Foreign Assistance: Disaster Recovery Program Addressed Intended Purposes, but USAID Needs Greater Flexibility to Improve Its Response Capability
Published: 2002-07-24T00:00:00

Fast Facts:

Highlights:
section_title: What GAO Found
paragraphs: In the fall of 1998, when hurricanes Mitch and Georges struck Central America and the Caribbean, the United States and other donors responded by providing emergency relief, such as food, water, medical supplies, and temporary shelter. Also, In May 1999, Congress passed emergency supplemental legislation that provided $621 million for a disaster recovery and reconstruction fund for the affected countries, as well as reimbursement for costs incurred by U.S. departments and agencies during the immediate relief phase. The U.S. Agency for International Development (USAID) and other departments and agencies made significant achievements in helping the affected countries rebuild their infrastructure and recover from the hurricanes. USAID and others used the disaster recovery assistance to bring about economic recovery, improve public health and access to education, provide permanent housing for displaced families, and improve disaster mitigation and preparedness. To achieve these broad objectives, USAID funded infrastructure construction and repair, technical assistance and training, loans for farmers and small businesses, and some equipment. In addition to its normal controls, USAID ensured that the funds were spent for intended purposes. USAID coordinated its activities with 12 other departments and agencies that were allocated $96 million for disaster recovery efforts. USAID also coordinated with other bilateral and multilateral donors through formal consultative group meetings and informal contacts among mission staff and other donors. USAID attempted to strengthen the capacity of host government audit in situations as a means to resist corruption. However, USAID was not successful in this area, mostly due to country conditions. USAID did not begin expending the supplemental funds until January 2000, 7 months after the appropriation was enacted. Some of the factors that added time included arranging for additional program staff and contractor support; ensuring that financial controls and other oversight measures were in place; coordinating with and planning for the involvement of numerous other departments and agencies; and providing for U.S. contractors and other organizations to compete for most of the contracts, grants, and cooperative agreements that were awarded.

section_title: Letter
paragraphs: In the fall of 1998, Hurricanes Mitch and Georges struck Central America  and the Caribbean. The storms left thousands dead and many more  homeless; damages were estimated at more than $10 billion. The United  States and other donors initially responded by providing emergency relief,  such as food, water, medical supplies, and temporary shelter. In May 1999,  the international donor community pledged $9 billion to assist in the  recovery and reconstruction of hurricane-affected countries in Central  America. Also, in May 1999, the Congress passed emergency supplemental  legislation that, among other things, provided $621 million for a disaster  recovery and reconstruction fund for the affected countries as well as  reimbursement funds to U.S. government departments and agencies for  costs incurred during the immediate relief phase.  The U.S. Agency for  International Development (USAID) and numerous other U.S. departments  and agencies used this funding to implement disaster recovery and  reconstruction activities. In discussions with congressional staff, USAID  agreed to complete the program and expend the supplemental funds by  December 31, 2001.
Congressional staff, concerned about the history of corruption in the  region and the prior misuse of foreign aid for relief and reconstruction,  asked us to concurrently monitor the delivery of assistance through  frequent field visits to assist in their oversight responsibilities. The emergency supplemental legislation provided $500,000 for us to monitor  the assistance provided.  This report is a summary of our monitoring  activities since July 1999. Our objectives were to determine (1) whether the  programs and projects funded by USAID and the other U.S. departments  and agencies addressed the intended purposes of disaster recovery and  reconstruction, (2) whether USAID coordinated with other U.S.  government entities and other international donors to avoid duplication,  (3) what USAID did to help the affected countries strengthen their audit  institutions’ capabilities to resist corruption, and (4) the challenges and  obstacles faced by USAID in delivering the assistance.
To address these matters on an ongoing basis, we made numerous trips to  the region, focusing most of our visits on the three countries that received  the most U.S. assistance—Honduras ($293.1 million), Nicaragua  ($94.1 million), and the Dominican Republic ($29 million). We also made at  least one visit each to four other countries that received U.S. assistance as  a result of Hurricane Mitch or Georges.  While we addressed all the  research questions during our field work, we focused most of our efforts on  whether the disaster recovery funds were spent for intended purposes. On  our trips, we visited numerous project sites at varying stages of progress.  We traveled to some of the most remote areas, talked with many of the  people seriously affected by the hurricanes, and monitored the progress of  numerous USAID projects and those of the other U.S. departments and  agencies across a wide range of sectors. We briefed USAID officials on our  findings during these trips and provided our observations on the progress  of the disaster recovery activities so that USAID could take corrective  action, if needed. (See app. I for a more complete description of our scope  and methodology.)  We also asked USAID missions and the other U.S.  departments and agencies about their experiences in implementing the  disaster recovery program. Their responses are summarized in appendixes  II and III, respectively.
subsections: section_title: Background
paragraphs: In late October and early November 1998, Hurricane Mitch struck Central  America, producing more than 6 feet of rain in less than a week, mostly  over Honduras. The heavy rainfall caused flooding and landslides that  killed thousands of people; left tens of thousands homeless; and devastated  infrastructure, agriculture, and local economies. In addition, in September  1998, Hurricane Georges hit several eastern Caribbean islands and the  island of Hispaniola, which comprises the Dominican Republic and Haiti.  Hurricane Georges also caused the deaths of hundreds of people and  severely damaged infrastructure, crops, and businesses. See figure 1 for a  map of the region and the countries affected by Hurricanes Mitch and  Georges that we visited.
U.S. relief efforts began immediately and USAID began providing limited  reconstruction assistance using redirected program funds and other  sources. However, the Congress and the administration recognized the  need for longer-term assistance for recovery and reconstruction. In March  1999, President Clinton visited Central America and promised to help these  countries rebuild their economies and social sectors. At the same time, USAID began developing a recovery plan for each hurricane-affected  country, which outlined USAID’s funding estimates and proposed  programs. In late May 1999, the Congress passed and the President signed  an emergency supplemental appropriation that provided, among other  things, $621 million for the countries affected by Hurricanes Mitch and  Georges. In general, the funds were to be used to rebuild infrastructure,  reactivate host country economies, and restore basic services.
section_title: Disaster Recovery Program Addressed Intended Purposes
paragraphs: USAID was the primary agency responsible for carrying out the U.S.  disaster recovery program. Of the $621 million authorized, USAID was  directly responsible for about $587 million, including about $62 million in  agreements with other U.S. departments and agencies, such as the U.S.  Department of Agriculture and U.S. Geological Survey. The remaining  $34 million was transferred directly by USAID to other U.S. departments  and agencies, such as the Departments of Housing and Urban Development  and State. Based on an informal agreement with congressional staff, USAID  agreed to expend all the funds by December 31, 2001—about 30 months  from enactment of the supplemental appropriation. As shown in table 1,  USAID and the other U.S. departments and agencies had completed most of  their programs by the deadline. Some activities, such as a $40 million urban  water and sanitation program in Honduras, are still being implemented.   Appendix IV contains further details on funding and expenditures for  USAID and the other U.S. government entities.
USAID and the other U.S. government entities implemented disaster  recovery activities that helped the hurricane-affected countries rebuild  their infrastructure and restore economic activity. USAID’s overall  objectives were to help bring about economic recovery, restore and  improve basic services, and mitigate the effects of future natural disasters.  Each country’s program varied based on country conditions and the USAID  mission’s approach. In general, the funds were used for  repairing or rebuilding the infrastructure needed for reactivating  economies (e.g., roads and bridges), public health infrastructure (e.g.,  potable water systems, sewage and drainage systems, and health  clinics), housing, and schools;   providing loans, credits, and technical assistance for small- and  medium-sized farms and businesses;   strengthening disaster mitigation efforts such as civil defense, early  warning and prevention, and watershed management; and  strengthening accountability.
In Honduras and Nicaragua, USAID financed the repair of 2,817 kilometers  (about 1,756 miles) of secondary and tertiary roads. In Honduras, USAID  funded the repair of 62 municipal water and sanitation systems and 1,211  rural water systems. In the Dominican Republic, USAID funding repaired  1,514 houses and constructed 2,248 new homes (see fig. 2). The activities of  other U.S. agencies ranged from installing stream gauges for early flood  warning to equipping national public health laboratories. These and many  other projects resulted in improved transportation, agricultural land  restored to productive use, improved health through potable water and  sanitation systems, increased access to health care and education,  increased employment through credit programs, and improved capabilities  to mitigate the effects of future disasters.
USAID attempted to ensure that projects and activities would be  sustainable after its disaster recovery activities were completed. For  example, in Honduras, USAID funded training for municipal officials and  local water boards to provide them with the management and budget skills  to operate and maintain new water and sanitation systems. Also, the  Honduran government ministry responsible for road maintenance gave  USAID-funded roads priority in its 2-year maintenance schedule. However,  the hurricane-affected countries are poor and in debt and, in many  instances, plagued by bureaucratic inefficiencies and corruption. It is too  early to determine if national governments and local officials will have the  resources or political will to maintain the infrastructure rebuilt with USAID  funds.
subsections: section_title: Additional Oversight Measures Established
paragraphs: Due to widespread concerns that such a large program with a 30-month  time frame would be susceptible to misuse or corruption, USAID missions  were cautious from the outset of the program. In addition to its regular  program and financial controls, USAID set up some additional oversight  measures, such as hiring accounting firms to oversee a host country’s  expenditures. In addition, the supplemental legislation provided funds for  USAID’s Office of the Inspector General and for us to monitor the provision  of the assistance. This additional oversight and monitoring resulted in  instances of problems being identified and addressed by USAID and other  U.S. government departments and agencies as activities were under way  and changes could still affect the success of the program or project. USAID  missions generally said that the additional oversight measures were useful  in enhancing accountability but that the time required by staff to comply  with numerous auditors was burdensome and sometimes affected program  implementation.
In Honduras, the major infrastructure construction programs—totaling  about $135 million—were implemented primarily by the Honduran Social  Investment Fund, a government agency established to ease the impact of  structural adjustment policies through employment generation and social  programs. To help protect the U.S. assistance from potential misuse, the  mission established a separate oversight unit within the fund for its  $50 million road and bridge program (see fig. 3). A U.S. project manager  headed the unit with a U.S. chief engineer and local technical and support  staff. For both the road and municipal water and sanitation system  programs, the mission contracted with financial services firms to handle  disbursements to the fund following approvals by USAID and the oversight  unit. For the water and sanitation program, USAID relied on the U.S. Army  Corps of Engineers to provide technical oversight. For its school  construction program, USAID only reimbursed the fund after units were  completed and inspected by USAID and its oversight contractors (see fig.  4). Finally, in many instances, the Honduran mission hired U.S.  management services firms and private voluntary organizations to oversee  other activities implemented by local entities.
USAID’s program in Nicaragua was mostly implemented by U.S. and  international voluntary and local implementing organizations that had a  proven track record with the mission and whose ongoing cooperative  agreements were easily amended. For its only program with the  Nicaraguan government—a $2.1 million municipal infrastructure program  implemented by the Emergency Social Investment Fund (an entity similar  to the Honduras fund)—USAID hired a U.S. management services firm to  provide oversight and technical assistance. USAID also relied on the Corps  of Engineers and the U.S. Department of Agriculture to review municipal  infrastructure designs and make recommendations accordingly.
A primary component of oversight is having sufficient staff to monitor  project activities and spending and identify any problems that may occur  along the way. As USAID’s direct-hire foreign service staff levels have  declined over the years, it has turned increasingly to using personal  services contractors to conduct most of the day-to-day oversight of its  programs, including the disaster recovery program. USAID hired  numerous personal services contractors to help oversee its activities and  provide technical and administrative support. In Honduras, the program  office and technical officers throughout the mission shared responsibility  for oversight. The mission hired 33 additional personal services contractors  to oversee its program and provide administrative support. In Nicaragua,  USAID contracted for a reconstruction coordinator and hired 40 additional  personal services contractors. In the Dominican Republic, the mission set  up a separate reconstruction team comprised mostly of contract staff.
In addition to our monitoring, the Regional Inspector General’s Office in El  Salvador contracted with the Defense Contract Audit Agency and local  affiliates of international accounting firms to conduct concurrent audits of  vulnerable programs and regular audits of many other activities. It also  hired five full-time personal services contractors to oversee its financial  audit activity. According to the Deputy Regional Inspector General, as of  December 31, 2001, its office had conducted 165 financial audits covering  $218 million in USAID-managed funds. The Regional Inspector General’s  Office also conducted 14 performance audits in 6 countries and provided  fraud awareness training in 7 countries to 2,141 participants. The USAID  Inspector General gave the USAID missions generally high marks for their  financial management of the disaster recovery program, noting that the  small amount of questioned costs identified by its audits (about $5 million, or 2.2 percent as of December 31, 2001) demonstrated the effectiveness of  ongoing oversight.
section_title: USAID Took Corrective Action During Implementation
paragraphs: Through increased oversight of this program, potential or ongoing  problems were identified as project implementation was under way. In  many cases, the USAID mission staff responsible for program oversight  identified problems and took immediate action to keep their programs on  track. In other instances, our visits, regional inspector general audits, and  others with technical expertise identified concerns that USAID corrected.
subsections: section_title: Honduras
paragraphs: During a trip to northern Honduras in October 2000, we traveled a road  repaired with USAID funds that had been poorly compacted. As a result,  recent rains had turned the road to mud and it was nearly impossible to  drive on. This road is an important access route for transporting African  palm oil to the coast for export and for local commerce. The U.S. engineer  responsible for technical oversight agreed with our concerns and took  prompt action to ensure that the road was repaired properly. On a  subsequent visit, we noted that the road had been repaired and was in  excellent condition.
In July 2000, during a visit to El Pataste in northern Honduras, we observed  a housing project with well-constructed houses but no firm plans for  potable water, despite a contractual obligation to ensure that key services  were incorporated into housing communities. USAID eventually was  successful in having the implementing organization negotiate a way to  provide potable water. To better track and report on the progress of its  housing program, USAID also developed a matrix for each housing project  that specified how water and other infrastructure were to be provided as  well as proof that an environmental assessment had been completed (see  fig. 5).
USAID provided $2.5 million to a Honduran agricultural lending  cooperative for loans for small- and medium-sized farms despite a record of  concerns about its management problems and financial viability. According  to USAID, this was the only organization available to provide credit for  smaller producers. USAID hired a management services firm to handle loan  disbursements and provide technical assistance for implementing  management reforms, but the problems persisted. Based on USAID’s  continuing oversight and our review, USAID strongly encouraged the  organization’s Board of Directors to accept major restructuring of its  organizational, management, and financial framework. In January 2001, the  Honduran minister of finance signed a memorandum of understanding with  the lending organization outlining these changes and the likely  consequences if the reforms were not made. USAID subsequently released  $500,000 of the $2.5 million loan fund that it had suspended pending the  signing of the memorandum.
section_title: Nicaragua
paragraphs: In Nicaragua, we visited numerous sites where four international private  voluntary organizations were implementing USAID’s cash-for-work and  food-for-work rural road rehabilitation projects. After consulting with  project engineers and Corps of Engineers staff, we pointed out several  deficiencies in the quality of the work, including roads not properly  crowned to prevent standing water, ditches not adequately dug to facilitate  drainage of water, and roadbed materials not suitable for withstanding  traffic and weather. Based on these observations, the private voluntary  organizations hired engineers to oversee road activities. We observed a  noticeable improvement in USAID’s road projects on subsequent visits (see  fig. 6).
USAID, in an effort to further improve the quality of road repairs in  Nicaragua, decided that the four nongovernmental organizations would use  heavy machinery on the more difficult roads. These cash-for-work and  food-for-work programs initially emphasized income generation, and  USAID’s plan was that the nongovernmental organizations would only use  hand labor. However, USAID and the Corps of Engineers soon realized that  some roads could not be adequately repaired using only hand labor and  would not withstand normal weather and traffic. USAID subsequently  required the organizations to use both heavy equipment and hand labor and  the road quality improved substantially. In addition, some organizations  later coordinated their roadwork activities and shared equipment, resulting  in lower costs.
In October 2000, we visited a health post in rural Nicaragua where a private  voluntary organization constructed a residence for medical personnel and  rehabilitated a clinic. USAID had been told that the work was completed,  the Ministry of Health had assigned medical personnel, and the post was in  operation. However, when we arrived, the facility was vacant and evidently  had been so for months. We questioned whether USAID should be involved  in such a project, given the ministry’s lack of support. In January 2001, we  returned to the clinic unannounced and found that the clinic was operating  and a doctor was present and living at the residence. He had been assigned  following our earlier visit.
section_title: Other Affected Countries
paragraphs: In December 2000, we visited a reforestation and agricultural project in El  Salvador. With USAID disaster recovery funding, a U.S. nongovernmental  organization was teaching farmers to grow cashews and lemon trees to  increase their incomes and provide erosion protection. Although a well was  nearby, the community leader pointed out to us that the farmers needed a  pump to irrigate the new plantings during their first dry season. We saw  that some trees had already died and others would soon die without  irrigation. In response, USAID committed to finance a new pump. In  October 2001, we returned to the community and observed that the pump  had been installed and that the plantings were growing.
In May 2000, we visited a school in the Dominican Republic that was  undergoing repairs with disaster recovery funds. The initial project  included only classroom repairs. However, the sanitation facilities had also  been destroyed and we were told that students were using the nearby field.  After we reported the apparent oversight, USAID responded by adding  latrines to the project. New latrines were in place when we visited in  August 2001.
Several USAID officials stated that our oversight and monitoring not only  encouraged specific improvements, but also provided a continuous  deterrent effect because contractors, grantees, host government officials,  and project beneficiaries were actively aware of U.S. congressional  scrutiny over the program. One mission director added that our visits were  used to encourage contractors and grantees to stay on track and comply  with the terms of their agreements. The acting mission director at another  mission noted that, although the multiple layers of auditing were  sometimes overwhelming, the audit findings helped the mission manage  the program and report to the Congress on its progress.
section_title: Two U.S. Departments Reprogram Funds
paragraphs: We also monitored the pace of expenditures and the activities of most of  the other U.S. departments and agencies. In June 2001, we attended  meetings of the Office of Management and Budget, USAID, and the other  U.S. departments and agencies. At the time, it was apparent that a few  departments and agencies were not expending their funds in a timely  manner and that they likely would not meet the December 31, 2001,  deadline for completing their activities.
subsections: section_title: Department of State
paragraphs: In early September 2001, an official with the State Department’s Bureau for  International Law Enforcement and Narcotics told us that, of the $923,600  the bureau planned to spend in the Dominican Republic, $400,000 would be  reprogrammed for an assets forfeiture project in the Dominican Republic  and the remaining $523,600 would be reprogrammed for a de-mining  program in Central America. However, the necessary arrangements to  implement those proposals had not been completed. After our inquiries, on  September 30, 2001, the bureau completed the paperwork to reprogram the  $400,000. In January 2002, the bureau told us that the remaining $523,600  would not be reprogrammed and that it had returned $514,242 to the U.S.  Treasury.
section_title: Department of Housing and Urban Development
paragraphs: In March 2001, the Department of Housing and Urban Development (HUD)  canceled a $1.1 million housing micro-credit project in Honduras because  the in-country organization tasked to implement the project did not have  the capacity. When we followed up in August 2001, HUD had not finalized  plans for what it would do with these funds. Subsequent to our inquiry, in  September 2001, HUD modified the housing finance contract to specify  how the funds were to be used for two different projects in the Dominican  Republic and El Salvador. The work in the Dominican Republican began  soon after the contract was modified. In El Salvador, a contract with a  private lender to capitalize a revolving loan fund for a housing micro-credit  program was signed in December 2001.
section_title: USAID Coordinated with U.S. Government Entities and International Donors
paragraphs: USAID worked with the 12 U.S. departments and agencies that  implemented about $96 million in disaster recovery activities to help plan  their efforts and provide administrative support. Because many of these  agencies had little or no experience working in developing countries, their  involvement in the program was time-consuming and burdensome for  USAID staff in the beginning stages. USAID officials noted, however, that  some agencies provided needed technical expertise. The other agencies  generally acknowledged that it took time to incorporate their activities into  USAID’s program but added that it had been a positive experience overall.  USAID also coordinated with other bilateral and multilateral donors  through formal consultative group meetings and informal contacts among  mission staff and other donors. In contrast to many donors, USAID  concentrated its activities in rural areas and smaller cities, making  duplication with other donor efforts unlikely. We found no evidence that  USAID activities duplicated those of other U.S. departments and agencies  or other international donors.
subsections: section_title: USAID Coordination with Other U.S. Departments and Agencies Was Initially Burdensome
paragraphs: Many of the U.S. government entities involved in the disaster recovery  program had little or no prior experience in working overseas. At the  outset, USAID staff spent considerable time incorporating these agencies  into USAID’s disaster recovery program and helping the agencies develop  work plans in accordance with USAID’s development approach. In  addition, the agencies’ administrative requirements, such as office space,  residences, vehicles, equipment, and supplies, had to be coordinated with  the respective U.S. embassy’s overall administrative services account.  According to USAID officials, coordinating with numerous other U.S.  entities was demanding and time-consuming for USAID staff, particularly  at the outset of the disaster recovery program when staff were involved in  initial relief and reconstruction activities.
Nevertheless, USAID officials generally agreed that many agencies added  value once the initial coordination problems were resolved. In particular,  USAID officials most often cited the four agencies with scientific,  technical, and engineering expertise not available at USAID— the Corps of  Engineers, the National Oceanic and Atmospheric Administration, the U.S.  Department of Agriculture, and the U.S. Geological Survey—as those that  added the most value to the USAID recovery program. For example, these  agencies provided engineering advice on infrastructure projects and  carried out a number of activities designed to mitigate the effects of future  natural disasters, such as conducting watershed management studies,  installing stream gauges to monitor river flooding, and providing technical  assistance on early warning and prevention systems to host government  staff.
Officials from the other U.S. departments and agencies expressed concerns  about the time it took to incorporate a relevant program into USAID’s  framework and the administrative constraints of operating overseas.  Officials from some agencies noted that each USAID mission and embassy  operated a little differently, and some missions asked for additional  paperwork that may not have been required at another mission. One  agency official told us that it received varying information on the need for  country clearances for travel. Another noted that the missions and USAID  headquarters sometimes provided conflicting information on the work plan  and reporting requirements. One agency reported that it had some  difficulty coordinating with the missions. However, as summarized in  appendix III, most agencies noted that working with USAID was a positive  experience and that USAID had been very helpful in guiding them through  the reconstruction program.
section_title: USAID Coordination with Other International Donors
paragraphs: USAID regularly coordinated with international financial institutions,  multilateral organizations, and other bilateral donors. For the Hurricane  Mitch countries, the highest level of coordination occurred at the  international consultative group level. At a consultative group meeting held  in May 1999 in Stockholm, Sweden, the governments of Central America  and the international community developed the guiding principles and  goals for reconstruction, known as the “Stockholm Declaration.”  The  overriding goal of reconstruction, as stated in the declaration, was to  reduce the social and ecological vulnerability of the region. At subsequent  meetings, donors and recipient countries, including civil society  representatives, reviewed the progress toward reconstruction. Although no  consultative groups were formed to assist the Dominican Republic, Haiti,  and other Caribbean islands affected by Hurricane Georges, USAID  similarly coordinated with its counterparts in the international donor  community.
At Stockholm, the international community pledged $9 billion, including  the U.S. pledge of $1 billion.  However, these pledges have not been fully  paid. According to USAID officials, commitments totaling about $5.3 billion  are still considered firm as of May 2002. We were unable to obtain  information on the status of other donors’ actual expenditures. Based on  discussions with officials of USAID, host governments, nongovernmental  organizations, and other donors, USAID was among the first to expend  funds and complete most of its program. In Honduras and Nicaragua, we  saw evidence of the contributions of other bilateral donors, particularly  bridges and other infrastructure built by the Swedish and Japanese aid  agencies.
Coordination among USAID and other donors was evident at the country  level. In Honduras and Nicaragua, donor representatives met regularly to  discuss their respective aid programs and emerging issues.  In addition,  USAID technical staff coordinated with their counterparts at the program  and project level. For the most part, USAID targeted its activities in rural  areas where other donors had little or no activity. In instances of potential  duplication, we found that USAID took action to ensure that its activities  added value. For example, when USAID began public health activities in a  remote area of northern Nicaragua along the Honduran border, it found  that the Organization of American States was conducting similar health- related activities in the same region. After several meetings and with  guidance from the Nicaraguan Ministry of Health, USAID and the  organization’s representatives agreed to target their activities to avoid  duplication. Specifically, the Organization of American States agreed to  continue its monthly training with community health agents, and USAID  agreed to focus its funds on sexual and reproductive health, disaster  prevention and mitigation, and other activities not covered by the  organization’s project.
Although coordination existed within the international community, some  USAID officials stated that coordination with the host governments was  less than optimal. Each Central American country developed its plan for  hurricane reconstruction with assistance and support from the donor  community. However, according to U.S. and other donor officials, in  practice, some governments generally did not maintain up-to-date  information on donor activities or prioritize their proposed projects.
section_title: USAID’s Efforts to Strengthen Host Government Audit Capabilities Were Limited
paragraphs: The conference report accompanying the legislation for the supplemental  appropriation directed USAID to help the affected countries develop an  institutional capacity to resist corruption.  USAID’s efforts to combat  corruption through assistance to audit institutions had mixed results. In  Honduras, USAID provided $1.3 million to the Controller General’s Office  to strengthen its capacity to audit reconstruction programs and promote  enhanced awareness of the importance of vigilance over public funds. This  funding for equipment, technical assistance, and training continued  institutional strengthening efforts initiated before Hurricane Mitch.  However, in other instances host government realities limited USAID’s  overall progress in this area.
The Nicaraguan government diluted the independence of its Controller  General’s Office by creating a panel of five appointees representing two  parties to oversee the office’s activities. USAID subsequently terminated  its regular program with the office 9 months later when it became  apparent that the panel would not take the advice of USAID-funded  technical advisors. Similarly, USAID terminated its program with the  Dominican Republic Controller General’s Office because it lacked  independence.
USAID also contributed $4.2 million to the Inter-American Development  Bank to establish independent oversight units within the Honduran and  Nicaraguan governments.  These units are intended to oversee the  operations of government ministries and independent government  agencies, similar to U.S. government offices of inspectors general. In  early June 2002, USAID released $1 million to the bank to contract for  the consulting services for the Honduras unit. According to USAID, the  unit in Honduras began operating in June 2002 and the remaining $2.2 million should be disbursed by the end of 2002. In Nicaragua,  according to USAID officials, the implementation of this unit was  slowed by the bank’s lengthy project approval process, the time needed  to gain financial support from other donors, and the previous  government’s lack of commitment. The government elected in  November 2001 supports the project and proposed some modifications  to strengthen local capacity building rather than merely hiring  contractors to implement the unit. USAID expects the unit to begin  operations in September 2002 with USAID’s $1 million covering the  initial costs.
section_title: USAID Had to Overcome Numerous Challenges to Initiate Disaster Recovery Assistance
paragraphs: USAID faced numerous challenges in initiating this large-scale disaster  recovery program that affected the pace of implementation in the  beginning phases. USAID had to balance the competing interests of  expediting implementation of the program with ensuring that appropriate  oversight and financial controls were in place and procurement actions  were open and transparent. Overall, USAID does not have the “surge  capacity” to quickly design and implement a large-scale infrastructure and  development program with relatively short-range deadlines. The reasons  are institutional, systemic, and long-standing and will require deliberate  and sustained actions if USAID is to improve its ability to respond more  quickly to such situations in the future.
subsections: section_title: USAID Did Not Begin Expending Supplemental Funds Until 2000
paragraphs: With a few exceptions, USAID began expending disaster recovery funds  from the supplemental appropriation in January 2000, about 7 months after  the supplemental appropriation of $621 million was approved.  (See fig. 7  for a timeline illustrating USAID’s expenditures.)  Some of this time was  used to notify the Congress about how the supplemental funds were to be  expended.  In most cases, the funds were available during July and August  of 1999. USAID then had to complete its contracting processes and ensure  that program management and oversight were in place.
During 1999, before the supplemental funds were available for use, USAID  missions used $189 million in other funds for emergency relief and initial  reconstruction programs, such as food-for-work activities to rebuild  infrastructure in hurricane-affected areas. During this time, USAID  missions were also operating with the staff resources allocated based on  their regular programs, and they also had to deal with the rotation of  several senior-level staff during the summer of 1999.
section_title: Start-up Challenges and Obstacles Slowed Program Initiation
paragraphs: Before Hurricane Mitch, the Honduran and Nicaraguan missions were  managing annual programs of about $23 million and $30 million,  respectively. The Honduran mission had recently been considerably  reduced in size and it took many months to fill the positions needed to  oversee the disaster recovery program. In particular, the Honduran mission  did not have a permanent contracts officer—it had been sharing one with  the Nicaraguan mission—until October 1999, a year after Hurricane Mitch.  Other missions also shared contracts officers. As noted in appendix II, the  missions in Honduras, Nicaragua, and the Dominican Republic said the  absence of full-time contracts officers led to delays.
The number of USAID direct-hire staff in general, and contracts officers in  particular, has declined in recent years and USAID had difficulty finding  qualified personnel to manage this large-scale emergency program on an  expedited basis. This problem was compounded by some USAID senior- level staff (for example, contracts and administrative officers) rotations  during the summer of 1999. Although USAID’s headquarters office  attempted to ease the burden by providing temporary staff in the hurricane- affected countries, the missions lacked needed continuity, and, according  to the Honduran mission, the lack of travel funds precluded timely  assistance for some activities. The Honduran mission emphasized that the  need to obtain qualified staff more quickly is one of the most important  lessons learned from the hurricane reconstruction program.
USAID also does not have any procedures to expedite the hiring of  personal services contractors. As a result, acquiring personal services  contractors with the requisite language and technical skills to manage the  reconstruction program often took 6 months to more than a year. The  process involves revisions in position descriptions and scopes of work,  internal and external position announcements, screenings, interviews, and  medical and security checks. For example, the Nicaraguan mission  experienced major delays in security clearances—one person accepted a  job elsewhere after waiting more than a year for a clearance. The hiring and  clearance process also precluded the timely arrival of in-country staff from  other U.S. departments and agencies to conduct their programs. Because  contractor and other U.S. agency staff provided much of the day-to-day  management of the program, these delays were burdensome for the USAID  staff on board and slowed the pace of implementation.
In addition to building up staffing levels, the missions in some countries  decided to implement certain accountability measures prior to program  implementation. For example, before it began its host country contracting  programs for major infrastructure projects, the USAID mission in  Honduras advertised for and selected a U.S. engineering and project  management firm to oversee the technical aspects and a third-party  accounting firm to handle disbursements to the Honduran government.
Although USAID missions had the authority to waive full and open  competition for awarding contracts and grants, it was used sparingly. The  Honduran mission used the waiver authority to bypass the normal  requirement to advertise in the Commerce Business Daily, which saved 60  days in awarding some contracts. In many instances, missions amended  existing cooperative agreements and contracts to accelerate the  procurement process. However, although using sole source awards would  have speeded up the award process, it may have precluded U.S. firms from  being awarded contracts. The Honduran mission, for example, redesigned  much of its municipal water and sanitation program to allow U.S. firms to  compete, resulting in a later start date.
The involvement of numerous other U.S. government departments and  agencies presented a challenge for which the USAID missions were  unprepared. Mission staff told us that, at the beginning of the program,  coordinating with officials from other agencies, helping them with their  work plans, and facilitating their administrative needs took considerable  time away from their already busy workload. The burden eased as some  agencies assigned in-country personnel, but it took considerable time for  these people to arrive because their positions had to be approved by the  embassy and they needed security clearances. Some U.S. entities did not  assign staff in country and USAID had to coordinate temporary duty tours  for these personnel as well.
section_title: Program Observations from USAID and Other U.S. Departments and Agencies
paragraphs: During our review, USAID and the other U.S. government entities provided  their observations on lessons learned and some ideas for improving the  delivery of disaster recovery assistance in the future. USAID and the other  agencies almost unanimously agreed that the December 31, 2001, deadline  was a major factor in how they planned, designed, and implemented their  disaster recovery activities, and it also affected the extent to which  sustainability could be built into the program. USAID missions suggested  limiting the number of other U.S. government entities involved, using  umbrella agreements and indefinite quantity contracts to hasten the  procurement process, avoiding host country contracting, and relying on  organizations that are already working with USAID in the country. Other  U.S. government entities noted that they had learned much about  coordinating an interagency program overseas and had come to appreciate  the complexities of working in developing countries. Some noted the need  for a simpler method of dealing with administrative costs while in  country—one suggestion was for USAID to create one account for charging  all administrative, logistical, financial, and procurement services for future  emergency programs. (As previously noted, see apps. II and III for more  detailed summaries of the responses from the USAID missions and other  U.S. departments and agencies.)
section_title: USAID’s Proposals to Improve Response Capability
paragraphs: USAID officials in the overseas missions and in USAID’s Washington, D.C.,  headquarters generally agreed with our observations on the obstacles it  faced in getting the disaster recovery program off the ground. They  emphasized that the lead role that USAID was expected to perform in  planning and implementing the disaster recovery program was a significant  challenge.
In mid-2000, USAID's Bureau for Latin America and the Caribbean drafted a  “lessons learned” analysis of the disaster recovery program's start-up and  offered recommendations for the systemic and procedural changes needed  for a similar response in the future. It suggested options for funding  flexibility, staff mobilization, program design and planning, accountability,  and the role of other U.S. government agencies and the private sector. The  USAID administrator subsequently formed the Emergency Response  Council to conduct an agencywide review of its experiences with  international emergencies.
In December 2001, the council proposed several program and procedural  reforms to provide more flexibility in planning and implementing activities  in post-crisis or post-emergency situations. In particular, the memorandum  proposed that USAID  missions include in their development strategies and implementation  instruments (such as contracts, grants, and cooperative agreements) a  “crisis modifier” clause to provide resources more quickly;  consider funding alternatives in the absence of supplemental  appropriations, such as increased borrowing authority to use available  USAID resources programmed for other activities;   develop a package of procurement waivers for reconstruction activities,  allowing, among other things, the purchase of certain commodities  without regard to source and origin;  develop strategies for addressing legislative authorities to obtain more  flexibility in reconstruction programming; and  develop a skills database of internal resources available for deployment  on reconstruction design teams.
In May 2002, the USAID administrator approved the council’s  recommendations in the areas of strategic planning and programming,  funding alternatives, and staffing. In addition, also in May 2002, a USAID  contractor hired to independently assess the agency’s response to  Hurricanes Mitch and Georges outlined numerous and sometimes detailed  actions that USAID can take to improve its response to future  reconstruction programs. These recommendations included options for  program design, staff mobilization, procurement, interagency coordination  and administrative support, and accountability.
section_title: Conclusions
paragraphs: USAID and the other U.S. departments and agencies provided disaster  recovery assistance that helped the affected countries recover from the  devastating effects of Hurricanes Mitch and Georges. USAID’s programs  and projects and those of the other U.S. government entities spanned all  sectors and affected countries, helping to rebuild infrastructure, restore  economic activity and access to basic services, and mitigate the effects of  future disasters. Increased oversight of the disaster recovery program  helped ensure that funds were spent for intended purposes and not  misused.
However, USAID faced numerous obstacles and challenges. Primarily,  USAID did not have the flexibility to readily replace key staff—primarily  contracts officers—or the ability to expeditiously hire personal services  contractors to help plan for and initiate the disaster recovery program.  Available USAID mission staff were also involved in providing emergency  relief, initial reconstruction assistance, and continuing regular  development programs. USAID missions in some countries also  implemented certain measures to help ensure accountability over the  assistance funds prior to program implementation. In addition,  coordinating with and helping the other U.S. departments and agencies  develop their programs was burdensome and time-consuming for the  missions. As a result, the initial pace of implementation was slowed as  USAID took steps to obtain adequate staff, incorporate oversight and  accountability measures, and coordinate the activities of other U.S.  government entities.
USAID will likely be called upon to deliver and oversee disaster recovery  assistance again as natural and man-made disasters continue to occur. The  proposal for USAID to oversee and implement a rebuilding program in  Afghanistan after more than two decades of war is the most immediate but  not the only example.  USAID’s Emergency Response Council and an  independent contractor have examined USAID’s response to Hurricanes  Mitch and Georges and made numerous recommendations and proposals  for improving the agency’s response to disaster recovery programs. Our  review further demonstrates that more flexible mechanisms and better  interagency coordination procedures are needed to facilitate initiation of  large-scale disaster recovery programs and could allow USAID to improve  its response time in future similar situations while maintaining adequate  oversight and accountability.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the USAID administrator expedite implementation of  the Emergency Response Council’s proposals approved in May 2002 to help  ensure that USAID has the flexibility and resources needed for a timely  response to future disaster recovery and reconstruction requirements. To  further improve USAID’s ability to respond in similar situations, we  recommend that the administrator develop and implement procedures that  would (1) allow USAID to quickly reassign key personnel, particularly  contracts officers, in post-emergency and post-crisis situations; (2) allow  missions to hire personal services contractors to augment staff on an  expedited basis; and (3) facilitate coordination of efforts with other U.S.  departments and agencies that may be involved in future programs.
section_title: Agency Comments and Our Evaluation
paragraphs: USAID provided written comments on a draft of this report, noting that the  report is comprehensive and constructive (see app. V). USAID concurred  with the report’s findings and conclusions on both the success of the  program and the challenges and impediments faced by USAID, particularly  in the initial phases. USAID stated that it has carefully considered the  lessons learned from the reconstruction experience in Latin America and  will continue to identify changes in its structure and functioning to make it  more flexible in responding to future similar crises.
USAID did not comment on our recommendations. USAID elaborated on  recent steps taken to address three of the five council recommendations in  the areas of strategic planning and programming, funding alternatives, and  staffing. We note, however, that these efforts are just beginning and that  USAID did not address the other two council recommendations on  expanded procurement waivers and legislative authorities. We further note  that these efforts do not address our recommendations to develop  procedures to (1) expedite the reassignment of key direct-hire personnel,  such as contracts officers, in post-emergency situations and (2) facilitate  coordination with other U.S. departments and agencies. As our report  demonstrates, these are important issues for future emergency response  situations and we urge USAID to address these areas.
In addition to USAID, we requested comments from the nine U.S.  departments and agencies that responded to our questionnaire summarized  in appendix III. The Centers for Disease Control and Prevention, the  Department of Agriculture, and the Department of Housing and Urban  Development suggested minor technical clarifications that we have  incorporated into the report as appropriate. The other departments and  agencies had no comments.
We will send copies of this report to interested congressional committees  as well as the Administrator, USAID; the Director, Office of Management  and Budget; and the heads of other U.S. departments and agencies that  participated in the disaster recovery assistance program in Latin America.  We will also make copies available to others upon request. In addition, this  report will be available at no charge on the GAO Web site at  http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-4128 or at FordJ@gao.gov. Other contacts and staff  acknowledgments are listed in appendix VI.
section_title: Scope and Methodology
paragraphs: To determine whether the program and projects funded by USAID and the  other U.S. departments and agencies addressed the intended purposes of  disaster recovery and reconstruction, we conducted work at the  headquarters offices of USAID and other U.S. government entities and  made more than 30 trips to the countries affected by Hurricanes Mitch or  Georges.
In Washington, D.C., we held frequent meetings with officials of USAID’s  Bureau for Latin America and the Caribbean to discuss program  oversight and the status of USAID’s activities. We coordinated with  USAID’s Office of the Inspector General (and its regional office in El  Salvador) to minimize duplication of effort and share information. We  also attended the April 1999 meeting of USAID’s mission directors from  Mitch-affected countries at which they discussed their respective  disaster recovery strategies and we reviewed program strategy  documents. We met with officials from the other U.S. departments and  agencies to discuss and document how the USAID-provided funds were  being spent and the status of their programs.  We coordinated with the  Office of Management and Budget regarding its oversight and attended  meetings it held in June 2001 with USAID and most of the other U.S.  departments and agencies to review the status of their activities and the  pace of their expenditures as the December 31, 2001, deadline  approached. We also visited the Centers for Disease Control and Prevention in Atlanta, Georgia, and the U.S. Army Corps of Engineers in  Mobile, Alabama, for the same purposes.
To conduct the overseas work, we made 11 trips each to Honduras and  Nicaragua, 7 trips to the Dominican Republic, 2 trips each to El Salvador  and Guatemala, and 1 trip each to Costa Rica and Haiti. In each country,  we reviewed USAID’s strategies, work plans, and applicable contracts,  grants, and cooperative agreements and discussed with USAID and  other U.S. officials how their respective programs addressed  reconstruction needs. We monitored USAID’s activities in all sectors in  all hurricane-affected areas, including the remote Caribbean coast  regions of Honduras and Nicaragua. We also visited projects  implemented by other U.S. departments and agencies. In many  instances, we visited and photographed sites before the projects began,  during implementation, and after completion to provide a basis for  comparison.
During these trips, we interviewed representatives of contractors,  nongovernmental organizations, and other entities responsible for day- to-day project implementation. Our Spanish-speaking staff interviewed  the intended recipients of U.S. assistance. We asked how their homes,  livelihoods, and communities had been affected by the hurricanes and  how the U.S.-funded projects were helping them rebuild their  infrastructure, restore their livelihoods, and provide basic services.
We also reviewed USAID’s procedures for oversight and financial  controls and met regularly with the personal services contractors,  firms, and organizations hired by USAID to provide program oversight.  We followed up with USAID mission staff and the other U.S.  departments and agencies to determine whether concerns raised by us  and others were being addressed.
To determine whether USAID coordinated with other U.S. departments and  agencies and other international donors, we met with USAID officials in  Washington, D.C., and at the overseas missions to discuss their procedures for incorporating the activities of the other agencies into their programs  and coordinating with multilateral and other bilateral donors. We also met  with officials of the other U.S. agencies involved in the program to get their  perspectives on agency coordination. Through documentation provided to  us and our field visits, we reviewed the activities of all the U.S. departments  and agencies to ensure that they did not duplicate one another. For the  other international donors, we attended the consultative group meetings  for Honduras in February 2000 and for Nicaragua in May 2000 and reviewed  the documentation from other key donor meetings. We met with officials  from the Inter-American Development Bank and the World Bank and  several donor countries. We discussed their respective programs and  reviewed their documentation. Finally, we met with host government  officials, including mayors and other local officials, to discuss their  procedures for ensuring donor activities did not conflict or overlap and  their views on donor coordination.
To determine what USAID did to help the affected countries strengthen  their institutional capability to resist corruption, we interviewed the  Controllers General in the Dominican Republic, El Salvador, Guatemala,  Honduras, and Nicaragua. We discussed the organization and resources of  their offices and their relationship to other entities in the national  government. Although USAID also funds other anticorruption and financial  management efforts at host country institutions, we did not include these  activities within our scope.  We also met with officials from USAID and  the Inter-American Development Bank in Honduras and Nicaragua to  discuss the status of the financial inspection units.
In addition to the above efforts, we sent a “pro forma” set of questions to  six USAID missions and to the nine U.S. departments and agencies that  were most closely tied to USAID’s program to obtain their views on the  lessons learned in planning, implementing, coordinating, and overseeing  the disaster recovery program.
We conducted our work between April 1999 and May 2002 in accordance  with generally accepted government auditing standards.
section_title: Summary of Disaster Recovery Experiences: USAID Missions
paragraphs: As the disaster recovery assistance program was coming to a close, we  asked USAID’s missions for their views on how the program proceeded. To  help provide a framework for answering our questions, we developed a pro  forma questionnaire and sent it to the USAID missions in the Dominican  Republic, El Salvador, Guatemala, Haiti, Honduras, and Nicaragua.  All  six replied. We grouped their responses into five broad topics: (1) program  planning and implementation, (2) staffing, (3) accountability, (4)  coordination, and (5) lessons learned that could be applied in future  disaster recovery and reconstruction situations. Our analysis of their  responses shows that all the missions had similar experiences, but the  three missions that received the largest amounts of funding—Honduras,  Nicaragua, and the Dominican Republic—encountered some unique  problems and issues. The following is a summary of their responses.
subsections: section_title: Program Planning and Implementation
paragraphs: All six USAID missions reported that they made certain planning and  implementation decisions based on the December 31, 2001, expenditure  deadline and took actions to reduce start-up time. These actions generally  helped ensure that the program would be completed by the deadline.  However, missions reported that, in some instances, nongovernmental  organizations and host governments were unprepared to meet the demands  of the disaster recovery program and its relatively short time frame.
All six missions reached agreements with organizations that were  already in these countries and with which they had previously worked  or actively engaged in the mission’s regular development programs. In  doing so, the missions were confident that projects would be  implemented by organizations familiar with USAID and with proven  capabilities and track records. However, the Nicaraguan mission  entered into some agreements that called for organizations to undertake  activities they had not done before. This led to some problems. For  example, one nongovernmental organization agreed to rehabilitate rural  roads. After some initial work, we and several others pointed out that  the roads were unlikely to stand up to normal traffic and weather. The  organization subsequently hired engineers and the quality of the  rehabilitated roads improved substantially.
Two missions—Nicaragua and Haiti—reported that they combined  relatively small activities that could have been awarded separately into  larger agreements. This helped streamline the start-up process because  the paperwork was reduced and USAID staff only had to deal with one  organization rather than several. The mission in Haiti also reported that  having one grantee enhanced communication, reporting, and  accountability.
The Nicaraguan mission transferred $16.6 million—nearly one-fifth of its  total disaster recovery funding—to USAID’s Bureau for Global  Programs, Field Support, and Research.  This allowed the mission to  bypass the process for soliciting and reviewing proposals and  negotiating agreements. The mission acknowledged, however, that  while using such global agreements is faster and the program quality is  high, the services provided are generally more expensive than  separately funded agreements.
The Honduran mission used host country contracting—a mechanism  whereby USAID transfers funds to the host government, which then  enters into contracts with implementing organizations—for some large  infrastructure projects in an attempt to speed up implementation.  However, USAID regulations for host country contracting required  numerous approvals and were difficult to mesh with Honduran  government regulations. The mission also said that some host country  counterpart ministries were bureaucratic and inefficient.
The Guatemalan mission noted that, due to the deadline, it limited its  monitoring and reporting to project outputs during implementation and  did not seek to measure impact as it would have for a longer-term effort.  The mission added that, for its watershed rehabilitation activities, a  period of more than 2 years is required to assess impact.
section_title: Staffing
paragraphs: The three USAID missions that received the largest amounts of  reconstruction funding—Honduras, Nicaragua, and the Dominican  Republic—reported staffing problems, primarily the absence of a contracts  officer at critical times during the disaster recovery program. In contrast,  the three missions receiving smaller amounts of funding—El Salvador,  Guatemala, and Haiti—reported no staffing problems.  Problems noted by  the missions included the following.
The Honduran mission reported that the absence of a permanent  contracts and grants officer until October 1999 was a serious constraint  due to the important role that a contracts officer plays during the life of  a program, particularly during the start-up phases. The mission noted  that a contracts officer is needed for negotiating and signing agreements  and providing valuable advice during the design process on issues such  as the selection of appropriate implementation mechanisms and  acquisition instruments.
The Nicaraguan mission reported that the absence of a contracts officer  was a problem during the closeout phase.  In particular, although  temporary-duty contracts officers were sent from headquarters, their  efforts did not prevent some activities from slowing down as the  program approached the December 31, 2001, deadline.
The mission in the Dominican Republic reported that the absence of a  permanent contracts officer greatly affected its program. Some actions  were delayed because the local-hire assistant contracts officer was also  responsible for the mission’s regular program contracts and for  contracting actions at the USAID mission in Jamaica.
The mission in the Dominican Republic reported that the majority of  staff hired for its reconstruction effort had no prior USAID experience.  As a result, initial implementation slowed as new staff learned the  USAID management system.
The Honduran and Nicaraguan missions reported that getting qualified  staff on board was a lengthy process. The Honduran mission noted that  the process to hire staff was long and burdensome and that nearly all  activities had delays or start-up difficulties due to staff shortfalls. The  Nicaraguan mission reported that it experienced major delays in  obtaining security clearances for staff it had hired. In one instance, the  mission selected a person who eventually accepted a job elsewhere  after waiting more than a year for a security clearance.
The Honduran mission reported it did not have the flexibility to reassign  existing mission staff to some reconstruction activities. In addition, the  mission had difficulties in obtaining temporary staff for its education  activities because USAID headquarters either did not have the staff  available or it lacked travel funds.
section_title: Accountability
paragraphs: All USAID missions reported that they took certain actions to ensure  accountability for disaster recovery assistance funds. Some missions cited  minimizing the funds provided directly to host governments as an example.  Missions noted that the extensive audit and oversight coverage required a  substantial commitment from mission staff already heavily involved in  planning and implementing reconstruction projects.
The Dominican Republic mission reported that it limited funds provided  directly to the Dominican government to speed up the implementation  process and reduce potential misuse of funds. It noted that the host  government required more time to plan its budget and disburse funds.  For example, government-funded potable water and sanitation systems  for several housing projects were delayed when contractors did not  receive payment from government institutions.
The USAID missions in Honduras and Nicaragua hired consulting and  management firms to handle funds and provide program oversight. The  Honduras mission used eight organizations to provide oversight and  technical assistance over various components of its disaster recovery  program. The Nicaragua mission also hired several firms to provide  oversight but one firm encountered problems in doing so. Specifically,  the Nicaragua mission hired a U.S. management and consulting firm to  oversee about $3.6 million provided to the Nicaraguan government for  more than 20 small municipal infrastructure projects. However, the  firm’s lack of engineering expertise and experience led to substantial  delays in several projects. Ultimately, about half the projects were  canceled and only $2.1 million was expended. The remaining funds were  reprogrammed and used for other reconstruction efforts.
section_title: Coordination
paragraphs: USAID missions noted numerous problems resulting from working with the  other U.S. departments and agencies. They did not cite any problems in  coordinating with other international donors.
The missions in the Dominican Republic, Honduras, and Nicaragua  reported that integrating the programs of the other U.S. entities was  time-consuming and burdensome for USAID staff. The mission in the  Dominican Republic further noted that coordination and  implementation were challenging because the other departments and  agencies did not have sufficient staff in country and did not spend  enough time during visits.
The USAID missions in Honduras and Nicaragua also reported that  problems arose because some U.S. departments and agencies lacked an  understanding of the complexities of working in a developing country  environment and overseas missions—some agencies developed  reconstruction plans without reference to local conditions. The  Honduran mission further noted that providing administrative support  for some agencies was particularly cumbersome and required the  establishment of a separate mechanism for cost sharing, even though  the program was relatively short-lived.
section_title: Lessons Learned
paragraphs: All USAID missions reported numerous lessons learned and indicated these  lessons could be applied in future disaster reconstruction situations. Some  examples follow.
The missions in Honduras and the Dominican Republic reported delays  in getting qualified contractor staff on board and the Nicaraguan  mission reported major delays in obtaining U.S. and local security  clearances for its contracted staff. The Dominican Republic mission  suggested that the ability to hire personal services contractors and other  staff—and get them to the mission—more quickly would be a great help  in rapidly designing and implementing future emergency response and  disaster assistance programs.
All missions emphasized that a longer implementation period would  have better ensured project sustainability. In addition, the Honduran  mission reported that it had avoided activities involving institutional  development and other complex reforms that would have required more  time to complete. It also noted that, by paying relatively little attention  to policy issues and emphasizing construction, it was unable to  adequately address some of the underlying issues that had prevented  Honduras from being prepared to respond adequately to disasters. The  mission in the Dominican Republic acknowledged that it selected some  types of activities that it knew could be completed by the expenditure  deadline. It did so despite recognizing that other activities might have  achieved greater sustainability, especially those with more cost sharing  with the host government and other implementing organizations.
Reaching agreements with established organizations with an in-country  permanent presence with whom USAID had previously worked was a  good mechanism that generally resulted in expediting program start-up  and ensuring project quality and financial accountability.
According to the Honduran mission, host country contracting should be  used with caution in a disaster recovery program with relatively short  time frames because these projects generally took longer to be  completed.
The Guatemala mission reported that using fixed amount reimbursable  contracts was a very efficient implementation mechanism through  which the implementing organization was periodically reimbursed for  activities it had successfully completed only after the activities were  inspected and certified by USAID-selected personnel. The mission also  noted that this mechanism limits the likelihood of corruption and  increases transparency when concurrent audits are also conducted.
The missions in Honduras and the Dominican Republic reported that  certain types of agreements with other U.S. departments and agencies  worked better than others. The Honduran mission noted that  participating agency services agreements worked better than  interagency agreements. Such agreements allowed the mission to define  the terms of reference, which helped make other U.S. government  programs more compatible with the broad objectives of USAID’s  reconstruction program and local conditions. The Dominican Republic  mission reported that agencies working under participating agency  services agreements and interagency agreements were more receptive  to coordination and teamwork than those agencies that had their funds  directly transferred to them by USAID.
The mission in Honduras reported that USAID needs to do a better job  in immediately identifying staff with the skills needed for reconstruction  activities, rather than relying on staff within the mission or region. The  mission further suggested including a human resources specialist in the  first response team who could also assist the mission in filling staffing  needs.
The Honduras mission reported that its authority to redirect  reconstruction funds within its own mission program contributed to  successful project implementation. The mission noted that, based on  progress and the changing needs of certain projects, it moved funds  from some activities into others and strongly stated that all missions  should retain this flexibility and authority.
section_title: Summary of Disaster Recovery Experiences: Other U.S. Departments and Agencies
paragraphs: As we did with USAID’s missions, we asked the other U.S. departments and  agencies that implemented reconstruction activities for their views on how  the program proceeded. We provided a pro forma questionnaire to nine  U.S. departments and agencies. All nine replied. We grouped the  responses into five broad topics: (1) program planning and implementation,  (2) staffing, (3) accountability, (4) coordination, and (5) lessons learned  that may apply to future disaster recovery efforts. In general, the agencies  encountered a variety of problems and issues but noted that they gained  valuable experience in implementing disaster recovery and reconstruction  programs overseas. The following is a summary of their responses.
subsections: section_title: Program Planning and Implementation
paragraphs: The ability of the other U.S. departments and agencies to plan and  implement their programs was affected by various factors, particularly the  December 31, 2001, deadline. For some, the deadline had little effect on  design and planning decisions but they could have used more time for  training or to reinforce efforts to make their programs more sustainable.  Other agencies reported that they designed their activities around the  deadline. Other factors that affected project planning and implementation  included administrative delays and host country conditions.
NOAA reported that if the deadline had not been in place, it would have  designed similar activities but would have included more training and  sustainability-related activities. NOAA further noted that it did not have  enough time at the beginning of the project to do a complete needs  assessment to determine and prioritize activities. DOT also reported  that, while the deadline did not affect the initial planning and designing  of its program, other uncontrollable local factors, such as land  acquisition and weather conditions, delayed some phases of DOT’s  projects. USGS said that it could have used more time for additional  feedback and to reinforce the methods and concepts of the training it  provided.
USDA reported that the deadline affected the design of its program  technically and administratively. USDA had to identify projects that  were feasible within the time frame and partners with sufficient  capacity to successfully undertake the work. In addition, various  administrative and bureaucratic delays, such as hiring staff to manage  the program, hindered initial project implementation. HUD also  reported that it would have designed its disaster mitigation activities  somewhat differently if the deadline had not been imposed.
section_title: Staffing
paragraphs: Most agencies did not report staffing problems, although USDA reported  that deploying permanent staff took some time and was a constraint in  starting up its program. USGS, NOAA, USDA, HUD, and INL reported that  they had full-time personnel in country, especially in the countries where  they had larger programs. CDC, EPA, FEMA, and DOT used contractors  and grantees or permanent staff that traveled on temporary duty to carry  out their work. USGS had full-time staff in Honduras and Guatemala and  relied on temporary duty personnel in other countries. USDA had full-time  personnel in Honduras and Nicaragua—both USDA direct-hire staff and  personal services contractors. USDA also used temporary duty personnel  in all countries in which it worked.
section_title: Accountability
paragraphs: USAID’s Bureau for Latin America and the Caribbean and mission staff, the  Office of Management and Budget, and we conducted most of the oversight  and review of the other U.S. departments and agencies. DOT and FEMA  were the only agencies that were audited by their respective inspectors  general—both reported positive audit outcomes. Staff from USAID’s  Bureau for Latin America and the Caribbean conducted most of the  oversight of interagency agreements. In general, agencies reported that the  oversight and reviews did not adversely affect program implementation  and were, in fact, helpful.
Most agencies reported adequate oversight of their programs and added  that the reviews did not affect program design or the pace of  implementation. An exception was FEMA, which reported that responding to inquiries, mostly from its inspector general’s office, took  time away from project activities.
Most agencies reported that the oversight and reviews provided  valuable input. For example, USDA reported that the additional  oversight by USAID and us was not overly intrusive and was welcomed  by division management. USGS also noted that meetings and field visits  allowed its staff to discuss expectations with auditors and comply with  regulations. However, EPA noted that, although the oversight helped  ensure accurate recordkeeping, it received little feedback on its  performance.
section_title: Coordination
paragraphs: Eight of the nine agencies, including the six agencies that had interagency  agreements with USAID, reported that they designed their program to  complement and supplement USAID’s program and that USAID had  provided valuable assistance in helping them formulate their strategies.  The same agencies reported that they also received a significant amount of  logistical and administrative support from USAID and several noted that  their programs would not have been as successful without USAID’s  programmatic and administrative assistance.  However, one agency  reported that its contractor encountered some problems in coordinating  with USAID.
Most agencies reported that they took into account USAID’s expertise  and guidance in planning and implementing activities. USGS reported  that its program was developed in consultation with USAID missions  and that it had made significant changes in its initial design in response  to suggestions from USAID. FEMA noted that it would not have been as  successful without the support and guidance it received from USAID’s  Bureau for Latin America and the Caribbean. However, CDC’s  contractor for its laboratory equipment and training project reported  that sometimes the missions’ priorities differed from those of the health  ministries or the national laboratories and the contractor had to change  its approach.
Several agencies reported that they provided technical expertise that  complemented USAID’s program. DOT implemented a port damage  assessment project that focused on the entire transportation network  supporting international trading ports in Honduras and Nicaragua.  According to DOT, USAID did not have the capability to deal with  transportation matters on a regional basis and DOT filled the void.
Eight of the nine agencies reported that they received in-country  logistical or program support from USAID missions. However, CDC’s  laboratory equipment contractor reported that administrative  coordination with USAID missions was sometimes difficult because  each mission required different information for issues such as country  clearances and this created confusion for the contractor.
section_title: Lessons Learned
paragraphs: All nine departments and agencies reported that they learned lessons that  could be applied in future disaster assistance programs.  Most noted the  constraints imposed by the December 31, 2001, deadline and suggested that  future efforts include time for follow-on activities, such as training, to  ensure more sustainability. Several also suggested that USAID develop an  easier method of charging for administrative activities. In addition to  working with USAID, several agencies noted the importance of good  coordination among the various U.S. government entities providing  disaster recovery assistance.
Three agencies reported that the limited time for project  implementation was a constraint, especially for follow-on activities and  project sustainability efforts. HUD reported that the deadline did not  allow enough time to complete efforts to train local entities in finding  other sources of funding for continuing activities in a resettlement  community in Honduras. According to NOAA, future projects should  have follow-on activities to assess implementation of the technical  guidance and training provided. NOAA further noted that more time and  resources should have been devoted to training host country  counterpart organizations. CDC had to obtain extensions for two  training programs beyond the December 31, 2001, deadline to ensure  that enough epidemiologists were trained and that laboratory equipment  would be used and maintained properly.
Three agencies reported that they would have preferred to have a  different manner of dealing with administrative expenses in country.   Each suggested that USAID create a funding citation to charge each  agency for all administrative, logistical, financial, and procurement  services for future emergency programs. CDC and USDA recommended  that USAID keep a portion of the funding before signing interagency  agreements and that USAID provide all of the logistical and  administrative support for the agencies, noting that this would allow for  greater transparency and less confusion. Also, FEMA was not aware  that administrative expenses were additional and had not budgeted for  these costs.
FEMA and USDA reported that a major constraint in overall planning  was that the disaster recovery funds were not available prior to signing  the interagency agreement to fund diagnostic, assessment, and planning  activities. According to USDA, this led to significant delays in start-up  activities. USDA suggested that USAID establish a rapid assessment  fund, which it could use to reimburse other U.S. government agencies  for their expenses.
HUD reported that local community members are invaluable in locating  work sites and then determining appropriate activities. Similarly, EPA  reported that it learned to identify local partners to assist with logistics  and technical support.
EPA, INL, and CDC reported that they learned about working with host  governments. EPA noted that it was important to get the host country  governments involved from the very beginning and keep them involved  throughout the program to help ensure sustainability. Staff responsible  for INL efforts in El Salvador noted that projects work better if based on  requests from host governments rather than on ideas developed in  Washington, D.C. They added that one of INL’s projects in El Salvador,  which now is on track, might have avoided some initial problems if more  attention had been given to country conditions. CDC noted the  importance of ensuring that U.S. agency priorities do not conflict with  the concerns of host governments.
USGS and CDC reported that they had learned more about working with  other U.S. departments and agencies. USGS conducted a  multidisciplinary program both within its agency and among other U.S.  entities. USGS found that working with other agencies allowed it to  share data among projects and programs, leading to more efficient and  cost effective use of resources. CDC noted that clear coordination and  communication from the very outset was important because agencies  interpreted information differently. In addition, EPA suggested that  greater efforts be made to help U.S. agencies create integrated programs  in the same communities.
HUD reported that it learned techniques and approaches to planning  construction programs in poor communities that will allow for faster  and more efficient reconstruction programs in the future.
section_title: Disaster Recovery Assistance Budgeted and Expended
paragraphs: The emergency supplemental appropriated $621 million to USAID and it  was the primary agency responsible for carrying out the U.S. disaster  recovery assistance program. In turn, USAID transferred almost  $96 million to 12 other U.S. departments and agencies that, for the most  part, planned and implemented their own programs. USAID transferred  funds in two ways as authorized by section 632 of the Foreign Assistance  Act of 1961, as amended. Under 632(a), USAID has minimal responsibility  for approving how the funds will be used, and program monitoring and  evaluation is the responsibility of the receiving department or agency.  Under 632(b), USAID and the receiving department or agency negotiate  and agree on how the funds will be used, and USAID is responsible for  program monitoring and evaluation; such transfers are implemented  through interagency agreements. Table 2 shows the status of the disaster  recovery funds through December 31, 2001, by the department or agency  implementing the activities.
section_title: Comments from the U.S. Agency for International Development
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Acknowledgments
paragraphs: In addition to those named above, David Artadi, Lyric Clark, John DeForge,  Francisco Enriquez, E. Jeanette Espinola, Phillip Herr, José R. Peña, and  George Taylor made key contributions to this report. Janey Cohen, Martin  de Alteriis, Mark Dowling, Kathryn Hartsburg, and Jim Michels also  provided technical assistance.
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