environments—particularly in 

Syria. Your office has identified corrupt practices in a number of cross-border aid 

programs to Syria that were operating from Turkey. 

♦Could you discuss further your findings, and how they were used to make 

changes in the way we implement life-saving humanitarian assistance to civilians in Syria? 

♦Given this aid is taking place in non-permissive environments, how does your 

team gain access to conduct oversight? 

♦What challenges do you face? Do you have to rely on partners to gain access to 

certain sites? 

♦Are you seeing greater access issues for investigations, as well as greater oversight challenges at USAID, as our forces draw down in Afghanistan? 

Answer. The fraud schemes uncovered by our investigators during unannounced 

visits to warehouses in Turkey and Jordan demonstrate the complexities in overseeing U.S. aid programs in nonpermissive areas and the vulnerabilities oversight 

gaps create. These schemes include collusion, bribery, and product substitution. Yet 

oversight of the cross-border programs, which involved 33 awards totaling more 

than $337 million, fell under the responsibility of four USAID employees deployed 

to Turkey and Iraq. 

In Afghanistan, as in Syria, it is difficult to get approval to access certain areas. 

However, our investigations work in Afghanistan revealed a number of procurement 

weaknesses that diminish USAID’s command over the programs it funds, including 

a lack of fair and open competition, insufficient US. Government monitoring, infrequent site visits to vendors, a lack of risk assessments of vendors, and a lack of approval thresholds for contracts and grants, and questionable segregation of duties. 

Our audits also found questionable costs. To provide more rigorous oversight of programs in Afghanistan, USAID designed a multitier monitoring plan to leverage data 

from multiple sources, such as the host government, donors, beneficiaries, and thirdparties. However, as we reported, the system as designed was only used in 1 of 127 

awards. 

In response to our investigative findings, USAID is implementing third-party 

monitoring to reduce reliance on implementer self-reporting, requiring all employees 

to attend OIG training on common fraud schemes and fraud indicators, and increasing site visits to include unannounced site visits to vendors and warehouses. In addition, USAID’s Office of Foreign Disaster Assistance (OFDA) hired a compliance officer to prevent future fraud and institute better monitoring and evaluation practices in close coordination with our Office of Investigations. Continued vigilance and 

follow-through on these and other new initiatives will be critical to protecting 

USAID’s investments in the conflict areas such as Syria and Afghanistan. 

One area that presents unique oversight challenges for USAID involves PIOs— 

which collectively receive about 40 percent of USAID’s budget for the humanitarian 

response in Syria—due to USAID’s limited authority to oversee these organizations. 

To identify opportunities where USAID can better ensure due diligence in monitoring despite these limitations, we are examining how USAID assesses and mitigates risks before it awards funds to a PIO and identifies vulnerabilities associated 

with relying on PIOs to provide U.S. foreign assistance. 

We remain committed to providing oversight in Syria and Afghanistan—despite 

the decreasing number of areas our investigators are permitted to go. Our efforts 

aim to provide the greatest return on investment, such as training agency and implementer personnel and beneficiaries on program risks and fraud indicators. We 

also maintain dialogue with OFDA and USAID’s Office of Food for Peace on 

strengthening future awards and programs, and are coordinating with international 

donors, including PIOs, which have access to areas where OIG staff and other U.S. 

Government personnel are not permitted. Information shared among bilateral donors, PIOs, and our investigators through the Syria Investigations Working Group 

that we established further strengthens oversight and helps inform our work to stop 

fraud. Our region- and country-specific fraud awareness campaigns and hotlines 

also help close oversight gaps. For example, working with Transparency International—Pakistan, we stood up the Pakistan Anti-Fraud Hotline, which has provided us a number of leads into alleged fraud, including bribery, collusion, and theft. 

For instance, we have received over 7,000 complaints that have led to cases being 

opened, programs being terminated, numerous employee terminations and savings 

and recoveries in the millions. The malaria campaign and hotlines we set up in NiFOREI-42327 with DISTILLER

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7OIG USAID, Fraud Prevention and Compliance: A Pocket Guide for the Middle East Humanitarian Crisis; August 1, 2016, 3rd edition. 

geria, Malawi, and Benin have similarly prompted individuals to contact OIG with 

allegations of fraud such as theft, diversion, and resale of U.S. Government-funded 

antimalarial commodities. Globally, illicit proceeds from the sale of stolen or falsified antimalarial medicine total more than $60 million a year. 

Finally, OIG developed ′′Fraud Prevention and Compliance—A Pocket Guide for 

the Middle East Crisis Humanitarian Response’’ 7 to assist the Agency with monitoring its implementing partners in the response to the humanitarian crisis in Syria 

and Iraq. The guide addresses trends identified in our investigative experiences and 

meetings with USAID implementing partners across the region, and provides a 

quick reference to detect weaknesses in internal controls and common fraud 

schemes. 

Question. I also appreciated our discussion of the challenge of providing adequate 

oversight of contracts and grants overseas. As State and USAID continue to 

prioritize the local ownership and involvement that comes with contracts and 

grants, what recommendations do you have for USAID to improve the design, management, and oversight of these programs? 

♦How receptive has USAID been to these recommendations? 

♦Are there any immediate steps you can take when you find such fraud in addition to the IG-created hotline and law enforcement partnership? 

Answer. Whether USAID works with U.S.-based contractors or non U.S.-based 

nongovernmental organizations (NGO), the deliberative decision making process 

should be the same when designing and managing awards and deciding on the degree of monitoring and evaluation necessary to protect U.S. interests. Poor design 

can limit the impact of USAID projects or derail them before they begin. 

However, USAID has been challenged to develop and maintain a fully equipped, 

fully trained workforce to design, manage, and oversee its development portfolios. 

With Foreign Service Officers’ relatively short overseas tours of duty (between 1 and 

4 years), USAID has relied on contractors and outside organizations to implement 

and maintain progress on development projects. USAID also relies heavily on local 

foreign nationals, who often stay at missions for years, to function as repositories 

for institutional knowledge, giving them significant influence in the delivery of U.S. 

foreign assistance. Moreover, frequent turnover can limit the effectiveness of U.S. 

direct hire employees, who are ultimately charged with ensuring program achievements and curbing opportunities for fraud. 

Our audits have also shown that some programs are at risk because USAID has 

not adequately secured host country commitment to sustain the gains made through 

the initial U.S. investment. For example, continued operations at 80 health care facilities in Haiti were at risk because USAID lacked a plan to transfer responsibility 

for health workers’ salaries at these facilities. Similarly, the host government lacked 

funds to maintain deteriorating USAID-funded roads in the West Bank and Gaza. 

Despite such outcomes, USAID lacks a robust pre-award process to clearly identify local implementers who do not have the institutional capacity to meet the administrative requirements for managing Federal funds. For example, USAID Paraguay failed to determine in its preaward survey that a local organization did not 

have sufficient capacity to manage USAID funds, assess results, or track the 

progress of a $24 million program intended to strengthen the internal management 

and government systems of select public institutions. USAID may elect to work with 

implementers that carry some level of risk. However, in some cases, USAID does 

not include conditions in the awards to minimize this risk, such as provisions requiring the implementer to take corrective actions before funds are disbursed. Even 

when such provisions have been put in place, it has been the tendency to not adequately monitor and enforce them. Ensuring that USAID staff routinely monitor 

and know the types of questions to ask and observations to make to detect potential 

losses and fraud is critical in overseeing high-risk implementers, especially those 

working in countries with high rates of corruption. 

Regarding agency receptiveness to OIG recommendations, our audits have traditionally focused on activities and projects, and our recommendations have, accordingly, been made to USAID mission directors and other unit heads. These managers 

tend to be receptive and take the actions we recommended for remedying the problems we identified. As part of the reforms I am making, we are moving to an approach that focuses our oversight of development programs at a more strategic level 

to have a more far reaching impact across the agency and its programs worldwide. 

FOREI-42327 with DISTILLER

47 

As such, our recommendations will be issued more broadly to bureau and agency 

leadership, I anticipate that reception at this level will be similar. 

In addition to our training, hotlines, and other outreach efforts, we regularly meet 

with USAID officials to bring audit recommendations and investigation concerns to 

the Agency for action. Our coordination with international donors and internal agency integrity working groups serve to further deter fraud, waste, and abuse. 

Question. We discussed how U.S.-funded humanitarian assistance projects in 

Syria are prone to more elevated risks than programs funded by other nations. 

♦Given this information, and given that fraud and loss are the two categories for 

which you have the highest numbers of reported complaints, do you feel that 

a risk assessment for fraud and loss should be a requirement for any implementer distributing United States foreign aid? Why or why not? 

♦Is it in fact the case that State and USAID do not require implementing partners to conduct a fraud risk assessment before pitching and implementing risk 

controls? 

♦Do you agree with GAO’s recommendation that a fraud risk assessment should 

be required for all USAID partnerships in Syria? 

♦Is this fraud risk assessment something that has come up in any of your past 

ongoing investigations or reports? 

Answer. In providing aid and assistance in Syria and similar nonpermissive environments, USAID assumes some measure of risk in each contract and grant it 

awards. While risk cannot entirely be eliminated in these environments, the risk of 

fraud can be mitigated through quality control procedures in contractual language 

of awards with implementers. For any project conducted in a nonpermissive environment, implementers should include in their proposal submission a detailed mitigation plan for addressing known fraud vulnerabilities and risks. 

Other measures include third-party monitoring, training for Agreement and Contracting Officer Representatives (AOR/COR) that improves their capacity to question 

implementer self-reporting, workforce assessments to determine the right AOR/ 

COR-to-award ratio, increased involvement of financial management specialists in 

monitoring and evaluation planning, mandated AOR/COR visits to project sites and 

allowing technical experts to conduct vendor and implementer warehouse visits, and 

deploying AORs/CORs during contingency operations. 

OIG agrees with the Government Accountability Office recommendation that a 

fraud risk assessment should be required for all USAID partnerships in Syria. Subsequent to the problems our investigators uncovered with implementers in Syria, 

OFDA took steps to improve its solicitation process and now requires implementers 

to address fraud risks in their proposal submission and to sign a Fraud Mitigation 

Self-Certification Checklist as part of its submission. 

We see OFDA’s actions as positive steps, but we have yet to assess their impact. 

Looking ahead, we will continue to consider the effectiveness of the measures both 

USAID and implementers employ to guard against fraud, including the role fraud 

risk assessments play in delivering aid in Syria. In particular, we are committed 

to continuing to be an effective partner with the Departments of State and Defense 

OIGs to carry out our Lead IG responsibilities for Operation Inherent Resolve (OIR), 

the operation to counter the Islamic State of Iraq and the Levant in Iraq, Syria, 

and the surrounding region. Joint oversight of initiatives such as Lead IG oversight 

of OIR demands upfront planning and ongoing coordination. Therefore, in stepping 

up our scrutiny of programs under OIR and other initiatives that involve multiple 

Federal agencies, we continue to expand collaborative efforts with our oversight 

partners, including a joint audit planning session that occurred in November 2016 

and another planned for this coming February. Our quick reference fraud prevention guide can also assist Disaster Assistance Response Teams detect lapses in internal controls, such as implementing partners’ failure to conduct a fraud risk assessment. 

Question. You identified that many operations overseas involve multiple United 

States government agencies, and that sometimes USAID priorities and goals don’t 

match up with those of other agencies. Can you discuss in more detail your findings 

on where interagency strategies haven’t linked up, and what are your recommendations to the next administration for ensuring these conflicts do not occur? 

Answer. USAID coordinates with other U.S. foreign assistance agencies on a number of cross-cutting U.S. Government initiatives like Feed the Future, Power Africa, 

the President’s Emergency Plan for AIDS Relief (PEPFAR), and the Central America Regional Security Initiative (CARSI), and in some cases assumes a lead role in 

advancing U.S. Government efforts. OIG has prioritized oversight of such initiatives 

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8 Competing Priorities Have Complicated USAID/Pakistan’s Efforts To Achieve Long-Term Development Under EPPA; Report No. G-391-16-003-P (Sept. 15, 2016) 9OIG, USAID, DOS, DHHS, Fiscal Year 2017 Coordinated Oversight Plan of Foreign Assistance to Combat HIV/AIDS, Tuberculosis, and Malaria; August 2016. 

and, based on recent work, identified areas in which USAID can work to improve 

interagency coordination and implementation of U.S. Government development initiatives overseas. 

A key concern we identified relates to the interagency relationship between the 

Department of State and USAID, especially in cases where USAID uses Economic 

Support Funds (ESF) to support aid and assistance programs for promoting economic or political stability in areas where the United States has special interests. 

While USAID is responsible for administering ESF programs, State is responsible 

for policy direction and justification of these programs, creating additional challenges in countries where USAID portfolios are funded mainly through ESF—like 

those in the Middle East and Central and South Asia—and State’s focus is on diplomacy rather than development goals. 

This State-USAID dynamic has a profound effect on missions’ ability to effectively 

follow USAID guidance on designing and implementing developmentally sound 

projects. We have also reported that infrastructure projects under this model lacked 

sustainability and failed to fully realize intended results. For example, our audit of 

USAID’s implementation of programs funded under the Enhanced Partnership with 

Pakistan Act of 2009, Public Law 111-73, revealed that State’s responsibility for 

budget and project decisions made it difficult for USAID/Pakistan to reconcile its 

long-term development objectives with State’s shorter-term priorities. 8 In general, 

State focused on stabilization and energy programs, while USAID focused on other 

priority areas, such as health, education, and economic growth. In response to our 

recommendation that USAID institute an interagency forum to better present its development perspective for State-led operations, USAID’s administrator engaged 

State leadership to discuss solutions that allow both agencies to pursue their objectives simultaneously, including reconciling interests at the beginning of planning 

and programming development assistance. It will fall on the next administrator to 

ensure this forum is put into place and used effectively. 

We have also suggested USAID needs to provide alternative development strategies on how it should adapt its project design process in politically sensitive transition environments. In politically sensitive environments when program decisions are 

made by other federal entities, USAID needs clear guidance on how to modify its 

design and implementation process to fit the circumstances. We recommended that 

USAID improve guidance on how to increase the flexibility of implementing mechanisms, especially in the case where expedited implementation is critical. 

Finally, we have a robust portfolio of ongoing or planned audits that will further 

assess USAID’s efforts to work with other agencies to achieve U.S. developmental 

goals. For example, our ongoing audit of the Power Africa initiative will determine 

whether projects under this complex program—which requires extensive coordination between USAID, the Millennium Challenge Corporation, the Overseas Private 

Investment Corporation, and the United States African Development Foundation, 

and other Federal components; multiple African governments; and private industry—are on track to achieve the initiative’s goal to greatly expand access to electricity in sub-Saharan Africa by providing at least 60 million new households and 

businesses with on- and off-grid power solutions. We also are planning to undertake 

work on CARSI, a major U.S. Government initiative in Central America. In addition, each year, we develop and implement our Joint Plan for Oversight of Foreign 

Assistance to Combat HIV/AIDS, Tuberculosis, and Malaria with the OIGs for State 

and the U.S. Department of Health and Human Services.9 Audits under the plan, 

including one on PEPFAR’s Site Improvement Through Monitoring System, are 

aimed at ensuring, among other things, that proper coordination is taking place in 

implementation of PEPFAR programs throughout the world. 

Question. As I mentioned during the hearing, I appreciate the goal that USAID 

has to ensure that communities have a stake in continuing activities and services 

after USAID involvement ends, which then builds the skills of local stakeholders. 

Your testimony and insights were particularly insightful on where the implementation of this concept falls short. 

FOREI-42327 with DISTILLER

49 

10 Audit of USAID/West Bank and Gaza Construction Programs; Report No. 8-294-16-001-P 

(Feb. 22, 2016). 11 Competing Priorities Have Complicated USAID/Pakistan’s Efforts to Achieve Long-Term Development Under EPPA; Report No G-391-16-003-P (Sept. 8, 2016); Audit of USAID/Paraguay’s 

Democracy and Governance Program; Report No. 1-526-16-004-P (Jan. 21, 2016). 

♦In greater depth, please discuss what steps does USAID need to take as they 

develop these kinds of projects to ensure local sustainability and ownership once 

the U.S. involvement ends? 

Answer. USAID’s development policy promotes the achievement of sustainable results. To help sustain development gains after agency programs end, USAID’s program development guidance calls for investing in communities that have a stake in 

continuing activities and services, building the skills of local stakeholders, and ensuring public- or private-sector participation and financial backing. Further, 

USAID’s Local Solutions initiative has explicitly sought to promote country ownership and sustainability of development outcomes by providing program funding directly to host country governments and local organizations—those typically based in 

the country receiving U.S. development assistance. As it undertakes development 

work worldwide, USAID often works directly with host country governments in implementing its programs. In these cases, it is imperative that USAID secures the 

host country’s commitment and assess its ability to support and sustain the initial 

investment. For such projects, the host country must possess the technical and financial capacity to effectively maintain and utilize USAID-funded projects. 

USAID’s efforts to ensure sustainability, including programs under Local Solutions, however, have sometimes fallen short of expectations. In my hearing I spoke 

of our audit work on a West Bank and Gaza construction program and noted the 

inability of the local government to maintain the program’s results.10 Additional 

audit reports also identified shortcomings in USAID missions’ implementation of activities using local government and NGO implementers in countries such as Pakistan and Paraguay.11

Based on our work to date, before USAID makes any decisions to transfer funds 

to a local organization, it is incumbent for it to be certain that the recipient organization has adequate procurement and accounting systems to manage United States 

funds in accordance with applicable regulations. This calls for an effective pre-award 

assessment process and for USAID to mitigate any risks identified before disbursing 

funds. OIG’s oversight coverage of USAID’s use of local organizations has systemically identified this as a problem. 

Equally critical is for USAID to have a robust post award follow-up process to 

hold local organizations accountable to correct deficiencies identified during the preaward assessments. Where USAID enters into an arrangement where it identified 

a lack of implementer capacity or other weaknesses that could enable fraud during 

the pre-award assessment, then USAID must as part of its program design incorporate the appropriate measures to guarantee that resources will be made available 

to continuously monitor and evaluate the implementer’s progress and internal controls. Again, OIG’s oversight work addressing programs that rely on local implementers has shown that these critical steps have been lacking, a condition that can enable fraud, waste, and abuse and lead to under achievement of development goals. 

OIG is currently taking a strategic look at USAID’s Local Solutions initiative to 

assess whether its efforts are working to strengthen local capacity, enhance and promote country ownership, and increase sustainability. We anticipate issuing this report in the coming year. 

Question. As we discussed during the hearing, the GAO has identified a lack of 

parity in the information that State and USAID share on ForeignAssistance.gov, the 

centralized public source of information on U.S. foreign aid and assistance online. 

♦Can you discuss whether your office is involved in analyzing these efforts to ensure that USAID is sharing pertinent information with ForeignAssistance.gov, 

as was mandated by Congress? 

♦Could you discuss any findings regarding tracking and managing foreign assistance funds? 

♦Do you have any recommendations for USAID for managing information and improving transparency of how taxpayer funds are spent on our efforts abroad? 

FOREI-42327 with DISTILLER

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12 USAID/West Bank and Gaza’s Financial Reporting Should Be Clearer on Use and Results 

of Foreign Assistance Spending; Reporting No. 8-294-17-001-P; (Nov. 18, 2016) 13 Audit of USAID’s Financial Statement for Fiscal Years 2016 and 2015, Report No. 0-000- 

17-001-C, November 15, 2016 

Answer. Historically, audits have frequently reported problems with data quality 

and reliability and these issues have been included in our report of top management 

challenges over the last several years. Weaknesses in data with quality and reliability problems that support performance results can negatively impact foreign assistance decisions. 

For example, we reported that USAID/West Bank and Gaza’s financial reporting 

was not accurate when reporting against foreign assistance program areas12. U.S. 

Government agencies use the same State Department framework for planning and 

reporting on their foreign assistance program areas, for example, education or 

health. The framework involves coding expenses to indicate which objective and related program areas foreign assistance funding is supporting. We conducted an 

audit to determine if USAID/West Bank and Gaza, which budgeted $1.1 billion for 

fiscal years 2012 to 2014, was accurately and consistently reporting which funds 

went to which areas and the impact of the mission’s spending. We found that, although the mission’s budget reporting was accurate; reporting on obligations and 

disbursements to the program level was not. Further, we identified reporting problems with performance information for 9 of 31 projects active during the three fiscal 

years. We also recommended that the USAID/West Bank and Gaza mission verify 

that each project’s financial information aligns with performance indicators. USAID 

took final action on this recommendation. 

With regards to transparency and accuracy of data, our office is currently assessing USAID’s readiness to comply with the Digital Accountability and Transparency 

Act of 2014 (DATA Act), which seeks to make federal spending more accessible, 

searchable, and reliable. Beginning next year, we are prepared to assess USAID’s 

compliance with the DATA Act to promote more accurate and transparent reporting 

of USAID spending, which may lead to what is shared with the public via 

ForeignAssistance.gov. This work will make appropriate recommendations for better 

managing information and improving transparency of how taxpayer funds are spent. 

Question. You also noted in your testimony that USAID often has unreconciled 

transactions with other federal agencies, and has an issue with reconciling their 

fund balance with the Treasury’s records. 

♦What does USAID need to do to get back on track here? As we discussed, we 

need all of our federal agencies to have records that ultimately match up to the 

Treasury. 

Answer. The U.S. Government has established strict financial management requirements to better ensure agencies are effective stewards of Federal resources. We 

continue to reinforce the importance of effective financial management and reporting systems through its audits of USAID’s compliance with these governmentwide 

requirements. We assess USAID’s controls most directly through our annual audits 

of USAID financial statements, including our most recent audit for Fiscal Years 

2016 and 2015, issued November 15, 2016, which continued to note the deficiencies 

cited above.13 The persistence of these deficiencies informed one of five management 

challenges facing USAID in fiscal year 2017: Meeting Governmentwide Financial 

and Information Management Requirements. We have identified these deficiencies 

in past years, making both long-standing areas in which USAID must improve its 

financial management and accounting systems and practices. 

USAID has made progress reconciling its Fund Balance With Treasury account 

(FBWT) with the balance reported by the U.S. Department of the Treasury (Treasury). However, at the close of fiscal year 2016, these differences totaled $195 million, of which $141 million was unexplained, and we consider USAID’s inability to 

reconcile these items as a material weakness. As we reported, these differences persist because USAID has not reconciled its FBWT account with Treasury’s fund balance on a monthly basis, thereby resolving identified differences in a timely manner. 

Instead, USAID simply adjusted its FBWT account to agree with Treasury’s fund 

balance. In making a recommendation that USAID’s Chief Financial Officer address 

this weakness we urged USAID to institutionalize the monthly reconciliation of the 

FBWT account. Further, a process USAID initiated in fiscal year 2014 to coordinate 

with Treasury and the Office of Management and Budget (OMB) to resolve these 

differences has not been completed. USAID will need to follow through on its plans 

to work with Treasury and OMB to resolve this issue. 

FOREI-42327 with DISTILLER

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With respect to USAID unreconciled transactions with other agencies, we reported 

that USAID has over $3 billion in such transactions as of September 30, 2016. 

USAID was required to reconcile $596 million of the total amount under OMB Circular A-136, but has made little progress. While USAID is likely to address timing 

differences, one cause of USAID’s unreconciled transactions, differences resulting 

from accounting errors for example, will require a special effort and greater resources. These are significant deficiencies, and we will continue to closely watch 

USAID’s actions to correct them. Additionally, we have ongoing and planned audits 

on USAID’s compliance with Data Act and FITARA requirements and efforts to reduce improper payments. 

Æ 

FOREI-42327 with DISTILLER