Foreign Assistance

Pursuant to a congressional request, GAO reviewed the Agency for International Development's (AID) policies and procedures for host country contracting for technical assistance services, construction services, and commodities at AID missions in Bangladesh, Egypt, Jordan, and Pakistan, focusing on: (1) whether project officers overseeing individual contracts supported the use of host country contracting; (2) whether AID assessed each host country agency's contracting capabilities prior to using a host country contract; (3) how AID determined whether the expected benefits of host country contracting were being achieved; and (4) whether AID monitoring and oversight of host country contracts was effective.

GAO found that: (1) project officers noted that the host country contracts regarding level of competition, price, and quality they managed compared favorably with AID direct contracts, but the contract process for host country contracts was significantly slower than for direct contracts; (2) project officers noted that host country contracts were generally more suitable for the procurement of construction services than AID direct contracts, since host country agencies were in a better position to obtain work permits and authorizations from local government agencies, and more likely to receive favorable judgments in local courts involving contractor or subcontractor noncompliance; (3) AID conducted a capability assessment for only 1 of the 103 host country contracts at the project design phase and for only one-fourth of all contracts after the project design phase; (4) the Egypt and Pakistan missions' capability assessments were superficial and included few specifics on the host agency's capability to award contracts, review invoices, and audit contractor records; (5) AID failed to measure or assess the achievement of principal expected benefits of host country contracting; (6) although senior missions officials discounted institution building and reduced administrative burden benefits of host country contracting, acknowledging only the increased sense of project ownership, project officers stated that all three benefits were achieved; and (7) each mission extensively monitored the contracting process, disbursed contract funds, and assumed responsibility for conducting contract audits, but failed to provide appropriate audit coverage.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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