Afghanistan Development: USAID Continues to Face Challenges in Managing and Overseeing U.S. Development Assistance Programs
Published: 2010-07-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: This testimony discusses oversight of U.S. assistance programs in Afghanistan. Strengthening the Afghan economy through development assistance efforts is critical to the counterinsurgency strategy and a key part of the U.S Integrated Civilian-Military Campaign Plan for Afghanistan. Since fiscal year 2002, the U.S. Agency for International Development (USAID) has awarded over $11.5 billion in support of development assistance programs in Afghanistan. Since 2003, GAO has issued several reports and testimonies related to U.S. security, governance, and development efforts in Afghanistan. In addition to reviewing program planning and implementation, we have focused on efforts to ensure proper management and oversight of the U.S. investment, which are essential to reducing waste, fraud, and abuse. Over the course of this work, we have identified improvements that were needed, as well as many obstacles that have affected success and should be considered in program management and oversight. While drawing on past work relating to U.S. development efforts in Afghanistan, this testimony focuses on findings in our most recent report released yesterday on the USAID's management and oversight of its agricultural programs in Afghanistan. It will address (1) the challenges the United States faces in managing and overseeing development programs in Afghanistan; and (2) the extent to which USAID has followed its established performance management and evaluation procedures.
section_title: What GAO Found
paragraphs: Various factors challenge U.S. efforts to ensure proper management and oversight of U.S. development efforts in Afghanistan. Among the most significant has been the "high-threat" working environment, the difficulties in preserving institutional knowledge due to the lack of a formal mechanism for retaining and sharing information during staff turnover, and the Afghan government ministries' lack of capacity and corruption challenges. USAID has taken some steps to assess and begin addressing the limited capacity and corruption challenges associated with Afghan ministries. In addition, USAID has established performance management and evaluation procedures for managing and overseeing its assistance programs. These procedures, among other things, require (1) the development of a Mission Performance Management Plan (PMP); (2) the establishment and approval of implementing partner performance indicators and targets; and (3) analyses and use of performance data. Although USAID disseminated alternative monitoring methods for projects in high-threat environments such as Afghanistan, USAID has generally required the same performance management and evaluation procedures in Afghanistan as it does in other countries in which it operates. Summary USAID has not consistently followed its established performance management and evaluation procedures. There were various areas in which the USAID Mission to Afghanistan (Mission) needed to improve upon. In particular, we found that the Mission had been operating without an approved PMP to guide its management and oversight efforts after 2008. In addition, while implementing partners have routinely reported on the progress of USAID's programs, we found that USAID did not always approve the performance indicators these partners were using, and that USAID did not ensure, as its procedures require, that its implementing partners establish targets for each performance indicator. For example, only 2 of 7 USAID-funded agricultural programs active during fiscal year 2009, included in our review, had targets for all of their indicators. We also found that USAID could improve its assessment and use of performance data submitted by implementing partners or program evaluations to, among other things, help identify strengths or weaknesses of ongoing or completed programs. Moreover, USAID needs to improve documentation of its programmatic decisions and put mechanisms in place for program managers to transfer knowledge to their successors. Finally, USAID has not fully addressed the risks of relying on contractor staff to perform inherently governmental tasks, such as awarding and administering grants. In the absence of consistent application of its existing performance management and evaluation procedures, USAID programs are more vulnerable to corruption, waste, fraud, and abuse. We reported in 2009 that USAID's failure to adhere to its existing policies severely limited its ability to require expenditure documentation for Afghanistan-related grants that were associated with findings of alleged criminal actions and mismanaged funds. To enhance the performance management of USAID's development assistance programs in Afghanistan, we have recommended, among other things, that the Administrator of USAID take steps to: (1) ensure programs have performance indicators and targets; (2) fully assess and use program data and evaluations to shape current programs and inform future programs; (3) address preservation of institutional knowledge; and (4) improve guidance for the use and management of USAID contractors. USAID concurred with these recommendations, and identified steps the agency is taking to address them. We will continue to monitor and follow up on the implementation of our recommendations.

section_title: Letter
paragraphs: I am pleased to be here to discuss oversight of U.S. assistance programs in  Afghanistan.
Strengthening the Afghan economy through development assistance  efforts is critical to the counterinsurgency strategy and a key part of the  U.S Integrated Civilian-Military Campaign Plan for Afghanistan. Since  fiscal year 2002, the U.S. Agency for International Development (USAID)  has awarded over $11.5 billion in support of development assistance  programs in Afghanistan.
Since 2003, GAO has issued several reports and testimonies related to U.S.  security, governance, and development efforts in Afghanistan. In addition  to reviewing program planning and implementation, we have focused on  efforts to ensure proper management and oversight of the U.S. investment,  which are essential to reducing waste, fraud, and abuse. Over the course  of this work, we have identified improvements that were needed, as well  as many obstacles that have affected success and should be considered in  program management and oversight. While drawing on past work relating  to U.S. development efforts in Afghanistan, I will focus much of my  testimony today on findings in our most recent report released yesterday  on the USAID’s management and oversight of its agricultural programs in  Afghanistan.
My statement today will address (1) the challenges the United States faces  in managing and overseeing development programs in Afghanistan; and (2)  the extent to which USAID has followed its established performance  management and evaluation procedures.
subsections: section_title: The United States Faces Challenges in Managing and Overseeing Programs in Afghanistan
paragraphs: Various factors challenge U.S. efforts to ensure proper management and  oversight of U.S. development efforts in Afghanistan. Among the most  noteworthy has been the “high-threat” working environment U.S.  personnel and others face in Afghanistan, the difficulties in preserving  institutional knowledge due in part to a high rate of staff turnover, and the  Afghan government’s lack of capacity and corruption challenges.
subsections: section_title: High-Threat Security Environment Impedes Monitoring and Oversight
paragraphs: As we have previously reported, Afghanistan has experienced annual  increases in the level of enemy-initiated attacks. Although the pattern of  enemy-initiated attacks remains seasonal, generally peaking from June  through September each year and then declining during the winter  months, the annual “peak” (high point) and “trough” (low point) for each  year have surpassed the peak and trough, respectively, for the preceding  year since September 2005. This includes a rise in attacks against coalition  forces and civilians, as well as Afghan National Security Forces. The high- threat security environment has challenged USAID’s and others’ ability to  implement assistance programs in Afghanistan, increasing implementation  times and costs for projects in nonsecure areas. For example, we found  during our review of the U.S. road reconstruction efforts that a key road to  the Kajaki dam was terminated after USAID had spent about $5 million  after attacks prevented contractors from working on the project. In  addition, U.S. officials cited poor security as having caused delays,  disruptions, and even abandonment of certain reconstruction projects. For  example, a project to provide Afghan women jobs in a tailoring business in  southwest Afghanistan failed, in part, because of the threat against the  female employees.
The high-threat security environment has also limited the movement and  ability of U.S. personnel to directly monitor projects. USAID has  specifically cited the security environment in Afghanistan as a severe  impediment to its ability to directly monitor projects, noting that USAID  officials are generally required to travel with armored vehicles and armed  escorts to visit projects in much of the country. USAID officials stated that  their ability to arrange project visits can become restricted if military  forces cannot provide the necessary vehicles or escorts because of other  priorities. In 2009, USAID documented site visits for two of the eight  programs included in our review (see fig. 1). We have experienced similar  restrictions to travel beyond the embassy compound during our visits to  Afghanistan.
In the Mission’s 2008 and 2009 Federal Managers Financial Integrity Act of  1982 Annual Certifications, the Mission reported its efforts to monitor  project implementation in Afghanistan as a significant deficiency. These  reports raised concerns that designated USAID staff are “prevented from  monitoring project implementation in an adequate manner with the  frequency required” and noted that there is a high degree of potential for  fraud, waste, and mismanagement of Mission resources. USAID further  noted that the deficiency in USAID’s efforts to monitor projects will  remain unresolved until the security situation in Afghanistan improves and  stabilizes. The reports identified several actions to address the limitations  to monitor project implementation, including, among others: placement of  more staff in the field; use of Afghan staff—who have greater mobility than  expatriate staff—to monitor projects; hiring of a contractor to monitor the  implementation of construction projects and conduct regular site visits;  and collecting of implementing partner video or photographs—including  aerial photographs.
section_title: USAID’s Institutional Knowledge Challenged by High Staff Turnover
paragraphs: Preserving institutional knowledge is vital to ensuring that new Mission  personnel are able to effectively manage and build on USAID assistance  efforts. We found, however, during our review of USAID’s road  reconstruction efforts in 2008 and, most recently, our review of USAID’s  agricultural development program that USAID had not taken steps to  mitigate challenges to maintaining institutional knowledge. USAID did not  consistently document decisions made. For example, staff working in  Afghanistan had no documented assessments for modifications to the  largest USAID-funded United Nations Office for Project Services (UNOPS)  project in Afghanistan—Rehabilitation of Secondary Roads—even though  these modifications increased the scope and budget of the program by  more than ten times its original amount.
Furthermore, USAID and other U.S. agencies in Afghanistan lack a  sufficient number of acquisition and oversight personnel with experience  working in contingency operations. This problem is exacerbated by the  lack of mechanisms for retaining and sharing institutional knowledge  during transitions of USAID personnel and the rate at which USAID staff  turn over, which USAID acknowledged as hampering program design and  implementation. In addition, the State Department Office of Inspector  General noted in its February 2010 inspection of the U.S. Embassy to  Afghanistan and its staff that 1-year assignments, coupled with multiple  rest-and-recuperation breaks, limited the development of expertise,  contributed to a lack of continuity, and required a higher number of  personnel to achieve strategic goals. The USAID monitoring officials for  the eight agricultural programs we focused on during our review of  USAID’s agricultural development efforts in Afghanistan were in place, on  average, 7.5 months (see table 1). Moreover, the length of time that a  monitoring official was in place has declined. The two most recently  initiated agricultural programs have had monitoring officials in place for  an average of only 3 months each.
USAID officials noted that the effectiveness of passing information from  one monitoring official to another is dependent on how well the current  official has maintained his or her files and what guidance, if any, is left for  their successor. USAID officials noted that a lack of documentation and  knowledge transfer may have contributed to the loss of institutional  knowledge.
We reported in April 2010 that USAID used contractors to help administer  its contracts and grants in Afghanistan, in part to address frequent  rotations of government personnel and security and logistical concerns.  Functions performed by these contractors included on-site monitoring of  other contractors’ activities and awarding and administering grants. While  relying on contractors to perform such functions can provide benefits, we  found that USAID did not always fully address related risks. For example,  USAID did not always include a contract clause required by agency policy  to address potential conflicts of interest, and USAID contracting officials  generally did not ensure enhanced oversight in accordance with federal  regulations for situations in which contractors provided services that  closely supported inherently governmental functions.
section_title: Limited Ministerial Capacity and Corruption Challenge Development Efforts
paragraphs: USAID has increasingly included and emphasized capacity building among  its programs to address the government of Afghanistan’s lack of capacity  to sustain and maintain many of the programs and projects put in place by  donors. In 2009, USAID rated the capability of 14 of 19 Afghan ministries  and institutions it works with as 1 or 2 on a scale of 5, with 1 representing  the need for substantial assistance across all areas and 5 representing the  ability to perform without assistance. The Ministry of Agriculture,  Irrigation, and Livestock was given a rating of 2—needing technical  assistance to perform all but routine functions—while the Ministry for  Rural Rehabilitation and Development was given a rating of 4—needing  little technical assistance. Although USAID has noted overall improvement  among the ministries and institutions in recent years, none was given a  rating of 5.
USAID has undertaken some steps to address the Afghan ministries’  limited capacity and corruption in Afghanistan by including a capacity- building component in its more recent contracts. In 2009, the U.S.  government further emphasized capacity building by pursuing a policy of  Afghan-led development, or “Afghanization,” to ensure that Afghans lead  efforts to secure and develop their country. At the national level, the  United States plans to channel more of its assistance through the Afghan  government’s core budget. At the field level, the United States plans to  shift assistance to smaller, more flexible, and faster contract and grant  mechanisms to increase decentralized decision making in the field. For  example, the U.S. government agricultural strategy stresses the  importance of increasing the Ministry of Agriculture, Irrigation, and  Livestock’s capacity to deliver services through direct budget and  technical assistance.
USAID also recognized that, with a move toward direct budget assistance  to government ministries, USAID’s vulnerability to waste and corruption is  anticipated to increase. According to USAID officials, direct budget  assistance to the Ministry of Agriculture, Irrigation, and Livestock is  dependent on the ability of the ministry to demonstrate the capacity to  handle the assistance. These officials noted that an assessment of the  Ministry’s ability to manage direct budget assistance was being completed.  The U.S. Embassy has plans under way to establish a unit at the embassy  to receive and program funds on behalf of the Ministry while building the  Ministry’s capacity to manage the direct budget assistance on its own.
According to the Afghanistan’s National Development Strategy,  Afghanistan’s capacity problems are exacerbated by government  corruption, describing it as a significant and growing problem in the  country. The causes of corruption in Afghan government ministries,  according to the Afghanistan National Development Strategy, can be  attributed to, among other things, a lack of institutional capacity in public  administration, weak legislative and regulatory frameworks, limited  enforcement of laws and regulations, poor and nonmerit-based  qualifications of public officials, low salaries of public servants, and a  dysfunctional justice sector. Furthermore, the sudden influx of donor  money into a system already suffering from poorly regulated procurement  practices increases the risk of corruption. In April 2009, USAID published  an independent Assessment of Corruption in Afghanistan that found that  corruption was a significant and growing problem across Afghanistan that  undermined security, development, and democracy-building objectives.  According to the assessment, pervasive, entrenched, and systemic  corruption is at an unprecedented scope. The USAID-sponsored  assessment added that Afghanistan has or is developing most of the  institutions needed to combat corruption, but these institutions, like the  rest of the government, are limited by a lack of capacity, rivalries, and  poor integration. The assessment also noted that the Afghan government’s  apparent unwillingness to pursue and prosecute high-level corruption, an  area of particular interest to this Subcommittee, was also reported as  particularly problematic. The assessment noted that “substantial USAID  assistance  already designed to strengthen transparency,  accountability, and effectiveness—prime routes to combat corruption.”
Additionally, we reported in 2009 that USAID’s failure to adhere to its  existing policies severely limited its ability to require expenditure  documentation for Afghanistan-related grants that were associated with  findings of alleged criminal actions and mismanaged funds. Specifically, in  2008, a United Nations procurement taskforce found instances of fraud,  embezzlement, conversion of public funds, conflict of interest, and severe  mismanagement of USAID-funded the UNOPS projects in Afghanistan,  including the $365.8 million Rehabilitation of Secondary Roads project.  The USAID Office of Inspector General also reported in 2008 that UNOPS  did not complete projects as claimed and that projects had defects and  warranty issues, as well as numerous design errors, neglected repairs, and  uninstalled equipment and materials—all of which were billed as  complete.
section_title: USAID Did Not Consistently Follow Established Performance Management and Evaluation Procedures
paragraphs: USAID’s Mission to Afghanistan manages and oversees most U.S.  development assistance programs in Afghanistan and relies on  implementing partners to carry out its programs. USAID’s Automated  Directives System (ADS) establishes performance management and  evaluation procedures for managing and overseeing its assistance  programs. These procedures, among other things, require (1) the  development of a Mission Performance Management Plan (PMP); (2) the  establishment of performance indicators and targets; and (3) analyses and  use of program performance data.
USAID had generally required the same performance management and  evaluation procedures in Afghanistan as it does in other countries in which  it operates. However, in October 2008, USAID approved new guidance that  proposed several alternative monitoring methods for USAID projects in  high-threat environments. This guidance was disseminated in December  2009, but the Afghanistan Mission agricultural office staff did not become  aware of the guidance until June 2010.
subsections: section_title: USAID Needs an Approved PMP to Guide Management and Oversight Efforts
paragraphs: The ADS requires USAID officials to complete a Mission PMP for each of  its high-level objectives as a tool to manage its performance management  and evaluation procedures. While the Afghanistan Mission had developed  a PMP in 2006, covering the years 2006, 2007, and 2008, the Afghanistan  Mission has operated without a PMP to guide development assistance  efforts after 2008. According to USAID, the Mission is in the process of  developing a new Mission PMP that will reflect the current  Administration’s priorities and strategic shift to counterinsurgency. USAID  expects the new PMP to be completed by the end of fiscal year 2010. The  Mission attributed the delay in creating the new PMP to the process of  developing new strategies in different sectors and gaining approval from  the Embassy in Afghanistan and from agency headquarters in Washington.
Overall, we found that the 2006-2008 Mission PMP incorporated key  planning activities. For example, the PMP identified indicators and  established baselines and targets for the high-level objectives for all  USAID programs in Afghanistan, including its agricultural programs,  which are needed to assess program performance. In addition, the PMP  described regular site visits, random data checks, and data quality  assessments as the means to be used to verify and validate information  collected. The Mission PMP noted that it should enable staff to  systematically assess contributions to the Mission’s program results and  take corrective action when necessary. Further, it noted that indicators,  when analyzed in combination with other information, provide data for  program decision making. The 2006-2008 Mission PMP, however, did not  include plans for evaluations of the high-level objective that the  agricultural programs in our review supported.
section_title: USAID Needs to Consistently Approve and Establish Indicators and Targets
paragraphs: Under USAID’s current policies, implementing partners working on USAID  development assistance projects in Afghanistan are required to develop  and submit monitoring and evaluation plans that include performance  indicators and targets to USAID for approval. However, during our most  recent review of USAID’s agricultural development programs, we found  that USAID did not always approve implementing partner performance  indicators and targets. While the implementing partners for the eight  agricultural programs we reviewed did submit monitoring and evaluation  plans, which generally contained performance indicators and targets, we  found that USAID had not always approved these plans and did not  consistently require targets to be set for all of indicators as required. For  example, only 2 of 7 active agricultural programs included in our review  had set targets for all of their indicators for fiscal year 2009. Figure 2  shows the number of performance indicators with targets by fiscal year for  the eight agricultural programs we reviewed that the implementing partner  developed and submitted to USAID for approval.
section_title: USAID Could Improve Its Assessment and Use of Performance Data
paragraphs: In addition to collecting performance data and assessing the data’s quality,  ADS also includes the monitoring activities of analyzing and interpreting  performance data in order to make program adjustments, inform higher- level decision making, and resource allocation. We found that while  USAID collects implementing partner performance data, or information on  targets and results, the agency did not fully analyze and interpret this  performance data for the eight agricultural programs we reviewed. Some  USAID officials in Afghanistan told us that they reviewed the information  reported in implementing partners’ quarterly reports in efforts to analyze  and interpret a program’s performance for the eight programs, although  they could not provide any documentation of their efforts to analyze and  interpret program performance. Some USAID officials also said that they  did not have time to fully review the reports. In addition, in our 2008  report on road reconstruction in Afghanistan, we reported that USAID  officials did not collect data for two completed road projects or for any  active road reconstruction projects in a manner to allow them to  accurately measure impact. As a result, it is unclear the extent to which  USAID uses performance data.
USAID is also required to report results to advance organizational learning  and demonstrate USAID’s contribution to overall U.S. government foreign  assistance goals. While USAID did not fully analyze and interpret program  data, the Mission did meet semiannually to examine and document  strategic issues and determine whether the results of USAID-supported  agricultural activities are contributing to progress toward high-level  objectives. The Mission also reported aggregate results in the Foreign  Assistance Coordination and Tracking System.
ADS also requires USAID to undertake at least one evaluation for each of  its high-level objectives, to disseminate the findings of evaluations, and to  use evaluation findings to further institutional learning, inform current  programs, and shape future planning. In May 2007, USAID initiated an  evaluation covering three of the eight agricultural programs in our  review—ADP-Northeast, ADP-East, and ADP-South. This evaluation  intended to assess the progress toward achieving program objectives and  offer recommendations for the coming years. The evaluators found  insufficient data to evaluate whether the programs were meeting  objectives and targets, and, thus, shifted their methodology to a qualitative  review based on interviews and discussions with key individuals. As  required, USAID posted the evaluation to its Internet site for  dissemination. However, we are uncertain of the extent to which USAID  used the 2007 evaluation to adapt current programs and plan future  programs. Few staff were able to discuss the evaluation’s findings and  recommendations and most noted that they were not present when the  evaluation of the three programs was completed and, therefore, were not  aware of the extent to which changes were made to the programs. With  regards to using lessons learned to plan future programs, USAID officials  could not provide examples of how programs were modified as a result of  the discussion. USAID has planned evaluations for seven of the eight  agricultural programs included in our review during fiscal year 2010.
Madam Chairwoman and members of the subcommittee, this concludes my  prepared statement. I will be happy to answer any questions you may have.
section_title: Scope and Methodology
paragraphs: To address our objectives, we reviewed past GAO reports and testimonies,  examining U.S. efforts in Afghanistan, including reviews of USAID’s  agricultural and road reconstruction projects. We reviewed U.S.  government performance management and evaluation, funding; and  reporting documents related to USAID programs in Afghanistan. Our  reports and testimonies include analysis of documents and other  information from USAID and other U.S. agencies, as well as private  contractors and other implementing partners working on U.S.-funded  programs in Washington, D.C., and Afghanistan. In Afghanistan, we also  met with officials from the United Nations and the governments of  Afghanistan and the United Kingdom. We traveled to Afghanistan to meet  with U.S. and Afghan officials, implementing partners, and aid recipients  to discuss several U.S.-funded projects. We analyzed program budget data  provided by USAID to report on program funding, as well as changes in  USAID’s program monitoring officials over time. We analyzed program  data provided by USAID and its implementing partners to track  performance against targets over time. We took steps to assess the  reliability of the budget and performance and determined they were  sufficiently reliable for the purposes of this report. Our work was  conducted in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives. A more detailed  description of our scope and methodologies can be found in the reports  cited throughout this statement.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: For questions regarding this testimony, please contact Charles Michael  Johnson Jr., at (202) 512-7331 or johnsoncm@gao.gov. Individuals making  key contributions to this statement include: Jeffrey Baldwin-Bott, Thomas  Costa, Aniruddha Dasgupta, David Hancock, John Hutton, Hynek Kalkus,  Farahnaaz Khakoo, Bruce Kutnick, Anne McDonough-Hughes, and   Jim Michels.
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