Foreign Aid: USAID Generally Complied with Its Antiterrorism Policies and Procedures for Program Assistance for West Bank and Gaza
Released: 2016-04-18T00:00:00

Letter

Background

The West Bank and Gaza cover about 2,400 square miles and have a combined population of about 4.6 million people. The West Bank has a land area of 2,263 square miles and a population of about 2.8 million. Gaza has a land area of 139 square miles and a population of about 1.8 million. The Palestinian Authority and Israel administer areas in the West Bank, and the Hamas-controlled de facto authorities control Gaza (see fig. 1). Since Hamas’ takeover of control in Gaza in June 2007, USAID has adjusted U.S. assistance to Gaza to take into account this factional and geographical split between Fatah and Hamas and to comply with U.S. law and policy.

The U.S. government’s foreign assistance program in the West Bank and Gaza is designed, among other things, to support development assistance, provide critical infrastructure programming, and improve security conditions on the ground while reinforcing Palestinian respect for the rule of law. USAID’s role is to assist in building institutions for an eventual Palestinian state that result from a comprehensive peace agreement to promote a viable economy and to improve everyday lives of Palestinians, according to USAID. In September 2015, we reported on the five development sectors administered by the USAID mission from fiscal years 2012–2014. Our analysis from that report indicated the following information by sector:

Water resources and infrastructure. The primary objective of USAID’s largest project in this sector is to focus on the rehabilitation and construction of roads, schools, water, and wastewater projects.

Health and humanitarian assistance. The primary objective of USAID’s largest project in this sector is to focus on food security, including meeting food needs, enhancing food consumption, and increasing the dietary diversity of the most vulnerable and food- insecure non-refugee population.

Democracy and governance. The primary objective of the largest project in this sector is to address infrastructure recovery needs through improvements in community infrastructure and housing, economic recovery, and development through the creation of income generation and business development opportunities.

Private enterprise. The primary objective of USAID’s largest project in this sector is to strengthen the competitiveness and export potential of at least four sectors: agriculture and agribusiness, stone and marble, tourism, and information technology.

Education. The primary goal of USAID’s largest program in this sector is to improve access to quality education and mitigate challenges to youth development in marginalized areas of the West Bank.

According to USAID, since September 2015, the USAID mission has reorganized its work along three new lines: (1) governance and civic engagement; (2) water, energy, and trade; and (3) social services and humanitarian assistance.

USAID Has Issued Antiterrorism Policies and Procedures for Program Assistance for the West Bank and Gaza and Developed a Key Antiterrorism Compliance Review Process

In March 2006, the USAID West Bank and Gaza mission approved and issued various antiterrorism policies and procedures for program assistance for the West Bank and Gaza in a document known as Mission Order 21, which it last updated in October 2007. In 2008, the USAID mission developed a key compliance review process to monitor compliance with antiterrorism policies and procedures. This process is reflected in formal mission notices.

In 2006, USAID West Bank and Gaza Issued Antiterrorism Policies and Procedures in Mission Order 21, Which Was Last Updated in 2007

In response to federal laws and executive orders prohibiting assistance to entities or individuals associated with terrorism, in March 2006, the USAID mission adopted a key administrative policy document known as Mission Order 21. The stated purpose of Mission Order 21, last amended in 2007, is to describe policies and procedures to ensure that the mission’s program assistance does not inadvertently provide support to entities or individuals associated with terrorism. Such procedures include (1) vetting, (2) obtaining antiterrorism certifications, and (3) including specific mandatory provisions in award documents. Mission Order 21 is intended to balance development efforts in the West Bank and Gaza with ensuring that the assistance does not benefit entities or individuals who engage in terrorist activity, according to a senior USAID official. The vetting requirements in Mission Order 21 apply to certain contractors and subcontractors, recipients of grants and cooperative agreements, trainees / students, and recipients of cash or in-kind assistance, with some exceptions. All program awards are required to have a reference to Mission Order 21, according to USAID.

Vetting

Mission Order 21 requires that certain individuals and non-U.S. organizations undergo vetting, which involves checking their names and other identifying information against databases and other sources to determine if they have any identified links to terrorism. Non-U.S. organizations are cleared by vetting their key individuals regardless of nationality, including U.S. citizens. The vetting process provides reasonable assurance that program assistance is “not provided to or through any individual, private or government entity, or educational institution that is believed to advocate, plan, sponsor, engage in, or has engaged in, terrorist activity.” Applicable vetting is required before an award is made or assistance is provided. Appendix II provides more detailed information on USAID’s vetting process.

Mission Order 21 Vetting Requirements Mission Order 21 requires USAID’s West Bank and Gaza mission to vet the following: All non-U.S. prime awardee and subawardee organizations or individuals proposed for a contract or subcontract above $25,000. The $25,000 threshold is cumulative for multiple awards to the same organization or individual within a rolling 12-month period. All non-U.S. prime awardee and subawardee organizations or individuals (other than public international organizations) proposed to receive cash or in-kind assistance under a cooperative agreement, grant, or subgrant, regardless of the dollar amount. All non-U.S. individuals who receive USAID-financed training, study tours, or invitational travel in the United States or third countries, regardless of the duration; or who receive training in the West Bank and Gaza lasting more than 5 consecutive work days. All entities or specifically identified persons who directly receive other forms of cash or in-kind assistance, with the following exceptions (these thresholds apply to assistance per occasion): individuals who receive jobs under employment generation activities, individuals who receive cash or in-kind assistance of $1,000 or less, organizations that receive cash or in-kind assistance of $2,500 or less, households that receive micro-enterprise loans or cash or in-kind assistance of $5,000 or less, and, vendors of goods or services acquired by USAID contractors and grantees in the ordinary course of business for their own use.

Non-U.S. organizations are cleared by vetting their key individuals regardless of nationality, including U.S. citizens. In addition, Mission Order 21 also provides that even if vetting would not otherwise be required under these rules, vetting will be conducted whenever there is reason to believe that the beneficiary of assistance or the vendor of goods or services commits, attempts to commit, advocates, facilitates, or participates in terrorist acts, or has done so in the past.

Mission Order 21 provides specific details on how vetting procedures will be operationalized and the information implementing partners need to provide to specific entities within the USAID mission. Attachments to Mission Order 21 include a form that prime awardees must use to provide the particular details necessary to conduct vetting of an individual or entity as well as required language that must be incorporated in USAID-funded awards for the West Bank and Gaza program.

Antiterrorism Certification

Mission Order 21 requires that all U.S. and non-U.S. organizations sign an antiterrorism certification before being awarded a grant or cooperative agreement to attest that the organization does not provide material support or resources for terrorism. The antiterrorism certification is generally an attachment to the award documentation that certifies, in part, that the “recipient did not provide…and will take all reasonable steps to ensure that it does not and will not knowingly provide material support or resources to any individual or entity that commits, attempts to commit, advocates, facilitates, or participates in terrorist acts.”

Mandatory Provisions

Mission Order 21 requires that all prime awards and subawards for contracts, grants, and cooperative agreements contain two mandatory provisions (which are included as clauses in award documents): a provision prohibiting support for terrorism and a provision restricting funding to facilities that recognize or honor an individual or entity that commits or has committed terrorism. These two mandatory provisions inform awardees of their legal duty to (1) “prohibit transactions with, and the provisions of resources and support to, individuals and organizations associated with terrorism” (antiterrorism clause) and (2) restrict “assistance for any school, community center, or other facility named after any person or group of persons that has advocated, sponsored, or committed acts of terrorism” (facility naming clause). Both mandatory clauses must be incorporated in agreements at the time of signature.

USAID Developed a Key Antiterrorism Compliance Review Process in 2008 That Is Reflected in Formal Mission Notices

USAID Developed a Key Compliance Review Process in 2008

In July 2008, the USAID mission established a post-award compliance review function under the Office of Contracts Management to assess implementing partners’ compliance with the requirements of the antiterrorism procedures contained in Mission Order 21 when making subawards. This function was detailed to implementing partners in a July 2008 notice issued by the USAID mission. In 2009, we reported that USAID had enhanced its Mission Order 21 oversight efforts by hiring a compliance specialist and implementing a new compliance review process that provides additional assurance over contract and grant management. These recurring, detailed reviews were developed specifically to examine implementing partners’ subaward compliance with Mission Order 21 in USAID’s program assistance for the West Bank and Gaza.

Since 2009, the internal compliance review process has been an essential control function that allows USAID to provide reasonable assurance that all prime awardees are in compliance with all applicable requirements when making subawards and providing funding for trainees. The compliance specialist uses a checklist to assess implementing partners’ subaward compliance in four categories: (1) the proper vetting of subawardees and beneficiaries, (2) the timely incorporation of the antiterrorism certificate, (3) the timely incorporation of applicable mandatory provisions, and (4) monthly subaward reporting. To conduct these compliance reviews, the compliance specialist assesses policies, procedures, and program activities associated with an awardee, interviews relevant implementing partners’ staff, conducts periodic site visits, and inspects subaward documentation. The compliance specialist produces an official compliance review report and provides feedback to the prime awardee regarding any weaknesses in compliance identified during the review. According to these reports, throughout the review process the compliance specialist educates relevant prime awardee staff members about the Mission Order 21 requirements and informally shares best practices and suggestions with the prime awardee to help improve compliance in the future.

In addition to identifying weaknesses in compliance, the reports also include a general observations section documenting noncritical, compliance-related issues identified during the review process. These observations are organized into three categories: (1) subaward reporting, (2) internal control over compliance with Mission Order 21, and (3) the cross-referencing of incorporated special mandatory provisions. This general observations section includes recommendations on how prime awardees can improve their policies and procedures to strengthen their compliance environment and avoid compliance-related issues in the future.

Implementing partners are granted 2 weeks following receipt of the compliance review report to provide a written response to explain the reasons for any identified weaknesses in compliance and to outline the corrective actions the prime awardee will take to mitigate them, according to USAID. The compliance specialist follows up with the implementing partner to ensure that responses to address any identified weaknesses in compliance are submitted on time and to check on the sufficiency of the corrective actions stated by the implementing partner, according to USAID. USAID officials told us that following up to ensure that all weaknesses in compliance have been sufficiently resolved is a key aspect of the overall compliance review process. Failure to comply with vetting, as outlined in Mission Order 21, may lead to disallowance of costs incurred by the prime awardee if the organization or individual in question is found to be ineligible to receive USAID funds, according to USAID.

The compliance specialist, the acquisition supervisor, and the director of the Office of Contracts Management meet with senior USAID mission officials annually to present the outputs, analysis, and notable findings of the compliance review cycle, according to USAID. In addition, common issues identified during the compliance reviews are shared with the mission’s Program Support Unit and the Resident Legal Officer so that they can address such issues in future Mission Order 21 training sessions for prime awardees.

Antiterrorism Compliance Review Process Is Reflected in Mission Notices

The compliance review function is a key control in the mission’s assistance program because it assesses the quality of the mission’s antiterrorism oversight over time. The compliance review process and procedures are described in a series of stand-alone documents, such as notices issued by the mission to implementing partners involved in assistance programs (see fig. 2).

For example, in December 2012 the mission issued a notice to implementing partners detailing new compliance review protocols that expand the scope of the compliance reviews to include a better understanding of the implementing partner’s internal controls in addition to Mission Order 21 compliance. This and other pertinent formal notices are posted on USAID’s West Bank and Gaza website. According to officials in the mission, the contents of the notices and compliance with Mission Order 21 are discussed in each program award orientation meeting with implementing partners. No new formal notices related to the compliance review have been issued since the end of 2012 because the latest guidance remains effective and there have been no changes to the process since the issuance of the latest notice, according to USAID.

USAID officials told us that they anticipate updating Mission Order 21 at some point in the future to reflect lessons learned from implementation of a joint USAID and State Partner Vetting System Pilot Program that vets both U.S. and non-U.S. persons, as well as lessons learned from ongoing vetting programs for the West Bank and Gaza, Afghanistan, and Syria assistance. One purpose of the pilot program is to help assess the extent to which partner vetting adds value as a risk mitigation tool, and if so, under what circumstances vetting should occur, according to USAID. Under the pilot program, USAID will test vetting policies and procedures, evaluate the resources required for vetting, and seek input from implementing partners, Congress, and other stakeholders about the impact of vetting on USAID-funded delivery of foreign assistance. USAID currently is implementing the pilot program in Guatemala, Kenya, Lebanon, the Philippines, and Ukraine.

USAID Has Generally Complied with Its Requirements for Program Assistance for the West Bank and Gaza at the Prime Award and Subaward Levels

GAO reviewed USAID’s compliance reviews, the official reporting documents created during the compliance review function described above. That review and GAO’s examination of prime awards and a generalizable sample of subawards from fiscal years 2012–2014 found that USAID generally complied with requirements for vetting as well as inclusion of required antiterrorism certification and mandatory provisions in awards. Our review was based on the following documentation relating to prime awards and subawards:

USAID’s internal compliance reviews of 24 prime awardees and the more than 14,000 subawards that they made. The compliance review reports USAID provided to us identified some weaknesses in prime awardees’ compliance with all aspects of Mission Order 21 requirements when making subawards and providing funding for trainees, including vetting, antiterrorism certification, and mandatory provisions. However, according to USAID officials, all noncompliance weaknesses identified in the compliance review reports for active awards were addressed as part of the overall compliance review process. According to USAID, prime awardees are required to amend applicable subaward documentation to incorporate the mandatory provisions if the subawards are ongoing and active. Prime awardees are not required to amend documentation for subawards that have already expired and are no longer active.

GAO’s review of 48 prime awards and a random generalizable sample of 158 subawards associated with these prime awards, covering the period of fiscal years 2012–2014. We found that USAID complied with the three applicable Mission Order 21 requirements for all prime awards we reviewed. In addition, we found that 155 of the 158 subawards reviewed in our random generalizable sample complied with applicable Mission Order 21 requirements.

Below, we discuss in more detail the findings of each set of documentation, in terms of vetting and inclusion of required antiterrorism certification and mandatory provisions in awards. In addition, we discuss an instance where the USAID mission during the course of our review self-reported an error in vetting that was subsequently resolved.

Vetting: USAID’s Internal Compliance Reviews and GAO’s Review

USAID’s internal compliance review reports identified instances of noncompliance with applicable vetting. In the universe of 14,436 subawards assessed by the compliance review reports provided by USAID, 1 prime awardee failed to vet a subawardee. In addition, 4 prime awardees collectively failed to vet a total of 18 non-U.S. individuals taking part in USAID-funded trainings in the West Bank (see table 1). Specifically, one of these prime awardees did not obtain valid vetting approval for 15 students participating in a U.S.- funded academic program. These prime awardees were required to address all noncompliance weaknesses and obtain the proper vetting approvals for the subawardee and all applicable trainees, according to USAID. The compliance review reports also identified 11 prime awardees that obtained late vetting approval, after the subawards were signed, across 23 subawards. In addition, 3 prime awardees conducted similar late vetting for 219 USAID-funded trainees. Most of these instances of late vetting for trainees occurred when a single prime awardee failed to obtain valid vetting approval for 167 non-U.S. individuals prior to the start date of their USAID-funded academic program. USAID’s compliance review reports identified one prime awardee that obtained late vetting approval targeting 4 beneficiaries of direct cash or in-kind assistance.

According to USAID, all noncompliance weaknesses in vetting procedures identified in the compliance review reports provided to GAO have been resolved, and there were no instances of USAID providing funding to any individual or entity that ultimately did not pass vetting.

GAO’s review found that prime awards were in compliance and subawards were generally in compliance with vetting requirements. We found that 11 of the 48 prime awards we reviewed required vetting according to Mission Order 21 because they were with non-U.S. organizations and, if contracts, had a value of more than $25,000. Our review of vetting information provided by USAID found that the vetting was conducted for all 11 of these prime awardees, and eligibility decisions were made prior to the signing of the awards, consistent with Mission Order 21. We also found that 29 of the 91 subawards (in our universe of 158 subawards) that went to non-U.S. organizations had a contract value or a time and cost amendment value of more than $25,000 and thus required vetting. Based on vetting information provided by USAID, vetting was conducted and eligibility decisions were made prior to the signing of the award in 28 out of the 29 instances, in compliance with Mission Order 21. However, vetting was obtained in 1 instance after the award was signed.

Antiterrorism Certification: USAID’s Internal Compliance Reviews and GAO’s Review

USAID’s internal compliance review reports identified one instance of noncompliance with antiterrorism certification requirements. The compliance review reports identified a single instance where a prime awardee failed to obtain an antiterrorism certificate from a subawardee. According to USAID officials, this prime awardee was required to amend the subaward paperwork to include the antiterrorism certificate.

GAO’s review found that prime awards and subawards were in compliance with antiterrorism certification requirements. We found that 16 of the 48 prime awards were grants or cooperative agreements and thus required a signed antiterrorism certification. All 16 prime awards contained a signed antiterrorism certification that was signed in advance of the award. We found that 4 of the 158 subawards were grants or cooperative agreements and therefore required an antiterrorism certification. All 4 subawards contained a signed antiterrorism certification that was signed in advance of the award.

Mandatory Provisions: USAID’s Internal Compliance Reviews and GAO’s Review

USAID’s internal compliance review reports identified noncompliance with the two mandatory provision requirements. The reports identified 9 prime awardees that collectively made a total of 449 subawards without the two mandatory provisions included. Specifically, the majority of these instances were the result of a single prime awardee failing to include the mandatory provisions in 378 of its subawards. According to USAID officials, the 9 prime awardees were required to amend the subaward paperwork to include the mandatory provisions if the awards were still active.

GAO’s review found that prime awards were in compliance with the two mandatory provisions requirements and the subawards were generally in compliance. All 48 prime awards made by USAID contained the mandatory provision antiterrorism clause and the facility naming clause in the award documents. Of the 48 prime awards, 2 were made to the United Nations, which is defined as a public international organization, and contained differently worded clauses than for nongovernmental organizations. We found that 155 of the 158 subawards, or 98 percent, included the mandatory antiterrorism clause and facility naming clause. Specifically, based on the subaward documents provided by USAID, we found one instance where the antiterrorism clause and facility naming clause were not present in the award documentation. We also found two instances where the facility naming clause was not included in the award documentation. We estimate that there are 100 errors in our overall subaward universe population of 8,744 as it relates to whether mandatory clauses are present in the subawards.

Vetting: USAID Mission Self-Reported Case

During the course of our review, the USAID mission contacted us after identifying an instance in which USAID erroneously provided funds to an organization that did not pass vetting, but subsequently determined that there was no indication of misuse of funds. According to the mission, the vetting error involved a previously cleared subawardee that had a change in a key individual in September 2014. A USAID official in the Program Support Unit entered the new individual’s information manually into the Partner Vetting System and in the process of cross-referencing records, the official mistook the new key individual for a previously vetted and cleared key individual of the organization, as these two individuals had similar names. As a result, the vetting package submitted to the USAID Office of Security’s Counterterrorism Branch erroneously included the formerly cleared individual and not the new individual. In June 2015 the subawardee resubmitted information to USAID for vetting because of another change in key individuals. The Program Support Unit compiled the vetting package and submitted it to the USAID Office of Security’s Counterterrorism Branch, which then sent back an ineligibility recommendation for one of the key individuals listed for the subawardee. According to USAID, a review of the Partner Vetting System audit trail led to the conclusion that in 2014 this key individual was mistaken for a former key individual with a similar name. According to the mission, it immediately communicated the ineligibility decision to the prime awardee, who communicated this information to the subawardee and accordingly did not proceed with the proposed award extension. According to mission officials, once they became aware of the error in vetting, the mission performed a financial assessment to determine if there was any misuse of the U.S. government funds, which had been provided to the subawardee, totaling about $77,000. The review concluded that adequate supporting documents were presented for the payments, both the prime awardee and subawardee had adhered to the terms and conditions of the subawards when making disbursements of funds, and therefore there was no indication of misuse. According to USAID, the mission promptly implemented a new policy to prevent such human error from recurring and also promptly notified both GAO and USAID’s Regional Inspector General of the error.

Agency Comments

We provided a draft of this report to State and USAID for comment. State provided no comments, and USAID provided technical comments that were incorporated, as appropriate.

We are sending copies of this report to appropriate congressional committees, the Administrator of USAID, and the Secretary of State. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-3149 or gootnickd@gao.gov. Contact points for our Offices of Congressional relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to the report are listed in appendix IV.

Appendix I: Objectives, Scope, and Methodology

This report examines the extent to which (1) the U.S. Agency for International Development (USAID) has established antiterrorism policies and procedures for program assistance for the West Bank and Gaza and (2) USAID complied with requirements for vetting, antiterrorism certification, and mandatory provisions for program assistance for fiscal years 2012–2014.

To examine the extent to which USAID has established antiterrorism policies and procedures for program assistance for the West Bank and Gaza, we identified and reviewed relevant legal requirements as well as USAID policies and procedures to comply with those requirements. These legal and other requirements are contained in U.S. federal laws and executive orders. Mission Order 21 is the primary document that details the procedures to comply with applicable laws and executive orders to help ensure that assistance does not provide support to entities or individuals associated with terrorism. The effective date of the most recent version of Mission Order 21 is October 3, 2007, and it has not been updated since then, according to USAID officials. We also reviewed memorandums and notices issued by the USAID West Bank and Gaza mission that pertain to USAID’s antiterrorism compliance review process and reminders about Mission Order 21 updates.

To examine the extent to which USAID complied with its antiterrorism policies and procedures for program assistance for the West Bank and Gaza, we interviewed officials from USAID’s Office of Inspector General regarding its oversight requirements, and results of audits of West Bank and Gaza assistance programs against Mission Order 21 requirements. We examined documentation on USAID’s policies and procedures for monitoring prime awardees’ compliance with Mission Order 21 when making subawards and reviewed USAID’s formal compliance review process. We looked at 23 audit reports conducted under the direction of USAID’s Regional Inspector General and covering all prime awardees that received fiscal year 2012, 2013, or 2014 Economic Support Fund (ESF) assistance. We also reviewed and analyzed all 47 compliance review reports provided to us that were conducted by USAID’s compliance specialist on 24 prime awardees during fiscal years 2012, 2013, and 2014. We analyzed these antiterrorism compliance review reports to assess and compile all noncompliance weaknesses with Mission Order 21 identified by USAID in four categories: (1) the proper vetting of subawardees and beneficiaries, (2) the timely incorporation of the antiterrorism certificate, (3) the timely incorporation of applicable mandatory provisions, and (4) subaward reporting. We also followed up with relevant USAID officials regarding these identified noncompliance weaknesses and the policies and practices USAID had in place to ensure that such weaknesses were addressed.

To determine the extent to which the USAID West Bank and Gaza mission complied–at the prime and subaward levels–with its vetting requirements as well as inclusion of antiterrorism certification and mandatory provisions for program assistance to provide reasonable assurance that its programs do not provide support to entities or individuals associated with terrorism, we reviewed key legal and other requirements as well as USAID’s policies and procedures for ensuring compliance with Mission Order 21. We discussed the USAID mission’s implementation of Mission Order 21 with the USAID Deputy Mission Director, senior staff, the regional legal advisor, program staff, and other officials responsible for managing assistance projects and overseeing contracts, grants, and cooperative agreements at the USAID mission in Tel Aviv, Israel, and the U.S. Consulate in Jerusalem. We also interviewed several of USAID’s implementing partners that had received relatively large dollar contracts from USAID. In addition, we interviewed State, USAID, and other officials involved in vetting USAID award recipients.

We focused our review on the mission’s prime award contracts, grants, and cooperative agreements that were made using Economic Support Fund (ESF) programming for fiscal years 2012–2014 as well as applicable subawards made by the prime awards during this time period. We selected this time period because it covers the last fiscal year that we reported on in our 2012 report and also represents the most recently available data. The mission provided us with copies of all 48 prime awards issued during this time frame and the relevant documentation to support proof of vetting of key individuals and the presence of antiterrorism certifications and mandatory provisions in awards.

To determine whether subawards complied with relevant Mission Order 21 requirements, we examined a final random generalizable sample of 91 subawards made to non-U.S. organizations and 67 subawards made to U.S. organizations for a total of 158 subawards. Initially, we selected a random sample of 174 subawards. However, the random sample decreased to 158 subawards because of various issues such as missing data, duplicates of awards, and errors identified by the mission in subaward reporting by the prime awardee. We selected these random generalizable samples from a universe of 8,744 subawards for fiscal years 2012 through 2014 identified by the mission based on subaward activity reported to the mission by prime awardees. The universe included 8,521 non-U.S. organizations and 223 U.S. organizations. The mission developed the universe by taking the 48 prime awards that we had received and reviewed and identifying the corresponding subaward reports made by each prime award. Some of the prime awards did not make any subawards during the time frame that we examined. In total, the mission identified 37 of the 48 prime awards that had subawards reported. According to the mission, the subaward reports track the subaward awarded in a certain period of time and have no association with the fiscal year funding it received. Further, according to the mission, their main objective in developing the subaward universe for us was to track the vetting threshold by including all the individual subawards as well as their cost and time modifications that could trigger the vetting requirement per Mission Order 21. As a result, our subaward sample included several cost modifications and time extensions to awards.

We reviewed vetting information provided by USAID for all 11 prime awards made to non-U.S. organizations and a sample of 29 subawards made to non-U.S. organizations. The remaining 37 prime awards and 129 subawards were made to U.S. organizations, and were therefore not subject to vetting. We compared the vetting date to the award date to determine if the mission vetted the appropriate non-U.S. organizations prior to the date of award. We found that of the 91 subawards in our sample, 29 subawards went to non-U.S. organizations that had a contract value or a time and cost amendment value of more than $25,000 and thus required vetting. Based on vetting information provided by USAID, vetting was conducted and eligibility decisions were made prior to the signing of the award in 28 out of the 29 instances, in compliance with Mission Order 21. However, vetting was conducted in 1 instance after the award was signed. To understand USAID’s vetting process, we interviewed various mission officials, including the head of the Program Support Unit, which is the division responsible for the vetting process. We also reviewed snapshots of the Partner Vetting System (PVS), the system in which partner information is inputted, as well as training material related to the PVS to understand the vetting process.

To determine whether required antiterrorism certifications were obtained, we reviewed applicable documentation provided by USAID for 16 prime awards and 4 subawards that were grants or cooperative agreements to determine if antiterrorism certifications were included in the award and signed prior to the date of the award. We determined that the16 prime awards and the 4 subawards contained a signed antiterrorism certification that was signed in advance of the award.

To determine whether the prime awards and subawards contained mandatory provisions, specifically two mandatory clauses, we reviewed applicable documentation for each award to determine if the clauses were present. We reviewed 48 prime awards to determine if both the antiterrorism and facility naming clauses were present in the award before it was signed. We determined that all 48 prime awards had the mandatory clauses in the award before it was signed. For the subawards, we reviewed all 158 subawards to determine if mandatory clauses were present in the awards before it was signed. We used electronic searches to identify copies of the two clauses as efficiently as possible. We obtained the award documents from USAID in the form of scanned PDF files and used Adobe Acrobat Pro XI to convert them into machine- readable text. This conversion was generally reliable but sometimes introduced misspellings or other anomalies. We wrote Python code that performed keyword searches on each of the 260 PDF files for apparent instances of the two clauses. Each time the program found a potential match, it computed the edit distance between the clause the search identified and the actual boilerplate clause. We then identified the candidate match for each award with the shortest edit distance from each clause and produced a document listing the best potential match for each clause in each award and a link to the PDF page from which we extracted each potential match. The search program treated all of the PDFs associated with a single award as a group and identified candidate matches, for example very likely matches, for both clauses in almost all of the awards. A GAO analyst manually reviewed each potential match on the original PDF and either confirmed that it was the required clause or not. If the computer did not find a match, we reviewed the entire award document to determine whether the required clause was present. Based on our review, we found three instances where mandatory clauses were missing from the award.

We conducted this performance audit from July 2015 to April 2016, 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 based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings based on our audit objectives.

Appendix II: U.S. Agency for International Development (USAID) West Bank and Gaza Mission’s Vetting Process for Awards

This appendix provides information on the vetting process for awards to non-U.S. implementing partners (awardees) receiving U.S. government funding, including contracts, grants, cooperative agreements, and training, based on USAID documents and information from officials.

A typical vetting process starts with the implementing partner, or prime awardee, submitting through an online portal, the Partner Vetting System (PVS), a completed Partner Information Form that has the names and identifying information of the organization’s key individuals, according to the USAID mission. The prime awardee has access to the online portal to submit the Partner Information Form and also collects and submits the needed vetting data from proposed recipients of subawards. Figure 3 provides details of the steps in the vetting process for awards. In a small number of cases, the implementing partner, or prime awardee, does not have access to the online portal, and hard copy forms are sent directly to USAID’s vetting team, known as the Programs Support Unit (PSU), which inputs the information into the PVS. The information submitted online or on hard copy is checked by vetting assistants at the USAID mission to ensure that it is complete and is a valid request. The information is compiled for a vetting package that is submitted through the portal to the USAID Office of Security’s Counterterrorism Branch (SEC/CT) at the Terrorist Screening Center in the United States. Until August 2015 the vetting package to be submitted to the SEC/CT was compiled by one member of the PSU team. In response to a vetting error identified in July 2015, the USAID mission implemented a new policy that requires an additional check of vetting packages submitted to the SEC/CT. The new process requires that a separate member of the PSU team verify that packages submitted to the SEC/CT include all key individuals listed in the Partner Information Form.

If the organization or individual submitted for vetting is found to have no derogatory information by the SEC/CT, analysts at the SEC/CT enter an eligible determination into PVS. If the proposed award is a contract or training, the PVS generates an automatic notification to the Contracting/Agreement Officer’s Representative (C/AOR) and the vetting is a one-step process. The C/AOR notifies the awardee of the results.

If the proposed award is a cash grant or in-kind assistance, following an eligible recommendation from the SEC/CT, the request is then sent to the Consulate General for a second vetting step. If the organization vetted by the Consulate General is also deemed eligible, results are entered into PVS, and an automatic notification is sent to the C/AOR who notifies the awardee of the results. If the SEC/CT finds derogatory information related to an organization or individual submitted for vetting, the SEC/CT analyzes the information to determine if an ineligible recommendation is warranted. If an ineligible recommendation is warranted, the SEC/CT, drafts an assessment of the derogatory information to the Supervisory Program Support Specialist, according to the USAID mission. The Consulate General follows a similar notification process if an organization submitted for vetting results in an ineligible recommendation. In both cases, the Supervisory Program Support Specialist reviews the derogatory information and consults with key mission vetting officials who have been granted the appropriate security clearance and have a need- to-know. The C/AOR may also be asked to provide an impact assessment to evaluate the potential consequences for the implementation of the program should a particular prospective implementing partner be found ineligible.

If the mission would like to consider an award notwithstanding an ineligible finding by the SEC/CT, the mission refers the case to the Vetting Working Group, located in the U.S. Consulate General in Jerusalem. The Vetting Working Group is a multiagency group, responsible for reconciling derogatory vetting information obtained by U.S. agencies implementing programs in the West Bank and Gaza, according to the mission. The group meets on an ad-hoc basis and recommends eligibility or ineligibility based on consensus, with the final decision made by the Consul General. For cases that are not referred to the Vetting Working Group, the Deputy Mission Director has the authority to make final ineligibility decisions, according to the mission. Once a final determination is made by either the Consulate General or the Deputy Mission Director, the Supervisory Program Support Specialist enters this determination into PVS and an automatic notification is sent to the C/AOR. The Contracting/Agreement Officer Representative notifies the awardee of the results.

If a program awardee has been approved through the vetting process, the approval generally remains valid for that particular award for up to 3 years from the date of the award. However, new vetting is required in several circumstances. First, vetting is required if there is a change in the awardee’s key individuals. Key individuals include principal officers of the organization’s governing body, the principal officer and deputy principal officer of the organization, the program manager or chief of party, and any other persons with significant responsibility for administration of USAID- financed activities or resources. Second, new vetting is also required for any new awards or extensions of existing awards if more than 12 months have passed since the awardee was last approved. Third, new vetting is required for cost extension of awards when the total cost of the subaward including with the additional cost exceeds $25,000. USAID may rescind vetting approval if the agency obtains information that an awardee or any of the key individuals is or has been involved in terrorist activity, according to USAID.

Appendix III: Comments from USAID

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, Judy McCloskey (Assistant Director), Andrea Riba Miller (Analyst-in-Charge), Bryan Bourgault, and Ria Bailey-Galvis made key contributions to this report. Ashley Alley, Martin de Alteriis, Justin Fisher, Jeffrey Isaacs, Debbie Chung, Brian Egger, Robert Letzler, and Oziel Trevino provided additional assistance.

Related GAO Products

Foreign Aid: U.S. Assistance for the West Bank and Gaza for Fiscal Years 2012–2014. GAO-15-823. Washington, D.C.: September 22, 2015.

Foreign Assistance: U.S. Assistance to the West Bank and Gaza for Fiscal Years 2010 and 2011. GAO-12-817R. Washington, D.C.: July 13, 2012.

Foreign Assistance: U.S. Assistance to the West Bank and Gaza for Fiscal Years 2008 and 2009. GAO-10-623R. Washington, D.C.: May 14, 2010.

Foreign Assistance: Measures to Prevent Inadvertent Payments to Terrorists under Palestinian Aid Programs Have Been Strengthened, but Some Weaknesses Remain. GAO-09-622. Washington, D.C.: May 19, 2009.

Foreign Assistance: U.S. Assistance to the West Bank and Gaza for Fiscal Years 2005 and 2006. GAO-07-443R. Washington, D.C.: March 5, 2007.

Foreign Assistance: Recent Improvements Made, but USAID Should Do More to Help Ensure Aid Is Not Provided for Terrorist Activities in West Bank and Gaza. GAO-06-1062R. Washington, D.C.: September 29, 2006.