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A MORE EFFICIENT AND EFFECTIVE 

GOVERNMENT: STREAMLINING OVERSEAS TRADE 

AND DEVELOPMENT AGENCIES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON FINANCIAL AND 

CONTRACTING OVERSIGHT 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

DECEMBER 11, 2013 

Available via the World Wide Web: http://www.fdsys.gov 

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

THOMAS R. CARPER, Delaware Chairman 

CARL LEVIN, Michigan 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

TAMMY BALDWIN, Wisconsin 

HEIDI HEIKAMP, North Dakota 

TOM COBURN, Oklahoma 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

RICHARD J. KESSLER, Staff Director 

JOHN P. KILVINGTON, Deputy Staff Director 

KEITH B. ASHDOWN, Minority Staff Director 

LAURA W. KILBRIDE, Chief Clerk 

LAUREN CORCORAN, Hearing Clerk 

SUBCOMMITTEE ON FINANCIAL AND CONTRACTING OVERSIGHT 

CLAIRE MCCASKILL, Chairman 

CARL LEVIN, Michigan 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

MARK BEGICH, Alaska 

TAMMY BALDWIN, Wisconsin 

RON JOHNSON, Wisconsin 

JOHN MCCAIN, Arizona 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

MARGARET DAUM, Majority Staff Director 

RACHEL WEAVER, Minority Staff Director 

KELSEY STROUD, Chief Clerk 
(III) 

C O N T E N T S 

Opening statement: Page 

Senator McCaskill ............................................................................................ 1 

Senator Johnson ............................................................................................... 3 

WITNESSES 

WEDNESDAY, DECEMBER 11, 2013 

Hon. Elizabeth Littlefield, President and Chief Executive Officer, Overseas 

Private Investment Corporation ......................................................................... 4 

Hon. Leocadia I. Zak, Director, U.S. Trade and Development Agency ............... 7 

ALPHABETICAL LIST OF WITNESSES

Littlefield, Hon. Elizabeth: 

Testimony .......................................................................................................... 4 

Prepared statement .......................................................................................... 27 

Zak, Hon. Leocadia I.: 

Testimony .......................................................................................................... 7 

Prepared statement .......................................................................................... 41 

APPENDIX 

Chart referenced by Senator McCaskill ................................................................. 51 

Responses to post-hearing questions for the Record: 

Ms. Littlefield ................................................................................................... 53 

Ms. Zak .............................................................................................................. 64 

(1) 

A MORE EFFICIENT AND EFFECTIVE 

GOVERNMENT: STREAMLINING OVERSEAS 

TRADE AND DEVELOPMENT AGENCIES 

WEDNESDAY, DECEMBER 11, 2013 

U.S. SENATE,

SUBCOMMITTEE ON FINANCIAL AND CONTRACTING OVERSIGHT

OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS,

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2 p.m., in room 

342, Dirksen Senate Office Building, Hon. Claire McCaskill, Chairman of the Subcommittee, presiding. 

Present: Senators McCaskill and Johnson. 

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator MCCASKILL. Welcome, everyone. We are glad to see you. 

Thank you for coming to the hearing today. 

Our hearing today deals with streamlining and strengthening 

oversight of overseas trade and development agencies. We are here 

today to review the opportunities to improve the efficiency and effectiveness in oversight of the Overseas Private Investment Corporation (OPIC) and the U.S. Trade and Development Agency 

(USTDA). 

On January 13, 2012, President Obama requested authority from 

Congress to reorganize and streamline agencies within the Federal 

Government. The first proposal by the White House for this reorganization authority was to reorganize six of the Federal agencies 

that focus on business and trade—the Department of Commerce’s 

core business and trade functions, the Small Business Administration’s (SBA) trade functions, the Office of U.S. Trade Representative, the Export-Import Bank, OPIC and TDA. 

OPIC and TDA serve an important role in our country’s trade 

and development goals. 

OPICS position as a lender and insurer of last resort helps U.S. 

businesses expand in areas that have potential but may be too 

risky for other insurers and lenders. 

Similarly, TDA’s facilitation of partnerships between foreign 

countries and U.S. business interests through feasibility studies is 

important to growing U.S. exports. 

Both agencies also report significant gains on investment. For example, OPIC has returned millions of dollars earned on its projects 

to the Treasury every year, and TDA’s internal audits show that 

the agency creates $73 in exports for every dollar of programming. 
2 

As with every part of the Federal Government, however, there is 

always room for improvement. And, as with every part of the Federal Government, oversight is essential. 

While OPIC and TDA appear to be very successful, I have questions regarding their internal controls and oversight. Neither agency has an independent inspector general (IG) or processes to 

achieve independent audits and reviews of their programs. 

When I pushed to have a special inspector general installed to 

oversee the Troubled Asset Relief Program (TARP), many pushed 

back because they did not think it was necessary. And just this 

weekend, the Washington Post reported that since 2008 the Office 

of the Special Inspector General for TARP has pursued criminal 

charges against 107 senior bank officers, most of whom have been 

sentenced to prison. That office’s work has resulted in $4.7 billion 

in restitution paid to the government and to victims. 

So I want to have a discussion today about the best way to implement adequate oversight to ensure OPIC and TDA do the best 

work they can on behalf of U.S. trade and development goals. 

I also have questions regarding the work each agency does. 

Under OPIC’s mission statement, it is supposed to focus its investment on ‘‘less developed countries in areas and countries in 

transition, from nonmarket to market economies.’’ 

However, currently, only 0.2 percent of OPIC’s 2012 spending 

and 6 percent of OPIC’s total portfolio is invested in low-income 

countries. It appears that approximately one-third of OPIC’s 2012 

investments were made in countries where OPIC’s own guidelines 

say it should restrict spending. 

I also have questions on how some of OPIC’s specific investments 

comport with its development mission. For example, it has approved projects to finance a chain of Wendy’s restaurants in the 

country of Georgia, expand a Porsche-Land Rover dealership in 

Ukraine, finance a Papa John’s franchise expansion in Russia and 

construct a shopping mall in Jordan, expand billboard advertising 

in Ukraine and build a Marriott Hotel in Armenia and Georgia, 

also to expand a technology leasing company’s operations in Portugal. 

I also have questions about the transparency of awards. For example, because TDA provides grants only to foreign entities, their 

information is not provided to Grants.gov even though all the funds 

are awarded directly back to U.S. companies. In addition, their information is not available on the equivalent website for grants to 

foreign entities, the Foreign Assistance Dashboard, which is run by 

U.S. Agency for International Development (USAID). 

Although TDA has provided its data to be uploaded onto the FA 

Dashboard every year as required, USAID has not on-ramped 

USTDA onto the system. 

In addition, as the President has noted, there are many areas of 

overlap in the Federal Government’s various agencies that have 

trade functions. Despite the efforts of agencies like OPIC and TDA 

to carve out a niche, there is a lot of potential to streamline trade 

functions to ensure that there is as little duplication as possible 

and also to give U.S. businesses, many of them small businesses, 

a clear process to follow when looking for opportunities. 
3 

U.S. businesses and all taxpayers deserve to have these functions 

carried out as efficiently and effectively as possible. 

I look forward to a frank and open discussion of these issues 

today, and I thank the witnesses for being here, and I look forward 

to their testimony. 

Senator Johnson. 

OPENING STATEMENT OF SENATOR JOHNSON 

Senator JOHNSON. Thank you, Madam Chairman. 

I would also like to welcome the witnesses and thank them for 

their testimony. 

I appreciate the hearing, and I certainly also appreciate your determination to make sure we get effective government. 

As we consider consolidation of these agencies, which I think on 

the surface really sounds like a good idea, we do need to make sure 

that we actually get the efficiencies out of those consolidations. 

We are, obviously, serving on the Committee that oversees the 

Department of Homeland Security. A decade ago, that was consolidated—22 different agencies—and I have yet to convince myself 

that we are actually saving money. I am concerned that what we 

did is we just created a larger bureaucracy that is not particularly 

functioning well. 

I am hoping that in this potential consolidation that we actually 

would look at consolidating functions and reducing overall budgets 

if we do these types of consolidations. 

Like I say, it sounds good, but sometimes making something bigger does not make it better. And I am certainly hoping the agencies 

are on guard about that eventuality. 

But with that, I am looking forward to hearing the testimony, 

and I apologize in advance for having to leave the hearing a little 

bit early. 

Thank you. 

Senator MCCASKILL. No problem. Thank you, Senator. 

Let me introduce the witnesses. 

First, we have Elizabeth Littlefield. She is President and Chief 

Executive Officer (CEO) of the Overseas Private Investment Corporation. In this role, she also serves as Chair of OPIC’s Board of 

Directors. 

Prior to joining OPIC, Ms. Littlefield was the CEO of a policy 

center dedicated to financial services access, and Director for the 

World Bank’s Financial and Private Sector Division. 

Ms. Littlefield previously served as J.P. Morgan’s Managing Director of Emerging Markets in Europe, the Middle East and Africa. 

And Leocadia—did I say that correctly? 

Ms. ZAK. Yes, thank you. 

Senator MCCASKILL. Leocadia I. Zak is the Director of the U.S. 

Trade and Development Agency, TDA. She is responsible for overseeing all of the agency’s operations. 

Prior to joining TDA, Ms. Zak worked as an attorney practicing 

in the areas of corporate, municipal and international finance, and 

is an adjunct professor of law at Boston University and Georgetown. 
4 

1The prepared statement of Ms. Littlefield appears in the Appendix on page 27. 

It is the custom of this Subcommittee to swear in all witnesses 

that appear before us. So, if you do not mind, I would ask you to 

stand and take the following oath: 

Do you swear that the testimony you are about to give before 

this Subcommittee is the truth, the whole truth and nothing but 

the truth; so help you, God? 

Ms. LITTLEFIELD. I do. 

Ms. ZAK. I do. 

Senator MCCASKILL. Let the record reflect the witnesses have answered in the affirmative. 

We would ask you that your oral testimony be limited to around 

5 minutes. We are pretty laid back here, and if it is a little longer, 

no one is going to object. 

And, obviously, you are welcome to put anything into the formal 

record of the hearing that you would like. 

And we will start with you, Ms. Littlefield. 

TESTIMONY OF THE HON. ELIZABETH LITTLEFIELD,1 PRESIDENT AND CHIEF OPERATING OFFICER, OVERSEAS PRIVATE 

INVESTMENT CORPORATION 

Ms. LITTLEFIELD. Thank you very much, Madam Chairman and 

Ranking Member Johnson. Thank you, Members of the Subcommittee as well. Thanks for inviting me here today alongside my 

good friend and colleague, USTDA’s Director Zak. 

I am Elizabeth Littlefield, President and CEO of the Overseas 

Private Investment Corporation. 

So, to begin, let me just share a couple of words about OPIC and 

what we do. 

OPIC is the U.S. Government’s development finance institution, 

and our mission is to support sustainable economic development in 

the poor, but emerging, countries of Africa, Asia, the Middle East, 

Europe—emerging Europe—and Latin America. 

We do that by catalyzing U.S. private capital investments into 

projects that help solve these countries’ important development 

challenges, like access to energy and health services. In so doing, 

of course, we help advance U.S. foreign policy and national security 

objectives. At the same time, we help U.S. businesses gain footholds in those fast growing, emerging markets, which of course 

spurs growth and job creation here at home. 

And, as you know, nearly 95 percent of the world’s customers live 

outside the U.S. borders, and all of the 100 top fastest growing 

economies last year were in emerging markets. So helping U.S. 

businesses tap these markets is key to our own growth. 

So how do we support these businesses? OPIC provides, as you 

said, Senator, companies and investors with market-based longterm loans and guarantees as well as political risk insurance. We 

work with a very broad range of U.S. clients, but importantly, 

small and medium enterprises represent nearly three-quarters of 

our projects. 

Our development mission and mandate means that OPIC 

projects build critical infrastructure, like roads and food storage 
5 

and housing, which improve low-income families’ access to energy, 

clean water, health services and schooling, for example. 

As you mentioned, Senator, OPIC charges fully cost-covering fees 

and interest rates, and as a result, for more than 36 consecutive 

years, the agency has operated on a fully self-sustaining basis at 

zero cost to the taxpayer, contributing to deficit reduction in each 

of those years. This past fiscal year, OPIC’s income reduced the 

Federal budget deficit by $426 million. 

I would like to just offer two quick examples of the range of 

OPIC projects. So, first, a Missouri-based company is using a $250 million loan 

from OPIC to build and operate a 60-megawatt solar photovoltaic 

plant in Boshof, in South Africa’s Free State Province. 

At the other end of the spectrum and across the planet, a Georgia-based family owned business that was selling low-cost cotton 

pants throughout the world wanted to support the U.S. Government’s effort in Afghanistan. They came to us, and OPIC lent this 

organization $3 million over time in a tranche-based, performancebased loan, to have them build a factory outside of Kabul to make 

uniforms for the Afghan military and police. The factory employs 

1,200 Afghan women, most of whom are war widows and who are, 

for the first time ever, working outside of the home, earning money 

to support their families. With our operational budget of only $53 million, which pays for 

our very small and highly specialized staff of only 225 people, the 

agency is able to execute around 100 such projects in any given 

year. 

Since the agency is profitable, on average, every single dollar in- vested in OPIC’s administrative or operating budget results in $6 

in income for deficit reduction—1 to 6. 

With additional staff resources, OPIC could generate more 

projects, support more U.S. businesses, contribute more to help economic development in poor countries, all while contributing even 

more to deficit reduction. 

So I have addressed the agency’s financial efficiency, but I also 

want to underscore our commitment to operational efficiency. 

In the past 4 years, OPIC has been laser-focused on further 

streamlining and strengthening the agency’s already very strong 

internal controls, and on improving and automating processes to 

improve performance and oversight, all while cutting costs at the 

same time. When working with a very small budget, every single 

penny matters. 

OPIC’s consistent and very strong performance results can be 

measured both transparently and tangibly in our bottom line—our 

income every year. These results, of course, are achieved thanks in 

part to this robust and state-of-the-art system of oversight and internal controls with multiple and reinforcing layers. 

It is noteworthy that a full third of our staff work in the areas 

of oversight and risk management, including policy and legal compliance—a full third of our staff. 

On top of that, OPIC has an independent 15-member board of directors with both private and public sector members. The board appoints an independent audit committee, and in addition, the OPIC 

is currently served by the USAID inspector general. 
6 

So I have addressed the agency’s financial effectiveness. 

So consistent with private sector practice, OPIC’s financial statements are audited by an independent financial auditor every single 

year, and we are very proud to have received an unqualified audit 

every single, solitary year of the agency’s existence. This, along 

with our financial performance and the fact that our defaults are 

less than 1 percent net of recoveries every year, I think speaks volumes about the agency’s performance, particularly in light of the 

very difficult markets in which the agency operates. 

We report regularly to Congress on our results, and in fact, there 

are nine separate reports provided each year, including six which 

are specifically related to OPIC’s financial risk and development 

impact. 

As a small agency, OPIC works in close collaboration with other 

agencies. We refer businesses that need feasibility studies to the 

experts at USTDA, and we rely on the State Department’s economic officers to be our eyes and ears on the ground. 

We partner with other agencies to leverage our strengths and our 

technical expertise for the benefit of U.S. companies while at the 

same time, maximizing, as you said, Senator, efficiency and agility, 

and maintaining the critical differences that Congress intended 

when it established us as separate entities. 

So, just a couple of examples in closing. 

Our friends and colleagues from TDA, Commerce and Ex-Im and 

others have all participated in nearly every one of our Expanding 

Horizons Workshops, which we carry out in cities throughout the 

country, including St. Louis. This enables the teams to show small 

businesses how they can actually access services from the different 

specialized Federal agencies. 

In the immediate aftermath of the Arab Spring and at the request of the Administration and the State Department, OPIC 

partnered together with USAID to establish small lending facilities 

in Egypt and Jordan to address the needs of stimulating private 

capital investment and job creation in those critical markets. 

And, of course, every single day of the week my teams are in 

close contact with the excellent USAID, State Department and 

Commerce officers in the embassies throughout the world where we 

work. 

So OPIC’s model of leveraging private sector investment for development is increasingly crucial at a time of constrained public resources and when the private sector is playing an ever greater role 

in international development and U.S. companies are, at the same 

time, seeking growth opportunities in the developing world. 

Our model enables us to support low-income countries while leveling the playing field for U.S. businesses and earning incomes for 

the taxpayer at the same time. It fosters the kind of foreign engagement that projects the best of American values, standards and 

innovation and good will. 

And, finally, I would like to say, Senators, that actually the timing of this hearing is rather auspicious as next week is the 30th 

anniversary of OPIC presenting its final check, which manifested 

itself in a large cardboard piece of paper handed to President 

Reagan, that final check to the U.S. Treasury which paid back all 

of our original startup appropriations. 
7 

1The prepared statement of Ms. Zak appears in the Appendix on page 41. 

So I am thankful for the opportunity to lead an agency that is 

having such a powerful impact around the world and using such 

an efficient and effective business model to do so. 

Thank you for your time, and I look forward to answering any 

questions you may have. Thank you. 

Senator MCCASKILL. Thank you very much. Ms. Zak. 

TESTIMONY OF THE HON. LEOCADIA I. ZAK,1 DIRECTOR, U.S. 

TRADE AND DEVELOPMENT AGENCY 

Ms. ZAK. Chairman McCaskill, Ranking Member Johnson and 

Members of the Subcommittee, thank you for this opportunity to 

testify about the U.S. Trade and Development Agency’s mission, 

operations, economic impact and oversight of funds. We appreciate 

your invitation to describe our efforts to level the playing field for 

U.S. companies overseas as well as to describe the procedures by 

which we ensure the agency’s continuing efficiency and effectiveness. 

I would like to begin by offering a bit of a personal perspective; 

I was raised by a family that owned a small business. From a 

young age, I worked with my parents and siblings in almost every 

aspect of my father’s veterinary clinic, from cleaning animal cages, 

to customer service, to accounting. I learned from my parents, who 

grew up during the Great Depression, to watch every penny. 

I bring those values to everything I do, including managing 

USTDA. 

Congress established USTDA as an independent agency in 1992 

in order to—and I quote from the statute—‘‘promote United States 

private sector participation in development projects in developing 

and middle-income countries, with special emphasis on economic 

sectors with significant United States export potential.’’ 

USTDA’s dual Congressional mandate is unique among Federal 

agencies in requiring that the Agency both provide foreign assistance focused on economic development and support U.S. job creation through exports. 

USTDA engages the private sector in development activities at 

critical early stages when technology options and project requirements are being defined. By highlighting opportunities for the use 

of U.S. expertise and technology when they can effectively be incorporated into project planning, the agency increases the likelihood 

that implementation will include U.S. exports. 

USTDA is a streamlined agency that takes rapid and targeted 

action to create meaningful, project-building partnerships when the 

need and opportunity are greatest. 

USTDA provides early stage grant funding for projects that may 

ultimately be financed by any number of entities, including U.S. 

Government agencies like Ex-Im Bank or OPIC, multilateral development institutions such as the International Finance Corporation 

(IFC), or commercial banks. 

Furthermore, the Agency can leverage financing from foreign 

governments in developing and middle-income countries. 

There is no U.S. private or public sector equivalent for USTDA, 

as a grant-making agency for early project planning. 
8 

In the Agency’s history of linking U.S. businesses to export opportunities, USTDA has generated over $45 billion in U.S. exports. 

In fiscal year 2013 alone, the Agency identified nearly $3 billion of 

new exports, which has helped to support approximately 14,000 

jobs in the United States. This is a tremendous return given the 

Agency’s appropriation of $47.5 million last year. 

The Agency’s success, in part, results from its rigorous, evidencebased decisionmaking processes. We continuously evaluate our program tools to determine their overall effectiveness. This exercise allows us to look both backward, at past success as well as lessons 

learned, and forward, toward forecasted trends and future opportunities, in order to prioritize the countries and the sectors on which 

we will focus in the coming year. 

This data-driven approach also informs the Agency’s project 

preparation and selection processes. USTDA’s talented, expert staff 

prepares funding requests for specific program activities. Each of 

these is reviewed and approved by the Agency’s senior management. 

USTDA staff believes in, and is proud of, our robust system of 

internal and external controls, which was designed to prevent 

waste, fraud and abuse, as well as to maximize the return on every 

U.S. taxpayer dollar the Agency spends. 

USTDA closely monitors the use of both its program and operating funds, and because we use the Interior Business Center (IBC) 

of the U.S. Department of Interior as our paying agent, there are 

additional checks on every payment made by the agency. 

Every year, we engage independent third-party companies, mostly recently KPMG, to audit our financial statements. Since 1993, 

the first full year of operation, the Agency has received unqualified 

audit opinions. 

But we also evaluate our programs and processes regularly by 

contracting with third-party companies to perform program and 

process audits. 

At USTDA, we pride ourselves on being efficient and effective. 

We have a long history of streamlining the Agency’s functions 

through cost-effective arrangements with shared service providers. 

For example, currently, we have agreements with IBC for human 

resources management, staffing and personnel matters, financial 

statements and payroll processing, as well as for travel authorization and voucher processing. 

Arrangements like these have allowed us to take advantage of 

our providers’ specialized technical expertise, allowing the employees to focus on achieving our mission. 

The Agency also continuously looks for additional ways to save 

costs. For example, USTDA previously maintained its Oracle financials on a standalone server hosted by IBC. We developed a plan 

to migrate the Oracle server to a shared platform, thus reducing 

our annual expenditures by 50 percent. 

By identifying savings like these, we have been able to streamline our operating expenses down the lowest levels and still allow 

for the reasonable management of our program. In fact, USTDA’s 

operating expenses have remained flat-lined since fiscal year (FY) 

2010. 
9 

In a time when results are more important than ever, we are 

providing our best results. As was indicated, the Agency’s current 

export multiplier, $73 in U.S. exports for every dollar programmed, 

is the highest in USTDA’s history. 

The Agency is committed to remaining an agile, responsive organization that supports U.S. jobs through exports while simultaneously providing important early project planning assistance to 

developing and middle-income countries. 

Furthermore, I think it is very important for the American public 

to have examples of agencies that are effective and efficient and 

watch out for the taxpayer dollar. I truly believe that USTDA is 

one of those agencies. 

Madam Chairman, Members of the Subcommittee, this concludes 

my remarks. I look forward to the questions. 

Thank you very much. 

Senator MCCASKILL. Thank you. 

And, since Senator Johnson has another important hearing he 

has to attend, I want to give him the opportunity to ask some questions before he has to leave. 

Senator JOHNSON. Thank you, Madam Chairman. 

This is a question for both witnesses. 

You both talked about controls and monitors and evidence-based 

decisionmaking, program audits, process controls—those types of 

things. 

Can you just tell me what are the main criteria you use in terms 

of grant-making or loan guarantees or loan-making? 

Specifically, we will start with Ms. Littlefield. 

Ms. LITTLEFIELD. Thank you very much, Senator. 

So the No. 1 criteria is those countries and those investments 

that our private sector clients are asking for. So we tend to go 

where the markets would like us to go, where they need our support. 

We are open currently in about 161 countries, and that list of 

places where we are open for business is determined by the income 

level of the country, whether or not we have a bilateral investment 

agreement and whether or not it is a country where are prohibited 

from working. For example, China and Sudan are both countries 

where we do not work for human rights reasons. In China, we have 

been closed ever since Tiananmen Square. 

So that is the eligibility. Beyond that, we looked for three things. 

One is whether or not the project proposed is going to have a 

positive development impact on that country, whether the client 

himself is eligible as a U.S. company, whether the project is commercially viable and we are sure we can get paid back, and then 

last, I would say we certainly make sure that project is consistent 

with all of our environmental, human rights, labor and other policies, as well as the policies that relate to ensuring that our projects 

have no damage to the U.S. economy or jobs. 

Senator JOHNSON. Can you quickly describe some of the more 

typical projects that you are dealing with? 

Ms. LITTLEFIELD. So I mentioned a few in my testimony, but I 

will mention just a few more if you would like. 

For example, in Togo, the West African country of Togo, which 

had severe energy deficits, we financed the creation of a tri-fuel 
10 

power plant that tripled the amount of power that country was 

able to produce and enabled it to export to neighboring countries, 

for example. 

All the way at the other end of the continent, in Rwanda, we 

have been financing just last year a man and his wife who are 

horticulturalists, who became interested in that country and in the 

very difficult time it is having feeding its own people. They have 

now exported their own horticultural technologies and have set up 

in Rwanda and are producing new crops of bananas and pineapples 

that are 10 times as productive as the crops that they replaced. 

So that is just—one is a $150 million project, and one is a $3 million project. 

Senator JOHNSON. Are these always with some private sector 

firm, or are they also sometimes loans with loan guarantees to governments? 

Ms. LITTLEFIELD. We are required by Congress and by statute to 

involve the private sector in everything that we do. 

Senator JOHNSON. OK. Ms. Zak, what about your criteria for 

your grants? 

Ms. ZAK. Thank you very much. 

As I mentioned, we have a very robust strategic planning process 

where we annually look at where there are opportunities from the 

host country that match with the U.S. businesses and what it is 

that they have the ability to provide. And I think that is very important. 

So the criteria, one, include: Will there be mutual benefit for 

meeting our dual mandate of economic development and jobs here 

at the United States? So we want to make sure we have both of 

those. 

The other is we want to be sure that we are looking at projects 

that have a reasonable likelihood of financing. They are not just pie 

in the sky, but from our experts in our office, they are projects that 

we believe have an opportunity to be able to move forward, and we 

want to be sure to level the playing field for those projects. 

The other thing that we look at, as I indicated, was the development impact in-country because we believe that this is a good way 

to have a positive impact in the future with respect to the U.S. 

economy. 

And, finally, we also look at whether or not there is competition 

from other countries. Our goal is to be able to level the playing 

field for U.S. businesses in what it is that we do, and it is also our 

goal to bring the private sector to development so that there is a 

return to the U.S. economy from development dollars. 

Senator JOHNSON. Am I correct to assume that maybe your agency would be the first on the ground in a particular country and a 

particular opportunity, and then you would be working to turn that 

over to Ms. Littlefield’s organization? Is that how it works? 

Ms. ZAK. Yes. We are often referred to as a SWAT team that is 

first on the ground to be able to do an evaluation of projects that 

are likely to be able to move forward with U.S. exports. Sometimes 

those projects move forward with OPIC, but oftentimes, those 

projects move forward with the Export-Import Bank or the host 

country government or the multilaterals. 
11 

So one of the things that USTDA brings is the ability to work 

with financing from a number of different institutions. 

Senator JOHNSON. OK, then the last question for Ms. Littlefield. 

I love the fact that we have an agency that actually makes a 

profit and returns money to the Federal Treasury, but at the same 

time that sends off some bells and whistles, in my head at least. 

Do you ever come under criticism for competing with the private 

sector, and would that be a legitimate concern? 

Ms. LITTLEFIELD. So, thank you for that question, Senator. 

It is a question because, as you say, we are one of the few agencies in the U.S. Government that do generate income. But, actually, 

no, we do not compete with the private sector. 

Statutorily, we do not compete with the private sector, but we 

also require every one of our project sponsors to represent that that 

financing is not available in the private markets. 

Also, why doesn’t the private market do this if it is so attractive? 

And the reasons for that are quite straightforward. 

One is because we are able to issue long-term debt we can do 

very long tenors, and many of these projects in emerging markets 

require long maturities that the banks cannot do. 

Second, we have a 40-year track record in working in these markets, and most banks do not have that. 

Third, most of our clients are small businesses, and small businesses, as you well know, have a very difficult time getting bank 

finance anywhere. 

So we do not compete with the private sector at all but work 

closely with it. 

And, in fact, we welcome the chance to work ourselves out of 

business. We like creating new markets and forging ahead. For example, we invented the political risk insurance product several decades ago, and now we are doing less and less of it as the private 

insurers are now coming in. So our political risk business is actually restricted to the super risky countries like the Afghanistans 

and Iraqs and Haitis and South Sudans of the world. 

But, if I may add, so the private sector we do not duplicate or 

compete with. I hope that is clear. 

But more concerning is—and Ms. Zak mentioned this when talking about leveling the playing field. More concerning is the public 

sector because every other G–8 country, G–7 country and many 

others have the equivalent of OPIC in the public sector that is designed to help their businesses invest in emerging markets. 

But, unfortunately, those other countries have agencies that are 

far bigger than we are, and so we are not able to invest—although 

their economies are far smaller than the U.S. economy, not to mention—so, Europe. All the European agencies tend to be larger than 

we are relative to our economy, and not to mention the Chinese. 

So it is not the private sector. The private sector we are helping. 

It is the public sector that I worry about. 

Senator JOHNSON. OK. Well, again, thanks for your testimony 

and your answers to my questions. 

Thank you, Madam Chairman. 

Senator MCCASKILL. Thank you. 

I have a lot of questions. 
12 

One of the reasons we are having this hearing today is I am constantly challenging my folks to find places where we have not 

taken a look. That does not mean that there is anything that you 

are doing wrong, but everybody that operates within the government should have oversight. 

Everyone should have independent oversight, and frankly, if you 

are doing really well, it is going to do nothing but make you look 

even better. 

So that is the reason we are here today, but I am very curious 

about both of your agencies and the practical impact of how you 

work. 

And I guess my first question would be I am a small business, 

and I have an interest in foreign investment and/or exports. How 

in the world do I find you guys? 

Who is it that brings me—I mean, I had never heard of you, and 

I am fairly knowledgeable about the Federal Government, certainly 

light years more knowledgeable than most of the small businesses 

that operate in Missouri. 

So who brings these businesses to you? 

You are not telling me that some small business in Missouri just 

picks up the phone and calls you, Ms. Littlefield. Who brings them 

to your door? 

Ms. LITTLEFIELD. So I am happy to start, and Lee, you may want 

to add to this. 

So you are absolutely right; it is difficult when we are as small 

as we are and all based in Washington, DC, with the exception of 

one person, to make sure that the markets that can use our services know about us. 

That is part of the reason we do these Expanding Horizons conferences throughout the country, in cities throughout the country, 

to advertise our services and those services of our sister agencies. 

But also, we find, frankly, we are pretty well known in the 

emerging markets themselves because most of the other development finance institutions such as ourselves in other countries are 

quite active there. So we find that we are quite well known outside 

the United States and in those emerging markets. 

Last, the way people often find out about our services—and I 

suspect the same may be true of the USTDA—is the terrific economic officers in the Foreign Commercial Service and the USAID 

officers in our embassies are very good at making sure that U.S. 

companies that are considering the possibility of investing in a 

given country are aware of the services that we can provide to facilitate that investment. 

I just came back Monday from a trip to West Africa, in Liberia 

and Ghana and Senegal, and the purpose there was to make sure 

that we were doing everything we could to help U.S. businesses 

that are interested in investing there. And, again, the embassies 

are really terrific at identifying and supporting those opportunities. 

Senator MCCASKILL. Are there repeat customers? 

And, by that, I mean in your loan portfolio, obviously, you have 

some private participation, and I am assuming that these are investment groups or banks that are coming to you with people that 

have come to them and they are looking to offload some of the risk, 

right? 
13 

Ms. LITTLEFIELD. That is right. And thank you for asking that 

question. 

We are very proud of the repeat customers that we have because 

it suggests that they are getting a good service from us. And so repeat customers is an important indicator to me of our performance. 

But you rightly mentioned that we do work with a number of, 

for example, U.S. banks. As part of our attempt to be more and 

more efficient and streamlined and cut costs, we use the services 

of other financial institutions to help us originate investment opportunities. 

Senator MCCASKILL. What percentage of your investment opportunities in the last two fiscal years were really led by financial institutions coming to you, where they are doing a piece of it and you 

are doing the lion’s share? 

Ms. LITTLEFIELD. Off the top of my head, I would say probably— 

I would say between 5 and 10 percent of our business in a given 

year has come through a U.S. private sector bank. 

But most of our business—well, I would not say most. I would 

say probably a third of it we are doing in conjunction with other 

types of lenders, though. 

Senator MCCASKILL. Hedge funds? 

Ms. LITTLEFIELD. No, other types of lenders, for example, other 

kinds of development finance institutions. 

Senator MCCASKILL. Oh, I see. Like, give me examples. 

Ms. LITTLEFIELD. Well, for example, we have negotiated an arrangement with the other development finance institutions such as 

the IFC of the World Bank, wherein we pre-agree on legal documentation to the extent possible and policy reporting requirements 

to the extent possible, such that we can share risks among ourselves without burdening the client with multiple reporting and 

documentation requirements, for example. 

Senator MCCASKILL. No, I mean your business. I am trying to get 

a handle on who is coming in your door. 

So you are saying that most of your business is not really generated through financial institutions that have a business that they 

want to finance, but rather, it is coming in directly with the businesses coming to you because they have made contact with the embassies? 

Ms. LITTLEFIELD. Most of the business that we do comes in directly to us; that is correct. 

Senator MCCASKILL. OK. 

Ms. LITTLEFIELD. There are various, different avenues into us, either direct—they have heard about us. They have heard us speaking at a conference, the embassies’ partner or repeat business. 

We have actually done this analysis, but I do not have the numbers in front of me as to what the sources of people hearing about 

us are. 

Senator MCCASKILL. So would you agree that based on your mission it is hard to say that you are being successful since such a 

small percentage of your work is being done in what we would consider really, truly developing countries? 

Ms. LITTLEFIELD. Right now, we are actually very proud of the 

amount of work that we are doing in less developed countries. It 
14 

has been consistently around 30 percent of our business for the 

last—— 

Senator MCCASKILL. How much? Thirteen? 

Ms. LITTLEFIELD. Thirty. Three-zero. 

Senator MCCASKILL. Three-zero. Now why do I have a figure of 

six? 

Ms. LITTLEFIELD. I do not know where that number is, but I can 

show you the reports that will indicate that it is more like 30, plus 

or minus 1 or 2 percent. 

Senator MCCASKILL. And that is where the purchasing power is 

$1,200 or less? 

Ms. LITTLEFIELD. We have an internal policy of focusing on countries that have a gross national income (GNI) per capita of 

$5,000—$15,000. 

Senator MCCASKILL. Or less? 

Ms. LITTLEFIELD. Or less. 

Statutorily, the inflation-adjusted limit from the 1986 number 

when it was originally established would be $18,000 as a limit, but 

we have reduced that to $15,000 and really focused on those poorest countries. 

I think an indicator of our focus on the poorest countries is that 

Africa, which used to be around 6 or 7 percent of our total a mere 

decade or so ago, is now over 25 percent of the total portfolio. So 

Africa—Sub-Saharan Africa has grown from 4 or 5 percent to a full 

quarter of our business. 

Senator MCCASKILL. OK. So the Foreign Assistance Act, you 

have internally decided—even though it is a per capita purchasing 

power in current dollars of $1,200 or less and to restrict OPIC activities in countries where it is over $7,822, you have just internally adjusted those numbers based on inflation? 

Ms. LITTLEFIELD. So the Foreign Assistance Act determined in 

1986 an upper limit on the countries that we would give preference 

to. When you take those numbers forward, it comes to around 

$1,800 in today’s dollars. 

We have determined that we wanted to focus on poorer countries 

than that. So, internally, as a guiding policy, we focus on those 

countries with GNI per capita of $15,000 instead of $18,000. 

I cannot reconcile the $12,000 number that you have right now, 

but I would be happy to do so and do the crosswalk between these 

numbers later on if that would be helpful. 

Senator MCCASKILL. OK. And part of it is your website is slightly 

confusing because your website says that you have spent—$1 billion out of $16 billion is spent on low-income countries. 

Ms. LITTLEFIELD. I do not know why that number would be on 

our website. It sounds like it is a misunderstanding or misrepresentation in some way. 

Senator MCCASKILL. Well, I think it is important because, obviously, what you are trying to do is do what the private markets 

cannot. 

Ms. LITTLEFIELD. That is right. 

Senator MCCASKILL. And that is to go into the high risk, lower 

value in terms of return in order to really, in a way, provide the 

financing that you could not—I mean, if this is financing that is 
15 

available in the private market, then it should be in the private 

market. 

Ms. LITTLEFIELD. Absolutely. 

Senator MCCASKILL. Was there a special reason that we would 

be in Israel or Portugal? 

I mean, those countries do not strike me as places that it would 

be difficult to get investment capital under any circumstances—not 

high risk, certainly not developing, very wealthy countries. 

Ms. LITTLEFIELD. So—yes. Now, originally, our statute was written in a way that exempted a few high-income countries for historical reasons, such as Portugal and Northern Ireland. We have not 

done any financing in those countries since I have been in the office, except for one legacy small transaction that was part of a multiple-country portfolio, I think, in Portugal. 

But other than that, as I say, our low-income portfolio has increased dramatically, and our higher-income portfolio has declined. 

With respect to Israel, Israel is the one exception to our $15,000 

cap, and we—again, that is historical reasons. 

But also, when we have done transactions in Israel, it has been 

with they have other extenuating circumstances such as being in 

the very high—very low-income, very poor northern parts of Israel, 

in the Negev, or when it has particular foreign policy considerations to it. 

So, yes, we do indeed make exceptions to that voluntary $15,000 

cap, but they indeed are exceptions and need to have overriding developmental or foreign policy justifications. 

Senator MCCASKILL. And is there someone who approves those 

exceptions, or is that all done internally? 

Ms. LITTLEFIELD. Well, given that the $15,000 cap is an internal 

policy, there is no official statutory change to our policy by going 

above it. 

The $18,000 cap is a policy that the board would have to approve 

a change of. 

Senator MCCASKILL. OK. So this is just board approval. There is 

no White House approval. There is no—because this is all supposed 

to be in support of the President’s foreign policy—— 

Ms. LITTLEFIELD. Yes. 

Senator MCCASKILL [continuing]. Development goals. 

When you all do one of these exceptions, is it just—as far as it 

goes, is it either you are making a decision or the board making 

a decision? 

Ms. LITTLEFIELD. Any changes to our policies would go to the 

board, and certainly, we would be consulting Congress with that as 

well. 

Senator MCCASKILL. OK. On the development goals, I notice that 

on your checklist for potential funding applicants there is not a single question about development. The questions include whether the 

project is in a country in which you can do business, whether a 

U.S. citizen or business has a meaningful involvement in the 

project, whether the applicant has a successful track record in the 

industry, but there is nothing about what the project’s development 

impact will be. 
16 

And some of the things I mentioned in the opening statement 

seemed to have a very tenuous connection with development goals, 

in terms of building energy or infrastructure. 

Wendy’s, Papa John’s—— 

Ms. LITTLEFIELD. Right. 

Senator MCCASKILL [continuing]. A Porsche dealership. I do not 

see how those support the development goals that are supposed to 

be one of the policy reasons for your agency’s existence. 

Ms. LITTLEFIELD. So, yes, thank you for that. 

That investor checklist that you have reviewed is really a 

prescreener to help us weed out the multiple inquiries that we 

have that do not qualify for even beginning a conversation with us. 

So it is really a blunt instrument—— 

Senator MCCASKILL. OK. 

Ms. LITTLEFIELD [continuing]. To weed out people that do not 

have viable projects, frankly. 

But the test of whether the development—the project has a development impact is certainly subjective but something that is the 

No. 1 goal of every one of our investment officers. So we would not 

be considering a project unless it had a positive development impact. 

Some of the projects that you mentioned do, I agree, on the surface look like they are less obviously developmental than a health 

or education project might be. But I think it is important to recognize that U.S. franchises in these markets create enormous numbers of jobs in markets that may be unstable because of unemployment, for example. 

So Marriott in Georgia is an extremely important job producer as 

well as, a standard bearer and a projection of American values in 

a country that is of high strategic importance to us and high foreign policy value, that was just emerging from a conflict situation. 

So each one of those stories, in and of themselves, one can look 

at and understand the context—the foreign policy context, the development context or the domestic economic context—in which that 

project contributes to economic development. 

But I can assure that as someone that has spent most of her life 

in development and several years living in Africa, on these matters, 

nothing matters to me more than having a positive development 

impact and doing so while helping U.S. businesses and do so in a 

sustainable way. 

Senator MCCASKILL. I think some of this—— 

Ms. LITTLEFIELD. So I can assure you I am a good steward of our 

development credentials. 

Senator MCCASKILL. And I do not question that. I do not question your motivation or your commitment to that. 

But I guarantee you that $20 million for a Porsche-Jaguar dealership in Ukraine probably makes you squirm a little bit, too. I 

mean just on its face. 

And some of this is—when you sit on this side of the desk, you 

can engage in all kinds of cheap shots, and I do not mean to be 

doing that. But, at the same time, some of these do give the impression that—I mean, I know there is plenty of places we can invest $20 million that would have more long-term value to the 
17 

Ukraine than somebody who is going to drive a Porsche or a Jaguar. 

And so, even those are—you know. I am sure that those franchises would argue with me that that is upward mobility that everyone aspires to, and that has other people look at that, and they 

want to work harder so they can aspire to have that also. I get that 

part. 

Let me talk a little bit about the oversight issue, and this is 

probably a little bit of stress here, about this. 

I am a big believer, as you probably know, in inspectors general 

and auditors. I am a big believer in independent government auditors. 

Spending as many years as I did as a government auditor, there 

is a huge difference between an audit that an entity hires to audit 

their books and an independent auditor coming in from the outside, 

that does not report to the board, does not report to the CEO but, 

rather, reports to the public, for public agencies. 

OPIC does not have its own inspector general. I know you referenced a relationship with the inspector general. 

But I know that you all tried to sit down and reach an agreement on a risk assessment of your programs and up to one performance audit. And, evidently, it is my understanding that you decided not to go that route. 

And I want to give you an opportunity to explain why and what 

would be barriers to your having a more robust relationship with 

an inspector general who would be making all of the decisions as 

to what to look at, when and why. 

Ms. LITTLEFIELD. Thank you for that question. 

Yes, indeed, as I mentioned, we use the services or we are the 

beneficiary of the services of USAID’s inspector general right now. 

That is part of the legacy of our having—— 

Senator MCCASKILL. Have they ever done any work there? 

Ms. LITTLEFIELD. Yes, they have. 

Senator MCCASKILL. So there is an audit they have done? 

Ms. LITTLEFIELD. They have done a number of different things. 

They have looked at two accusations of fraud, I believe, as well as 

we have engaged them for a Federal Information Security Management Act (FISMA) audit, which they have done now, and they are 

doing fraud awareness training as well. 

That is a legacy of our having been part of the AID in the beginning. 

But, as you rightly said, I personally have an interest in 

strengthening our oversight. I believe, as you mentioned, that if 

you are doing well it is a good thing. And, frankly, it is an extremely valuable management tool for management. 

So we have been engaging with the Congress and in particular 

with the Senate Foreign Relations Committee to strengthen our 

oversight mechanisms and to ensure that the skill set of our inspectors general comes with all the skills that we need. 

We are neither a pure development agency, like USAID, nor are 

we a purely financial agency. So we need an inspector that has tailored skills that are appropriate for this agency. 

So we have been pursuing the avenue of a designated Federal entity IG, which is similar to 35 other small Federal agencies who are 
18 

financial in nature, such as the Federal Reserve Board (FRB), the 

Federal Housing Board, the Securities and Exchange Commission 

(SEC) and others. So that is the avenue that we have been pursuing now. 

And I look forward to really benefiting from this oversight because, frankly, as the CEO and President it would be nice to have 

the assurances that these inspectors general would be. 

So that is the avenue we have been pursuing. It will give a Congress a one-stop shop of an independent entity that they can check 

in with on all matters related to OPIC and oversight. 

Senator MCCASKILL. OK. And I will look forward to getting specifics of what you want. 

And, if you are generating the kind of cash for the Treasury that 

you are, I bet you I can talk folks into making sure some of that 

is used to get you that oversight. 

Ms. LITTLEFIELD. Thank you. 

Senator MCCASKILL. It only makes sense, especially for both of 

you. When you are committing resources far away, there is no way 

you have the resources. 

I mean, I have scars up and down my back from the oversight 

in Iraq and Afghanistan, where we were spending billions of dollars and too often had nobody on the ground paying attention as 

to how those were being spent. 

Now you have a little more ability, although with you, Ms. Zak, 

probably not as much because it is grants as opposed to loans and 

risk management. 

But let’s talk a little bit about failure. What happens when you 

have a failure? 

For you, Ms. Zak, how successful have you been at recovering the 

money that has been expended when it has been determined that 

the project was failing? 

And, for you, Ms. Littlefield, how is the loss divided between the 

private sector and the money that you have guaranteed, that you 

have loaned? Is it pro rata, or is the loss to the private sector first, 

or is the loss to the government first? 

I will start with you, Ms. Zak. 

Ms. ZAK. Thank you very much, Madam Chairman. 

And I would just like to also address one thing that you just 

mentioned with respect to following our grant funding. 

As you mentioned earlier, with respect to our grant funding, we 

do require that U.S. businesses participate and perform the duties 

under the grants, and as a result, payments are made directly here 

in the United States to those U.S. businesses. 

So we have significant oversight with respect to our grantees 

overseeing a project as well as USTDA’s program staff overseeing 

a project as well as our Office of Grants Management. 

So, with respect to our grant activities, they benefit the host 

country, but because we want to level the playing field for U.S. 

businesses, the work is being performed by U.S. companies and the 

money never leaves the United States. 

With respect to recovery, one of the things we like to ensure is 

that we do not have a loss. So we have significant processes put 

in place with respect to every single performance milestone in a 

grant, where there is review by the program staff with respect to 
19 

that particular performance and all the way through the process to 

the end. When a project is complete, our Office of Grants Management reviews the whole project. 

However, as you indicated, there are times that when we get to 

the very end we may have an issue that arises. It is rare. But people are very much in tune to that, and we do a couple of things. 

One of the things we do is we often get outside auditors to come 

in and review the project to determine how much money is to be 

owed to us, and we then provide for demand letters from our agency. However, if we are unable to collect from USTDA, we have referred U.S. companies to the Department of Justice (DOJ) to be 

able—and the Treasury—to collect on our behalf. 

Senator MCCASKILL. And they have been successful? 

Ms. ZAK. They have been successful. 

Senator MCCASKILL. OK. I am curious; if the money never leaves 

the United States, are you saying because they use their money 

over there? 

Aren’t these projects being done in other countries? 

Ms. ZAK. They are being done in other countries. 

Senator MCCASKILL. But how—— 

Ms. ZAK. They are being done by U.S. contractors or U.S. businesses, often small businesses that are going abroad to look at the 

specifications. 

So these grants are often early project planning to be able to develop procurements or specifications, and we want to ensure that 

they are to the level that levels the playing field and that U.S. 

goods and services could be used. 

So the actual activities are being performed, the feasibility studies are being written, by U.S. companies. They are being overseen 

by the host country because we think that is extremely important 

for their development, to oversee their projects. 

At each milestone, the grantee signs off on the invoice. The contractor—U.S. contractor—certifies to the invoice. It then comes to 

USTDA to be reviewed for proper payment. 

Senator MCCASKILL. OK. I have lot of experience with money 

being paid to American companies to be used in foreign countries 

where it did not go well. So the picture you are painting is remarkable, that it is so seamless, without a problem. 

Do you have people on the ground in these countries that are 

looking at these projects—feet on the ground? 

Ms. ZAK. We have a couple different ways that we look at these 

projects on the ground. 

One is the fact that our program staff does travel to those countries. 

We also work very closely with the U.S. embassies and the Commercial Service to oversee these projects. 

We also, as a matter of fact, have a series of audits that we perform annually—that we bring in, again, independent companies to 

audit those projects, to be able to review them. 

So it is a process of embassies, our staff, independent auditors, 

to be able to look over and track the projects. 

Senator MCCASKILL. Does every project get an independent auditor hired? 

Ms. ZAK. Not, not every single project. 
20 

Senator MCCASKILL. What is the criterion to when you hire an 

independent auditor and when you do not? 

Ms. ZAK. Annually, our Office of Grants Management goes out to 

the staff of the agency to request whether or not there are any 

anomalies, anything they are concerned about. That is the beginning of a process. 

We also go through a process by which we look at what the risks 

are with respect to each project. It could be including things like 

what country they are in, have they done work with us before, have 

there been any concerns with lags with respect to their invoices. 

And then, as a result of those indicators, projects sort of rise to the 

top. 

They are then presented to an audit working group that reviews 

them. And as a result, outside auditors, which are usually small 

businesses, are hired, and those outside auditors will look at those 

specific projects. 

Senator MCCASKILL. Are you hiring these outside auditors incountry, or are you hiring people like KPMG and folks like that? 

Ms. ZAK. We are hiring U.S. businesses—often, they are smaller 

than KPMG—to do these particular audits, but they travel in-country to be able to look at what is going on. 

Senator MCCASKILL. And how many countries do you have these 

projects in? 

Ms. ZAK. We currently have streamlined our processes to where 

we have 18 priority countries. 

Senator MCCASKILL. Eighteen countries. 

And what—so how frequently—and how many people do you 

have working at this agency? 

Ms. ZAK. We have 50 full-time equivalents (FTEs). 

Senator MCCASKILL. You have 50 people, and you have 18 countries. And how many projects a year? 

Ms. ZAK. We have approximately—about 100 projects a year. 

Senator MCCASKILL. So everybody—so how much travel—is your 

travel budget extensive? 

Ms. ZAK. It is not extensive. 

And, as matter of fact, one of the things that the agency did is 

that, even before other people, they have tried to economize with 

respect to their travel. And, when they may be allowed to do things 

like travel business class because of the length of time, our agency, 

beginning in 2009, volunteered to cut down and to go coach so that 

they can do more trips. 

So, with respect to our program staff, they travel at least quarterly to their countries, and our evaluation staff also travel to the 

countries. 

Senator MCCASKILL. Do the auditors travel? 

Ms. ZAK. And the auditors travel on a separate audit budget, but 

the auditors travel—— 

Senator MCCASKILL. Are they going coach? 

Ms. ZAK. They probably are going under the Federal rules, which 

they are not. 

Senator MCCASKILL. I bet they are. 

And what about failure in your agency, Ms. Littlefield? 

Ms. LITTLEFIELD. So, thank you. 
21 

You asked two questions. One is about the capital structure and 

who loses first and second, and about failure. But since you are 

asking failure now, I will address that first. 

For me, there are two kinds of failure. One is failure to achieve 

the development impact that we are aiming for, and two—and related to that, of course—is failure to perform financially. 

With respect to failure to perform financially, we do find that 

particularly the smaller businesses sometimes struggle and need a 

lot of hand-holding. So our nonperforming loans can look significant—say, 6, 7, 8 percent of our portfolio. 

But, at the end of the day, we find that hard work with those 

clients enables them to finally end up pulling themselves together 

and performing, which results in our write-off rate, as I mentioned 

earlier, of less than 1 percent net of recoveries. 

So, with respect to failure, we hope to have some failure. If we 

are not failing sometimes, we are not taking enough risk. But I do 

find it continually remarkable how rare that is that we do have an 

actual write-off, particularly considering the places that we are 

working. 

The biggest effort I have put into marketing and working in the 

last year or so has been in Afghanistan, in Haiti, in South Sudan, 

Pakistan and elsewhere. 

With respect to failure to achieve a development impact—because, of course, you can perform financially but not have a development impact—we are putting in place and have upgraded our development monitoring system, and we do have development analysts that travel to visit each of the projects and determine what 

impact their having. And we are going to try to do that over a 

much longer period of time once we have some money to invest in 

that long-term evaluation. 

With respect to whether the private sector and OPIC share, pro 

rata or in some other way, any losses, normally the project structure that we would work in would have the private sector investing 

in the equity in a project, which is generally the 25 percent sort 

of first base loss, and then we would be the financing on top of 

that. 

So, in order for us to actually lose money, the private sector partner would have to lose all of their money first. And then we would 

kick into, of course, the other mechanisms for getting paid back, 

whether it is collateral or personal guarantees or other means of 

getting repaid. 

But, yes, the bottom line is the private sector partners have a lot 

of skin in the game, and they lose before we do. 

Senator MCCASKILL. And that is huge, and that is probably saving you a lot of money because they are going to do so much due 

diligence because their skin is going to hurt first. That is obviously 

the right way, and I appreciate that is the way you are doing it. 

In preparing for this hearing, it is very difficult to figure out 

where the Federal Government is spending money on trade and development. It takes work, a lot of work, to figure it out. 

Your websites are good sources of information on projects, but 

neither of you are on ForeignAssistance.gov although I understand 

it is due to USAID having trouble uploading the information. 
22 

1The chart referenced by Senator McCaskill appears in the Appendix on page 51. 

You have this chart,1 which is not big, but I had my staff do this. 

And what this is, is you read across. This is OPIC, TDA, ExportImport, SBA, USAID, US Trade Group, Commercial Service in 

Commerce, Manufacturing and Service in Commerce, Market Access and Compliance in Commerce, then Commodity Credit in 

USDA, Foreign Market Development in USDA, Market Access Program in USDA, Emerging Markets Program and Export Credit 

Guaranty Program. OK? 

So that is the full deck. 

And then you go down as to what the responsibilities are. And 

you see the Xs all over this thing? 

I mean, it is a mess. 

Now I talk to any individual, whether I am—I mean, both of you 

are, obviously, highly competent and qualified and working hard 

and trying to do the right thing. 

And I talk to any of the agencies on this, and it is, oh, man, we 

have it covered. Do not touch us. This is good. 

But this has to be confusing for businesses. 

And it is hard to get the information in a way that people who 

sit in these chairs can really assess effectiveness and whether or 

not—I mean, honestly, Ms. Littlefield, I think that there—I have 

had an awful lot of interaction with USAID. I would vote for giving 

you a lot more of their money. I mean billions more of their money, 

in a heartbeat. 

But most members will never even know who you are or what 

you do because it is so fragmented and it is so niche-oriented that 

we are losing, I think, a lot of the punch and power of our development dollars. 

What do you think you all can do to up the transparency and up 

the coordination in a way that might bring more effectiveness to 

this overall goal that both of you have? 

You can go first. 

Ms. LITTLEFIELD. I can maybe just start with that. 

We have actually developed, along with Ex-Im Bank and USAID, 

some simple marketing materials that show on one piece of paper 

roughly what services you get from whom, and we found that can 

be very helpful in explaining to companies where they need to go 

for their specialized services. 

We have also articulated in—I do not know how many fora we 

have been sitting next to each other on a panel, describing very 

much as you did, or Senator Johnson did, at the outset, how 

USTDA’s, for example, feasibility studies among other things can 

give rise to an OPIC investment which then, of course, creates a 

magnet for exports in the future that can be financed through ExIm Bank. So that sort of stylized diagram, if you will, of how we 

relay to one another I think is helpful to people. 

I also think some of the websites that have been launched, and 

particularly concentrated with Business USA and Export.gov from 

Commerce, will help, once they are fully up and running, create a 

one-stop shop that does triage for businesses coming in, to understand which agency they can go to for that specialized expertise 

that they are looking for. 
23 

We find it looks complicated when you look at it on a spreadsheet, but frankly, the ecosystem of U.S. business is quite complex 

as well. So I think that is worth bearing in mind—that it is a complicated world out there. 

Senator MCCASKILL. OK. 

Ms. ZAK. May I also add to that? 

I think—as Elizabeth had pointed out, I think it is true that 

there are some websites, such as Business USA, Export.gov that 

we do provide the information to and that does describe the agencies and what they do. 

I think a very important thing, though, that has happened is 

that the agencies are working extremely closely together. Matter of 

fact, some of the agencies, regularly meet. The heads of the agencies regularly meet to make sure that our activities are streamlined, make sure we know what is going on with respect to the 

other agencies. So we work very closely together. 

As was mentioned, with respect to the public, I do think that one 

of the things that has been very valuable is that OPIC, Ex-Im 

Bank, Commerce Department, State Department have both traveled within the United States and abroad as Team USA. I think 

that is extremely important—that we are able to work together, to 

show what we can do and how we can work together. 

But I also think that at all levels of the agencies they have been 

communicating extremely well, and I think it is important for us 

through the websites to continue to communicate to the public. 

Senator MCCASKILL. And do you feel you have the same communication even all the way into USDA? 

Ms. ZAK. As a matter of fact, we work with USDA, but we also 

work with the Department of Energy (DOE). 

Because of the amount of aviation work we do, we also work very 

closely with the Federal Aviation Administration (FAA). And, as a 

matter of fact, Administrator Huerta was just at one of our workshops. 

So, as a matter of fact, USTDA is a convener and works very 

closely with many agencies, and so that is one of the things we 

have had to do—is to leverage the other agencies. And we work 

with a broad spectrum. 

Senator MCCASKILL. How many other agencies—Federal agencies—are doing feasibility studies in foreign countries? 

Ms. ZAK. I am not aware of any agencies. I know that occasionally USAID may do feasibility studies that are not focused necessarily on exports, the way that we do, but I am not aware of anyone that focuses on feasibility studies that are specifically focused 

on exports, which is our mission. 

Senator MCCASKILL. OK. So the Foreign Commercial Service Bureau within the Commerce Department or the International Trade 

Administration is not doing feasibility studies? 

Ms. ZAK. Not to my knowledge. 

Senator MCCASKILL. OK. Well, we think they are. So we will 

double-check and let you know. 

Ms. ZAK. Thank you. 

Senator MCCASKILL. If they are, then that is obviously a problem—— 

Ms. ZAK. I would like to know about it. 
24 

Senator MCCASKILL [continuing]. That you do not know it. 

And I assume that you would say the difference between OPIC 

and Ex-Im Bank is that you are focused on development goals and 

they are not? [Pause.] 

Because they do political risk insurance. They do investments 

abroad. They serve as a lender and insurer of last resort. 

You read their goals, and they are very similar to yours except 

with the development piece. 

Ms. LITTLEFIELD. The instruments sound similar, but I would say 

certainly they do not have a development mission, and we do not 

have a primary export generation mission either. 

So, as I have often explained it to our clients abroad, we are financing flows of U.S. capital for development purposes into emerging markets, and Ex-Im Bank is financing flows out of those 

emerging markets to acquire U.S. goods and services. 

Senator MCCASKILL. Well, what if we—just think about this for 

a minute. OK? Like do not immediately say, no. 

What if we combined your agency with Export-Import and added 

development goals to their mission? 

Ms. LITTLEFIELD. That is certainly something that has been discussed, and I know the President has proposed this, of course. And 

I think, as we have said, he has every right to organize I believe 

his executive team the way he sees fit. 

And I have no doubt that however any reorganization happened 

it would be done in a way that enabled us to preserve our development mission, but I feel it is also important to do it in such a way 

that Ex-Im Bank preserves its export promotion mission, too. 

And sometimes it can be challenging to have mission misalignment within one large entity. 

Senator MCCASKILL. But other than what you see as maybe some 

natural tension between exports and development goals, is there 

any other really compelling reason that you would see that they 

could not be combined? 

Ms. LITTLEFIELD. I have not looked into it in any great detail, 

but I have every faith that the President and the White House will 

do it well if they decide to so. 

Senator MCCASKILL. Well, unfortunately, for the President, it is 

not up to him. This is one of those deals that he needs Congress 

to help. And he would tell you, I am sure if he were here, that has 

been challenging, at a minimum, to get Congress to go along. 

Let’s talk a little bit about TDA’s outside financial auditors. I 

know that they report to your deputy financial officer and to the 

chief operation officer (COO). 

And your general counsel is serving as your inspector general 

now; is that correct? 

Ms. ZAK. As you indicated, we do not have an inspector general. 

As a result, our general counsel is a coordinator. If there are any 

activities, they can be brought to our general counsel. If there is 

a need to go to another agency with respect to—as we referred to 

DOJ in the past, then she is able to provide that information to 

others as well. 

With respect to the outside auditors, the auditors do report to 

our chief financial officer, but as a matter of fact, the senior man-
25 

agement team meets with our auditors to ensure that we review 

all of the information that the auditors have provided. 

Senator MCCASKILL. OK. But I am assuming that neither one of 

you would have a problem if we could figure out a way to give you 

special—I mean your own designated inspectors general to provide 

that independent, third-party, outside look at risk assessment— 

most importantly, risk assessment—and then going in and doing a 

deep dive in whatever areas they determined were risk-worthy. 

I am assuming you would be OK with that. You would not have 

a problem with having an IG. 

Ms. LITTLEFIELD. As I mentioned earlier—— 

Senator MCCASKILL. Right. 

Ms. LITTLEFIELD [continuing]. That is the avenue that we are 

pursuing with the Senate Foreign Relations Committee. I think it 

is the solution that makes the most sense for a small agency and 

one that enables us to ensure that we have the relevant skills embodied in that IG. 

Senator MCCASKILL. We have IGs in agencies, frankly, that are 

much smaller than yours and have much less connection with finances than yours. 

I mean, there are some tiny agencies with IGs and that do not 

have the financial impact that yours have. 

Are you OK with an IG? 

Ms. ZAK. With respect to the attorney general, we have—or inspector general, rather. We have spoken with both our appropriators as well as our authorizers that are aware of our size, the nature of the work that we do and the oversight that we have. 

And, with respect to the size, one of—the thinking is to be able 

to have access and to continue with our audits as we have performed them in the past. 

But, basically, the issue has been sort of the size and nature of 

the work. 

Senator MCCASKILL. Right. OK. Is there anything that I have not 

asked a question about that you wished I would have? 

Ms. LITTLEFIELD. I, personally, cannot think of one. I think you 

have been very thorough. 

And we appreciate the time and attention you and your staff 

have spent to understanding—I speak for Lee as well, I think—our 

two small but vital agencies, both of which I believe are punching 

well above their weight. 

Senator MCCASKILL. I think that both of you are. 

And this is one of those areas—and I will be honest with you. 

When you are in this line of work—and I have a sense that neither 

one of you are in your jobs because you are looking for big money. 

I think both of you probably have the kind of resumes that you 

could make much more money in other jobs. 

One of the things that is really hard right now is the cynicism 

that is out there about government and that government does not 

do anything right and that government just pretty much sucks and 

that government is the enemy and government is the problem. 

And, with more oversight, I think both of your agencies would 

get more exposure to the work you are doing. I think both of you 

are working very hard to make your agencies appropriately riskfree and productive. 
26 

And there are two sides to oversight. One is that you figure out 

when bad things are going on, and you get them fixed. The other 

is you highlight agencies that are doing things right. 

My sense is that overall if you all had more aggressive thirdparty oversight you would do very well, and that is good for all of 

us—to have every once in a while some parts of government that 

are doing what they should be doing. 

We are going to continue to pursue, to the extent we can, on consolidation of programs where it makes sense. There is, I think, 

some value to making this a little less complicated to someone who 

is not intimately involved in foreign development and foreign investment. 

It is complicated. And I know you all talk to each other, but coming in from the outside as I did to this, I kind of went, wow, this 

is a labyrinth. 

To you, it seems simple because it is who you work with every 

day and it is your areas of expertise, but I think to most businesses 

it is much more complicated. 

And I am going to continue to work on that and will look forward 

to getting your input on it. 

Generally, the problem with consolidation has nothing to do with 

the agencies. It has to do with committee chairs that do not want 

to give up their jurisdiction. That is a problem that would be my 

responsibility to try to deal with. 

Yes? 

Ms. ZAK. I just wanted to respond to your question of what is a 

question that I wished you would have asked, and that is, what do 

you need? 

And I think one of the things that we do need is for people to 

support the President’s budget. I think both for OPIC and for 

USTDA because I do think—and I really appreciate your focusing 

on agencies that are effective. And I think we are effective, and 

with the President’s budget, we can be even more effective. 

Senator MCCASKILL. Well, we actually got a budget deal last 

night, and it was not the President’s budget, but it was a lot closer 

than many of us thought we would get. So there is a little glimmer 

of hope at the end of the tunnel that we are going to be doing the 

shutdown dance again and that we will begin to maybe get back 

to some regular order and begin authorizing and appropriating the 

way the rules are designed. 

So I really appreciate your time today. 

We will have some followup questions for you. Particularly, I 

want to get to the bottom of what percentage of your work is actually in developing countries and what is the criteria and how is 

that being decided and what does it relate to, to the original authorization and how that was determined. 

We are going to want to take a little bit deeper dive around that 

and clear up some of the confusion that seems to exist about how 

much of your body of work is actually being done in developing 

countries. 

Ms. LITTLEFIELD. Yes, I would welcome that. Thank you. 

Senator MCCASKILL. OK. Thank you both. 

[Whereupon, at 3:20 p.m., the Subcommittee was adjourned.] 
(27) 

A P P E N D I X 

Statement of Elizabeth Littlefield President and CEO 

Stnlamlliningand Strengthening Oversight of 

Room SD-342 Dirksen Senate Office Building 

December 
28 

CEO 

Madam Chair, Ranking Member Johnson, Members of the Subcommittee, thank you for inviting me to 

appear here today. I am Elizabeth L littlefield, the President and CEO of the Overseas Private 

Investment Corporation. 

OPIC is the u.s. government's development finance institution. An independent federal agency created 

in 1971, OPIC mobilizes private capital to help solve critical development challenges and in doing so, 

advances U.S. foreign policy and national security objectives. Because OPIC works with the U.S. private 

sector, it helps businesses gain footholds in emerging markets by catalyzing revenues, jobs and growth 

opportunities both at home and abroad. OPIC achieves its mission by providing investors with financing, 

guarantees, political risk insurance, and support for private equity investment funds. OPIC operates in 

more than 150 countries on a self-sustaining basis at no net cost to U.S. taxpayers. In fact, OPIC has 

contributed to U.S. deficit reduction for 36 consecutive years. 

OP/C's mission, simply put, is to use its financing and insurance programs to catalyze investments that 

promote development and U.S. foreign policy objectives in poorer countries. 

Over the last four decades, OPIC's business model has proven to be nimble, successful, and profitable 

for the U.S. taxpayer by serving critical development and foreign policy goals while supporting U.S. 

business interests. 

OPIC's statutory framework, contained in the Foreign Assistance Act (22 USC 2191 et seq.), requires 

OPIC to fulfill this mission by: 

• working with the private sector here and in the host country, 

being financially self-sustaining, 

• upholding high environmental and social policy standards, 

• ensuring OPIC-supported projects will not harm U.S. jobs, 

• using prudent underwriting and due diligence standards, and 

participating in only those transactions which the private sector could not otherwise undertake. 

2 
29 

Thus, OPIC is a highly-specialized agency with some unique characteristics. 

• It works exclusively with the private sector. 

Its professional staff comes largely from private-sector backgrounds -- principally individuals 

with developing country banking, insurance, and project finance experience. 

It is fully self-sustaining, returning a profit to the federal government each year. 

• It adds a "development overlay" to all Its activities, as well as high levels of financial, legal, 

environmental and social safeguards. 

I. OPIC 

To give you an overview of OPIC's operations, I would like to present the following charts: 

OPIC portfolio. Overall, OPIC has an $18 billion portfolio of loans, guarantees, and insurance. This is well 

below our Congressionally-authorized limit of $29 billion. OPIC's portfolio growth depends critically on 

the number of its transaction teams. With more resources, OPIC could generate more transactions and 

more revenue to the Treasury. 

Chart 1: OPIC Portfolio 

$30 

$25 

$20 

$15 

$10 

$5 

$-

COI1gr,essionallv'-auth()rized limit 

Total OPIC Portfolio 

$18.0b 

Total Exposure 

-Investment Funds (12%) 

-Insurance (17%) 

-- Debt Financing (70%) 

3 
30 

GPIC's activities are diversified by product line, region of the world, and business sector. 

Chart 2: OPIC Portfolio Product Line 

$20 $18 billion FY2013: 

m Invel)tment Funds {12%} 

$15 

I 

IiIlmurancel17%) 

I I III finance (70%) 

$10 

$5 

SO 

2008 2009 2010 2011 2012 20U 

Growth of 10% in FY 2013 after landmark growth rate for FY 2012. 

Chart 3: OPIC Portfolio 

$20 $18 billion 

$15 

III $10 

$5 

$0 

2008 2009 2010 2011 2012 2013 

!!lWorldwide(5%) 

ORtls!.ia and th~ CiS (7%) 

Ofurope (including T mi<eyj {9%} 

lZ1AsialPa-cific Islands (15%) 

mMiddle East/North Afrh:a (17%) 

IIIS"Il-5.1",0" Afrk. (22%) 

IiIl.tin America/Caribbean (lll%) 

Latin America/Caribbean is now the largest regional concentration, sub-Saharan Africa has grown the 

most in recent years. 

4 
31 

Chart 4: OPIC Portfolio Sector 

$20 $18 billion 

$15 

IIII $10 

$5 

$0 

2008 2009 2010 2011 2012 2013 

OConstructlon (4%) 

Cather* {S%} 

CJ Manufacturing (6%) 

flServices 112%) 

• Energy (27%) 

• Financia! Services (47%) 

Financial Services continues to represent the lorgest sector concentration. 

OPIC's product innovations. A key observation about OPIC's products is that OPIC basically invented two 

of them. In the 1970's there was no such thing as political risk insurance. OPIC brought it into the market 

and then broadened its reach in the 1980's. Because of OPIC's catalytic role, a private market has 

emerged and blossomed. Now there are private sector players, and the agency carefully avoids 

competing with them. OPIC continues to provide coverage in countries where private insurers do not 

wish to operate and for small businesses that private insurers do not wish to insure. 

OPIC also largely pioneered the emerging markets private equity (PEl sector. In the 1980's, OPIC began 

encouraging private equity (PEl funds to come into the poorer countries where OPIC operates and 

created a specialized investment funds department to manage this activity. In the beginning, OPIC had 

to work hard to find any PE funds willing to take the step. Today, dozens of PE funds operate in this 

space. They even have their own trade association. So now OPIC can set the bar far higher for PE funds 

seeking our support and more readily mobilize investment into developmental markets. In addition to 

building up hundreds of successful businesses in the developing countries, the PE funds that OPIC has 

financed have returned over $ 70 milfjon to U.s. taxpayers. OPIC's partnership with these funds are a 

unique core competency, possessed by no other federal agency. 

OPIC has a robust record of managing its assets and exposures during regional and even global financial 

crises. During the latin American downturn of the 1980's, the Asian financial crisis of the 1990's and the 

global financial crisis of 2008-10, OPIC was not seriously impacted. OPIC's cumulative record through 

these crises would be impressive if it came from the most sophisticated private-sector lenders in the 

u.s. Yet, very few of these lenders operate in a significant way in the higher-risk foreign markets where 

OPIC is active. 

OPIC support for U.S. small business. By design, OPIC involves U.S. small businesses in most of its 

transactions. 

5 
32 

and 

Chart 5: OPIC for U.S. Small Businesses 

Average Number of OPIC 

Financed and Insured Projects 

(FY2009-FY2013) 

23% 

.. U.s. Small Businesses 

11 Other U.s. Businesses 

77% 

Total Dollar Amount of OPIC 

Financed and Insured Projects 

(FYlOO9-FY2.0131 

$7.2 

billion 

!III U.S. Small Sus!".,,,,,, 

Businesses: 

Over the past five years, from FY2009-FY2013, OPIC financed or insured 391 projects significantly 

involving U.S. small businesses. OPIC's portion of these prajects is valued ot $5.4 billion and represents 

77% of al/ OPIC transactions ond 47% of the dolior value of all OPICfinoncing and insurance during that 

period. 

This is not just a commitment to helping U.S. small businesses gain footholds in emerging markets, as 

important as that goal is. It is also a process of showing small businesses how to do it, so they can keep 

on doing it, with or without future OPIC assistance. 

OPIC is proud to participate not only in the efforts of the President's Global Development Council, but 

also the President's Export Council and the Trade Promotion Coordinating Committee to increase small 

business exports. OPIC is unique within the federal government in supporting U.S. small companies that 

want to invest in fast-growing emerging markets. OPIC's Small and Medium Size Enterprise Finance 

Department, the agency's biggest line department, focuses on this element of our mission. 

Working together, all of OPIC's finance and insurance departments deliver on the statutory mandate for 

OPIC to be financially self-sufficient. 

OPIC revenues. OPIC has recorded deficit-reducing collections for 36 consecutive years. Here is the 

recent record of OPIC's contribution to reducing the federal deficit. 

6 
33 

Chart 6: OPIC Contribution to Deficit Reduction 

$450 

$400 

$350 

$300 

$250 

$200 

$150 

$100 

$50 

$0 

2009 2010 2011 2012 

President 

$426 

2013 

In FY 2013, OPIC reduced the United States deficit by $426 million, the 36'" consecutive year that OPIC 

contributed to U.S. budget deficit reduction. 

Because OPIC is a government corporation that works extensively with the private sector, it reports its 

revenues on both a private sector Generally Accepted Accounting Principles (GAAP) and a federal 

government accounting basis. 

• On a private GAAP basis, OPIC made more than $1 billion in GAAP profits [net income] for the U.S. 

government overthe pastflve years (FY2009-13). 

• On a government accounting baSiS, OPIC contributed almost $1.6 billion in deficit reduction to the 

U.S. Treasury [outlays] over the past five years (FY2009-13). 

• OPIC's administrative expenses, over the same five year period (FY2009-13), were $264 million (an 

average of $52,8 million per year). Thus for every administrative dollar appropriated to OPIC, the 

agency generated six dollars in deficit reduction. 

• Over the life of the agency, OPIC has generated more than $7.3 billion in deficit reduction, 

Moreover, OPIC has a strong track record of success in its basic mission of catalyzing outside private 

investment in developing countries. For example in FY2013, each dollar in OPIC's appropriated 

administrative expenses is projected to catalyze $173 dollars in outside investment to the developing 

and emerging world. 

7 
34 

OPIC and 

All of this has also paid big dividends in economic growth here in the United States. OPIC projects have 

supported more than 278,000 U.S. lobs and ~76 billion in exports of U.S. goods and services. 

And, all of this has been achieved with a very small staff footprint: 229 full-time employees. In fact, 

OPIC's main constraint is not capital or skills, but staff capacity to meet the demand from U.S. 

businesses for OPIC's products and services. 

How OPIC Develops its Transactions 

OPIC's business process starts with business development. Our outreach to the nation's companies 

includes our "Expanding Horizons" conferences for small businesses, which have taken place in 17 cities 

from coast to coast, including St. Louis, and involved more than 2,500 companies since 2006. I am proud 

that our friends and colleagues from TDA have participated in nearly everyone of these outreach 

conferences, as have other federal agencies including SBA and Commerce. Business proposals also come 

to us from OPIC's "Enterprise Development Network", a group of over 120 loan originators and business 

advisors worldwide who have been trained on OPIC's products and approval processes. In addition, 

many hands throughout the U.S. Government both here and abroad send potential clients and leads our 

way- including U.S. Embassies, Foreign Service Officers, the Commerce Department's Commercial 

Service, and USTDA. 

Once we identify companies with the business plans and backing to be eligible for and in need of OPIC's 

assistance, we work with them to assess whether the project is viable - whether the economics and 

risks meet our development mandate and our risk tolerances. 

Our "transaction teams" then take over, structuring a finance or insurance package custom fit for the 

company and the project. The basic criteria for OPIC financing include: 

The management team proposed for the project must be experienced and credible. 

The company must have significant "skin in the game". It must assemble a separate package of 

equity to underpin OPIC's loan or loan guaranty. 

The means for repaying OPIC must be dear, and if possible, collateralized. 

OPIC's loan should be senior - in other words, other investors should not receive returns while 

OPIC's (and by extension, the U.S. taxpayer's) exposure is left unreimbursed. 

Where appropriate, independent engineering and legal analysis will be commissioned and 

analyzed. 

8 
35 

Testimony 

How OPIC Evaluates Credit Risks 

As the transaction team is completing its work, OPIC's credit quality requirements are applied to the 

proposal. 

• Based on guidance and supervision from OPIC's Board and its Audit Committee, as well as OPIC's 

Executive Management, the agency's Risk Management and Credit Policy teams measure and 

govern portfolio exposure, and provide individual underwriting clearance for each transaction. 

This provides OPIC with strategic assessments of risk, as well as transaction by transaction 

governance integral to any lending program. 

• OPIC's Risk Management function is comprised of specialized staff responsible for developing 

portfolio risk measures across OPIC's diverse portfolio, and a risk tolerance framework to guide 

decisions and to demonstrate integrity to outside reviewers and auditors. Risk Management, for 

example, has been leading an effort to update OPIC's risk scoring methods with Moody's 

Analytics, to ensure that OPIC is aligned with industry best practices. 

OPIC's Credit Policy unit works at a transaction level, subjecting new transactions to a detailed 

analysis and ensuring compliance with OPIC's mission and underwriting guidelines. Credit Policy 

examines each transaction and advises on potential improvements and risks. 

How Ollie Conducts its Due Diligence 

Credit risk is not just about business models but also about reputations, experience, and the character of 

borrowers and investors. In collaboration with the Departments of State and Treasury, OPIC screens 

applicants with a comprehensive background check - using more than 200 databases covering all 

available public records and filings, plus additional research, including comprehensive credit checks, 

searches of local, state and Federal court filings, Foreign Corrupt Practices violation records, federal 

databases on money-laundering and sanctions violations, databases of politically-exposed individuals 

(family members or business associates of senior government officials), and Federal "Do Not Pay" 

databases. 

How oPle Applies its Investment Policy Standards 

Parallel to its financial analyses, OPIC conducts a policy analysis of each project to gauge whether the 

transaction meets our mission-requirements for development impact, effects on the u.s. economy, and 

compliance with environment, labor, and human rights standards. 

• OPIC estimates a project's development impact according to indicators in five broad categories 

ranging from direct job creation to broader development reach. OPIC's development impact 

9 
36 

of 

results are as strong as its financial results: projects committed by OPIC from FY 2009 to 2013, 

for example, are expected to create over 66,000 new jobs in developing economies over the 

following five years. Job creation is the most critical development impact that development 

finance can have: jobs bring income; jobs mean empowerment, especially for women and 

young people; quality jobs increase productiVity, and; quality jobs build the foundation for 

sustainable growth. 

• OPIC also makes sure that projects do not adversely affect u.s. employment. OPIC does not 

finance or insure projects that would result in the loss of any U.S. jobs. 

Finally, the policy review ensures a project's compliance with the range of statutory 

requirements and policy standards summarized in OPIC's 2010 Environmental and Social Policy 

Statement. Projects must demonstrate respect for human rights, including internationally 

recognized worker rights. Potential projects are also screened according to their potential for 

adverse environmental and social impacts; some are categorically prohibited on these grounds 

and others are subject to additional requirements. 

OPIC also monitors every project from inception through to the conclusion of OPIC support. 

Monitoring, including site visits, allows OPIC to capture, verify, and report data on the issues 

analyzed during the policy review. 

OPIe's Internal Governance and Transaction Approval Process 

Transactions that meet these criteria for credit, policy, and portfolio allocation requirements, are 

reviewed through multiple levels of oversight and several internal committees, including specialist and 

senior long time career staff. For larger transactions, as President and CEO, I lead committees comprised 

of senior management, senior level career staff, and OPIC vice presidents to review the transaction's 

compliance with legal, credit, and policy issues. 

Ultimately, the largest OPIC transactions are reviewed by OPIC's is-member Board of Directors before 

being approved. The Board is comprised of eight private sector members and seven federal government 

members. The private sector members are appointed by the President of the United States and 

confirmed by the US Senate. They are drawn from diverse sectors, induding banking and private equity, 

and include representatives of small bUSiness, organized labor and cooperatives. By statute, the federal 

government members include the Administrator of the Agency for International Development, the 

United States Trade Representative or Deputy U.S. Trade Representative, and senior leaders from the 

Treasury, Commerce, State and labor Departments. 

10 
37 

OPIC's Transaction Monitoring and Portfolio Management 

To maintain the integrity of OPIC's financial exposure, its reporting, and its responsibilities to the 

Treasury and the taxpayer, OP1C aggressively monitors and manages all financial exposures throughout 

the lifetime of the exposure. 

Once the disbursement has been made on the loan or loan guaranty, or the insurance policy has been 

executed, OPIC follows through with ongoing portfolio supervision to ensure that OPIC's financial 

interests are monitored and enforced and that accurate information are communicated through OPIC's 

financial statements and federal reporting. Monitoring, which includes a combination of client selfreporting and site visits, also allows OPIC to capture, verify, and report data on the issues analyzed 

during the policy review. In this manner, OPIC is able to continue to monitor whether the projects it 

supports meet OPIC's standards for environmental and social impact management and deliver the 

intended results on the ground. 

o. Integration of Financial Audits and Risk 

OPIC is subject to the Federal Credit Reform Act of 1990, and implements other best practices (FMFIA, 

CFO Act, and Circular A123). 

For example, OPIC has invested significant effort in a new credit methodology with the support of 

Moody's Analytles. Each transaction is individually scored, reviewed annually, and subject to a reserve 

process whose results are in turn subject to internal controls audits and external auditor study. 

Additionally, this new framework system will be regularly updated to maintain best practices moving 

forward. 

Evidence of the rigor of OPIC's transaction selection and structuring, internal controls, and risk 

management practices can be seen in some basic statistics about OPIC's performance: 

• The agency's net write offs have been Jess than 1% of outstandings for each of the last 5 years. 

OPIC's cumulative re-estimates, a measure of risk under the Credit Reform Act, show more than 

$1 billion in net returns to the Treasury since 1990. In other words, OPIC outperformed its own 

Credit Reform Act risk projections by a cumulative $1 billion. 

• OPIC's generates "negative outlays" to the Treasury, demonstrating that it collects more than it 

spends. Further, OPIC maintains reserves pursuant to its charter to ensure that it remains selfsustaining. 

11 
38 

b. Internal controls 

OPIC is committed to ensuring that effective and 

efficient internal controls are in place to protect the 

Corporation's assets from waste, fraud and abuse. The 

agency's internal control program was established in 

accordance with the Office of Management and 

Budget's Circular A-123 and operates within the COSO 

framework. 

The agency implements a risk based approach to its 

annual testing that takes into account both industry 

best practices and the Office of Government and 

Accountability's Financial Audit Manual (FAM). OPIC 

policies and the Audit Committee provide the scope 

and governance authorities for the program. 

The COSO Framework is a method of 

looking at on organization's control 

environment in 0 holistic way 

The Council of Sponsoring Organizations (COSO) is a joint initiative of the five private sector 

organizations listed below and is dedicated to providing thought leadership through the development of 

frameworks and guidance on enterprise risk management, internal control and fraud deterrence. 

• American Accounting Association 

• Financial Executives International 

• The Institute of Internal Auditors 

American Institute of CPAs 

• The Association of Accountants and Financial Professionals in Business 

As an additional oversight mechanism, the Foreign Assistance Act also authorizes the Inspector General 

of USAID -the agency from which OPIC was spun off in 1971- to conduct such investigations and 

inspections of OPIC as may be necessary. 

12 
39 

CEO 

c. Outside Independent Audits 

Every year, as directed by OPIC's authorizing statute, OPIC's books are audited by outside independent 

auditors. In accordance with best practices, these auditors are under the supervision of the Audit 

Committee of the OPIC Board of Directors, not OPIC management. 

In the 41 years since its inception, OPIC has received a "clean" (unqualified) audit, with no material 

weaknesses identified in every audit. To preserve and build on this record, OPIC continues to invest 

extensively in internal controls, risk management, data systems, and accounting procedures, even under 

the constraints of sequester and limited appropriations. 

n. with Other U.S. Government ft!!It:lIl;U::' 

OPIC is constantly looking for ways to improve its efficiency including exploring opportunities for 

interagency coordination. Over the last several years, OPIC has forged exceptionally strong working 

relationships with the other development agencies including the State Department, USAID and USTDA. 

We have found creative ways to leverage the respective strengths of our agencies to the benefit of U.S. 

companies and investors in emerging markets, while maintaining the critical differences that Congress 

intended. While our two agencies have distinctly different missions, mandates, and highly-specialized 

technical skill sets, we collaborate in a number of areas to improve efficiency, particularly because of our 

small sizes. 

To maximize financial resources and deepen interagency trade and investment links, OPIC and USTDA 

supported by the Department of State, recently established the Asia-Pacific Clean Energy Program at the 

U.S. Embassy in Bangkok, Thailand. The program is intended to catalyze private U.S. investment in the 

Asia-Pacific region by offering a range of tools, such as financing, insurance, project preparation and 

technical assistance support, while enhancing U.S.-Asia business partnerships. 

And last year, both agencies set up a similar center at the U.S. Consulate in Johannesburg, South Africa. 

The U.S.-Africa Clean Energy Development and Finance Center includes OPIC, USTDA and the u.s. 

Export-Import Bank and is working with the U.S. private sector to provide a coordinated approach to 

clean energy project development in sub-Saharan Africa. 

In both cases, co-locating staff like this or providing a 'one-stop shop: enables us to spot project 

opportunities and refer clients to one another that are in different places in the trade and investment 

process. This results in a more seamless interface with private sector clients, faster referrals, better 

integration of client services, and ultimately broader opportunities for U.S. businesses resulting in 

stronger development outcomes. 

13 
40 

Testimony President and CEO Elizabeth L 

December .11,2013 

How OPIC Complements and Does Not Compete with the Private Sector 

It is important to note that the Foreign Assistance Act calls on OPIC to be "additional" Congress did not 

want OPIC competing with the private sector or crowding out private sector investments. 

Accordingly, OPIC weighs every transaction in terms of whether the private sector could undertake it 

without OPIC's participation. Before beginning a transaction, OPIC confirms with its clients whether they 

have sought financing or insurance elsewhere. OPIC transaction teams are trained to evaluate this 

factor, and the investment papers used in OPIC's internal analyses of proposed transactions specifically 

address it. This is also a criterion that is weighed in every Credit Committee meeting, every Investment 

Committee meeting, and every Board of Directors meeting that an OPIC transaction may have to pass 

through. In the area of OPIC's political risk insurance, Congress has required OPIC to annually assess 

whether OPIC is impinging on the private sector political risk insurance field by, among other things, 

convening a meeting with the leaders of the field to discuss the matter. 

In addition, OPIC requires a level of rigor and oversight that goes beyond the requirements of most 

private sector financiers in terms of environmental, social and worker protections in addition to 

assurances that the projects that OPIC finances do not have a negative impact on the U.S. economy. 

So while we will remain attentive to this, at present we are not aware of any private-sector entities 

offering the same services OPIC offers for the projects and markets in which we operate. 

Chairwoman McCaskill, Ranking Member Johnson, thank you again for the opportunity to discuss OPIC, 

its mission and mandate as the U.S. Government's development finance institution. I would be happy to 

take any questions at this time. 

14 
41 

Statement by Leocadia I. Zak 

Director, U.S. Trade and Development Agency 

Before the Committee on Homeland Security and Governmental Affairs 

Subcommittee on Financial and Contracting Oversigbt 

December 11, 2013 

2:00p.m. 

Chainnan McCaskill, Ranking Member Johnson and Members of the Subcommittee, thank you 

for the opportunity to testify about the U.S. Trade and Development Agency's mission, 

operations, economic impact and oversight mechanisms. USTDA's dual mandate uniquely 

positions our Agency to create jobs here at home, while promoting sustainable infrastructure in 

emerging markets around the world. We welcome the Subcommittee's interest in USTDA's 

work to level the playing field for U.S. companies overseas, and we look forward to describing 

the procedures by which the Agency ensures its continuing efficiency and effectiveness. 

USTDA was created to "promote United States private sector participation in development 

projects in developing and middle-income countries, with emphasis on economic sectors 

with significant United States export potentiaL"l USTDA is unique among federal agencies in 

that it has been mandated by Congress to engage the U.S. private sector in development projects 

at the critical early stages when technology options and project requirements are being defined. 2 

By highlighting opportunities for the use of U.S. and technology when they can 

effectively be incorporated into planning, the Agency increases opportunities for the use 

of U.S. exports in project implementation. 

USTDA is a streamlined, nimble agency that takes rapid and targeted action to create meaningful 

project-building partnerships when the need and opportunity for them are greatest As explained 

by the Center for Strategic and Intemationa! Studies (CSIS) in its 2011 report, USTDA: Good 

Value for Development Dollars, the Agency often acts as a bridge for countries that are 

transitioning from traditional aid-based relationships with the United States to mutually 

beneficial trade partnerships. 3 As such, USTDA has the authority to provide grant funding for 

projects that may ultimately be financed by any number of entities, including the Export-Import 

Bank of the United States the Overseas Private Investment Corporation (OPle), 

multilateral development banks and, where resources exist, the foreign govennnents that will 

I 22 U.S.G § 2421(a). 

222 US.C. § 2421(b)(2). 

3 Daniel F. Runde and Lauren Bieniek, US7I>A: Good 

International Studies, October 21, 20] I, available at httIls:J,lcsi:wrglpubliieatioru'ustda.,goo<d-value-d"veloplnerltdollars, las( accessed December 2013. 
42 

ultimately implement the projects themselves. As an early project planning, grant-making 

agency, there is no U.S. private or public sector equivalent to USTDA. As noted by CSIS, 

USTDA has the "unique ability to leverage its assets in a multitude of ways: to strengthen the 

domestic economy, continue international development priorities, and serve diplomatic interests 

in emerging markets around the world.,,4 

USTDA's Mission and History 

USTDA's dual Congressional mandate is unique among federal agencies in requiring that the 

Agency both (a) provide foreign assistance for trade and economic development and (b) help to 

put Americans to work in the jobs that result from exports. In the Agency's history of linking 

U.S. businesses to export opportunities, USTDA has generated over $45.8 billion in U.S. 

exports5 and has emerged as the leading U.S. government agency for early project development 

and planning activities in emerging economies. 

The Agency accomplishes its mission by providing grants to overseas sponsors for priority 

infrastructure projects in their countries. The funding may be used to perform a feasibility study, 

provide technical assistance or launch a pilot project. USTDA also connects project developers 

with U.S. businesses through its reverse trade missions, which are specially tailored to bring 

foreign decision-makers to the United States to observe the design, manufacture and operation of 

U.S. products and services in order to inform their procurement decisions. 

These activities have produced results for both U.S. industry and USTDA's partuers in emerging 

markets: U.S. companies are provided access to the lead infrastructore project developers around 

the world, while foreign partuers gain insight into the latest, most appropriate U.S. technologies 

to meet their development needs. USTDA focuses its program on sectors where U.S. finns are 

globally competitive, such as energy, transportation and telecommunications. As a result, the 

Agency is able to provide targeted foreign assistance, support U.S. trade and economic 

development priorities, and promote U.S. job creation. 

USTDA's predecessor organization was originally established at the U.S. Agency for 

International Development (USAID) in the 1970s to provide foreign countries access to U.S. 

development advice, technical assistance, equipment and technology. Thereafter, Congress 

recognized that the organization's targeted mission was lost to USAID's broader one and 

steadily increased its independence through successive actions, culminating in USTDA's 

creation as an independent agency in the Jobs through Exports Act of 1992.6 When it created 

USTDA, Congress described its predecessor as "one of the most successful governrnent export 

4 Ibid. 

S This historic cumulative export total includes data collected by the Agency's predecessor organization, prior to 

USTDA's fonnation as an independent agency in 1992. 

6 P.L. 102-549, Title II, § 201, lOG Stat. 3655. 

2 
43 

promotion programs," increased its budget authorization and highlighted the increased need for 

its services. 7 

USTDA's Economic Impact 

Consistent with its mission, USTDA's is to create U.S. jobs by increasing 

exports of U.S. goods and services for projects that promote sustainable development and 

economic growth in its partner countries. In FY 2013 alone, the Agency identified $2.95 billion 

of new exports generated from USTDA-funded activities, which has helped support 

approximately 14,000 jobs in the United States8 These results are consistent with the Agency's 

track record of generating over $2 billion in exports each fiscal year, which is a tremendous 

return on investment given the Agency's annual appropriation of approximately $50 million per 

fiscal year. 

The Agency's programs provide opportunities for all levels of U.S. businesses through grants 

and contracts. USTDA snpports efforts by companies of any size to enter or expand into 

emerging markets through its grants to foreign project sponsors, and has broadened its outreach 

efforts to increase the involvement of small- and medium-sized enterprises in Agency-funded 

activities. The Agency particularly relies on small businesses, as defined by the Small Business 

Administration (SBA), drawing extensively on the of consulting and engineering firms 

to provide independent technical and financial analysis during the critical early stages of a 

project's definition. In fact, in FY 2013, 64% of the Agency's direct contracts were awarded to 

small businesses - surpassing the SBA's goal for federal agencies to award at least 23% of their 

procurements to small businesses. 9 

Under its foreign grant program, USTDA creates for small businesses to succeed 

by showcasing their technical expertise in the global marketplace. For example, USTDA helped 

Roeslein & Associates, Inc. (St. Louis, MO) take advantage of a business opportunity to produce 

alnminum cans in Nigeria. When Roeslein first leamed ofthe business opportunity, they were 

not willing to pursue it because of the perceived risk. However, its team brought the project to 

USTDA, who agreed to share the cost ofa feasibility study with the company. The results of the 

study were positive and, consequently, project financing was arranged for Roeslein with the help 

7 House Report No. 102-551, reprinted in [1992J US. undAd. News at 3255, 3263. Congress 

tmderscored USTDNs independence and special character when explained that it expected that "the increase iu 

[USTDNs] authorization will discourage attempts by other agencies and departments within the executive branch to 

dnplicate [USTDA's] work." ld. at 3264. 

B Martin Johnson and Chris Rasmussen, Jobs Supp0I1ed by Eyports 2012: An Update, Office of Competition and 

Economic Analysis, International Trade Administration, Department of Commerce, Fehruary 26, 2013, available at 

bttp://www. trade.gov/masiiru1l1mild1groups/public/ @tg)anldocuments/wcbcontentltg_ian_004021.pdf, last accessed 

December 2013. 

9 U.S. Small Business Administration, Strategic Plan Fiscal Years 2011-2016, 

http://www.sba.gov/sites/defaultifilesiserv_stmtegic...J1lan_20 I 0-20 16.pdl: last accessed December 2013. 

3 
44 

of a guarantee from Ex-1m. The project resulted in the export of approximately $30 million in 

U.S.-manufactured goods and services. Since the USTDA-funded feasibility study, Roeslein has 

gone on to build three more carrning facilities in Africa, two in Nigeria and one in Angola. 

Roeslein sources steel from numerous states and purchases components from up to 10 states to 

build their can-making facilities before they are shipped overseas. 

USTDA's Collaborative Partnerships 

USTDA is distinct among the US. govemment's foreign assistance agencies because, as 

required by its mandate, it partners with the U.S. private sector at the very early stages of project 

development to jointly craft solutions to developmental aronnd the world. In the 

course of providing these solutions, USTDA collaborates with a wide variety of U.S. government 

agencies and multilateral institutions in a manner that ensures success. USTDA has been 

recognized by its key government partners, including the Office of the U.S. Trade Representative 

and the Departments of State and Transportation, among others, for the flexibility of its program, 

the range of tools at its disposal and the speed with which it can deploy results-oriented 

assistance. 

USTDA is well-positioned to mobilize tlle resources of multiple financing organizations, 

including Ex-1m, OPIC, multilateral development banks like the International Finance 

Corporation, and commercial banks. Beyond that, however, the Agency can uniquely leverage 

financing from foreign governments in developing and middle-income countries. These public 

sector entities are able to commit their own resources or the resources of their infrastructure 

hanks - to develop power, transportation and communications projects. 

For example, USTDA supported a technical assistance program to help the government of 

Romania plan its next generation network (NGN) infrastructure for emergency management. At 

the time the assistance was requested, Romania's telecommunications infrastructure was limited 

in its functionality, bandwidth capacity, geographical reach and transmission/storage 

security. Romania's goal of establishing an NGN infrastructure for emergency management 

would address tllese shortcomings via a comprehensive system upgrade. The Romanian 

govemment has financed substantial implementation of its NGN network, which has generated 

ahnost $39 million in U.S. exports of equipment and technology. 

USTDA's Operations and Services 

The Agency's effectiveness is demonstrated by the fact that its programs are now generating 

more U.S. exports per program dollar than at any other time in the Agency's history: $73 of 

exports for every dollar prograrrnned, up from $41 four years ago. The Agency's success is 

4 
45 

a result of its rigorous evidence-based decision-making processes. USTDA evaluates its 

program tools on a continuous basis to detennine their overall effectiveness and responsiveness 

to U.s. industry, U.s. government policy priorities and emerging market needs. 

Program Evaluations 

USTDA's Program Evaluations Office monitors development once USTDA-funded 

activities are completed to document the linkage between the activities and the project outcomes. 

The Program Evaluations Office measures the U.S. content, defined in tenns of the U.S.-

manufactured goods or services of commercial sales when projects are implemented. USTDA 

then uses the data to calculate its export multiplier, the dollar amount of exports generated per 

USTDA program dollar obligated, as well as its total cumulative exports, the amount of exports 

associated with USTDA funding in any given time 

During its annual strategic planning, USTDA combines its evaluations data with additional 

comparative factors - including Gross Domestic Product (GDP) per capita, World Bank income 

rankings, total population, the Intemational Monetary Fund's GDP growth projections, total u.s. 

exports, and the top five industry sectors for exports for each country - in order to prioritize 

countries and sectors for Agency funding. This strategic planning process, which engages the 

full participation of the Agency's staff, has helped foster a results-oriented culture at USTDA. 

This is evidenced by the fact that USTDA was ranked the top small/independent agency 

perfonner in the category of "Results-Oriented Performance Culture" in the Office ofPersounel 

Management's 2013 Federal Employee Viewpoint Survey results. to 

USTDA has continued to refine its strategy to ensure that it is dedicating its resources 

effectively. For example, USTDA decreased its number of priority countries from 26 to 18 

between FYs 2011 and 2013. Based upon its most recent evaluation, USTDA is again targeting 

18 key markets in FY 2014. Notably, while the total number ofcOlmtries remains unchanged, 

the composition of the list does not USTDA has adjusted its priority cmmtry list to match the 

interests and expertise of U.s. industry, replacing markets where its program was not producing 

the anticipated results with countries that offer significant growth opportunities in key 

infrastructure sectors, as appropriate. 

10 U.S. Office of Personnel Management, 2013 Federal Employee Viewpoint Survey Results: Employees Influencing 

('hange, available at: http://www.tedview.opm.gov/2013FlLESJ2013_Governmentwide _ Management_ Report.pdf, 

last accessed December 2013. 

5 
46 

Project Preparation and Approval 

The Agency's senior managers, II including the Director, also employ evaluation information 

when they review funding requests for specific activities. Each program funding request, which 

must include an analysis of potential export sales, is evaluated in light of financing options, 

foreign competition and past Agency results in a particular country or sector. USTDA fundiug is 

prioritized for those projects for which the Agency's historical performance data suggests the 

strongest potential for success. Approval from a senior manager is required for every obligation 

of program funds, regardless of the dollar amount. 

USTDA evaluates projects based on the following criteria: developmental priority in the host 

country, (b) likelihood of success receiving implementation financing and (c) mutual benefit for 

the United States and partner country, including U.S. export potential. 

USTDA develops early project planning activities by (a) working with a host-country partner 

(potential grantee) or (b) working directly with a U.S. company that is pursuing a business 

opportunity in a USTDA-eligible country. These are developed, reviewed and 

recommended to senior management for funding (typically by grant to the foreign grantee) by 

USTDA's program staff. 

• USTDA program staff identifies early project planning activities through meetings 

with U.S. industry and travel to priority markets. 

• USTDA program staff recommends that funds be obligated to contract with a 

technical expert for a Desk StudylDefinitional Mission to review the proposed 

project's scope of work and corresponding budget. 

• Once a project has been reviewed by the technical expert, USTDA undertakes an 

extensive due diligence review of the proposed grantee, as further described below. 

• lfthe project meets USTDA's funding criteria and the proposed parties clear due 

diligence review, the program staff provides an action memorandum requesting 

approval from senior management to enter into a grant agreement with the proposed 

grantee. 

Due Diligence 

In order to ensure that USTDA complies with and executive branch restrictions and 

that its funds support the work and projects of reputable, solvent entities and individuals, the 

Agency conducts due diligence on all its program activities before its funds are put to use. Using 

a variety of private and public databases, U.S. government, internal and external sources, 

USTDA thoroughly yet expeditiously vets its prospective foreign grantees and delegates, as well 

11 The Agency's senior managers include the Director, Deputy Director, General Cmmsel, Chief of Staff, Director of 

Policy and Program, and Director of Congressional "nd Public Atll!irs. 

6 
47 

as the U.S. firms and subcontractors that are proposed to perform USTDA-funded work 

Specifically, USTDA conducts due diligence on both private and public prospective foreign 

grantees, foreign entities and individuals that may in its reverse trade missions, and 

U.S. contractors and their subcontractors inclnding, as applicable, the entities' parent 

corporations, principal officers, directors and shareholders. 

Transparency 

Due to the nature ofUSTDA's work, the Agency is committed to increasing transparency and 

ensuring that accurate, relevant information about its activities is available to and easily 

accessible by the pUblic. USTDA's website, for instance, contains a virtual library where any 

person can search for and request reports on USTDA's grant-funded feasibility studies and 

technical assistance projects. USTDA also gathers a wealth of valuable business data, such as 

data on market conditions in particular countries and sectors, in the normal course of its project 

development efforts. Because this information could be of significant use to U.S. companies 

looking to expand their businesses in overseas markets, USTDA is currently in the process of 

making more of it publicly available on its website. 

USTDA's Oversight Mechanisms 

Effective oversight, which is crucial to USTDA's success, is accomplished through a robust 

system of internal and extemal controls designed to prevent waste, fraud and abnse, as well as to 

maximize the value of every U.s. taxpayer dollar the Agency spends. Beyond its evidence-based 

decision-making processes, USTDA closely monitors the use of both its program and operating 

funds, and engages independent third-party companies to audit its financial statements, as well as 

its programs and processes. Since 1993, the first full year USTDA was operational as an 

independent agency, the Agency has received only unqualified audit opinions. Furthermore, 

because USTDA uses the Interior Business Center (IBC) of the U.S. Department ofInterior as its 

paying agent, there is a check on every payment made by the Agency, as described below. 

Internal Processes 

After senior managers approve funding decisions and funds are obligated, various internal 

processes are in place to ensure the funds are put to proper use. The majority ofUSTDA's 

program budget is used to provide grant umding to foreign project sponsors for early plauning 

infrastructure project activities in developing and middle-income countries; the average amount 

of these grants in FY 2013 was $558,355. Regardless of the amount ofa particular grant, 

USTDA monitors the activity closely throughout and after - the project's duration. At the 

outset, payment schedules are based on the completion of project milestones rather than time 

periods; all invoices, which are reviewed and approved by program staff, must contain specified 

7 
48 

certifications regarding the work performed. USTDA's Office of Grants Administration reviews 

final invoices and work products before they are transmitted to the Agency's Finance 

Department. Once the Finance Department authorizes payment of a particular invoice, it 

forwards the invoice to IBC. For each invoice, !BC reviews the relevant grant agreement and 

contract to validate that payment from the U.S. Treasury is proper. After all of the foregoing 

steps have been successfully completed, IBC disburses USTDA's grant funds directly to the U.S. 

contractor in the United States; thus, USTDA funds never leave the United States. 

USTDA contract actions, which averaged less than $191,000 per program-related acquisition and 

less than $23,000 per operations acquisition in FY 2013, are also subject to rigorous internal and 

external controls. Contract invoices are reviewed and approved at multiple levels, including by a 

Contracting Officer's Representative, before they are transmitted to the Agency's Finance 

Department. After reviewing and authorizing the payment, the Finance Department transmits the 

invoice to !BC for verification of relevant information and validation that payment from the U.S. 

Treasury is proper, prior to the disbursement of funds. 

USTDA has received assurance of the operating effectiveness of!BC' s accounting operations 

through an unqualified audit opinion ofIBC's independent public accounting firm. 

In addition to the processes described above, USTDA's Finance Department reviews every 

transaction processed by the Agency in the course of its annual reporting, under the Improper 

Payments Elimination and Recovery Act (IPERA). To date, the Agency has not found any 

significant improper payments as defined by IPERA. In order to enhance its policies and 

procedures for the prevention and detection of improper payments, the Agency has entered into 

an agreement with !BC to utilize the Do Not Pay Business Center to check all invoices prior to 

payment. 

External Audits 

In compliance with the OffIce Mall1a!serrlent and Budget's Circular A-136, USTDA contracts 

with an independent auditor armually to review and provide an opinion on the Agency's financial 

statements. In FY 2013, the Agency's independent auditor, KPMG, LLP, expressed an 

unqualified opinion ofUSTDA's financial statements marking the 21 st year in a row that the 

Agency has received an unqualified opinion. 

USTDA selects a number of grant activities each year for post-award audits by independent 

companies based on recommendations from its Audit Working Group. Led by the Office of 

Grants Administration, the Working Group uses an tool based on a variety of 

standardized factors to assess which grant activities present the highest risk and recommend 

them for program andlor financial audit. The Group also solicits recommendations for 

8 
49 

audit activities from the Agency's program staff. Depending on the results of a particular audit, 

further action may be taken by the Agency, such as a demand for a refund of amounts owed to it. 

In rare circumstances, USTDA may refer the matter to the U.S. Department of Treasury or the 

U.S. Department of Justice. 

USTDA frequently and its its own programs and processes, contracting with third-party 

companies to review them. For example, in FY 2013, USTDA contracted with an independent 

CPA ftrm to review the use ofUSTDA's funds in four of its International Business Partnership 

Program activities, which directly connect U.S. industry representatives with leading decisionmakers from emerging economies. Speciftcally, the auditor was tasked with evaluating whether 

USTDA funds were used iu accordance with the terms of the contract, whether its invoice review 

procedures were consistent with generally accepted accounting principles and whether the 

reimbursable rates were appropriate and consistent with market rates for the tasks outlined in the 

underlying contract's Statement of Work. In each case, the auditor found funds were used 

according to the terms of the contract, the invoice process was compliant, and reimbursable rates 

were appropriate and consistent with market rates. The audit also found that there was a need for 

USTDA to better ensure evaluations feedback from all participants in the Agency-funded 

activities lUlder review. 

USTDA has also utilized an independent, third-party audit of its evaluation processes since the 

Agency's inception. In FY 2013, the Agency strengthened that process by adding a second 

third-party company to separately and independently review USTDA's evaluation methodology 

and data on an annual basis, and to recommend ways in which the methodology might be 

improved. 

USTDA's Efftciency and Effectiveness 

USTDA's goal of maximizing the value of every taxpayer dollar it spends also drives its ongoing 

efforts to be more efftcient, improve its customer service and reduce uunecessary costs. In FY 

2013, USTDA deployed a new Project Management Database System to standardize the 

management of current open obligations across the Agency. USTDA also developed a project 

timeline, which will permit it to track every step in an activity's life cycle, identify bottlenecks 

and implement changes to increase efftciency. Both of these effOlts, which were implemented 

in-house and at minimal cost, will improve the Agency's ability to meet the needs of its 

customers. 

USTDA has long streamlined its functions through arrangements with Shared Service Providers 

(SSPs) to take advantage of their technical expertise while redncing the Agency's 

budgetary and stafftng costs and minimizing redundancies across the federal government. 

USTDA currently has agreements with mc for human resources management, staffing and 

9 
50 

personnel matters, financial statements and payroll processing, as well as for travel authorization 

and voucher processing. These agreements have allowed the Agency to tap into mc's 

knowledge base to improve in a variety 

For instance, by fully adopting mc's processing requests, USTDA has eliminated the 

need for time-consuming internal ranking panels - thereby fllling vacant positions more quickly, 

which eliminates highly inefficient staffing gap periods. Additionally, USTDA had historically 

maintained its Oracle Federal Financials on a stand-alone server hosted by mc. Through a 

migration plan developed between USTDA and IBC, the Oracle server was migrated to a shared 

platform, thereby reducing annual expenditures by almost 50 percent ($1.1 million in FY 2010 as 

compared to $548,040 in FY 2013). The one-time $536,000 migration cost in FY 2010 was 

recouped in FY 2011 and FY 2012, allowing for the realization of significant cost savings for the 

Agency and the U.S. government. 

USTDA's savings through shared services have helped the Agency streamline its operating 

expenses down to the lowest levels that still allow for the responsible management of its 

program. USTDA's operating expenses have remained flat since FY 2010. 

Conclusion 

USTDA's unique and targeted focus on engaging the U.S. private sector in early project planning 

for development projects places it at the forefront of an innovative, sustainable foreign assistance 

model. The Agency moves quickly to build mutually beneficial partnerships between the U.S. 

private sector and overseas project sponsors at a critical point in project planning. Throughout 

its history, USTDA has made use of a relatively small budget the Agency's current 

export multiplier of$73 in expOlts for evelY $1 programmed, the highest in USTDA history, 

speaks for itself USTDA's success is attributable to rigorous, evidence-based decision-making, 

efficiency through streamlining and shared services, and effective oversight mechanisms that are 

appropriate for the Agency's size and programs. In a time when results are more important than 

ever, USTDA is producing its best results. The Agency is committed to remaining an agile, 

responsive organization that supports U.S. jobs through exports while simultaneously providing 

important early project planning assistance to developing and middle-income countries, helping 

them to develop the needed infrastmcture for trade. 

10 
OPIC TDA Ex-1m SBA USAID US Trade Commerce (international Trade Admin.) USDA (Foreign Agricultural Service

(net) (net) Rep. Foreign Market Emerging 

Commercial Manfacturing Market Access and Commodity Market 

Access Markets Service and Services Compliance Credit Corp. Develop. 

Prog. Program Prog. 

2013 Budget (millions) -$204 $50 $754 $1,754 $1,528 $50 $461.4 (entire ITA) $172.3 (entire FAS) 

Formulate U.S. trade X X 

policy 

Participate in trade 

negotiations 

X X 

Financing for investments X X X 

abroad 

Political risk insurance X X 

Feasibility studies and 

training 

X X 

Partial loan guarantees X X 

Trade market research X X 

Export market I development (including X X X X X X research & promotional 

activity) 

Export credit insurance X 

Export assistance and X X X X X 

counseling 

Support at major U.s. and X Overseas trade shows 

Partial loan guaranties X X X 

Trade missions and 

business workshops X X X 

Reverse trade missions 

and business workshops X 

Enhanced financing for 

purchases of U.S. goods X 

and services 

--------- ----
52 

Geographic Regions 

Sub-Saharan Africa 

North Africa/Middle East 

Caribbean/Central America 

Europe (Including Turkey) 

South America 

Russia and the CiS' 

South Asia' 

East Asia/Pacific islands (including Regional Funds)' 

Worldwide Funds 

Total 

Dollar values in millions 

Portfolio Date loans Past Due more than 90 days 

FYE 2012 4.1% 

FYE 2013 2,3% 

1 Central Asia (Kyrgyzstan) is included in Russia and the CIS, 

September 30, September 30, 

2002 2012 

$822 $3,743 

$524 $3,285 

$929 $1,901 

$1,522 $1,601 

$4,761 $1,491 

$1,260 $1,374 

$841 $1,275 

$1,633 $1,129 

$712 $966 

$13,004 $16,401 

Write-offs (net of recoveries) 

as % of avg outstandings 

0,269% 

0.808% 

2 South Asia includes: Afghanistan, Bangladesh, India, Nepal, Pakistan and Sri lanka. 

% 

Change 

+356% 

+527% 

+105% 

+5% 

-69% 

+9% 

+52% 

-31% 

+36% 

+26% 

3 East Asia/Pacific Islands includes: Cambodia, China, East Timor, Fuji, Indonesia, Malaysia, Mongolia, Papua New 

Guinea, Philippines, South Korea, Thailand, Vietnam and the Regional Funds. 

4 Adjustment represents the maximum insurance exposure amount as measured by Mel, in excess of an aggregate 

cumulative claims compensation, 

1 
53 

Post-Hearing Qnestions for the Record 

Submitted to the Honorable Elizabeth Littlefield 

From Senator Claire McCaskill 

"Streamlining and Strengthening Oversight of Overseas Trade and Development 

Agencies" 

December ll. 2013 

I. On page 6 of its annllal 

income cOllntries and that 

OPIC states that it has $1 billion in total commitments in low 

total portfolio is $16.4 billion. I 

of 

Q. How does OPIC define "Low Income"? 

2012 Annual Report (online at 1)1tJ}l~\}.\'iu'r'i",I~'\,·lilr.}:.}I.c~I}\\'1L!ih]h·".UtK..J.'lL;;"Blmilblll (SepL 2(12). 

22 USC 231 (2) 

, OPIC uses the latest availahl~ at the start of a fiscal 

for FY 2014, derived the threshold figures 

ofthc Bureau ofEconomk 

2012. from the 
54 

Income 

Crolllling 

In addition to the cfi(xts 

account a variely ofothcr 

tile composition 

and policy and include: 

* Devc ioplllcm 

$ US development 

.. Prudent 

.. OPIC 

Some ofthcsc considerations 

lowest income countries than 

more consistcnUy 

,I Sumner, A 

Washington, 

rf11ere Will the World's Poor Live? An L{)(/ote on Globo! Poverty and the 

Global Development 

and 

International, 

and expansion 

Bo/tomBillion 
55 

• Itisalso 

countries 

docs to 

2. In a December 10,2013 email to the Subcommittee. OPIC staff stated that: 

preferential consideration to 

investment projects in less developed with per capita incomes of $984 

or less in 1986 United States dollars, and to restrict its activities [in countries 

with] per capita incomes of $4,269 or more in 1986 United States dollars." With 

an inflation adjustment using thc lJ .S. GNP implicit price deflator available from 

the Bureau of Economic Analysis. those levels are equivalent to $ 1.803 and 

$7,822, respectively, in FY 14. As a result, OPIC restricts its activities in the 

wealthier OPIC-eligible countries. and those countries with GNI/capita of greater 

than $15,000 are generally not eligible f(Jr new Most importantly, the 

market also tclls us when we are no longer OPIC doesn't generally get 

requests to help US businesses invest in the wealthier economies. 

3 
56 

However, from the list 01'2012 OPIC projects available on OPICs website 5

, 0.2% of 

2012 projects were in countries with per capita incomes less than $1,803 and ofOPICs 

20]2 projects were in countries above the $7,822 threshold. This was calculated using the 

World Bank's GNl per capita index", 

Q. Please confirm the accuracy of this ini{)fmation, IfOPIC disputes any part of this, please 

provide detailed explanations for any disputed information. 

noted our 

3. In 2013, OPIC approved a loan guarantee of up to $18.9 million to fInance the establishment 

and operation ora chain of up to 22 Wendy's restaurants in the country of Georgia,S In2012, 

OPIC approved a loan of up to $20 million to expand a Ukrainian company's automobile 

5 Current OPIC Projects (online at !JW12:ij.\\\'w,.m:iJL.gil'''/.l2l21S:::llilml1i£:l.Ifl:~[1I::<:)Ilsc:nr\'CI'~~L;;) 

(accessed December 18.2013). 

6 The World Bank, Gl' .. 1 per capita (on Ii nc at "Cll',"""'."".",,,.::,"'!,,,,""."I".",,","',,'".L:':"."""!'"'!..!,.! .. l!,.!! I (accessed December 

2013), 

Tanzania and India pr~iccts ulone from either of these tabs comprise more than 0.2 percent of the number of 20 12 

in either tab. which suggc~b we be mi,swlllcrslandillg eitllcr the data set ur tIlE behind t[lis 

Schulz Global Investments website, (online at 6,2(13), 

4 
57 

business, including construction of two new, state-of-the-art dealership filcilities tor POl'sche 

and Land Rover/Jaguar automobiles and to repay the outstanding balance of an existing 

OPIC loan9 

Q, Please provide detailed il1fcmnation 011 how each ofthcsc expenditures advances a U.s. 

development goal. 

5 

noted 

the IIl1h 

proi!.;ssinnal and 

t5krain~, LTD (online at 

10l3), 
58 

country, 

.. 

.. 

.. 

dm~ the 

6 
59 

Ukfllillc 

.. 

cOllntries. ) 

had below) 1hat 

7 
60 

community 

has 

technical alltomotive skills, 

automotive 

'"kndcr of 

and 

8 
61 

duties 

" 

" 

9 
62 

4. OPIC is investing $10 million to co-finance loans to small- and medium sized businesses in 

Mongolia. but the U.S. neXlIS, according to OP1C"s public information summary, is a "U.S. 

citizen and owner ora interest of Schulze Globallnvestmcnts Limited, a British 

Virgin Islands limited company."IO 

Q. Please provide detailed information on the U.S. nexus for this project. 

In this instance. 

5. Please describe OP[C's pre-award process. 

6. GAO and the Inspectors General have identiticd grant closeout as a major challenge tor 

federal agencies. As you know, closeout procedures are intended to ensure that grants 

recipients have complied with financial requirements and returned unused funds. GAO has 

identified millions of dollars in expired grant accounts across the government. 

Q. Please provide the average length oftime that it takes OP[C to close out a grant. 

Not applkabk'. 

Q. Please identify how much your agency currently has in undisbursed funding in expired 

grant accounts. 

7. Are OPIC's domestic project sponsors subject to the Single Audit Act? 

10 Overseas Private Investment Corporatioll Public Document Summary Schulze Global 

Mongolia Deh Facility (online at =~c.:.:..=~=~~.=c"='==,~~:o=~~==~."-,,,-,­

""-"~~.=L-'-"'-'!"-''-'' (accessed Dec. 6. 2013). 

10 
63 

8. Please provide a breakdown ofwhere OPIC's domestic project sponsors are sourced. For 

example, what percentage ofOPICs domestic project sponsors are referred to OPIC rrom 

u.s. embassies? 

advisors, 

OPIC products and npplical ion 

lilf clients. 

oul ff)!' 

oftllc US 

11 
64 

U.S. Trade and Development Agency 

Response to 

Post-Hearing Questions for the Record 

Submitted to the Honorable Leocadia Zak 

From Senator Claire McCaskill 

"Streamlining and Strengthening Oversight of Oversl~as Trade and Development 

Agencies" 

December 11,2013 

1. Are TDA 'sforeign grant recipients required to 

their operations? 

See below. 

and performance audits 0/ 

2. Are TDA 's eventual US. granl recipients required to conduct financial and perjimnance 

audits of their operations? 

USTDA provides grants to foreign grantees for feasibility studies and technical assistance 

that are performed by U.S. firms. Therefore. there are no foreign grantee "operations" 

that could meaningfully or usefully be audited. While USTDA docs not audit the 

"operations" of foreign grantees. the Agency conducts extensive due diligence, prior to 

funding any activity, on each prospective grantee to ensure it is a reputable. solvent entity 

with the capacity to successfully implement the development project. As an example, 

USTDA recently provided a grant to assist Vietnam in developing a roadmap to integrate 

new wind generation into its electrical grid. Like all USTDA grant agreements. the 

grantee·-in this case. the Electricity Regulatory Authority ofVietnam-·is required to 

enter into a fixed-price contract, funded by USTDA grant fi.mds. with a U.S. firm for the 

pcrform,mce orlhe work. and further provides that USTDA will pay the U.S. firm 

directly on the grantee's behalf. Accordingly. USTDA's grant funds are never disbursed 

to its grant recipients. Rather. the grantees receive the services funded by the grants. and 

the U.S. firms receive payment lor their work directly from USTDA. In this example, the 

Electricity Regulatory Authority of Vietnam will receive a Final Report containing the 

U.S. finn's recommendatiolls lor future infrastructure and design priorities. It is 

USTDA's goal that Vietnam will subsequently adopt some or all of the Final Report's 

recommendations. and procure U.S. goods and services in implementing them. 

USTDA docs not have any U.S. grant recipients. U.S. firms always perform the services 

required under the Agency's grant program, as described in the above example. As 

Director Zak explained in her testimony, USTDA does select a number of grant activities 

each year for post-award audits by independent companies based on recommendations 
65 

from its Audit Working Group. Led by the Of1ice of Grants Administration, the Working 

Group uses an objective tool based on a variety of standardized factors to assess which 

grant activities present the highest risk and recommend them for program and/or financial 

audit. The Working Group also solicits recommendations for audit activities from the 

Agency's program staff. Depending on the results of a particular audit, the Agency may 

take further action, such as a demand for a refund of amounts owed to it. USTDA issues 

its demand to the U.S. firm responsible for the work. not to its grant recipients. In rare 

circumstances, USTDA may refer a matter to the U.S. Department of Treasury or the 

U.S. Department of Justice. 

3. Does TDA {'flJ1rrlnlli'l' tlnml('ullI 10 the reverse trade missions that it organizes? 

Yes, as the organizer of reverse tTade missions (RTMs), USTDA contributes to the visits, 

typically covering the costs of travel, lodging, meals, logistics and interpretation services. 

However, U.S. firms often sponsor portions oCthe RTMs, which can include the 

transportation and/or meals associated with a particular site visit. 

4. What percentage of the reverse trade "market ", so to speak, does TDA occupy as opposed 10 

other organizations, private or public, that organize reverse trade missionl'? 

USTDA is not aware of a public or private program analogous to its RTM program. The 

Agency plays a unique role in connecting foreign buyers and project developers with 

U.S. businesses by bringing these foreign delegates to the United States to observe the 

design, manufacture and operations of U.S. goods, services and technologies in order to 

infonn their procurement decisions. By funding RTMs, USTDA provides U.S. industry 

access to fbreign delegates, oftentimes at the critical stage before a procurement decision 

is made, to demonstrate how industry-leading U.S. technology options can address the 

infrastructure development needs of the foreign ofTicials. 

5. flow does TDA measure the success and value (?/a reverse trade mi,,;sion? 

USTDA monitors developments once RIMs are completed to document the linkage 

between the activities and their outcomes. Specifically, the Program Evaluations Office 

measures the U.S. content, defined in terms of the lJ.S.-manuJactured goods or services 

of commercial sales when ibllow-on projects are implemented. USTDA then uses the 

data to calculate its export multiplier, the dollar amount of exports generated per USTDA 

program dollar obligated, as well as its total cumulative exports, the amount of exports 

associated with USTDA funding in any given lime period. This analysis is done on 

RTMs, as well as all other USTDA-funded activities. in order to measure the results of 

USTDA's program and determine the Agency's effectiveness in achieving its mission. 

2 
66 

6. GAO ({nd the in.lpectors General have identified granl closeout as a major challengeji)/' 

federal agencies. As you kmTw, closeout procedures are intended to ensure that grants 

recipients have complied withjinancial requirements and returned unusedjimds. GAO has 

identified millions of dollars in expired grant accounts across the government. 

Q. Please identitY how much your agency clirrent(v has in 

grant accounts. 

in expired 

As the term is used by GAO, "grant closeout" is the process by which agencies redirect 

funds in expired grant accounts (accounts more than three months past the grant end date 

that have been inactive for nine months or more) to other projects or retum the funds to 

the Department of the Treasury (Treasury). Due to USTDA's intemal controls and 

authority to de-obligate and re-ohligate its funds, the Agency never has funds in expired 

grant accounts (and therefore does not have any funds in such accounts at present). In 

other words. there are only two options with respect to how a USTDA grant-funded 

activity may end: either 1) the funded acti vity proceeds to completion with all grant funds 

disbursed within the period of availahility of funds, or 2) the funded is terminated 

prior to completion and the funds de-obligated and for another purpose. As 

long as funds are obligated within the initial statutory period. they remain available to be 

de-obligated and re-obligated for flmr years after the date they originally would have 

expired. As an example, consider the Vietnam grant previously referenced. Because the 

funds for that grant (fiscal year 2013-14 funds) were obligated within their original twoyear period of availability. they are available to be de-obligated and re-obligated for four 

years from the date they otherwise would have expired (until September 30. 2018). The 

grant agreement's timelines are designed to ensure that the activity is completed well in 

advance of the deadline for de-obligation and re-obligation. It contains an estimated 

activity completion date ofSeptcmber 30, 2014 (these dates typically range from one to 

two years from the grant agreement's effective date), and an outside limit of four years 

from the grant agreement· s effective date for disbursement of the grant funds. a standard 

time limitation in USTDA's grant agreements. 

Given the nature of USTDA's grant activities and the length of time its funds remain 

available. the Agency's program staff closely monitors grant activities throughout the 

duration of the funds' availability and in the rare event that au activity does not progress 

satisfactorily, terminates the grant agreement before the funds expire. As a further check. 

LJSTDA utilizes a strict de-obligation timeline to ensure that it takes the requisite actions 

if it docs become necessary to de-obligate fi.ll1ds. In the event grant funds have not been 

disbursed by January 15 of their final tlscal year of availability. USTDA sends a waming 

letter to the grantee and U.S. firm. and begins taking the steps to terminate the grant 

agreement and de-obligate the funds. should that nJtim"j,·iv become necessary. 

3 
67 

Q. Please provide the average length of/ime thai it takes USTDA 10 close out a grant, 

In the nonnal course of bringing a grant activity to completion (as opposed to "grant 

closeout" as the (enn is used by GAO), USTDA takes approximately one to two months 

to review the Final Report and make the final disbursement of grant funds. USTDA 

retains at least 15% of funding for an activity until the U.S. firm's Final Report is 

approved. The Agency undertakes a review of every Final Report to ensure that the U.S. 

firm has complied with the Tem1s of Reference and mandatory clauses ofthe grant 

agreement, the foreign grantee has approved the document, and all applicable documents 

have been submitted. If necessary, USTDA interacts with the U.S. firm to resolve any 

outstanding issues with respect to perfonnance of the work. In some instances, such as 

when a question arises concerning the U.S. firm's performance, USTDA may hire an 

independent technical expert to evaluate the work performed and recommend a final 

amount due to the U.S. firm or owed to USTDA, Thereafter, the Agency disburses the 

appropriate final payment or seeks the appropriate retlll1d from the U.S. firm. 

Throughout this process, USTDA's Office of Grants Administration coordinates with the 

Agency's program and finance stan: the Office of the General Counsel and USTDA's 

Deputy Director. 

7. Please descrihe TDA '.I' pre-award process. 

The Agency's senior I11Bl11nrrelrS employ a data-driven approach when reviewing funding 

requests for specific activities. Each program funding reques!' which must include an 

analysis of potential export sales, is evaluated in light of financing options, foreign 

competition and past Agency results in a particular country or sector. USTDA funding is 

prioritized for those projects for which the Agency's historical pertllnnance data suggests 

the strongest potential for success. Senior management approval is required for every 

obligatioll of program !llllds, regardless of the dollar amount. 

USTDA evaluates projects based on the following criteria: (a) developmental priority in 

the host country, (b) likelihood of receiving implementation fInancing and (c) mutual 

benefit for the United States and partner counlry, including U.S. export potentiaL 

USTDA develops early project activities by (a) working with a host-country 

partner (potential grantee) or (b) working directly with a U.S. firm that is pursuing a 

business opportunity in a USTDA-eligible country. These projects are developed, 

reviewed and recommended to senior management for funding (typically by grant to the 

foreign grantee) by USTDA's program stall. 

I USTDA's senior 

Policy and Program, 

Director, General Counsel, ChiefofStatT, Director of 

Affairs. 

4 
68 

Æ 

• USTDA program staff idcntiflcs early project activities through 

meetings with U.S. industry and travel to priority markets. 

• USTDA program staff recommends that funds be obligated to contract with a 

technical cxpcl1 for a Desk Mission to revicw the proposed 

project's scopc of work and conesponding budget. 

• Once a has been revic,ved by the tcchnieal expert, USTDA undcrtakes 

an extensive due diligence review of the pnJp()sc,d grantee, as further 

described below. 

• If the project meets USTDA's 

due diligence review. the program an action memorandum 

requesting approval from scnior management to fund the proposed activity by 

entering into a grant agreement with the grantee. 

In order to ensure that USTDA complies with and executive branch 

restrictions and that its funds support the work and projects solvent entities 

and individuals, the Agency conducts due on all its program activities before its 

funds are put to use. Using a and public databases, U.S. government, 

internal and external sources, USTDA thoroughly vets its prospective 

foreign grantees and delegates, as well as the U.S. firms and subcontractors that are 

proposed to perform USTDA-funded work. USTDA conducts due diligence 

on both private and public prospective foreign grantccs, entities and individuals 

that may participate in its reverse trade missions, and U,S. firms and their subcontractors 

including, as applicable, the entities' parent cOI'porations, prm,:;lp:al officers, directors and 

shareho Iders. 

5