The U.S. government has provided assistance to Palestinians both bilaterally and multilaterally for several decades. USAID is the agency primarily responsible for implementing the bilateral aid program, while State oversees annual contributions to international organizations, primarily to UNRWA, for the multilateral program. The focus, size, and intent of the bilateral and multilateral programs differ. Table 1 compares the main characteristics of the two programs. “Prior to the obligation of funds appropriated by this Act under the heading ‘Economic Support Fund’ for assistance for the West Bank and Gaza, the Secretary of State shall take all appropriate steps to ensure that such assistance is not provided to or through any individual, private or government entity, or educational institution that the Secretary knows or has reason to believe advocates, plans, sponsors, engages in, or has engaged in, terrorist activity nor, with respect to private entities or educational institutions, those that have as a principal officer of the entity’s governing board or governing board of trustees any individual that has been determined to be involved in, or advocating terrorist activity or determined to be a member of a designated foreign terrorist organization. The Secretary of State shall, as appropriate, establish procedures specifying the steps to be taken in carrying out this subsection and shall terminate assistance to any individual, entity, or educational institution which she has determined to be involved in or advocating terrorist activity.” “None of the funds appropriated under title II through V of this Act for assistance under the West Bank and Gaza program may be made available for the purpose of recognizing or otherwise honoring individuals who commit, or have committed, acts of terrorism.” The Secretary of State has deferred to USAID, the implementing agency, to ensure compliance with these and similar provisions. The USAID Mission to the West Bank and Gaza (the mission) developed Mission Order 21, which outlines USAID’s procedures to help ensure that its assistance program does not inadvertently provide support to entities or individuals associated with terrorism, in accordance with U.S. law. Mission Order 21 establishes, among others, the following requirements: All solicitations and awards for contracts, grants, and subagreements must contain the antiterrorism clause. This clause reminds award recipients that they must comply with U.S. executive orders and laws prohibiting transactions with terrorists, and the provision of resources and support to individuals or organizations associated with terrorism. UN agencies that receive USAID funds must include a separate clause. All U.S. and non-U.S. organizations must sign the antiterrorism certification before being awarded a grant or cooperative agreement to certify that the organization does not provide material support or resources for terrorism. This certification recommends that the recipient follow certain steps to comply with its obligation, including (1) screening against the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) list and the UN Security Council’s Al-Qaida and Taliban Sanctions Committee Consolidated List (UN 1267 list) before providing any material support or resources to an individual or entity and (2) implementing reasonable monitoring and oversight procedures to safeguard against assistance being diverted to support terrorist activity. All contracts, subcontracts, grants, cooperative agreements, and subgrants must contain the clause restricting facility names, known as the naming clause. This clause states, among other things, that no assistance shall be provided under this contract or agreement for any school, community center or other facility that is named after any person or group that has advocated, sponsored, or committed acts of terrorism. Certain individuals and organizations need to be vetted, which involves checking recipients’ names and other identifying information against databases and other information sources to determine if they have links to terrorism. “No contributions by the United States shall be made to the United Nations Relief and Works Agency for Palestinian Refugees in the Near East except on the condition that the United Nations Relief and Works Agency takes all possible measures to assure that no part of the United States contribution shall be used to furnish assistance to any refugee who is receiving military training as a member of the so-called Palestinian Liberation Army or any other guerrilla type organization or who has engaged in any act of terrorism.” This clause is commonly referred to as “section 301(c).” State is responsible for implementing section 301(c) and, in that capacity, oversees U.S. contributions to UNRWA. UNRWA beneficiaries include Palestinian refugees and a limited number of individuals displaced by the 1967 Arab-Israel conflict. According to UNRWA, most of the displaced individuals are in Jordan. Since 2006, USAID has strengthened its antiterrorism policies and procedures to help ensure that assistance is not inadvertently provided to terrorists. USAID complied with its strengthened policies and procedures when issuing new prime awards in fiscal year 2008. Although USAID’s new monthly reporting system was intended, in part, to improve compliance at the subaward level, we found that it did not provide sufficient information for us to assess compliance. In response to our 2006 recommendation, USAID strengthened its antiterrorism policies and procedures—as outlined in Mission Order 21— to help ensure that assistance is not inadvertently provided to terrorists by clarifying how those policies and procedures would be applied to each type of assistance instrument. Although USAID had established antiterrorism provisions that apply to contracts, cooperative agreements, and grants, we reported in 2006 that it had not clearly articulated how antiterrorism provisions apply to other types of assistance instruments, such as purchase orders. We recommended that USAID develop policies and procedures to address how each of its antiterrorism provisions apply to other types of assistance instruments. In its October 3, 2007, revision to Mission Order 21, USAID strengthened its antiterrorism policies and procedures by listing which clauses and certifications would apply to each type of assistance instrument—thereby responding to our 2006 recommendation. For example, the antiterrorism certification now clearly applies to grants made under contracts. In addition, USAID clarified that instruments that can function as contracts, such as purchase orders, are subject to the same policies as contracts. USAID strengthened its vetting process in response to a 2006 GAO recommendation that the mission’s vetting management database promote data reliability, satisfy technical documentation requirements, and meet all applicable security requirements. This recommendation was based on our finding that the mission did not routinely collect or verify detailed identifying information—such as date and place of birth—needed to fully vet individuals. We also identified weaknesses in the mission’s unclassified database, which was designed to record and track vetting results. For example, few safeguards were in place to control access to the information stored in the database. In response to our recommendation and findings, the following were completed: In December 2006, USAID instituted a new strengthened vetting system, called the Partner Vetting System. This system uses U.S. law enforcement and intelligence databases to vet the names of individuals that it receives from the mission. It also requires additional information for individuals being screened, such as the individual’s government-issued photo identification number and type (e.g., passport and passport number). Access to the system is limited to certain individuals who may have different levels of access to information in the system. For example, the clerks who enter vetting information do not have the same level of access as the contracting officer who makes the award. USAID placed a U.S. citizen with a security clearance in charge of the office responsible for maintaining the vetting system, thereby enabling sensitive derogatory information on potential awardees to be shared with the mission. Derogatory information indicates that vetted organizations or individuals appear to have links with terrorism. USAID conducted additional vetting at the U.S. consulate in Jerusalem for organizations receiving cash or in-kind assistance, which serves as another review to help ensure that funds are not inadvertently given to terrorists. According to USAID officials and prime awardees we spoke with, these improvements have strengthened controls over the system and decreased vetting time from about 9 months to as little as 1 to 2 weeks. In 2008, USAID enhanced its efforts to monitor prime awardee compliance with applicable Mission Order 21 requirements by commissioning an additional compliance audit, hiring a compliance specialist to conduct recurring compliance reviews, and requiring that prime awardees address noncompliance findings. USAID commissioned an additional compliance audit by contracting with an independent auditing firm to review 15 prime awardees’ compliance with Mission Order 21 during the period from June 1, 2006, through January 31, 2008. The audits examined 1,094 subawards and found 70 total weaknesses; 62 awards contained at least 1 weakness and 5 of those awards contained multiple weaknesses. Thirty-eight of the 70 weaknesses were related to mandatory clauses, 13 were related to vetting approval, and 4 were related to vetting procedures. The audit also found 15 monthly reporting weaknesses. According to USAID officials, where appropriate, prime awardees took actions to address the identified weaknesses. They also said that, in response to these findings, mandatory clauses were inserted into subawards when necessary, and required vetting was conducted and each subawardee passed vetting. This one-time audit provided additional feedback to USAID on the 15 prime awardees’ compliance beyond the existing feedback provided through the annual Regional Inspector General audits. Building on the one-time additional compliance audit, USAID further enhanced its oversight of prime awardees’ efforts to comply with their Mission Order 21-related requirements by hiring, in 2008, a compliance specialist. This specialist is responsible for conducting recurring compliance reviews of prime awardees’ subaward activities. Previously, USAID only examined prime awardee compliance with these requirements as part of periodic contract and compliance audits conducted under the direction of the Regional Inspector General. According to USAID officials, the compliance specialist’s reviews allow USAID to monitor compliance on a more timely basis than can be done with the annual USAID Regional Inspector General audits.