International Food Aid: Prepositioning Speeds Delivery of Emergency Aid, but Additional Monitoring of Time Frames and Costs Is Needed
Published: 2014-03-05T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Through Title II of the Food for Peace Act, the United States provides U.S. agricultural commodities to meet emergency food needs in foreign countries. In fiscal years 2007 to 2012, USAID delivered $9.2 billion in emergency food aid to recipient countries through cooperating sponsors. In 2000, Congress authorized USAID to order, transport, and store food for prepositioning in both overseas and domestic locations. Through prepositioning, the agency orders food before it is requested and stores it in warehouses in or near regions with historically high needs.
GAO was asked to examine U.S. international food aid procurement. This report examines (1) the effects of prepositioning on emergency food aid delivery time frames, (2) the effects of prepositioning on the costs of the food aid, and (3) the extent to which the agency monitors prepositioning to maximize time savings and cost effectiveness. GAO analyzed data on delivery time frames and costs; reviewed agency documents; and interviewed agency officials and representatives from WFP, other cooperating sponsors, and ocean freight contractors.
section_title: What GAO Found
paragraphs: The U.S. Agency for International Development (USAID) reduces the average delivery time frame for emergency food aid by prepositioning food domestically—that is, in warehouses in the United States—and overseas. GAO estimates that compared with USAID's standard shipping process, which can take several months, prepositioning food aid shortened delivery time frames by an average of almost a month for shipments to the World Food Program (WFP). GAO also estimates that prepositioning shortened delivery time frames by an average of more than 2 months for other organizations—“cooperating sponsors”—that receive USAID grants. In addition, USAID reduces delivery time frames when it diverts shipments en route to overseas prepositioning warehouses to areas with immediate needs. For all cooperating sponsors, GAO estimates that diversions saved, on average, about 2 months.
Prepositioning food can increase the cost of emergency food aid because of additional warehouse, shipping, and commodity costs. For example, in fiscal year 2012, USAID paid approximately $8 million for its overseas and domestic prepositioning warehouses. USAID also paid $13 million to ship food by ocean freight from overseas prepositioning warehouses to recipient countries, in addition to the cost of shipping from the United States to the warehouses. Further, USAID generally paid higher weighted annual average prices for domestically prepositioned commodities than for standard shipment commodities. U.S. officials and vendors noted that factors such as limited commodity supplies and few participating suppliers may have contributed to higher prices.
USAID has taken some steps to evaluate prepositioning, but the agency does not collect and analyze data needed to systematically monitor delivery time frames for prepositioned commodities. In addition, some available data are unreliable. Further, USAID does not systematically monitor the total cost of prepositioning. According to USAID policy and federal internal control standards, the agency should monitor its programs by collecting and analyzing data to guide higher-level decision making and allocate resources. Without such monitoring, USAID is limited in its ability to assess prepositioning's impact on delivery time frames and costs and to maximize emergency food aid's timeliness and cost effectiveness.
section_title: What GAO Recommends
paragraphs: GAO recommends that USAID systematically collect, and ensure the reliability of, data for prepositioned food aid and systematically monitor and assess the effectiveness of food aid's delivery time frames and costs. USAID concurred with the recommendations and is working to improve both the collection of reliable data and its monitoring of prepositioning.

section_title: Letter
paragraphs: U.S. international emergency food aid assists nations affected by severe  ongoing crises, such as the long-term food shortage in Ethiopia, as well  as unanticipated crises, such as the 2010 earthquake in Haiti. In fiscal  years 2007 to 2012, the United States donated about $9.2 billion in  emergency food aid to recipient countries under Title II of the Food for  Peace Act (Title II). The U.S. Agency for International Development’s  (USAID) Office of Food for Peace, which is responsible for managing the  U.S. emergency food aid program, delivers this assistance through  cooperating sponsors such as the World Food Program (WFP), Catholic  Relief Services, and Save the Children. In 2005, to expedite the delivery  of emergency food aid, USAID began to stockpile, or preposition, food  commodities, such as lentils, peas, and vegetable oil, in or near regions  of the world with historically high emergency food needs. From 2007 to  2012, USAID increased the tonnage of commodities that it ordered for  prepositioning under Title II from 6 percent to 22 percent of all emergency  food aid commodities. To address immediate needs, USAID can also  redirect, or divert, commodities intended for prepositioning and ship them  directly to areas in crisis.
In 2000, Congress authorized USAID to order, transport, and store food  for prepositioning in the United States and in foreign countries. Since  2008, Congress has authorized up to $10 million annually for storage of  food in overseas prepositioning sites. The Farm Bill signed by the  President in February 2014 increased the authorization for overseas  prepositioning storage costs to $15 million annually. For this report, you  asked us to assess several issues related to U.S. international food aid  procurement. This report examines the (1) effects of USAID’s  prepositioning on delivery time frames for emergency food aid  shipments, (2) the effects of prepositioning on the costs of emergency  food aid, and (3) the extent to which the agency monitors prepositioning  to maximize time savings and cost effectiveness.
To determine the effects of USAID’s prepositioning on the delivery time  frames and costs of emergency food aid, we analyzed data for 3,785  emergency food aid shipments in fiscal years 2007 through 2012. We  used characteristics such as commodity type, month and year the  commodity was requested, and discharge port to control for the  differences between standard and prepositioned emergency food aid  shipments. We conducted separate analyses, and present separate  findings, on the effects of prepositioning for WFP and the other  cooperating sponsors because of differences in time periods and  shipment dates tracked. We also analyzed cost data related to  emergency food shipments in fiscal years 2007 through 2012. To  determine the extent to which USAID has monitored prepositioning, we  reviewed agency documents to assess whether USAID’s monitoring was  consistent with its policy and regulations. We interviewed officials of U.S.  agencies, WFP and one other cooperating sponsor, and freight  forwarders—contractors that manage the supply chain of emergency food  aid for USAID and its cooperating sponsors—in Washington, D.C.  Appendixes I though IV contain additional information on our scope and  methodology.
We conducted this performance audit from July 2013 to March 2014 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe the  evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: To respond to food aid emergencies, USAID can provide emergency food  aid commodities through four general delivery processes: standard  shipping, overseas prepositioning, domestic prepositioning, or diversion  (see fig. 1). USAID determines the most appropriate of these four  processes by analyzing the request for food aid, the nature of the  emergency, and the availability of commodities and resources. USAID  aims to maintain a combined total of up to 100,000 metric tons of food in  its prepositioning supply chain at any given time. USAID currently  maintains prepositioning warehouses in six overseas locations (Colombo,  Sri Lanka; Djibouti, Djibouti; Dubai, United Arab Emirates; Durban, South  Africa; Las Palmas, Spain; and Mombasa, Kenya) and two domestic  locations (Jacinto Port, Texas, and Miami, Florida).
In 2007, we reported that U.S. food aid delivery is generally too time  consuming to be sufficiently responsive in emergencies, requiring 4 to 6  months on average, including time required for procurement and  transportation of the commodities. We recommended, among other  things, that USAID conduct a cost-benefit analysis of prepositioning to  improve its food aid logistical planning. In 2008, USAID commissioned a  cost-benefit analysis of the U.S. government’s food prepositioning  activities. The commissioned analysis did not compare the timeliness of  domestic and overseas prepositioning; however, it recommended that  USAID consider increasing the amount of food aid prepositioned  domestically, to improve its response times to critical emergency program  needs. In 2013, a report by USAID’s Inspector General found that the  agency had not determined whether the benefits of overseas  prepositioning in the Horn of Africa outweighed the costs or whether  overseas prepositioning saved time in comparison with domestic  prepositioning.
section_title: USAID’s Prepositioning of Emergency Food Aid Shortens Delivery Time Frames
paragraphs: Prepositioning of emergency food aid reduces the average delivery time  frame for USAID’s food aid shipments for WFP and other cooperating  sponsors. For WFP, prepositioning food aid in overseas and domestic  warehouses shortened delivery time frames by an average of almost a  month. For nine of USAID’s other cooperating sponsors, prepositioning  food aid in domestic and overseas warehouses shortened delivery time  frames by an average of more than 2 months. In addition, diversion of  emergency food aid from the prepositioning process shortened delivery  time frames by, on average, about 2 months for WFP and the other  sponsors.
subsections: section_title: For WFP, Prepositioning Emergency Food Aid Shortened Average Delivery Time Frame by Almost a Month
paragraphs: We estimated, using statistical modeling to control for various factors, that  prepositioning food in overseas and domestic warehouses shortened the  average delivery time frame for shipments for WFP by 28 days in fiscal  years 2009 through 2012 compared with USAID’s standard shipping  process. As table 1 shows, during this period, the 472 prepositioned  shipments for WFP had an average delivery time frame of about 102  days. In contrast, the 1,665 standard shipments for WFP had an average  delivery time frame of 135 days. According to WFP officials, USAID’s  prepositioning of food in warehouses has helped WFP provide food aid  more quickly. WFP officials also stated that because prepositioned food is  available for immediate collection from warehouses, prepositioning helps  ensure a sufficient food aid supply to meet spikes in demands due to  unforeseen emergencies.
Although both overseas and domestic prepositioning shortened delivery  time frames for WFP, the estimated time savings were larger for overseas  prepositioning. As table 1 shows, we estimated, using statistical modeling  to control for various factors, that prepositioning food in overseas  warehouses saved an average of 41 days compared with USAID’s  standard shipping process. We found that prepositioning food in domestic  warehouses saved fewer days—an estimated average of 16.
section_title: For Other Cooperating Sponsors, Prepositioning Food Aid Shortened Average Delivery Time Frame by More than 2 Months
paragraphs: We estimated, using statistical modeling to control for various factors, that  prepositioning food aid commodities in overseas and domestic  warehouses in fiscal years 2007 through 2012 saved an average of about  67 days for nine of USAID’s cooperating sponsors, compared with  USAID’s standard shipping process. As table 2 shows, during this  period, the average delivery time frame for the 141 prepositioned  shipments for these cooperating sponsors was about 87 days. In contrast,  the average delivery time frame for the 869 standard shipments was 161  days.
Both overseas and domestic prepositioning resulted in time savings, with  larger savings from overseas prepositioning. As table 2 shows, after  controlling for various factors, we estimated that prepositioning food for  these cooperative sponsors in overseas warehouses saved an average of  73 days relative to USAID’s standard shipping process. We also  estimated that, relative to the standard shipping process, prepositioning  food in domestic warehouses saved USAID an average of 62 days.
While prepositioning of food aid shortens delivery time frames, it has  some disadvantages, according to one cooperating sponsor’s  representative whom we interviewed. For example, the representative  noted that although overseas prepositioning makes commodities  available for immediate collection and thus saves time, handling of  prepositioned commodities by multiple parties can lead to losses due to  damage during the transit from prepositioning warehouse to discharge  port. In addition, prepositioned commodities may be comingled in the  warehouse, making it difficult to identify infestation problems in a  particular shipment of commodities. The cooperating sponsor’s  representative further noted that prepositioned commodities may have to  be fumigated several times if they remain in the warehouse for months; if  the commodities are overexposed to the fumigation chemicals, they can  no longer be used for food aid.
section_title: Diversion of Food Aid Intended for Prepositioning Shortened Delivery Time Frames by About 2 Months
paragraphs: We estimated, using statistical modeling to control for various factors, that  diversion of emergency food aid from the prepositioning process  shortened the average delivery time frame by about 64 days in fiscal  years 2007 through 2012 compared with USAID’s standard shipping  process (see table 3). During this period, the average delivery time frame  for the 568 diverted shipments was about 76 days. In contrast, the  average delivery time frame for the 938 standard shipments was 156  days.
According to USAID officials, prepositioning of emergency food aid allows  for greater flexibility to divert food assistance when necessary to meet  immediate needs. The officials further stated that, because the U.S.  government retains ownership of prepositioned food aid, USAID does not  have to replace diverted commodities. In contrast, when food aid is  shipped under the standard process, non-governmental cooperating  sponsors usually take ownership of commodities before they are shipped,  and depending on the availability of commodities and resources, USAID  may decide to replace diverted shipments.
USAID has diverted commodities before and after they left the U.S. port  and at all points in the procurement, transportation, or shipping process.  Our analysis shows that in fiscal years 2007 through 2012, an average of  80 days elapsed between USAID’s ordering commodities for  prepositioning and diverting the commodities. The smallest number of  days between USAID’s ordering and diverting commodities was 6 days,  and the largest number of days was 163. Our analysis also shows that  larger number of days between USAID’s ordering and diverting  commodities are associated with shorter delivery time frames.
section_title: Prepositioning Emergency Food Aid Involves Additional Costs
paragraphs: USAID pays additional costs for prepositioning of emergency food aid,  compared with standard shipping. For both overseas and domestic  prepositioning, USAID incurs additional warehouse costs that it does not  incur for standard shipments. USAID also incurs additional shipping costs  due to a second leg of ocean shipping from overseas prepositioning  warehouses to foreign discharge ports. Furthermore, USAID often pays  higher weighted annual average prices for domestically prepositioned  commodities than it does for standard shipment commodities.
subsections: section_title: USAID Incurs Additional Costs for Prepositioning Warehouses
paragraphs: USAID incurs various additional costs to store prepositioned food in  overseas and domestic prepositioning warehouses, depending on the  quantity of food stored and the duration of the storage. In contrast, for  standard shipments of emergency food aid, USAID transports the food  directly from U.S. ports to recipient countries. The cost per day for food  storage at USAID’s six overseas prepositioning warehouses averaged  $0.25 per ton in fiscal years 2011 and 2012; the longer food is stored at  the prepositioning warehouses, the higher the storage costs.
In fiscal years 2011 and 2012, USAID expended approximately half of the  annual $10 million authorized by the fiscal year 2008 Farm Bill for  overseas warehouse costs. Warehouse costs include, in addition to food  storage, storage of nonfood items (e.g., bags, pallets, and cartons) and  payment of warehouse operators for handling commodities (e.g.,  unloading trailers and loading bulk commodities). To help ensure that its  total costs for overseas prepositioning warehouses do not exceed the  ceiling authorized by Congress, USAID sets annual cost targets for each  warehouse that total $8.5 million. In fiscal year 2011, USAID expended  approximately $5.4 million—about 54 percent of its annual ceiling—for  food storage and other costs for its overseas prepositioning warehouses.  In fiscal year 2012, USAID expended about $4.6 million—about 46  percent of its annual ceiling. Table 4 shows USAID’s annual targets and  total expenditures for its overseas prepositioning warehouses in fiscal  years 2011 and 2012.
In addition, USAID expended $2.0 million in 2011 and $3.1 million in fiscal  year 2012 for its domestic prepositioning warehouse in Jacinto Port.  However, these expenditures did not count against the $10 million ceiling  set by the 2008 Farm Bill.
section_title: USAID Incurs Additional Shipping Costs for Overseas Prepositioning
paragraphs: USAID incurs additional shipping costs when overseas prepositioning  requires a second leg of ocean shipping, from the overseas  prepositioning warehouses to the final discharge ports. Although the first  leg of ocean shipping—from a U.S. port to the overseas warehouse—is  comparable to ocean transport for standard shipping, the second leg does  not exist in the standard shipping process. For example, a prepositioned  shipment might undergo a first leg of ocean shipping to the Djibouti  warehouse and a second leg of ocean shipping from Djibouti to Beira,  Mozambique; in contrast, a standard shipment would travel directly from a  U.S. port to Beira. As table 5 shows, in fiscal year 2012, 75 percent of  shipments from overseas prepositioning warehouses—including 100  percent of shipments from Colombo, Las Palmas, and Lomé—traveled  via ocean freight and thus involved costs for the second leg of ocean  shipping. In fiscal year 2012, USAID paid a total of $13 million, averaging  $143 per metric ton, for the second leg of ocean shipping for overseas  prepositioned food aid.
section_title: USAID Generally Paid Higher Prices for Domestically Prepositioned Commodities Than for Standard Shipment Commodities
paragraphs: In fiscal years 2007 to 2012, USAID generally paid higher weighted  annual average prices for commodities that it purchased for domestic  prepositioning than for similar commodities that it purchased for standard  shipping. Six commodities—corn-soy blend, cornmeal, pinto beans,  vegetable oil, yellow split peas, and sorghum—accounted for 76 percent  of USAID’s domestic prepositioning purchases in those years. Figure 2  shows the percentage differences between the weighted annual average  prices that USAID paid per ton for domestically prepositioned and  standard shipment commodities in fiscal years 2007 through 2012. In  figure 2, the bars above the zero line show that USAID paid a higher  weighted annual average price for domestically prepositioned  commodities in 24 instances, and the bars below the zero line show that  USAID paid a lower weighted annual average price in 8 instances. USAID  generally did not pay higher weighted annual average prices for overseas  prepositioning of these commodities during this period. (See app. IV for  more information.)
Many factors may have contributed to the higher weighted annual  average prices paid for domestically prepositioned commodities. For  example, limited commodity supply and limited numbers of suppliers for  domestic prepositioning purchases are two possible factors, according to  U.S. officials and commodity vendors whom we interviewed. First, if  USAID purchases commodities for domestic prepositioning after  commodity vendors have fulfilled their monthly orders for standard  shipment and overseas prepositioning, vendors may have a reduced  supply of commodities available for domestic prepositioning and may  therefore charge higher prices. Second, because domestically  prepositioned commodities—unlike standard shipment and overseas  prepositioned commodities—are delivered to only two preselected U.S.  ports, vendors for some commodities may be unwilling to compete with  vendors who are geographically closer to the port and who thus can  deliver the commodities to the port more cheaply.
section_title: USAID Does Not Systematically Monitor Prepositioning to Maximize Time Savings and Cost Effectiveness
paragraphs: USAID has taken some steps to evaluate timeliness and costs associated  with prepositioning. However, the agency does not collect and assess  data needed to systematically monitor delivery time frames for  prepositioned commodities to maximize time savings. Further, USAID  does not systematically monitor the costs of prepositioning to maximize  the program’s cost-effectiveness. According to USAID guidance, the  agency should monitor programs through various activities, including  collecting and analyzing data to make necessary program adjustments  and to guide higher-level decision making and resource allocation.  Additionally, federal internal control standards indicate that monitoring  should assess the quality of performance over time and ensure that the  findings of these assessments are promptly resolved.
subsections: section_title: USAID Has Taken Some Steps to Evaluate Prepositioning
paragraphs: USAID has taken some steps to evaluate prepositioning of emergency  food aid by examining timeliness and costs. For example, in 2008, USAID  commissioned a cost-benefit analysis of prepositioning. The analysis  found that prepositioning food aid reduced delivery time frames of  emergency shipments from an average of 177 days for standard  shipments of food aid to an average of 26 days. The analysis also found  that the average cost for domestically prepositioned food aid amounted to  an additional $23 per metric ton, and the average cost for overseas  prepositioned food aid amounted to an additional $164 per metric ton.  However, the methodology for the 2008 analysis had several limitations.  First, the analysis did not include data on delivery time frames for WFP,  USAID’s largest cooperating sponsor for emergency food aid. Second,  the analysis included data on delivery time frames up to the date when  the shipments were discharged at the foreign ports but did not include  any data up to the date when the shipments arrived in the recipient  countries. Third, the evaluation did not compare shipments of  prepositioned food with standard shipments that had similar  characteristics, such as the recipient country. Because differences in  such characteristics can contribute to differences in delivery time frames,  the evaluation may not have accurately isolated the effects of  prepositioning.
In 2009, USAID also developed a framework for prepositioning that  outlines the purpose of the program. However, the framework is not up- to-date and does not guide current prepositioning practices, according to  USAID officials. Additionally, the framework does not outline guidelines  for evaluations on timeliness or costs.
In 2013, USAID’s Inspector General found that the agency had not  determined whether the benefits of overseas prepositioning in the Horn of  Africa outweighed the costs and whether overseas prepositioning saved  time compared with domestic prepositioning. The report recommended,  among other things, that USAID conduct another independent evaluation  of the cost and timeliness of prepositioning. In November 2013, USAID  released a solicitation for a third-party vendor to conduct an independent  evaluation of prepositioning; the contract was awarded in January 2014.  According to USAID, the evaluation will be finalized in March 2014 and  will include an analysis of the cost, benefits, and effectiveness of  prepositioning.
section_title: USAID Does Not Collect and Assess Data Needed to Systematically Monitor Delivery Time Frames for Prepositioned Commodities
paragraphs: Although USAID’s goal for prepositioning is to improve the timeliness of  emergency food aid, USAID does not collect or assess data needed to  systematically monitor delivery time frames for prepositioned emergency  food aid shipments. According to guidance in USAID’s Automated  Directives System, the agency should monitor programs through various  activities, including collecting and analyzing data to make necessary  program adjustments and to guide higher-level decision making.  Moreover, USAID’s evaluation policy states that programs can best  manage for results by collecting and analyzing information to track  progress toward planned results and by ensuring that implementing  partners collect relevant monitoring data. The policy also states that  monitoring can reveal whether desired results are occurring and whether  implementation is on track.
USAID officials told us that the agency would be able to calculate delivery  time frames of prepositioned food only if its cooperating sponsors  provided data on all emergency food aid shipments. According to the  officials, these sponsors are responsible for tracking food shipments once  the shipments leave U.S. loading ports. However, according to USAID,  the terms of its agreements with its cooperating sponsors do not require  these sponsors to collect or provide comprehensive data to USAID. As a  result, USAID lacks the ability to determine whether prepositioning is  achieving its primary goal of shortening response times or to identify  possible time savings relative to standard emergency food aid shipments.
In addition, some emergency food aid data that are currently available  from WFP and USAID’s other cooperating sponsors have limitations that  constrain their usefulness for monitoring delivery time frames. We  collected data on emergency food aid shipments, including prepositioned  shipments, from 19 cooperating sponsors; however, because of the  following limitations, we did not include some of these data in our analysis  of delivery time frames.
Limitations in WFP data. We did not use data provided by WFP for  our analysis of diversion’s effect on delivery time frames, because  WFP’s data on emergency food aid shipments do not distinguish  diversions from other standard or prepositioned shipments. WFP also  was unable to provide data for years before 2009 because of changes  in its data management systems. As a result, we used data provided  by a freight forwarder for our analysis of WFP diversions.
Limitations in some data from several other cooperating  sponsors. Some data from five cooperating sponsors that received  emergency food aid in fiscal years 2007 through 2012 do not  distinguish emergency food aid shipments from other types of food aid  shipments. In addition, some data for these five cooperating sponsors  and three others were incomplete, missing some shipments and  providing only partial information for others. As a result, we were  unable to use some of the data from these eight sponsors.
section_title: USAID Does Not Systematically Monitor the Total Cost of Prepositioning to Maximize Cost Effectiveness
paragraphs: Although USAID collects data on the cost of its international food aid  programs, it does not use these data to systematically monitor the total  cost of prepositioning in order to maximize the program’s cost  effectiveness. According to USAID’s Automated Directives System, the  agency should collect and analyze data to make necessary program  adjustments and to guide higher-level decision making and resource  allocation. Further, federal internal controls indicate that monitoring  should assess the quality of performance over time and ensure that the  findings of these assessments are promptly resolved. USAID collects  data on the total costs of its overseas prepositioning warehouses to  ensure that the costs do not exceed the limit established by Congress.  However, USAID does not analyze this information to determine whether  the locations of these warehouses are cost effective. Further, the agency  does not systematically or routinely monitor and analyze prepositioning  commodity and shipping costs to determine the cost-effectiveness of  prepositioning.
USAID collects data on prepositioning commodity and shipping costs,  according to agency officials. However, USAID does not store these data  in a single system or spreadsheet, where they would be easily accessible  for monitoring purposes. Instead, according to USAID, various offices  collect these data and store them in a number of different systems or  spreadsheets. In addition, agency officials told us that because  prepositioning is not a separate program but is part of USAID’s  emergency food aid program, the agency does not monitor prepositioning  costs separately. These officials also stated that the agency does not  monitor prepositioning’s total costs, because the primary goal of  prepositioning is rapid response rather than financial savings.
As a result of the lack of monitoring of prepositioning costs, USAID does  not conduct analyses that could help it manage its resources and improve  the program’s cost-effectiveness. For example, the agency does not know  the causes of the commodity price differences that we identified and  therefore is limited in its ability to ensure that the procurement of  prepositioned commodities is conducted in a cost-effective manner.
section_title: Conclusions
paragraphs: The emergency food aid that USAID provides helps to save lives in  countries where ongoing or unanticipated crises have severely disrupted  food supplies. Our analysis of prepositioning showed that this approach  can have a significant effect on the United States’ and its cooperating  sponsors’ ability to deliver food quickly in response to humanitarian  emergencies. However, without reliable data on the delivery time frames  of prepositioned shipments, USAID lacks management tools that could  help it assess and improve prepositioning’s effect on emergency  response times. Such data could also help USAID assess the tradeoffs  between prepositioning’s timeliness and its additional warehouse,  shipping, and commodity costs. Furthermore, although cost savings are  not USAID’s primary goal for the prepositioning program, without  systematic monitoring of the total cost of prepositioning the agency has  limited ability to maximize the resources available for addressing  emergency food crises.
section_title: Recommendations for Executive Action
paragraphs: To strengthen USAID’s ability to help ensure that its food aid  prepositioning program meets the goal of reducing delivery time frames in  a cost-effective manner, we recommend that the USAID Administrator  take the following three steps to systematically  1.  collect, and ensure the reliability and validity of, data on delivery time  frames for all emergency food aid shipments, including prepositioned  food aid shipments;  2.  monitor and assess data on delivery time frames for prepositioned  food aid shipments; and  3.  monitor and assess costs associated with commodity procurement,  shipping, and storage for prepositioned food aid shipments.
section_title: Agency Comments
paragraphs: We provided a draft of this report for comment to USAID.
USAID provided written comments on a draft to this report, which we  reprinted in appendix VI. In its comments, USAID concurred with our  recommendations.  In addition, USAID stated that it is working to identify  actions needed to ensure the collection of reliable data on delivery time  frames for all emergency food aid. USAID also stated that it is revising its  prepositioning program strategy to provide a framework for monitoring  and assessing data on the timeliness and cost effectiveness of the  prepositioning program.
In addition to providing copies of this report to your offices, we will send  copies to interested congressional committees. We will make copies  available to others on 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 regarding this report, please  contact me at (202) 512-9601 or MelitoT@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 key contributions to this  report are listed in appendix VI.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: We examined (1) the effects of USAID’s prepositioning on delivery time  frames for emergency food aid shipments, (2) the effects of prepositioning  on the costs of emergency food aid, and (3) the extent to which the  agency monitors prepositioning to manage program resources effectively.
To examine the effects of prepositioning on delivery time frames, we  collected shipment-level data from the World Food Program (WFP) and  six freight forwarders for 19 other cooperating sponsors. We assessed  the reliability of these data by asking WFP and the six freight forwarders  how the data were collected, what quality checks were performed, and  what other internal controls were in place. We determined that the data  were sufficiently reliable for tracking the delivery time frames of  emergency food aid for WFP and three of the freight forwarders that  manage the food aid supply chain for nine cooperating sponsors. For the  remaining three freight forwarders, the data were not sufficiently reliable  for tracking delivery time frames because of a number of limitations,  including incomplete or missing data and, in one freight forwarder’s data,  a lack of distinction between emergency and nonemergency shipments.
The data that we included in our analysis of the effects of prepositioning  on delivery time frames include the date when the cooperating sponsor  requested the food (or the closest approximation)  and the date when the  food arrived at the discharge port or in the recipient country. In addition,  the data indicate whether the shipment was from prepositioning. The data  also include other shipment characteristics—for example, the loading  port, the discharge port, and the commodity shipped—and indicate  whether the shipment was an emergency or nonemergency shipment and  whether it was bulk or packaged.
We separately discuss our analysis of data provided by WFP and the  other cooperating sponsors’ three freight forwarders because WFP’s and  these freight forwarders’ data differ in the time periods covered and their  treatment of food aid diversions.
Time periods covered. Data provided by WFP cover shipments in  fiscal years 2009 through 2012, while data provided by the three  freight forwarders cover shipments in fiscal years 2007 through 2012.
Treatment of food aid diversions. Data provided by WFP do not  distinguish shipments that USAID diverted from the prepositioning  process from shipments that it prepositioned, while data provided by  the freight forwarders do identify diversions. Despite this difference,  our analysis suggests that using WFP’s data to estimate the number  of days saved from prepositioning would not have affected our  estimates significantly.
To analyze delivery time frames, we calculated the number of days  between a cooperating sponsor’s request for the commodities and the  commodities’ arrival at the discharge port or in the recipient country. To  compare delivery time frames for overseas and domestic prepositioning  with those for standard shipping for WFP and for other cooperating  sponsors, we estimated ordinary least squares regression models to  control for characteristics of prepositioning and standard shipments that  would allow us to isolate the effect of prepositioning.
To examine the effects of USAID’s diversions of emergency food aid  shipments on delivery time frames, we used data primarily from the  freight forwarder responsible for tracking all diverted shipments for World  Food Program (WFP) and for eight other cooperating sponsors. This  freight forwarder’s data include all diverted food aid shipments from fiscal  years 2007 through 2012. For the comparison group of standard  shipments, we used data from this freight forwarder in addition to data  from two other freight forwarders. We determined that these data were  sufficiently reliable for tracking delivery time frames. Like the data that we  included in our analysis for prepositioning, the diversions data are at the  shipment level and include the date when WFP and other cooperating  sponsors requested the food (or the closest approximation) and the date  when the food arrived at the discharge port or in the recipient country. In  addition, the data indicate whether the shipment was diverted. The data  also include other shipment characteristics—for example, the loading  port, the discharge port, and the commodity shipped—and indicate  whether the shipment was bulk or packaged and was an emergency or  nonemergency shipment. GAO analysts collected the dates USAID  authorized food aid diversions by reviewing one freight forwarder’s  shipment documents.
To analyze additional costs associated with prepositioning, we looked at  three types of cost that are unique to prepositioned food: costs for  prepositioning warehouses, costs for ocean shipping from overseas  prepositioning warehouses to discharge ports, and costs for procurement  for prepositioning commodities.
Warehouse costs. To analyze prepositioning warehouse costs, we  obtained warehouse contracts from USAID. Each contract identifies  the annual expenditure target that USAID had established for the  warehouse as well as the daily storage charge per metric ton and  outlines other charges related to handling the commodities.
Ocean shipping costs. We estimated the additional cost due to  prepositioning using the actual cost of the second leg of ocean  shipping, because the data required to re-construct the hypothetical  cost of direct shipping for every prepositioned shipment were not  available to us. Although the first leg of ocean shipping—from a U.S.  port to the overseas warehouse—is comparable to ocean transport for  standard shipping, the second leg does not exist in the standard  shipping process. We obtained data from USAID that track the mode  of transportation of shipments from each of the overseas warehouses,  the metric tonnage, and the freight cost. (See app. III for examples of  the additional ocean transportation costs.)
Commodity procurement costs. To analyze prepositioning  commodity procurement costs, we focused on six commodities that  accounted for 76 percent of total prepositioning purchases. We  compared the weighted annual average prices of commodities  purchased for domestic prepositioning, overseas prepositioning, and  standard shipping. To understand the possible reasons for the  observed differences in prices for prepositioned commodities, we  interviewed U.S. Department of Agriculture (USDA) officials as well as  commodity vendors. (See app. IV for the results of the price  comparison.).
To examine the extent to which USAID monitors prepositioning to  maximize time savings and cost effectiveness, we reviewed USAID  documentation related to prior, current, and future efforts to monitor its  prepositioning program, specifically efforts to monitor the delivery time  frames and program costs. We also interviewed USAID officials in  Washington, D.C., to discuss the extent to which the agency has taken  steps to monitor the program. We also interviewed WFP, one other  cooperating sponsor, and freight forwarders in Washington, D.C. We  reviewed evaluations and reports on USAID’s prepositioning, such as a  2008 evaluation of the program and a 2013 USAID Inspector General  report on prepositioning. Using USAID criteria, we evaluated USAID’s  efforts to monitor its prepositioning program. We also analyzed and  assessed the reliability of data on emergency food aid shipments that we  collected from cooperating sponsors’ freight forwarders to determine  whether these data could be used to monitor delivery time frames of  prepositioned food. We found that the data provided by three freight  forwarders were not sufficiently reliable for tracking delivery time frames  for emergency food aid shipments owing to a number of limitations,  including incomplete or missing data and, in one freight forwarder’s data,  lack of distinction between emergency and nonemergency shipments. We  also reviewed relevant legislation to determine where there are any  statutory requirements to monitor or evaluate USAID’s prepositioning  program.
We conducted this performance audit from July 2013 to March 2014 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe the  evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Delivery Time Frames Regression Analysis
paragraphs: A variety of factors besides prepositioning and food aid diversions may  affect delivery time frames, therefore we developed a statistical model—a  linear regression model—to control for factors that are likely to be  associated with delivery time frames, helping to isolate the effect of  prepositioning and food aid diversions.
subsections: section_title: Data Sources
paragraphs: We collected shipment data from the WFP and six freight forwarders.  The data indicate whether the shipment was from prepositioning or was  standard and include the date (or the closest approximation) when the  cooperating sponsor requested the food, the date of the food’s arrival at  the discharge port or in the recipient country, and other shipment  characteristics such as the commodity shipped. We assessed the  reliability of these data by asking WFP and the six freight forwarders how  the data were collected, what quality checks were performed, and  whether other internal controls were in place. We determined that the  data from WFP and three of the freight forwarders—74 percent of the  data we collected—were sufficiently reliable for tracking delivery time  frames and comparing standard, prepositioning, and diverted shipments.  Table 6 shows the numbers of prepositioned, standard, and diverted  shipments represented in the data that we deemed sufficiently reliable for  our analysis.
We excluded shipments from our analysis that were outside our scope,  were duplicated in two freight forwarders’ data, or did not have a  discernible delivery time frame. In addition, we found data from the  remaining three freight forwarders to be insufficiently reliable for tracking  delivery time frames of emergency food aid owing to a number of  limitations, including incomplete or missing data and, in one freight  forwarder’s data, a lack of distinction between emergency and  nonemergency shipments. Table 7 shows the number of shipments that  we excluded from our analysis and the reasons for their exclusion.
We separately analyzed data provided by WFP and the three freight  forwarders that we included in our analysis, because the two groups of  data differ in the time periods covered and their treatment of food aid  diversions. WFP’s data cover shipments in fiscal years 2009 through  2012, while the three freight forwarders’ data cover shipments in fiscal  years 2007 through 2012. In addition, WFP’s data do not distinguish  between diversions of food aid and other shipments, preventing our  estimation of the number of days saved from diversions of food aid using  WFP’s data.
We also separately analyzed the effect of food aid diversions on delivery  time frames. All food aid diversions, including diversions to WFP’s  programs, are managed by one freight forwarder. For a comparison  group, we used standard shipments included in the three freight  forwarders’ data. We did not include WFP’s data in the comparison  group because of the differences between WFP’s and the three freight  forwarders’ data. GAO analysts collected the dates USAID authorized  food aid diversions by reviewing one freight forwarder’s shipment  documents.
section_title: Limitations
paragraphs: Because of differences between the data sources, we used slightly  different start and end dates to estimate delivery time frames. In addition,  our results from the linear regression model do not cover 2007 and 2008  for WFP’s shipments or other freight forwarders’ shipments not included  in our analysis.
Start dates. Although we defined delivery time frame as the number  of days between a cooperating sponsor’s request for food and arrival  at a discharge port or recipient country, the start dates we collected  were the best available approximations of the date of request and  differed slightly in data provided by WFP and the freight forwarders.  However, USAID and WFP officials stated that the number of days  between the start dates and WFP’s food request dates does not differ  for prepositioning and standard shipments. USAID and freight  forwarder officials also stated that the number of days between the  freight forwarder start dates and the dates they request the food does  not differ for prepositioning and standard shipments. For comparisons  of prepositioning and standard shipments, the difference between the  start dates we collected and the request dates should not affect our  results. However, these differences may affect the average delivery  time frames we calculated, which should be considered as context for  our regression analysis rather than exact estimates. For diversions,  we also used the best available approximations of the date of  request—usually the date when USAID authorized the diversion.  According to USAID officials, the authorization date is generally a few  days after the request date. Therefore, for comparisons of diversions  and standard shipments, our estimates should be accurate to within a  few days.
End dates. Data provided by WFP include only the date of the food’s  arrival at the discharge port. Data provided by the freight forwarders  include, for some freight forwarders, only the date of the food’s arrival  at the discharge port for some shipments and, for other freight  forwarders, only the date of the food’s arrival in the recipient country  when inland transportation is required. Although this affects the  average delivery time frames we calculated, it should be considered  as context for our regression analysis rather than exact estimates.  Moreover, we found that combining these shipments did not affect our  regression estimates of number of days saved from prepositioning;  inland transport from the discharge port to the recipient country is  similar for prepositioned and standard shipments. In addition, we  controlled for the port of arrival (either a discharge port or in the  recipient country) in our analysis. See table 8 for average delivery  time frames for shipments with dates of arrival at the discharge port  and in the recipient country.
Treatment of diversions. Data provided by WFP do not distinguish  diversions from standard or prepositioning shipments. However, we  estimate that this limitation may affect our estimates of number of  days saved by prepositioning by only a few days.
Nongeneralizable results. Our estimates are not generalizable  beyond the time periods covered by the data (fiscal years 2009  through 2012 for data provided by WFP and fiscal years 2007 through  2012 for the data provided by the freight forwarders) or beyond WFP  and the three freight forwarders’ data that we included in our analysis.
section_title: Average Delivery Time Frames
paragraphs: Table 8 shows the average delivery time frames for two groups of  emergency food aid shipments. The first group comprises shipments  shown in WFP’s data, with delivery time frame defined as the number of  days between the date when WFP and USAID signed a grant agreement  and the date when the shipment arrived at the discharge port. The  second group comprises shipments shown in the freight forwarders’ data,  with the delivery time frame defined as the number of days between the  date when the cooperating sponsor requested the food and the date  when the shipment arrived at the discharge port or recipient country.
section_title: Prepositioning
paragraphs: To isolate the effect of prepositioning on delivery time frames for  emergency food aid, we estimated ordinary least squares regression  models that control for characteristics of prepositioned and standard  shipments for WFP and for the nine other cooperating sponsors  represented in the three freight forwarders’ data. Tables 9 and 10,  respectively, show the results of our regression analysis of the data  collected from WFP and the three freight forwarders, demonstrating the  average number of days saved by prepositioning relative to standard  shipping delivery time frames. Specifically, we estimated Y = α + βPrepo  + δX + ε for the second column in each table, where Y is the delivery  time frame of shipment i, Prepo is a dummy for whether shipment i is  from prepositioning, and X are the control variables listed in column 1.  We estimated Y = α + βDomesticPrepo + βOverseasPrepo + δX + ε  for the third column, where Y is the delivery time frame of shipment i,  DomesticPrepo is a dummy for when shipment i is from domestic  prepositioning, OverseasPrepo is a dummy for when shipment i is from  overseas prepositioning, and X are the control variables listed in  column 1. We clustered the standard errors by the discharge port or  recipient country. For WFP, we included the discharge port, the year of  the commodity request, the month of the commodity request, and the  commodity type as control variables. For the nine cooperating sponsors,  we included the freight forwarder, the cooperating sponsor, the discharge  port or recipient countries, the year of the commodity request, the month  of the commodity request, and the commodity type as control variables.  These variables are known to USAID when cooperating sponsors submit  requests for commodities. Controlling for these variables allowed us to  compare shipments that fulfilled requests with similar characteristics. We  did not control for the shipment’s tonnage, the port of loading, and other  variables that USAID determines when it decides whether to fulfill a  sponsor’s request with commodities sourced from the standard shipping  process or from prepositioned warehouses.
section_title: Food Aid Diversions
paragraphs: To isolate the effect of diverted shipments on the delivery time frame of  emergency food aid, we estimated ordinary least squares regression  models that control for characteristics of diverted shipments,  prepositioning shipments, and standard shipments. Table 11 shows the  results of our regression analysis, demonstrating the average number of  days saved by diversions relative to standard shipping time frames.  Specifically, we estimate Y= α + β + β +  βOverseasPrepo + δX + ε for the second column, where Y is the  delivery time frame of shipment i; Divert is a dummy for when shipment i  is diverted; DomesticPrepo is a dummy for when shipment i is from  domestic prepositioning; OverseasPrepo is a dummy for when shipment i  is from overseas prepositioning; and X are the control variables listed in  column 1. We clustered the standard errors by the discharge port or  recipient country. We include the freight forwarder, the cooperating  sponsor, the discharge port or recipient countries, the year of the  commodity request, the month of the commodity request, and the  commodity type. These variables are known to USAID when cooperating  sponsors submit requests for commodities. Controlling for these  variables allowed us to compare shipments fulfilling requests with the  same characteristics. We did not control for the shipment’s tonnage, the  port of loading, and other variables that USAID determines when deciding  whether to fulfill a sponsor’s request with commodities sourced from the  standard shipping process or with food aid diversions.
section_title: Appendix III: Examples of Additional Ocean Shipping Costs for Overseas Prepositioning
paragraphs: To derive examples of the additional cost of the second leg of ocean  shipping for prepositioning, we first estimated the costs of shipping from  the United States to the prepositioning warehouse in Djibouti and from the  Djibouti warehouse to three discharge ports—Mombasa, Kenya; Dar es  Salaam, Tanzania; and Beira, Mozambique—in fiscal year 2012. We then  compared those estimates with the estimated cost of shipping from U.S.  ports directly to the three ports. (See table 12).
section_title: Appendix IV: Analysis of Weighted Annual Average Prices for Domestic and Overseas Prepositioned Commodities
paragraphs: To identify additional commodity costs associated with USAID’s domestic  and overseas prepositioning of emergency food aid, we compared the  weighted average annual prices paid for six key prepositioned  commodities with the weighted average annual prices paid for each of  those commodities for standard shipments of emergency food aid in fiscal  years 2007 through 2012. We found that, relative to standard shipments,  the weighted average annual prices were higher relative to standard  shipments for domestically prepositioned commodities more often than for  overseas prepositioned commodities.
As figure 3 shows, for domestically prepositioned commodities, the  weighted average annual prices were higher relative to standard- shipment commodities in 24 instances and lower in 8 instances. For  overseas prepositioned commodities, the prices relative to standard- shipment commodities were higher in 13 instances and lower in 9  instances. Additionally, the size of the percentage differences between  prices for prepositioned commodities relative to standard-shipment  commodities was generally larger for domestic prepositioning than for  overseas prepositioning. For domestically prepositioned commodities, the  difference exceeded 15 percent in 7 instances; for overseas  prepositioned commodities, the difference reached 15 percent in only one  instance. Weighted annual average prices were consistently higher for  two domestically prepositioned commodities, corn-soy blend (2007-2011)  and vegetable oil (2007-2012).
To further examine price differentials between prepositioned and  standard-shipment commodities, we analyzed the number of purchases  per year in fiscal years 2007 through 2012. For commodities that the U.S.  government purchased infrequently, the differences in the average prices  might be a result of monthly commodity price fluctuations. For example,  the U.S. government made only one purchase of pinto beans in 2008 and  two purchases in 2009 for domestic prepositioning. In comparison, there  were 81 purchases of pinto beans in 2008 and 75 in 2009 for standard  shipments. Table 13 lists the numbers purchases for domestic  prepositioning and for standard shipment in fiscal years 2007 to 2012.
section_title: Appendix V: Related GAO Products about International Food Aid
paragraphs: These products can be downloaded from the links shown or can be found  on the GAO website at http://www.gao.gov .
Global Food Security: USAID Is Improving Coordination but Needs to  Require Systematic Assessments of Country-Level Risks. GAO-13-809.  Washington, D.C.: September 17, 2013. E-supplement GAO-13-815SP.
International Food Assistance: U.S. Nonemergency Food Aid Programs  Have Similar Objectives but Some Planning Helps Limit Overlap.   GAO-13-141R. Washington, D.C., December 12, 2012.
International Food Assistance: Improved Targeting Would Help Enable  USAID to Reach Vulnerable Group. GAO-12-862. Washington, D.C.:  September 24, 2012.
World Food Program: Stronger Controls Needed in High-Risk Areas.  GAO-12-790. Washington, D.C.: September 13, 2012.
Farm Bill: Issues to Consider for Reauthorization. GAO-12-338SP.  Washington, D.C.: April 24, 2012.
International Food Assistance: Funding Development Projects through  the Purchase, Shipment, and Sale of U.S. Commodities Is Inefficient and  Can Cause Adverse Market Impacts. GAO-11-636. Washington, D.C.:  June 23, 2011.
International Food Assistance: Better Nutrition and Quality Control Can  Further Improve U.S. Food Aid. GAO-11-491. Washington, D.C.: May 12,  2011.
International School Feeding: USDA’s Oversight of the McGovern-Dole  Food for Education Program Needs Improvement. GAO-11-544.  Washington, D.C.: May 19, 2011.
International Food Assistance: A U.S. Governmentwide Strategy Could  Accelerate Progress toward Global Food Security. GAO-10-212T.  Washington, D.C.: October 29, 2009.
International Food Assistance: Key Issues for Congressional Oversight.  GAO-09-977SP. Washington, D.C.: September 30, 2009.
International Food Assistance: Local and Regional Procurement Can  Enhance the Efficiency of U.S. Food Aid, but Challenges May Constrain  Its Implementation. GAO-09-570. Washington, D.C.: May 29, 2009.
International Food Security: Insufficient Efforts by Host Governments and  Donors Threaten Progress to Halve Hunger in Sub-Saharan Africa by  2015. GAO-08-680. Washington, D.C.: May 29, 2008.
Foreign Assistance: Various Challenges Impede the Efficiency and  Effectiveness of U.S. Food Aid. GAO-07-560. Washington, D.C.: April 13,  2007.
section_title: Appendix VI: Comments from the U.S. Agency for International Development
section_title: Appendix VII: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Valérie Nowak (Assistant  Director), Farahnaaz Khakoo-Mausel, Teresa Abruzzo Heger, Ming Chen,  Fang He, Rhonda Horried, Carol Bray, Martin De Alteriis, Justin Fisher,  Mark Dowling, Reid Lowe, Todd Anderson, Sushmita SriKanth, John  O’Trakoun, Barbara Shields, Patrick Hickey, Gergana Danailova-Trainor,  Gezahegne Bekele, and Etana Finkler made key contributions to this  report.