Foreign Assistance: Middle East Partnership Initiative Offers Tools for Supporting Reform, but Project Monitoring Needs Improvement
Published: 2005-08-08T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In December 2002, the U.S. Department of State (State) established the Middle East Partnership Initiative (MEPI) to promote democracy in the Middle East and North Africa. MEPI provides assistance for political, economic, and educational reform and women's empowerment. In fiscal years 2002-2004, State and the U.S. Agency for International Development (USAID) reviewed U.S. bilateral economic assistance programs in the region to ensure they were aligned with the new U.S. policy focus on promoting democracy and reform. In this report, GAO (1) describes MEPI's structure for managing projects and allocating funding, (2) examines MEPI's uses of the reviews, and (3) evaluates MEPI's project monitoring.
section_title: What GAO Found
paragraphs: MEPI has worked with U.S. embassies, USAID headquarters in Washington, D.C., and USAID missions overseas to manage projects and obligate funding. In turn, MEPI and its partners have negotiated agreements with nongovernmental organizations, the private sector, and other U.S. agencies to implement the projects. MEPI has obligated about 45 percent of the $129 million that it received for fiscal years 2002-2003, and its partners have obligated the remainder. MEPI used the State and USAID reviews of existing U.S. bilateral economic assistance programs in the Middle East and North Africa in two ways. First, in response to the reviews, MEPI targeted reform activities in the Middle East and North Africa that were not being addressed by other U.S. agencies. For example, responding to the reviews' finding that little progress had been made in supporting women's political involvement, MEPI provided funds to assist women candidates. Second, MEPI shaped its strategy in response to the reviews, particularly regarding the need to monitor projects' short-term results and hold project implementers accountable for project performance. Despite its strategic emphasis on monitoring projects' performance, MEPI's monitoring has been limited by unclear communication of roles and responsibilities and a lack of complete project information. MEPI has acknowledged these deficiencies and begun to address them; in July 2005, State and USAID agreed on a framework for project monitoring roles and responsibilities. Without the ability to evaluate its projects' performance with certainty and access to complete information, MEPI's capacity to meet its strategic goals of producing tangible results and making results-based decisions is limited.

section_title: Letter
paragraphs: According to the United Nations, many Middle Eastern and North African  countries face enormous deficits of human development, including limited  political and personal freedoms and low economic growth. Because of  concern that these issues could sharpen extremism and increase the risk  of terrorist activities originating from an already unstable region, the U.S.  government has shown a growing interest in improving socioeconomic  and political conditions in the region. In December 2002, the U.S.  Department of State (State) announced the establishment of the Middle  East Partnership Initiative (MEPI) as a presidential initiative to support  the administration’s new policy of promoting democracy and reform in the  Middle East and North Africa. MEPI, which has received about $293  million for fiscal years 2002-2005, provides assistance in four reform  areas, or pillars—political, economic, and educational reform and  women’s empowerment.
In 2002, at the request of the Deputy Secretary of State, State and the U.S.  Agency for International Development (USAID) undertook reviews of  existing U.S. bilateral economic assistance programs in the Middle East  and North Africa to ensure that they reflected the U.S. government’s new  policy emphasis on promoting democracy and reform. These reviews were  conducted for Egypt, Jordan, Morocco, the West Bank and Gaza, and  Yemen. According to State officials, State initiated an interagency process  to develop MEPI’s strategy, objectives, and goals, including the objective  of providing close monitoring of projects to achieve tangible results and  to facilitate results-based management decisions. In this report, we (1)  describe MEPI’s structure for overseeing projects and obligating funds,  (2) examine MEPI’s uses of the reviews of U.S. bilateral economic  assistance in the region, and (3) evaluate MEPI’s monitoring of its  projects.
We examined reviews and supporting documentation provided by the  State Department and USAID and reviewed documents describing MEPI  and USAID activities and funding mechanisms. We also analyzed project  agreement documentation and project performance reports for 25 MEPI-  and USAID-administered projects, representing MEPI’s four reform pillars,  that we selected on the basis of their funding amount and their country- specific or regionwide status. Although our audit generally covered MEPI  activities from December 2002 through May 2005, in reviewing MEPI’s  budget information and project monitoring, we focused on data for fiscal  years 2002-2003 because the data for those years were most complete. In  addition, we conducted structured interviews with representatives of  some of MEPI’s implementing organizations. We also conducted  interviews with officials at State and USAID headquarters in Washington,  D.C.; officials representing embassies and USAID missions in 9 of the 14  MEPI countries; and officials administering MEPI programs in the  territories of West Bank and Gaza. To assess MEPI’s mechanisms for  monitoring its activities, we focused on relevant areas of MEPI’s  management control system, including (1) roles and responsibilities of  MEPI staff and administrative partners in Washington, D.C., and overseas  and (2) information flow. We performed our work in the United States,  Bahrain, Egypt, Germany, and Morocco from July 2004 through May 2005  in accordance with generally accepted government auditing standards.  Appendix I provides a more detailed description of our scope and  methodology.
subsections: section_title: Background
paragraphs: From the 1950s through 2001, U.S. bilateral economic assistance to the  Middle East and North Africa focused primarily on promoting regional  stability by providing funding for large bilateral military and economic  programs, chiefly in Egypt, Israel, and Jordan, and by fostering  development. In December 2002, the State Department announced the  creation of MEPI, which has expanded U.S. assistance to other countries  in the region and includes programs focused on democracy and reform.  Figure 1 shows MEPI’s area of operation.
According to the administration, MEPI comprises a new approach to  foreign assistance for the region, aimed at linking Arab, U.S., and global  private-sector businesses, NGOs, civil society elements, and governments  to develop innovative policies and programs that support reform in the  region. MEPI is also an important element of the administration’s  counterterrorism and public diplomacy strategies. MEPI projects are  organized under its four reform pillars (see fig. 2).
MEPI’s budget of $293 million for fiscal years 2002-2005 was derived from  supplemental appropriations and annual foreign operations legislation.   Figure 3 shows MEPI’s budget for fiscal years 2002-2005.
The Office of Regional Affairs within State’s Bureau of Near Eastern  Affairs (NEA) in Washington, D.C., administered MEPI activities during  MEPI’s first 6 months. The office worked with USAID, which managed the  long-standing bilateral economic assistance programs in the Middle East  and North Africa, to implement most of its initial projects. The office also  worked with the embassies in the region to implement projects funded  through small grants. In June 2003, State established the Office of the  Middle East Partnership Initiative within NEA to manage MEPI policy and  projects and work closely with agencies across the U.S. government. The  Deputy Secretary of State serves as Coordinator for MEPI. In August 2004,  MEPI set up two regional offices in Tunisia and the United Arab Emirates.  (See app. II for more details of MEPI’s organizational structure as of May  2005.)
In fiscal years 2002-2004, State and USAID formally reviewed existing  bilateral economic assistance programs in the Middle East and North  Africa.
From June 2002 to May 2003, State and USAID jointly conducted an in- depth review of U.S. bilateral assistance to Egypt, one of USAID’s largest  programs, including assessing the programmatic and financial data for the  seven strategic objectives in USAID/Egypt’s program.
From September to December 2003, State and USAID conducted an  abbreviated review of USAID’s program in West Bank and Gaza.
In 2003, State participated in USAID’s periodic strategy reviews of its  programs in Jordan, Morocco, and Yemen.
In 2003 and 2004, State also considered information from U.S. embassies  and from other U.S. government agencies with programs in the region to  identify areas where MEPI could provide assistance. During this period,  MEPI staff responsible for each of MEPI’s four reform pillars organized  meetings with the other U.S. government agencies. In addition, State relied  on several secondary sources to supplement the information received  from formal reviews of USAID programs and input from embassies and  other U.S. government agencies. Finally, State officials met with donors  such as the World Bank and the European Union to learn about their  activities in the region.
State and USAID have used the reviews of existing U.S. bilateral economic  assistance programs, as well as information obtained from other U.S.  entities providing assistance in the region, to realign many existing  programs, strategic plans, and coordination mechanisms to conform to the  new U.S. policy of promoting democracy and reform in the Middle East  and North Africa.
section_title: MEPI and Administrative Partners Have Overseen Activities and Obligated Funding
paragraphs: In fiscal years 2002-2003, MEPI and its administrative partners—U.S.  embassies, USAID/Washington, and USAID missions—oversaw MEPI  projects. MEPI and its administrative partners also obligated MEPI funds,  with MEPI obligating about 45 percent of its fiscal years 2002-2003 funding  and its administrative partners obligating the remainder.
subsections: section_title: MEPI Directly Oversaw Some Projects and Used Administrative Partners to Oversee Others
paragraphs: MEPI oversaw some of its projects directly in fiscal years 2002-2003 and  partnered with U.S. embassies, USAID/Washington, and USAID missions  to oversee other projects. (See fig. 4.) MEPI and its administrative partners  negotiated agreements with NGOs, the private sector, and other U.S.  government entities to implement more than 100 projects.
section_title: MEPI and Administrative Partners Have Obligated 2002-2003 Funds
paragraphs: MEPI and its administrative partners have obligated the $129 million that  MEPI received for fiscal years 2002 and 2003. MEPI has directly obligated  about 45 percent of the funds; MEPI’s administrative partners have  obligated the remainder (see fig. 5).
MEPI: MEPI has obligated about 45 percent ($58 million) of its 2002-2003  funds directly to NGOs, the private sector, and U.S. government entities.
NGOs and the private sector: MEPI has obligated 33 percent ($42.8  million) of the funds in various grants directly to American or locally  based NGOs or private companies. According to MEPI, these grants are  intended to support innovative ideas that can be implemented quickly  to produce concrete results, such as increasing women’s political  participation. MEPI officials say that they would like to obligate more  MEPI resources directly, but they acknowledge that such a shift would  require MEPI staff to shoulder a significant administrative burden in  monitoring these projects.
U.S. government implementers: Through interagency acquisition  agreements, MEPI has obligated about 12 percent ($15.2 million) of its  2002-2003 funds to U.S. government entities with specific expertise in  the areas of reform that MEPI supports. These entities implement  projects, such as the Department of the Treasury’s technical assistance  project to develop expertise in surplus and debt management in  Algeria.
U.S. embassies: Embassies have obligated about 1 percent ($1.4 million, or  $100,000 per country) of MEPI’s 2002-2003 funds through its small-grants  program. A central objective of the program is to build the capacity of  local organizations, such as the Ibn Khaldun Center, which, among other  things, introduces concepts of economic opportunity to young women in  two of Egypt’s rural and urban areas to enable them to improve their living  conditions. The embassies use the funds to award local organizations  small, short-term grants of up to approximately $25,000. The MEPI office  approves all small-grant decisions, and embassy staff perform grant  administration.
USAID/Washington: USAID/Washington has obligated about 40 percent  ($50.8 million) of MEPI’s fiscal years 2002-2003 funds, including funding  for many of MEPI’s largest projects. According to USAID and MEPI  officials, many of these projects have been implemented through  preexisting cooperative or contractual agreements between the U.S.  government and U.S. NGOs or contractors.
USAID missions: USAID missions have obligated about 15 percent ($18.7  million) of MEPI’s 2002-2003 funds, according to budget data provided by  USAID and MEPI. These funds have been used to complement USAID’s  existing efforts, such as civil society capacity building and local political  party training.
Figure 6 shows the obligation of MEPI funds to Middle Eastern and North  African countries and West Bank and Gaza in fiscal years 2002-2003.
section_title: Reviews Identified New Reform Opportunities and Helped Shape MEPI’s Strategy
paragraphs: According to State, the reviews of U.S. bilateral economic assistance have  been used to (1) identify new reform areas that were not previously  addressed and (2) develop a results-based strategy for implementing and  evaluating the performance of MEPI activities.
subsections: section_title: Reviews and Other Information Have Led MEPI to Target New Reform Opportunities
paragraphs: Responding to the reviews of U.S. bilateral economic assistance in the  region, as well as information provided by other U.S. entities, MEPI has  initiated reform activities that were not being addressed by U.S. agencies  in the region, including countries where USAID does not operate. For  example:    Political reform: The reviews found that in many countries where MEPI  operates, little progress had been made in political reform, including  women’s political involvement. In response, MEPI has provided funds to  help increase the number of women candidates and assist them through  activities such as improving their media presentation techniques.
Economic reform: The reviews revealed that although limited assistance  was being provided to increase trade capacity within the region, U.S.  agencies were not addressing the need to increase the access and capacity  of small and medium-sized enterprises in countries such as Morocco.  Regionally, MEPI has supported a program that aims to, among other  things, increase managerial and entrepreneurial skills in several countries.  MEPI also funds efforts to teach business people and managers of small  and medium-sized enterprises how to take immediate advantage of U.S.  bilateral free trade agreements by initiating export sales, acquiring new  technology, and developing joint ventures and other strategic alliances  with U.S. firms (see fig. 7).
Educational reform: U.S. agencies operating in the region identified gaps  in education for the impoverished and for students in primary and  secondary grade levels. MEPI funds implementers that provide Arabic  books for elementary school children in Jordan, Lebanon, and Bahrain and  teach Bahraini mothers and preschool-age children living in poverty. (See  fig. 8.)
Women’s empowerment: U.S. agencies identified the lack of gender equity  as an impediment to reform in the region. To create more opportunities for  women, MEPI funds projects that provide young women from the Middle  East and North Africa unique opportunities to learn management and  business skills in the classroom and while working for U.S. companies.  (See fig. 9.)
section_title: Reviews Have Helped Shape MEPI’s Results- Based Strategy
paragraphs: The 2002 and 2003 reviews of U.S. bilateral economic assistance in the  Middle East and North Africa have significantly influenced MEPI officials’  development of MEPI’s results-based strategy, including the objective of  providing close monitoring of MEPI projects. In particular, according to  State, the comprehensive USAID/Egypt review cited weaknesses in  USAID/Egypt’s mission performance monitoring system that limited the  mission’s ability to strategically reallocate resources away from programs  that were not achieving their objectives. According to one of the review’s  principal authors, USAID/Egypt did not monitor its projects closely or  frequently enough to obtain the performance information needed. State  recommended that USAID make changes to the performance monitoring  system, including engaging consultants and producing more rigorous,  succinct, and integrated qualitative and quantitative measurements of  performance at all levels of activity.
MEPI officials told us that these observations made MEPI management  aware of the need to monitor projects’ short-term performance and hold  project implementers accountable for results. MEPI’s September 2004  project monitoring and management plan indicates that all project  agreements should include benchmarks and performance goals that reflect  the results MEPI hopes to attain, based on pillar-specific objectives. The  plan also states that, to prevent negative impacts on project outcomes,  staff should ensure that project implementers are on the right track at all  stages of project development and implementation. However, neither  MEPI’s general strategy nor its monitoring and management plan provides  specific guidance regarding project monitoring.
section_title: Unclear Roles and Responsibilities and Incomplete Information Have Inhibited MEPI’s Project Monitoring
paragraphs: MEPI’s ability to monitor the performance of its projects and measure  results has been limited by (1) unclear communication of monitoring roles  and responsibilities and (2) a lack of complete project information.
subsections: section_title: Unclear Communication of Roles and Responsibilities Has Limited Project Monitoring
paragraphs: MEPI has not clearly communicated roles and responsibilities for project  monitoring in accordance with federal standards for management  control, and as a result, not all projects have received the level of  monitoring needed to measure results. According to MEPI officials, MEPI  project monitoring responsibilities generally would include participation  in project activities, regular review and assessment of implementer  performance reports, and regular feedback to implementers on project  performance. However, we found that some MEPI administrative partners,  particularly those overseas, have been confused about their roles and  responsibilities for project monitoring and that some MEPI activities have  been monitored sporadically or not at all. Officials from 9 of the 14 U.S.  embassies supporting MEPI projects stated that they were uncertain of  their roles and responsibilities for monitoring MEPI projects and that  MEPI had not yet specified their monitoring duties. USAID/Washington  officials told us that USAID mission staff were expected to assist  USAID/Washington in monitoring MEPI projects that it administers.  However, USAID mission officials in Rabat, Morocco, told us that MEPI  projects administered by USAID/Washington were not being monitored  and that they had not received instructions for monitoring these projects.  Officials at USAID/Washington acknowledged that it had not performed  many of its monitoring duties in the field and stated that  USAID/Washington is currently working to ensure better communication  and provide instructions to the missions regarding their support of project  monitoring. In addition, MEPI and USAID officials in Washington, D.C., as  well as MEPI regional office, embassy, and USAID mission office staff,  said that they were uncertain of the role that the MEPI regional offices  would play in monitoring MEPI projects. Although MEPI officials generally  expect that regional office staff will lead the monitoring of projects that  MEPI directly administers, currently only one of MEPI’s two regional  offices has a monitoring specialist on staff.
In April 2004, the Department of State’s Office of Inspector General (OIG)  expressed concern that MEPI was communicating inconsistent priorities  and causing confusion among a number of embassies. MEPI and USAID  officials in Washington, D.C., acknowledged that confusion exists  regarding roles and responsibilities for project monitoring. MEPI officials  stated that they were still defining, and working toward agreement with  USAID and other parties regarding, MEPI and its administrative partners’  respective roles and responsibilities. MEPI officials also stated that on July  14, 2005, they signed an addendum to an October 2004 memorandum of  agreement (MOA), establishing a framework for project management roles  and responsibilities—including monitoring—of MEPI and USAID officials  in Washington and in the Middle East and North Africa.
section_title: Incomplete Information Has Limited Project Monitoring
paragraphs: MEPI’s monitoring of project performance, in accordance with federal  standards for management control, has been limited by (1) a lack of  baseline information, (2) inconsistency among projects’ performance  reporting requirements, (3) unverified project information, (4) inconsistent  communication of project information, (5) incomplete project records,  and (6) lack of access to project information.
Lack of baseline information: Our examination of a selected sample of  MEPI project documents showed that for most of these projects, MEPI  lacked baseline information against which to measure their performance.  According to MEPI’s strategy, baseline data are necessary for measuring  future progress on its projects, and MEPI officials told us that it was  important to establish these measurements at the beginning of each  project as the basis for determining project performance. However, of the  project agreements we received from MEPI and USAID for the 25 projects  in our selected sample, only three project agreements contained a  requirement to establish a baseline, and none of the projects reported  baseline measurements. MEPI officials told us that they were aware that  they had not required baseline measurement in all of their project  agreements but said that they planned to do so in future agreements.
Inconsistent reporting requirements: MEPI project agreements do not  consistently require that implementers report on quantitative, measurable  performance indicators. As a result, some implementing organizations  report general project information instead of the measurable indicators of  performance that MEPI has stated are needed to manage a results-based  program. According to one MEPI official, some of the reports are therefore  too vague to be useful in monitoring project performance. In our selected  sample of 25 projects, a substantial majority of the performance indicators  required in project agreements were qualitative in nature rather than the  quantitative indicators of project performance that MEPI has stated are  necessary for managing MEPI as a results-based program. Further, a  February 2005 report by USAID’s OIG reported that 6 of 17  USAID/Morocco MEPI projects did not have indicators to measure project  performance. One MEPI official told us that they sometimes negotiate  requirements for additional indicators informally over the telephone and in  e-mail after signing a project agreement. However, these informally  negotiated requirements are not formally documented, readily available, or  tracked by MEPI or the implementers. MEPI officials said that they are  seeking to acquire grant-tracking software that would facilitate the  documenting of agreed-on indicators and closer monitoring of  implementers’ reporting on these indicators.
Unverified project information: MEPI’s ability to verify the information  reported in implementers’ quarterly reports and to provide detailed  performance feedback to implementers has been limited, because MEPI  and its administrative partners have not consistently observed project  activities. In the sample we analyzed, only 8 of the 19 implementers we  interviewed said that MEPI and its administrative partners had made on- site visits to discuss and observe project activities. According to embassy,  MEPI, and USAID mission staff, they often do not have time to monitor  MEPI projects, including visiting or observing project activities, because of  conflicting demands on staff time. USAID OIG’s February 2005 report  stated that, primarily because of limited resources, the USAID/Morocco  mission had not validated the performance data reported by implementers.
Inconsistent communication of project information: MEPI has  inconsistently communicated project information, particularly to  embassies and USAID missions overseas. Overseas embassy and USAID  officials stated that MEPI had not always informed them of important  project information, including when new projects were to begin in their  country of operation. USAID’S OIG February 2005 report noted that MEPI  and USAID/Washington had not always notified USAID/Morocco when  they awarded regional activities taking place within the country. As a  result, in some cases, embassy officials have had little or no knowledge of  some of the implementer’s activities. Officials from two embassies and one  USAID mission told us that MEPI project implementers had arrived in  country expecting embassy and USAID assistance, although the embassies  and USAID missions had received little or no prior notice of the projects’  start or the implementers’ needs. In another example, in one country we  visited, we arrived expecting to meet with a particular project  implementer but found that embassy officials there were unaware of the  project or the implementer’s operations in country. Further, when  embassies have communicated with MEPI, MEPI has not always been  responsive. Three embassies stated that, since MEPI’s inception, MEPI had  provided no response or guidance in response to their regular reports on  MEPI activities. However, according to MEPI officials, embassies have not  always responded to MEPI’s communications. For example, according to  one senior MEPI official, after the summer 2003 awarding of small grants  through the embassies, the majority of embassies administering MEPI  projects did not respond to December 2003 requests from MEPI for basic  evaluative descriptions of the projects the embassies were administering.  According to this senior official, the embassies’ failure to respond to MEPI  resulted, in some cases, in MEPI’s lacking records of actual activities  conducted and descriptions of successes and lessons learned.
Incomplete project records: MEPI and USAID have not maintained  complete records for all of the projects that they administer, which has  limited their ability to monitor project performance. We found gaps in  records that the MEPI office in Washington, D.C., maintained for the  projects that it administered. For example, in our selected sample of 25  projects, MEPI’s files for fiscal year 2003 projects that it administered  directly contained 44 percent of quarterly reports that project  implementers were to have submitted. MEPI officials said that the grant- tracking software they sought to acquire would enable them to track the  submission of implementers’ quarterly reports. Without such software, the  MEPI office has managed project data on Excel spreadsheets and office  calendars, using the incomplete copies of quarterly reports that it has  maintained since the program’s inception. MEPI officials in the past have  asked implementers to provide copies of records missing from their files.  In addition, we found that USAID had incomplete records for the projects  that it administers for MEPI. For example, in our selected sample, USAID’s  files for the fiscal year 2003 projects that it administered contained 63  percent of MEPI project agreements with implementers and 62 percent of  the quarterly reports that project implementers were to have submitted.  USAID officials stated that their records were scattered in many  locations—in the various bureaus in Washington, D.C., that administer  MEPI projects and at USAID missions in the Middle East and North  Africa. In other cases, USAID has had to obtain copies of the records from  the implementing organizations themselves.
Lack of access to project information: MEPI has lacked ready access to  information on USAID-administered MEPI projects, which has limited its  ability to monitor those projects’ performance. According to MEPI’s  strategy and officials, MEPI is responsible for ensuring the performance of  all projects that it funds, including those administered by USAID.  However, MEPI and USAID have maintained separate performance and  financial records, and MEPI and USAID officials stated that prior to the  July 2005 signing of the MOA addendum regarding monitoring roles and  responsibilities, they had not reached agreement on the sharing of these  records. Further, USAID officials stated that USAID has not maintained  records for MEPI projects separately from its records for non-MEPI- funded projects. Some USAID implementers responsible for implementing  MEPI projects have included MEPI performance reporting in their general  reporting on the region, making USAID’s extraction of information on  MEPI projects more difficult and time consuming. MEPI and USAID  officials said that they expected the recently signed addendum to the 2004  MOA to facilitate the sharing of performance and financial information.
section_title: Conclusion
paragraphs: In accordance with the U.S. foreign policy of promoting democracy and  reform in the Middle East and North Africa , State established MEPI to  design and fund projects supporting political, economic, and educational  reform and the empowerment of women. However, despite MEPI’s  strategic emphasis on monitoring projects’ performance, a failure to  clearly communicate roles and responsibilities and a lack of complete  project information have hampered MEPI’s monitoring of its projects. In  July 2005, subsequent to receiving our preliminary findings regarding the  need to communicate project monitoring roles and responsibilities to its  administrative partners, State finalized an agreement with USAID that  establishes a framework for roles and responsibilities and coordination  between the agencies. Although these guidelines represent progress in  clarifying roles and responsibilities, it remains essential that specific  monitoring duties be established for, and communicated to, all parties  involved in each MEPI project. Without the ability to evaluate its projects’  performance with certainty, and lacking access to complete information,  MEPI’s capacity to meet its strategic goals of producing tangible results  and making results-based decisions is limited.
section_title: Recommendations for Executive Action
paragraphs: To bolster MEPI’s ability to monitor and evaluate project performance,  and to help ensure that MEPI achieves its goals of producing tangible  results and making results-based decisions, we are making three  recommendations to the Secretary of State. We recommend that the  Secretary of State ensure that MEPI managers    clearly delineate, document, and communicate roles and responsibilities    systematically obtain, maintain, and communicate complete information  regarding all MEPI projects, including performance and financial data; and regularly assess MEPI’s progress in communicating roles and  responsibilities and obtaining, maintaining, and communicating key  information.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Secretary of State and the  Administrator of USAID for their review and comment. Both officials  provided written responses, which we have printed in appendixes III and  IV. State and USAID also provided technical comments that we  incorporated as appropriate.
Although State and USAID agreed with our recommendations, State  disagreed with the extent of our finding that it could not with certainty  evaluate its projects’ performance; however, it did not point out specific  aspects of that finding with which it disagreed. State’s comments  acknowledged our recommendations regarding bolstering its ability to  monitor and evaluate project performance. In its comments, State said that  its July 2005 agreement with USAID regarding project management should  improve the management, information flow, documentation, and  monitoring of USAID-administered MEPI projects. In addition, State said  that it would implement a monitoring and evaluation timetable for every  project, identify projects that require on-site monitoring in the next year  and assign responsibility to the appropriate MEPI action offices.
State’s comments also laid out other general steps that, if taken, would  help ensure more comprehensive project monitoring, including two steps  to guarantee complete and accurate project information: (1) ensuring that  files on every project are complete and (2) implementing an integrated  grants and project management database system. In addition, State said  that it would provide ongoing training in grants and project management  for staff both in MEPI Washington and at MEPI regional offices and engage  outside consultants to provide project monitoring support where  necessary.
State did not comment on our recommendation that it monitor progress on  clearly delineating, documenting, and communicating roles and  responsibilities for monitoring and systematically obtaining, maintaining,  and communicating complete information about all MEPI projects.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  date of this letter. At that time, we will send copies of this report to  interested congressional committees and to the Secretary of the State and  the Administrator of USAID. We also will make copies available to others  upon request. In addition, the 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 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.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: In this report, we (1) describe MEPI’s structure for administering projects  and obligating funds, (2) examine MEPI’s uses of the reviews of U.S.  bilateral economic assistance in the region, and (3) evaluate MEPI’s  monitoring of its projects.
To describe the administration of MEPI projects and obligation of MEPI  funding, we examined budget and programmatic documentation provided  by State and USAID. This documentation included information on funding  levels and project administration for fiscal year 2002 and 2003 projects. We  also interviewed State and USAID officials familiar with MEPI budget and  project administration, in particular for fiscal years 2002 and 2003.  Although our audit generally covered MEPI activities from December 2002  through May 2005, in reviewing MEPI’s budget information and project  monitoring, we focused on data for fiscal years 2002-2003, because they  were the most complete data that MEPI could provide.
To describe MEPI’s uses of the 2002-2004 reviews of U.S. bilateral  economic assistance to the region, we examined (1) State’s and USAID’s  joint reviews of programs in Egypt and West Bank and Gaza; (2) USAID’s  reviews of democracy and governance for Algeria, Bahrain, Jordan,  Morocco, Tunisia, and Yemen; and (3) other supplemental information  provided by U.S. embassies and USAID missions in the region, including  mission performance plans and USAID country strategies. We also  conducted interviews with officials at State and USAID headquarters in  Washington, D.C.; officials representing embassies and USAID missions in  9 of the 14 MEPI countries; and officials administering MEPI programs in  the territories of West Bank and Gaza.
To assess MEPI’s mechanisms for monitoring its activities, we obtained  information from MEPI on all of its fiscal year 2003 projects, including  information on each project’s pillar, MEPI partner, implementing  organization, funding level, project location, and project type (country- specific or regionwide). From this information, we selected a  nonprobability sample of 25, or approximately 34 percent, of the 73 MEPI  projects funded in fiscal year 2003. This sample also represented about 63  percent of MEPI’s $100 million in fiscal year 2003 project funding. We used  the sample to examine project monitoring performed by MEPI and its  administrative partners and reports provided by project implementers. Our  sample included regionwide projects and projects from the countries we  would be visiting, projects with the highest funding levels for fiscal year  2003, projects administered both by MEPI and USAID, and projects from  each of the four MEPI pillars.
The documentation that we reviewed included project proposals, project  agreements, scopes of work and work plans, and quarterly reports for the  25 projects. Our analysis of these documents clarified the nature of MEPI’s  monitoring and reporting requirements and supplemented and validated  information that we obtained through interviews. We developed a  structured interview instrument to systematically collect data on the 25  projects, which included questions on implementer reporting  requirements, the use of performance baselines and indicators, and  feedback and verification by MEPI and its administrative partners. We  analyzed the interview data by developing categories for each relevant  response, using the categories to code the data, and tallying the codes to  obtain the number of projects to which each response was applicable. We  also interviewed officials from MEPI, USAID, U.S. embassies, and  implementing organizations in the United States, Bahrain, Egypt, and  Morocco regarding MEPI project monitoring. We selected these MEPI- participating countries because (1) Bahrain is a high-income country and  does not have a traditional U.S. bilateral assistance program; (2) Egypt, a  lower-middle-income country, is one of the largest recipients of U.S.  bilateral development funding; and (3) Morocco, a lower-middle-income  country, was the largest recipient of fiscal year 2003 MEPI funding. We  also traveled to Germany during a MEPI regional conference, where we  met with embassy and USAID officials responsible for project monitoring  in 8 of the 14 MEPI countries and in the West Bank and Gaza. In addition,  we used U.S. government internal control standards to assess relevant  areas of MEPI’s management control system that affected project  monitoring, including (1) roles and responsibilities of MEPI staff and  administrative partners in Washington, D.C., and overseas and (2)  information flow.
We conducted our fieldwork in Washington, D.C., and in Bahrain, Egypt,  Germany, and Morocco from July 2004 to May 2005 in accordance with  generally accepted government auditing standards.
section_title: Appendix II: The Office of Middle East Partnership Initiative’s Organizational Structure
paragraphs: Manager (Grants)
Manager (Grants)
section_title: Appendix III: Comments from the Department of State
paragraphs: The following are our comments on the Department of State’s letter dated  July 22, 2005.
subsections: section_title: GAO Comments
paragraphs: 1.  State commented that it agreed with GAO’s conclusion that the  Department of State has effectively launched MEPI reform programs.  However, GAO did not audit the effectiveness of MEPI projects and  did not present such a conclusion in this report.  2.  State commented that our report recognized that MEPI had established  effective partnerships with other bureaus at State, with other U.S.  government agencies, and with a wide range of nongovernmental  organizations (NGOs), including the private sector. However, our  report did not present such a conclusion. Our report describes rather  than assesses the relationships between MEPI and other U.S.  government and nongovernment entities.  3.  State said that it disagreed with the extent of our finding that MEPI  cannot with certainty evaluate its projects’ performance, but it did not  specify aspects of that finding with which it disagreed. State’s  comments acknowledged our recommendations regarding bolstering  its ability to monitor and evaluate project performance and laid out  general steps that, if taken, would help ensure more comprehensive  project monitoring. For example, State said that it would ensure the  completion of every project’s files, to allow for periodic reviews of  activity status and project outcomes and shortcomings; engage outside  consultants to provide project monitoring and evaluation support,  where necessary; and implement an integrated grants and program  management database system. In addition, State pointed out that,  subsequent to receiving our preliminary findings in May, it finalized, on  July 14, 2005, an addendum to an October 2004 memorandum of  agreement (MOA) with USAID on USAID’s administration of MEPI  projects. This MOA addendum establishes a framework for roles and  responsibilities and coordination between State and USAID. In its  comments, State said that this agreement should improve the  management, information flow, documentation, and monitoring of  USAID-administered MEPI projects.
section_title: Appendix IV: Comments from the U.S. Agency for International Development
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Zina Merritt (Assistant  Director) as well as David Dornisch, Suzanne Dove, Reid Lowe, Grace Lui,  and Addison Ricks made key contributions to this report.