Report to the Ranking Minority

Member, Committee on Governmental

Affairs, U.S. Senate

United States General Accounting Office

GAO

August 2001 U.S. AGENCY FOR

INTERNATIONAL

DEVELOPMENT

Status of Achieving

Key Outcomes and

Addressing Major

Management

Challenges

GAO-01-721
Page 1 GAO-01-721 USAID: Status of Achieving Key Outcomes

August 17, 2001

The Honorable Fred Thompson

Ranking Minority Member

Committee on Governmental Affairs

United States Senate

Dear Senator Thompson:

As you requested, we reviewed the U.S. Agency for International

Development’s (USAID) fiscal year 2000 performance report and fiscal

year 2002 performance plan required by the Government Performance and

Results Act of 1993 (GPRA) (P. L. 103-62, 107 Stat. 285) to assess the

agency’s progress in achieving selected key outcomes that you identified

as important mission areas for the agency.1

 These are the same outcomes

we addressed in our June 2000 review of the agency’s fiscal year 1999

performance report and fiscal year 2001 performance plan to provide a

baseline by which to measure the agency’s performance from year to year.2

These selected key outcomes are

• economic growth and development,

• the spread of Human Immunodeficiency Virus/Acquired

Immunodeficiency Syndrome (HIV/AIDS), and

• natural and man-made disasters.

As agreed, using the selected key outcomes for USAID as a framework, we

(1) assessed the progress USAID has made in achieving these outcomes

and the strategies the agency has in place to achieve them and (2)

compared USAID’s fiscal year 2000 performance report and fiscal year

2002 performance plan with the agency’s prior year performance report

and plan for these outcomes. Additionally, we agreed to analyze how

USAID addressed its major management challenges, including the

governmentwide high-risk areas of strategic human capital management

and information security, that we and USAID’s Inspector General

 1

This report is one of a series of reports on the 24 Chief Financial Officers (CFO) Act

agencies’ fiscal year 2000 performance reports and fiscal year 2002 performance plans.

2

Observations on the U.S. Agency for International Development’s Fiscal Year 1999

Performance Report and Fiscal Years 2000 and 2001 Performance Plans

(GAO/NSAID-00-195R, June 30, 2000).

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-01-721 USAID: Status of Achieving Key Outcomes

identified. Appendix I provides detailed information on how USAID

addressed these challenges.

Although USAID reported it made progress toward achieving the selected

outcomes, the extent of the progress is unclear because the agency based

its support on disaggregated and, in some cases, out-of-date and selective

data. Unlike past years when USAID issued separate performance reports

and performance plans, the agency issued a performance overview

supplemented by more detailed data in the FY 2000 Budget Justification to

the Congress, both of which incorporated elements of performance

reporting and planning. In the FY 2000 Performance Overview, USAID

based its statements of progress on self-reported fiscal year 1999

performance data provided by individual USAID missions. In addition,

USAID reported progress toward achieving agency goals and objectives by

relying on selected information of individual country missions’

performance. Although USAID reported detailed fiscal year 2000

performance data at the operating unit level (i.e., country mission) in the

Budget Justification, those data were not aggregated to summarize

progress toward achieving agency objectives. Specific results under the

selected key outcomes are as follows.

Planned Outcome: Increasing Economic Growth and Development -

USAID reported it made progress toward achieving this key outcome;

however, the extent of its progress toward meeting its goals in this area is

unclear. The agency reported an agencywide summary of self-assessment

scores for the overall strategic goal of increasing economic growth and

agricultural development, but the summary data were for 1999 and were

not broken out by program objective. Operating unit data for 2000 were

presented but not aggregated to summarize progress toward this key

outcome.

Planned Outcome: The Spread of HIV/AIDS - USAID reported that it made

progress toward achieving this key outcome; however, it is difficult to

assess actual progress. USAID did not systematically report on the sole

indicator—condom usage—outlined in the Annual Performance Plan for

2000, or on progress toward the reduction of HIV/AIDS prevalence rates.

The agency reported on many generally accepted proxy indicators for

prevalence, but 2000 data were limited to progress at the country mission

level. The lack of agencywide or regional level summary data—either for

proxy indicators or prevalence rates—limits the utility of the reported data

for assessing progress toward the desired outcome.

Results in Brief
Page 3 GAO-01-721 USAID: Status of Achieving Key Outcomes

Planned Outcome: Natural and Man-Made Disasters - USAID reported it

made progress toward achieving this outcome; however, the extent of

USAID’s progress toward meeting its goals in this area is unclear. The

agency reported an agencywide summary of self-assessment scores for the

overall strategic goal of promoting humanitarian assistance, but the

summary data were for 1999 and were not broken out by program

objective. Operating unit data for 2000 were presented, but not aggregated

to summarize progress toward this key outcome.

USAID made significant changes in the manner of reporting progress and

future plans. USAID changed the focus of planning and reporting from the

agencywide level to the level of the country missions’ and regional offices’

(operating units) strategic objectives or programs. This approach sought

to tie agency programs more closely to agency outcomes. In addition,

information to meet requirements for performance planning and reporting

was presented in two documents. The FY 2000 Performance Overview

provided a broad summary of agency performance for 1999 and a brief

description of plans for 2002. This overview primarily relied on selected

examples of progress rather than a systematic analysis. More detailed

information on performance in 2000, and planned performance targets for

2002, was presented in the FY 2000 Budget Justification to the Congress,

but the information is limited to individual operating units and is not

aggregated to summarize performance at regional or agency levels.

The performance overview includes a discussion of specific goals, actions,

and measures for addressing governmentwide management challenges—

strategic human capital and information security—as well as three others

we identified: (1) developing reliable performance measures and

accurately reporting results of programs, (2) implementing an integrated

financial management system, and (3) developing accurate and reliable

financial management information. The discussion summarized efforts

conducted in 2000 and plans for 2002.

In this report, we recommend that in future years the Administrator of

USAID provide clearer evidence of progress toward achieving agency

outcomes, including, where possible, aggregating performance results

across agency objectives and the activities under them.

In providing oral comments on a draft of this report, USAID officials said

they agreed with our recommendation but noted that not all measures

were conducive to aggregation due to differences in program operations

and country needs. We modified our recommendation to reflect the

agency’s concerns.
Page 4 GAO-01-721 USAID: Status of Achieving Key Outcomes

Purposes of the Government Performance and Results Act - GPRA is

intended to shift the focus of government decisionmaking, management,

and accountability from activities and processes to the results and

outcomes achieved by federal programs. New and valuable information on

the plans, goals, and strategies of federal agencies has been provided since

federal agencies began implementing GPRA. Under GPRA, annual

performance plans are intended to clearly inform the Congress and the

public of (1) the annual performance goals for agencies’ major programs

and activities, (2) the measures that will be used to gauge performance, (3)

the strategies and resources required to achieve the performance goals,

and (4) the procedures that will be used to verify and validate

performance information. These annual plans, issued soon after

transmittal of the President’s budget, provide a direct linkage between an

agency’s longer-term goals and mission and day-to-day activities.3

 Annual

performance reports are to subsequently report on the degree to which

performance goals were met. The issuance of the agencies’ performance

reports, due by March 31, represents a new and potentially more

substantive phase in the implementation of GPRA —the opportunity to

assess federal agencies’ actual performance for the prior fiscal year and to

consider what steps are needed to improve performance and reduce costs

in the future.4

USAID Mission, Operating Environment, and Strategic Plan - USAID, an

independent federal government agency, is responsible for implementing

U.S. foreign assistance programs. USAID’s Administrator receives overall

foreign policy guidance from the Secretary of State on implementing U.S.

foreign assistance.5 USAID operates programs in about 125 countries, with

resident staff in 75 countries in 4 regions of the world: sub-Saharan Africa,

Asia and the Near East, Latin America and the Caribbean, and Europe and

Eurasia. USAID promotes a wide range of assistance objectives related to

economic and agricultural growth; population, health, and nutrition; the

environment; democracy, governance, and the rule of law; education and

training; and humanitarian assistance. USAID staff frequently work in

difficult environments and under evolving demands, and programs often

require years of effort to achieve desired outcomes.

 3

The fiscal year 2002 performance plan is the fourth of these annual plans under GPRA.

4

The fiscal year 2000 performance report is the second of these annual reports under

GPRA.

5

USAID’s activities also contribute to the Department of State’s strategic plan for

international affairs.

Background
Page 5 GAO-01-721 USAID: Status of Achieving Key Outcomes

At USAID, decisions about programs and operating resources are based on

the settings in which the agency pursues its goals. These settings can vary

significantly across countries and regions, as well as over time. Therefore,

USAID relies on local participation in planning and implementing

programs since mission personnel are more familiar with the needs of a

specific locale. According to USAID, the agency develops a new strategic

plan and objectives for operating units to accomplish, or modifies existing

ones, as appropriate. As part of this effort, operating units develop plans

for performance monitoring that include baseline data and performance

targets. Operating units annually report progress against performance

targets and, based on the results, request resources for the following fiscal

year. USAID headquarters uses these results both to allocate funding and

to make “sector-wide assessments of the effectiveness of various

objectives and approaches” for use in its annual performance report.6

In 1997, USAID defined a limited set of performance goals and indicators

for each of the agency’s strategic goals. According to the agency, the goals,

indicators, and targets are broad and at a country level. They share

common attributes, such as “they are commonly available across

countries; they are for the most part independently collected and available

from published sources; and they permit performance reporting using a

fairly compact set of tables that can be readily summarized and

aggregated.”7 However, despite these attributes, USAID acknowledges that

one cannot attribute overall country progress toward specific outcome

areas solely to USAID programs. According to the USAID strategic plan,

despite supporting and contributing to the achievement of performance

goals, actual achievement is at best only weakly linked to USAID programs

and resources. With this in mind, USAID revised its strategic plan in

October 2000, and beginning this year, the agency will use the strategic

objectives and indicators of operating units, which include country

missions, regional offices, and bureaus, as the agency’s performance goals

for its annual performance plan and annual performance report. USAID

felt that at this level, it could more clearly demonstrate its contributions.

Further, the agency changed the manner in which it will present

performance plans and results by issuing two annual documents replacing

previous years’ Annual Performance Plan and Annual Performance Report,

starting with results reporting for fiscal year 2000 and planning for 2002.

 6

USAID Strategic Plan 1997 (Revised 2000).

7

Ibid, p. 5.
Page 6 GAO-01-721 USAID: Status of Achieving Key Outcomes

Both new documents will incorporate elements of past year results and

future year plans, with a general description of both provided in a

Performance Overview and more detailed performance data and targets

provided in the annual Budget Justification to the Congress.

This section discusses our analysis of USAID’s performance in achieving

its selected key outcomes and the strategies the agency has in place.8

Although USAID reported it made progress toward achieving the selected

outcomes, the extent of the progress is unclear because the agency based

its support on disaggregated and, in some cases, out-of-date and selective

data. Actual progress toward achieving outcomes, detailed in the FY 2000

Performance Overview, is not clear because USAID did not base its

assessment of progress on fiscal year 2000 performance data. Instead, the

agency relied on selective performance data the operating units submitted

for fiscal year 1999.9

 Data presented in the Fiscal Year 2002 Budget

Justification to the Congress represent 2000 performance; however,

USAID provided no discussion of the data’s validity and reliability. In

addition, limiting performance data to the disaggregated level of the

operating units’ strategic objectives makes determining progress toward

achieving agency goals difficult. Finally, the agency provided a discussion

of strategic human capital management10 issues and strategies related to its

 8

USAID generally has a three-tiered hierarchy for describing its strategic and performance

plans. At the top of the framework are the strategic development goals, which are

statements of USAID’s broad activities, such as encouraging economic growth and

agricultural development. Next are the USAID objectives, which are more focused

statements of areas of activity, such as expanding and strengthening critical private

markets, but are still applied to agencywide efforts. Lowest in the framework are the

operating unit strategic objectives, which are in essence the actual programs operated by

the country missions and regional offices and bureaus. To be consistent with our

requestor’s mandate, we refer to the strategic goals and USAID objectives we examined as

“selected key outcomes.” However, we do maintain USAID’s vernacular when discussing

performance at the operating unit level.

9

USAID relied on performance data derived from a preexisting internal reporting process.

The reporting deadline for this process, however, was past the point in which fiscal year

2000 data could be collected and analyzed to meet its performance reporting deadline

under GPRA. Assuming USAID continues to use this internal reporting process for GPRA

reports, the time frame for that process must be made compatible with GPRA time frame.

If not, USAID will be forced either to report out-of-date information in its annual GPRA

report or to issue its performance report with the correct data after GPRA deadline.

10Key elements of modern human capital management include strategic human capital

planning and organization alignment; leadership continuity and succession planning;

acquiring and developing staffs whose size, skills, and development meet agency needs;

and creating results-oriented organizational cultures.

Assessment of

USAID’s Progress and

Strategies in

Achieving Selected

Key Outcomes
Page 7 GAO-01-721 USAID: Status of Achieving Key Outcomes

efforts for addressing natural and man-made disasters, but it did not

discuss human capital issues and strategies in the context of its economic

development and HIV/AIDS activities. The agency also did not discuss

information technology issues and strategies in the context of

accomplishing the three key outcomes.

USAID reported it made progress toward achieving its outcome of

increasing economic growth during 2000. However, the Performance

Overview does not clearly articulate the agency’s actual progress and

relies on 1999 performance results and mission self-assessments.

Moreover, fiscal year 2000 data reported in the Budget Justification were

not aggregated to summarize regional or agency level performance.

To achieve this outcome11 USAID undertakes programs under three broad

objectives:

• expanding and strengthening critical private markets,

• enhancing agricultural development and encouraging food security, and

• expanding and creating more equitable access to economic opportunity

for the rural and urban poor.

Seventy-five missions, regional offices, and bureaus (operating units) carry

out 152 programs, also referred to as strategic objectives, under one or

more of the three objectives. For example, more than two-thirds of the

operating units supporting the economic growth outcome have programs

with a focus on strengthening markets. The agency reported in the

Performance Overview that overall it met or exceeded performance

expectations for encouraging economic growth and agricultural

development for 88 percent of the 152 strategic objectives. USAID based

this determination on operating unit self-assessments but does not explain

how these self-assessments were conducted.

In addition, USAID did not assess agency progress against the

performance goals contained in the Annual Performance Plan for Fiscal

Year 2000. For example, the agency did not report 2000 performance for

the percentage of countries with annual growth of Gross Domestic

Product per capita of at least 1 percent. Instead, the performance overview

includes a discussion of economic growth trends in USAID recipient

countries by region drawing on these broad country-level indicators.

 11USAID refers to this outcome as a strategic goal.

Economic Growth and

Development
Page 8 GAO-01-721 USAID: Status of Achieving Key Outcomes

USAID’s fiscal year 2002 Budget Justification, which USAID completed

after it submitted the Performance Overview, does contain fiscal year 2000

performance data. These data described the progress missions and other

units made relative to agreed upon targets. However, the data are

presented for individual operating units and are not aggregated to

summarize regional or agencywide performance in either this document or

the Performance Overview.

USAID reported that 13 percent of the operating units’ economic growth

and agricultural development strategic objectives did not meet

expectations. For example, the overview states that several USAID

programs under the strengthening markets objective failed to meet their

goals. The Performance Overview listed operating units in the Europe and

Eurasia region, including Albania, Armenia, Croatia, Kyrgyzstan, Moldova,

Tajikistan, Turkmenistan, and Uzbekistan, as having difficulties. USAID

further reported that programs in other regions, including Angola,

Colombia, and Haiti, also fell short of expectations. USAID attributed

these difficulties to external factors, especially to the lack of host

government commitment to reforms and, in some cases, to political

instability stemming from government transition. For example, USAID

reported that in Croatia the agency suspended assistance under its

financial program in 1998 because the government showed no willingness

to engage in any meaningful economic reform.

USAID’s explanation for not meeting some of its performance goals is

consistent with its reporting of the prior year’s performance. USAID

acknowledged that external factors, such as international financial

conditions, might seriously affect desired program outcomes. Although,

the Performance Overview provides examples of some programs that did

not meet expectations in 1999, it does not provide details on all programs

that did not meet expectations. Nor does it discuss strategies for

addressing unmet goals in either 2000 or 2001. Although the Budget

Justification contains detailed fiscal year 2000 performance information

for individual operating units, explanations for why missions failed to

meet performance targets for specific strategic objectives are not always

provided. For example, one target of USAID’s program for reconstruction

and expanded economic opportunity in Lebanon was “7,800 informal

sector loans delivered.” The actual number of loans provided in 2000 was

5,880. The Budget Justification did not discuss the significance of, or

provide a reason for, this shortfall.

The Performance Overview does not assess the impact of its fiscal year

2000 performance on the likelihood of achieving its fiscal year 2001 goals
Page 9 GAO-01-721 USAID: Status of Achieving Key Outcomes

for economic growth and agricultural development. The overview contains

a general statement concluding that prospects for further progress are

good, but it does not state what data this assertion is based on. It adds,

however, that actual progress will continue to depend mainly on the selfhelp efforts of governments and countries.

The Budget Justification discusses fiscal year 2000 performance and fiscal

year 2001 prospects for each strategic objective described for the

individual countries and regions. For example, one strategic objective

presented in the Budget Justification for the Philippines is to “accelerate

the economic transformation of Mindanao.” USAID cited progress in some

of its efforts in fiscal year 2000, such as the number of marginal farm and

fishing families initiating commercial-level production of more high-value

products. The agency reported that performance in 2001 will be affected

by the general poor performance of the national economy and the degree

to which progress is achieved in managing the continued conflict in parts

of Mindanao.

The Performance Overview includes a general discussion of planned

activities at a few operating units for achieving unmet performance goals

(based on fiscal year 1999 data), but it does not include specific strategies

or time frames. For example, in commenting on efforts in Haiti, where

programs did not meet expectations, USAID reported that it would

continue to work in collaboration with other donors to consolidate gains

and continue a reform process. USAID’s overall strategies for achieving its

performance goals, such as expanding trade through policy, legal, and

regulatory reform; increasing production of agricultural commodities; and

providing small loans and business training for the rural poor, are

reasonable. The overview provides a general discussion of USAID’s plans

for 2002, stating that the basic framework that guides operating choices

will remain the same. The Budget Justification contains more detailed

information by country and region.

USAID recognized the contribution of other multilateral and bilateral

donor organizations, host-country governments, and U.S. government

agencies. The Performance Overview included a general statement

acknowledging that its economic growth and agricultural development

programs do not operate in a vacuum. The overview also lists major

multilateral and bilateral donors. The Fiscal Year 2002 Budget Justification

provided more details on USAID’s specific contributions and the

contributions of other donor programs by country and strategic objective.

In addition, the overview discussed using studies and evaluations to

confirm its broad-based economic approach to development, but it did not
Page 10 GAO-01-721 USAID: Status of Achieving Key Outcomes

state whether these tools were employed when developing plans for 2002.

In addition, the overview did not discuss issues related to strategic human

capital management and information security as strategies to achieve

increased economic growth and agricultural development. The overview

includes a separate section that discusses USAID’s agencywide strategic

goal to achieve USAID goals efficiently and effectively. This goal includes

objectives that address strategic human capital management and

information technology issues.

It is difficult to assess the progress USAID made in 2000 toward achieving

this outcome. The agency did not systematically report on its sole

indicator—condom usage—detailed in the Annual Performance Plan for

2000. Moreover, the Performance Overview relies on 1999 performance

data of selected missions, and fiscal year 2000 data reported in the Budget

Justification were not aggregated to summarize regional or agency level

performance.

Strategies for addressing this selected outcome of reducing the

transmission and impact of HIV/AIDS12 are diverse and include efforts to

change sexually risky behavior and cultural norms; develop, test, and

promote prevention and provide care; treat and prevent sexually

transmitted infections; enhance nongovernmental, public- and privatesector organizations’ capacities to prevent the spread of HIV/AIDS and

support persons affected by the disease; and improve the availability,

quality, and use of evaluations and surveillance information. USAID works

closely with the international community on HIV/AIDS efforts, including

host governments, other national and multilateral assistance agencies,

nongovernmental organizations, and the private sector. In addition, USAID

partners with the U.S. Bureau of the Census to maintain and update the

HIV/AIDS International Surveillance Database and provides funding for

HIV/AIDS research to the Centers for Disease Control.

The performance goal for USAID’s HIV/AIDS activities is to reduce HIV

infections by 10 percent among 15- to 24-year-olds between 1998 and

2007.13 Although this goal is objective and quantifiable, progress toward

 12This selected outcome is one of five agency objectives under USAID’s strategic goal of

stabilizing the world’s population and protecting human health.

13The prevalence rate is the percentage of the adult population currently infected with HIV.

USAID uses as its baseline country-level and regional-level prevalence rates for 1997

developed by the Joint United Nations Programme on HIV/AIDS.

The Spread of HIV/AIDS
Page 11 GAO-01-721 USAID: Status of Achieving Key Outcomes

achieving it cannot be assessed since USAID did not systematically report

prevalence data for 2000 either at the regional or country level.14 In

addition, USAID also did not systematically report on its sole proxy

indicator for reducing HIV/AIDS prevalence—condom usage—identified in

the Annual Performance Plan for 2000 but did not cite a reason. However,

the agency reported on other generally accepted proxy indicators for

reducing HIV/AIDS transmissions not prescribed in the plan for 2000, such

as condom sales, but data reported in the Performance Overview were

mostly from 1999, while 2000 data reported in the Budget Justification

were not sufficiently aggregated to summarize agency performance.

In a March 2001 report, we concluded, in part, that USAID’s ability to

measure the impact of its activities on reducing the transmission of

HIV/AIDS is limited by a “lack of routine reporting of results to

headquarters.”15 While the agency has begun implementing a new

monitoring and evaluation system, planning for the system did not specify

to whom data would be reported or how it would be used. We also noted

in the report that in 1998 USAID established a data repository for

collecting and tracking performance data from HIV/AIDS programs.

However, the agency did not require that missions actually report

information to that data facility. The lack of a reporting requirement to a

centralized unit—whether at the regional or headquarters level—affected

the agency’s ability to generalize about progress toward the selected

outcome and to make management and resource decisions based upon the

data. It also inhibited sharing best practices because the agency cannot

compare activities across countries. We concluded that failure to address

these issues not only inhibits USAID’s ability to measure performance, but

also hinders the agency’s decisionmaking regarding allocation of

resources among missions and regional offices and limits its efforts to

identify best practices.

USAID’s reporting of 2000 results and its planning for 2002 performance

underscore our conclusion. USAID did not provide information on

indicators that summarized worldwide or regional levels. Further, in

addition to a reliance on fiscal year 1999 data, information provided in the

Performance Overview to support overall statements of accomplishments

 14 USAID is supporting improvement in national sentinel surveillance systems to allow for

annual measurement of this indicator.

15Global Health: U.S. Agency for International Development Fights AIDS in Africa, but

Better Data Needed to Measure Impact (GAO-01-449, Mar. 2001).
Page 12 GAO-01-721 USAID: Status of Achieving Key Outcomes

is selective and at a country level, and may or may not be representative of

all countries where similar data are collected. For example, in the

Performance Overview USAID addressed progress toward the reduction of

HIV/AIDS prevalence by discussing only three countries, saying its

assistance resulted in a 50-percent decline in prevalence rates among

young urban women in Uganda, a reported reduction in rates for 15- to 19-

year-olds in Zambia, and the maintenance of low prevalence rates in

Senegal. Despite citing no data for the latter two countries, USAID

officials said Uganda, Senegal, and Zambia represent significant

accomplishments and show the donor community can have impact on

stemming the spread of HIV/AIDS. Although it is important to show where

USAID and its partners in the international community have made strides

against the pandemic, these three countries represent just 7 percent of the

countries where USAID operates HIV/AIDS programs.16 Moreover, the

citation of three interventions generally considered successes does not

provide enough information to assess overall progress toward achieving

the desired outcome.

USAID’s 2002 Budget Justification provided data on various HIV/AIDS

indicators for each unit operating HIV programs. As with the Performance

Overview, the indicators were generally accepted proxies for HIV/AIDS

prevalence. These indicators were diverse—almost 60 distinct measures

used by 24 missions and regional offices in the Africa region alone (see

table 1 for examples from Zambia and South Africa). In addition, many

missions used output- rather than outcome-oriented performance

measures, reflecting their primary use as management tools for specific

program activities. A few operating units, such as the missions in Uganda

and Ghana, reported prevalence-based indicators, while other country

missions, such as in Rwanda, Ethiopia, and Mozambique, reported on

condom usage. Although the data contained in the Budget Justification

may be useful for program management within a specific mission, or for

individuals interested in assessing effects of activities in a specific

country, the lack of consistent indicators limits the usefulness of this

document for determining agencywide progress toward achieving the key

outcome.

 16The agency reported that as of spring 2000 it operated HIV/AIDS programs in 46 countries.
Page 13 GAO-01-721 USAID: Status of Achieving Key Outcomes

Table 1: Fiscal Year 2000 Performance and Future Year Planned Performance on HIV/AIDS Indicators for Zambia and South

Africa

FY 2000 FY 2000 Target FY 2001 FY 2002

HIV/AIDS Indicators (actual) (planned) achieved (planned) (planned)

Zambia

Condoms sold (millions) 8.6 7.5 Yes 9.5 10.5

Family planning, new acceptors 98,000 175,000 No 105,000 110,000

Vitamin A, 6 to 72-month-olds receiving

supplements (%)

86 74 Yes 85 85

South Africa

Sexually transmitted infections treated,

males (%)

82 75 Yes 86 90

Prenatal consultation, females (%) 74 80 No 78 82

HIV counseling access (%) NR 85 Unknown 90 95

Antenatal care access, females (%) NR 80 Unknown 85 90

Legend

NR = Not Reported

Source: GAO analysis of USAID data.

In 2001, USAID began expanding its response to the HIV/AIDS pandemic

by developing new strategies and activities designed to prevent new

transmissions of HIV and identify and treat those with the disease. In the

Performance Overview, USAID stated it would support both highprevalence countries and low-prevalence, high-risk countries by building

capacity to provide care and support for affected individuals and families;

reduce the social and economic impact of key vulnerable groups, such as

health, education, and government professionals; and develop and

introduce new prevention and care approaches and technologies, such as

microbicides, lower-cost testing with quicker results, and behavior change

activities.

The Performance Overview provided no specific set of overall

performance targets for its efforts in 2002, but it discussed the

accomplishments USAID expects to make by 2007 in unspecified “selected

countries,” which include

• reducing HIV prevalence rates among 15- to 24-year-olds by 50 percent in

high-prevalence countries and maintaining prevalence rates below 1

percent among 15- to 49-year-olds in low-prevalence, high-risk countries;

• providing access to interventions aimed at reducing mother-to-child

transmissions of HIV to 25 to 50 percent of infected mothers in highprevalence countries;
Page 14 GAO-01-721 USAID: Status of Achieving Key Outcomes

• building host-country capacity to provide basic care and psychosocial

services to at least 25 to 50 percent of children affected by AIDS, including

those who have lost parents to the disease; and

• lessening the impact of HIV/AIDS on the key labor sectors, such as

education, health, and government professionals.

The above measures are objective and measurable, and USAID stated that

the targets would be regularly reviewed and revised in light of the evolving

pandemic and ongoing analyses of the cost-effectiveness of the programs.

To do so, USAID, in collaboration with the Centers for Disease Control,

the World Health Organization, and the Joint United Nations Programme

on HIV/AIDS, will improve HIV sentinel surveillance systems in selected

countries to report annually on HIV prevalence among 15- to 24-year-olds.

However, USAID did not state the degree by which information will be

aggregated so that decisionmakers in USAID’s regions and headquarters,

as well as the Congress, can deliberate on resource allocations based on

progress toward reducing the spread of the HIV/AIDS pandemic.

As with the performance data for 2000, USAID’s 2002 Budget Justification

provided more detailed indicators of planned future performance than the

Performance Overview. However, the indicators are again disaggregated to

the mission level. The lack of meaningful data aggregation—whether to

the regional or agency level—of HIV/AIDS performance indicators

reported in the Performance Overview and Budget Justification limits their

value for determining progress toward this selected outcome. We

understand that missions must operate HIV/AIDS programs as they fit with

the needs of the host nation and that some USAID activities are not

conducive to quantitative measurement. However, there are methods of

data aggregation, such as showing the number of country missions that

achieved planned targets for any particular indicator common among

missions, that provide more meaningful assessments of whether progress

is being made toward the agency’s goals and objectives.

USAID reported it made progress toward achieving its outcome of saving

lives and reducing suffering associated with natural or man-made disasters

during 2000. However, the Performance Overview does not clearly

articulate the agency’s actual progress and relies on 1999 performance

results and mission self-assessments. Moreover, fiscal year 2000 data

reported in the Budget Justification were not aggregated to summarize

regional or agency level performance.

Natural and Man-Made

Disaster
Page 15 GAO-01-721 USAID: Status of Achieving Key Outcomes

USAID supports this outcome around the world through a total of 31

strategic objectives in 24 operating units. USAID stated performance

expectations were met or exceeded for 87 percent of operating units’

strategic objectives. However, the agency based this determination on

1999 operating unit self-assessments, without explaining how these selfassessments were conducted. The overview also discussed USAID’s

humanitarian assistance trends by regions, using indicators such as crude

mortality rate; prevalence of acute malnutrition in children under age 5;

number of refugees and internally displaced persons; and changes in the

freedom, civil liberties, and political rights classification of post-conflict

countries. Data for these indicators also represented 1999 performance

results.

USAID used the operating units’ strategic objectives and local

performance indicators to report progress in the Budget Justification. The

performance indicators are measurable and provide a reasonable

assessment of USAID’s specific efforts. For example, a strategic goal of

USAID’s program in El Salvador is to reduce the vulnerability of the rural

poor to natural disasters in target areas. One of the performance measures

is the number of community members trained in disaster preparedness.

USAID’s target for 2000 was to train 750 community members. The actual

number for fiscal year 2000 was 2,313.

The Performance Overview does not assess the impact of its fiscal year

2000 performance on the likelihood of achieving its fiscal year 2001 goals.

It does include a discussion of future plans that describes a number of

recommended actions that, based on its past experience, the agency

intends to implement to improve its capacity to respond to disasters. In

addition, the Budget Justification provides specific details for individual

countries’ strategic objectives. For example, for USAID’s program in the

Dominican Republic, the Budget Justification states that its Hurricane

Georges Reconstruction objective is meeting expectations and should

achieve all objectives by December 31, 2001.

In March 2001, we testified that USAID’s disaster recovery assistance

program in the wake of hurricanes Mitch and Georges has made progress.17

After some initial start-up problems, most activities are scheduled for

completion on or before December 31, 2001, as USAID and congressional

 17Foreign Assistance: Implementing Disaster Recovery Assistance in Latin America

(GAO-01-541T, Mar. 21, 2001).
Page 16 GAO-01-721 USAID: Status of Achieving Key Outcomes

staff had informally agreed. In its most recent quarterly report for the

period ending June 30, 2001, USAID reported that it and the other U.S.

agencies involved in the hurricane assistance had spent about $413

million, or 67 percent, of the disaster recovery funding. With some

variance by country, USAID and the other U.S. departments and agencies

involved have used the disaster recovery assistance to bring about

economic recovery, improve public health and access to education,

provide permanent housing for displaced families, and improve disaster

mitigation and preparedness. To achieve these broad objectives, USAID

funded infrastructure construction and repair, technical assistance and

training, loans for farmers and small businesses, and some commodities.

The Performance Overview provides a general discussion of USAID’s

plans for 2002, stating that the agency’s disaster relief, based on the 1999

self-assessments of performance from the operating units, are on track

and that no major changes to the strategic framework are expected.

USAID further reports that it anticipates responding to the same levels of

crises in the next year but that it may be called upon to provide increasing

levels of assistance. The Performance Overview includes a general

discussion of the participation of other U.S. and international agencies. It

specifically mentions USAID’s relationship with United Nations agencies,

particularly the World Health Organization and the United Nations

Administrative Coordinating Committee/Subcommittee on Nutrition. The

overview states that the committee/subcommittee is a coordinating

mechanism for exchanging information and technical guidance on

nutrition and that it assists USAID in monitoring the performance goals on

nutrition status of children under age 5 and crude mortality rate. The

Budget Justification also discusses USAID’s collaboration with other

agencies for specific strategic objectives.

USAID reports that during fiscal year 2000, it began an evaluation of

internal responses to emergencies and transitions with a special focus on

complex emergency transitions, but it did not provide specific details.

USAID reported sharing lessons learned across the agency and with

implementing partners. The overview addresses some human capital

issues in its discussion of recommended actions needed to strengthen

USAID’s capacity to respond to complex emergencies. For example,

USAID plans to develop a reserve corps of nondirect-hire workers to

supplement direct-hire humanitarian workers and establish a career ladder

for its humanitarian response professionals.
Page 17 GAO-01-721 USAID: Status of Achieving Key Outcomes

USAID’s revised approach to performance planning and reporting, which

uses the Performance Overview for discussing general performance and

future expected results, and the Budget Justification for presenting

detailed data on operating unit performance, have advantages and

disadvantages. Reporting progress against the operating units’ strategic

objectives gives a clearer picture of how the agency’s activities contribute

to performance goals. However, USAID acknowledges that the main

drawback to the reporting change is that there are many different

objectives and performance indicators and that the measures and

objectives are based on programs that are tailored to local needs. Another

problem is that the Performance Overview for 2000 contains limited and

out-of-date performance data, making it difficult to assess USAID’s

progress. Moreover, the overview does not consistently provide

explanations for unmet goals or strategies for achieving them in the future.

The Budget Justification provides more detailed fiscal year 2000

performance information and fiscal year 2002 plans for individual

countries and regional offices and bureaus.

USAID’s decision to use actual operating units’ strategic objectives as the

agency’s performance goals responds to past criticisms of its use of broad

development performance indicators. For example, in June 2000, we

reported that indicators of economic growth could not realistically serve

as measures of USAID’s specific efforts.18 We further stated, and USAID

acknowledged, that although its assistance can contribute to economic

growth, many other factors determine the actual level of growth in a

country. However, by disaggregating performance planning and reporting

data to the operating unit level, USAID has made it more difficult to assess

progress toward achieving agency objectives and goals.

 18Observations on the U.S. Agency for International Development’s Fiscal Year 1999

Performance Report and Fiscal Years 2000 and 2001 Performance Plan

(GAO/NISAD-00-195R, July 20, 1999).

Comparison of

USAID’s Fiscal Year

2000 Performance

Report and Fiscal

Year 2002

Performance Plan

With the Prior Year

Report and Plan for

Selected Key

Outcomes
Page 18 GAO-01-721 USAID: Status of Achieving Key Outcomes

We have identified two governmentwide high-risk areas: human capital

and information security.19 Regarding human capital, we found that

USAID’s Performance Overview discussed performance results of efforts

in 2000 to resolve strategic human resource issues. The indicators for this

area were objective and measurable. The Performance Overview also

discussed two performance goals for 2002 regarding strategic human

capital management—strengthening human capital resources planning

capabilities and addressing skill shortages. These goals and their

associated indicators are objective and measurable. USAID also reported

meeting two key milestones to support information security challenges

management and technology it achieved in 2000, but the agency did not

state whether these were all the performance targets for the year. USAID

also listed two performance indicators related to information security for

2002—the security and integrity of the legacy core financial management

systems enhanced and federal certification of the general control

environment and system security for half of the agency’s missions

obtained. Both indicators are objective and measurable. While the

Performance Overview discussed achievements and planned performance

for strategic human capital and information security on an agency level, it

generally did not discuss them within the selected key outcomes.

In January 2001, we reported on one additional management challenge

specific to the agency.20 USAID faces challenges in developing reliable

performance measures and accurately reporting the results of its

programs. Our past work, and that of the USAID Inspector General,21 has

identified a number of problems with the annual results data that USAID’s

operating units have been reporting. For example, in commenting on

USAID’s fiscal year 2000 performance plan, we noted that the plan

provided limited confidence that the agency had the capacity to obtain

credible, results-oriented program performance information. In addition, a

1999 Inspector General review of data prepared by 18 missions for 1996

showed problems with the results reported for 83 percent, or 252, of the

302 indicators. USAID has acknowledged that performance measurement

is a challenge. In the Performance Overview, the agency reported the

 19Major Management Challenges and Program Risks: A Governmentwide Perspective

(GAO-01-241, Jan. 2001)

20Major Management Challenges and Program Risks: U.S. Agency for International

Development (GAO-01-256, Jan. 2001).

21Audit of the Quality of Results Reported in USAID Operating Units’ Results Review and

Resources Request Reports Prepared in 1997 (Report No. 9-000-99-006-P, Mar. 5, 1999).

USAID’s Efforts to

Address Its Major

Management

Challenges Identified

by GAO
Page 19 GAO-01-721 USAID: Status of Achieving Key Outcomes

results of a number of efforts it undertook in 2000 to improve the quality

and availability of performance data, most of which were objective and

measurable. USAID also provided three performance goals and indicators

for 2002 to continue addressing this challenge. However, the goals and

indicators were general in scope, not readily measurable, and not well

explained.

In June 2000, we reported on two additional challenges related to financial

management: USAID had not implemented an integrated financial

management system, and the agency’s financial information was

unreliable. In the Performance Overview, USAID stated it initiated a

comprehensive study of its financial management operations worldwide,

begun transitioning to a new accounting system, and begun configuring a

commercial financial software package for the agency. In 2002, USAID

plans to install a fully operational, secure, core financial system compliant

with federal requirements and that will integrate worldwide financial

operations.

USAID has made an attempt to address past criticisms of its performance

indicators. For example, many indicators in past years were too broad to

demonstrate the agency’s actual contribution toward meeting performance

goals. This year’s approach sought to tie the agency’s efforts more closely

to the agency’s desired outcomes by reporting performance data at the

operating unit level. By using this approach, however, USAID did not

adequately demonstrate progress toward the agency’s selected key

outcomes in its performance reporting documents. Although USAID

provided aggregate data of the number of strategic objectives met under

an outcome area, additional information summarizing results at the unit

level and linking it to agency goals is needed to help assess overall

progress. For example, under economic development activities, it would

have been useful for USAID to provide information on the number of units

meeting performance targets related to the agency objective of expanding

and strengthening critical private markets and associated activities, such

as developing private enterprises.

We recommend that the Administrator of USAID take actions to provide

clearer evidence of progress toward achieving agency outcomes. The

actions should include reporting aggregated performance results of agency

objectives and the activities under them. This aggregation should be

sufficient to provide a clear linkage between overall statements of

Conclusions

Recommendation
Page 20 GAO-01-721 USAID: Status of Achieving Key Outcomes

progress found in the Performance Overview and unit level data presented

in the Budget Justification.

As agreed, our evaluation was generally based on the requirements of

GPRA, the Reports Consolidation Act of 2000, guidance to agencies from

the Office of Management and Budget (OMB) for developing performance

plans and reports (OMB Circular A-11, part 2), previous reports and

evaluations by us and others, our knowledge of USAID’s operations and

programs, our identification of best practices concerning performance

planning and reporting, and our observations on USAID’s other related

GPRA efforts. We also discussed our review with agency officials at

USAID and OMB, and with the USAID Office of Inspector General. The

agency outcomes that were used as the basis for our review were

identified by the Ranking Minority Member of the Senate Committee on

Governmental Affairs as important mission areas for the agency and do

not necessarily reflect the outcomes for all of USAID’s programs or

activities. We did not independently verify the information contained in

the Performance Overview or Budget Justification, although we did draw

from our other work in assessing the validity, reliability, and timeliness of

USAID’s performance data. We conducted our review from April 2001

through July 2001 in accordance with generally accepted government

auditing standards.

We received oral comments on a draft of this report from the Director,

Center for Development Information and Evaluation and other USAID

officials who agreed with our general recommendation that the agency

take actions to provide clearer evidence of progress toward achieving

outcomes. In addition, the officials agreed in principle that aggregation of

performance data would allow a better understanding of agency progress.

However, the officials noted that the complexity of the issues USAID

addresses, the long-term sustained efforts needed to affect positive

change, and the difficult environments where the agency works can lead

to differences in programs between countries. As a result, they were

concerned that many outcome and some output measures were not

conducive to aggregation. We modified our recommendation to reflect the

agency’s concerns.

In response to our statement that USAID failed to report on HIV/AIDS

prevalence and condom sales, USAID officials stated that these data have

become available since the issuance of the Performance Overview and

Budget Justification. In addition, they noted that under monitoring and

evaluation activities for USAID’s expanded response to HIV/AIDS, the

Scope and

Methodology

Agency Comments
Page 21 GAO-01-721 USAID: Status of Achieving Key Outcomes

agency is developing a template for annual HIV/AIDS performance reports

to help guide the field missions. This template will show not only the

topics and order of discussion in the report, but also the data needs and

sources to inform the discussion. USAID officials said this monitoring and

evaluation activity could become a model for agencywide performance

planning and reporting. USAID officials provided technical comments that

we incorporated as appropriate.

As arranged with your office, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days after the

date of this letter. At that time, we will send copies to appropriate

congressional committees; the Administrator, U.S. Agency for

International Development; and the Director, Office of Management and

Budget. Copies will also be made available to others upon request.

If you or your staff have any questions, please call me at (202) 512-4128.

Key contributors to this report are listed in appendix II.

Sincerely yours,

Jess T. Ford

Director, International Affairs and Trade
Appendix I: Observations on the U.S. Agency

for International Development’s Efforts to

Address Its Major Management Challenges

Page 22 GAO-01-721 USAID: Status of Achieving Key Outcomes

The following table identifies the major management challenges

confronting the U.S. Agency for International Development (USAID),

which include the governmentwide high-risk areas of strategic human

capital management and information security. The first column lists the

challenges identified by our office, USAID’s Inspector General, and the

agency itself. The second column discusses progress USAID made in

resolving its challenges, based on its FY 2000 Performance Overview. The

third column discusses the extent to which USAID’s fiscal year 2002

performance plan includes performance goals and measures to address

the challenges identified by us and USAID’s Inspector General. We found

that USAID reported progress during 2000 in resolving most of its

challenges except for three: (1) the reconciliation of financial management

information, (2) the agency’s broad and changing mandate, and (3)

strengthening of collaboration with partners and stakeholders. Of the

agency’s 12 major management challenges, its performance plan had (1)

goals and measures directly related to 7 of the challenges; (2) no goals and

measures related to 2 of the challenges but discussed strategies to address

them; and (3) no goals, measures, or strategies to address 3 of the

challenges.

Appendix I: Observations on the U.S. Agency

for International Development’s Efforts to

Address Its Major Management Challenges
Appendix I: Observations on the U.S. Agency

for International Development’s Efforts to

Address Its Major Management Challenges

Page 23 GAO-01-721 USAID: Status of Achieving Key Outcomes

Table 2: Major Management Challenges

Major management challenge

Progress in resolving major

management challenge, as

discussed in the fiscal year 2000

performance overview

Applicable goals and measures in the fiscal year

2002 performance plan

GAO-designated

governmentwide high-risk

challenges

Strategic Human Capital

Management: GAO has identified

shortcomings at multiple agencies

involving key elements of modern

human capital management,

including strategic human capital

planning and organizational

alignment; leadership continuity

and succession planning;

acquiring and developing staff

whose size, skills, and deployment

meet agency needs; and creating

results-oriented organizational

cultures.

(GAO also identified human capital

management issues as a major

management challenge for

USAID.)

(USAID’s Inspector General also

reported strategic human capital

management as a major

management challenge.)

USAID stated it took a number of steps

to build a stronger and more capable

human resource base. Of primary

importance, USAID stated it “staffed

every critical position through FY 2000

and believes that its human resource

constraints will be sufficiently eased by

FY 2002.” The agency initiated a New

Entry Professionals (NEP) program for

hiring entry-level staff (FS-4 salary

class), and increased the level of midcareer professionals. In addition, the

agency increased the number of seniorlevel managers trained through external

sources and developed in-house

training to enhance the results-oriented

management, financial management,

acquisitions and assistance, and

supervisory skills of program managers

and staff.

Specific performance results in 2000

included

• hiring 51 NEPs and retaining 63

NEPs at the end of the fiscal year;

• having 996 Foreign Service Officers

on staff at the end of 2000;

• providing training to

- 101 senior executives through

the Federal Executive Institute,

Carley Senior Leadership

Training, and Foreign Affairs

Leadership Seminar;

- 140 individuals in supervisory

classes and seminars;

- 435 technical staff on funds

management; and

- 700 employees on new

acquisition and assistance rules

and procedures;

• certifying 80 percent of contracting

officers; and

• outsourcing the automated

personnel and payroll functions to

the Department of Agriculture’s

USAID reported it intends to strengthen its human

resource planning capabilities and address skill

shortages in 2002 by pursuing and achieving the

following goals and indicators:

Human Resource Planning Capabilities Strengthened:

Rapid deployment of staff in all labor categories

through intensified recruitment efforts. USAID plans to

meet all its Foreign Service and Civil Service staffing

requirements and make “Web-enhanced human

resource management tools” available to human

resource management personnel.

Skill Shortages Addressed:

USAID will continue to provide in-house training on

critical operational skills, including acquisitions and

assistance training to 450 technical officers and

leadership training for 125 managers.

FAIR Act Report:

In March 2001, the Office of Management and Budget

directed federal agencies to prepare a plan for 2002

for outsourcing not less than 5 percent of “commercial

activities” positions defined by the Federal Activities

Inventory Reform (FAIR) Act of 1998 (P.L. 105-270).

USAID stated that it identified a total of 631 positions

classified as commercial functions, which would

translate to 32 positions, at a minimum, being

outsourced. USAID stated that given its current skills

shortage and the existing efforts to recruit new

employees, it will not be able to achieve OMB’s

requirement. In addition, USAID stated that the

majority of commercial activities staff also perform

USAID core functions that cannot be outsourced or

contracted out.
Appendix I: Observations on the U.S. Agency

for International Development’s Efforts to

Address Its Major Management Challenges

Page 24 GAO-01-721 USAID: Status of Achieving Key Outcomes

Major management challenge

Progress in resolving major

management challenge, as

discussed in the fiscal year 2000

performance overview

Applicable goals and measures in the fiscal year

2002 performance plan

National Finance Center.

USAID planned to have a total of 1,000

Foreign Service Officers at the end of

fiscal year 2000, but fell just short with

996. USAID reported no performance

targets for the remaining indicators.

Information Security: Our January

2001 high-risk series update noted

that since our last high-risk report

in January 1999, efforts to

strengthen information security

have gained momentum and

expanded both at individual

agencies and at the

governmentwide level. However,

recent audits continue to show that

federal computer systems are

riddled with weaknesses that make

them highly vulnerable to

computer-based attacks and place

a broad range of critical operations

and assets at risk for fraud,

misuse, and disruption.

(USAID’s Inspector General also

reported computer security as a

major management challenge and

noted that mission directors are

not accountable for information

security.)

USAID’s 2000 performance overview

stated that security risk assessments

were completed at a number of

missions and a Web-based security

course was developed. However, the

report does not list the number or

location of the missions. In addition,

the report does not provide any

information on the content of the

security training or the numbers and

types of personnel who received the

training.

USAID’s plan provided two performance goal

indicators. One is for USAID to enhance the security

and integrity of legacy core financial management

systems. The second is for the agency to achieve

federal certification of the general control environment

and system security for half of the agency’s missions.

GAO- and IG-designated major

management challenges

Challenges with developing

reliable performance measures,

and accurately reporting results of

programs: USAID continues to

have problems developing

performance measurement

systems that meet external and

internal reporting requirements,

including the requirements of the

Government Performance and

Results Act of 1993.

USAID stated a key step taken to

address this challenge was overhauling

the regulations and procedures for

delivering development assistance

through the Automated Directive Series

200—Managing for Results. In

addition, USAID developed a

performance management workshop,

which it piloted in October 2000.

(During fiscal year 2001, USAID plans

to conduct 14 workshops and train 350

employees in 4 regions and

Washington, D.C.)

USAID also stated it expanded

technical assistance on performance

measurement in missions, and

USAID provided three performance goals for 2002 that

related to improving the reliability of performance

indicators and the reporting of results. However, the

performance goals and indicators are vaguely written,

and USAID provides no explanation of what they

actually entail. The performance goals and indicators

are

• program performance assessment systems and

capabilities increased.

- Indicator: USAID program performance tracked.

• knowledge to plan and implement USAID’s

programs acquired and shared effectively.

- Indicator: Knowledge.

• agency operations guided by effective policies and

procedures.

- Indicator: Assessments and audits validate

implementation of policies and procedures.
Appendix I: Observations on the U.S. Agency

for International Development’s Efforts to

Address Its Major Management Challenges

Page 25 GAO-01-721 USAID: Status of Achieving Key Outcomes

Major management challenge

Progress in resolving major

management challenge, as

discussed in the fiscal year 2000

performance overview

Applicable goals and measures in the fiscal year

2002 performance plan

conducted technical analyses of

performance data quality and coverage,

but it did not explain what these

activities included or their results.

Implementing an integrated

financial management system:

USAID acknowledged the cornerstone

of its financial management

improvement program is the

implementation of a core financial

system that is fully compliant with

federal requirements and standards.

The agency noted that in fiscal year

2000, it successfully configured a

commercial financial software package

that is currently being used at multiple

federal agencies. USAID noted that it

followed a “best practice” approach and

reengineered its business process to

avoid costly and risky changes to the

commercial software product. It also

notes that the software underwent

extensive testing and that the agency

implemented a comprehensive program

to train and prepare agency staff to

transition to the new accounting

system.

USAID reports substantial completion

of the work to transition to the new

accounting system; however, the

updated implementation plan required

the agency to close fiscal year 2000

with its current accounting system

before transitioning to the new

accounting system in fiscal year 2001.

(According to USAID’s fiscal year 2000

accountability report, the new system

began supporting Washington financial

operations on December 15, 2000. Key

financial data including obligation,

expenditure, and loan information have

been migrated to the new system.)

(The Inspector General, in the fiscal

year 2000 audit report, noted that the

USAID remediation plan said the

agency would achieve compliance with

Federal Financial Management

Improvement Act in fiscal year 2003 by

implementing an integrated financial

management system at

USAID’s performance goal for a core financial

management system certified compliant with federal

requirements has two indicators:

• integrated, automated financial systems worldwide,

with the targets to (a) link the remaining legacy

financial systems to the new core financial

management system in Washington D.C. and (b)

obtain federal certification of the general control

environment and system security for the accounting

operations of overseas missions not certified in

fiscal year 2001;

• a fully operational, secure, and compliant core

financial system installed with interfaces to major

feeder systems. USAID noted that its target is to

expand this system to as many overseas field

missions as budgetary resources allow.

The plan does not provide progress milestones or

resource allocations and specific time frames for

completion.
Appendix I: Observations on the U.S. Agency

for International Development’s Efforts to

Address Its Major Management Challenges

Page 26 GAO-01-721 USAID: Status of Achieving Key Outcomes

Major management challenge

Progress in resolving major

management challenge, as

discussed in the fiscal year 2000

performance overview

Applicable goals and measures in the fiscal year

2002 performance plan

USAID/Washington and two pilot

missions. However, the Inspector

General concluded that USAID might

not achieve the goal until the system is

implemented worldwide.)

Financial management information

unreliable/Financial statements

inaccurate and do not measure

program results: The Inspector

General was unable to report on

USAID’s financial statements for

fiscal year 2000 because the

agency had not implemented

adequate accounting and financial

management systems to produce

complete, reliable, timely, and

consistent financial statements.

Agency systems do not meet the

federal requirements and

standards for financial

management.

USAID identified financial management

as a management challenge, and

recognizes the need to improve the

quality and availability of financial and

performance data. However, the report

does not directly address agency

progress in obtaining an unqualified

opinion on its financial statements.

USAID reports that during fiscal year

2000, it concentrated on correcting this

problem by making substantial progress

toward completing the transition to the

new accounting system. USAID noted

that it installed, configured, tested, and

readied the new core financial

management system to support

Washington’s financial operations,

beginning in fiscal year 2001.

To improve its financial management

procedures, USAID said it initiated a

comprehensive study of its financial

management operations worldwide.

USAID feels this study, undertaken in

collaboration with the Chief Financial

Officer’s Council, is a critical first step to

enhance the agency’s financial

management operations, introduce best

practices into its financial management

procedures, and bring USAID’s

financial procedures and operations

into compliance with various federal

financial management laws and

regulations. The agency received the

study’s findings in 2000 and will begin

implementation of key

recommendations during fiscal year

2001.

The plan has no goals or measures. However, it

provides general time frames for establishing an

integrated financial management system certified

compliant with federal requirements. Also, USAID

indicated that its target is to install a system capable of

allocating costs to strategic objectives in Washington,

D.C. and the field.
Appendix I: Observations on the U.S. Agency

for International Development’s Efforts to

Address Its Major Management Challenges

Page 27 GAO-01-721 USAID: Status of Achieving Key Outcomes

IG-designated major

management challenges

Reconciliation of financial

management information at USAID

continues to be a problem

USAID identified data reconciliation as

one of the critical problem in dealing

with financial management issues.

However, the report does not discuss

any progress directly related to

reconciliation of various financial data.

(The Inspector General, in its

December 1, 2000, letter to the

Committee on Government Affairs’

Chairman on USAID management

challenges, discussed data

reconciliation and progress made to

resolve some of the problems. The

Inspector General noted that USAID

contracted with independent public

accounting firms to assist in reconciling

USAID’s fund balance with Treasury

and each grant currently recorded in its

Letter-of-Credit system; these

reconciliations were performed as of

September 30, 2000. In addition,

USAID contracted with the Department

of Health and Human Services (DHHS)

to process, disburse, and liquidate

advances to grantees. USAID

expected significant improvements in

the recording of disbursements and

liquidations of advances awarded to

grantees through the contract with

DHHS. To date, the Inspector General

has not seen evidence of this expected

improvement.)

The plan does not address this challenge.

Challenges with accounts

receivable: Despite improvements

in its process and procedures for

reporting Credit Receivables

Program, significant discrepancies

exist between the contractor

bank’s loan information and

USAID’s records

USAID recognized weak financial

management procedures as another

critical financial management issue. To

this end, the agency reported that it

adopted a new standard general ledger

posting model for credit programs,

eliminated the backlog of debtrescheduling entries, and began to use

commercial banks to service

outstanding loans. However, the report

does not provide information on the

status or results of these initiatives.

The plan does not address this challenge.

Information resource

management: new management

system reporting and resource

management capabilities and

information resource management

processes

USAID reported it faces several

management challenges linked to its

ability to improve its information

management and technology systems.

The performance overview stated that

USAID developed an Information

Management Strategic Plan for Fiscal

USAID’s plan for 2002 stated that the agency will

continue to be challenged as it attempts to provide

more effective information resources management.

The plan provided performance goals for upgrading

(1) desktop/network operating systems at more than

half the agency’s worldwide locations, and (2)

telecommunication network equipment at more than

one-third of the agency’s worldwide locations. The
Appendix I: Observations on the U.S. Agency

for International Development’s Efforts to

Address Its Major Management Challenges

Page 28 GAO-01-721 USAID: Status of Achieving Key Outcomes

Years 2001-05 that maps a course for

more effectively applying information

management and technology to the

goals and objectives of the agency.

USAID also reported that it

• established a Capital Investment

Portfolio;

• developed a Target Information

Architecture;

• completed Year 2000 transition and

operations unimpeded;

• completed an analysis of agency

connectivity options; and

• implemented a pilot electronicgovernment (e-gov) initiative.

plan also stated that USAID expects to link its new

core financial management system in Washington to

remaining legacy financial management systems. In

addition, the plan stated that USAID expects to

complete the development phase of the agency’s

Government Paperwork Elimination Act initiative,

thereby setting the stage for final implementation and

testing in fiscal year 2003.

USAID’s broad and changing

mandate: Studies dating to 1992

reported USAID was faced with a

multiplicity of programs, unclear

mandates, and an out-of-balance

ratio of country programs to staff

and budget. In addition, the

agency’s mandate continues to

evolve from sustainable

development in poor countries to

emergency assistance in response

to man-made and natural disasters

(war, hurricanes, disease, etc.),

and transition to democracy.

The performance overview does not

address this issue.

(The Inspector General reported USAID

has sought to obtain additional

resources for personal services

contractors and direct and technical

advisers in response to increased

demands for emergency responses,

such as disaster assistance resulting

from hurricanes Mitch and Georges. In

addition,USAID created a working

group to address the resource

demands of supplemental

appropriations.)

The plan does not address this challenge.

Accountability in the international

environment: Corruption and lack

of accountability in the overseas

environment are major

impediments to economic

development, the growth of

democratic institutions, and the

ability of developing countries to

attract foreign investments.

Not addressed specifically as a

management challenge.

In the performance overview, USAID

reported that 30 operating units

throughout the world had programs

pursuing transition to democracy and

strengthening government institutions.

In addition, 23 units had programs

focused on improving capacities of

government institutions, and 16 units

operated rule of law programs.

Not addressed specifically as a management

challenge.

USAID stated it will increase efforts to fight corruption,

in collaboration with the Department of State, by

creating and refining regional strategies. The agency

also said it expects to increase program activities in

connection with the May 2001 global forum on fighting

corruption.

(The Inspector General’s office stated it will focus on

efforts to detect financial losses.)

USAID-identified major

management challenges

Agency goals and objectives

served by well-planned and

managed acquisitions and

assistance: In its Revised Strategic

Plan, USAID made efficient and

effective acquisitions and

assistance a strategic goal of the

agency due to its heavy reliance

on intermediaries, contractors,

grantees, and cooperative

USAID developed four performance

goals and indicators for the new

strategic objective. The performance

goals are

• acquisitions and assistance planning

and program development

integrated;

• acquisitions and assistance

competencies of technical and

contract staff strengthened;

Fiscal year 2002 activities and performance targets

under the performance goals are

• acquisitions and assistance planning and program

development integrated

- establish and modify procurement priorities and

negotiate 38 percent of fiscal year 2002

obligations within the first three quarters, 20

percent during July, 21 percent in August, and 21

percent in September.

- twenty percent of contracts over $25,000 are
Appendix I: Observations on the U.S. Agency

for International Development’s Efforts to

Address Its Major Management Challenges

Page 29 GAO-01-721 USAID: Status of Achieving Key Outcomes

agreement awardees to deliver the

actual assistance programs.

(In March 2001, we reported a

potential obstacle to rapid

HIV/AIDS program expansion in

sub-Saharan Africa derived from

human capital shortages and

some processes within the USAID

acquisition process.)

• partnership among USAID technical

offices, contract offices, and

contractors and recipients approved;

and

• consistency in application of

acquisitions and assistance policies

and procedures.

USAID also established indicators for

three of the goals and baselines for two

goals.

USAID stated that during 2000, it

trained 700 employees in new

acquisitions and assistance rules and

procedures.

performance-based.

- ninety-five percent of contracts valued at over

$25,000 are advertised via the Internet.

• acquisitions and assistance competencies of

technical and contract staff strengthened

- ninety percent of contract officers certified by

end of 2002.

- establish performance target for training of

Cognizant Technical Officers.

• partnership among USAID technical offices,

contract offices, and contractors and recipients

approved

- increase post-award meetings between all

parties to establish relationships when

substantial new awards are made. Target will be

set following establishment of baseline in 2001.

• consistency in application of acquisitions and

assistance policies and procedures

- contract Review Board findings, special

evaluations, and feedback from agency

acquisitions and assistance ombudsman validate

consistent implementation of policies and

procedures. Target will be set following

establishment of baseline in 2001.

Collaboration with partners and

stakeholders strengthened

The performance overview did not

address this issue.

(In May 2001, the USAID Administrator

testified before the Congress that within

the agency there has been an

increased emphasis on the roles of

religious institutions, nongovernmental

organizations, private foundations,

universities, corporations, and

individuals in providing services and

accomplishing public objectives.)

Plans for 2002 performance state USAID will work to

(1) increase strategic consensus with other donors on

key development issues to ensure compatibility of

efforts in select sectors, countries, and regions; (2)

increase public awareness of USAID programs and

achievements to the U.S. public and the Congress;

and (3) enhance the role of country partners in

strategic planning and program implementation by

including more country partners in strategic objective

teams, and ensure that country partners perceive that

they are part of the team.

(In addition, the USAID Administrator testified before

the Congress that the agency will become the catalyst

for mobilizing ideas, efforts, and resources of the

public sector, corporate America, university

community, and nongovernmental organizations in

support of shared objectives. The agency will act

similarly to a venture capital partner by using its

resources and experience to help partners with

investment decisions. The agency will also seek new

partners who can bring new investment and ideas into

the development arena. USAID calls this “new

business model” the Global Development Initiative.)
Appendix II: GAO Contact and Staff

Acknowledgments

Page 30 GAO-01-721 USAID: Status of Achieving Key Outcomes

Lawrence L. Suda (202) 512-5380

In addition to Mr. Suda, Shawket Ahmed, David G. Bernet, Janey Cohen,

Kirk Daubenspeck, Patrick Dugan, Audrey Solis, Laverne Tharpes and

Tom Zingale made key contributions to this report.

Appendix II: GAO Contact and Staff

Acknowledgments

GAO Contact

Acknowledgments

(320038)
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