GAO 

United States Government Accountability Office

Report to Congressional Requesters

FOREIGN AID 

REFORM 

Comprehensive 

Strategy, Interagency 

Coordination, and 

Operational 

Improvements Would 

Bolster Current 

Efforts 

April 2009 

GAO-09-192 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

April 2009

FOREIGN AID REFORM

Comprehensive Strategy, Interagency Coordination,

and Operational Improvements Would Bolster Current 

Highlights of GAO-09-192, a report to Efforts

congressional requesters 

In January 2006, to better align 

foreign assistance programs with

U.S. foreign policy goals, the 

Secretary of State appointed the 

Administrator of the U.S. Agency 

for International Development 

(USAID) to serve concurrently as 

Director of Foreign Assistance 

(DFA) and gave the DFA authority 

over all Department of State and 

USAID foreign assistance funding

and programs. The Office of the

Director of Foreign Assistance 

(State/F) was given responsibility 

for reforming foreign assistance by, 

among other things, consolidating 

State and USAID foreign assistance

processes. GAO was asked to (1) 

examine State/F’s key efforts to 

consolidate State and USAID

foreign assistance processes and

(2) identify any key challenges that 

affect State/F’s reform of foreign 

assistance. GAO evaluated budget,

planning, and other documents and

interviewed agency officials in 

Washington, D.C.; Ethiopia; Haiti; 

Jordan; Kenya; Peru; and Ukraine. 

What GAO Recommends

GAO is making seven 

recommendations to enhance

State-USAID organizational 

transformation, interagency 

coordination and collaboration,

planning processes, and workforce 

management. State and USAID 

generally acknowledged or agreed 

to consider six of the seven

recommendations but asserted 

they had met the one related to

regional planning. GAO maintains

this recommendation is valid; it is 

important that an agency clearly

capture all relevant programs and 

activities in its planning processes.

Since June 2006, in its efforts to consolidate State and USAID foreign 

assistance processes, State/F has implemented certain key practices that are

characteristic of successful organizational transformations—for example, 

developing a mission statement and involving employees. In addition, State/F 

has taken several steps to consolidate State and USAID planning and 

budgeting processes—for example, instituting common program definitions 

for the use of foreign assistance funds to collect, track, and report on data 

related to program funding and results. State/F also began developing annual 

operational plans, based on the common program definitions, to serve as 

annual expenditure plans, performance plans, and performance reports for 

State and USAID foreign assistance projects worldwide and to provide 

descriptive information about other U.S. government agencies’ foreign 

assistance programs. Moreover, State/F initiated a pilot program for 

developing a 5-year country assistance strategy (CAS) intended to provide a 

comprehensive view of all U.S. foreign assistance activities in every country in

which U.S. resources are targeted. Further, beginning with fiscal year 2008, 

State/F implemented a joint State-USAID foreign assistance budget process to

bring needed coherence of program activities and accountability for 

resources. Finally, State/F established an integrated State-USAID workforce to 

direct the consolidation of State and USAID foreign assistance operations. 

Despite this progress, State/F faces challenges that could constrain its efforts 

to reform foreign assistance. For example, State/F lacks time frames for 

developing a comprehensive U.S. foreign assistance strategy—one of its 

assigned responsibilities—and fully implementing the 5-year CAS. As a result, 

State/F has limited capacity to demonstrate progress in these key reform 

efforts. State/F also lacks a clear, consistent strategy for communicating with 

USAID and State employees about its efforts, leading to confusion among staff 

and hindering management-staff relations; although State/F has devised an 

initial plan to address this challenge, it has not yet carried out this plan. In 

addition, State/F’s operational plans do not adequately describe some of 

USAID’s regional foreign assistance activities, and consequently senior 

management may lack a holistic overview of foreign assistance resources

needed to make informed trade-offs among various priorities. Further, the 

goals and measures in State/F’s country operational plans sometimes do not 

align with those of other agencies providing foreign assistance in the country, 

limiting State/F’s assurance that all U.S. foreign assistance funds in the 

country are strategically tied to broader U.S. foreign policy goals in the 

country. Finally, both a 2008 State/F internal review and GAO found that 

State/F had not yet clearly defined the roles of some of its employees and 

organizational units and had not matched all employees’ skills with their 

positions. State/F has taken initial steps in response to the internal report’s 

findings, including defining the roles and responsibilities of various executive 

and managerial positions and organizational units, but has not yet done so for 

all State/F staff, and has not developed a long-term workforce management 

plan to address workforce planning challenges. 

View GAO-09-192 or key components.

For more information, contact Denise Fantone 

at (202) 512-4997 or fantoned@gao.gov; or 

David Gootnick at (202) 512-3149 or 

gootnickd@gao.gov. 
Contents 

Letter 1

Results in Brief 3

Background 8

State and USAID Have Taken Steps to Support Organizational 

Transformation, Develop Consolidated Foreign Assistance 

Planning and Budgeting Processes, and Establish State/F 

Workforce 17

State/F Faces Implementation Challenges Related to 

Organizational Transformation, Planning and Budgeting, and

Workforce 28

Conclusions 39

Recommendations for Executive Action 40 

Agency Comments and Our Evaluation 41 

Appendix I Scope and Methodology 43 

Appendix II U.S. Departments, Agencies, and Other Entities 

That Provide Foreign Assistance 45 

Appendix III State/F Information Systems 46 

Appendix IV Foreign Assistance Framework 48 

Appendix V Comments from the Department of State 50 

Appendix VI GAO Contacts and Staff Acknowledgments 54 

Tables 

Table 1: Budget Accounts and Authority under State/F Budget and 

Planning Approval Processes, Fiscal Year 2008 10 

Page i GAO-09-192 Foreign Aid Reform
Table 2: Key Foreign Assistance Planning and Reporting 

Documents 11

Table 3: Key Practices and Implementation Steps For Mergers And 

Organizational Transformations 15 

Figures 

Figure 1: FACTS and FACTS Info Data Flow Chart 14 

Figure 2: Excerpt of State/F’s Standardized Program Structure 21 

Abbreviations 

CAS country assistance strategy 

COO Chief Operating Officer 

CT counterterrorism 

DFA Director of Foreign Assistance 

DOD Department of Defense 

FACTS Foreign Assistance Coordination and Tracking 

 System 

foreign assistance Framework for U.S. Foreign Assistance 

 framework 

GHAI Global HIV/AIDS Initiative 

MCC Millennium Challenge Corporation 

State Department of State 

State/F Office of the Director for Foreign Assistance 

USAID U.S. Agency for International Development 

WMD weapons of mass destruction 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately. 

Page ii GAO-09-192 Foreign Aid Reform
United States Government Accountability Office

Washington, DC 20548 

 

April 17, 2009

The Honorable Robert Menendez 

Chairman 

Subcommittee on International Development and 

 Foreign Assistance, Economic Affairs, and 

 International Environmental Protection 

Committee on Foreign Relations 

United States Senate 

The Honorable Daniel K. Akaka 

Chairman 

Subcommittee on Oversight of Government Management, 

 the Federal Workforce, and 

 the District of Columbia 

Committee on Homeland Security and 

 Government Affairs 

United States Senate 

The Honorable Howard L. Berman 

Chairman 

Committee on Foreign Affairs 

House of Representatives 

In January 2006, the Secretary of State announced a major transformation 

in the U.S. government’s procedures for directing and managing foreign 

assistance programs. The Secretary noted that U.S. foreign assistance 

programs were fragmented among multiple Department of State (State) 

bureaus and offices and between State and the U.S. Agency for 

International Development (USAID). The Secretary observed that this 

fragmentation made it more difficult to plan coherently and risked 

conflicting or redundant efforts and wasted resources. To better align U.S. 

foreign assistance with broader foreign policy goals, the Secretary created 

the position of Director of Foreign Assistance (DFA),1

 reporting to the 

Secretary of State at a level equivalent to the rank of Deputy Secretary of 

State. The Secretary gave the DFA authority over all State and USAID 

foreign assistance funding and programs and charged the DFA with 

 1

In the past, the DFA has served concurrently as USAID Administrator, a position that also

reports to the Secretary of State. 

Page 1 GAO-09-192 Foreign Aid Reform
 

providing overall leadership to foreign assistance delivered through other 

entities.2

In June 2006, State’s Office of the Director of Foreign Assistance (State/F) 

was created to carry out the DFA’s responsibilities and focus the use of 

foreign assistance on achieving the Secretary’s transformational 

diplomacy goal: “to help build and sustain democratic, well-governed 

states that will respond to the needs of their people, reduce widespread 

poverty, and conduct themselves responsibly in the international system.”3

State/F was given responsibility for developing, among other things, 

• a coherent, coordinated U.S. government foreign assistance strategy; 

• multiyear country-specific assistance strategies and annual countryspecific operational plans; 

• consolidated policy, planning, budget, and implementation mechanisms 

and staff functions required to provide leadership to USAID and State 

foreign assistance; and 

• guidance for foreign assistance delivered through other U.S. government 

agencies. 

In this context, you asked us to (1) examine key actions that State/F has 

taken to reform and consolidate State and USAID foreign assistance 

processes and (2) identify any key challenges that affect State/F’s reform 

of foreign assistance. At your request, in October 2008 we issued a legal 

opinion on the delegation of authorities to the DFA.4

 Additionally, in 

November 2008, we issued a correspondence on State/F’s foreign aid

information systems recommending that the Secretary of State direct the

DFA to use best practices for risk management procedures for two 

 2

More than 25 U.S. government entities are involved in providing foreign assistance. See

appendix II. 

3

Strategic Plan Fiscal Years 2007-2012: Transformational Diplomacy, U.S. Department 

of State and U.S. Agency for International Development, revised May 7, 2007. The five 

strategic objectives of transformational diplomacy are achieving peace and security, 

governing justly and democratically, investing in people, promoting economic growth and

prosperity, and providing humanitarian assistance. 

4

We concluded that, with respect to functions originally conferred by statute either upon

the Secretary or the President, the subsequent redelegation by the Secretary of these 

functions was authorized by law. See GAO, Delegation of Authorities to the Director of 

Foreign Assistance, GAO B-316655 (Washington, D.C.: Oct. 29, 2008). 

Page 2 GAO-09-192 Foreign Aid Reform
 

information systems currently managed by State/F.5 (See app. III for 

details on State/F’s information systems and the status of our 

recommendations.) 

In preparing this report, we examined and analyzed budget, planning, 

management, and workforce plans and documents. We also interviewed 

officials at State and USAID headquarters in Washington, D.C., and at six 

U.S. embassies and USAID missions in Ethiopia, Haiti, Jordan, Kenya,

Peru, and Ukraine; the USAID missions in Kenya, Peru, and Ukraine have 

responsibilities for activities in several countries throughout their 

respective regions. We conducted this performance audit from May 2008 

to April 2009 in accordance with generally accepted government auditing

standards. Those standards require that we plan and perform the audit to

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives. Appendix I contains a 

more detailed description of our scope and methodology. 

State/F has taken a number of actions to reform and consolidate State and 

USAID foreign assistance processes. These actions have included 

undertaking an organizational transformation, developing consolidated 

planning and budgeting processes, and creating an integrated State-USAID 

workforce to manage the foreign assistance reforms. 

Results in Brief 

• Organizational transformation. In consolidating State and USAID 

foreign assistance processes, State/F has taken steps that are consistent 

with key practices that we have found to support successful organizational 

transformations. These practices include developing mission and vision 

statements and, to involve employees in the transformation, creating 

employee review teams and conducting “after-action reviews” to obtain 

employee feedback. 

• Consolidated planning and budgeting processes. First, State/F 

instituted common definitions for requesting and reporting on foreign 

assistance funds—known as the standardized program structure—based 

on a framework that reflects the transformational diplomacy goal’s five 

 5

GAO, Foreign Assistance: State Department Foreign Aid Information Systems Have 

Improved Change Management Practices but Do Not Follow Risk Management Best 

Practices, GAO-09-52R (Washington, D.C.: Nov. 21, 2008). 

Page 3 GAO-09-192 Foreign Aid Reform
 

strategic objectives, to collect, track, and report on standardized data on 

program funding and results achieved with that funding. Second, in 2006,

State began developing annual operational plans, based on the 

standardized program structure, that were intended to serve as annual 

spending plans, performance plans, and performance reports and thus 

strengthen the linkage between resources, activities, and results for State 

and USAID foreign assistance programs.6

 The operational plans, which 

State/F has modified over time, reflect funding information for State and 

USAID foreign assistance projects worldwide; they also aim to provide 

information about other U.S. government agencies’ foreign assistance 

activities and resources. Third, in 2008, State/F initiated a pilot program 

for developing a 5-year country assistance strategy (CAS) document 

designed to provide a comprehensive view of all U.S. agencies’ foreign 

assistance programs in each country, including strategic approach, top 

priorities, and resource assumptions. State/F guidance encourages State

and USAID to obtain input from other U.S. government agencies in 

developing the CAS. Fourth, beginning with fiscal year 2008, State/F 

implemented a joint State-USAID foreign assistance budget process, 

refining the process annually based on its after-action reviews. 

• Integrated workforce. In early 2006, to support the consolidated budget,

planning, and reporting processes for State and USAID foreign assistance 

programs, State/F established 88 employee positions to staff the new 

office. Sixty-five positions were to be filled by USAID personnel and 23 

positions were to be filled by State personnel. In commenting on a draft of 

this report, State/F noted that, as of October 2008, it had created job 

descriptions for all of these new positions. 

Despite its progress in reforming State and USAID foreign assistance, 

State/F lacks implementation time frames, goals, and benchmarks for 

aspects of its foreign assistance reforms; does not have a clear, consistent 

communication strategy; and faces a number of challenges related to 

annual and multiyear planning, budgeting processes, and workforce 

management. 

• Lack of time frames, goals, and benchmarks. Time frames for 

developing and implementing a comprehensive, integrated U.S. foreign 

assistance strategy have not been established. According to State/F 

officials, State/F is awaiting direction and guidance on U.S. foreign 

assistance reforms from the new administration. In addition, State/F has 

 6

After fiscal year 2008, the performance plan and performance report were removed from 

the operational plans; they are now a separate document. 

Page 4 GAO-09-192 Foreign Aid Reform
 

not yet developed time frames for the full implementation of the CAS 

because it has not completed the pilot phase for implementing the CAS. 

We have previously reported that, without time frames for key 

transformation initiatives, agencies miss opportunities to determine—and 

focus attention on—critical phases of their transformation efforts and the 

essential activities that need to be completed.7

 Moreover, without both a 

comprehensive, integrated U.S. foreign assistance strategy and guidance 

for other U.S. entities’ foreign assistance, State/F lacks assurance that U.S. 

foreign assistance programs are strategically tied to overarching U.S. 

goals. Also, as of February 2009, State/F had not determined how it will 

measure the anticipated efficiency gains to be realized from developing its 

consolidated program management systems, the Foreign Assistance 

Coordination and Tracking System (FACTS) and FACTS Info.8

• Unclear communication strategy. State/F lacks a clear, consistent 

strategy for communicating about its planning and budgeting reforms. 

Communicating information early and often helps, among its other 

benefits, to build an understanding of the purpose of planned changes and 

build trust among employees and stakeholders. According to many 

officials in headquarters and in the six countries we visited, poor 

communication about the fiscal year 2007 operational planning process—

for example, State/F’s failure to clarify contradictory guidance—led to 

confusion among staff. In November 2008, State/F said that it would create 

a Communications Manager position to develop and implement more 

effective communications processes. As of April 2009, State/F had created 

but not yet filled this position. 

• Annual planning challenges. First, State/F’s operational plan, as 

designed, does not clearly capture all of the foreign assistance programs 

and services implemented by USAID’s regional offices. As a result, senior 

State/F managers may lack the overview of foreign assistance resources 

that they need to make informed decisions. Second, State/F faces 

challenges in coordinating and collaborating with officials in other U.S. 

government agencies to obtain funding and performance information 

about these agencies’ foreign assistance programs. For example, 

Department of Defense (DOD) staff responsible for implementing certain 

 7

GAO, Results-Oriented Cultures: Implementation Steps to Assist Mergers and

Organizational Transformations, GAO-03-669 (Washington, D.C.: July 2, 2003). 

8

FACTS, which State/F began developing in mid-2006, is used to collect foreign assistance 

planning and reporting data, including plans for implementing current-year appropriated

budgets and performance planning and reporting data. FACTS Info, which State/F created 

in 2007, is used to aggregate, analyze, and report data on U.S. foreign assistance programs 

under the authority of the DFA. 

Page 5 GAO-09-192 Foreign Aid Reform
 

foreign assistance programs told us that the goals and measures in 

State/F’s operational plans do not always align with the goals and 

measures articulated in DOD plans and strategies. Third, foreign 

assistance program definitions and categories used in State/F’s operational 

plan sometimes overlap and do not always adequately describe program 

achievements. Fourth, although State/F encourages the use of customized, 

outcome-oriented indicators to measure program impact, its guidance 

does not describe how State/F will use this information. State/F uses the 

quantitative, output-oriented information from its standard output 

indicators to inform its resource requests and report to Congress and the 

American people. Fifth, State/F’s planning process excludes State’s and 

USAID’s operating and administrative expenses for foreign assistance 

programs, constraining State/F’s ability to ensure needed levels of 

administrative support for their foreign assistance programs.9

• Multiyear planning challenges. The 5-year CAS currently being piloted 

may not adequately replace USAID long-term country strategies as a dayto-day management tool for USAID country missions. According to some 

USAID and State officials, the CAS is a high-level document that includes 

overall objectives for the country but—unlike USAID’s previous multiyear 

country strategies—lacks substantive content and details on how USAID is 

to achieve its objectives. Furthermore, the initial suspension of the 

development of USAID country strategies during the CAS pilot led to 

planning challenges at some USAID missions, particularly during 2006 and 

2007—the first 2 years of State/F’s existence. According to some USAID 

officials, until USAID issued its guidance for developing interim country 

strategies, uncertainty about USAID’s long-term goals and strategies for 

the country hampered their ability to plan and manage project activities 

and reach long-term agreements with host country governments. In 

September 2008, USAID took a step to address USAID missions’ concerns

by issuing interim guidance for missions that had not yet developed a CAS, 

permitting them to extend and update their country strategies, if needed.

The DFA also issued guidance in October 2008 outlining three strategic 

planning options regarding the development of interim country strategies. 

However, until State/F finalizes the CAS document and USAID fully 

develops and implements its new multiyear country strategies, the 

development of USAID country-specific strategic plans will remain an 

interim process. 

 9

In this report, references to operating and administrative expenses include amounts 

derived from State’s Diplomatic and Consular Protection account and USAID’s Operating 

Expense account but do not include program funds used to support administrative costs. 

Page 6 GAO-09-192 Foreign Aid Reform
 

• Budget process challenges. First, although State/F intended the 

consolidated budget process in part to bring needed coherence and 

accountability to State and USAID foreign assistance programs, as of 

March 2009 the process included only about half of the funds appropriated 

to or administered by State and USAID for international affairs programs.10

Second, although there are benefits and drawbacks that must be 

considered and balanced in any budgeting system, aspects of State/F 

budget reforms may affect missions’ ability to respond to unexpected 

events in a timely manner. State/F’s budget process requires that all funds

be committed in advance and at a finer level of detail than in the past. 

State and USAID officials in headquarters and the field described the 

process to approve changes in committed resources as lengthy and 

complex and expressed concern that these requirements could have the 

unintended effect of limiting missions’ ability to respond to time-critical 

conditions, such as those caused by riots or natural disasters. 

• State/F workforce management challenges. First, State/F has not yet 

clearly defined the roles of some of its employees and organizational units

and, second, it has not fully ensured that all of its employees have the 

skills needed to carry out their responsibilities—that is, to support and 

manage the consolidated budget, planning, and reporting processes for 

USAID and State foreign assistance programs. An October 2008 State/F 

internal management review noted, among other issues, that the roles of 

some State/F employees and organizational units were not well defined or

understood and that employees’ skills were not always well matched with 

their positions. Moreover, State and USAID officials in Washington, D.C., 

and the field told us that some State/F employees lacked experience with, 

and knowledge of, countries’ foreign assistance needs. State/F has taken 

some steps in response to the internal report’s findings, including defining

the roles and responsibilities of its various executive and managerial 

positions and its organizational units. However, as of April 2009, State/F 

had not defined roles and responsibilities for some of its staff and had not 

developed a long-term workforce management plan for periodically 

reassessing its workforce capacity to carry out assigned responsibilities. 

We are making seven recommendations to enhance State-USAID 

organizational transformation, interagency coordination and collaboration, 

planning processes, and workforce management. In commenting on a draft 

of this report, State and USAID generally acknowledged, or agreed to 

consider, six of the seven recommendations but asserted that they had met 

 10The process also excludes billions of dollars of foreign assistance funds for programs

outside State and USAID’s jurisdiction. 

Page 7 GAO-09-192 Foreign Aid Reform
 

our recommendation related to regional planning. We maintain that the 

operational plan structure does not adequately define regional activities 

and note that it is important that an agency clearly capture all relevant 

programs and activities in its planning processes. 

In January 2006, the Secretary of State stated that America’s current 

foreign assistance structure risks incoherent policies, ineffective 

programs, and wasted resources when spending is not strategically tied to

overarching U.S. goals and foreign assistance is fragmented across 

numerous bureaus and agencies.11 At that time, the Secretary created the 

position of DFA to lead State/F’s implementation of State and USAID’s 

consolidated planning, budgeting, and reporting processes and also to 

serve concurrently as the Administrator of USAID, with both of these 

positions reporting directly to the Secretary. In addition, within the federal 

government and among interest groups, scholars, and others, an ongoing

debate about how to improve the efficiency and effectiveness of U.S. 

foreign assistance has led to several proposals to reform U.S. foreign aid, 

ranging from, among others, elevating USAID to a cabinet-level agency to

merging USAID with State. 

In January 2009, the new Secretary of State observed that the incoming 

administration is committed to reviewing ways to improve the distribution 

of U.S. foreign assistance. She stated that the administration should build 

on initiatives that had proven successful while determining whether poorly

performing initiatives could be improved. The Secretary also noted that 

the incoming administration has emphasized, among other things, the need 

to coordinate and consolidate foreign assistance programs housed 

throughout executive agencies. Meanwhile, modernizing foreign 

assistance is a stated priority of the Chairman of the House Committee on 

Foreign Affairs. 

In 2006, to help align foreign assistance programs with the 

transformational diplomacy goal, State/F developed the framework for 

U.S. foreign assistance (foreign assistance framework). The framework 

ties this goal to five strategic objectives—peace and security, governing 

Background 

Foreign Assistance 

Framework 

 11USAID, “Remarks by Condoleezza Rice, U.S. Secretary of State: New Direction for 

Foreign Assistance, January 19, 2006, U.S. Department of State, Washington, D.C.,”

http://www.usaid.gov/press/speeches/2006/sp060119.html (accessed Apr. 2, 2009). 

Page 8 GAO-09-192 Foreign Aid Reform
 

justly and democratically, investing in people, economic growth, and 

humanitarian assistance—to various category-country types, in an effort to

move recipient countries to the next level. (See app. IV for a detailed 

description of the foreign assistance framework, including descriptions of 

the country categories.)

Funding for international affairs, which includes funding for foreign 

assistance, is provided through annual appropriations and an account

structure reflected in reports of the appropriations committees.

12 Of the 

$42.5 billion appropriated for programs classified as international affairs in 

fiscal year 2008, almost $36.6 billion was appropriated to accounts 

administered by State or USAID; the remaining $5.9 billion went to other 

departments, agencies, and organizations.13 For example, programs are 

implemented by the Departments of Defense (e.g., education and training); 

Agriculture (e.g., P.L. 480 food aid); and Treasury (e.g., technical 

assistance and debt restructuring). In addition to these agencies 

implementing programs classified as international affairs, a number of 

other federal entities are involved in providing foreign assistance (see app.

II). Of the $36.6 billion appropriated to or administered by State and 

USAID, approximately half went through the new State-USAID 

consolidated budget, planning, and reporting processes in fiscal year 2008 

(see table 1).

14

International Affairs 

Funding and State/F’s 

Budget and Planning 

Processes 

 12Each appropriation account is also assigned to a budget function and subfunction used by 

the budget committees to develop an overall fiscal plan—a system to classify budget 

authority outlays, receipts and expenditures according to the national needs being 

addressed. Function 150, International Affairs, includes maintaining peaceful relations, 

commerce, and travel between the United States and the rest of the world and promoting

international security and economic development abroad.

13Congressional Research Service. GAO did not independently verify this funding 

information. 

14Accounts at State and USAID that are not reflected in State/F’s budget and planning 

processes for fiscal year 2008 include State’s Diplomatic and Consular Program ($6.8 

billion), Contributions to International Organizations ($1.4 billion) and International 

Peacekeeping ($2 billion) accounts, and USAID’s Operating Expense account ($801

million). 

Page 9 GAO-09-192 Foreign Aid Reform
 

Table 1: Budget Accounts and Authority under State/F Budget and Planning Approval Processes, Fiscal Year 2008 

Account name

Estimated fiscal year 2008 budget authority 

(current dollars in millions)

Andean Counterdrug Initiative 325

Assistance for Eastern Europe and the Baltic States (formerly Support for 

Eastern European Democracy) 

294

Assistance for the Independent States of the Former Soviet Union 397

Child Survival and Health Programs 1,829a

Conflict Response Fund n/a

Democracy Fund 239b

Development Assistance 1,624

Development Credit Authority 8

Economic Support Fund 5,323b

Foreign Military Financing 4,689b

International Disaster/Famine Assistance 650b

International Military Education and Training 85

International Narcotics Control and Law Enforcement 944b

International Organizations and Programs 317

Migration and Refugee Assistance 1,338b

Nonproliferation, Anti-Terrorism, Demining and Related Programs 497b

Peacekeeping Operations 261

U.S. Emergency Refugee and Migration Assistance 76b

USAID Office of Transition Initiatives 45

Total 18,941

Sources: State Department and Congressional Research Service.

Notes: 

In addition to having approval authority over these accounts, the DFA has authority to coordinate

with, but not approve, State’s Global HIV/AIDS Initiative account (approximately $4.7 billion in fiscal 

year 2008) and the Millennium Challenge Corporation (approximately $1.5 billion in fiscal year 2008).

Public Law 480 Food Aid (approximately $2.1 billion in fiscal year 2008) is appropriated to the 

Department of Agriculture and its Title II programs (Food For Peace) is administered by the USAID 

Administrator, not the DFA (in the past, these positions were held by the same individual). 

In some cases, foreign assistance funds administered by State or USAID support programs are 

implemented by other agencies. For example, State administers funding appropriated for Foreign Military 

Financing and International Military Education and Training programs that are implemented by DOD. In

administering these appropriations, State shares accountability for the proper use of these funds. 

GAO did not independently verify funding information provided by the Congressional Research 

Service. 

a

This is an approximation of the portion of the Global Health and Child Survival appropriation 

apportioned to USAID. 

b

The amounts for these accounts include funding provided in Supplemental Appropriations Act, Pub. 

L. No. 110-252, 122 Stat. 2323 (2008), and in the case of the Economic Support Fund, Disaster 

Relief and Recovery Supplemental Appropriations Act, Pub. L. No. 110-329, 22 Stat. 3585 (2008) as

well. GAO has not independently verified amounts appropriated in these two acts. 

Page 10 GAO-09-192 Foreign Aid Reform
 

State and USAID use several planning and budget documents in the 

consolidated planning and budget processes for State and USAID foreign 

assistance. Some were created by State/F, some predate State/F, and some 

are governmentwide documents (see table 2). 

Table 2: Key Foreign Assistance Planning and Reporting Documents 

Key State/F planning and reporting documents

Document Description

Primary 

purpose Key dates 

State/F annual operational 

plan, performance plan, and 

performance report 

In each country receiving U.S. assistance, an operating 

unit (i.e., country program, regional office, or Washingtonbased bureau) led by the U.S. Ambassador compiles an 

annual operational plan, performance plan, and 

performance report in an effort to ensure that the activities 

of all U.S. agencies providing assistance in the country 

are coordinated and appropriately linked to foreign policy 

objectives. These documents are intended to provide a 

comprehensive presentation of all foreign assistance 

resources planned for implementation in country; to 

strengthen the link between funding, activities, and 

results; and to collect standardized data about foreign 

assistance programs. 

Annual 

planning; 

budgeting 

Operating units began 

developing operational plans 

in October 2006. 

State/F 5-year country 

assistance strategy (CAS) 

State/F is developing 5-year, country-specific strategies 

that aim to bring together all U.S. agencies’ foreign 

assistance activities in a country regardless of funding 

source. The CAS document will be a maximum of 15 

pages long, and will be developed separately from 

USAID’s country-specific long-term strategies, which are 

currently being revised. 

Strategic 

planning 

In 2008, State/F began a 

pilot project in 10 countries 

to develop the CAS. State/F

began an after-action review 

in early 2009, to inform CAS 

development and 

implementation going 

forward. 

Key pre-existing State and USAID foreign assistance planning and reporting documents 

Document Description

Primary 

purpose Key dates 

USAID multiyear country 

strategy 

Prior to the creation of State/F, USAID missions routinely 

developed multiyear country strategies, which identified 

USAID goals and strategic objectives and included 

detailed information on expected results and how 

progress toward results would be measured. 

Strategic 

planning 

In June 2006, State/F

suspended the development 

of new country strategies. In 

September 2008, USAID 

issued guidance for 

developing interim strategies 

at missions where a CAS 

had not yet been developed. 

USAID plans to further 

develop final country 

strategy guidance after the 

CAS roll-out is complete. 

Page 11 GAO-09-192 Foreign Aid Reform
 

Mission strategic plan (MSP) Annually, all U.S. overseas posts, whether they receive 

U.S. foreign assistance funding or not, are required to 

submit a 3-year MSP. The MSP is intended to enable 

posts to track progress toward mission-specific, high-level 

diplomatic and management goals. It includes a post’s 

annual budget request for all State and USAID foreign 

assistance funding by program area, and for the investing

in people strategic objective, by program element. 

Strategic 

planning; 

budgeting 

This document was revised 

in 2007 to include a section 

on State/USAID foreign 

assistance. 

Key governmentwide planning and reporting documents 

Document Description

Primary 

purpose Key dates 

Congressional Budget 

Justification (CBJ) 

Agencies submit CBJs to the appropriations committees 

in support of their annual budget requests. State/F’s CBJ 

is linked to the foreign assistance framework and 

consistent with the long-term considerations of the joint 

State-USAID strategic plan. 

Budgeting Beginning with the CBJ for 

fiscal year 2008, State/F

integrated foreign assistance 

resources into one joint 

document and submitted it in 

February 2007.

Performance and 

Accountability Report (PAR) 

Called for by Office of Management Budget (OMB) 

guidance, the PAR combines the annual performance 

report required by the Government Performance and 

Results Act of 1993a

 with an agency’s financial statements 

and accountability report. The PAR provides information 

on an agency’s actual performance and progress toward 

achieving the goals in its strategic plan and performance 

budget. The majority of performance information for 

results achieved with State and USAID foreign assistance 

resources are extracted from the performance reporting 

information in State/F’s FACTS database. 

Performance 

reporting

Agencies were to transmit 

various aspects of their fiscal 

year 2008 PARs to the 

President, Congress, and 

OMB between December 

2008 and January 2009. 

Sources: USAID, State, and OMB. 

a

Pub. L. No. 103-62, § 4, 107 Stat. 285, 299-89 (1993). 

The budget process for State and USAID’s foreign assistance funds follows 

the traditional federal budget and appropriation process, with one 

important distinction: after Congress appropriates funds to programs 

authorized under the Foreign Assistance Act, USAID and State undergo a 

congressional notification process known as the 653(a) consultation 

process.15 In compliance with notification procedures established by law 

State/F notifies Congress of the type of assistance and level of funding to 

be provided to individual countries and international organizations. In 

 15This process is named after Section 653(a) of the Foreign Assistance Act of 1961, now 

codified at 22 U.S.C, §2413(a). This section states that not later than 30 days after the

enactment of a law appropriating funds to carry out a provision of this act (other than

section 451 or 637 of the Arms Export Control Act), the President shall notify Congress of

each foreign country and international organization to which the U.S. government intends 

to provide any portion of the funds under such law and the amount of funds under that law,

by category of assistance, that the U.S. government intends to provide to each. 

Page 12 GAO-09-192 Foreign Aid Reform
 

practice, State and USAID foreign assistance funds generally are not made 

available for obligation until the reporting requirements are finalized. 

State/F Information 

Systems 

In conjunction with USAID, State/F developed the FACTS I database to 

collect foreign assistance planning and reporting data, including plans for

implementing current-year funds and performance planning and reporting 

data. According to numerous FACTS I users as well as our previous 

review, FACTS I was slow and unreliable during the first 2 years of the 

foreign assistance budget, planning, and reporting processes.16 State/F 

developed FACTS II to address these issues. State/F also created FACTS 

Info, a system that allows State/F to aggregate, analyze, and report data on

many U.S. foreign assistance programs. During its pilot phase (September 

2007–February 2009), FACTS Info was accessible to a limited number of 

users within State and USAID; State/F began to expand usage to additional 

State/F and USAID users in early 2009. Figure 1 depicts the data flow for 

both systems. 

 16GAO-09-52R. 

Page 13 GAO-09-192 Foreign Aid Reform
 

Figure 1: FACTS and FACTS Info Data Flow Chart

State/F uploads budget data from mission 

strategic plans and HIV/AIDS country 

operational plans, as well as demographic 

data, into FACTS Info

State/F uses FACTS to collect foreign 

assistance planning and reporting data

from operating units

State/F

State

and 

USAID 

operating

units

Reports on 

individual 

operating 

units

1-year 

operational 

plans and 

performance 

reports

Aggregated 

data

Analyzed 

data

Reports to 

Congress

Sources: GAO analysis of Department of State data; Nova Development (clip art).

FACTS

Info

State/F aggregates

operational plan data

in FACTS Info

State/F uploads the final 

operational plan and 

performance report data

into FACTS Info

State/F 

analyzes data

in FACTS Info 

State/F uses

FACTS Info to create 

reports for OMB, 

Congress, and others

in State and USAID

Input

Input

Input

Outputs

Outputs

FACTS

Notes: 

FACTS= Foreign Assistance Coordination and Tracking System 

OMB= Office of Management and Budget 

State= Department of State 

State/F= Office of the Director of Foreign Assistance 

USAID= U.S. Agency for International Development 

Page 14 GAO-09-192 Foreign Aid Reform
 

Page 15 GAO-09-192 Foreign Aid Reform 

Implementing a large-scale change management initiative such as the StateUSAID foreign assistance organizational transformation is a complex 

endeavor that requires the concentrated efforts of both leadership and 

employees to accomplish new organizational goals. Experience shows that 

failure to adequately address—or, often, to consider—organizational culture 

is at the heart of unsuccessful mergers and transformations. We have 

reported on a number of key practices that have consistently been found in 

successful mergers, acquisitions, and transformations (see table 3).17

Table 3: Key Practices and Implementation Steps for Mergers and Organizational Transformations 

Key practice Implementation step 

1. Ensure that top leadership drives the 

transformation. 

• Define and articulate a succinct and compelling reason for change. 

• Balance continued delivery of services with merger and transformation 

activities. 

2. Establish a coherent mission and integrated 

strategic goals to guide the transformation. 

Adopt leading practices for results-oriented 

strategic planning and reporting. 

3. Focus on a key set of principles and priorities 

at the outset of the transformation. 

Embed core values in every aspect of the organization to reinforce the new 

culture. 

4. Set implementation goals and a timeline to 

build momentum and show progress from day 

one. 

• Make public implementation goals and timeline. 

• Seek and monitor employee attitudes and take appropriate follow-up 

actions. 

• Identify cultural features of merging organizations to increase 

understanding of former work environments. 

• Attract and retain key talent. 

• Establish an organization-wide knowledge and skills inventory to 

exchange knowledge among merging organizations. 

5. Dedicate an implementation team to manage 

the transformation process. 

• Establish networks to support implementation team. 

• Select high-performing team members. 

6. Use the performance management system to 

define responsibility and assure accountability for 

change. 

Adopt leading practices to implement effective performance management 

systems with adequate safeguards. 

7. Establish a communication strategy to create 

shared expectations and report related 

progress. 

• Communicate early and often to build trust. 

• Ensure consistency of message. 

• Encourage two-way communication. 

• Provide information to meet specific needs of employees. 

8. Involve employees to obtain their ideas and 

gain their ownership for the transformation. 

• Use employee teams. 

• Involve employees in planning and sharing performance information. 

• Incorporate employee feedback into new policies and procedures. 

• Delegate authority to appropriate organizational levels. 

 17GAO-03-669. 

Key Practices for Agency 

Transformation 
 

Key practice Implementation step

9. Build a world-class organization. Adopt leading practices in acquisition management, financial management, 

human capital and information technology to build a world class organization. 

Source: GAO.

Note: We compared State and USAID efforts related to seven of the nine key practices developed in 

our past work on organizational mergers and transformations. These seven practices are shown in 

boldface type. Because of the evolving nature of State/F’s organization and workforce, we did not 

review State and USAID efforts related to key practice 6 (“using the performance management 

system to define responsibility and assure accountability for change” ) or 9 (“building a world-class

organization” because of the evolving nature of State/F’s organization and workforce). 

Interagency Coordination 

and Collaboration 

Successful planning and implementation of multi-agency efforts such as 

foreign assistance reform is a challenge that requires interagency 

coordination and collaboration. We have previously reported on a range of 

barriers that agencies face when they attempt to collaborate.18 For 

example, agencies sometimes have missions and goals that may conflict,

making reaching a consensus on strategies and priorities difficult. Also, 

interagency collaboration is often hindered by incompatible procedures, 

processes, data, and computer systems. As we have also previously 

reported,19 the following practices can help agencies sustain and enhance 

interagency collaboration: 

• Define and articulate a common outcome. 

• Establish mutually reinforcing or joint strategies. 

• Identify and address needs by leveraging resources. 

• Agree on roles and responsibilities. 

• Establish compatible policies, procedures, and other means to operate 

across agency boundaries. 

• Develop mechanisms to monitor, evaluate, and report on results. 

• Reinforce agency accountability for collaborative efforts through agency 

plans and reports. 

• Reinforce individual accountability for collaborative efforts through 

performance management systems. 

 18GAO, Managing for Results: Barriers to Interagency Coordination, GAO/GGD-00-106 

(Washington, D.C.: Mar. 29, 2000). 

19GAO, Results-Oriented Government: Practices That Can Help Enhance and Sustain

Collaboration among Federal Agencies, GAO-06-15 (Washington, D.C.: Oct. 21, 2005). 

Page 16 GAO-09-192 Foreign Aid Reform
 

In consolidating their foreign assistance operations, State and USAID took 

several steps that our previous work has shown to support such an 

organizational transformation.20 State/F also took steps to develop 

consolidated State-USAID foreign assistance planning and budgeting 

processes. In addition, State/F took steps to establish an integrated StateUSAID workforce. 

Consistent with key practices that we have previously found in successful 

mergers and organizational transformations, State and USAID efforts to 

establish State/F have included (1) ensuring top leadership’s involvement 

in the transformation, (2) establishing a mission statement, (3) developing

key operating principles, (4) establishing key implementation goals and 

timelines, and (5) involving employees in the transformation. 

Top leadership at State and USAID articulated reasons for, and drove, the 

organizational transformation of State’s and USAID’s foreign assistance, 

beginning with the Secretary of State’s 2006 announcement creating the 

DFA position. In April 2006, 2 months before State/F was officially 

established, the DFA appointed a Chief Operating Officer (COO), who was 

responsible for helping formulate the transformed organizational structure 

as well as developing and implementing State/F’s reformed planning and 

budgeting processes. We have previously reported that appointing a COO 

or Chief Management Officer is one way to elevate attention on 

management issues and transformational change, integrate various 

initiatives, and institutionalize accountability for addressing them.21

State and USAID Have 

Taken Steps to 

Support 

Organizational 

Transformation, 

Develop Consolidated 

Foreign Assistance 

Planning and 

Budgeting Processes, 

and Establish State/F 

Workforce 

Key State and USAID 

Efforts Supported 

Organizational 

Transformation 

Top Leadership Involvement 

 20GAO-03-669. 

21GAO, Organizational Transformation: Implementing Chief Operating Officer/Chief 

Management Officer Positions in Federal Agencies, GAO-08-34 (Washington, D.C.: Nov. 1,

2007). 

Page 17 GAO-09-192 Foreign Aid Reform
 

State/F’s top leadership and key staff established mission and vision 

statements to guide the organization’s transformation. This effort began 

about 2 years after State/F was created, in response to findings from an 

April 2008 outside review of its organization and processes. According to

the statement, State/F’s mission, on behalf of the Secretary of State and

the DFA, is to 

Mission Statement 

• provide leadership, coordination, and strategic direction within the U.S. 

government and with external stakeholders to enhance foreign assistance 

effectiveness and integrate foreign assistance planning and resource 

management across State and USAID; 

• lead strategic, operational, and performance planning of U.S. foreign 

assistance with a focus on aligning resources with policy priorities; 

• develop and defend foreign assistance budget requests and allocate State 

and USAID foreign assistance funding to meet urgent needs and new 

opportunities and to ensure long-term sustainable investments; and 

• promote good stewardship of foreign assistance funds by strengthening 

oversight, accountability, and transparency. 

In addition to establishing mission and vision statements, State/F senior 

leaders and staff developed a key set of operating principles. These 

principles include 

Key Operating Principles 

• being accountable to the American people for ensuring the effective use of

foreign assistance resources, 

• being constructive and cooperative partners with stakeholders, and 

• valuing State/F’s employees as its most important resource. 

We have previously reported that operating principles articulating the core 

values of a new organization can, like the mission statement, serve as an 

anchor that remains valid and enduring while organizations, personnel, 

programs, and processes may change.22

State/F set and met certain implementation goals and timelines for key 

aspects of its consolidated budget and planning processes. For example, 

State/F exceeded its goal of implementing country-specific operational 

plans—a key annual budget and planning document for the reformed 

Implementation Goals and 

Timelines 

 22GAO-03-669. 

Page 18 GAO-09-192 Foreign Aid Reform
 

performance budgeting process—to 67 pilot countries in its first year. In 

addition to those pilot countries, each USAID country mission, regional

office, and Washington, D.C.-based bureau—collectively known as 

operating units—produced an operational plan for fiscal year 2007.

23 All 

operating units produced operational plans for fiscal year 2008. State/F’s 

COO told us that another key goal was submitting a joint State-USAID 

foreign assistance budget request based on the new foreign assistance 

framework. State/F accomplished this goal even though the office was 

established after the fiscal year 2008 budget formulation process had 

begun. 

State and USAID involved their employees in the transformation by using 

employee teams and by obtaining employees’ ideas about the 

transformation. According to its COO, State/F created implementation 

teams at State/F’s inception to focus on two key areas: (1) overseeing the 

organizational and administrative changes needed to create the new office

and (2) developing and implementing the reformed planning and budgeting 

processes. Each year since its creation in 2006, State/F has conducted 

after-action reviews to seek employee feedback on how to improve 

various processes. For example, employee teams are currently reviewing 

State/F’s core processes and identifying suggested improvements for each. 

According to State and USAID bureau and field staff with whom we met, 

State/F implemented several employee suggestions from these reviews. 

We have previously reported that employee involvement, such as State/F’s 

use of employee teams and after-action reviews, strengthens the 

transformation process by including frontline perspectives and 

experiences.24

Employee Involvement 

 23Although State/F uses the term “country-specific operational plan,” operating units other

than countries submit operational plans. For example, in fiscal year 2008, State/F listed 190 

operating units—155 countries, 11 USAID regional offices, and 24 State and USAID regional 

and functional bureaus based in Washington, D.C.—that were required to submit 

operational plans. State/F defines an operating unit as the organizational unit responsible 

for implementing a foreign assistance program for one or more elements of the foreign

assistance framework. 

24GAO-03-669. 

Page 19 GAO-09-192 Foreign Aid Reform
 

State/F developed a program configuration, known as the Standardized 

Program Structure and Definitions (standardized program structure), to 

provide a consistent way to categorize and account for State-USAID 

foreign assistance. State/F also began developing annual operational plans, 

performance plans and performance report based on the standardized 

program structure, to strengthen the link between foreign assistance 

funding, activities, and results.25 In addition, State/F initiated a pilot 

program for multiyear, country-specific foreign assistance strategies, 

intended to take a comprehensive approach in describing overall U.S. 

strategic approaches and priorities, goals, and resource assumptions. 

Moreover, State/F implemented a consolidated budget process for State 

and USAID foreign assistance programs, beginning with the fiscal year 

2008 budget request. 

To collect and track standardized data on program funding and results 

achieved with that funding, State/F instituted the standardized program 

structure. This structure provides common definitions for the use of 

foreign assistance funds and flows from the foreign assistance framework, 

using the framework’s five program objectives plus one administrative 

objective. For each objective, State/F developed a common configuration 

of goals linked to implementing mechanisms. This program structure is the 

foundation of the annual operational plan and the performance report as 

well as the FACTS data system. (Fig. 2 shows an excerpt of the 

configuration of goals for the governing justly and democratically program 

objective.) State/F also developed standard definitions and sets of 

indicators related to these goals. For example, State/F defines the human 

rights program element as “advancing the protection of international 

human rights, including labor rights, by supporting governmental and 

nongovernmental organizations created to protect, promote, and enforce 

human rights.” One indicator related to this program element is “the 

number of public advocacy campaigns on human rights supported by the 

U.S. government.” 

State/F Developed 

Consolidated State-USAID 

Foreign Assistance 

Planning and Budgeting 

Processes 

Standardized Program 

Structure 

 25Prior to fiscal year 2008, the operational plan included the performance plan and 

performance report; these are now published as a separate document. 

Page 20 GAO-09-192 Foreign Aid Reform
 

Figure 2: Excerpt of State/F’s Standardized Program Structure 

Source: State/F.

Program area 2.1

Rule of law and 

human rights

Program element 2.1.4

Human rights

Program element 2.1.3

Justice system

Program element 2.1.2

Judicial independence

Subelement 2.1.4.3

Education and training

Subelement 2.1.4.2

Systems and policies

Subelement 2.1.4.1

Advocacy

Implementing

mechanism

(e.g., contractor)

Implementing

mechanism

(e.g., nongovernmental

organization)

Implementing

mechanism

(e.g., grantee)

Program element 2.1.1

Constitutions and laws

Program objective 2

Governing justly and 

democratically

Program area 2.2

Good governance

According to State/F’s operational plan guidance, State/F’s annual 

operational plans are intended to show how all U.S. government agencies’ 

foreign assistance resources—including resources provided by U.S. 

agencies26 other than State and USAID—are being used to support the 

goals and objectives outlined in the foreign assistance framework. The 

operational plans, which operating units began developing in October 

2006, were originally multifunctional, serving as annual spending plans, 

performance plans, and performance reports. According to State/F 

guidance, the plans were intended to strengthen the link between funding,

Annual Country-Specific 

Operational Plans 

activities, and results for joint State-USAID foreign assistance programs. 

 26See appendix II for a list of the more than 25 U.S. departments, agencies, and other 

entities involved in providing foreign assistance. 

Page 21 GAO-09-192 Foreign Aid Reform
 

State/F guidance notes that operational plans differ from other State and

USAID planning and reporting requirements in that they provide detail

about the specific uses of all available funds for the given fiscal year. 

State/F piloted the operational plan in 67 “fast track” operating units in

fiscal year 2007 and required all 190 operating units, including country 

missions and regional and functional bureaus in State and USAID, to 

complete an operational plan in fiscal year 2008. 

Using the standardized program structure, the operational plan reflects 

,

t

ween

tate/F 

.

,

 

funding information for individual State and USAID foreign assistance 

projects (i.e., at the implementing mechanism level).27 For each project,

the operational plan shows the entities and individuals receiving funding

the amounts received, the activities being funded, and the expected 

results. We have previously reported that pursuing a closer alignmen

between performance planning and budgeting—much like State/F is 

attempting to do with its operational plans and standardized program

structure—is essential in supporting the transition to a more resultsoriented and accountable federal government.28 Developing a link bet

requested funding and expected performance goals is a critical first step in 

defining the performance consequences of budgetary decisions. By 

structuring the operational plan around the program configuration, S

is able to collect standard funding and performance data on individual 

programs worldwide through FACTS and report on foreign assistance in

the aggregate—something that was not possible prior to State/F’s reforms

Although State and USAID are the only U.S. agencies currently entering 

data into and receiving reports from the FACTS and FACTS Info systems

State/F originally expected the systems to eventually include data from the 

more than 25 other U.S. entities involved in foreign assistance.29 State/F 

27State/F’s guidance for operational plans defines an implementing mechanism as a binding

relationship established between a U.S. Government agency and an outside party to carry 

out U.S. Government-funded programs, by authorizing the use of U.S. Government funds

for (1) acquisition of services or commodities; (2) the provision of assistance (a grant); or

(3) to fulfill specific agreements such as cash transfers to host-country governments. For 

the purposes of this report, we refer to implementing mechanisms as projects. 

28GAO, Managing for Results: Agency Progress in Linking Performance Plans with

Budgets and Financial Statements, GAO-02-236 (Washington, D.C.: Jan. 4, 2002). 

29We acknowledged in November 2008 (GAO-09-52R) that FACTS does not include 

information from agencies other than State and USAID; however, we also noted that 

contractual documents for FACTS I and FACTS II state that one of the purposes of FACTS 

is to combine all U.S. government planning and reporting on foreign assistance activities 

into one central data system. 

Page 22 GAO-09-192 Foreign Aid Reform
 

recognizes that doing so will be difficult because, among other reasons, 

different agencies use different procedures, processes, and systems to 

formulate budget requests, allocate resources, and measure results. 

In addition, the operational plans are intended to provide information 

about how all U.S. government agencies are coordinating and 

collaborating in each country to achieve short-term and long-term foreign 

assistance goals as well as information on other agencies’ foreign 

assistance resources. State/F’s operational plan guidance requires State 

and USAID staff to describe how the programs of all other U.S.

government agencies in the country are helping address, at the program 

area level, the goals in State/F’s foreign assistance framework.30 To obtain 

this information, State and USAID staff must work with other agencies. 

According to some USAID and State staff at field missions, the annual

operational plan process has improved transparency among the various 

U.S. government agencies involved in U.S. foreign assistance activities in 

the country. For example, State officials in Ukraine stated that, because of 

going through the operational plan process with other U.S. agencies, State 

has a much better view of all U.S. agencies’ programs in Ukraine, including 

some details about what activities other agencies’ programs include. Also, 

USAID officials in both Haiti and Peru said that interacting and

collaborating with other agencies that are implementing foreign assistance 

activities in the country during the operational plan process raised their 

own awareness of other agencies’ program activities and goals. As a result, 

they said that they were able to make better-informed decisions for 

State/F’s planning and budgeting processes. 

State/F has made several changes to the operational plan process. In 

response to findings in the 2007 after-action review, the process was split 

into two phases beginning in fiscal year 2008. The purpose of this two-part 

structure was to more evenly distribute the workload for State and USAID 

over time and to permit State and USAID project data to be provided later 

in the fiscal year, after each operating unit receives its allocations and has

had the opportunity to plan their projects. According to State/F officials, 

after fiscal year 2008, State/F discontinued the two-phased approach and 

instead separated the operational plans from the performance plans and 

reports. The operational plans serve as annual spending plans and discuss 

planned activities and expected results from the current year 

 30Prior to fiscal year 2008, this information was required at the program element level, 

which includes a finer level of detail than the program area level. 

Page 23 GAO-09-192 Foreign Aid Reform
 

appropriation; annual performance plans and reports capture fiscal year 

performance planning and performance reporting. 

State/F also made a number of changes to the information contained in the 

operational plans, based on feedback from the after-action reviews. For 

example, State/F eliminated the requirement for operating units to provide 

narrative information at the subelement level and made this information 

optional at the implementing mechanism level. It also eliminated 

performance indicators at the implementing mechanism level. These 

changes were in direct response to staff concerns that State/F was 

collecting detailed information that was not being used in decision 

making. Also, State/F now prepopulates certain data fields in the FACTS 

database with prior-year information; staff must re-enter prior-year 

information only if it has changed. According to USAID and State officials, 

these changes have reduced the workload burden for staff working on the 

operational plans, especially in field locations that experienced slow 

connections with the FACTS database. Finally, State/F adjusted some of 

the standard indicators to better fit programs and permits the use of 

custom indicators at the program element level to highlight the unique 

circumstances of a particular program or country in addition to the 

standard indicators. 

In June 2006, State/F directed USAID to suspend any planned updates to

its multiyear country strategies. State/F did so because it planned to 

replace the USAID-only country strategies with a joint State-USAID 

country assistance strategy (CAS). In August 2007, the DFA established a 

joint USAID-State task force to develop an approach for these strategies. 

The task force completed its efforts and, since February 2008, the DFA 

approved plans for new 5-year CAS that would take a comprehensive 

approach by including the efforts of all U.S. agencies providing foreign 

assistance in the country. According to State/F’s guidance for developing a 

CAS document, each CAS should include, among other things, an overall 

strategic approach and priorities, a discussion of up to five priority goals,

and resource assumptions.31 The guidance states that the CAS is meant to 

5-Year Country-Specific 

Foreign Assistance Strategies 

 31State/F guidance states that each CAS will be a maximum of 15 pages in length and 

consist of four major sections: (1) introduction (1.5 pages); (2) overall strategic approach

and priorities (2 pages); (3) discussion of up to five priority goals 2-3 pages per goal); and 

(4) resource assumptions (1-2 pages). Each CAS will also include two appendixes: (1) a

bibliography of relevant technical analyses and (2) country analyses requirements. 

Page 24 GAO-09-192 Foreign Aid Reform
 

• identify and describe U.S. foreign assistance goals in specific countries 

and provide a sense of prioritization among these goals; 

• improve strategic and programmatic coordination, collaboration, and 

transparency within the U.S. government; and 

• provide a comprehensive statement of overall U.S. foreign assistance 

priorities in a given country, regardless of funding source. 

To achieve these goals, USAID and State are to consult with the hostcountry government, nongovernment and private sector organizations in 

the country, and other international donors. State/F guidance also 

encourages input from other U.S. government agencies. 

During 2008, State/F piloted the CAS in 10 countries.32 According to the 

pilot selection criteria, the countries chosen 

• are broadly representative of the diversity of U.S. foreign assistance; 

• are enthusiastic about participating in the pilot; 

• have large, medium, and small programs; and 

• receive funds through a large variety of accounts, including the Millennium 

Challenge Account Compact and Threshold Programs and the President’s

Emergency Plan for AIDS Relief. 

In the meantime, some USAID officials in Washington, D.C., and at field 

missions expressed concern that some USAID country strategies had 

become outdated and did not reflect the current political and

developmental environment, creating a gap between country-level 

guidance for planning, programming, and budgeting and a longer-term 

view of a country’s needs and strategies for meeting them. In September 

2008, USAID issued guidance permitting field missions to develop interim 

country strategies until the CAS is fully developed and implemented. 

As of January 2009, all 10 pilot countries had submitted a draft CAS to 

State/F; as of April 2009, State/F had approved four of them and the 

remaining six were under review. According to State/F, when all 10 pilot 

CAS documents are approved, State/F plans to conduct an after-action 

review to determine best practices and lessons learned and then may 

 32The countries are Armenia, Bosnia and Herzegovina, Democratic Republic of the Congo, 

Honduras, Jamaica, Morocco, Mozambique, Nepal, the Philippines, and Tanzania. 

Page 25 GAO-09-192 Foreign Aid Reform
 

consider initiating a subsequent follow-on pilot project. State/F has not 

established time frames for implementing the CAS worldwide.33

State/F implemented a joint State-USAID foreign assistance budget 

process, beginning with the fiscal year 2008 budget request, and made 

subsequent changes to the process based on its experiences and feedback

from after-action reviews. Initially, it focused on foreign assistance 

planned for individual countries based on a categorization of their 

development using the foreign assistance framework.34 State/F created 

country core teams for each country receiving foreign assistance and gave 

them the responsibility of recommending funding requests for each 

country, based on State/F’s five strategic objectives and using the 

standardized program structure. These initial core teams consisted of a 

team leader from State/F, representatives from relevant regional and 

functional bureaus, a State/F Resources and Appropriations staff member, 

and other stakeholder U.S. government agencies. Because this process 

began after embassies and USAID missions submitted their funding 

requests for fiscal year 2008, embassy and mission staff were not initially 

assigned to country core teams. 

State/F’s joint budget process increased the visibility of foreign assistance 

resources within State and USAID. According to State/F and USAID 

officials with whom we met, the new process had a positive effect on how 

foreign assistance budgets were presented and defended during the 

Secretary’s review. Under this new process, comparable USAID and State 

bureaus present their foreign assistance budget proposals to the Secretary 

in a joint session. In the past, because the USAID Administrator also 

served as the DFA,35 the Administrator had an opportunity to participate in

each session along with the Secretary, the Deputy Secretary of State, or 

the Under Secretary of State for Political Affairs. According to State/F 

officials, this process resulted in a better understanding of foreign 

assistance programs and priorities between State and USAID and provided 

Consolidated Budget Process 

for State and USAID Foreign 

Assistance Programs 

 33Some countries, including Afghanistan and Iraq, will be exempt from producing a CAS 

based on the size of their programs and other factors. 

34The five country categories are rebuilding countries, developing countries, transforming 

countries, sustaining partnership countries, and restrictive countries. A sixth category, 

global or regional, captures activities that cross a single country’s borders. 

35Two USAID Administrators have served as DFA, from June 2006 to April 2007 and from

November 2007 to January 2009, respectively. 

Page 26 GAO-09-192 Foreign Aid Reform
 

the Secretary of State with a comprehensive overview of planned foreign 

assistance resource allocation. 

State/F responded to employee feedback from after-action reviews and 

made several changes to the fiscal year 2009 and 2010 budget processes. 

For fiscal year 2009, to better reflect the bureau structures of State and 

USAID, State/F replaced the country core teams, which focused on 

individual countries, with assistance working groups, which were 

composed of regional and functional bureau representatives and had 

greater knowledge of particular countries and programs. In addition to 

establishing the regional assistance working groups, State/F held a 

roundtable for each of the five strategic objectives. This allowed 

functional bureaus to incorporate cross-cutting and global priorities into 

country-focused funding proposals for the fiscal year 2009 budget request. 

For fiscal year 2010, the process was pared down further and regional 

bureaus were given primary responsibility for creating budget proposals, 

which reduced the time State/F officials had to spend reconciling regional 

and functional bureaus budget requests. State/F also created an intranet 

site to which it posted budget proposals, allowing regional and functional 

bureaus to comment on each other’s budget proposal. The effect of this 

change remains to be seen. 

State/F took several steps to establish its organizational structure and 

develop its human resource capabilities. In early 2006, State/F began to

staff its new office. State reassigned 23 employee positions to State/F, and

USAID assigned 65 employee positions to State/F.

36 The 23 State positions 

were reassigned from various bureaus and units within State. The 65

USAID positions were reassigned from several USAID offices, including

many from the Bureau for Policy and Program Coordination.37 USAID and 

State reached an agreement on the employee reassignments on June 1, 

2006. 

State/F Integrated 

Workforce 

 36In September 2007, State/F established additional positions, for a total of 97. An additional 

position was added in January 2008, resulting in a total of 98. As of February 2009, 15 of the 

98 positions were vacant.

37The Bureau for Policy and Program Coordination, which was abolished in 2006, included 

several offices that were responsible for allocation of resources, strategic planning, and 

related functions. 

Page 27 GAO-09-192 Foreign Aid Reform
 

By the end of March 2007, State/F had created new job descriptions and 

defined the skills and competencies needed for 16 of the 23 positions 

reassigned from State; State/F made minor or no changes to the rest of the 

existing position descriptions. New job descriptions for the 65 positions 

reassigned from USAID were approved in September 2007, 16 months after 

State/F began operations. In commenting on a draft of this report, State/F 

told us that, as of October 2008, it had created job descriptions for all of 

the new positions. 

Despite progress in its organizational transformation, developing 

consolidated planning and budgeting processes, and establishing an 

integrated State-USAID workforce, State/F faces implementation 

challenges related to these efforts. Specifically, State/F (1) lacks 

implementation time frames, as well as goals and benchmarks, for several

aspects of its foreign assistance reform efforts; (2) lacks a clear and 

consistent strategy for communicating with staff and stakeholders about 

its transformation and reform efforts; (3) faces several challenges related 

to its annual planning processes; (4) faces challenges in developing and 

implementing its multiyear planning process; (5) faces challenges in its 

consolidated budget process; and (6) has not fully addressed concerns 

regarding management of its workforce. 

Although State/F has established time frames for certain key elements of 

foreign assistance reform, it has not established time frames for 

developing and implementing a comprehensive, integrated U.S. foreign 

assistance strategy covering all agencies involved in delivering U.S. foreign

assistance, or for developing guidance for foreign assistance delivered 

through other U.S. government entities. According to State/F officials, 

State/F was awaiting direction and guidance from the incoming 

administration regarding its goals and priorities for U.S. foreign assistance 

reforms. In addition, because it has not completed the pilot phase for the 

5-year CAS, State/F has not yet developed time frames for fully 

implementing the CAS. As our previous work suggests,38 without time 

frames for implementing the comprehensive and country-specific 

strategies, State/F lacks target dates needed as an objective means to track 

and report its progress. Moreover, until it develops and implements a 

comprehensive, integrated U.S. foreign assistance strategy, as well as 

State/F Faces 

Implementation 

Challenges Related to 

Organizational 

Transformation, 

Planning and 

Budgeting, and 

Workforce 

State/F Lacks 

Implementation Time 

Frames for Comprehensive 

Foreign Assistance 

Reforms and Developing a 

Foreign Assistance 

Strategy and CountrySpecific Strategies 

 38GAO-03-669. 

Page 28 GAO-09-192 Foreign Aid Reform
 

guidance for other U.S. agencies’ foreign assistance, State/F lacks 

assurance that State’s, USAID’s, and other agencies’ programs are 

strategically tied to overarching U.S. goals. 

State/F has not defined goals for certain aspects of foreign assistance 

reform or developed benchmarks to gauge whether the reforms are 

successful. Without these key aspects of successful mergers and 

transformations, State/F is unable to pinpoint performance shortfalls and 

gaps and suggest midcourse corrections, and will not know what success 

looks like. For example, State/F’s COO told us that State/F did not define 

what it wanted to achieve from restructuring and streamlining State and 

USAID mission and bureau plans and reports or determine how it would 

gauge progress toward those goals and define success. Without a clear 

picture of the results to be achieved, it is difficult to ensure that reforms 

are implemented in a way that achieves the desired results. 

Also, as of January 2009, State/F had not determined how it will measure 

the anticipated efficiency gains to be realized from developing

consolidated program management systems. As a result, some State and 

USAID employees in Washington, D.C., and in the six countries we visited 

did not understand how their work was contributing to State/F’s desired 

results and could not determine whether the reforms were helping State/F

achieve its goals. For instance, according to State/F, one of the results 

expected from FACTS and FACTS Info was a substantial decline in ad hoc 

requests to embassies and missions for budget and performance 

information. However, USAID officials in all six countries we visited told 

us they have no way of knowing whether the data they enter into FACTS is 

being used because State/F does not disseminate information about the 

use of FACTS data. They also said that the number of USAID headquarters 

and State/F requests for information—known as taskers—had declined 

only slightly or not at all. On the other hand, State/F told us that although 

it does not track and communicate to the field the number of inquiries it 

handles at headquarters using FACTS or FACTS Info, its reliance on 

embassy- and mission-provided data has declined. State/F’s Congressional 

Relations Specialist said that she frequently uses FACTS and FACTS Info 

to respond to information requests from congressional committees and 

rarely sends taskers to the field for information. She hypothesized that the 

taskers to the field may be from State and USAID bureau officials and that 

these requests would decline over time as FACTS and FACTS Info become 

more widely accessed and well known. 

State/F Lacks Goals and 

Benchmarks for Measuring 

Progress for Certain 

Reform Processes 

Page 29 GAO-09-192 Foreign Aid Reform
 

State/F lacks a clear, consistent strategy for communicating about its 

organizational transformation and planning and budgeting reforms. 

Communicating information early and often helps to build an

understanding of the purpose of planned changes, builds trust among 

employees and stakeholders, cultivates a strong relationship with 

management, and helps gain employee ownership for a merger or 

transformation. 

According to officials in headquarters and in the six countries we visited, 

poor communication about the fiscal year 2007 operational planning 

process led to a great deal of confusion. For example, a USAID official in

Jordan said that State/F repeatedly changed its guidance over a short 

period of time; at times, the updated guidance contradicted, instead of 

built on, previous guidance and staff were unsure which guidance to 

follow. In addition, many staff told us that when seeking clarification on 

the conflicting guidance, they had received either no response or an 

untimely response from State/F. Also, State/F officials told us that, in 

hindsight, it appeared that State/F could have benefited from fuller and 

earlier communication about its planning and budgeting reforms with 

Congress and other stakeholders, such as contractors and nonprofit 

organizations involved with program implementation. To address these 

challenges, in November 2008, State/F said that it would create a 

Communications Manager position to develop and implement more 

effective communications processes; as of March 2009, this position had

been created but not yet filled. 

As with any planning structure, State/F’s operational plans have several

strengths but also present challenges. First, although regional missions 

complete operational plans, they do not clearly capture all of the foreign 

assistance programs and services implemented by USAID’s regional 

offices. As a result, senior management may lack the holistic overview of 

foreign assistance resources needed to make informed decisions about 

trade-offs among various priorities. According to leading practices in 

federal strategic planning, an agency’s strategic goals and objectives 

should cover its major functions and operations, and its annual 

performance plan should cover each program activity set forth in its 

State/F Lacks a Clear and 

Consistent Communication 

Strategy 

State/F Faces Challenges 

in Its Annual Operational 

Planning Processes 

Page 30 GAO-09-192 Foreign Aid Reform
 

budget.39 Like its country-specific, or bilateral, missions, USAID’s regional 

offices provide foreign assistance programs, although these programs tend 

to operate across borders. Regional offices also implement and manage 

programs in limited presence countries40 and provide technical assistance 

and support to bilateral missions and programs. However, according to 

regional officials with whom we met, it is difficult to categorize and 

capture technical assistance in the operational plan. In addition, they 

stated that because the operational plan has a bilateral mission focus and 

distinguishes between programs in different sectors, it does not adequately 

describe regional offices’ programs and services in multiple sectors for 

multiple limited presence countries. Senior leaders in State/F 

acknowledged that the operational plan’s bilateral mission focus is 

problematic in this regard. In commenting on a draft of this report, State/F

stated that regional activities can be and are captured in operational plans, 

noting that regional operating units produce operational plans. Based on 

our work, we maintain that the operational plan structure does not 

adequately capture regional activities.

Second, State/F faces challenges in coordinating and collaborating with 

officials in other U.S. government agencies to obtain funding and 

performance information, at the program element level, about these 

agencies’ foreign assistance programs. Officials from these agencies told 

us that State/F did not coordinate well with their agencies in planning for 

programs that these agencies implement with State or USAID funding. For 

example, DOD staff who implement Foreign Military Financing and 

International Military Training and Education programs told us during our 

site visits that State/F’s goals and measures—as reflected by the 

standardized program structure in the operational plans—did not always 

align with the broader goals and measures articulated in DOD’s own 

planning documents and strategies for its own programs. Moreover, 

officials from other U.S. government agencies implementing their own 

foreign assistance programs told us of challenges they face in providing 

information to State and USAID officials for inclusion in the operational 

plan. As a result, State/F cannot be sure, through its operational plan 

 39Although the Government Performance and Results Act requires these practices at the 

department/agency level, we have previously reported that they can serve as leading 

practices for planning within lower levels within federal agencies. For example, see GAO, 

Pipeline Safety: Management of the Office of Pipeline Safety’s Enforcement Program

Needs Further Strengthening, GAO-04-801 (Washington, D.C.: July 23, 2004). 

40A limited presence country is one in which USAID has limited or no official presence but 

to which a regional office provides some foreign assistance. 

Page 31 GAO-09-192 Foreign Aid Reform
 

process, that governmentwide foreign assistance funds are strategically 

tied to overarching policy goals. At some field missions, officials from the 

Departments of Commerce, Energy, Health and Human Services, and the

Treasury told us that providing support for State/F processes, such as the 

operational plan, creates an additional workload that is neither recognized

by their agencies nor a factor in their performance ratings. We have

previously reported that federal programs contributing to the same or 

similar results should collaborate to ensure that goals are consistent and, 

as appropriate, program efforts are mutually reinforcing.41 In addition, as a 

key collaboration practice, agencies can reinforce individual 

accountability for collaborative efforts through their performance 

management systems. 

Third, although the standardized program structure is generally a useful 

tool to categorize foreign assistance programs, its program structure 

categories sometimes overlap and in some cases, its performance 

indicators do not always adequately describe program achievements. 

State/F guidance does not discuss how to categorize programs within the 

standardized program structure, except to say that it is critical that funds

be identified by what is being done, rather than why it is being done. 

• Standardized program structure categories are not mutually 

exclusive. Staff from State and USAID told us that it is not always clear to

them how to categorize program activities, which could result in similar 

programs’ being coded differently. For example, a USAID official in the 

East Africa Regional Office, describing a civilian program similar to 

neighborhood watches, said that the subelement that best describes the 

program falls under the “Stabilization Operations and Security Sector 

Reform” program area, which generally involves military programs. The 

official ultimately sought legal counsel to determine whether it was 

appropriate to code the program in this subelement or whether it should 

be coded in a subelement under a civilian program area. State/F officials 

told us that the standardized program structure was developed by 

interagency experts in each of the program areas and that it would 

continue to rely on individuals who know and understand the programs 

and are best positioned to categorize them. 

• Standard indicators do not always capture program performance. 

Staff from State and USAID told us that they sometimes cannot find 

standardized performance indicators to describe State/F programs and 

 41GAO-06-15. 

Page 32 GAO-09-192 Foreign Aid Reform
 

therefore choose “the next best thing.” As a result, State/F cannot ensure 

that its programs and projects are reported accurately and consistently. 

For example, a State official in Ethiopia told us that he and USAID 

officials whom he consulted were unable to find a performance indicator 

that accurately described training provided to Ethiopian police units for 

defusing bombs. Eventually, the State and USAID officials selected one 

indicator from several that related generally to police training, even 

though none accurately described the type of assistance being provided. In 

commenting on a draft of this report, State/F officials told us they have 

been working for the past year on a comprehensive review of the 

standardized program structure in order to clarify and update program 

definitions but that they would also review the standard indicators 

These design weaknesses in the standardized program structure could 

compromise accuracy and data reliability in the operational plans, 

performance reports, FACTS, and FACTS Info, all of which are grounded 

in the standardized program structure. 

Fourth, as State/F itself recognizes, its required standard indicators are 

generally output oriented and therefore provide little information about 

program impact. State/F chose to use output measures, in part, to 

aggregate and report, at the agency level, quantitative information 

common to foreign assistance programs across countries. USAID staff at 

the six overseas missions we visited told us they saw this shift as a step 

backward from the progress some USAID missions had made over the 

years toward using more outcome-oriented measures to obtain 

information on program impact. State and USAID officials in headquarters 

and the field recognized the value of being able to aggregate information 

across countries at the agency level but questioned the usefulness of the 

output-oriented information collected with State/F’s standard indicators. 

For example, a USAID official in Haiti told us that the USAID mission and 

its implementing partners have shifted their focus away from impact 

measures toward measures that provide less information on actual 

progress. In addition, USAID officials in Kenya expressed concerns that 

the quality and availability of the qualitative information needed to manage

program activities had declined, reducing the mission’s ability to measure, 

and respond to inquiries about, program impact. State/F’s guidance 

encourages the use of custom indicators to establish targets and monitor 

the progress and impacts of their projects but it does not describe how 

State/F will use this information. Some State and USAID officials noted 

that although information related to program impact is important for 

managing programs and understanding the programs’ effects, they were 

not sure how, or if, State/F uses such information. These officials observed 

Page 33 GAO-09-192 Foreign Aid Reform
 

that, in contrast, State/F’s guidance says that the quantitative, outputoriented information collected with the standard indicators is used to 

inform its resource requests and report to Congress and the American 

people. 

Fifth, State/F’s planning process excludes certain of State’s and USAID’s 

operating and administrative expenses for foreign assistance programs, 

constraining State/F’s ability to ensure needed levels of administrative 

support for their foreign assistance programs.42 Although State/F plans and 

budgets for foreign assistance program funds, State’s Resource 

Management Bureau and USAID’s Management Bureau plan and request 

funds for operating and administrative expenses. As a result, senior 

management lacks a comprehensive view of the total resources needed to 

support their program activities. 

State/F faces two key challenges related to its development of the 5-year 

CAS. First, the CAS may not adequately replace USAID’s country 

strategies, as State/F initially planned. According to some USAID and State 

officials in Washington, D.C., and in the countries we visited, the CAS is a 

high-level document that includes overall objectives for the country but—

unlike USAID’s country strategies—lacks substantive content and details 

on how USAID is to achieve its objectives. For example, the CAS’ content 

is limited to high-level information on (1) the country program and the 

overall U.S. strategic approach and priorities, (2) up to five priority goals,

and (3) resource assumptions. In contrast, the 2002-2006 USAID country 

strategy for Peru, for example, includes, for each of Peru’s seven 

objectives, a detailed discussion of the objective, the development 

challenge, performance measures, critical assumptions, commitment and 

capacity of other development organizations, and sustainability issues. 

To address USAID missions’ concerns, in October 2008 the DFA issued an 

executive message that outlined three strategic planning options regarding 

the development of interim country strategies. The message stated that a 

USAID mission could (1) continue to use an existing country strategy; (2) 

develop an interagency CAS; or (3) develop an updated, USAID-specific 

country strategy if the existing strategy is no longer relevant and a CAS is 

State/F Faces Challenges 

in Developing and 

Implementing Its Multiyear 

Planning Process 

 42In this report, references to operating and administrative expenses include amounts 

derived from State’s Diplomatic and Consular Protection account and USAID’s Operating 

Expense account. Program funds used to support administrative costs are included in the 

operational plan process. 

Page 34 GAO-09-192 Foreign Aid Reform
 

not likely to be in place in fiscal year 2009. According to this guidance, 

these options would be available while the CAS is being piloted. As of 

March 2009, State/F officials told us that it had not yet completed an 

assessment of the CAS pilot. 

Second, State/F’s suspension of the development of USAID country 

strategies led to planning challenges at some USAID missions, particularly 

during the first 2 years of State/F’s existence. According to some USAID 

officials, until October 2008—when USAID issued guidance for developing

interim country strategies—the absence of a long-term country strategy 

hampered their ability to plan and manage project activities. For example, 

in June 2008, USAID officials in Ethiopia told us that before their country 

strategy had expired, USAID and the Ethiopian government routinely 

agreed on program activities that USAID planned to carry out over the 

next several years, pending availability of funds. However, absent a 

current multiyear strategy, and because of the resulting uncertainty about

USAID’s long-term goals and strategies for the country, USAID officials 

were reluctant to reach preliminary agreements with various Ethiopian 

government ministries. In Ukraine, USAID officials told us that in June 

2006, State/F suspended the mission’s efforts to update its 2003-2007 

country strategy. As a result, the officials said, USAID’s strategy for 

Ukraine became outdated and did not reflect the current political, 

economic, and developmental environment in Ukraine, which had changed 

dramatically. They, too, were reluctant to execute agreements with the 

Ukrainian government without a clear understanding of how these 

projects link to a long-term strategy for the country. In contrast, USAID 

officials in Haiti told us that State/F’s suspending development of new 

country strategies had not adversely affected them because a 3-year 

country strategy for 2007-2009 had been approved and implemented in 

August 2006. Although the guidance issued by USAID in September 2008 is

a step forward in addressing USAID missions’ concerns, the development 

of USAID country-specific strategic plans will remain an interim process 

until the CAS is finalized and USAID country strategies are fully developed 

and implemented. 

We identified two key concerns with State/F’s consolidated budget 

processes. First, although State/F’s consolidated budget process was in 

part intended to bring needed coherence and accountability to

governmentwide foreign assistance programs, the process excludes 

billions of dollars both within and outside State and USAID’s jurisdiction. 

For example, of the $36.6 billion appropriated to, or administered by, State 

and USAID, only about half went through the new State-USAID 

State/F Faces Challenges 

in Its Consolidated Budget 

Processes 

Page 35 GAO-09-192 Foreign Aid Reform
 

consolidated budget, planning, and reporting processes in fiscal year 2008. 

Further, according to State/F guidance, State/F coordinates with, but does 

not approve budget requests and resource allocations for, the Global 

HIV/AIDS Initiative (GHAI) or the Millennium Challenge Corporation 

(MCC); the appropriations act for fiscal year 2008 included $1.8 billion and 

$1.6 billion, for GHAI and MCC, respectively. State/F’s process also does 

not include Pub. L. 480 Title II grants,

43 for which almost $1.7 billion was 

appropriated in fiscal year 2008. 

Second, State/F’s budget process reforms may affect a mission’s ability to 

respond to unexpected events in a timely manner. Under State/F’s 

operational plan process, funds are allowed and committed at lower 

levels—the element and subelement levels respectively—than they were 

with previous processes. This change allows State/F to report a finer level 

of detail regarding how funds are used. However, State and USAID 

officials, both in headquarters and the field, expressed concern that this 

change could have unintended impacts on a mission’s ability to respond 

effectively to changing conditions, possibly hampering its ability to 

address time-critical issues such as riots or disasters. For example, 

officials in State’s Bureau of Western Hemisphere Affairs, describing their

efforts to identify funding for a new, multiyear administration initiative, 

said that before State/F was created, the bureau was able to quickly and 

easily reallocate funds to respond to unexpected events. Now, to address 

such an event, the bureau must request and receive approval to reallocate

funds in the operational plan, because State/F requires all funds to be 

committed in advance. The officials said that they have found this to be a 

complex and lengthy process, requiring multiple levels of approval—often

up to the DFA44—for a variety of funding changes. State/F has taken some 

steps to reduce the burden of its reallocation process. For example, it 

delegated authority to USAID mission directors to approve reallocation 

requests in certain instances. In addition, State/F decreased the number of 

 43Title II of the Agricultural Trade Development and Assistance Act of 1954 (a.k.a. Public 

Law 480) ch. 469, 68 Stat. 454 (1954), codified as amended at 7 U.S.C. § 1691a, provides U.S. 

food assistance in response to emergencies and disasters around the world, and provides

development-oriented resources to help improve long-term food security. Title II funding is

appropriated to the Department of Agriculture and administered by USAID. 

44State/F’s guidance states that the DFA must approve changes to (1) the overall funding

amount for an operating unit; (2) the amount of funding for any account within an

operating unit; (3) the overall funding amount for an objective; and (4) funding related to

“protected” program areas, program elements, implementing mechanisms, and other items 

such as congressional directives and administration priorities. 

Page 36 GAO-09-192 Foreign Aid Reform
 

reallocation requests that need to be approved by the DFA. In another 

example, USAID officials in the field described their efforts to respond to 

unexpected parliamentary elections in Ukraine while their operational 

plan was under review by State/F. According to these officials, the mission

requested that State/F release some funds prior to approving the plan, so 

that the mission could develop and implement programs related to the 

Ukraine’s upcoming elections. According to State/F’s reprogramming 

guidance for fiscal years 2007 and 2008, this request required the 

signatures of 10 USAID and State officials (outside State/F) and 4 State/F

officials, including the DFA. USAID officials said the approval took 6 

weeks and that this limited their ability to develop and implement their 

programs. 

Although State/F has taken some steps to establish a workforce and 

organizational structure, including beginning to define the roles and 

responsibilities of its employees, our work and an October 2008 State/F 

internal management review found that State/F faces key challenges in 

managing its workforce. For example, the State/F internal management 

review found that (1) State/F had not yet clearly defined the roles of some 

of its employees and organizational units and (2) State/F had not ensured 

that its employees have the skills and competencies needed to manage 

foreign assistance programs. According to State/F officials, in an effort to 

demonstrate an impact on U.S. foreign assistance programs, State/F 

initially gave precedence to creating and deploying consolidated budget, 

planning, and reporting processes rather than to examining the workforce 

composition, defining roles and responsibilities, and ensuring needed 

skills and competencies. Although it is important for leaders to be decisive 

and deliver early successes, we have previously found that success in an 

organizational transformation or merger is more likely when positions are 

filled based on the competencies needed for the new organization.45

State/F Faces Challenges 

in Workforce Management 

Issues 

• Roles and responsibilities. The October 2008 internal management 

review noted that the roles of some State/F employees and organizational 

units were not well defined or understood; that the responsibilities of 

some offices overlapped; and that there was confusion about when, during 

the planning and budgeting processes, certain employees should be 

involved in various issues. Similarly, State and USAID officials in 

 45GAO, Highlights of a GAO Forum: Mergers and Transformation: Lessons Learned for a

Department of Homeland Security and Other Federal Agencies, GAO-03-293SP 

(Washington, D.C.: Nov. 14, 2002). 

Page 37 GAO-09-192 Foreign Aid Reform
 

Washington, D.C., and most of the six countries we visited told us that 

State/F employees sometimes were unable to answer questions about 

operational plan guidance, FACTS, and FACTS Info and were unsure 

where in State/F to direct such questions so as to ensure timely, accurate 

answers. 

• Skills and competencies. State/F’s internal management review noted 

concerns about whether some State/F employee skills are well matched 

with State/F’s core functions. The review found that although State/F staff 

had strong skills, they either were not placed in positions where they 

could leverage these skills or their skills did not match the capabilities that 

State/F required. During our work, some State and USAID officials in 

Washington, D.C., and in the field echoed these concerns. 

Although State/F has taken some actions in response to its October 2008 

internal review, it has not developed a long-term workforce management 

plan for addressing these challenges. During our review, State/F officials 

told us that they had initiated several corrective actions in response to 

recommendations in the internal review, such as defining roles and 

responsibilities for its various executive and managerial positions and its 

organizational units; developing plans to ensure that the current 

workforce is aligned to meet these needs; and improving training and 

professional development offered to its employees. However, State/F has 

not clearly defined roles and responsibilities for some of its employees. In 

addition, State/F has not developed a long-term workforce management 

plan to periodically reassess its workforce capacity to carry out assigned 

responsibilities, such as supporting and managing the consolidated 

budget, planning, and reporting processes for State and USAID foreign 

assistance programs. Our previous work has shown that many aspects of 

workforce planning and management require long-term strategies, to 

ensure that the agency’s human capital program capitalizes on its 

workforce’s strengths and addresses related challenges in a manner that is

clearly linked to achieving the agency’s mission and goals.46

Further, although State/F has defined its core functions and is “translating 

them down to its various offices,” State/F officials told us that these 

definitions are considered an internal management tool and therefore have

not been, and will not be, shared with State and USAID employees outside

State/F. We have previously reported that having an effective and ongoing 

 46GAO, Human Capital: Key Principles for Effective Strategic Workforce Planning, 

GAO-04-39 (Washington, D.C.: Dec. 11, 2003).

Page 38 GAO-09-192 Foreign Aid Reform
 

internal and external communication strategy is essential to making 

transformation happen;47 communicating with stakeholders should be a 

top priority and is central to forming the partnerships that are needed to

develop and implement the organization’s strategies. Moreover, we have 

observed that such communication is especially crucial in public sector 

organizational transformations, such as State and USAID’s reform of 

foreign assistance. Policymaking and program management demand 

transparency, and stakeholders and interested parties are concerned not 

only about the results to be achieved but also about the processes to be 

used in achieving those results. 

State/F has taken important recent steps to align State and USAID foreign 

assistance activities with broader foreign policy goals. Several aspects of

State/F’s establishment—such as involving top leadership, developing a 

mission statement and operating principles, employing a Chief Operating

Officer, and involving employees in the transformation process—are 

consistent with leading practices that we have previously found to 

increase the likelihood of success in such a large-scale transformation. 

Moreover, State/F’s actions to consolidate and reform State and USAID 

planning and budgeting could help address program fragmentation; 

strengthen accountability; and tighten the link among strategic objectives, 

resource allocation, and program implementation. For example, by basing 

its annual operational plans and 5-year CAS on its standardized program 

structure, State/F is attempting to tie its planning and budgeting to 

strategic foreign policy objectives. Further, the CAS process has the 

potential to further transparency and enhance interagency coordination 

and collaboration by including the activities of all U.S. agencies providing

foreign assistance in the country. If effectively implemented, the CAS 

could also be a first step in creating a comprehensive governmentwide 

strategy for U.S. foreign assistance. 

In other respects, State/F’s initiatives are not well aligned with key 

practices that we have previously found in successful transformations and 

mergers. Without time frames, goals, and measures for defining success 

for all aspects of its foreign assistance reforms—including developing and 

implementing a comprehensive U.S. foreign assistance strategy, 

developing guidance for other U.S. entities’ foreign assistance, and fully 

implementing its stated goal of multiyear comprehensive country 

Conclusions 

 47GAO-03-293SP. 

Page 39 GAO-09-192 Foreign Aid Reform
 

assistance strategies—State/F’s capacity to build momentum and 

demonstrate progress in these key reform efforts is limited. Lacking a 

comprehensive U.S. strategy, federal agencies risk implementing a 

fragmented patchwork of programs that could limit the overall 

effectiveness of the federal effort while failing to address the highest 

priorities. In addition, absent a clear, consistent strategy for 

communicating with staff about planning and budget reforms, State/F’s 

communications with staff in Washington, D.C., and in the field may—

despite initial steps to develop and implement more-effective

communications processes—continue to cause confusion, constraining its 

ability to build management-staff relations and staff’s sense of ownership 

for the reforms. 

Among the planning and budgeting challenges discussed in this report, it is 

particularly important to clearly capture all relevant programs and 

activities in an agency’s planning process. Because State/F’s operational 

plan does not clearly articulate the programs and services implemented by

USAID’s regional offices, senior management may lack a holistic picture of 

foreign assistance resources and may therefore lack important information 

needed to make informed decisions among competing priorities. 

Additionally, unless State/F ensures that the goals and measures in its 

operational plans are compatible with those articulated in the related 

plans and strategies of other U.S. entities delivering foreign assistance, it 

may continue to face challenges in obtaining information about these 

agencies’ activities and, in the long term, may face challenges in 

collaborating with these agencies to develop a comprehensive 

governmentwide foreign assistance strategy. 

Finally, without a long-term workforce management plan for periodically 

assessing its workforce capacity to manage foreign assistance, including 

implementing strategies to fill any identified gaps in skills and 

competencies, State/F cannot ensure that its staff are prepared to meet the 

demands of reforming and consolidating foreign assistance processes. 

We are making the following seven recommendations to the Secretary of 

State to further the reform of U.S. foreign assistance. 

Once the incoming administration has defined its overarching goals for 

foreign assistance, we recommend that the Secretary of State work with 

all U.S. government entities involved in the delivery of foreign assistance 

to take the following steps: 

Recommendations for 

Executive Action 

Page 40 GAO-09-192 Foreign Aid Reform
 

• Develop and implement a comprehensive, governmentwide foreign 

assistance strategy, complete with time frames and measures for 

successful implementation. Involving other agencies in this effort could 

include adopting key practices that we have found to sustain and enhance 

interagency coordination and collaboration in addressing common goals. 

• Develop and use compatible goals and measures to inform their planning, 

budgeting, and reporting for their respective foreign assistance programs. 

If the administration decides to continue foreign assistance reform efforts 

consistent with the State/F reforms announced in January 2006, we 

recommend that the Secretary direct the DFA to 

• establish a time frame for fully implementing all aspects of these reforms 

as well as benchmarks and goals to measure progress and define success;

• establish a time frame for developing and implementing multiyear, 

country-specific, foreign assistance strategies in all countries where U.S. 

departments, agencies, or organizations provide assistance; 

• ensure that State/F’s communication strategy encourages substantive, 

timely, two-way information exchanges between State/F and USAID and 

State employees; 

• consider an operational plan structure that clearly portrays and accurately

captures the functions and activities of regional programs and activities; and 

• develop a long-term workforce management plan to periodically assess 

State/F’s workforce capacity to manage foreign assistance. 

We provided a draft of this report to the Secretary of State and the USAID 

Administrator for review. State provided consolidated, written comments 

on behalf of both State and USAID that are reprinted in appendix V. In 

addition, State and USAID provided technical corrections and additional 

comments for our consideration, which we incorporated as appropriate. 

While State and USAID generally acknowledged or agreed to consider six 

of our seven recommendations, State and USAID officials said that they

believed they had already met our recommendation to consider an 

operational plan structure that clearly portrays and accurately captures 

the functions and activities of regional programs and activities. 

In response to this comment, we clarified in our report that regional missions

do in fact complete operational plans. However, as we note in our report,

regional officials told us that it is difficult to categorize and capture key 

Agency Comments 

and Our Evaluation 

Page 41 GAO-09-192 Foreign Aid Reform
 

regional activities in the plan. Specifically, they said that because the 

operational plan has a bilateral mission focus and distinguishes between 

programs in different sectors, it does not adequately describe regional offices’ 

programs and services in multiple sectors for multiple limited presence 

countries. Further, we note in our report that senior leaders in State/F

acknowledged that the operational plan’s bilateral mission focus is 

problematic in this regard. We believe that it is important to clearly capture all

relevant programs and activities in an agency’s planning process so that

senior management has a holistic picture of foreign assistance resources—

important information needed to make informed decisions among competing

priorities. We therefore maintain that this recommendation remains valid.

As agreed with your offices, unless you publicly announce the contents of this 

report earlier, we plan no further distribution until 30 days from the report date.

At that time, we will send copies of this report to interested congressional 

committees, the Secretary of State, the Acting Administrator of USAID, and the 

Director of the Office of Management and Budget. We will also make copies 

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

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

If you or your staff have any questions about this report, please contact 

Denise M. Fantone at (202) 512-4997 or fantoned@gao.gov; or David 

Gootnick at (202) 512-3149 or gootnickd@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on the 

last page of this report. Individuals who made key contributions to this 

report are listed in appendix VI. 

Denise M. Fantone 

Director, Strategic Issues 

David Gootnick 

Director, International Affairs and Trade 

Page 42 GAO-09-192 Foreign Aid Reform
Appendix I: Scope and Methodology Appendix I: Scope and Methodology 

The objectives of this study were to (1) examine key actions that the 

Office of the Director of Foreign Assistance (State/F) has taken to reform 

foreign assistance by consolidating the foreign assistance operations of 

the Department of State (State) and the U.S. Agency for International 

Development (USAID) and (2) identify any key challenges that affect

State/F’s implementation of these reforms. 

To accomplish both of these objectives, we obtained and analyzed various

agency documents describing the creation of State/F and its workforce, 

including organizational charts, staffing charts, position descriptions, and 

changes in work responsibilities. We also obtained and analyzed various 

State/F documents describing its reformed planning, budgeting, and 

reporting processes, guidance for implementing these processes, and 

examples of the documents produced by these processes (e.g., Operational

plans and Congressional Budget Justifications). We also obtained and 

reviewed the fiscal years 2007 and 2008 “after-action reviews” of the 

State/F’s planning and budgeting processes conducted by State/F, as well 

as documents that describe changes to the processes based on these 

reviews. 

We conducted more than 40 interviews with State and USAID officials in 

Washington, D.C., involved in State/F’s reforms, including officials in 

various State/F offices and in various State and USAID regional and 

functional bureaus. To gain an understanding of the field’s involvement in 

and perspectives on State/F’s reforms, we also conducted site visits at U.S. 

Embassies and USAID missions in six countries: Ethiopia, Haiti, Jordan, 

Kenya, Peru, and Ukraine. We selected these locations on the basis of the 

following factors: 

• Funding levels. Each country’s program was among the top recipients of

U.S. funding in its geographic region.

• Regional responsibilities. USAID missions in three of the six countries—

Kenya, Peru, and Ukraine—are also responsible for managing regional 

programs or programs in neighboring countries. 

• Variety of foreign assistance activities. In all of the countries, a variety of 

foreign assistance activities are provided by State and USAID as well as by

other federal agencies, including the Departments of Agriculture, 

Commerce, Defense, Energy, Health and Human Services, and the 

Treasury. 

At each embassy and mission, we met with officials involved in State/F’s 

planning and budgeting processes. While most of these officials were from 

Page 43 GAO-09-192 Foreign Aid Reform
Appendix I: Scope and Methodology 

State and USAID, we also met with officials from other agencies that 

implement programs on their behalf or that coordinate with them, 

including the Departments of Agriculture and Defense. 

Finally, our review was informed by our past work. We reviewed our past 

reports related to State and USAID, as well as reports on strategic 

planning, performance budgeting, performance reporting, and interagency

collaboration and coordination. We also selected seven of the nine key

practices from our past work on organizational mergers and 

transformations to review State and USAID efforts to establish State/F. 

Our review did not include the practices of using the performance 

management system to define responsibility and assure accountability for 

change or building a world-class organization because of the evolving 

nature of State/F’s organization and workforce. 

Page 44 GAO-09-192 Foreign Aid Reform
Appendix II: U.S. Departments, Agencies, and 

Other Entities That Provide Foreign Appendix II: U.S. Departments, Agencies, and Assistance 

Other Entities That Provide Foreign 

Assistance 

• African Development Foundation 

• Centers for Disease Control and Prevention 

• Department of Agriculture 

• Department of Commerce 

• Department of Defense 

• Department of Energy 

• Department of Health and Human Services 

• Department of the Interior 

• Department of Justice 

• Department of Labor 

• Department of State 

• Department of the Treasury 

• Environmental Protection Agency 

• Export-Import Bank 

• Inter-American Development Foundation 

• Millennium Challenge Corporation 

• National Institute of Standards and Technology 

• National Oceanic and Atmospheric Administration

• National Science Foundation 

• Overseas Private Investment Corporation 

• Peace Corps 

• USAID 

• U.S. Fish and Wildlife Service 

• U.S. Forest Service 

• U.S. Institute of Peace 

• U.S. Patent and Trademark Office 

• U.S. Trade and Development Agency

Note: Congressional Research Service presentation of Organization for Economic Co-operation and 

Development (OECD) data. 

Page 45 GAO-09-192 Foreign Aid Reform
Appendix III: State/F Information Systems Appendix III: State/F Information Systems 

To support State and USAID planning, budgeting, and reporting of foreign 

assistance under these reforms, State/F developed two new data 

information systems, the Foreign Assistance Coordination and Tracking 

System (FACTS) and FACTS Info.1

 FACTS, which State/F began to develop 

in mid-2006, is a database used to collect foreign assistance planning and 

reporting data, including plans for implementing current-year appropriated 

budgets and performance planning and reporting data. FACTS Info, which 

State/F created in 2007, is a system used to aggregate, analyze, and report 

data on U.S. foreign assistance programs under the authority of the DFA. 

Although State and USAID are the only U.S. agencies currently using both 

systems, State/F expects the systems to eventually include data from other 

agencies involved in foreign assistance, including, among others, the 

Millennium Challenge Corporation and the Department of Treasury. 

In November 2008, in connection with our body of work addressing the 

management of State/F and at your request, we reported on (1) the creation

and development of FACTS and FACTS Info and (2) whether State/F is

following best practices for configuration management—the process of 

establishing and maintaining control over changes made to a system—and

risk management of FACTS and FACTS Info.

2

 In conducting this work, we 

reviewed FACTS and FACTS Info system procurement, contract,

development, performance, and assessment documents from State and 

USAID. We also reviewed State/F’s configuration management and risk

management procedures for consistency with industry best practices. 

FACTS has been developed in two phases, known as FACTS I and FACTS 

II. In conjunction with USAID, State/F developed FACTS I in December 

2006 as a database to collect foreign assistance planning and reporting 

data, including plans for implementing current-year appropriated budgets 

and performance planning and reporting data for State, USAID, and the 

more than 25 other U.S. departments and agencies involved in providing 

foreign assistance.3

 According to a State/F survey of over 100 State and 

USAID users in 2007, as well as our interviews with State and USAID 

officials in Washington, D.C., and the six countries we visited, FACTS I 

 1

Neither FACTS nor FACTS Info is intended to serve as an accounting or financial tracking

system. Both State and USAID have separate systems for these purposes. 

2

GAO, Foreign Assistance: State Department Foreign Aid Information Systems Have 

Improved Change Management Practices but Do Not Follow Risk Management Practices, 

GAO-09-52R (Washington, D.C.: Nov. 21, 2008). 

3

Only programs under the authority of the DFA are currently detailed in FACTS. 

Page 46 GAO-09-192 Foreign Aid Reform
Appendix III: State/F Information Systems 

was slow and unreliable during the first 2 years of the new foreign 

assistance funding process. To remedy these problems, in February 2008,

State/F hired a contractor to develop FACTS II, which was deployed 

worldwide in October 2008. State/F created FACTS Info to aggregate, 

analyze, and report data on U.S. foreign assistance programs under the 

authority of the DFA. During the initial pilot phase, which began in 

September 2007, FACTS Info was accessible to a limited number of State 

and USAID users. FACTS Info was expanded to include additional State/F

and USAID users when the pilot phase ended in February 2009. 

FACTS II and the ongoing pilot of FACTS Info have recently implemented 

new configuration management processes, but both lack adequate risk

management procedures, such as formalized procedures to plan for

foreseeable risks. State/F has taken steps to address these challenges, such as

updating the project management plan and implementing change tracking

software to address certain weaknesses, particularly to both systems’

configuration management. However, as of October 2008, State/F had not 

fully implemented improvements to the systems’ risk management; State 

officials noted that they plan to complete these improvements by December 

2008. Because both FACTS II and FACTS Info lack formal processes for risk 

management, State/F cannot ensure that risks are identified, analyzed,

tracked, and mitigated, increasing the likelihood that potential problems 

become actual problems. Moreover, State/F was unable to mitigate a key risk

that led to problems with the development of FACTS II. Without improved

risk management processes, risks may not be effectively managed. 

In our November 2008 report, we recommended that, to help ensure that

FACTS II and FACTS Info are implemented successfully and perform as

designed, the Secretary of State direct the DFA to better utilize best practices

for risk management procedures to both systems.4

 In particular, we 

recommended that the DFA (1) identify and develop a comprehensive list of

system development risks for FACTS II and FACTS Info; and (2) fully develop 

risk mitigation plans for FACTS II and FACTS Info. State has taken some 

actions in response to these recommendations. Specifically, State/F issued a 

risk registry that includes 27 systems development risks for both FACTS II

and FACTS Info and how it had either already addressed or planned to

address the risks. Also, State/F developed a draft of a combined risk

management plan for both FACTS II and FACTS Info and, in February 2009, a 

State/F official told us that they expected the plan to be approved by the end 

of that month. However, as of April 2009, the plan had not yet been approved.

 4

GAO-09-52R. 

Page 47 GAO-09-192 Foreign Aid Reform
Appendix IV: Foreign Assistance Framework 

Goal: To help build and sustain democratic, well-governed states that respond to the needs of their people, reduce 

widespread poverty and conduct themselves responsibly in the international system. 

Strategic objectives 

Country

category and

definition 

Peace and

security 

Governing

justly and 

democratically 

Investing in

people

Economic

growth 

Humanitarian

assistance 

End goal of

U.S. foreign

assistance 

Graduation 

trajectory 

Rebuilding 

countries

States in, or 

emerging from 

and rebuilding 

after, internal 

or external

conflict. 

Prevent or 

mitigate state 

failure and/or 

violent conflict.

Assist in 

creating and/or

stabilizing a 

legitimate and 

democratic 

government 

and a 

supportive 

environment for 

civil society and 

media. 

Start or restart 

the delivery of 

critical social 

services, 

including health 

and 

educational 

facilities, and 

begin building 

or rebuilding 

institutional 

capacity. 

Assist in the 

construction or

reconstruction 

of key internal 

infrastructure 

and market 

mechanisms to 

stabilize the 

economy. 

Address 

immediate 

needs of 

refugee, 

displaced, and 

other affected 

groups. 

Stable 

environment for 

good 

governance, 

increased 

availability of 

essential social

services, and 

initial progress 

in creating 

policies and 

institutions on 

which future

progress will 

rest. 

Advance to 

“developing 

countries” or 

“transforming 

countries” 

category. 

Developing

countries

States with low

or lower-middle

income, not yet 

meeting MCC 

performance 

and political 

rights criteria. 

Address key 

remaining 

challenges to 

security and 

law 

enforcement. 

Support 

policies and 

programs that 

accelerate and

strengthen 

public 

institutions and 

the creation of 

a more vibrant 

local 

government, 

civil society and 

media. 

Encourage 

social policies 

that deepen the 

ability of 

institutions to 

establish 

appropriate 

roles for the 

public and 

private sector 

in service 

delivery. 

Encourage 

economic 

policies and 

strengthen 

institutional 

capacity to 

promote broadbased growth.

Encourage 

reduced need 

for future HA 

by introducing

prevention and

mitigation 

strategies, 

while 

continuing to 

address 

emergency 

needs. 

Continued 

progress in

expanding and

deepening 

democracy, 

strengthening 

public and 

private 

institutions, and 

supporting 

policies that 

promote 

economic 

growth and 

poverty 

reduction. 

Advance to 

“transforming 

countries” 

category. 

Transforming 

countries

States with low

or lower-middle

income, 

meeting MCCa

performance 

and political 

rights criteria. 

Nurture 

progress 

toward 

partnerships on

security and 

law 

enforcement. 

Provide limited

resources and 

technical 

assistance to 

reinforce 

democratic 

institutions. 

Provide 

financial 

resources and 

limited 

technical 

assistance to 

sustain 

improved

livelihoods. 

Provide 

financial 

resources and 

technical 

assistance to 

promote broadbased growth.

Address 

emergency 

needs on a 

short-term 

basis, as 

necessary. 

Government, 

civil society, 

and private 

sector 

institutions 

capable of 

sustaining 

development 

progress. 

Advance to 

“sustaining 

partnership” 

category or 

graduate 

from foreign 

assistance. 

Appendix IV: Foreign Assistance Framework 

Page 48 GAO-09-192 Foreign Aid Ref
Appendix IV: Foreign Assistance Framework 

Strategic objectives 

Country

category and

definition 

Peace and

security 

Governing

justly and 

democratically 

Investing in

people

Economic

growth 

Humanitarian

assistance 

End goal of

U.S. foreign

assistance 

Graduation 

trajectory 

Sustaining

partnership

countries

States with 

upper-middle 

income or 

greater for 

which U.S. 

support is 

provided to 

sustain 

partnerships, 

progress, and 

peace. 

Support 

strategic 

partnerships 

addressing

security, CT, 

WMD, and 

counternarcotics. 

Address issues

of mutual 

interest. 

Address issues

of mutual 

interest. 

Create and 

promote 

sustained 

partnerships on

trade and 

investment. 

Address 

emergency 

needs on a 

short-term 

basis, as 

necessary. 

Continued 

partnership as 

strategically 

appropriate 

where U.S. 

support is 

necessary to 

maintain 

progress and 

peace. 

Continue 

partnership 

or graduate 

from foreign 

assistance. 

Restrictive 

countries

States of 

concern where

there are 

significant 

governance 

issues. 

Prevent the 

acquisition and

proliferation of 

WMD and 

support CT and 

counternarcotics. 

Foster effective 

democracy and 

responsible 

sovereignty. 

Create local 

capacity for 

fortification of 

civil society and 

path to 

democratic 

governance. 

Address 

humanitarian 

needs. 

Promote a 

market-based 

economy. 

Address 

emergency 

needs on a 

short-term 

basis, as 

necessary. 

Civil society 

empowered to 

demand more 

effective 

democracies 

and states 

respectful of 

human dignity, 

accountable to 

their citizens, 

and 

responsible 

towards their 

neighbors. 

Advance to 

other 

relevant 

foreign 

assistance 

category. 

Global or

regional 

Activities that advance the five objectives, transcend a single country’s borders, and 

are addressed outside a country strategy. 

Achievement of

foreign 

assistance goal 

and objectives. 

Determined 

based on 

criteria 

specific to 

the global or 

regional 

objective. 

Source: Department of State. 

Notes: 

CT = counterterrorism 

MCC = Millennium Challenge Corporation 

WMD = weapons of mass destruction 

Page 49 GAO-09-192 Foreign Aid Ref
Appendix V: Comments from the Department 

of State 

Page 50 GAO-09-192

Appendix V: Comments from the Department 

of State 

Foreign Aid Reform
Appendix V: Comments from the Department 

of State 

Page 51 GAO-09-192 Foreign Aid Reform
Appendix V: Comments from the Department 

of State 

Page 52 GAO-09-192 Foreign Aid Reform
Appendix V: Comments from the Department 

of State 

Page 53 GAO-09-192 Foreign Aid Reform
Appendix VI: 

A

GAO Contacts and Staff 

cknowledgments 

Page 54 GAO-09-192

Appendix VI: GAO Contacts and Staff 

Acknowledgments 

Denise M. Fantone, (202) 512-4997 or fantoned@gao.gov; and David 

Gootnick, (202) 512-3149 or gootnickd@gao.gov. 

In addition to the contacts named above, Jacqueline M. Nowicki (Assistant 

Director), Thomas Costa, Benjamin T. Licht, Reid Lowe, Sheila Rajabiun,

and George Taylor made key contributions to this report. David Dornisch 

and Grace Liu provided technical support. 

Foreign Aid Reform

GAO Contacts 

Staff 

Acknowledgments 

(450676) 
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