United States Government Accountability Office

Washington, DC 20548 

September 29, 2006 

The Honorable Mitch McConnell 

Chairman 

The Honorable Patrick J. Leahy 

Ranking Minority Member 

Subcommittee on State, Foreign Operations, 

 and Related Programs 

Committee on Appropriations 

United States Senate 

The HonorableJim Kolbe 

Chairman 

The Honorable Nita M. Lowey 

Ranking Minority Member 

Subcommittee on Foreign Operations, 

 Export Financing, and Related Programs 

Committee on Appropriations 

House of Representatives 

Subject: Foreign Assistance: Recent Improvements Made, but USAID Should Do More to

Help Ensure Aid Is Not Provided for Terrorist Activities in West Bank and Gaza 

The United States has worked for decades to achieve a resolution to the IsraeliPalestinian conflict through initiatives such as the 1993 Oslo Accords and the more 

recent 2003 Roadmap for Peace. During fiscal years 1993 through 2005, the United States 

provided more than $2 billion in assistance to Palestinians in the West Bank and Gaza, 

including nearly $275 million in fiscal year 2005, to help achieve this goal. In particular, 

the 2005 assistance was provided to support the president of the Palestinian Authority, 

elected in January 2005, and to facilitate the Israeli disengagement from parts of the West 

Bank and Gaza, among other things. This assistance, primarily administered by the U.S. 

Agency for International Development (USAID), has been directed mainly toward five 

development sectors: economic growth, water and infrastructure, democracy and 

governance, health, and higher education. 

In recent years, the United States has taken several steps to help ensure that U.S. 

resources, including its aid to the West Bank and Gaza, do not support terrorist activities. 

On September 23, 2001, President Bush issued an executive order prohibiting the support 

GAO-06-1062R West Bank and Gaza Antiterrorism Procedures 
of any organizations or individuals that have been designated as terrorists.1

 Since 2001, to 

implement the executive order and other antiterrorism provisions in various subsequent 

appropriations acts,2

 USAID, in consultation with the Department of State, Congress, and 

others, developed a number of provisions to help ensure that its assistance is not 

delivered to or through terrorists. In addition, the USAID mission for the West Bank and 

Gaza (the mission) developed policies and procedures to implement antiterrorism 

provisions for the awards it administers. The provisions that were in effect for assistance 

delivered through contracts, grants, and cooperative agreements active in 20053

 included 

(1) the vetting of certain non-U.S. prime awardees and subawardees for terrorist 

connections; (2) certifications by all prime awardees and subawardees of grants and 

cooperative agreements that they have not assisted and do not assist terrorists; and (3) a 

clause in all awards and related subawards prohibiting the support of terrorists 

(antiterrorism clause) and clauses in all prime awards prohibiting (a) the use of U.S. 

funds to recognize or honor terrorists (naming clause) and (b) the provision of cash to 

the Palestinian Authority (cash clause). 

Responding to a 2005 mandate to the Comptroller General of the United States, we 

examined fiscal year 2005 assistance to the West Bank and Gaza to, among other things,

ensure that the required antiterrorism measures were implemented.4

 In addition, we 

reviewed the financial audit reports of West Bank and Gaza contractors and grantees 

(and significant subcontractors and subgrantees) prepared by the USAID Office of the 

Regional Inspector General–Cairo (RIG) in response to a 2003 mandate and subsequent 

 1

Executive Order 13224, 66 Fed. Reg. 49070 (Sept. 23, 2001) pursuant to the authorities of the International 

Emergency Economic Powers Act (50 U.S.C. 1701 et seq.); the National Emergencies Act (50 U.S.C. 1601 et 

seq.); sec. 5 of the United Nations Participation Act of 1945, as amended (22 U.S.C. 287c) (UNPA); and sec. 

301 of title 3, United States Code. 

2

Consolidated Appropriations Resolution of 2003, Pub. L. No. 108-7, § 568(b), 117 Stat. 11, 207 (2003); 

Consolidated Appropriations Act of 2004, Pub. L. No. 108-199, § 566(b), 118 Stat. 3, 195 (2004); and 

Consolidated Appropriations Act of 2005, Pub. L. No. 108-447, §559(b), 118 Stat. 2809, 3019 (2004). 

3

For the purposes of this report, we define active awards as awards for which obligations or expenditures

were made in fiscal year 2005. According to West Bank and Gaza mission documents, vetting involves

checking the names of individuals and organizations that implement USAID projects against databases and 

other information sources to determine if they are involved with terrorism. Throughout this report, we use 

the term “prime awardees” to refer to organizations that receive USAID contracts, grants, or cooperative

agreements to implement U.S. assistance projects. “Subawardees” refer to organizations that receive 

subcontracts or subgrants from prime awardees for work on U.S. assistance projects. In addition to using 

contracts, grants, and cooperative agreements, USAID provides assistance through consulting agreements,

letters of understanding, memorandums of understanding, and purchase orders. See enclosure I for

definitions of these terms. 

4

Emergency Supplemental Appropriations for Defense, the Global War on Terror, and Tsunami Relief, 

2005, Pub. L. No. 109-13, § 2103, 119 Stat. 231, 266 (2005). Other issues related to assistance delivered by

USAID’s West Bank and Gaza mission—including information on obligations, expenditures, and the impact 

of the assistance—will be covered in a future report. 

Page 2 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
mandates.5

 Among other things, the audits examined the awardees’ compliance with 

antiterrorism provisions. 

To address these objectives, we reviewed the relevant laws and executive orders and 

USAID’s directives, internal memorandums, operating procedures, and guidance for 

assistance-related antiterrorism measures. We focused on USAID’s implementation of 

procedures related to vetting and antiterrorism certification and clauses. We developed a 

database of USAID West Bank and Gaza awards to capture and summarize their 

characteristics and requirements. We traveled to Tel Aviv, Israel, and met with cognizant 

West Bank and Gaza mission officials, including the USAID Mission Director and his 

senior staff. We examined an unclassified USAID West Bank and Gaza mission database 

designed to help the mission manage its vetting, and we analyzed 99 USAID contracts, 

grants, and cooperative agreements and over 900 related subawards that were associated 

with awards active during 2005 to determine whether they had the required certifications 

and clauses. We also met with the mission’s staff responsible for overseeing the various 

awards and related subawards. In addition, we traveled to Cairo, Egypt, and met with 

USAID officials at the RIG and reviewed and analyzed the contents of 62 audit reports 

that it had completed, which addressed West Bank and Gaza assistance for awards active 

from 2002 through 2005 (with corresponding reports issued from 2004 through 2006). We 

conducted our review from October 2005 through August 2006 in accordance with 

generally accepted government auditing standards. (For further details of our scope and 

methodology, see enc. I.) 

Results in Brief 

The mission’s implementation of its antiterrorism requirements for vetting, certification, 

and clauses for awards active in fiscal year 2005 had certain limitations. However, the 

mission has taken, or is taking steps, to resolve many of these problems. 

• Until June 2006, the mission did not routinely collect detailed identifying information 

on individuals, such as date and place of birth, or verify that information. 

Approximately 94 percent of the vetting results memorandums indicated that 

additional information, such as an individual’s date and place of birth and an Israeli 

identification number, was needed for a more complete assessment. Further, we 

found that the mission had not established procedures, such as requesting some form 

of identification, to verify the accuracy of key individuals’ names provided by 

 5

Since 2003, U.S. appropriations acts (§ 568(b), 117 Stat. at 207; § 566(b), 118 Stat. at 195; § 559(b) 118 Stat.

at 3019) have required that federal or nonfederal audits of all USAID contractors, grantees, and significant 

subcontractors and subgrantees in the West Bank and Gaza be conducted at least annually to ensure, 

among other things, compliance with U.S. antiterrorism provisions related to assistance for West Bank and 

Gaza. The USAID RIG determined the significance of subawardees based on the total value of the awards 

provided to the subawardee. 

Page 3 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
awardees.6

 The mission drafted a policy in June 2006 to collect additional identifying 

information and in its comments stated that it would take action to improve its ability 

to verify the information provided by awardees. In addition, in March 2006, although 

the mission added certain conditions that would trigger revetting of awardees, the 

mission eliminated a requirement to periodically revet certain awardees, thus 

reducing the chances of identifying terrorist connections with more recent 

intelligence information. However, in its comments on a draft of this report it agreed 

with our recommendation and has reinstituted the periodic revetting requirement. 

• Data reliability issues, security weaknesses, and other problems with the mission’s 

unclassified database, which is designed to record and track vetting results, limited 

its utility for management and oversight purposes. We found important data fields 

that were left blank or filled with inappropriate information. Also, a foreign service 

national developed the database counter to State internal regulations, and few 

safeguards were in place to control access to hard copies of the information stored in 

the database. In April 2006, a USAID team of information specialists began addressing 

these problems, and cognizant USAID officials told us they expect to have a more 

useful and secure unclassified vetting management database in operation later this 

year. 

• Although the mission generally ensured that prime awardees signed the required 

certifications, many prime awards did not contain the required clauses and, until 

recently, the mission did not systematically verify that recipients of subawards signed 

the required certifications or that subawards contained the mandatory clauses. In 

some cases, the required clauses did not appear or had been added months or years 

after award initiation, including after our inquiry. Consequently, some prime 

awardees and subawardees may not have been aware of their contractual obligations 

to comply with certain antiterrorism provisions. In response to our observations, the 

mission revised its policy in March 2006 to require that before award approval, all 

prime awardees submit subawardee certifications as well as evidence that the 

required clauses were included in the subawards. The mission has not, however, 

clearly articulated how its antiterrorism provisions are applied to assistance 

agreements such as memorandums of understanding and consulting agreements, and 

as a result, it has applied these provisions inconsistently. 

To address the 2003 mandate and subsequent related mandates for financial audits of 

West Bank and Gaza assistance, USAID’s RIG contracted with audit firms in the region.7

 6

The mission defines key individuals as those who have financial and management decision-making 

authority over the operations of the organization. USAID specifies that such individuals include the

program manager or chief of party for the USAID-financed program; the principal officer and deputy 

principal officer of the organization (for example, executive director, deputy director, president, or vicepresident); the principal officers of the organization’s governing body (for example, chairman, vicechairman, treasurer, and secretary of the board of directors or board of trustees); and any other person

with significant responsibilities for administration of USAID-financed activities or resources. 

7

Up to $1 million was provided to the USAID Office of the Inspector General in each fiscal year to conduct

the audits. 

Page 4 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
The RIG added the requirement for reviewing antiterrorism provisions to its audits in 

supplementary guidance in 2003. Since then, the RIG has prepared 62 reports, issued 

from 2004 through 2006, based on the contract auditors’ reviews. However, although the 

mandate was addressed, the RIG’s financial audits did not help the mission ensure that 

awardees complied with the antiterrorism requirements before awards and subawards 

were entered into. In particular, the nature of the RIG’s financial audits means the audits 

were not initiated until after the award had been implemented or, in some cases, 

completed. This means that any omissions in conducting the required vetting or ensuring 

that the antiterrorism certifications and clauses were in the awards, as required, were 

not found by the auditors until after the award had been entered into. In addition, 

• The guidance to the RIG’s contract auditors did not always reflect the mission’s

antiterrorism policies and procedures. For example, the 2003, 2004, and 2005 

guidance directed auditors to check for a less detailed version of the antiterrorism 

clause than the mission was using. 

• The October 2003 guidance provided that all subawards should be examined rather 

than a sample. However, this requirement was not in the guidance to auditors for 

2004 and 2005. Unless the auditors were otherwise aware of the 2003 guidance, they 

may not have reviewed all subawards. 

We are making several recommendations to the Director of U.S. Foreign Assistance and 

USAID Administrator to strengthen the mission’s efforts to help ensure that U.S. 

assistance to the West Bank and Gaza does not support terrorist activities, including 

addressing limitations with the mission’s vetting management database and developing 

antiterrorism policies and procedures for all its financial agreements. We also 

recommend that the Director of U.S. Foreign Assistance and USAID Administrator and 

the West Bank and Gaza mission, in cooperation with the RIG, develop a system to 

review awards and applicable subawards to help ensure that antiterrorism requirements 

are met before the financial agreements are implemented. This system should also 

ensure that the reviews (1) reflect the mission’s policies and procedures at the time of 

the award and (2) have a consistent methodology for examining subawards. 

In commenting on a draft of this report, USAID and the USAID Inspector General 

generally accepted four of our five recommendations. USAID noted that our fieldwork 

and the draft report were a positive contribution to improving and strengthening the 

West Bank and Gaza mission’s antiterrorism provisions. However, the mission disagreed 

on our recommendation on the need to develop policies and procedures for applying 

antiterrorism provisions to other assistance agreements, such as memorandums of 

understanding and purchase orders. Although the mission added guidance regarding inkind assistance to its mission order, USAID commented that further clarification for 

applying antiterrorism provisions to other assistance agreements such as memorandums 

of understanding was not needed. We believe that further clarification is needed in the 

mission order to ensure that antiterrorism provisions are correctly and consistently 

applied to all agreements. In addition, USAID noted that the mission has taken steps that 

address the intent of our recommendation to ensure compliance with antiterrorism 

provisions before awards and subawards are implemented. 

Page 5 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
Background 

The Palestinian territories, comprising the West Bank and Gaza, cover 2,402 square miles 

and have a combined population of 3.8 million people.8 Gaza is administered by the 

Palestinian Authority, while the West Bank includes areas administered by the authority 

and Israel. (See fig. 1.) 

 8

The West Bank has a land area of 2,263 square miles and a population of about 2.4 million. Gaza has a 

land area of 139 square miles and a population of about 1.4 million. 

Page 6 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
Figure 1: Map of West Bank and Gaza and Surrounding Countries 

EGYPT

SAUDI

ARABIA

JORDAN

SYRIA

LEBANON

ISRAEL

Gaza

West

Bank

Golan

Heights

Gaza City

Haifa

Tel-Aviv

Mediterranean

Sea

Jerusalem

Ramallah

Sources: GAO (data); Map Resources (map) and CIA World Factbook.

0 50 miles

UN Disengagement 

Observer

Force Zone 

Israeli 

occupied

In 1993, the Oslo Peace Accords9

 were signed and USAID established its West Bank and 

Gaza mission in Tel Aviv. In September 2000, the second intifada (uprising) began and 

the Oslo peace process unraveled. Peace efforts were renewed in June 2002 when 

President George W. Bush outlined the principles that served as the foundation for a 

 9

The accords called for the withdrawal of Israeli forces from Gaza and parts of the West Bank and affirmed

the Palestinian right to self-government within those areas through the creation of the Palestinian Interim 

Self-government Authority. Palestinian rule would last for a 5-year interim period during which a 

permanent agreement would be negotiated (beginning not later than the third year of the interim period). 

Page 7 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
performance-based strategy called the Roadmap for Peace, which calls for an 

independent Palestinian state coexisting peacefully with the State of Israel. The United 

Nations (UN), the United States, the European Union, and Russia—known as the Quartet 

on the Middle East10—as well as Israel and the Palestinian Authority endorsed the 

strategy in April 2003. In January 2005, Mahmoud Abbas, a supporter of the peace 

strategy, was elected president of the Palestinian Authority. A year later, in January 2006, 

the Palestinian people elected a Hamas majority to the Palestinian Legislative Council. 

Hamas is designated as a terrorist organization by Israel, the United States, and the 

European Union. On January 30, 2006, the Quartet on the Middle East stated that its 

members would only provide support and assistance to the Hamas-led government if the 

government would agree to nonviolence, recognize the state of Israel, and respect 

previous Israeli-Palestinian peace agreements. As of September 2006, Hamas had not 

accepted these conditions. 

Since 1993, the United States has provided more than $2 billion to the West Bank and 

Gaza to support the Middle East peace process and encourage progress in reforming the 

Palestinian Authority.11 The 2005 appropriation of $274.4 million—the largest yearly 

amount of U.S. bilateral assistance for the West Bank and Gaza since the second 

intifada—was provided to, among other things, support the president of the Palestinian 

Authority, elected in January 2005, and to facilitate the Israeli disengagement from Gaza 

and four northern West Bank settlements. As of June 30, 2006, the West Bank and Gaza 

mission reported that it had obligated $222.9 million in Economic Support Fund 

assistance12 through various financial agreements active during fiscal year 2005 and had 

expended $60.8 million. For fiscal year 2006, USAID reported that it had obligated just 

$1.1 million and expended only $139,000—reflecting the fact that U.S. assistance to the 

West Bank and Gaza has been frozen pending a comprehensive review. In April 2006, the 

Secretary of State announced a substantial reduction in assistance and redirected $300 

million to humanitarian, democracy promotion, and civil society activities. In June 2006, 

concerned that Hamas’ influence was growing, the Congress directed that none of the 

funds appropriated under the Economic Support Fund in 2006 or any prior appropriation

for foreign operations, export financing, and related programs may be obligated for 

assistance to the West Bank and Gaza until the Secretary of State reports to the 

Committees on Appropriations how the funds will be spent and that appropriate 

measures are in place to ensure that no funds will support terrorist activities. 13 On July 

 10The quartet is involved in mediating the peace process between the State of Israel and the Palestinian

Authority. 

11These funds include $121 million in direct budget support for the Palestinian Authority and $1.3 billion to 

the UN Relief and Works Agency. 

12The Economic Support Fund promotes the economic and political foreign policy interests of the United

States by providing assistance to allies and countries in transition to democracy, supporting Middle East 

peace negotiations, and financing economic stabilization programs. Recent appropriations acts prohibit 

the provision of Economic Support Fund assistance in the West Bank and Gaza to support or recognize 

individuals or organizations involved in terrorism. 

13See Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane 

Recovery, 2006 Pub. L. No. 109-234, § 1304, 120 Stat. 418, 435 (2006). The act was signed into law on June

15, 2006. 

Page 8 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
21, 2006, the Secretary of State submitted the report to the committees. The report 

included a revised strategy that provided details on an assistance package totaling $468 

million.14

Since establishing its mission in the West Bank and Gaza in September 1993, USAID has 

directed assistance to the Palestinians toward five main development sectors: economic 

growth, water and infrastructure, democracy and governance, health, and higher 

education. It has supported these objectives through efforts such as, respectively, job 

creation programs, construction of reservoirs and roads, election support projects, 

projects to improve maternal and child health, and university scholarship programs. As a 

result of Hamas’ election victory in January 2006, the terrorist organization’s 

unwillingness to accept the conditions set by the Quartet, and continued attacks on 

Israel by Hamas’ military wing, USAID reduced and redirected its overall assistance 

program and focused its assistance primarily on democracy support, health, education, 

and private sector development activities that would not provide political or economic 

gain to, or require contact with, the Hamas-led Palestinian Authority.

U.S. policy to prevent assistance from supporting known terrorists in the West Bank and 

Gaza is articulated in a 2001 executive order and several appropriations laws: 

• Executive Order 13224, issued in September 2001, blocks property and prohibits 

transactions with persons who commit, threaten to commit, or support terrorism.15

 

 

14The assistance includes $50 million for Israel’s use in easing the movement and access of Palestinian 

people and goods, while improving its security. 

15Earlier executive orders concerning antiterrorism and the Middle East peace process include Executive

Order 12947, 60 Fed. Reg. 5079 (Jan. 23, 1995), and Executive Order 13099, 63 Fed. Reg. 45167 (Aug. 20, 

1998). Orders issued subsequent to Executive Order 13224 that amend it include Executive Order 13268, 67

Fed. Reg. 44751 (July 2, 2002), which, among other actions, added two individuals to the list of designated

terrorists contained in Executive Order 13224, and Executive Order 13284, 68 Fed. Reg. 4075 (Jan. 23, 

2003), which stipulates that the Department of Homeland Security be included in consultations about 

whether to designate an individual or organization as a terrorist and what actions should be taken to carry 

out Executive Order 13224. 

Page 9 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
• The Consolidated Appropriations Acts of 2003, 2004, and 2005 16 require that before 

obligating assistance under the Economic Support Fund for the West Bank and Gaza, 

the Secretary of State must establish vetting procedures to ensure that U.S. 

assistance is not provided to or through any individual, entity, or institution 

associated with terrorist activity. The 2005 law also prohibits the obligation of 

assistance under the Economic Support Fund to recognize or honor individuals who 

commit, or have committed, acts of terrorism.17 In addition, the laws require that the 

USAID Administrator ensure that annual audits of all West Bank and Gaza 

contractors and grantees and significant subcontractors and subgrantees are 

conducted to, among other things, ensure compliance with the antiterrorism 

provisions contained in the acts.18

To implement Executive Order 13224 and the antiterrorism provisions in the various 

laws, USAID has issued several Acquisition and Assistance Policy Directives since 2002 

that require an antiterrorism certification in all grants and cooperative agreements and 

an antiterrorism clause in all USAID awards.

• All prime awardees and subawardees of grants and cooperative agreements are 

required to certify that they do not provide material support or resources to 

individuals or entities engaged in terrorist activity or to those that support them.19 The 

certification delineates steps that awardees are supposed to take to help prevent 

assistance from being provided to terrorists, such as (1) reviewing U.S. and UN 

terrorist lists to ensure that awardees do not appear on them and (2) developing 

reasonable monitoring procedures to safeguard against the diversion of assistance to 

support terrorist activity. This certification also provides for unilateral termination of 

the award by USAID if the terms of the certification are violated. 

• The antiterrorism clause applies to all prime awardees and subwardees. It is 

intended to familiarize award recipients with the names contained in Executive Order 

13224 and apprise them of their contractual responsibility to comply with executive 

orders and laws that prohibit transactions with, and provision of resources and 

 16§ 568(b), 117 Stat. at 207; § 566(b), 118 Stat. at 195; § 559(b) 118 Stat. at 3019. Similar language was 

included in the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2006, 

Pub. L. 109-102, § 559(b), 119 Stat. 2172, 2221 (2005). Section 1304 of the Emergency Supplemental 

Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006, requires the 

Secretary of State to report to the Committees on Appropriations that appropriate procedures and 

safeguards exist to ensure that U.S. assistance is not provided to or through any individual, private or 

government entity, or educational institution that the Secretary knows or has reason to believe advocates,

plans, sponsors, engages in, or has engaged in, terrorist activity. 

17Consolidated Appropriations Act of 2005, Pub. L. No. 109-102, § 559(c), 118 Stat. 2809, 3019 (2004). 

18§ 568(c), 117 Stat. at 207; § 566(c), 118 Stat. at 195; § 559(d) 118 Stat. at 3019. 

19This requirement can be found in USAID Acquisition and Assistance Policy Directives 02-19 (December 

2002), 04-07 (March 2004), 04-14 (September 2004) and action memorandums. 

Page 10 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
support to, individuals and organizations associated with terrorism.20 USAID also

mandated the inclusion of an antiterrorism clause in awards to the UN. It states that 

the UN will make reasonable efforts to ensure that no USAID funds are used to 

provide support to individuals and organizations associated with terrorism.21

 

The West Bank and Gaza mission developed additional clauses to implement other 

legislated antiterrorism provisions that applied to its awards during 2005.22

 

• The “naming” clause, according to the mission’s regional legal advisor, is required in 

all prime awards initiated after December 2004. The clause was introduced in 

response to allegations that USAID was providing funding to institutions that were 

honoring terrorists. After these allegations, a provision was included in the 2005 

appropriations law prohibiting the use of assistance appropriated under the 

Economic Support Fund to recognize or honor individuals who commit, or have 

committed, acts of terrorism.23

• The “cash” clause, according to the mission’s regional legal advisor, is required in all 

prime awards and prohibits the provision of direct cash assistance to the Palestinian 

Authority unless a presidential certification is filed. It was first introduced in the 1998 

appropriations law and has been included in annual appropriations law since then.24

The regional legal advisor told us that, although the mission originally required the 

cash clause as an anticorruption measure, the clause could now serve to help prevent 

the use of U.S. funds to support terrorism.25

 

 20The antiterrorism clause requirements are specified in Acquisition and Assistance Policy Directive 02-04

(March 2002) and in action memorandums. 

21The UN version of the antiterrorism clause is specified in Acquisition and Assistance Policy Directive 03-

04 (May 2003). 

22On October 30, 2002, and July 3, 2003, the USAID West Bank and Gaza mission Regional Legal Advisor 

issued two action memorandums that were distributed to the mission summarizing the antiterrorism 

requirements in place at the time. 

23§ 559(c), 118 Stat. at 3019.

24Foreign Operations, Export Financing, and Related Programs Appropriations Act of 1998, Pub. L. No. 105-

118, § 566, 111 Stat. 2386, 2428 (1997); Omnibus Consolidated and Emergency Supplemental 

Appropriations Act of 1999, Pub. L. No. 105-277, § 566, 112 Stat. 2681, 2681-194 (1998); Consolidated

Appropriations Act of 2000, app. B, Pub. L. No. 106-113, § 563, 113 Stat. 1501, 1501A-105, (1999); Foreign 

Operations, Export Financing, and Related Programs Appropriations Act of 2001, app. A, Pub. L. No. 106-

429, § 562, 114 Stat. 1900, 1900A-46 (2000); Foreign Operations, Export Financing, and Related Programs

Appropriations Act of 2002, Pub. L. No. 107-115, § 555, 115 Stat. 2118, 2160 (2002); Consolidated 

Appropriations Resolution of 2003, Pub. L. No. 108-7, § 552, 117 Stat. 11, 2000 (2003); Consolidated

Appropriations Act of 2004, Pub. L. No. 108-199, § 552, 118 Stat. 3, 188 (2004); Consolidated Appropriations

Act of 2005, Pub. L. No. 108-447, § 550, 118 Stat. 2809, 3014; and Foreign Operations, Export Financing, and 

Related Programs Appropriations Act of 2006, Pub. L. No. 109-102, § 550, 119 Stat. 2172, 2217 (2005). 

25We analyzed the application of the cash clause in all USAID awards active in 2005 because of Hamas’ 

election victory and subsequent control of the Palestinian Authority. 

Page 11 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
Figure 2 presents the mission’s antiterrorism measures that applied to USAID contracts, 

grants, and cooperative agreements during fiscal year 2005. 

Figure 2: Antiterrorism Vetting, Certification, and Clause Requirements 

Applicable in Fiscal Year 2005, by Financial Agreement 

























 



























 









USAID contracts

U.S. prime contractor

Non-U.S. prime contractor

• U.S. subcontractor 

• Non-U.S. subcontractor

• U.S. subgrantee 

• Non-U.S. subgrantee

USAID grants and 

cooperative agreements

U.S. prime grantee 

Non-U.S. prime grantee

• U.S. subgrantee

• Non-U.S. subgrantee

USAID grants and 

cooperative agreements 

with the UN

UN prime grants and 

cooperative agreements 

• U.S. subcontractor

• Non-U.S. subcontractor

• U.S. subgrantee

• Non-U.S. subgrantee

Financial agreement/

awardee Vetting Certification

Antiterrorism 

clause

Naming 

clause

Cash

clause

Antiterrorism requirements

Source: GAO analysis of USAID and West Bank and Gaza mission guidance.

West Bank and Gaza Mission’s Implementation of Antiterrorism Measures Had 

Limitations, but the Mission Is Taking Certain Corrective Actions 

The mission’s implementation of its measures for antiterrorism vetting, certification, and 

clauses in fiscal year 2005 had limitations that reduced its ability to help ensure that U.S. 

assistance does not support terrorist activities. However, the mission has taken steps, or 

is taking steps, to correct many of these limitations. 

Mission’s Vetting Procedures Had Limitations, but It Has Taken Corrective Actions

The mission developed procedures for vetting awardees, but limitations in these 

procedures reduced the mission’s ability to help ensure that U.S. funds do not support 

terrorists. However, the mission has implemented actions to strengthen its procedures. 

The mission did not collect certain biographical information, leading to less-thancomprehensive vetting results. In addition, the mission had not developed procedures to 

verify the information provided by prime awardees or to ensure that prime awardees 

verified information provided by subawardees. Further, until March 2006, a higher dollar 

threshold for vetting some contractors and subcontractors reduced the numbers vetted, 

Page 12 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
and the mission eliminated a requirement for periodic revetting of awardees in early 

2006. As a result of our review and consultations with congressional staff, the mission 

has made changes to strengthen its procedures, including collecting more complete 

biographical data, verifying the data provided by awardees, lowering the vetting

threshold for contracts, and reinstituting periodic revetting. Finally, several limitations 

associated with the mission’s vetting management database have hampered the mission’s 

oversight of the vetting process, although the mission has begun taking steps to correct 

these issues. 

West Bank and Gaza Mission Developed Vetting Procedures 

According to mission officials, the mission’s vetting procedures were the culmination of 

a process beginning in 2001 and based on consultations with Congress. These 

procedures represent an interagency effort forged from consultations with USAID’s Asia 

and Near East Bureau, USAID’s antiterrorism task force, the Office of the General 

Counsel, the U.S. Embassy in Tel Aviv, U.S. implementing partners, and Palestinian 

nongovernmental organizations (NGOs). Since then, the vetting procedures have been 

refined to account for concerns raised by these and other parties. The mission’s vetting 

procedures state that the process begins when a non-U.S. prime awardee submits 

identifying information about itself and its key individuals, or information about a 

subawardee and its key individuals, to the mission. This information is entered in the 

mission’s unclassified vetting management database26 and is forwarded to U.S. officials in 

the U.S. Embassy in Tel Aviv who are responsible for the vetting. These officials consult 

available resources, such as counterterrorism databases, to determine whether the prime 

awardee, the subawardee, or any key individuals are linked to terrorism. Memorandums 

containing the vetting results are sent to the mission, which records the results in the 

vetting management database. 

If the prime awardee, the subawardee, or any of their key individuals are found to have 

links to terrorism, the mission has the opportunity to collect and forward additional 

information. If the additional data fail to alter the initial vetting assessment results 

showing links to terrorism, the mission may submit an appeal to officials at the U.S. 

Embassy–Tel Aviv and the U.S. Consulate General–Jerusalem. Once a final determination 

has been made, the cognizant technical officer notifies the mission’s contracting officer27

and the awardee of the result and the mission’s vetting management database is updated. 

The proposed award or subaward is denied if the final determination shows links to 

terrorist organizations or activity.

 

 26The mission database is intended to store information collected on organizations and individuals that

require vetting, track the dates when vetting occurred, and record the vetting results. 

27A cognizant technical officer performs functions that are designated by the contracting or agreement 

officer or is specifically designated by policy or regulation as part of contract or assistance administration.

A contracting officer represents the U.S. government through the exercise of his or her delegated authority 

to enter into, administer, and terminate contracts and make related determinations and findings. 

Page 13 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
Mission Did Not Gather Comprehensive Vetting Information or Have Procedures 

to Verify Information Collected from Awardees 

Until recently, the mission’s vetting of individuals associated with awardees was limited 

by the mission’s decision not to collect certain identifying information for key individuals 

associated with prime awardees and subawardees. The mission changed this policy in 

June 2006. Similarly, the vetting process was limited because the mission did not have 

procedures to verify the information provided by prime and subawardees. However, the 

mission has indicated it will take steps to correct this problem. 

USAID documents show that in 2001, the mission intended to collect detailed identifying 

information about Palestinian prime awardees and subawardees, including key 

individuals’ names,28 places and dates of birth, and identification numbers. However, 

according to USAID officials, a number of NGOs expressed concern about providing 

identifying information for key individuals because they feared that such efforts would 

be seen as intelligence gathering for the United States, Israel, or both. Consequently, the 

mission decided in 2002 to routinely collect only the four-part name. 

In 2002, embassy vetting officials informed USAID that (1) a person’s name alone is not 

sufficient proof of their identity, given how easily names may be changed or aliases used; 

(2) alternative spellings of Arabic names in English add another layer of uncertainty; and 

(3) additional data elements such as date of birth would increase the reliability of the 

vetting process. Since USAID provided only the four-part name, the vetting officials 

required that all of their vetting results be qualified. Our analysis showed that providing 

only the four-part name led to incomplete vetting results most of the time. In a random 

probability sample of 104 of 520 vetting results memorandums received by the mission 

since October 2002, 94 percent of all memorandums characterized the vetting based on 

only the four-part name as less than comprehensive.29 The memorandums state that 

additional information, such as the individual’s date and place of birth and Israeli 

identification number, was needed for a more complete assessment. In addition, we 

found that the mission had established no procedures to verify the accuracy of key 

individuals’ names provided by awardees, such as requiring an Israeli identification card, 

passport, driver’s license, or some other identification document. 

In February 2006, USAID officials told us that when vetting with an individual’s four-part 

name indicated terrorist associations, the mission would collect and provide additional 

information in an attempt to verify the initial vetting results. In June 2006, as a result of 

consultations with congressional staff, the mission drafted an amendment to its policy 

and now requires the collection of key individuals’ dates and places of birth and Israeli 

 28The four-part name comprises the individual’s given name, the father’s given name, the grandfather’s 

given name, and the individual’s surname. 

29Our sample survey finding that vetting in 94 percent of the 520 memorandums was less than 

comprehensive has a 95-percent confidence interval of 88 to 98 percent.

Page 14 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
identification numbers.30 However, because the mission has not yet developed 

procedures to verify this information, it cannot be certain that the information in its 

database correctly identifies the key individuals to be vetted. In commenting on this 

report, USAID stated that the mission is following current policies and regulations, 

common throughout the U.S. government, which place the burden on the contractors 

and grantees to ensure the accuracy of information provided to the government. 

However, the mission, prompted by our findings, is planning to obtain an affirmative 

certification from awardees as to the accuracy of key individuals’ names and other data 

provided. 

Other Procedural Limitations Have Hampered Vetting 

Until March 2006, a higher dollar threshold limited the number of awards that were 

vetted, resulting in the vetting of fewer individuals and organizations. Also, in March 

2006, the mission eliminated a requirement to periodically revet awardees, which may 

preclude the revetting of some awardees after an initial clearance. Based on our review 

and other factors, USAID has taken action to strengthen its vetting procedures. 

Vetting Dollar Threshold 

In fiscal years 2001 through 2003, the mission required vetting for all non-U.S. 

contractors and subcontractors, as well as their key individuals, for awards valued at 

$25,000 or more.31 However, the mission’s July 2003 action memorandum raised this 

threshold to $100,000. We found that as a result of this increase, non-U.S. organizations 

and individuals associated with 34 contracts totaling approximately $2.1 million were not 

vetted during the period August 2003 through February 2006. According to the mission’s 

Regional Legal Advisor, mission officials raised the vetting threshold in 2003 in part 

because they were concerned that vetting was limiting the mission’s ability to meet 

urgent humanitarian needs in the West Bank and Gaza. In addition, the lower vetting 

threshold had not identified any non-U.S. contractor associated with terrorism. 

Nevertheless, responding to increased pressure to prevent U.S. assistance from reaching 

terrorists, the mission lowered the vetting threshold back to $25,000 in March 2006.

Periodic Revetting

The mission’s current policy regarding revetting of individuals and organizations does 

not provide for the possibility that terrorist associations may develop over the duration 

of an award. Prior to March 2006, mission guidance required that awardees be 

automatically revetted every 3 years. However, because most prime awards and 

subawards do not last 3 years, the mission dropped the revetting requirement from its 

 30The amendment states that mission order 21 encouraged the submission of additional data but did not 

require it. As of September 2006, the mission was awaiting clearance on privacy act and paper reduction

approvals associated with the amendment of mission order 21. 

31All recipients of grants and cooperative agreements have been subject to vetting requirements, regardless 

of the dollar value of the award, since vetting began in 2001. 

Page 15 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
guidance in March 2006. These March 2006 vetting procedures required that individuals 

and organizations be vetted once—prior to award approval. The vetting results were 

considered valid for the award’s duration. The procedures also introduced additional 

conditions that would cause awardees to be revetted. These conditions included changes 

in key individuals, if an extension of the award is proposed, or if information is provided 

to USAID that indicates that an organization or its key individuals have been or may 

currently be involved in terrorist activity. 

This procedure does not take into account the fact that intelligence regarding terrorist 

affiliations changes over time and that such information may not be provided to USAID. 

For example, according to mission officials, new intelligence information in 2005 showed 

possible links to terrorists, including Hamas, for six organizations that previously had 

been cleared. Five of these organizations had received U.S. assistance through multiple 

subawards and had been vetted and cleared by U.S. Embassy vetting officials several 

times. The new intelligence information was received after three of the subawards had 

been completed.32 One award was terminated based on the validation of the new 

information and the remaining two organizations were cleared through additional 

vetting. 

Although the resources needed for vetting increase with the frequency of vetting, 

intelligence officials stated that periodic revetting is needed to help ensure that 

individuals and organizations are not involved in terrorism. Periodic revetting would 

allow USAID to proactively seek new information about awardees that had not met any 

of the conditions contained in the mission’s procedures that trigger revetting. In its 

comments, USAID stated that, as a result of our review, it has reinstated a periodic 

revetting requirement. 

Limitations in the Mission’s Vetting Management Database Have Hindered Its 

Utility, but the Mission Is Taking Corrective Action 

A number of limitations associated with the mission’s vetting management database—

unreliable data, a lack of adherence to security policies, insufficient technical 

documentation, and the mission’s low prioritization of the database—have constrained 

the mission’s management and oversight of the vetting process. Since our review, the 

mission has begun taking steps to resolve many of these limitations.33

 

Unreliable Data 

Our review of the database revealed several issues that call into question the data’s 

reliability. 

 32 One of these three organizations was found to have links to terrorist organizations upon application for 

another award. 

33The vetting management database and the information it contains are considered unclassified. 

Page 16 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
• At least one of the names in the four-part name was missing from the name fields in 

more than 2,595 of the database’s nearly 8,800 records. 

• Inappropriate data appeared in more than 1,000 records. In these records, fields 

designed to display key individual titles with decision-making and fiduciary 

responsibilities as defined by USAID (such as president, executive director, or 

treasurer) contained the names of Middle Eastern countries or titles such as “office 

boy” and “administrative assistant.”34

 

• Data fields could be overwritten, and the system lacked an audit trail to record 

changes to critical data. Thus, important historical data, such as the date of a vetting 

request, could be removed inadvertently when records were updated. 

 Security Issues

In January 2006, the USAID RIG conducted a review of the mission’s vetting procedures 

and recommended that relevant application and security controls be implemented. When 

we followed up on the RIG’s work, we found several remaining weaknesses in the 

security of the vetting management database. 

• Vetting reports, containing the names of key individuals identified as having links to 

terrorism and the organizations they served, were stored in an unlocked filing 

cabinet. As a result, the mission’s foreign service nationals and other staff without a 

need to know had unrestricted access to this information. 35 

• USAID had not obtained required approvals for a Palestinian foreign service national 

to design and develop the mission’s vetting management database.36

 

• Because the mission did not classify the database as a major application (that is, an 

application that was critical to USAID’s operations), the mission did not consider the 

 34The database contains 1670 records associated with organizations and 8,772 records associated with key

individuals. 

35According to the mission’s October 2002 action memorandum, information in the database should be

available only to those with an official need for access. Much of the information contained in the database

is also contained in these paper files. 

36According to State Department guidance (12 Foreign Affairs Manual 633.1), under certain conditions, 

foreign nationals are not to develop, modify, or perform maintenance on software used on State computer

systems without specific diplomatic security authorization. The information management officers

responsible for State’s computer systems, both in the United States and abroad, must obtain authorization 

before such work is begun. USAID’s information systems security personnel stated USAID works to 

comply with FAM 633.1 and the mission should have consulted with information security personnel prior 

to developing the database.

Page 17 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
relevance of application and security controls in maintaining its database, including 

the requirements outlined in USAID Automated Directives System Section 545.37

 

Insufficient Technical Documentation

Although the mission backs up the database daily to allow it to restore the database in 

the event of a system failure, we found that the mission had not developed 

accompanying technical documentation. This documentation would help ensure that 

data were consistently defined and that the database could be rebuilt in the event of a 

system failure.38 The minimum amount of documentation required is a data dictionary or 

the equivalent information associated with a database management system, including a 

description of the data elements and their relationship.39

Low Priority 

No office within the mission was formally designated as the database owner, as 

required.40 As a result, the database was shifted among five different offices within the 

mission over a 5-year period, which may have contributed to staffs’ lack of 

understanding of the database capabilities and operation. For example, the individual 

responsible for operating the system at the time of our review was unaware of a database 

instruction manual that described how to enter information and retrieve reports on the 

status of vetting submissions. In addition, the foreign service national employee who had 

managed the unclassified vetting management database since March 2005 lacked the 

security clearances needed to communicate directly with vetting officials about vetting 

results—adding inefficiencies to the vetting process. 

 Corrective Actions 

Since our review of the West Bank and Gaza mission’s vetting management database, the 

mission has taken several steps to correct many of the limitations we identified. 

• In March 2006, the mission hired a U.S. direct-hire employee with a security clearance 

to manage the vetting process. 

 37According to USAID information systems security personnel, the criteria in effect when the database was 

developed did not require the system to be classified as a major application. 

38USAID Automated Directive 502.5.6a states that USAID database applications should comply with Code 

of Federal Regulations (CFR) Title 36,1234.20(b). According to the CFR, agencies must maintain adequate

and up-to-date technical documentation for each electronic information system that produces, uses, or

stores data files. 

39In database management systems, a data dictionary is a file that defines the basic organization of a 

database, including a list of all files in the database, the number of records in each file, and the names and

types of each field. 

40Automated Directive System, sec. 545. 

Page 18 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
• In April 2006, as a result of the Regional Inspector General’s earlier review and our 

observations, USAID headquarters sent information technology specialists and the 

USAID counterterrorism coordinator to review the database and related vetting

procedures. Based on that review, USAID plans to implement a more robust and 

secure database by November 2006.41

• The mission has moved the vetting database to the Office of Contracts Management, 

where the award and vetting processes can be better integrated. 

Mission Did Not Ensure that All Antiterrorism Certifications and Clauses Were 

Completed before Awards Were Approved 

Although the mission generally ensured that prime awardees of grants and cooperative 

agreements certified that they have not assisted and do not now assist terrorists, it did 

not ensure that applicable contracts, grants, and cooperative agreements included the 

antiterrorism, naming, and cash clauses. In addition, the mission lacked a system for 

verifying, before award approval, that subawardees had signed the required certifications 

and that subawards contained the required clauses. Based on our review, the mission has 

implemented procedures to verify that certifications are signed and clauses are included 

in subawards. However, the mission’s policies on how its antiterrorism requirements 

apply to awards other than contracts, grants, and cooperative agreements is unclear. 

Most Prime Awardees Signed Certifications, but the Mission Did Not Verify 

Subawardee Certifications

The West Bank and Gaza mission generally ensured that prime awardees of grants and 

cooperative agreements signed the required antiterrorism certification;42 the required 

certifications were signed for all of the 46 applicable prime awards that we reviewed. 

However, although it has required since April 2003 that all subgrantees also sign the 

certification, until recently the mission did not verify that prime awardees collected 

subgrantee certifications before they gave funds to the subgrantees. About one-fourth of 

the 177 certifications for applicable subgrants that we reviewed were signed after the 

subgrant start date, and 11 of the certifications were signed 6 months to more than a year 

after subgrant approval. According to mission officials, prime contractors and grantees 

are responsible, as part of their due diligence in receiving and administering awards, to 

develop and maintain award files, including all required or relevant preaward 

certifications and representations. They are also legally obligated to adhere to laws and 

regulations, emphasizing those in their subawards that ensure the proper use and 

 41A prototype of the system was undergoing refinement and testing in September 2006. 

42The certification requirement is in AAPD 02-19 and subsequent revisions and mission action

memorandums. NGOs initially raised concerns about the language contained in the certification and their 

potential liability for subawardee compliance. Some refused to sign it altogether. Moreover, the Palestinian 

Legislative Council’s Economics Committee in May 2004 published a report that discouraged Palestinian 

NGOs from signing the certification because it considered the requirement an affront to its sovereignty and

did not want any of its assistance to be conditioned. USAID made revisions to the certification after 

lawyers representing NGOs persuaded the agency to change the language. These changes resulted in more

Palestinian NGOs signing the certifications. 

Page 19 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
accountability of U.S. funds. Consequently, the mission stated that it is primarily the 

responsibility of the prime awardees to ensure that required certifications are contained 

in subawards. However, in responding to our observation that it lacked a system to verify 

compliance, in March 2006 the mission revised its policy to require that all prime 

awardees submit subgrantees’ certifications to the mission before award approval. 

Some Prime Awards and Subawards Did Not Contain Required Clauses 

Although the mission required for fiscal year 2005 that all prime awards contain the 

antiterrorism, naming, and cash clauses and all subawards contain the antiterrorism 

clause, some awards did not include all the applicable clauses. As a result, some prime 

awardees and subawardees may not have been aware of their responsibilities outlined 

within these clauses. Similarly, prime awardees may not have been aware that they were 

not to use U.S. funds to honor terrorists or provide U.S. cash assistance to the 

Palestinian Authority.43

Prime Awards

While the West Bank and Gaza mission required that all prime awards contain the 

antiterrorism, naming, and cash clauses, we found that many did not include all three 

clauses. As table 1 shows, most of the awards that we reviewed included the 

antiterrorism clause, including the UN version of this clause when applicable. However, 

half of the awards did not contain the naming clause and more than one in five did not 

contain the cash clause. 

Table 1: Percentages of USAID West Bank and Gaza Prime Awards that 

Contained Required Clauses 

Clause Percentage 

with clause 

Antiterrorism 96

Naming 50

Cash 78

Source: GAO analysis of USAID data. 

Notes: We reviewed 99 awards that were active during 2005. See enclosure I for more information on our 

sampling methodology. 

The 96 percent includes the UN-specific antiterrorism clause. 

Subawards

The mission did not verify that subawards contained the antiterrorism clause or require 

them to contain the naming and cash clauses. The mission stated that existing 

regulations and policies do not require the mission to verify the inclusion of certain 

 43According to the mission, subsequent to our review, the mission has verified that all current and active

awards contain all three clauses. 

Page 20 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
clauses prior to making a subaward. Instead it is primarily the responsibility of the prime 

awardee to ensure that required clauses are contained in the subawards. However, as a 

result of our review, the mission now requires prime awardees to provide the mission 

with copies of the pages of the subawards containing the required clauses. 

• Antiterrorism clause. Although the mission has required since 2002 that prime 

awardees insert the antiterrorism clause in all subawards, the mission did not 

maintain lists of all current subawardees, including the type, amount, and duration of 

the subawards, and did not routinely check for the antiterrorism clause. As a result, 

until revising its policy in March 2006, the mission had no way to determine the 

extent to which prime awardees were complying with the requirement to include the 

clause in subawards. Mission officials stated that it was the prime awardees’ 

responsibility to ensure that all subawards included the required clause and that the 

mission used annual audits conducted by the RIG to verify whether the prime 

awardees had included the antiterrorism clause in all subawards. However, in 

commenting on a draft of this report, RIG officials stated that the mission should 

have its own verification system and not use RIG audits for this purpose. Thirty-nine 

(about 10 percent) of the 393 applicable subawards, which were associated with the 

prime awards active in 2005 that we reviewed, did not contain the antiterrorism 

clause at the subaward start date. In six of these subawards, the clause was added 2 

or more years after the start date.44 With the issuance of Mission Order 21 in March 

2006, the mission now requires prime awardees, including the UN, to provide copies 

of the subaward sections containing the antiterrorism clauses. 

• Naming clause. The naming clause was not required in subawards for fiscal year 

2005. With the issuance of Mission Order 21, the mission now requires that all 

subawards include the clause. 

• Cash clause. The mission did not require the cash clause in subawards active in 2005. 

However, the Regional Legal Advisor stated that West Bank and Gaza subawardees 

are nonetheless legally obligated to adhere to the federal requirement on which the 

clause is based. In commenting on a draft of this report, the mission stated that it has 

modified all ongoing prime and subawards to include the clause and that the clause 

will be required in all future subawards. 

Mission Antiterrorism Polices for Some Agreements Unclear 

 

Although the mission has developed policies and procedures for applying antiterrorism 

requirements to contracts, grants, and cooperative agreements, it has not clearly 

delineated how its antiterrorism provisions apply to certain other agreements used to 

transfer assistance. These include consulting agreements, letters of understanding, 

memorandums of understanding, and purchase orders (see enc. V for definitions of these 

 44USAID did not provide documentation for 24 of the subawards; consequently, inclusion of the 

antiterrorism clause could not be verified. 

Page 21 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
terms). We found that prime awards active in 2005 contained subawards that were used 

to transfer more than $5 million in assistance through these types of agreements. 

The regional legal advisor told us that without clear policies and procedures for these 

other agreements, the mission applied its antiterrorism provisions inconsistently. For 

example, the regional legal advisor stated that the mission’s antiterrorism provisions 

applied to consulting agreements as they would to subcontracts. However, he also stated 

that the consulting agreements did not need to include the mandatory antiterrorism 

clause, which the mission requires in all subcontracts. Further, according to a mission 

official, USAID’s Office of Transition Initiatives required that recipients of in-kind 

assistance45 through memorandums of understanding were supposed to sign the 

antiterrorism certification. However, the mission did not enforce this requirement until 

USAID’s Office of the General Counsel instructed the mission to require all in-kind 

assistance recipients to sign the antiterrorism certification. In our examination of 

subaward information provided by prime awardees, we found purchase orders with the 

antiterrorism clause and others without. Similarly, we found memorandums of 

understanding with the antiterrorism certification and others without. 

Although the mission amended Mission Order 21 to address issues involving in-kind 

assistance, the order does not clearly address how the mission’s antiterrorism provisions 

apply to the other agreements. In commenting on a draft of this report, mission officials 

stated that there is no need to specify other types of agreements by name in its mission 

order because the mission order’s language is broad enough to cover all awards that 

would provide assistance whether cash or in-kind. We found that the language in the 

mission order broadly defined “awards” as any contract, grant, or cooperative agreement 

and any cash or in-kind assistance provided by USAID or an implementing partner in any 

form. However, the language in the order describing the types of agreements that require 

the antiterrorism certification and clause is very specific. For example, the order states 

that the certification requirement applies to all grants and cooperative agreements, and 

the clause requirement applies to all contracts, grants, and cooperative agreements. 

There is no mention of other types of agreements. Consequently, this inconsistency 

between the level of specificity in the award definitions and the descriptions of certain 

antiterrorism provisions leaves their application to other types of agreements open to 

interpretation. 

USAID Complied with the Mandate to Audit Awardees, but the Audits Did Not 

Help Ensure Compliance with Antiterrorism Provisions before Awards Were 

Implemented 

To address the 2003 mandate and subsequent related mandates to complete financial 

audits of prime awardees and significant subawardees in fiscal years 2003 through 2005, 

USAID’s RIG in Cairo, Egypt, contracted with Palestinian audit firms and the Palestinian 

 45The mission defines in-kind assistance as assistance provided in the form of goods and services, such as 

medical supplies and equipment. 

Page 22 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
offices of international audit firms.46 Overall, the audits focused on compliance with 

financial and accounting requirements—examining the fund accountability statement, 

identifying whether award costs were allowable and reasonable, and evaluating the 

awardee’s internal controls. The audits also reviewed compliance with various 

agreement provisions, laws, and regulations, including the applicable requirements for 

vetting, certification, and clauses.47

 

As of June 2006, the RIG issued 62 reports based on the contract auditors’ reviews for 

fiscal years 2003 through 2005. However, even though the mandate was addressed, the 

audits’ antiterrorism reviews were of limited utility to the mission for ensuring 

compliance with antiterrorism provisions prior to award implementation. This is 

primarily because the audits were not initiated until after the award had been 

implemented. In addition, the RIG’s guidance to its contract auditors did not always 

reflect the mission’s antiterrorism policies and procedures and, in 2004 and 2005, did not 

address certain methodological guidance issued in October 2003. 

The RIG’s Antiterrorism Compliance Reviews Were Not Initiated Until after Awards 

Were Implemented

The timing of the RIG’s financial audits and certain other issues limited their usefulness 

to the mission for determining whether awardees had complied with the 

antiterrorism requirements. Because the primary focus of the RIG’s audits was financial, 

the audits were not initiated until after the award had been implemented or, in some 

cases, completed. This means that any shortcomings or omissions in conducting the 

required vetting or ensuring that the antiterrorism certifications and clauses were in the 

awards or subawards, as required, would not have been found by the auditors until after 

the award or subaward had been made. As a result, the mission would not have learned 

of any instances of noncompliance identified by the RIG’s auditors until after the award 

start date or, in some cases, until after the award’s conclusion. 

In addition, as directed by the mandate, the RIG’s audits focused on contractors and 

grantees (and significant subawardees) implementing U.S. assistance programs in the 

West Bank and Gaza. However, some prime awardees in fiscal years 2002 through 2005 

administered several awards. As a result, once an award to a particular contractor, 

grantee, or significant subawardee had been audited, other awards to the same awardee 

would not necessarily have been examined, and compliance with antiterrorism 

provisions for those awards or significant subawards would not have been reviewed. 

Moreover, about one-third of the RIG’s audit reports issued in fiscal years 2004 through 

2006 did not clearly state which antiterrorist provisions were examined, if any, or did not 

 46To conduct the audits, up to $1 million was provided in each fiscal year to the USAID Office of the 

Inspector General. 

47In 2003, the RIG issued supplementary guidance to its contract auditors addressing antiterrorism

provisions and also specified requirements in its contract auditor’s statements of work from 2003 through

2005. 

Page 23 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
report the audit results. Of the 62 reports, 14 reports (23 percent) did not state which 

mission requirements for vetting, certification, and clauses were applicable, if any, or 

whether compliance with them was reviewed. An additional seven reports (11 percent) 

stated that compliance with the mission’s antiterrorism provisions was reviewed but did 

not provide any statement of the results. 

In commenting on a draft of this report, the mission stated that it used annual audits 

managed by the RIG to verify whether the prime awardees were in compliance with 

antiterrorism certification and clause requirements. It also stated that the audits served 

to strengthen and improve compliance with antiterrorism requirements. However, the 

Inspector General’s Office stated in its response to a draft of this report that since the 

mission is responsible for ensuring compliance with antiterrorism provisions, the 

mission should develop a system other than relying solely on financial audits, which are 

conducted after awards are made to ensure that funds provided to awardees are being 

spent as intended. 

Auditors’ Guidance Did Not Always Reflect Mission Policy and Was Not Clear on Audit 

Methodology for Subawards

In some instances, the written guidance provided to the RIG’s contract auditors did not 

reflect the mission’s policies and procedures for vetting, certifications, and clauses. 

 

• Vetting. Although the mission implemented its vetting policies and procedures in 

October 2002, the written guidance to auditors in September and October 2003 did 

not explicitly require that they confirm that vetting was done. However, the 

statements of work provided to auditors in 2004 and 2005 included specific language 

directing auditors to determine compliance with vetting procedures. 

• Certifications. The October 2003 written guidance regarding antiterrorism 

certifications differed from the mission’s policy at the time. The mission required 

signed certifications for all awards and subawards, but the RIG guidance did not 

direct the auditors to verify that certifications were signed for subgrants under 

grants.48

 

• Clauses. The RIG’s written guidance directed the auditors to check for a less detailed 

version of the antiterrorism clause than mission guidance called for. The clause 

provided to the auditors, unlike the mission’s version, did not state that (1) it was 

required in subawards, (2) awardees must promptly notify USAID of significant 

changes in key individuals, or (3) USAID reserves the right to approve or reject 

certain subawardees. 

In addition, the RIG’s October 2003 supplementary guidance to its auditors prohibited 

selecting a random sample of subawards to review for compliance with the antiterrorism 

 48The October 2003 guidance to contract auditors stated that the certification requirement applies to the

prime recipients of grants, as well as to the recipients of grants under contracts, but it does not apply to 

subgrantees under grantees. 

Page 24 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
certifications and clauses. However, the statements of work for fiscal years 2004 and 

2005 did not specify whether auditors should select a sample of subawards or examine 

all subawards. Two contract audit firms were hired after the 2003 guidance was issued. 

We found that these firms had not received the guidance; consequently, unless the 

auditors were otherwise aware of the October 2003 guidance, some auditors may not 

have reviewed all subawards. 

Conclusion 

The January 2006 election victory of Hamas in the Palestinian Legislative Council has led 

to increased concern that U.S. assistance to the West Bank and Gaza not support 

terrorists, as required by U.S. antiterrorism provisions. Although the USAID West Bank 

and Gaza mission developed policies and procedures for antiterrorism vetting, 

certifications, and clauses, its implementation of the provisions limited the mission’s 

ability to ensure that U.S. assistance was not provided to terrorists or was used to 

support terrorism. Since our review, the mission has taken steps to correct many of 

these limitations, but others remain to be addressed. 

• Although the mission has begun to collect more complete identifying information for 

vetting key individuals, its lack of a procedure to verify this information means that it 

cannot be certain that the information is accurate. 

• Unresolved problems with the mission’s vetting management database continue to 

affect its reliability, maintenance, and security, and the mission’s recent elimination 

of a requirement that awardees be periodically revetted makes it less likely the 

mission will detect an awardees’ terrorist associations that develop after initial 

vetting. 

• Because the mission still does not require that prime awardees include the cash 

clause in all subawards, some subawardees may not be aware of their contractual 

responsibility not to support the Palestinian Authority. 

• The mission’s lack of formal policies and procedures for applying its antiterrorism 

provisions to financial agreements other than contracts, grants, and cooperative 

agreements may have resulted in some U.S. assistance going to the West Bank and 

Gaza without applying the antiterrorism provisions. 

Despite the difficulty of the task, the mission should do more to ensure that U.S. 

assistance is not provided to terrorists or those who support terrorism. 

To comply with the 2003 mandate to conduct financial audits of mission awardees, 

USAID’s RIG contracted for audits and included the requirement to review compliance 

with antiterrorism provisions. However, financial audits are typically initiated after an 

award has been implemented or, in some cases, completed. As a result, the audits were 

of limited utility to the West Bank and Gaza mission for helping ensure compliance with 

the vetting, certification, and clause requirements, which, according to mission guidance, 

should be met before the award is made. In addition, the guidance for the RIG’s contract 

Page 25 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
auditors did not always reflect the mission’s policies and procedures for vetting, 

certifications, and clauses at the time of the award; and the RIG’s October 2003 

methodological guidance for examining subawards was not incorporated into its written 

guidance for 2004 and 2005. To enhance the mission’s ability to promptly identify and 

address any lack of compliance with U.S. antiterrorism provisions, the mission needs to 

develop a system to review and report on compliance with its antiterrorism requirements 

before the awards are made and to ensure that the guidance provided for such reviews 

reflects the mission’s policies and procedures at the time and adequately documents 

methodological approaches. 

Recommendations for Executive Action 

To help ensure that U.S. assistance to West Bank and Gaza does not support terrorist 

activity, we recommend that the Director of U.S. Foreign Assistance and USAID

Administrator direct the mission to take the following four actions: 

• consider (1) verifying the identifying data it collects for vetting, such as date of birth, 

by requiring Israeli identification cards or some other form of identification and (2) 

rescinding its decision to eliminate periodic revetting of awardees; 

• ensure that the mission’s vetting management database promotes data reliability, 

satisfies technical documentation requirements, and meets all applicable security 

requirements;

• ensure that the cash clause is included in all subawards before they are initiated; and 

• develop policies and procedures that address how each antiterrorism provision 

applies to consulting agreements, letters of understanding, memorandums of 

understanding, and purchase orders. 

We also recommend that the Director of U.S. Foreign Assistance and USAID 

Administrator and the West Bank and Gaza mission, in cooperation with USAID’s Office 

of the Regional Inspector General–Cairo, develop a review and reporting system other 

than USAID’s financial audits to help ensure that the requirements for vetting, 

certifications, and clauses for each award and applicable subawards are met before the 

financial agreements are implemented. This system should also ensure that the reviews 

(1) reflect applicable West Bank and Gaza mission policies and procedures for vetting, 

certification, and clauses at the time of the awards; and (2) have a clear and consistent 

audit methodology for examining subawards. 

Agency Comments and Our Evaluation 

USAID and USAID’s Office of Inspector General provided written comments on a draft of 

this report. See enclosures II and III, respectively. State did not provide written 

comments. In addition, USAID, the USAID Regional Inspector General–Cairo, and State 

provided us with technical comments and updates, which we have incorporated 

Page 26 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
throughout this report, as appropriate. In its written comments, USAID also suggested 

several points of clarification, which we have also incorporated. 

Overall, USAID noted that our fieldwork and draft report made a positive contribution to 

improving and strengthening the mission’s antiterrorism procedures. As we note 

throughout the report, the mission acted on or began acting on many of our findings 

while the engagement was ongoing. USAID accepted our recommendations to modify its 

vetting procedures, improve its vetting management database, and ensure that the cash 

clause is included in all subawards. It noted the mission has begun or completed action 

to address these issues. 

However, USAID disagreed with our recommendation that it should develop policies and 

procedures for applying antiterrorism provisions to other assistance agreements, such as 

memorandums of understanding and purchase orders. It noted that these “unusual 

instruments” either do not provide assistance or are already covered by the mission’s 

current guidance. We note that since our review the mission has amended Mission Order 

21 to apply antiterrorism provisions to in-kind assistance. We also note that, while the 

order is very specific regarding contracts, grants, and cooperative agreements (and now 

in-kind assistance), it does not specifically address other types of agreements. We 

believe the mission still needs to clarify how antiterrorism provisions apply to all types 

of agreements the mission uses. 

Finally, the USAID Inspector General said his office would be pleased to cooperate with 

the mission to develop a system to help ensure that the antiterrorism provisions are met 

before financial agreements are implemented. The Inspector General did not specifically

address our recommendation that it ensure that its audit guidance reflects applicable 

mission policies and that its methodology for examining subawards is clear and

consistent. USAID agreed about the necessity of an improved system for ensuring 

compliance with antiterrorist provisions before prime awards and subawards are 

implemented. However, it noted that this responsibility rests with the mission and the 

prime awardees, and should not be the subject of “preaward audits.” USAID also noted 

that its contractors and grantees are long-standing implementing partners who are 

cognizant of their obligations to adhere to federal and USAID policies and guidance. 

Moreover, as of March 2006, the mission began systematically verifying that subawardees 

signed the required certifications and that subawards had the mandatory clauses. We 

purposely did not specify how the mission should ensure that its antiterrorism provisions 

are in place before awards are implemented. We recommended that USAID and the West 

Bank and Gaza mission cooperate with the USAID Regional Inspector General–Cairo to 

develop such a system because the mission had relied on its audits in the past.

- - - - - 

Copies of this report are being sent to the Secretary of State, the Director of Foreign 

Assistance and USAID Administrator, the USAID Inspector General, relevant 

congressional committees, and other interested parties. We will also make copies 

available to others upon request. In addition, the report will be made available at no 

charge on GAO’s Web site at http://www.gao.gov. 

Page 27 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
If you or your staff have any questions about this report, please contact me on (202) 512-

3149 or at GootnickD@gao.gov. Contact points for our Office of Congressional Relations 

and Office of Public Affairs may be found on the last page of this report. Major 

contributors to this report are listed in enclosure IV. 

David Gootnick, Director 

International Affairs and Trade 

Enclosures 

Page 28 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
Enclosure I 

Scope and Methodology 

To determine the extent to which the United States Agency for International 

Development’s (USAID) West Bank and Gaza mission (the mission) complied with 

Executive Order 13224 and the various antiterrorist restrictions in the Consolidated 

Appropriations Acts of 2003, 2004, and 2005, we examined the mission’s implementation 

of several USAID Acquisition and Assistance Policy Directives issued since 2002. 

Because we were mandated to examine USAID’s use of fiscal year 2005 funding for the 

West Bank and Gaza, we focused our review on the mission’s contracts, grants, and 

cooperative agreements (and related subawards) that were active during fiscal year 2005 

and had received fiscal year 2005 funds through March 2006. In February 2006, we 

traveled to Tel Aviv, Israel, and discussed the mission’s implementation of the 

antiterrorism requirements with the USAID Mission Director, his senior staff, project 

officers, contract technical officers, and other USAID mission officials responsible for 

managing assistance projects and overseeing contracts, grants, and cooperative 

agreements. We reviewed the mission’s antiterrorism guidance and examined in detail 

(1) the mission’s vetting documentation and vetting management database to determine 

if the mission had documented that it had vetted awardees and subawardees, as required;

and (2) the various financial agreements’ records to determine if antiterrorism 

certifications had been signed and the required clauses were in the awards and 

subawards, as required. 

• To understand the mission’s vetting process, we discussed with various mission 

officials, including the Regional Legal Advisor, how the process worked. We 

examined the documentation provided to the mission in response to its vetting for 

organizations and individuals. To gain a better understanding of the vetting 

responses, we randomly selected a probability sample49 of 520 vetting results 

memorandums accumulated by the mission beginning in 2002 through March 2006. 

We also discussed the operation of the mission’s vetting management database with 

the foreign service national charged with maintaining it at the time of our review. He 

provided us access to the vetting database and its related documentation. In addition, 

during our review, we obtained related information from the Defense Intelligence 

Agency, the Central Intelligence Agency, and the Departments of State and Treasury. 

 49With a probability sample, each member of the study group (in this case, the mission’s vetting results 

memorandums) has a known chance of being selected. Our sample was only one of a large number of

samples that we might have drawn. Since each sample could have provided different estimates, we express 

our confidence in the precision of our particular sample’s results as a 95 percent confidence interval. For

this estimate of 94 percent, the confidence interval extends from 88 to 98 percent. This is the interval that

would contain the actual population value for 95 percent of the samples we could have drawn. 

Page 29 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
• To determine whether the mission’s prime awards contained the antiterrorism 

certification and clauses, as required, we reviewed the mission’s files for all 99 prime 

awards that were active during 2005. Of the 99 prime awards, 20 were cooperative 

agreements and 3 were grants. To determine whether the subawards contained the 

required antiterrorism certifications and clauses, we reviewed all 99 prime awards to 

determine which had subawards. We found 67 prime awards with a total of 931 

subawards. We then examined the subawards as follows: 

o For antiterrorism certifications, the requirement applied to any subgrants issued 

under a contract, grant, or cooperative agreement after April 1, 2003. We found 

that 14 prime awards (6 contracts, 2 grants, and 6 cooperative agreements) had 

subgrants that required an antiterrorism certification. For 13 of these prime 

awards, we examined all the applicable subgrants, for a total of 104. However, 4 of 

these were not dated, and thus, could not be assessed. The remaining prime 

award had 190 applicable subgrants. We selected a random sample of 73 of these. 

Therefore, we examined a total of 177 (about 60 percent) out of 294 applicable 

subgrants under 14 prime awards. 

o For the antiterrorism clauses, the requirement applied to any subawards under 

prime awards that were issued on or after March 20, 2002. In some cases, prime 

awards entered into prior to March 20, 2002, were modified to include the clause, 

and those related subawards also required the clause as of the date of the 

modification. Of a total of 488 subawards that fit this category, 24 were missing 

documentation and therefore could not be analyzed. Seventy-one of these 

subawards were affiliated with UN agencies and therefore did not require the 

clause to be included in subawards. Therefore, we found that a total of 393 

subawards were required to contain the clause and we examined all of them. 

For our analysis of the mission’s financial agreements, we developed a data collection 

instrument to help ensure that our reviews of the mission’s files were consistent. To help 

us track and analyze the information collected, we developed a database to record the 

data for each award. For each prime award, we recorded information regarding vetting, 

certification, and clauses, as well as more than 30 other data elements, including the 

award number, project name, start and end dates, and objectives and goals. For each 

subaward, we recorded key information about the certifications and antiterrorism 

clause, as well as the subaward type, signature date, dollar value, subawardee name, U.S. 

or non-U.S. designation, and key individuals’ names. During our review of the mission’s 

financial agreement files, we discussed any conflicting data or, in some cases, missing 

data, with the cognizant project officer or contract technical officer. In this way, we 

resolved any apparent disparities and satisfied ourselves that the data we compiled were 

sufficiently reliable for the purposes of this report. 

In reviewing the RIG’s financial audits that addressed, in part, the West Bank and Gaza 

mission’s compliance with its antiterrorism provisions, we examined 62 audit reports on 

assistance to the West Bank and Gaza issued in fiscal years 2004 through 2006. These 

reports covered awards active from 2002 through 2005. In addition, we traveled to Cairo, 

Egypt, and met with RIG officials to discuss its audit coverage of USAID West Bank and 

Page 30 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
Gaza awards. When we were not clear about the audit reports’ scope and methodology, 

we followed up with the cognizant Regional Inspector General (RIG) official. In this way,

we resolved any apparent disparities and satisfied ourselves that the data we compiled 

were sufficiently reliable for the purposes of this report. 

Page 31 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
Enclosure II

USAID Comments 

Note: GAO

comments 

supplementing 

those in the 

report text

appear at the

end of this

appendix. 

Page 32 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
 See 

 comment 1. 

 See 

 comment 2. 

Page 33 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
Page 34 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
 See 

 comment 3. 

 See 

comment 4. 

Page 35 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
 See 

 comment 5. 

 See 

 comment 6. 

 See 

 comment 7. 

Page 36 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
Page 37 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
The following are GAO’s comments on USAID’s letter dated September 22, 2006. 

1. The diagram provided by USAID has been included with the agency’s comments. 

2. Information pertaining to the overall purpose of USAID’s assistance is included in 

the background section of the report. 

3. USAID disagrees with our recommendation that it should develop antiterrorism 

policies and procedures for “unusual” instruments such as memorandums of 

understanding and purchase orders. USAID stated that it believes that its current 

policies and procedures are broad enough to cover all types of assistance 

agreements. We believe that clarifying the definitions of awards and subawards 

contained in mission order 21 and how antiterrorism provisions apply to other 

types of awards could help ensure that antiterrorism policies are correctly and 

consistently applied. We added additional evidence and information to the report 

to further demonstrate the need to clarify the policies and procedures. 

4. We agree that the responsibility for ensuring that the antiterrorism policies and 

procedures are correctly and consistently applied rests with the mission and 

prime awardees. We purposely did not specify how the mission should ensure that 

its antiterrorism provisions are in place before awards are implemented. We 

recommended that USAID and the West Bank and Gaza mission cooperate with 

the USAID Regional Inspector General–Cairo to develop such a system because 

the mission had relied on its audits in the past. We also noted in the report that 

USAID now requires that awardees provide copies of required certification and 

award sections containing the antiterrorism-related clauses prior to award 

approval. 

5. In technical comments USAID provided on a draft of this report, USAID stated 

that it is planning to obtain an additional certification from awardees as to the 

accuracy of key individuals’ names and other data provided. We added 

information to the report to reflect this new procedure. 

6. We describe the corrective actions that USAID is taking to improve its vetting 

management database where applicable in the report. 

7. Additional information has been added to the report that describes the additional 

conditions that would require that revetting occur. USAID also stated in its 

technical comments that it plans on reinstating a periodic revetting requirement. 

This change in policy has been added to the report. 

Page 38 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
Enclosure II

USAID Inspector General Comments 

Page 39 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
Page 40 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
Enclosure IV

GAO Contact and Staff Acknowledgments 

GAO Contact 

David Gootnick (202) 512-3149 

Staff Acknowledgments 

Albert H. Huntington, III; David M. Bruno; Jeffrey L. Hartnett; Arthur James; and Robert 

E. Lee made key contributions to this report. In addition, Claude T. Adrien, Martin de 

Alteriis, Etana Finkler, Reid L. Lowe, Grace P. Lui, and Jose M. Pena provided technical 

assistance.

Page 41 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
Enclosure V 

Glossary 

USAID has used the following types of financial agreements to transfer assistance in the 

West Bank and Gaza.50

Consulting agreements are used to retain, in an advisory role, an individual considered 

an expert in his or her field. The contractual form may be an employment agreement or 

subcontract, depending on the organization’s practices. 

Contracts are principally used to acquire property or services for the use of the federal 

government. 

Cooperative agreements are used to transfer money, property, or services to provide 

federally authorized support or stimulation in which USAID is expected to be 

substantially involved. 

Grants are principally used to transfer money, property, or services to provide federally 

authorized support or stimulation in which USAID is not expected to be substantially 

involved. 

Letters of agreement are used to record a common understanding where USAID's 

standard provisions would not otherwise be required to be incorporated to apply specific 

conditions on the interaction. 

Memorandums of understanding (MOUs) set forth an agreement between parties. An 

MOU may be used to cover a range of topics, including results to be achieved, activities 

to be implemented, and the respective roles and responsibilities of each party. An MOU 

is not used for obligating funds. However, an MOU may be used to confirm an agreement 

with a host government on a program that USAID will fund directly through an obligating 

agreement signed with other parties. 

Purchase orders set forth USAID’s contractual agreement for small purchases of goods 

and services. 

(320379) 

 50These definitions are from the USAID Automated Directives System Glossary and West Bank and Gaza

mission staff. 

Page 42 GAO-06-1062R USAID West Bank and Gaza Antiterrorism Procedures 
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