CUBA DEMOCRACY 

ASSISTANCE

USAID’s Program Is 

Improved, but State 

Could Better Monitor 

Its Implementing 

Partners

Report to the Chairman, Committee on 

Foreign Relations, U.S. Senate

January 2013

GAO-13-285

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-13-285, a report to the 

Chairman, Committee on Foreign Relations, 

U.S. Senate

January 2013 

CUBA DEMOCRACY ASSISTANCE

USAID’s Program Is Improved, but State Could 

Better Monitor Its Implementing Partners

Why GAO Did This Study

Since 1996, Congress has 

appropriated $205 million to USAID 

and State to support democracy 

assistance for Cuba. Because of 

Cuban government restrictions, 

conditions in Cuba pose security risks 

to the implementing partners—

primarily NGOs—and subpartners that 

provide U.S. assistance.

For this report, GAO (1) identified 

current assistance, implementing 

partners, subpartners, and 

beneficiaries; (2) reviewed USAID’s 

and State’s efforts to implement the 

program in accordance with U.S. laws 

and regulations and to address 

program risks; and (3) examined 

USAID’s and State’s monitoring of the 

use of program funds. This report is a 

publicly releasable version of a 

Sensitive But Unclassified Report that 

GAO issued in December 2012. 

To address these objectives, GAO 

analyzed program activities and 

funding, relevant laws and regulations, 

and practices for monitoring the use of 

funds. GAO also conducted 

performance and financial reviews of a 

nongeneralizable sample of six 

implementing partners—representing 

about 60 percent of USAID and State 

funding for awards and contracts active 

in fiscal year 2011—and 11 

subpartners.

What GAO Recommends

GAO is recommending that State take 

steps to improve its financial 

monitoring of implementing partners 

and provide clear guidance for 

approving subpartners. State 

concurred with GAO’s

recommendations and cited steps they 

are taking to address them.

What GAO Found

The U.S. Agency for International Development (USAID) and Department of 

State (State) provide democracy assistance for Cuba aimed at developing civil 

society and promoting freedom of information. Typical program beneficiaries 

include Cuban community leaders, independent journalists, women, youths, and 

marginalized groups. USAID receives the majority of funding allocated for this 

assistance, although State has received 32 percent of funding since 2004. In 

recent years, both USAID and State have provided more funding for program 

implementation to for-profit and nongovernmental organizations (NGO) with a 

worldwide or regional focus than to universities and to NGOs that focus only on 

Cuba. All types of implementing partners, but worldwide or regional organizations 

in particular, used subpartners to implement program activities under 21 of the 29 

awards and contracts that GAO reviewed.

USAID and State legal officials view the Cuba democracy program’s authorizing 

legislation as allowing the agencies discretion in determining the types of 

activities that can be funded with program assistance. Agency officials added that 

the agencies ensure that program activities directly relate to democracy 

promotion as broadly illustrated in related program legislation. The officials stated 

that organizations are expected to work with agency program officers to 

determine what activities are permitted or appropriate. In addition, they said that 

program partners and subpartners are expected to spend U.S. government funds 

consistent with U.S. laws, and that requirements in primary award agreements 

generally flow down to any subpartners. 

USAID has improved its performance and financial monitoring of implementing 

partners’ use of program funds by implementing new policies and hiring 

contractors to improve monitoring and evaluation and to conduct financial internal 

controls reviews, but GAO found gaps in State’s financial monitoring. While GAO

found some gaps in implementing partners’ performance planning and reporting, 

both agencies are taking steps to improve performance monitoring. For financial 

monitoring, USAID performs financial internal controls reviews of its 

implementing partners with the assistance of an external auditor. Since 2008, 

USAID has used a risk-based approach to determine the coverage and 

frequency of the 30 reviews the auditor has conducted, which have identified 

weaknesses in implementing partners’ financial management, procurement, and 

internal controls. However, because of resource constraints, State did not 

perform financial internal controls reviews for more than two-thirds of its 

implementing partners during fiscal years 2010 through 2012. State procured an 

external financial auditor in September 2012 that plans to review more than half

of State’s implementing partners, and has taken steps toward implementing a

risk-based approach for scheduling these reviews. Federal regulations generally 

require agencies to approve the use of subpartners. GAO found that USAID 

issued specific guidance in 2011 to its implementing partners on requirements for 

subpartner approval. While State told GAO it has similar requirements, State’s 

requirements are not clearly specified in its written guidance. As a result, State 

was not provided with the information it would have needed to approve at least 

91 subawards and subcontracts that were obligated under eight awards. View GAO-13-285. For more information, 

contact David Gootnick at (202) 512-3149 or 

gootnickd@gao.gov. 
Page i GAO-13-285 Cuba Democracy Assistance

Letter 1 

Background 4

USAID and State Focus on Promoting Cuban Civil Society and 

Access to Information; Most Funding Goes to Worldwide or 

Regional Partners and Their Subpartners 7

Agencies Exercise Discretion under Authorizing Legislation in 

Funding Cuba Program Activities 18

USAID Has Improved Its Monitoring of Partners; State’s Monitoring 

Does Not Ensure Program Funds Are Used as Intended 20

Conclusions 39

Recommendations for Executive Action 40

Agency Comments and Our Evaluation 41

Appendix I Objectives, Scope, and Methodology 43

Appendix II Comments from the U.S. Agency for International 

Development 48

Appendix III Comments from the U.S. Department of State 50

Appendix IV GAO Contact and Staff Acknowledgments 53

Tables

Table 1: Key USAID and State Roles and Responsibilities for Cuba 

Democracy Assistance 6

Table 2: Cuba Democracy Assistance Provided from Fiscal Years 

2009 to 2011 9

Table 3: Characteristics of Partners’ Performance Planning and 

Reporting for Selected USAID Awards and Contracts 23

Table 4: Characteristics of Partners’ Performance Planning and 

Reporting for Selected State Awards 27

Table 5: Selected USAID and State Implementing Partners 45

Contents 
Page ii GAO-13-285 Cuba Democracy Assistance

Figures

Figure 1: Cuba Democracy Funding Allocations to USAID and State 

from Appropriations for Fiscal Years 1996-2011 11

Figure 2: Characteristics of USAID and State Cuba Democracy 

Assistance Implementing Partners and Their Awards and 

Contracts, Fiscal Years 1996-2012 14

Figure 3: Number of Active USAID and State Awards and Contracts 

for Cuba Democracy Assistance, by Type of Organization, 

Fiscal Years 1996-2012 16

Abbreviations

DRL Bureau of Democracy, Human Rights, and Labor

LAC Latin American and Caribbean Bureau

M/E Monitoring and evaluation

NED National Endowment for Democracy

NGO Nongovernmental organization

OMB Office of Management and Budget

OTI Office of Transition Initiatives

Partner Implementing partner

RFA Request for Application

RFP Request for Proposal

State Department of State

USAID United States Agency for International Development

USINT U.S. Interests Section in Havana, Cuba

WHA Bureau of Western Hemisphere Affairs

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

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Page 1 GAO-13-285 Cuba Democracy Assistance

United States Government Accountability Office

Washington, DC 20548

January 25, 2013 

The Honorable John F. Kerry

Chairman

Committee on Foreign Relations

United States Senate

Dear Mr. Chairman:

The U.S. Agency for International Development (USAID) and the 

Department of State (State) provide assistance to increase respect for

human rights and fundamental freedoms, strengthen independent Cuban 

civil society, and foster greater access to independent information on the 

island.

1 Cubans have lived under an authoritarian regime for more than 

50 years; in that time, Cubans have faced continuous restrictions in 

citizens’ rights to organize, express themselves freely, and participate in 

political life without fear of being harassed and repressed by the Cuban 

government. Conditions in Cuba pose risks and challenges for the 

delivery of program assistance on the island, which is largely provided by 

implementing partners (partners) and their subpartners.2 In fiscal years 

1996 through 2011, Congress appropriated $205 million for Cuba 

democracy assistance, with about 90 percent of program funding 

provided since fiscal year 2004. While USAID has received most of this 

funding, State has also received program funding allocations since fiscal 

year 2004.

 

1

The Cuban Democracy Act of 1992 (Pub. L. No. 102-484, Div. A, Tit. XVII) and the 

Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 (Pub. L. No. 104-114, 

commonly known as the Helms-Burton Act) authorize assistance and other support for 

individuals and independent nongovernmental organizations (NGOs) to promote peaceful, 

nonviolent democratic change in Cuba through various types of democracy-building 

efforts. Appropriations are provided through the annual Department of State, Foreign 

Operations, and Related Programs Appropriations Act, generally in the Economic Support 

Fund account. 

2

For the purposes of our review, partners include contractors, grantees, and recipients of 

cooperative agreements. Awardees include recipients of grants and cooperative 

agreements. Subpartners include recipients of subawards (subgrants, grants under 

contract, consultants, etc.) and subcontracts. Program beneficiaries are the ultimate 

targets of program assistance, including human rights and democracy advocates on the 

island, as well as Cuban civil society actors. 

 
 

Page 2 GAO-13-285 Cuba Democracy Assistance

In November 2006 and November 2008, we reported problems with 

USAID’s management and oversight of its Cuba program, such as 

oversight weaknesses that increased the risk of grantees’ improper use of 

grant funds and noncompliance with U.S. laws and regulations.3 We 

made several recommendations to help USAID strengthen its program 

management and monitoring, including recommendations to improve the 

timeliness of preaward reviews, and to ensure partners develop approved 

implementation plans for awards. USAID has reported taking several 

steps to address the recommendations. However, security risks and 

challenges related to the delivery of program assistance persist.

To respond to your request, this report focuses on USAID’s and State’s 

efforts to provide democracy assistance for Cuba. We (1) identified the 

types and amounts of assistance that USAID and State have provided, as 

well as characteristics of their partners, subpartners, and program 

beneficiaries; (2) reviewed USAID’s and State’s efforts to implement the 

program in accordance with U.S. laws and regulations and to address 

program risks; and (3) examined USAID’s and State’s monitoring of the 

use of program funds. This report is a publicly releasable version of a 

prior GAO report, issued in December 2012, that USAID and State had 

designated Sensitive But Unclassified. Although the information provided 

in this report is more limited in scope, it addresses the same questions 

and uses the same overall methodology as the sensitive report. 

In conducting this review, we identified all awards and contracts funded 

from 1996 to 2012 and analyzed selected characteristics of all 22 USAID 

and State partners that received program funding from fiscal years 2007 

to 2009 appropriations and were active in fiscal year 2011. These 

partners received 29 awards and contracts during that period. We 

reviewed relevant U.S. laws and regulations and agency and 

departmental policies and procedures, and we interviewed USAID and 

State officials regarding program implementation and related risks. We 

also analyzed reported activities, assistance delivered, and management 

 

3

See GAO, Foreign Assistance: U.S. Democracy Assistance for Cuba Needs Better 

Management and Oversight, GAO-07-147 (Washington, D.C.: Nov. 15, 2006); and GAO, 

Foreign Assistance: Continued Efforts Needed to Strengthen USAID’s Oversight of U.S. 

Democracy Assistance for Cuba, GAO-09-165 (Washington, D.C.: Nov. 24, 2008). These 

reports focused primarily on assistance provided by USAID’s Latin American and 

Caribbean Bureau. A classified version of the November 2006 report was published in 

May 2007.
 

Page 3 GAO-13-285 Cuba Democracy Assistance

and internal controls4 for a nonprobability,5 nongeneralizable sample of 

six USAID and State partners and 11 of their subpartners, to assess 

performance and financial monitoring and oversight of their awards and 

contracts. We selected at least one partner from each of the four USAID 

and State bureaus and offices implementing program assistance. The six 

selected partners were among the top 15 recipients of program funding 

awarded in fiscal years 2007 through 2010 and represented about 60 

percent of funding for awards active in fiscal year 2011. These six 

partners received 10 USAID and State awards and contracts over the 

time period we reviewed—five from USAID and five from State. We

reviewed and analyzed performance and financial documentation and 

data and conducted interviews with USAID and State officials and with 

representatives of partners and subpartners in our sample. In addition, we 

conducted fieldwork in Miami, Florida, where we interviewed 

representatives and reviewed documentation at local partners and 

subpartners, and at the U.S. Interests Section (USINT) in Havana, Cuba, 

where we interviewed U.S. officials and observed activities at post.6

Appendix I provides further details on our scope and methodology.

We conducted this performance audit from September 2011 to January 

2013 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.

 

4

Internal controls comprise the plans, methods, and procedures used to meet missions, 

goals, and objectives and, in doing so, support performance-based management.

5

A nonprobability sample is not randomly selected, but rather is selected based on the use 

of a set of key criteria; also, it is not a large enough sample for findings to be generalizable 

to the full population of partners.

6

The United States does not have an embassy in Cuba, but USINT provides services 

including consular services and public diplomacy.
 

Page 4 GAO-13-285 Cuba Democracy Assistance

Conditions in Cuba continue to pose substantial challenges for U.S. 

assistance. Cuba is a Communist state that restricts nearly all political 

dissent on the island; tactics for suppressing dissent in Cuba include 

surveillance, arbitrary arrests, detentions, travel restrictions, exile, 

criminal prosecutions, and loss of employment. Furthermore, there is no 

free press in Cuba, and independent journalists and activists are 

harassed and imprisoned. The Cuban government substantially restricts 

and controls the flow of information, limiting access to the Internet, cell 

phones, radio antennas, and other items, and restricting their use 

through high costs, punitive laws, and the threat of confiscation. 

Moreover, the government routinely jams all external, non-Cuban 

broadcasts, including the U.S. government-supported Radio and TV Martí 

broadcasts.

The United States, which maintains an embargo on most trade with Cuba, 

does not have diplomatic relations with the Cuban government. 

Consequently, USAID does not work cooperatively or collaboratively with 

Cuban government agencies, as it does in most other countries receiving 

U.S. democracy assistance. USAID does not have staff in Cuba, and 

State does not have staff dedicated to the Cuba democracy program in 

Havana.7 USAID and State program staff have been unable to obtain 

visas to visit Cuba over the past decade, which poses challenges for 

program implementation, monitoring, and evaluation. In addition, Cuban 

law prohibits citizens from cooperating with U.S. democracy assistance 

activities. In December 2009, a subcontractor working for one of USAID’s 

partners was arrested in Cuba while delivering computer equipment to 

provide Internet access to Jewish communities on the island. He was 

subsequently sentenced to 15 years in prison for “acts against the 

independence or the territorial integrity of the state.” 

Several USAID and State bureaus and offices implement Cuba 

democracy assistance efforts, including soliciting proposals, competitively 

awarding funds, and monitoring program implementation.

 

7

However, staff at USINT have a role in overseeing program efforts that are funded by 

State’s Bureau of Western Hemisphere Affairs. 

Background 

Challenges Affecting Cuba 

Democracy Assistance 

Roles and Responsibilities 

for Implementing Cuba 

Democracy Assistance
 

Page 5 GAO-13-285 Cuba Democracy Assistance

• USAID:

• The Latin American and Caribbean Bureau (LAC), Office of 

Cuban Affairs, is chiefly responsible for implementing Cuba 

democracy assistance efforts.

• The Management Bureau has various offices that also assist in 

overseeing program awards and contracts.

• The Office of Transition Initiatives (OTI) oversaw 

implementation of a single contract from fiscal years 2009 through 

2012. OTI’s Cuba program efforts were envisioned from their 

inception to be temporary, as is typically the case with OTI’s 

programs, which generally aim to provide short-term assistance.

• State:

• The Bureau of Democracy, Human Rights, and Labor (DRL) is 

responsible for managing and overseeing the majority of State’s 

Cuba democracy assistance program activities. 

• The Bureau of Western Hemisphere Affairs (WHA), including 

the U.S. Interests Section in Havana, Cuba, (USINT), also 

manages and oversees Cuba program activities., 

• The Bureau of Administration assists DRL and WHA in the 

financial management and oversight of Cuba democracy 

assistance awards.8

Reporting on Cuba democracy assistance in 2006,9 we found that USINT 

delivered some assistance to independent groups and individuals in 

Cuba, including assistance provided by USAID- and State-funded 

awardees. Because of heightened security concerns, USINT no longer 

has a role in implementing assistance for USAID and State/DRL partners. 

However, USINT continues to provide information on conditions in Cuba, 

facilitates and assists with State/WHA training courses, and supports civil 

society in Cuba.

Table 1 outlines key USAID and State roles and responsibilities for 

providing U.S. democracy assistance for Cuba.

 

8

The Office of Acquisitions Management is the primary office within the Bureau of 

Administration involved in these functions. In addition, there are other bureaus and offices 

that have administrative and oversight functions for State’s Cuba program. 

9

GAO-07-147. 
 

Page 6 GAO-13-285 Cuba Democracy Assistance

Table 1: Key USAID and State Roles and Responsibilities for Cuba Democracy Assistance

Responsible entity Staff roles/responsibilities

USAID

LAC, Office of Cuban Affairs A Director, four Program Managers, a Budget Analyst, and an Administrative Assistant share fulltime responsibilities for program management and oversight. These responsibilities include 

program design, implementation, and monitoring as well as budgeting and financial 

management.

Management Bureau Various staff members assist in program oversight, including closing out awards and contracts, 

conducting risk assessments, and auditing programs. 

OTI A Country Representative dedicated full-time to Cuba and a part-time Deputy Team Leader 

shared responsibilities for all aspects of the temporary program’s management and oversight 

through the end of program efforts in fiscal year 2012.

State 

DRL Two Program Officers share part-time responsibilities for Cuba program planning, 

implementation, monitoring and evaluation. A Foreign Affairs Officer also provides part-time 

assistance, primarily on policy issues related to Cuba. 

WHA About a dozen staff members each spend about 5 to 10 percent of their time on Cuba program 

management and oversight.

USINT, Havana Several staff, dedicated part-time to providing information on conditions in Cuba, facilitate and 

assist with State/WHA training courses and support civil society in Cuba.

Bureau of Administration Various staff members are responsible for financial oversight and providing financial 

management guidance to DRL and WHA Cuba program partners. 

Source: GAO analysis of USAID, State, and other records.

In addition, the National Endowment for Democracy (NED), an 

independent, nongovernmental organization, funds programs to promote 

democracy in Cuba through both direct congressional appropriations and 

with funding that it receives through State/DRL.10

Program partners—such as nongovernmental organizations, universities, 

and development contractors—and subpartners also have roles and 

responsibilities for Cuba democracy program assistance. USAID and 

State provide funding for partners through various mechanisms, including 

grants and cooperative agreements (together referred to as “awards” in 

this report) and contracts. Partners may also award funding to 

subpartners to assist them in implementing program efforts. Subpartners 

 

10NED was not included in the scope of this review, because it is not a U.S. government 

agency and because USAID and State provide the majority of Cuba democracy 

assistance.
 

Page 7 GAO-13-285 Cuba Democracy Assistance

may include consultants, subcontractors, subgrantees, and recipients of 

grants under contract.

USAID and State support democracy for Cuba by providing awards and 

contracts to partners with objectives related to developing civil society 

and promoting freedom of information. USAID receives the majority of 

funding allocated for this assistance, although State has received 32 

percent of funding since it started taking part in the program in 2004. 

Since 2008, USAID and State have awarded more funds to larger 

organizations with a worldwide or regional presence than to the other two 

categories of typical awardees: universities, and smaller organizations 

that focus only on Cuba. Under 21 of the 29 recent awards and contracts 

that we reviewed, partners used subpartners to implement program 

activities and obligated about 40 percent of the funding associated with 

these awards and contracts to subpartners. Worldwide or regional 

organizations provided more than 90 percent of the funding provided to 

subpartners.

USAID’s and State’s democracy assistance efforts for Cuba generally 

focus on developing an independent civil society and promoting freedom 

of information in Cuba. The overall goal and guiding principle of U.S. 

democracy assistance for Cuba is to improve the effectiveness of citizens 

to participate in activities affecting their lives and to increase access to 

information.11 Efforts to develop Cuban civil society include training in 

organizational and community development, leadership, and advocacy. 

Related material assistance may include the provision of books, 

pamphlets, movies, music, and other materials that promote democratic 

values. In addition, efforts to promote freedom of information have 

included the following, among other activities:

• information technology training for Cuban nationals, ranging from 

basic computing to blogging;

 

11The overall goal of the Cuba program is laid out in USAID and State’s most recent 

performance plan report for fiscal year 2011. This report also notes that the Cuba program 

is focused on advancing democracy and improving human rights conditions by supporting 

efforts to promote democratic reforms in Cuba, and promoting increased respect for 

human rights and fundamental freedoms in Cuba. State officials noted that State/DRL 

Cuba program efforts focus on civil society and human rights, including freedom of 

information as well as workers’ and women’s rights.

USAID and State 

Focus on Promoting 

Cuban Civil Society 

and Access to 

Information; Most 

Funding Goes to 

Worldwide or 

Regional Partners and 

Their Subpartners

Program Focuses on 

Promoting Civil Society 

and Access to Information
 

Page 8 GAO-13-285 Cuba Democracy Assistance

• journalism training;

• support for independent publications; and

• provision of material assistance. 

USAID and State officials noted that in recent years, program efforts have 

included a greater focus on information technology, particularly on 

supporting independent bloggers and developing social networking 

platforms on the island.

Several partners we reviewed received funding to support international 

solidarity activities, although agency and partner officials indicated that 

the program recently has reduced its focus on off-island activities to foster 

support for democracy in Cuba. Activities of this type that State/DRL 

funded in fiscal years 2009 through 2011 included the following:

• an essay contest for Latin American youths related to Cuba Solidarity 

Day, and

• exhibits and documentaries presented outside Cuba for the purpose 

of bringing awareness globally to Cuban human rights issues and civil

society development.

In recent years, USAID and State had few awards or contracts focused 

solely on such humanitarian assistance as assistance for political 

prisoners and their families, according to agency officials. USINT officials 

noted that humanitarian assistance has declined along with a decrease in 

the number of political prisoners in Cuba.12 Officials added that USINT 

itself no longer provides any humanitarian assistance on the island.

To broaden reach and impact, Cuba democracy assistance efforts have 

expanded beyond a focus on traditional activists to include groups such 

as poor and rural communities, religious organizations, small businesses, 

and information technology enthusiasts. Typical program beneficiaries 

also include Cuban community leaders, independent journalists, 

independent bloggers, women, and youths.

 

12USINT officials noted that, during a crackdown in 2003 known as the “Black Spring,” the 

Cuban government arrested 75 dissidents. All of the dissidents have since been released, 

with many exiled to Spain. According to the USINT officials, in the past 2 to 3 years the 

Cuban government has shifted away from sentencing convicted dissidents to long prison 

terms; instead, the government now is generally detaining dissidents for shorter periods of 

time. Officials added that as of January 2012 there were several dozen political prisoners 

in Cuba, but that it is difficult to ascertain exact numbers as there are no official statistics.
 

Page 9 GAO-13-285 Cuba Democracy Assistance

Table 2 summarizes information on recent program assistance and target 

beneficiaries.

Table 2: Cuba Democracy Assistance Provided from Fiscal Years 2009 to 2011

Purpose of assistance Examples of assistance provided Target beneficiaries

Development of independent 

civil society

• Training on topics such as democracy building, economic rights, 

free markets, leadership and advocacy, organizational and 

community development, conducting small projects, and human 

rights abuse response and documentation

• Books, pamphlets, and other materials to promote democratic 

values

• Support for the development of independent social networking 

platforms

• Technical and material assistance to increase awareness of

freedom of expression. 

Community leaders

Cuban youths and students, 

girls and women, poor and 

rural communities

Other groups

Promotion of freedom of 

information

• Information technology training, such as basic computing, 

Internet, and blogging

• Journalism training

• Digital newspaper publication to disseminate work of 

independent journalists

• Development and distribution of media content for youth

• Digital photo contest

• Shortwave independent radio station

• Material assistance

Cuban public

Independent Cuban journalists

Cuban youths

Humanitarian assistance • Food products, over-the-counter medication, basic clothing

• Financial aid for family members of political prisoners

• Material assistance for civil society organizations targeting 

political prisoners and their families

Political prisoners and their 

families

Source: GAO analysis of USAID, State, and other records.
 

Page 10 GAO-13-285 Cuba Democracy Assistance

In fiscal years 1996 through 2011, Congress appropriated $205 million for 

Cuba democracy assistance, appropriating 87 percent of these funds 

since 2004. Increased funding for Cuba democracy assistance was 

recommended by the interagency Commission for Assistance to a Free 

Cuba, which was established by President George W. Bush in 2003.13

Program funding, which peaked in 2008 with appropriations totaling $44.4 

million, has ranged between $15 and $20 million per year during fiscal 

years 2009 through 2012. For fiscal year 2013, USAID and State reduced 

their combined funding request to $15 million, citing operational 

challenges to assistance efforts in Cuba.14

In fiscal years 1996 through 2011, $138.2 million of Cuba democracy 

funds were allocated to USAID and $52.3 million were allocated to State 

(see fig. 1).15

 

13President Bush established the Commission for Assistance to a Free Cuba in October 

2003 to identify (1) ways in which the U.S. government could hasten the end of the Castro 

dictatorship and (2) U.S. programs to assist the Cuban people during a transition to 

democracy. The commission’s July 2006 report recommended providing $80 million over 

2 years to increase support for Cuban civil society, disseminate uncensored information to 

Cuba, expand international awareness of conditions in Cuba, and help realize a 

democratic transition in Cuba. The report also recommended subsequent annual funding 

of at least $20 million until the end of the Castro regime. 

14State officials stated that they do not believe this reduction will affect program efficacy.

15The agencies have obligated 81 percent of these funds to partner organizations to 

implement program assistance; the agencies used the remainder of funding for expenses 

such as program administration and procurement of materials for distribution. 

USAID Has Received the 

Majority of Allocations, 

but State’s Portion Has 

Grown in Recent Years
 

Page 11 GAO-13-285 Cuba Democracy Assistance

Figure 1: Cuba Democracy Funding Allocations to USAID and State from Appropriations for Fiscal Years 1996-2011

Note: The fiscal year 2012 appropriations for Cuba democracy funding have not yet been allocated 

between the USAID and State bureaus. Since 1984, through its congressional appropriation, NED 

has also provided democracy assistance to Cuba ranging from $0 to $1.4 million annually from 2006 

to 2010. In addition, since 2005, State/DRL has transferred funding to NED for Cuba democracy 

assistance that has totaled $14.4 million and has ranged from $0 to $4 million annually. 

When the Cuba democracy program began in 1996, USAID was the only 

agency involved and USAID/LAC was the only programming bureau.

• USAID/LAC has received the largest total amount of program funding 

and has continued to receive the largest annual amount, averaging 

$12.1 million annually since fiscal year 2004.
 

Page 12 GAO-13-285 Cuba Democracy Assistance

• USAID/OTI received program funding totaling $14.3 million from the 

appropriations for fiscal years 2007 through 2010.16

State has received 32 percent of Cuba democracy funding since fiscal 

year 2004.

• State/DRL has received an average of $5.8 million annually since 

fiscal year 2004.17

• State/WHA has received an average of $1.4 million annually since 

fiscal year 2008.

USAID and State have awarded funding for Cuba democracy assistance 

to three categories of partners: (1) Cuba-specific nongovernmental 

organizations (NGO), (2) worldwide or regional organizations, and (3) 

universities.18

USAID’s and State’s awards and contracts tended to share certain 

characteristics, such as their broad objectives and amounts awarded, 

depending on the type of partner.

• Objectives. USAID and State awards and contracts to Cuba-specific 

NGOs and to worldwide or regional organizations have generally 

funded similar types of program activities, such as efforts to provide 

training and material assistance on the island. Awards to universities 

have tended to have different objectives. In the early years of the 

Cuba program, awards to universities funded activities such as 

research on how to promote a democratic transition in Cuba and 

 

16USAID/OTI’s funding supported the award and oversight of one grant and one contract. 

According to USAID/OTI officials, USAID/OTI does not plan to continue its Cuba program 

activities, which were envisioned from their inception to be temporary. The office’s 

programs are generally intended to provide short-term assistance to take advantage of 

windows of opportunity to build democracy and peace.

17This average amount does not include additional funding that State/DRL has transferred 

to NED, which totaled $14.4 million from fiscal years 2005 to 2011. 

18Cuba-specific NGOs focus only on Cuba; worldwide or regional organizations, 

comprising both NGOs and for-profit companies, focus on multiple countries. Although 

most Cuba funds have been awarded through grants or cooperative agreements to NGOs, 

USAID has also awarded contracts to two companies that operate worldwide. All 

universities that have received program funding are based in the United States. 

USAID and State Have 

Provided Most Recent 

Awards and Contracts to 

Worldwide or Regional 

Organizations
 

Page 13 GAO-13-285 Cuba Democracy Assistance

scholarships to study at universities in the United States. Since the 

mid-2000s, after finding that the Cuban government would not provide 

exit visas for Cuban students to study in the United States, USAID 

and State have awarded funding to universities largely for programs to 

provide distance learning training to Cubans on the island or courses 

at universities in other Latin American countries.

• Amount of award or contract. USAID’s awards and contracts in fiscal 

years 1996 through 2012 averaged $1.9 million for Cuba-specific 

NGOs, and $2.1 million for worldwide or regional organizations. 

State’s awards and contracts averaged $0.8 million for Cuba-specific 

NGOs and $0.9 million for worldwide or regional organizations. Both 

USAID’s and State’s awards and contracts to universities averaged 

$0.8 million.

In fiscal years 1996 through 2012, USAID and State had a combined total 

of 111 awards and contracts to 51 partners representing all three types of 

organizations (see fig. 2). Many of the awards were concentrated among 

certain partners, with 25 of these partners receiving multiple awards from 

USAID, State, or both. For example, one partner received a combined 11 

awards from USAID and State, more than any other partner, and 10 of 

the 51 partners received 67 percent of total funding to partners.19

 

19USAID and State awarded most program funding through cooperative agreements and 

grants, respectively. In terms of annualized funding, USAID’s largest cooperative 

agreement was for $6.7 million over 4 years, and State’s largest grant was for $6.1 million 

over 3.25 years. Only two contracts were awarded, both by USAID in 2008, one for $11.6 

million over 3.75 years and the other for $6.9 million over 2.5 years. Since 2006, most 

USAID and State awards and contracts have resulted from openly competed solicitation 

processes. 
 

Page 14 GAO-13-285 Cuba Democracy Assistance

Figure 2: Characteristics of USAID and State Cuba Democracy Assistance Implementing Partners and Their Awards and 

Contracts, Fiscal Years 1996-2012

a

The sum of USAID’s and State’s implementing partners exceeds the total for each type of 

organization because 11 implementing partners, across the different types of organizations, received 

awards from both USAID and State.

b

Difference in sum of subtotals and total is due to rounding.
 

Page 15 GAO-13-285 Cuba Democracy Assistance

Since fiscal year 2008, regional or worldwide organizations have had 

more active USAID and State awards and contracts each year, and have 

received more funding, than Cuba-specific NGOs or universities. Prior to 

2008, Cuba-specific NGOs had more active USAID awards than the other 

categories of recipients in most years. However, the program’s partners 

have consistently included worldwide or regional organizations, some of 

which have a history of working on Cuba issues (see fig. 3). For example, 

for awards that began in fiscal years 1996 through 2007, Cuba-specific 

NGOs received 48 percent of award funding, worldwide or regional 

organizations received 43 percent, and universities received 9 percent. In 

contrast, for awards made since fiscal year 2008, worldwide or regional 

organizations received 74 percent of award and contract funding, while 

Cuba-specific NGOs received almost 17 percent, and universities 

received almost 10 percent. As we previously reported, this greater use of 

worldwide or regional organizations, which began in 2008, reflected more 

formal requirements for submitting proposals and USAID’s decision to 

fund awards and contracts that incorporate capacity building for 

subpartners as an important element.20

 

20GAO-09-165. 
 

Page 16 GAO-13-285 Cuba Democracy Assistance

Figure 3: Number of Active USAID and State Awards and Contracts for Cuba Democracy Assistance, by Type of Organization, 

Fiscal Years 1996-2012

Many partners, and worldwide or regional organizations in particular, use 

subpartners to help carry out their Cuba democracy assistance work. We 

reviewed 29 recent awards and contracts to determine the extent to which 

partners use subpartners to implement program activities.21 We found that 

partners used subpartners under 21 of the 29 awards and contracts, 

obligating about 40 percent of the funding under these awards and 

contracts to subpartners. On average, partners that used subpartners 

under an award or contract had 12 subpartners.

 

21We reviewed selected characteristics—including the use of subpartners—for all of 

USAID’s and State’s 29 awards and contracts that were active in fiscal year 2011, funded 

with appropriations from fiscal years 2007 through 2009. These awards and contracts 

were awarded to 22 partners. 

Most Partners Use 

Subpartners to Help 

Implement Program 

Activities
 

Page 17 GAO-13-285 Cuba Democracy Assistance

However, the numbers of subpartners under each of the 21 awards 

varied:

• Four awards had one subpartner.

• Seven awards had between two and nine subpartners.

• Ten awards and contracts had more than 10 and up to 38 

subpartners.

The purposes of subawards and subcontracts also varied greatly. Many 

subawards and subcontracts were for discrete activities, such as to 

conduct workshops. Other subawards and subcontracts covered an array 

of tasks, such as content development and instruction for a distance 

learning course or development, training, and support for civil society 

networks. Accordingly, subpartners included different types of non-profit 

and for-profit organizations as well as individuals who worked as 

consultants that provided the skills necessary to implement the varying 

activities.

Furthermore, the amount of funding that went to subpartners ranged from 

less than $5,000 to several hundred thousand dollars. For six of the 21 

awards and contracts with subpartners, the majority of program funding 

was obligated to subpartners. In such cases, subpartners generally 

performed all or most of the programmatic functions under the overall 

award or contract, while the partners’ main functions were to provide 

strategic direction of the overall award or contract and to perform 

management functions such as reporting to the agency and overseeing 

their subpartners.

Worldwide or regional organizations were more likely to use subpartners 

than were the other categories of organizations. In total, 93 percent of the 

subawards and subcontracts were awarded by worldwide or regional 

organizations. Also, on average, worldwide or regional organizations had 

12 subpartners for each of their awards or contracts, while Cuba-specific 

NGOs had three and universities had five. Correspondingly, five of the six 

partners that obligated the majority of their funding to subpartners were 

worldwide or regional organizations.
 

Page 18 GAO-13-285 Cuba Democracy Assistance

USAID and State legal officials view the Cuba program’s authorizing 

legislation as providing the purposes for which foreign assistance funds 

may be used and allowing discretion to determine which program 

activities will be funded. The officials stated that they view the types of 

activities listed in section 109(a) of the Helms-Burton Act as illustrating, 

not limiting, the types of program assistance that the agencies can 

provide. Specific authority for Cuba democracy assistance activities was 

provided in section 1705 of the Cuban Democracy Act of 1992 and in 

section 109(a) of the Helms-Burton Act in 1996.22 Section 1705 

authorizes the donation of food for NGOs and individuals in Cuba; exports 

of medicines and medical supplies, instruments, and equipment; and 

assistance to appropriate NGOs to support efforts by individuals and 

organizations to promote nonviolent democratic change in Cuba. Section 

109(a) authorizes assistance and other support that may be provided, 

such as published informational matter for independent democratic 

groups, humanitarian assistance for victims of political repression and 

their families, and support for democratic and human rights groups.

USAID and State legal officials said that the agencies ensure that 

program activities directly relate to democracy promotion as broadly 

illustrated in related program legislation. For example, the officials noted 

that the types of activities that fit within the scope of “democracy 

promotion,” as that term has been broadly defined in various foreign 

assistance appropriations,23 would be the types of activities eligible for 

 

22According to USAID and State legal officials, the Foreign Assistance Act of 1961, as 

amended, is the primary authority for both USAID’s and State’s efforts to provide foreign 

assistance to promote democracy in Cuba. These officials stated that because of 

prohibitions on assistance to certain countries and other restrictions in the act applicable 

to Cuba, “notwithstanding authority“ is needed to provide assistance to individuals and 

independent groups in Cuba to support democracy-building efforts.”Notwithstanding 

authority” allows agencies to carry out activities abroad regardless of country prohibitions 

or certain procurement regulations, personnel regulations, competitive process standards, 

or other restrictions that would otherwise prohibit or restrict programming. Both section 

1705 of the Cuban Democracy Act and section 109(a) of the Helms-Burton Act authorize 

the provision of assistance “notwithstanding any other provision of law.” See 22 U.S.C. § 

6004(a) and 22 U.S.C. § 6039(a).

23For example, section 7034(m) of the Consolidated Appropriations Act of 2010 (Pub. L. 

No. 111-117) states that the term “promotion of democracy” means programs that support 

good governance, human rights, independent media, and the rule of law, and otherwise 

strengthen the capacity of democratic political parties, governments, nongovernmental 

organizations and institutions, and citizens to support the development of democratic 

states, institutions, and practices that are responsive and accountable to citizens. 

Agencies Exercise 

Discretion under 

Authorizing 

Legislation in Funding 

Cuba Program 

Activities
 

Page 19 GAO-13-285 Cuba Democracy Assistance

funding under section 109(a) of the Helms-Burton Act. They added that, 

while the agencies have not compiled a list of activities that will be 

approved or not approved for funding under the Cuba program, proposed 

or approved activities are set forth in agency congressional notifications

and listed in individual requests for proposals or applications and in award 

agreements and contracts. In addition, they said that organizations are 

expected to work with agency program officers to determine what 

activities are permitted or appropriate, and whether Department of 

Treasury and Commerce authorizations, as required, already exist for 

delivery of various types of assistance or whether the organization must 

instead apply for a license.24 Furthermore, they noted that program 

partners and subpartners, including subpartners based in other countries, 

are expected to spend U.S. government funds consistent with U.S. laws 

and that requirements in primary award agreements and contracts 

generally flow down to any subpartners.

 

24Under Treasury regulations at 31 C.F.R. Part 515, general licenses authorize certain 

types of transactions in which Cuba or a Cuban national has an interest, such as certain 

humanitarian assistance, without the need to apply for a specific license on a case-bycase basis. By statute, informational materials may be exported to Cuba without a license. 

In addition, USAID and State legal officials noted that USAID and State/DRL both have 

specific licenses that may extend to implementing organizations and individuals under the 

program.
 

Page 20 GAO-13-285 Cuba Democracy Assistance

Since 2008, USAID has worked to improve performance and financial 

monitoring of its Cuba program partners.25 However, we found gaps in 

State’s financial monitoring efforts. For performance monitoring, we found 

some deficiencies in the performance planning and reporting conducted 

by USAID’s and State’s partners in our nongeneralizable sample, but both 

agencies are taking steps to improve their performance monitoring. For 

financial monitoring, USAID has hired an external auditor to perform 

financial internal controls reviews of its partners, and has used a riskbased approach considering criteria such as award value and prior issues 

identified to determine the coverage and frequency of the 30 reviews the 

auditor has conducted. These reviews have identified financial 

management, procurement, and internal controls weaknesses that USAID 

has taken steps to address. While State conducted no financial internal 

controls reviews for at least two-thirds of its partners between fiscal year 

2010 and 2012, State recently hired an external auditor to perform such 

reviews starting in fiscal year 2013 and has taken steps to implement a 

risk-based approach to prioritize the scheduling of its reviews. 

Specifically, State plans to complete reviews for three-quarters of

State/DRL’s partners and none of State/WHA’s partners. In addition, in 

accordance with federal regulations, the agencies approve partner 

requests to award funding to specific subpartners. In June 2011, USAID 

provided specific written guidance to its partners on what USAID requires

for approval of subpartners. State has provided limited written guidance 

on approval to some partners, which does not clearly inform partners of 

the specific types of information State requires for approval. As a result, 

State was not provided with the detailed information that officials told us 

would have been required for State to have approved 91 subawards and 

subcontracts that were obligated under eight of its recent awards.

 

25We selected a nonprobability, nongeneralizable sample of six USAID and State 

implementing partners and 11 of their subpartners, to assess performance and financial 

monitoring and oversight of their awards and contracts. These six partners were among 

the top 15 recipients of program funding awarded in fiscal years 2007 through 2010 and 

represented about 60 percent of funding for awards active in fiscal year 2011. 

USAID Has Improved 

Its Monitoring of 

Partners; State’s 

Monitoring Does Not 

Ensure Program 

Funds Are Used as 

Intended 
 

Page 21 GAO-13-285 Cuba Democracy Assistance

USAID has taken steps to improve its ability to monitor its Cuba program 

partners’ performance, by working with them to improve their 

performance planning and reporting.26 USAID has numerous 

requirements for partners’ performance planning and reporting, the key 

elements of which are summarized below.

• Performance Planning: USAID directs its Cuba program partners to 

establish monitoring and evaluation (M/E) plans that include certain 

specific characteristics.27 USAID works with partners to include more 

detailed information on indicators in their M/E plans. USAID/LAC also 

required its one contractor to perform data quality assessments on its 

performance data.

• Performance Reporting: USAID requires awardees to submit 

progress reports on a quarterly basis and requires contractors to 

submit monthly and annual progress reports, among others.28 USAID 

uses information in these performance reports to track the progress of 

individual awards and contracts and to track the progress of the 

overall Cuba program. According to USAID officials, USAID first 

reviews the reporting to compare it against targets set in partners’ M/E 

plans. In addition, USAID analyzes and aggregates the information 

reported by partners to track performance for USAID’s Cuba program 

 

26The statutory framework for performance management of U.S. government programs is 

contained in the Government Performance and Results Act of 1993 (GPRA), Pub. L. No. 

103-62, as amended by the GPRA Modernization Act of 2010, Pub. L. No. 111-352. 

27USAID now uses the term “performance management plan” to refer to monitoring and 

evaluation plans. USAID regulations require that every country program and its partners 

develop and maintain a comprehensive performance management system. 

28According to USAID regulations, these reports should compile information about 

activities that occurred under the award or contract during the reporting period, including 

any activities carried out by subpartners, if applicable. 

USAID and State Are 

Taking Steps to Improve 

Their Performance 

Monitoring to Address 

Weaknesses in Some 

Partners’ Performance 

Planning and Reporting

USAID Continues to Take Steps 

to Improve Performance 

Monitoring; USAID’s Partners’ 

Had Some Weaknesses in 

Performance Planning 
 

Page 22 GAO-13-285 Cuba Democracy Assistance

and to report to State’s Office of U.S. Foreign Assistance Resources 

on government-wide performance.

We reviewed the M/E plans and progress reports for the five USAID 

awards or contracts in our nongeneralizable sample, which began in fiscal 

year 2008 or 2009 (see table 3).29 We found some weaknesses in the 

partners’ M/E plans but found detailed reporting against indicators in the 

progress reports we reviewed. For example, our analysis indicates that all 

M/E plans we reviewed included clearly defined indicators for program 

activities. 

However, not all partners specified targets and data collection methods 

for each indicator in their M/E plans. Establishing targets for indicators 

during the planning stage is important because targets form the standard 

against which actual results will be compared and assessed. Specifying 

data collection methods for each indicator enables the agency to 

determine whether it will be realistic for the partner to measure 

performance for that indicator in a timely manner. One partner included 

no information on data collection methods in their M/E plan, while another 

partner only included general information on their planned data collection 

methods, such as by stating that the data would be collected by 

subpartners.

Based on review of the partners’ progress reports, we found that all 

partners in our sample reported to USAID on progress through 

quantitative updates against each indicator, allowing USAID to gauge the 

specific progress made during each reporting period.30 One partner also 

reported progress for each individual subpartner, including by reporting 

the number of each subpartner’s beneficiaries disaggregated by target 

group. Partners’ progress reports also provided narrative information 

 

29We reviewed M/E plans to determine if they had clearly defined indicators, targets set 

for each indicator, and data collection methods specified for each indicator, as these were 

some basic elements of M/E plans as defined in both USAID and State guidance. To 

review progress reports, we determined whether progress was clearly reported against 

each indicator identified in the M/E plans, as such reporting allows the agency to see the 

progress being made toward the awards’ and contracts’ identified objectives, according to 

USAID and State guidance. 

30Four of the partners did this through organizing their reporting against targets into 

indicator tracking tables, while another partner provided weekly quantitative updates on 

progress against targets to USAID/OTI through an online database. 
 

Page 23 GAO-13-285 Cuba Democracy Assistance

describing program activities, challenges encountered, and planned 

activities for the next reporting period.

Table 3: Characteristics of Partners’ Performance Planning and Reporting for Selected USAID Awards and Contracts

Partner 

Awarding agency and 

bureau/ office 

Performance Planning: M/E plans

Performance reporting: 

progress reports

Indicators 

clearly defined 

Target set 

for each 

indicator

Data collection 

methods identified for 

each indicator

Updates on progress clearly 

reported for each indicator

Partner #1 USAID/OTI ● ○  ●

Partner #2 USAID/LAC ●  ● ●

Partner #3 USAID/LAC ● ○ ○ ●

Partner #4 USAID/LAC ● ● ● ●

Partner #5 USAID/LAC ● ● ● ●

Legend: ● = Yes;  = Partially; ○ = No.

Source: GAO analysis of USAID and partner records.

Note: Each row in the table represents a separate award or contract. M/E plans for our sample 

partners were created in fiscal year 2008 or 2009 when their awards and contracts began. The 

progress reports we reviewed were from fiscal year 2011, except for Partner #2 progress reports from 

fiscal year 2009. 

Although we found some gaps in these partners’ performance planning, 

USAID/LAC has been working to improve the quality of performance 

information that it receives from its partners,31 with a particular emphasis 

since 2010 on improving their M/E plans. To improve M/E plans and 

partners’ reporting based on those plans, in 2010, according to USAID, 

USAID/LAC conducted in-depth assessments of each of its partners’ M/E 

plans to determine whether they included indicator tracking tables, 

definitions of indicators, data collection responsibilities, data quality 

limitations, and other key information. Also, in September 2010, 

 

31In addition, in 2007, USAID developed and began to implement a structured approach to 

monitoring meetings with its partners through which USAID collects information on partner 

performance, such as more in-depth information on activities and planning. Also, since 

December 2009, USAID/LAC has convened quarterly coordination meetings for all of 

USAID’s and State’s Cuba program partners to provide guidance and share experiences 

and program implementation strategies. According to USAID officials, since December 

2010, USAID and State have also used the quarterly partner meetings to obtain 

information orally about which beneficiaries in Cuba receive goods and services, to 

identify any potential duplication of beneficiaries across partners. Since partners often 

consider the names of beneficiaries as sensitive, they do not generally include names or 

other identifying information about beneficiaries in their progress reports. 
 

Page 24 GAO-13-285 Cuba Democracy Assistance

USAID/LAC hired an M/E contractor to work with each of its partners to 

further improve and standardize their performance management systems. 

The M/E contractor has worked with partners to identify and track the 

most appropriate indicators, including any applicable standardized 

indicators that USAID/LAC can aggregate across the partners to 

determine its own overall progress. In 2011, this M/E contractor also 

provided training to each partner and helped them to improve their M/E 

plans, for example by specifying quarterly targets and data collection 

plans for each indicator. According to M/E contractor representatives, 

partners’ performance planning has improved, although additional 

improvement is needed in the quality of some partners’ data. In fiscal year 

2013, the M/E contractor plans to perform data quality audits of the 

partners.32

State has also made some recent improvements to performance 

monitoring of its Cuba program, in the areas of both performance 

planning and reporting. State’s requirements for performance planning 

and reporting include:

• Performance Planning: State/DRL and State/WHA have provided 

different requirements for prospective partners regarding elements of 

M/E plans.

• State/DRL. In 2010, State/DRL increased the level of 

requirements for prospective partners’ M/E plans through the 

request for proposal (RFP) it issued that year.33 Previously, 

State/DRL required that prospective partners submit an M/E plan 

but did not specify characteristics that the M/E plan should 

include. The RFP issued in 2010 specified that M/E plans should 

include a baseline and target for each indicator and data collection 

methods and sources, among other characteristics. In addition, 

the RFP referenced M/E guidance available on State/DRL’s 

 

32During these data quality audits, the M/E contractor plans to review whether partners 

document lists of specific beneficiaries counted against any particular indicators, either 

with their specific names or, given program sensitivities, some other form of 

documentation to show that reported numbers are accurate and do not include any 

duplication. 

33Requests for proposals (RFPs) are used in negotiated acquisitions to communicate 

Government requirements to prospective contractors and to solicit proposals. (See The 

Federal Acquisition Regulation § 15.203.)

State Is Taking Steps to 

Improve Performance 

Monitoring to Address Its 

Partners’ Weaknesses in 

Performance Planning and 

Reporting
 

Page 25 GAO-13-285 Cuba Democracy Assistance

website that included more details on how to develop an effective 

M/E plan.

• State/WHA. For the State/WHA award in our sample, the RFP 

issued in fiscal year 2010 required the prospective partner to 

submit an M/E plan outlining performance indicators, sources and 

means for verification, risks and assumptions for goals and 

objectives, and expected results and activities. For WHA’s most 

recent RFPs issued in fiscal year 2012, State/WHA also included 

additional guidance for prospective partners’ M/E plans, for 

example, including by defining indicators and providing a sample 

M/E plan. In addition, State/WHA further clarified that all indicators 

in M/E plans must include measurable, numerical targets. 

• Performance Reporting: Both State bureaus require their partners to 

submit quarterly progress reports.34 According to State/DRL and 

State/WHA officials, they review partners’ quarterly reports against the 

partners’ planned performance to confirm that the awards are making 

progress toward established targets and that activities align with the 

award’s objectives.35 State officials then analyze the quarterly 

progress reports to aggregate progress for each of its bureaus with 

USAID’s progress to be able to report government-wide performance 

for the Cuba democracy program to State’s Office of U.S. Foreign 

Assistance Resources.

State’s partners that we reviewed ranged in the amount and kind of detail 

they included in their M/E plans as well as in their progress reports. For 

the State awards in our sample, we found that State/WHA’s partner had 

the most clearly defined M/E plan (see table 4). This partner’s M/E plan 

included specific and clearly defined indicators, targets against which the 

partner could measure its performance, and clear plans for data 

 

34Similar to the progress reports submitted to USAID, State’s partners must submit reports 

that compile information about all activities that occurred under their award during that 

quarter, including any activities carried out by subpartners, if applicable. Also, State 

officials may follow up with partners for more information by phone, e-mail, or, less 

frequently, in-person meetings. 

35In addition, USINT officials will review the quarterly reports for these awards to ensure 

they are accurate.
 

Page 26 GAO-13-285 Cuba Democracy Assistance

collection. For the four State/DRL awards, the partners included 

indicators in their M/E plans but did not define them.36 

We also found that one partner with three State/DRL awards did not set 

clear targets for a number of its indicators. In addition, two partners 

identified some data collection methods in their M/E plans, but did not 

clearly identify which methods would be used to collect data for each 

individual indicator.

We also found that, for State/WHA’s award, progress reports included 

detailed reporting against each indicator, as well as additional qualitative 

and quantitative information on overall progress including survey results 

and statistics. On the other hand, reporting for the State/DRL awards 

lacked such detail. For example, for one State/DRL award, the partner 

tracked its performance in quarterly reports for only 3 of the more than 10 

indicators in its M/E plan. For three other awards, the partner did not 

aggregate or track performance against any specific indicators in their 

progress reports. While not reporting on progress against specific 

indicators, these partners generally reported anecdotally on the topics 

covered in the indicators or scattered some performance data throughout 

their reports.

 

36One of the awards in our sample, the third award to Partner #3 as listed in table 4, 

originated from the RFP State/DRL issued in fiscal year 2010, while the other three 

State/DRL awards in our sample were from the RFP State/DRL issued in fiscal year 2009. 
 

Page 27 GAO-13-285 Cuba Democracy Assistance

Table 4: Characteristics of Partners’ Performance Planning and Reporting for Selected State Awards 

Partner 

Awarding agency and 

bureau/ office

Performance Planning: M/E plans

Performance reporting: 

progress reports

Indicators 

clearly defined 

Target set for 

each indicator

Data collection 

methods identified 

for each indicator

Updates on progress 

clearly reported for each 

indicator

Partner #3a State/DRL  ○ ● ○

Partner #3 State/DRL   ● ○

Partner #3 State/DRL    

Partner #5 State/DRL  ●  

Partner #6 State/WHA ● ● ● ●

Legend: ● = Yes;  = Partially; ○ = No.

Source: GAO analysis of State and partner records.

Notes: Each row in the table represents a separate award. M/E plans for our sample partners were 

created in fiscal year 2009 or 2010 when their awards and contracts began. The progress reports we 

reviewed were from fiscal year 2011, except for the reports for Partner #3’s third award, which were

from fiscal year 2012. a

One State/DRL partner (Partner #3) received three awards during the period of our sample, and we 

reviewed that partner’s planning and reporting for all three awards.

In September 2012, State/DRL awarded a contract to a firm specializing 

in M/E, which could address such gaps in its partners’ performance 

planning and reporting.

37 In the area of performance planning, State/DRL 

has directed the M/E contractor to provide training and technical 

assistance to its partners to improve their M/E plans, such as to ensure 

they include information on data collection methods. In addition, 

State/DRL directed the M/E contractor to develop indicators for all 

State/DRL partners to report on that meet or surpass data quality 

standards. This should allow State/DRL to more easily aggregate 

information on the overall performance of its Cuba program partners.

 

37No State/WHA partners will be reviewed or trained by this M/E contractor.
 

Page 28 GAO-13-285 Cuba Democracy Assistance

The partners in our sample had various policies, procedures, and 

mechanisms in place for monitoring subpartner performance, which they 

compiled information on to report to the agencies.38 We found that 

partners generally required subpartners to report on their activities 

quarterly or monthly, and at the end of a subaward or subcontract. Some 

partners also required subpartners to submit trip reports after any travel to 

Cuba.39 Other monitoring practices cited by partners included site visits to 

subpartners and frequent communication via phone, email, or in-person.

Because of security concerns and limited on-site monitoring in Cuba, 

partners and subpartners use a variety of methods to verify the delivery of 

assistance to Cuban beneficiaries. Representatives from USAID’s M/E 

contractor indicated that partners have had difficulty collecting and 

reporting data because of Cuban beneficiaries’ reluctance to maintain and 

provide specific information in writing (e.g., timesheets, attendance 

sheets, or other documents naming beneficiaries). However, the M/E 

contractor has found that partners and subpartners often communicate 

with beneficiaries though various means. Similarly, according to 

representatives of partners and subpartners we interviewed,40 some 

delivery verification methods they used included the following:

• having future travelers ask beneficiaries how they used assistance 

provided previously; and

• observing beneficiaries’ use of assistance through remote or indirect 

means—for example, through articles published online that 

demonstrate that beneficiaries received training.

Partners generally aggregate information obtained from such methods in 

their progress reports to the agencies. However, in certain instances, the 

monitoring methods selected have limited subpartners’ ability to track and 

 

38Partners are responsible for managing and monitoring each project, program, subaward, 

function, or activity supported by their award.

39These trip reports documented information such as the purpose of the trip, locations 

visited, number of individuals receiving assistance in Cuba, details on assistance 

provided, and traveler assessments of the situation on the island. 

40We interviewed 11 subpartners under the six partners in our sample, nine of which were 

under USAID awards or contracts and two of which were under State awards. Some 

factors that we considered in our selection of subpartners included the amount of funding 

obligated to and the type of activity performed by the subpartner. Table 5 in appendix I 

describes characteristics of the six sample partners and their subpartners that we 

reviewed. 

Partners Generally Monitored 

Subpartner Performance and 

Used Various Methods to 

Monitor Beneficiaries 
 

Page 29 GAO-13-285 Cuba Democracy Assistance

report detailed information. For example, one subpartner reported on an 

indicator, the number of signatures on petitions, by providing data that it 

obtained over the phone (instead of through document reviews that would 

prevent double counting of signatures and allow for other data quality 

checks). In addition, USAID’s M/E contractor has found cases in which 

data could not be transmitted in a timely manner, preventing reporting on 

activities in the quarter when they were implemented. As a result, both 

the partners and the agencies can have difficulty knowing the exact 

numbers and identities of beneficiaries in Cuba.

Since 2008, USAID has made improvements to financial monitoring of its 

Cuba program partners.41 In April 2008, USAID/LAC hired an external 

auditor to perform financial internal controls reviews of its partners to 

ensure that they have appropriate internal controls and to review selected 

transactions under the program to ensure that they are allowable, 

allocable, and reasonable.42 Since 2008, this auditor has conducted 30

audits across 13 of the 16 partners USAID funded during fiscal years 

2007 through 2010. These audits are in addition to audits performed by 

USAID’s Management Bureau and its Inspector General.43 Across its 

 

41We recommended that USAID strengthen its financial monitoring of its Cuba program in 

GAO-07-147 and GAO-09-165. According to GAO’s Standards for Internal Control in the 

Federal Government (GAO/AIMD-00-21.3.1, Washington, D.C.: November 1999), for 

financial monitoring of partners, agencies’ internal controls should be designed to provide 

for ongoing monitoring in the course of normal operations. Prior to 2008, the only ongoing 

financial monitoring that USAID performed during active awards involved reviewing highlevel summaries of expenditures included in a standard federal financial report, known as 

Form 425, which partners submit quarterly.

42In addition to financial internal controls reviews, the external auditor has performed other 

reviews, as requested, such as compliance and financial systems reviews.

43USAID’s Management Bureau performs preaward and follow-up audits. USAID’s 

Inspector General also performs periodic audits of some ongoing awards and contracts. 

USAID Has Improved 

Financial Monitoring of 

Partners; State Has Not 

Consistently Conducted 

Financial Internal Controls 

Reviews

USAID Has Bolstered Financial 

Monitoring of Its Partners
 

Page 30 GAO-13-285 Cuba Democracy Assistance

different auditing entities, USAID has a goal of reviewing each partner 

approximately once every 6 months. Other risk-based factors are 

considered in the scheduling and sequencing of reviews, such as 

preaward reviews, prior audit findings, and period of performance.

Through December 2011, the external auditor had found 50 instances of 

unsupported costs, such as insufficient documentation and lack of 

authorization, and 15 instances of excessive costs charged to an award 

or contract, such as charging incorrect rates or expenses not allocable to 

the award or contract. In sum, the external auditor questioned 11 percent 

of the charges made to USAID/LAC during the external auditor’s periods 

of review.44 In addition, the external auditor found inadequacies in the 

following three main areas:

• the financial management systems at 11 partners,

• procurement standards at 8 partners, and

• internal controls at 8 partners.

Two of the external auditor’s most common specific findings were that (1) 

partners did not properly complete their quarterly financial reports, and (2) 

partners did not perform a cost-price analysis before procuring a 

subpartner or equipment to ensure that it was procured at a fair price.45

Specifically, the external auditor found that four partners did not provide 

any documentation of a cost-price analysis. In addition, the auditor found 

that another four partners had insufficiently completed or documented 

cost-price analyses, either by performing them verbally but not 

documenting them or by having unorganized or unexplained 

documentation of the cost-price analysis, limiting the external auditor’s 

ability to confirm the reasonableness of the costs in question.

 

44At each partner, the external auditor reviewed nonpayroll disbursements that occurred 

during a certain review period, ranging from one quarter to over a year. As of September 

2012, according to USAID, 75 percent of questioned costs were adequately resolved and 

USAID had received $50,000 in refunded costs, while the remaining questioned costs 

were in the process of being resolved. 

45According to both USAID and State Department regulations (22 C.F.R. § 226.45 and 22 

C.F.R. § 145.45), some form of cost or price analysis shall be made and documented in 

the procurement files in connection with every procurement action. Price analysis may be 

accomplished in various ways, including the comparison of price quotations submitted, 

market prices and similar indicia, together with discounts. Cost analysis is the review and 

evaluation of each element of cost to determine reasonableness, allocability, and 

allowability.
 

Page 31 GAO-13-285 Cuba Democracy Assistance

As a result of the external auditor’s findings, USAID/LAC has provided 

training to partners and, according to USAID/LAC’s external auditor, 

partners have made improvements. First, USAID/LAC asked the external 

auditor to provide briefings to the Cuba program partners at their 

December 2008 and March 2011 quarterly meetings on topics such as 

unallowable expenses, internal control standards, and procurement 

regulations. In addition, our review of audit reports issued from 2008 

through 2011 showed that the external auditor found fewer inadequacies

at some partners that had previously been audited. An official with 

USAID’s external auditor who is responsible for these audits noted that 

recent reviews have found that the partners have improved their financial 

management capacity.

USAID/OTI used other processes to regularly monitor the financial 

performance of its partner under the Cuba democracy program. 

According to USAID/OTI, USAID/OTI staff worked closely with their Cuba 

program partner to plan future expenditures and reviewed documentation 

related to individual subpartners to determine each subpartner’s real 

costs. In addition, USAID/OTI officials maintained a database that the 

partner updated on a weekly basis, allowing USAID/OTI to monitor all 

expenditures weekly.

Based on our financial internal controls reviews of the five USAID awards 

and contracts in our nongeneralizable sample (see table 5 in appendix 

I),46 we found that partners’ internal controls included (1) policies to 

prevent the commingling of U.S. government funds, such as unique 

accounting codes to identify awards and separate bank accounts for U.S. 

government funds; (2) policy manuals to instruct employees on the proper 

 

46Our selected sample consisted of six partners. Out of the six selected partners, one had 

an award solely with State, three had awards solely with USAID, and two had awards with 

both State and USAID during the period from which we sampled. See table 5 in appendix I 

for further information on the six selected partners. During our review, we examined 

partners’ policies and procedures, interviewed key officials knowledgeable of the partners’ 

financial management processes, and then tested a nongeneralizable sample of 

transactions related to program expenditures under the partners’ awards and contracts in 

our sample. Specifically, we verified that the transactions made were supported with 

adequate documentation; tested the partners’ policies and procedures relating to approval 

of payments, segregation of duties, and subpartner approval; and reviewed the partners’ 

processes to ensure that the payments made were allowable, allocable, and reasonable. 

We also verified that expenditures made were within limits approved in the contracts and 

agreements negotiated with the agencies and that payments made were in accordance 

with the scope of work established in those contracts and agreements.
 

Page 32 GAO-13-285 Cuba Democracy Assistance

use of U.S. government funds received through grants and contracts; and 

(3) procedures to segregate incompatible financial duties. We found that 

USAID/LAC was overcharged for some overhead and labor expenses by 

one of USAID/LAC’s partners in our sample.

47

State has not consistently conducted ongoing, in-depth financial 

monitoring of its Cuba program partners. State’s Bureau of Administration 

is responsible for conducting financial internal controls reviews of 

State/DRL’s and State/WHA’s partners.48 However, the Bureau of 

Administration has conducted financial internal controls reviews of less 

than one-third of partners active since fiscal year 2010. For State/DRL 

awards, the Bureau of Administration conducted one review in each fiscal 

year for 2010 and 2011 and four in July 2012. It conducted no reviews of 

State/WHA partners.49 According to State officials, the Bureau of 

Administration attempts to conduct financial internal controls reviews at 

least once during the course of each DRL and WHA award but has not 

done so for many of its awards because of staffing turnover and 

constraints in the Bureau of Administration. 

In September 2012, State/DRL awarded funding to an external auditor to 

perform financial internal controls reviews in fiscal year 2013. During this 

fiscal year, State intends for the auditor to perform one review of three-

 

47Specifically, we found that the USAID/LAC partner overcharged for overhead expenses, 

such as facility rental expenses and office supply purchases, because the partner included 

overhead in its labor rate multiplier (a negotiated multiplier applied to direct salary costs), 

while simultaneously directly charging these actual costs. We were unable to determine 

the total amount of overcharges caused by this double billing because the partner 

declined to provide us with information necessary to complete this calculation. In addition, 

we identified almost $1,000 in overbilled labor charges by this partner. In October 2012, 

we informed USAID of this issue.

48During the reviews, Bureau of Administration officials review financial records, 

documentation of expenditures, and the adequacy of financial and other administrative 

systems. The review allows State to trace financial statement balances through the 

recipient’s general ledger, cash books, and other summary journals to the original detailed 

accounting transactions and their supporting documentation for audit trail purposes.

49Other than performing financial internal control reviews, State’s main tool for financial 

oversight of its partners is to review the high-level summary of expenditures reported on 

their quarterly Form 425 submissions. These forms are reviewed by Bureau of 

Administration officials and officials in the relevant programming bureau, State/ DRL or 

State/WHA. State uses the information that their partners report on Form 425 to ensure 

that payments are commensurate with progress and that the partners do not maintain 

large unused cash balances. 

State Has Not Consistently 

Performed Financial Internal 

Controls Reviews of Its 

Partners but Plans to Bolster 

Its Monitoring of Some Awards
 

Page 33 GAO-13-285 Cuba Democracy Assistance

quarters of State/DRL’s partners and no reviews of State/WHA’s 

partners.50 State provided documentation to us showing that, in October 

2012, State/DRL worked with the external auditor to develop a preliminary 

plan to select the ordering of its partners to be reviewed using a riskbased approach that considered criteria such as the value of awards, any 

prior financial compliance issues identified, and the partners’ internal 

administrative capacity. 

We conducted financial internal controls reviews on three partners with

five State awards in our nongeneralizable sample (see table 5 in 

appendix I).51 These three partners had been recently reviewed by 

USAID/LAC’s external auditor, because they have also been USAID/LAC 

awardees, and had made internal control improvements in response to 

the auditor’s findings.52 Similar to our review of USAID’s partners, we 

found that partners had internal control mechanisms in place, including 

(1) policies to prevent the commingling of U.S. government funds, (2) 

policy manuals to instruct employees on the proper use of U.S. 

government funds, and (3) procedures to segregate incompatible financial 

duties. However, State has had eight partners with nine State/DRL and 

State/WHA awards active in fiscal years 2011 or 2012 that have received 

no financial internal controls reviews during the course of their awards, 

 

50The external auditor will review approximately 9 of State/DRL’s 12 current and new 

partners.

51Our selected sample consisted of six partners. Out of the six partners we selected for 

further review, one had an award solely with State, three had awards solely with USAID, 

and two had awards with both State and USAID during the period from which we sampled 

(see table 5 in appendix I for further information on these partners). During our review, we 

examined partners’ policies and procedures, interviewed key officials knowledgeable of 

the partners’ financial management processes, and then tested a nongeneralizable 

sample of transactions related to program expenditures under the partners’ awards and 

contracts in our sample. Specifically, we verified that the transactions made were 

supported with adequate documentation; tested the partners’ policies and procedures 

relating to approval of payments, segregation of duties, and subpartner approval; and 

reviewed the partners’ processes to ensure that the payments made were allowable, 

allocable, and reasonable. We also verified that expenditures made were within limits 

approved in the contracts and agreements negotiated with the agencies and that 

payments made were in accordance with the scope of work established in those contracts 

and agreements.

52Because of overlap in partners under State’s and USAID/LAC’s programs, nine of 

State’s partners active in fiscal years 2011 and 2012 have been reviewed by 

USAID/LAC’s external auditor. 
 

Page 34 GAO-13-285 Cuba Democracy Assistance

through either State’s Bureau of Administration or USAID’s external 

auditor.

Our review of the six partners in our nongeneralizable sample found that 

partners had written policies and procedures for financial monitoring of 

their subpartners’ use of program funding.53 For example, partners had 

risk assessment processes to determine the level of monitoring required 

for a certain subpartner, depending on that subpartner’s capacity and the 

type of subaward or subcontract. In addition, some of the partners 

required certain types of subpartners to provide receipts to document 100 

percent of expenses.54

To test the partners’ application of their financial monitoring policies and 

procedures, we conducted reviews of 11 subpartners under the six 

partners in our sample.55 Generally, all partners maintained the necessary 

documentation (i.e., receipts, timesheets, authorizations) to support 

expenses incurred at the subpartner level. We found that partners 

maintained varying levels of documentation on cost-price analyses 

performed and that one partner had incomplete documentation for one of 

its subpartner’s expenditures.

• For three of the five subpartners with fixed-price subcontracts in our 

sample,56 documentation supporting the partners’ cost-price analyses 

included (1) the actual amounts paid for similar services to 

subpartners on previous awards, (2) price quotes to procure supplies 

and equipment from various vendors, or (3) surveys demonstrating 

the market value of labor paid for different labor categories to 

substantiate that the amounts were within industry standards. For two 

of the five subpartners with fixed-price subcontracts within our 

 

53According to Office of Management and Budget (OMB) regulations for awardees and 

Federal Acquisition Regulations for contractors, partners are responsible for financial 

monitoring of subpartners. Partners should manage and monitor the costs incurred by 

subpartners to ensure all costs expended are reasonable, allocable, and allowable. 

54One partner noted that this 100 percent threshold was more than it requires of many of 

its subpartners, but that it maintained this requirement for its Cuba program given its high 

risk and monitoring challenges.

55For more information on these subpartners and how they were selected, see appendix I.

56The price of a fixed-price subcontract is set before the subcontract is signed and is not 

subject to any adjustment on the basis of actual costs.

USAID and State Partners Used 

a Range of Mechanisms for 

Financial Monitoring of 

Subpartners
 

Page 35 GAO-13-285 Cuba Democracy Assistance

sample, the partners documented that they believed the price of the 

subcontract to be fair based on the partner’s prior experience.57

• One subpartner of a USAID/LAC partner submitted its receipts in a 

foreign language that staff at the partner could not read and provided 

little explanation of the receipts.

USAID and State have no direct relationships with their partners’ 

subpartners. Partners are responsible for all oversight of their subpartners 

and for reporting to the agencies any updates and problems related to the 

subpartners’ work, such as through any quarterly reports and site visits. 

However, the agencies are generally required to approve any partner 

requests to award funding to subpartners.58

 

57We were not able to substantiate the assertions of these two partners based on the 

documentation provided. According to USAID officials, they are currently taking steps to 

address issues relating to lack of detailed information on cost/price analysis identified by 

USAID’s external auditor for some USAID awards.

58OMB regulations state in 22 C.F.R. § 215.25(c)(8) that a partner shall request prior 

approval from the federal awarding agency for the subaward, transfer, or contracting out 

of any work performed under an award, unless described in the application and funded in 

the approved award. A similar agency-specific USAID regulation is at 22 C.F.R. § 

226.25(c)(8). 

Agencies Have No Direct 

Relationships with 

Subpartners except to 

Approve Their Funding, 

and State Does Not 

Provide Clear Guidance on 

Subpartner Approval 

Requirements

Agencies Have No Direct 

Relationships with Subpartners 

Other Than Approving Partner 

Requests for Their Funding
 

Page 36 GAO-13-285 Cuba Democracy Assistance

USAID has provided guidance to its Cuba program partners on what is

required for approval of subpartners, both during the preaward phase and

during the course of the award.

• Preaward phase. According to USAID officials, subpartners can be 

considered pre-approved during the preaward phase if they are 

described in award proposals, in accordance with the standard 

provisions that are referenced in partners’ awards. USAID officials 

indicated that some of USAID’s partners in the past had interpreted 

the term “described” to include any reference in a proposal to a 

subpartner’s activities, even if the proposal did not specify that the 

work would be completed by a subpartner or provide specific 

information about the subpartner. As a result, USAID learned—

through reviews conducted since May 2009 by its external auditor and 

its own subsequent reviews—that some partners had subcontracts 

and subawards USAID had not approved. In response, in June 2011, 

USAID added guidance to its requests for applications (RFA) on the 

type of information that partners must submit in order to receive prior 

approval for all types of subpartners.59 This information includes, for 

example,

• the name of the proposed subpartner,

• a description of the work to be performed by the subpartner under 

the award,

• the total estimated cost to be paid to the subpartner, and

• a detailed, line-item budget.

In some cases, USAID accepts this information orally if the partner is 

concerned that the leaking of this information could compromise the 

security of individual consultants who travel to Cuba. To provide 

further clarity to partners on whether or not USAID considers 

subpartners as approved during the preaward phase, USAID stated in 

its RFAs issued in fiscal year 2011 that a subaward or subcontract is 

not considered approved until the USAID Agreement Officer in the 

Management Bureau signs a letter approving it.

• Award phase. For USAID approval during the award phase, the 

partner must submit all of the same information as required during the 

 

59An RFA is a type of solicitation notice in which an organization announces that grant 

funding is available.

USAID Provides Specific 

Guidance to Its Partners on 

Requirements for Subpartner 

Approval 
 

Page 37 GAO-13-285 Cuba Democracy Assistance

preaward phase, as well as a copy of the proposed agreement with 

the subpartner and documentation of the process through which the 

subaward or subcontract was procured. 60 In May 2011, to further its 

understanding of the work to be performed by its subpartners, 

USAID/LAC set up a technical evaluation committee. For ongoing 

awards, partners submit proposed subpartners for approval to the 

committee. The committee may ask for information on proposed 

subpartner activities, among other things, to ensure that the 

programmatic content of the work to be performed by subpartners fits 

in the scope of the overall award.

State’s Bureau of Administration is responsible for approving subawards 

and subcontracts under State/DRL and State/WHA awards, and has 

requirements similar to USAID’s. However, State does not clearly inform 

its Cuba program partners of these requirements in written guidance and, 

as a result, some partners have not provided the required information. 

According to language in State’s Standard Terms and Conditions,61 prior 

written approval is required for any subawards or subcontracts unless 

they are described in the application and funded in the approved award.62

Specifically, State officials told us that the Bureau of Administration

requires certain information and documentation to approve subpartners, 

including

• the name of the subpartner organization,

• a copy of the draft agreement with the subpartner,

• the amount of and budget for the agreement,

 

60The USAID/LAC contract we reviewed required the contractor to develop USAIDapproved guidelines, including criteria for selecting subpartners, and to obtain USAID 

approval for individual subawards and subcontracts. The technical proposal for the 

contract also stated that a USAID representative would participate in the contractor’s 

subpartner proposal review process, and representatives of the contractor noted that they 

also submitted copies of all final subpartner agreements to USAID for approval. For the 

USAID/OTI contract, USAID/OTI worked closely with the contractor to select and approve

all subpartners, in accordance with the contract terms.

61These Standard Terms and Conditions apply to all overseas federal assistance awards 

made by State. 

62No differentiation is made in the Standard Terms and Conditions between requirements 

for the approval of subawards or subcontracts, including those for the use of consultants 

to perform work toward award objectives.

State Does Not Provide Clear 

Guidance to Its Partners on 

Subpartner Approval 

Requirements 
 

Page 38 GAO-13-285 Cuba Democracy Assistance

• the period of performance, and

• a description of the subpartner’s role.

According to State officials, State’s requirements are currently the same 

whether a partner obtains preapproval during the preaward phase or 

during the course of the award. They added that, for consultants under 

State/DRL awards, the Bureau of Administration does not require their 

names because of security and sensitivity concerns. Instead, according to 

officials, the Bureau of Administration requires information on the amount 

of the consultancy contract, the consultant’s budget, and a description of 

the consultant’s role and qualifications.63 Nevertheless, the detailed 

information that State told us is required to preapprove subawards,

subcontracts, and consultants is not specified in written guidance to all 

partners. For example, in State’s handbook for grant recipients, State

informs recipients to provide in award proposals details on any 

subpartners, but does not specify the type of information to provide. In 

addition, based on our review of fiscal year 2010 and 2011 award 

documents, we found that in cases when State/DRL is made aware of a 

prospective partner’s intention to have a subpartner through review of 

their proposal, State/DRL included a requirement in the partner’s award to 

provide a copy of the agreement with that specific subpartner to State 

within 10 days of its execution. However, State/DRL omitted this 

requirement from awards for which it was not clear the partner intended to 

use a subpartner. As a result, we found that many partners only received 

the broad written guidance in State’s Standard Terms and Conditions and 

recipient handbook. 

Based on our analysis of the use of subpartners under recent State 

awards,64 we found that State had sufficient information to preapprove the 

subawards and subcontracts under State/WHA’s awards. However, State 

did not have the detailed information that, according to State officials, 

 

63These requirements for preapproval of consultants reflect factors contained in OMB, 

Circular A-122: Cost Principles for Non-profit Organizations, which lays out the types of 

information that an agency may use to determine that consultant fees are reasonable and 

allowable under an award, such as the nature and scope of the service to be performed, 

the qualifications of the individual or organization performing the service, and their 

customary fees.

64We reviewed the 18 awards that were State’s portion of the 29 Cuba program awards 

and contracts funded from fiscal years 2007 through 2009 appropriations that were active 

in fiscal year 2011.
 

Page 39 GAO-13-285 Cuba Democracy Assistance

would be required to approve 91 subawards and subcontracts to which 

partners obligated funding under 8 State/DRL awards. 

According to representatives of one of the State/DRL partners, they 

assumed that State was aware of their subawards and subcontracts and 

considered them preapproved because the partners’ proposals had 

referenced the types of work to be performed under the award by the 

subpartners. We found, however, that the partners’ proposals only 

provided general information for all proposed subpartners, such as an 

estimated total cost aggregated for all subawards and subcontracts. The 

proposals did not specify information about individual proposed 

subawards or subcontracts, such as proposed periods of performance, a 

description of the work to be performed, or copies of draft subpartner 

agreements. Officials said that State has provided training to grants 

officers over time to ensure greater consistency in the application of 

preapproval requirements. However, we interviewed two partners with 

ongoing State/DRL awards, and both were still unaware of the information 

required for subpartner approval.

USAID has been implementing Cuba democracy assistance efforts since 

1996, and State’s role in the program has increased since it began 

providing assistance several years later, in 2004. More than $200 million 

has been provided for these efforts over the past 15 years, with recent 

growth in the use of worldwide and regional organizations that often use 

subpartners to help implement program activities. Despite ongoing 

challenges stemming from the difficult operating environment in Cuba, 

since our 2006 and 2008 reports, USAID has taken steps to improve its 

performance and financial monitoring of Cuba democracy program 

awards. While State has also taken initial steps to improve performance 

monitoring of its Cuba program awards, we found that State’s financial 

monitoring was lacking in certain areas.

For performance monitoring of Cuba program partners, both USAID and 

State have required partners to submit program planning and reporting 

documents that the agencies use to monitor their partners’ 

implementation of program activities and progress toward program goals. 

Although we found some gaps in these efforts, such as instances in which 

partners did not identify targets in performance plans, lacked clearly 

defined indicators, or did not report on established indicators, both 

agencies are taking steps to improve performance monitoring of their

partners. Specifically, since 2010, USAID has used an external contractor 

to enhance its Cuba program monitoring and evaluation efforts. In 

Conclusions 
 

Page 40 GAO-13-285 Cuba Democracy Assistance

September 2012, State hired an organization for a similar purpose, with 

work on this effort slated to begin in fiscal year 2013.

To enhance financial monitoring, in 2008 USAID hired an external auditor 

to perform financial internal controls reviews of its Cuba program partners 

and used a risk-based approach to determine how often each partner 

should be reviewed to enable more efficient and effective reviews, with 

resources focused on areas of greater risk. Such an approach considers 

key factors such as the value of awards, coverage, previously identified 

deficiencies, award type, and the frequency of the reviews that will be 

needed. USAID’s auditor conducted 30 audits through fiscal year 2012, 

which identified questionable charges and weaknesses in partners’ 

financial management, procurement standards, and internal controls. 

State did not conduct financial internal controls reviews for more than 

two-thirds of its awards during fiscal years 2010 through 2012, although 

State recently awarded funding to an external auditor for this purpose and 

has taken steps toward implementing a risk-based approach for these 

reviews. However, because these actions were taken recently, State’s 

ability to ensure that funds are being spent as intended remains unknown

until it has completed these reviews. Moreover, unlike USAID, State has 

not provided clear guidance to its partners regarding requirements for 

subpartner approval. As a result, State lacks complete and accurate 

information on its partners’ use of subpartners to implement program 

efforts. Without adequate information on program subpartners, State has 

limited ability to fully understand and assess its partners’ use of program 

funds.

To strengthen State’s ability to monitor the use of Cuba democracy 

program funds, we recommend that the Secretary of State take the 

following two actions:

• To enhance financial oversight, use a risk-based approach for 

program audits, including those conducted by an external auditor, that 

considers, among other factors, specific indicators—such as value of 

awards, prior deficiencies, oversight coverage, and frequency—for 

each of State’s Cuba program partners.

• To obtain sufficient information to approve implementing partners’ use 

of subpartners, provide clear guidance to implementing partners 

regarding requirements for approval of the use of subpartners, and 

monitor implementing partners to ensure that they adhere to these 

requirements.

Recommendations for 

Executive Action
 

Page 41 GAO-13-285 Cuba Democracy Assistance

We provided a draft of this report to USAID and State for review and 

comment. Their written comments are reproduced in appendixes II and 

III, respectively. USAID noted that it is a challenge to implement 

assistance programs in countries where USAID does not have dedicated 

staff in-country, and cited their ongoing commitment to ensuring that 

Cuba democracy assistance programs managed by USAID receive 

appropriate management and oversight to minimize waste and 

mismanagement and maximize impact on the ground in Cuba. USAID 

highlighted steps that the agency has taken to improve program 

management, such as dedicating additional resources to conduct 

financial audits and monitoring of awardees, and conducting pre-award 

audits on organizations with limited or no experience managing USAIDfunded projects. USAID expressed appreciation for our recognition of the 

agency’s program improvements. 

State concurred with both of our recommendations and noted relevant 

actions it has taken or plans to take. Regarding our recommendation to 

enhance financial oversight through using a risk-based approach for 

Cuba program audits, State noted that the external auditor that State/DRL

recently procured to audit some of its partners has taken steps to 

implement a risk-based approach. State further noted that the department 

is evaluating staffing in its Bureau of Administration and audit 

requirements to be able to address program oversight needs not covered 

by this external auditor. State also concurred with our recommendation to 

obtain sufficient information to approve implementing partners’ use of 

subpartners. State said that it plans to hold meetings with awardees to 

discuss award requirements and provide an orientation on resources and 

technical support available to Cuba program awardees.

USAID and State also provided technical comments that we have

incorporated, as appropriate.

Agency Comments

and Our Evaluation
 

Page 42 GAO-13-285 Cuba Democracy Assistance

We are sending copies of this report to the Administrator of USAID, the 

Secretary of State, appropriate congressional committees, and other 

interested parties. In addition, the report will be available at no charge on 

GAO’s website at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

me 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. GAO staff who made major contributions to 

this report are listed in appendix IV.

Sincerely yours,

David Gootnick, Director

International Affairs and Trade
Appendix I: Objectives, Scope, and 

Methodology

Page 43 GAO-13-285 Cuba Democracy Assistance

This report (1) identifies the types and amounts of democracy assistance 

that the United States Agency for International Development (USAID) and 

the Department of State (State) have provided to Cuba and 

characteristics of implementing partners, subpartners, and program 

beneficiaries; (2) reviews USAID’s and State’s efforts to implement the 

program in accordance with U.S. laws and regulations and to address 

program risks; and (3) examines USAID’s and State’s monitoring of the 

use of program funds. This report is a publicly releasable version of a 

prior GAO report, issued in December 2012, that USAID and State had 

designated Sensitive But Unclassified. 

To identify types and amounts of democracy assistance, and 

characteristics of implementing partners (partners), subpartners, and 

beneficiaries, we reviewed congressional notifications, agency and 

partner documents and data on program awards and funding, copies of 

award agreements and contracts and any modifications, partner interim 

and final reports, and other key documents and data. We interviewed 

agency officials and partner representatives to corroborate information 

and data obtained. We also discussed Cuba democracy assistance with 

officials at the National Endowment for Democracy.1 We reviewed 

amounts of assistance and characteristics of partners that received 

program funding in fiscal years 1996 through 2012. To test the reliability 

of funding data, we compiled lists of all funding that went to each partner 

and sent these lists to USAID and State for verification. In addition, we 

reviewed the use of subpartners under all of USAID’s and State’s 29 

awards and contracts that were active in fiscal year 2011, which were 

funded with appropriations from fiscal years 2007 through 2009. These 

awards and contracts were awarded to 22 partners. We obtained 

information and data from each of the partners on their use of 

subpartners under the respective awards and contracts. For the purposes 

of our review, we defined subpartners as recipients of subawards, 

including subgrants, grants under contract, subcontracts, or consultants. 

To test the reliability of subpartner data, we compared information 

obtained from partners to agency information, and interviewed agency 

and partner officials regarding any discrepancies. We determined data on 

 

1

The National Endowment for Democracy (NED), an independent, nongovernmental 

organization, funds programs to promote democracy in Cuba through both direct 

congressional appropriations and with funding that it receives through State/DRL. NED 

was not included in the scope of this review, because it is not a U.S. government agency 

and because USAID and State provide the majority of Cuba democracy assistance.

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 44 GAO-13-285 Cuba Democracy Assistance

program funding and on the use of subpartners were sufficiently reliable 

for the purposes of this report.

To review USAID’s and State’s efforts to ensure that program 

implementation is consistent with U.S. laws and regulations, and to 

provide guidance to partners and subpartners regarding program risks, 

we reviewed relevant U.S. laws and regulations and agency and 

departmental policies and procedures. We also interviewed USAID and 

State legal and program officials regarding program implementation and 

related risks. For selected partners and subpartners, we reviewed award 

agreements; contracts; and partner guidance, policies, and procedures 

regarding program security risks and travel security and safety. We also 

interviewed representatives of partners and subpartners regarding 

program security risks and traveler safety and security measures.

We analyzed reported activities and assistance delivered, and 

management and internal controls for a nonprobability,2 nongeneralizable 

sample of six USAID and State partners and 11 of their subpartners, in 

order to assess performance and financial monitoring and oversight of 

their awards and contracts. While the results of our analysis of these six 

partners are not generalizable to the population, we selected this 

nonprobability sample to be generally reflective of other partners in the 

population and to cover a large proportion of the overall dollar value of 

aid. We selected at least one partner from each of the four USAID and 

State bureaus and offices implementing program assistance—USAID’s 

Bureau of Latin American and Caribbean Affairs (LAC); the Office of 

Transition Initiatives (OTI) within USAID’s Bureau for Democracy, 

Conflict, and Humanitarian Assistance; State’s Bureau of Democracy, 

Human Rights, and Labor (DRL); and State’s Bureau of Western 

Hemisphere Affairs (WHA). While there were in total 29 partners from 

which we selected, the six selected partners were among the top 15 

recipients of program funding awarded in fiscal years 2007 through 2010, 

and represented about 60 percent of funding for awards active in fiscal 

year 2011. Other factors that we considered in selecting partners included 

the timing of the awards and contracts—we selected partners with awards 

or contracts active in fiscal year 2011—and other strategic factors, such 

as the type of activity planned under the award or contract and whether 

 

2

A nonprobability sample is not randomly selected, but rather is selected based on the use 

of a set of key criteria; also, it is not a large enough sample for findings to be generalizable 

to the full population of partners.
Appendix I: Objectives, Scope, and 

Methodology

Page 45 GAO-13-285 Cuba Democracy Assistance

the partner had ongoing or new program activities planned for fiscal year 

2012 and beyond. We judgmentally selected two subpartners for further 

review under each of the partners, except for the one partner that only 

used one subpartner. To select subpartners, we considered factors such 

as funding received, whether the subpartner had recent activity in fiscal 

year 2011, the type of activity implemented, and other strategic factors. 

These subpartners are not generalizable to the population, but provided 

additional program context and examples for the purposes of our review. 

Table 5 provides additional information on the partners in our sample.

Table 5: Selected USAID and State Implementing Partners

Implementing partner

Awarding agency and 

bureau/office for each 

award/contract

Total obligation to award/ 

contract

Number and type of subpartners 

reviewed per award/contract

Partner #1 USAID/OTI $11,600,000 Two subgrantees

Partner #2 USAID/LAC $6,857,817 Two subgrantees

Partner #3 USAID/LAC $3,300,000 One subcontractor and one subgrantee

State/DRL $591,000 — 

State/DRL $500,000 — 

State/DRL $837,053 — 

Partner #4 USAID/LAC $3,700,000 Two subcontractors

Partner #5 USAID/LAC $3,000,000 One subgrantee

State/DRL $591,000 One subcontractor

Partner #6 State/WHA $821,232 One subcontractor

Source: GAO analysis of USAID, State, and implementing partner records.

To examine USAID’s and State’s monitoring of the use of program funds, 

we reviewed and analyzed performance and financial documentation and 

data and conducted interviews with USAID and State officials, as well as 

representatives of partners and subpartners in our sample. In addition, we 

conducted fieldwork in Miami, Florida—where we interviewed 

representatives and reviewed documentation at local partners and 

subpartners—and at the U.S. Interests Section (USINT) in Havana, 

Cuba—where we interviewed U.S. officials and partner representatives, 

and observed WHA-funded democracy assistance activities at post. We 

examined USAID’s and State’s program operational plans and 

performance progress reports; agency and partner policy and procedure 

manuals and program guidance; agendas and information presented at 

quarterly partner meetings; partner and subpartner award agreements 

and contracts; partner implementation, monitoring and evaluation (M/E) 

plans; partner and subpartner interim and final performance and financial 
Appendix I: Objectives, Scope, and 

Methodology

Page 46 GAO-13-285 Cuba Democracy Assistance

reports; and audits of partner activities, among other documents and 

data.

To review partners’ M/E plans, we assessed whether each plan had three 

of the basic elements of M/E plans, as described in USAID and State 

guidance: (1) clearly defined indicators, (2) targets set for each indicator, 

and (3) data collection methods specified for each indicator. We selected 

these criteria since they were common elements that M/E plans should 

have, according to USAID and State guidance. Because we focus on 

assessing the agencies’ and partners’ abilities to monitor, not to evaluate, 

the Cuba democracy program, we did not select criteria for assessing any 

portions of the M/E plans related to evaluation. We analyzed each M/E 

plan to determine the extent to which the plan incorporated each element. 

For example, we determined that an M/E plan partially met the criterion 

for clearly defined indicators if the plan had indicators but did not provide 

definitions for the indicators. For targets, we assessed a partner’s M/E 

plan as having partially met the criterion if there were relevant targets 

specified for some but not all indicators. For data collection methods, we 

assessed the partner’s M/E plan as having partially met the criterion if 

data collection methods were only described for some indicators or if the 

plan generally described data collection methods, but did specify which 

methods pertained to each indicator.

To review partners’ progress reports, we assessed whether progress was 

clearly reported against each indicator identified in the M/E plans. We 

determined that a partner’s progress report met this criterion if the report 

included specific updates on progress for each indicator, with any 

progress for quantitative indicators (e.g., number of beneficiaries) 

reported in numeric form. We assessed a partner’s progress report as 

partially having met the criterion if it reported progress in this specific way 

on some but not all indicators. We assessed a partner’s progress report 

as not having met the criterion if the partner did not clearly report 

progress on any of its indicators.

Additionally, we interviewed officials from the two organizations 

contracted by USAID/LAC to conduct performance and financial reviews 

of partners. We reviewed partner and subpartner internal controls and 

related residual fiscal accountability risk, and also performed walkthroughs of their disbursement processes and reviewed invoices and 

other supporting documentation. We primarily focused our review on 
Appendix I: Objectives, Scope, and 

Methodology

Page 47 GAO-13-285 Cuba Democracy Assistance

compliance with internal controls standards relating to monitoring of 

program funds and to reviewing certain control activities.3 We performed 

selected expenditure testing at each partner and subpartner in our 

sample, when applicable, to identify potential internal controls or financial 

management issues. We also reviewed our previous reports and 

interviewed experts to identify lessons learned and to better understand 

challenges related to providing democracy assistance for Cuba.

We conducted this performance audit from September 2011 to January 

2013 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.

 

3

See GAO, Standards for Internal Control in the Federal Government, 

GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999). 
Appendix II: Comments from the U.S. Agency 

for International Development

Page 48 GAO-13-285 Cuba Democracy Assistance

Appendix II: Comments from the U.S. Agency 

for International Development

Note: GAO received 

comments from USAID 

on November 21, 2012

for the Sensitive But 

Unclassified version of 

this report.
Appendix II: Comments from the U.S. Agency 

for International Development

Page 49 GAO-13-285 Cuba Democracy Assistance
Appendix III: Comments from the U.S. 

Department of State

Page 50 GAO-13-285 Cuba Democracy Assistance

Appendix III: Comments from the U.S. 

Department of State 
Appendix III: Comments from the U.S. 

Department of State

Page 51 GAO-13-285 Cuba Democracy Assistance
Appendix III: Comments from the U.S. 

Department of State

Page 52 GAO-13-285 Cuba Democracy Assistance
Appendix IV: GAO Contact and 

Staff Acknowledgments

Page 53 GAO13-285 Cuba Democracy Assistance

David Gootnick, (202)512-3149 or gootnickd@gao.gov

In addition to the contact named above, Leslie Holen, Assistant Director; 

Elisabeth Helmer, Heather Latta, Joshua Akery, Laura Bednar, Beryl 

Davis, David Dayton, David Dornisch, Ernie Jackson, Crystal Lazcano, 

John Lopez, Reid Lowe, and Kim McGatlin provided significant 

contributions to the work. Etana Finkler and Jeremy Sebest provided 

technical assistance.

Appendix IV: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(320959)
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