Foreign Assistance
Disaster Recovery Program Addressed Intended Purposes, but USAID Needs Greater Flexibility to Improve Its Response Capability Gao ID: GAO-02-787 July 24, 2002In the fall of 1998, when hurricanes Mitch and Georges struck Central America and the Caribbean, the United States and other donors responded by providing emergency relief, such as food, water, medical supplies, and temporary shelter. Also, In May 1999, Congress passed emergency supplemental legislation that provided $621 million for a disaster recovery and reconstruction fund for the affected countries, as well as reimbursement for costs incurred by U.S. departments and agencies during the immediate relief phase. The U.S. Agency for International Development (USAID) and other departments and agencies made significant achievements in helping the affected countries rebuild their infrastructure and recover from the hurricanes. USAID and others used the disaster recovery assistance to bring about economic recovery, improve public health and access to education, provide permanent housing for displaced families, and improve disaster mitigation and preparedness. To achieve these broad objectives, USAID funded infrastructure construction and repair, technical assistance and training, loans for farmers and small businesses, and some equipment. In addition to its normal controls, USAID ensured that the funds were spent for intended purposes. USAID coordinated its activities with 12 other departments and agencies that were allocated $96 million for disaster recovery efforts. USAID also coordinated with other bilateral and multilateral donors through formal consultative group meetings and informal contacts among mission staff and other donors. USAID attempted to strengthen the capacity of host government audit in situations as a means to resist corruption. However, USAID was not successful in this area, mostly due to country conditions. USAID did not begin expending the supplemental funds until January 2000, 7 months after the appropriation was enacted. Some of the factors that added time included arranging for additional program staff and contractor support; ensuring that financial controls and other oversight measures were in place; coordinating with and planning for the involvement of numerous other departments and agencies; and providing for U.S. contractors and other organizations to compete for most of the contracts, grants, and cooperative agreements that were awarded.
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Director: Team: Phone:GAO-02-787, Foreign Assistance: Disaster Recovery Program Addressed Intended Purposes, but USAID Needs Greater Flexibility to Improve Its Response Capability
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Report to Congressional Committees:
July 2002:
Foreign Assistance:
Disaster Recovery Program Addressed Intended Purposes, but USAID Needs
Greater Flexibility to Improve Its Response Capability:
GAO-02-787:
Contents:
Letter:
Results in Brief:
Background:
Disaster Recovery Program Addressed Intended Purposes:
USAID Coordinated with U.S. Government Entities and International
Donors:
USAID‘s Efforts to Strengthen Host Government Audit Capabilities Were
Limited:
USAID Had to Overcome Numerous Challenges to Initiate Disaster Recovery
Assistance:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Summary of Disaster Recovery Experiences: USAID Missions:
Program Planning and Implementation:
Staffing:
Accountability:
Coordination:
Lessons Learned:
Appendix III: Summary of Disaster Recovery Experiences: Other U.S.
Departments and Agencies:
Program Planning and Implementation:
Staffing:
Accountability:
Coordination:
Lessons Learned:
Appendix IV: Disaster Recovery Assistance Budgeted and Expended:
Appendix V: Comments from the U.S. Agency for International
Development:
Appendix VI: GAO Contacts and Staff Acknowledgements:
GAO Contacts:
Acknowledgments:
Tables:
Table 1: Disaster Recovery Assistance Budgeted and Expended as of
December 31, 2001:
Table 2: Status of Disaster Recovery Assistance Funds through December
31, 2001:
Figures:
Figure 1: Map of Central America and the Caribbean Showing the
Hurricane-Affected Countries Visited by GAO:
Figure 2: Damaged and Permanent Housing in the Dominican Republic:
Figure 3: Guaymon Bridge Constructed in Honduras:
Figure 4: School Under Repair in Honduras:
Figure 5: Temporary Shelters and Permanent Housing at El Pataste,
Honduras:
Figure 6: Rural Road Near Jinotega, Nicaragua:
Figure 7: Timeline Illustrating USAID‘s Disaster Recovery Expenditures
Funded by the May 21, 1999, Supplemental Appropriation, through
December 31, 2001:
Abbreviations:
CDC: Centers for Disease Control and Prevention:
DOT: Department of Transportation:
EPA: Environmental Protection Agency:
FEMA: Federal Emergency Management Agency:
GAO: General Accounting Office:
HUD: Department of Housing and Urban Development:
INL: International Narcotics and Law Enforcement Affairs (State
Department):
NOAA: National Oceanic and Atmospheric Administration:
USAID: U.S. Agency for International Development:
USDA: U.S. Department of Agriculture:
USGS: U.S. Geological Survey:
Letter:
July 24, 2002:
The Honorable Robert C. Byrd, Chairman
The Honorable Ted Stevens, Ranking Member
Committee on Appropriations
United States Senate:
The Honorable C. W. Bill Young, Chairman
The Honorable David R. Obey, Ranking Member
Committee on Appropriations
House of Representatives:
In the fall of 1998, Hurricanes Mitch and Georges struck Central
America and the Caribbean. The storms left thousands dead and many more
homeless; damages were estimated at more than $10 billion. The United
States and other donors initially responded by providing emergency
relief, such as food, water, medical supplies, and temporary shelter.
In May 1999, the international donor community pledged $9 billion to
assist in the recovery and reconstruction of hurricane-affected
countries in Central America. Also, in May 1999, the Congress passed
emergency supplemental legislation that, among other things, provided
$621 million for a disaster recovery and reconstruction fund for the
affected countries as well as reimbursement funds to U.S. government
departments and agencies for costs incurred during the immediate relief
phase.[Footnote 1] The U.S. Agency for International Development
(USAID) and numerous other U.S. departments and agencies used this
funding to implement disaster recovery and reconstruction activities.
In discussions with congressional staff, USAID agreed to complete the
program and expend the supplemental funds by December 31, 2001.
Congressional staff, concerned about the history of corruption in the
region and the prior misuse of foreign aid for relief and
reconstruction, asked us to concurrently monitor the delivery of
assistance through frequent field visits to assist in their oversight
responsibilities. The emergency supplemental legislation provided
$500,000 for us to monitor the assistance provided.[Footnote 2] This
report is a summary of our monitoring activities since July 1999. Our
objectives were to determine (1) whether the programs and projects
funded by USAID and the other U.S. departments and agencies addressed
the intended purposes of disaster recovery and reconstruction, (2)
whether USAID coordinated with other U.S. government entities and other
international donors to avoid duplication, (3) what USAID did to help
the affected countries strengthen their audit institutions‘
capabilities
to resist corruption, and (4) the challenges and obstacles faced by
USAID
in delivering the assistance.
To address these matters on an ongoing basis, we made numerous trips to
the region, focusing most of our visits on the three countries that
received the most U.S. assistance--Honduras ($293.1 million),
Nicaragua ($94.1 million), and the Dominican Republic ($29 million). We
also made at least one visit each to four other countries that received
U.S. assistance as a result of Hurricane Mitch or Georges.[Footnote 3]
While we addressed all the research questions during our field work, we
focused most of our efforts on whether the disaster recovery funds were
spent for intended purposes. On our trips, we visited numerous project
sites at varying stages of progress. We traveled to some of the most
remote areas, talked with many of the people seriously affected by the
hurricanes, and monitored the progress of numerous USAID projects and
those of the other U.S. departments and agencies across a wide range of
sectors. We briefed USAID officials on our findings during these trips
and provided our observations on the progress of the disaster recovery
activities so that USAID could take corrective action, if needed. (See
app. I for a more complete description of our scope and methodology.)
We also asked USAID missions and the other U.S. departments and
agencies about their experiences in implementing the disaster recovery
program. Their responses are summarized in appendixes II and III,
respectively.
Results in Brief:
As of December 31, 2001, USAID and the other U.S. departments and
agencies had expended about $553.1 million or about 89 percent of the
disaster recovery funds. The U.S. disaster recovery assistance program
made significant achievements in helping the affected countries rebuild
their infrastructure and recover from the damage caused by the
hurricanes. Although programs varied by country, USAID and the other
U.S. departments and agencies generally used the disaster recovery
assistance to bring about economic recovery, improve public health and
access to education, provide permanent housing for displaced families,
and improve disaster mitigation and preparedness. To achieve these
broad objectives, USAID funded infrastructure construction and repair,
technical assistance and training, loans for farmers and small
businesses, and some equipment. In addition to its normal controls,
USAID added some precautions to help ensure that funds were spent for
intended purposes. For example, USAID channeled much of the assistance
through organizations and contractors with proven track records,
contracted with management and financial services firms to handle
disbursements to vulnerable partners (including host governments), and
hired contractors to monitor project progress and quality. In addition,
the USAID Inspector General conducted numerous audits and we monitored
many projects in process. Although some activities did not go as
smoothly as planned, the missions and other U.S. government entities
responded to concerns identified through these oversight measures. For
example, USAID hired engineers to oversee road repairs, developed a
system to track services for housing projects, ensured that a rural
health clinic was staffed and operating, improved irrigation for a
reforestation project, and installed new latrines at a school
undergoing classroom repairs. Other U.S. agencies also provided more
accountability over their funds as a result of increased oversight.
USAID coordinated its activities with 12 other U.S. departments and
agencies that were allocated about $96 million for disaster recovery
efforts. Many had little or no previous overseas experience and their
involvement placed a burden on USAID mission staff at the outset as
they helped these other U.S. entities plan their activities in
accordance with the mission‘s strategy and provided them administrative
support. USAID also coordinated with other bilateral and multilateral
donors through formal consultative group meetings and informal contacts
among mission staff and other donors. In contrast to most donors, USAID
concentrated its activities in rural areas and smaller cities reducing
the likelihood it would duplicate other donor efforts. We found no
evidence that USAID activities duplicated those of the other U.S.
departments and agencies or other international donors.
USAID attempted to strengthen the capacity of host government audit
institutions as a means to resist corruption. For example, it provided:
$1.5 million to the Controller General‘s Office in Honduras to continue
an effort to strengthen the office‘s capacity to audit USAID-funded
activities. In other cases, however, USAID cannot point to much success
in this area, mostly due to country conditions. For example, in
Nicaragua, the government diluted the office‘s independence by creating
a panel of five appointees to oversee its activities. USAID
subsequently terminated its regular program with the Controller
General‘s Office because it declined the advice of USAID‘s technical
advisors. USAID also contributed
$4.2 million to the Inter-American Development Bank to establish
financial inspection units, similar to U.S. inspector general offices,
in Honduras and Nicaragua. According to USAID, the Honduras unit began
operations in June 2002, and the Nicaragua unit should begin operating
in September 2002.
Although USAID and its U.S. partners carried out a large-scale disaster
recovery program, mostly within agreed-upon time frames, USAID faced
numerous challenges and obstacles that affected the pace of initiating
the program. As a result, USAID did not begin expending the
supplemental funds until January 2000, 7 months after the appropriation
was enacted. Some of the factors that added time included arranging for
additional program staff and contractor support; ensuring that
financial controls and other oversight measures were in place;
coordinating with and planning for the involvement of numerous other
U.S. departments and agencies; and providing the opportunity for U.S.
contractors and other organizations to compete for most of the
contracts, grants, and cooperative agreements that were awarded.
Moreover, the program was neither short-term emergency relief nor long-
term development assistance--more typical USAID programs. Overall,
USAID did not have the ’surge capacity“ to quickly design and initiate
a large-scale infrastructure and development program with relatively
short-range deadlines while at the same time providing emergency
relief, initial reconstruction assistance, and managing its regular
development program.
The USAID Administrator recently approved several program and
procedural reform proposals to facilitate planning and implementing
activities in post-crisis or post-emergency situations. To help ensure
that USAID has the flexibility to respond more quickly to future
disaster recovery efforts, we recommend that the Administrator expedite
implementation of the approved reforms and consider ways to more
readily augment overseas staff and facilitate coordination with other
U.S. departments and agencies.
Background:
In late October and early November 1998, Hurricane Mitch struck Central
America, producing more than 6 feet of rain in less than a week, mostly
over Honduras. The heavy rainfall caused flooding and landslides that
killed thousands of people; left tens of thousands homeless; and
devastated infrastructure, agriculture, and local economies. In
addition, in September 1998, Hurricane Georges hit several eastern
Caribbean islands and the island of Hispaniola, which comprises the
Dominican Republic and Haiti. Hurricane Georges also caused the deaths
of hundreds of people and severely damaged infrastructure, crops, and
businesses. See figure 1 for a map of the region and the countries
affected by Hurricanes Mitch and Georges that we visited.
Figure 1: Map of Central America and the Caribbean Showing the
Hurricane-Affected Countries Visited by GAO:
[See PDF for image]
Source: GAO.
[End of figure]
U.S. relief efforts began immediately and USAID began providing limited
reconstruction assistance using redirected program funds and other
sources. However, the Congress and the administration recognized the
need for longer-term assistance for recovery and reconstruction. In
March 1999, President Clinton visited Central America and promised to
help these countries rebuild their economies and social sectors. At the
same time, USAID began developing a recovery plan for each hurricane-
affected country, which outlined USAID‘s funding estimates and proposed
programs. In late May 1999, the Congress passed and the President
signed an emergency supplemental appropriation that provided, among
other things, $621 million for the countries affected by Hurricanes
Mitch and Georges. In general, the funds were to be used to rebuild
infrastructure, reactivate host country economies, and restore basic
services.
Disaster Recovery Program Addressed Intended Purposes:
USAID was the primary agency responsible for carrying out the U.S.
disaster recovery program. Of the $621 million authorized, USAID was
directly responsible for about $587 million, including about $62
million in agreements with other U.S. departments and agencies, such as
the U.S. Department of Agriculture and U.S. Geological Survey. The
remaining $34 million was transferred directly by USAID to other U.S.
departments and agencies, such as the Departments of Housing and Urban
Development and State. Based on an informal agreement with
congressional
staff, USAID agreed to expend all the funds by December 31, 2001--about
30
months from enactment of the supplemental appropriation. As shown in
table 1, USAID and the other U.S. departments and agencies had
completed most of their programs by the deadline. Some activities, such
as a $40 million urban water and sanitation program in Honduras, are
still being implemented.[Footnote 4] Appendix IV contains further
details on funding and expenditures for USAID and the other U.S.
government entities.
Table 1: Disaster Recovery Assistance Budgeted and Expended as of
December 31, 2001:
[See PDF for image]
[End of table]
USAID and the other U.S. government entities implemented disaster
recovery activities that helped the hurricane-affected countries
rebuild their infrastructure and restore economic activity. USAID‘s
overall objectives were to help bring about economic recovery, restore
and improve basic services, and mitigate the effects of future natural
disasters. Each country‘s program varied based on country conditions
and the USAID mission‘s approach. In general, the funds were used for:
* repairing or rebuilding the infrastructure needed for reactivating
economies (e.g., roads and bridges), public health infrastructure
(e.g., potable water systems, sewage and drainage systems, and health
clinics), housing, and schools;
* providing loans, credits, and technical assistance for small-and
medium-sized farms and businesses;
* strengthening disaster mitigation efforts such as civil defense,
early warning and prevention, and watershed management; and:
* strengthening accountability.
In Honduras and Nicaragua, USAID financed the repair of 2,817
kilometers (about 1,756 miles) of secondary and tertiary roads. In
Honduras, USAID funded the repair of 62 municipal water and sanitation
systems and 1,211 rural water systems. In the Dominican Republic, USAID
funding repaired 1,514 houses and constructed 2,248 new homes (see fig.
2). The activities of other U.S. agencies ranged from installing stream
gauges for early flood warning to equipping national public health
laboratories. These and many other projects resulted in improved
transportation, agricultural land restored to productive use, improved
health through potable water and sanitation systems, increased access
to health care and education, increased employment through credit
programs, and improved capabilities to mitigate the effects of future
disasters.
Figure 2: Damaged and Permanent Housing in the Dominican Republic:
[See PDF for image]
Source: GAO.
[End of figure]
USAID attempted to ensure that projects and activities would be
sustainable after its disaster recovery activities were completed. For
example, in Honduras, USAID funded training for municipal officials and
local water boards to provide them with the management and budget
skills to operate and maintain new water and sanitation systems. Also,
the Honduran government ministry responsible for road maintenance gave
USAID-funded roads priority in its 2-year maintenance schedule.
However, the hurricane-affected countries are poor and in debt and, in
many instances, plagued by bureaucratic inefficiencies and corruption.
It is too early to determine if national governments and local
officials will have the resources or political will to maintain the
infrastructure rebuilt with USAID funds.
Additional Oversight Measures Established:
Due to widespread concerns that such a large program with a 30-month
time frame would be susceptible to misuse or corruption, USAID missions
were cautious from the outset of the program. In addition to its
regular program and financial controls, USAID set up some additional
oversight measures, such as hiring accounting firms to oversee a host
country‘s expenditures. In addition, the supplemental legislation
provided funds for USAID‘s Office of the Inspector General and for us
to monitor the provision of the assistance. This additional oversight
and monitoring resulted in instances of problems being identified and
addressed by USAID and other U.S. government departments and agencies
as activities were under way and changes could still affect the success
of the program or project. USAID missions generally said that the
additional oversight measures were useful in enhancing accountability
but that the time required by staff to comply with numerous auditors
was burdensome and sometimes affected program implementation.
In Honduras, the major infrastructure construction programs--totaling
about $135 million--were implemented primarily by the Honduran Social
Investment Fund, a government agency established to ease the impact of
structural adjustment policies through employment generation and social
programs. To help protect the U.S. assistance from potential misuse,
the mission established a separate oversight unit within the fund for
its $50 million road and bridge program (see fig. 3). A U.S. project
manager headed the unit with a U.S. chief engineer and local technical
and support staff. For both the road and municipal water and sanitation
system programs, the mission contracted with financial services firms
to handle disbursements to the fund following approvals by USAID and
the oversight unit. For the water and sanitation program, USAID relied
on the U.S. Army Corps of Engineers to provide technical oversight. For
its school construction program, USAID only reimbursed the fund after
units were completed and inspected by USAID and its oversight
contractors (see fig. 4). Finally, in many instances, the Honduran
mission hired U.S. management services firms and private voluntary
organizations to oversee other activities implemented by local
entities.
Figure 3: Guaymon Bridge Constructed in Honduras:
[See PDF for image]
Source: GAO.
[End of figure]
Figure 4: School Under Repair in Honduras:
[See PDF for image]
Source: GAO.
[End of figure]
USAID‘s program in Nicaragua was mostly implemented by U.S. and
international voluntary and local implementing organizations that had a
proven track record with the mission and whose ongoing cooperative
agreements were easily amended. For its only program with the
Nicaraguan government--a $2.1 million municipal infrastructure program
implemented by the Emergency Social Investment Fund (an entity similar
to the Honduras fund)--USAID hired a U.S. management services firm to
provide oversight and technical assistance. USAID also relied on the
Corps of Engineers and the U.S. Department of Agriculture to review
municipal infrastructure designs and make recommendations accordingly.
A primary component of oversight is having sufficient staff to monitor
project activities and spending and identify any problems that may
occur along the way. As USAID‘s direct-hire foreign service staff
levels have declined over the years, it has turned increasingly to
using personal services contractors to conduct most of the day-to-day
oversight of its programs, including the disaster recovery
program.[Footnote 5] USAID hired numerous personal services contractors
to help oversee its activities and provide technical and administrative
support. In Honduras, the program office and technical officers
throughout the mission shared responsibility for oversight. The mission
hired 33 additional personal services contractors to oversee its
program and provide administrative support. In Nicaragua, USAID
contracted for a reconstruction coordinator and hired 40 additional
personal services contractors. In the Dominican Republic, the mission
set up a separate reconstruction team comprised mostly of contract
staff.
In addition to our monitoring, the Regional Inspector General‘s Office
in El Salvador contracted with the Defense Contract Audit Agency and
local affiliates of international accounting firms to conduct
concurrent audits of vulnerable programs and regular audits of many
other activities. It also hired five full-time personal services
contractors to oversee its financial audit activity. According to the
Deputy Regional Inspector General, as of December 31, 2001, its office
had conducted 165 financial audits covering $218 million in USAID-
managed funds. The Regional Inspector General‘s Office also conducted
14 performance audits in 6 countries and provided fraud awareness
training in 7 countries to 2,141 participants. The USAID Inspector
General gave the USAID missions generally high marks for their
financial management of the disaster recovery program, noting that the
small amount of questioned costs identified by its audits (about $5
million, or 2.2 percent as of December 31, 2001) demonstrated the
effectiveness of ongoing oversight.[Footnote 6]
USAID Took Corrective Action During Implementation:
Through increased oversight of this program, potential or ongoing
problems were identified as project implementation was under way. In
many cases, the USAID mission staff responsible for program oversight
identified problems and took immediate action to keep their programs on
track. In other instances, our visits, regional inspector general
audits, and others with technical expertise identified concerns that
USAID corrected.
Honduras:
During a trip to northern Honduras in October 2000, we traveled a road
repaired with USAID funds that had been poorly compacted. As a result,
recent rains had turned the road to mud and it was nearly impossible to
drive on. This road is an important access route for transporting
African palm oil to the coast for export and for local commerce. The
U.S. engineer responsible for technical oversight agreed with our
concerns and took prompt action to ensure that the road was repaired
properly. On a subsequent visit, we noted that the road had been
repaired and was in excellent condition.
In July 2000, during a visit to El Pataste in northern Honduras, we
observed a housing project with well-constructed houses but no firm
plans for potable water, despite a contractual obligation to ensure
that key services were incorporated into housing communities. USAID
eventually was successful in having the implementing organization
negotiate a way to provide potable water. To better track and report on
the progress of its housing program, USAID also developed a matrix for
each housing project that specified how water and other infrastructure
were to be provided as well as proof that an environmental assessment
had been completed (see fig. 5).
Figure 5: Temporary Shelters and Permanent Housing at El Pataste,
Honduras:
[See PDF for image]
Source: GAO.
[End of figure]
USAID provided $2.5 million to a Honduran agricultural lending
cooperative for loans for small-and medium-sized farms despite a record
of concerns about its management problems and financial viability.
According to USAID, this was the only organization available to provide
credit for smaller producers. USAID hired a management services firm to
handle loan disbursements and provide technical assistance for
implementing management reforms, but the problems persisted. Based on
USAID‘s continuing oversight and our review, USAID strongly encouraged
the organization‘s Board of Directors to accept major restructuring of
its organizational, management, and financial framework. In January
2001, the Honduran minister of finance signed a memorandum of
understanding with the lending organization outlining these changes and
the likely consequences if the reforms were not made. USAID
subsequently released $500,000 of the $2.5 million loan fund that it
had suspended pending the signing of the memorandum.
Nicaragua:
In Nicaragua, we visited numerous sites where four international
private voluntary organizations were implementing USAID‘s cash-for-
work and food-for-work rural road rehabilitation projects. After
consulting with project engineers and Corps of Engineers staff, we
pointed out several deficiencies in the quality of the work, including
roads not properly crowned to prevent standing water, ditches not
adequately dug to facilitate drainage of water, and roadbed materials
not suitable for withstanding traffic and weather. Based on these
observations, the private voluntary organizations hired engineers to
oversee road activities. We observed a noticeable improvement in
USAID‘s road projects on subsequent visits (see fig. 6).
Figure 6: Rural Road Near Jinotega, Nicaragua:
[See PDF for image]
Source: GAO.
[End of figure]
USAID, in an effort to further improve the quality of road repairs in
Nicaragua, decided that the four nongovernmental organizations would
use heavy machinery on the more difficult roads. These cash-for-work
and food-for-work programs initially emphasized income generation, and
USAID‘s plan was that the nongovernmental organizations would only use
hand labor. However, USAID and the Corps of Engineers soon realized
that some roads could not be adequately repaired using only hand labor
and would not withstand normal weather and traffic. USAID subsequently
required the organizations to use both heavy equipment and hand labor
and the road quality improved substantially. In addition, some
organizations later coordinated their roadwork activities and shared
equipment, resulting in lower costs.
In October 2000, we visited a health post in rural Nicaragua where a
private voluntary organization constructed a residence for medical
personnel and rehabilitated a clinic. USAID had been told that the work
was completed, the Ministry of Health had assigned medical personnel,
and the post was in operation. However, when we arrived, the facility
was vacant and evidently had been so for months. We questioned whether
USAID should be involved in such a project, given the ministry‘s lack
of support. In January 2001, we returned to the clinic unannounced and
found that the clinic was operating and a doctor was present and living
at the residence. He had been assigned following our earlier visit.
Other Affected Countries:
In December 2000, we visited a reforestation and agricultural project
in El Salvador. With USAID disaster recovery funding, a U.S.
nongovernmental organization was teaching farmers to grow cashews and
lemon trees to increase their incomes and provide erosion protection.
Although a well was nearby, the community leader pointed out to us that
the farmers needed a pump to irrigate the new plantings during their
first dry season. We saw that some trees had already died and others
would soon die without irrigation. In response, USAID committed to
finance a new pump. In October 2001, we returned to the community and
observed that the pump had been installed and that the plantings were
growing.
In May 2000, we visited a school in the Dominican Republic that was
undergoing repairs with disaster recovery funds. The initial project
included only classroom repairs. However, the sanitation facilities had
also been destroyed and we were told that students were using the
nearby field. After we reported the apparent oversight, USAID responded
by adding latrines to the project. New latrines were in place when we
visited in August 2001.
Several USAID officials stated that our oversight and monitoring not
only encouraged specific improvements, but also provided a continuous
deterrent effect because contractors, grantees, host government
officials, and project beneficiaries were actively aware of U.S.
congressional scrutiny over the program. One mission director added
that our visits were used to encourage contractors and grantees to stay
on track and comply with the terms of their agreements. The acting
mission director at another mission noted that, although the multiple
layers of auditing were sometimes overwhelming, the audit findings
helped the mission manage the program and report to the Congress on its
progress.
Two U.S. Departments Reprogram Funds:
We also monitored the pace of expenditures and the activities of most
of the other U.S. departments and agencies. In June 2001, we attended
meetings of the Office of Management and Budget, USAID, and the other
U.S. departments and agencies. At the time, it was apparent that a few
departments and agencies were not expending their funds in a timely
manner and that they likely would not meet the December 31, 2001,
deadline for completing their activities.
Department of State:
In early September 2001, an official with the State Department‘s Bureau
for International Law Enforcement and Narcotics told us that, of the
$923,600 the bureau planned to spend in the Dominican Republic,
$400,000 would be reprogrammed for an assets forfeiture project in the
Dominican Republic and the remaining $523,600 would be reprogrammed for
a de-mining program in Central America. However, the necessary
arrangements to implement those proposals had not been completed. After
our inquiries, on September 30, 2001, the bureau completed the
paperwork to reprogram the $400,000. In January 2002, the bureau told
us that the remaining $523,600 would not be reprogrammed and that it
had returned $514,242 to the U.S. Treasury.
Department of Housing and Urban Development:
In March 2001, the Department of Housing and Urban Development (HUD)
canceled a $1.1 million housing micro-credit project in Honduras
because the in-country organization tasked to implement the project did
not have the capacity. When we followed up in August 2001, HUD had not
finalized plans for what it would do with these funds. Subsequent to
our inquiry, in September 2001, HUD modified the housing finance
contract to specify how the funds were to be used for two different
projects in the Dominican Republic and El Salvador. The work in the
Dominican Republican began soon after the contract was modified. In El
Salvador, a contract with a private lender to capitalize a revolving
loan fund for a housing micro-credit program was signed in December
2001.
USAID Coordinated with U.S. Government Entities and International
Donors:
USAID worked with the 12 U.S. departments and agencies that implemented
about $96 million in disaster recovery activities to help plan their
efforts and provide administrative support. Because many of these
agencies had little or no experience working in developing countries,
their involvement in the program was time-consuming and burdensome for
USAID staff in the beginning stages. USAID officials noted, however,
that some agencies provided needed technical expertise. The other
agencies generally acknowledged that it took time to incorporate their
activities into USAID‘s program but added that it had been a positive
experience overall. USAID also coordinated with other bilateral and
multilateral donors through formal consultative group meetings and
informal contacts among mission staff and other donors. In contrast to
many donors, USAID concentrated its activities in rural areas and
smaller cities, making duplication with other donor efforts unlikely.
We found no evidence that USAID activities duplicated those of other
U.S. departments and agencies or other international donors.
USAID Coordination with Other U.S. Departments and Agencies Was
Initially Burdensome:
Many of the U.S. government entities involved in the disaster recovery
program had little or no prior experience in working overseas. At the
outset, USAID staff spent considerable time incorporating these
agencies into USAID‘s disaster recovery program and helping the
agencies develop work plans in accordance with USAID‘s development
approach. In addition, the agencies‘ administrative requirements, such
as office space, residences, vehicles, equipment, and supplies, had to
be coordinated with the respective U.S. embassy‘s overall
administrative services account. According to USAID officials,
coordinating with numerous other U.S. entities was demanding and time-
consuming for USAID staff, particularly at the outset of the disaster
recovery program when staff were involved in initial relief and
reconstruction activities.
Nevertheless, USAID officials generally agreed that many agencies added
value once the initial coordination problems were resolved. In
particular, USAID officials most often cited the four agencies with
scientific, technical, and engineering expertise not available at
USAID--the Corps of Engineers, the National Oceanic and Atmospheric
Administration, the U.S. Department of Agriculture, and the U.S.
Geological Survey--as those that added the most value to the USAID
recovery program. For example, these agencies provided engineering
advice on infrastructure projects and carried out a number of
activities designed to mitigate the effects of future natural
disasters, such as conducting watershed management studies, installing
stream gauges to monitor river flooding, and providing technical
assistance on early warning and prevention systems to host government
staff.
Officials from the other U.S. departments and agencies expressed
concerns about the time it took to incorporate a relevant program into
USAID‘s framework and the administrative constraints of operating
overseas. Officials from some agencies noted that each USAID mission
and embassy operated a little differently, and some missions asked for
additional paperwork that may not have been required at another
mission. One agency official told us that it received varying
information on the need for country clearances for travel. Another
noted that the missions and USAID headquarters sometimes provided
conflicting information on the work plan and reporting requirements.
One agency reported that it had some difficulty coordinating with the
missions. However, as summarized in appendix III, most agencies noted
that working with USAID was a positive experience and that USAID had
been very helpful in guiding them through the reconstruction program.
USAID Coordination with Other International Donors:
USAID regularly coordinated with international financial institutions,
multilateral organizations, and other bilateral donors. For the
Hurricane Mitch countries, the highest level of coordination occurred
at the international consultative group level. At a consultative group
meeting held in May 1999 in Stockholm, Sweden, the governments of
Central America and the international community developed the guiding
principles and goals for reconstruction, known as the ’Stockholm
Declaration.“ The overriding goal of reconstruction, as stated in the
declaration, was to reduce the social and ecological vulnerability of
the region. At subsequent meetings, donors and recipient countries,
including civil society representatives, reviewed the progress toward
reconstruction. Although no consultative groups were formed to assist
the Dominican Republic, Haiti, and other Caribbean islands affected by
Hurricane Georges, USAID similarly coordinated with its counterparts in
the international donor community.
At Stockholm, the international community pledged $9 billion, including
the U.S. pledge of $1 billion.[Footnote 7] However, these pledges have
not been fully paid. According to USAID officials, commitments totaling
about $5.3 billion are still considered firm as of May 2002. We were
unable to obtain information on the status of other donors‘ actual
expenditures. Based on discussions with officials of USAID, host
governments, nongovernmental organizations, and other donors, USAID was
among the first to expend funds and complete most of its program. In
Honduras and Nicaragua, we saw evidence of the contributions of other
bilateral donors, particularly bridges and other infrastructure built
by the Swedish and Japanese aid agencies.
Coordination among USAID and other donors was evident at the country
level. In Honduras and Nicaragua, donor representatives met regularly
to discuss their respective aid programs and emerging issues.[Footnote
8] In addition, USAID technical staff coordinated with their
counterparts at the program and project level. For the most part, USAID
targeted its activities in rural areas where other donors had little or
no activity. In instances of potential duplication, we found that USAID
took action to ensure that its activities added value. For example,
when USAID began public health activities in a remote area of northern
Nicaragua along the Honduran border, it found that the Organization of
American States was conducting similar health-related activities in the
same region. After several meetings and with guidance from the
Nicaraguan Ministry of Health, USAID and the organization‘s
representatives agreed to target their activities to avoid duplication.
Specifically, the Organization of American States agreed to continue
its monthly training with community health agents, and USAID agreed to
focus its funds on sexual and reproductive health, disaster prevention
and mitigation, and other activities not covered by the organization‘s
project.
Although coordination existed within the international community, some
USAID officials stated that coordination with the host governments was
less than optimal. Each Central American country developed its plan for
hurricane reconstruction with assistance and support from the donor
community. However, according to U.S. and other donor officials, in
practice, some governments generally did not maintain up-to-date
information on donor activities or prioritize their proposed projects.
USAID‘s Efforts to Strengthen Host Government Audit Capabilities Were
Limited:
The conference report accompanying the legislation for the supplemental
appropriation directed USAID to help the affected countries develop an
institutional capacity to resist corruption.[Footnote 9] USAID‘s
efforts to combat corruption through assistance to audit institutions
had mixed results. In Honduras, USAID provided $1.3 million to the
Controller General‘s Office to strengthen its capacity to audit
reconstruction programs and promote enhanced awareness of the
importance of vigilance over public funds. This funding for equipment,
technical assistance, and training continued institutional
strengthening efforts initiated before Hurricane Mitch. However, in
other instances host government realities limited USAID‘s overall
progress in this area.
* The Nicaraguan government diluted the independence of its Controller
General‘s Office by creating a panel of five appointees representing
two parties to oversee the office‘s activities. USAID subsequently
terminated its regular program with the office 9 months later when it
became apparent that the panel would not take the advice of USAID-
funded technical advisors. Similarly, USAID terminated its program with
the Dominican Republic Controller General‘s Office because it lacked
independence.
* USAID also contributed $4.2 million to the Inter-American Development
Bank to establish independent oversight units within the Honduran and
Nicaraguan governments.[Footnote 10] These units are intended to
oversee the operations of government ministries and independent
government agencies, similar to U.S. government offices of inspectors
general. In early June 2002, USAID released $1 million to the bank to
contract for the consulting services for the Honduras unit. According
to USAID, the unit in Honduras began operating in June 2002 and the
remaining
$2.2 million should be disbursed by the end of 2002. In Nicaragua,
according to USAID officials, the implementation of this unit was
slowed by the bank‘s lengthy project approval process, the time needed
to gain financial support from other donors, and the previous
government‘s lack of commitment. The government elected in November
2001 supports the project and proposed some modifications to strengthen
local capacity building rather than merely hiring contractors to
implement the unit. USAID expects the unit to begin operations in
September 2002 with USAID‘s $1 million covering the initial costs.
USAID Had to Overcome Numerous Challenges to Initiate Disaster Recovery
Assistance:
USAID faced numerous challenges in initiating this large-scale disaster
recovery program that affected the pace of implementation in the
beginning phases. USAID had to balance the competing interests of
expediting implementation of the program with ensuring that appropriate
oversight and financial controls were in place and procurement actions
were open and transparent. Overall, USAID does not have the ’surge
capacity“ to quickly design and implement a large-scale infrastructure
and development program with relatively short-range deadlines. The
reasons are institutional, systemic, and long-standing and will require
deliberate and sustained actions if USAID is to improve its ability to
respond more quickly to such situations in the future.
USAID Did Not Begin Expending Supplemental Funds Until 2000:
With a few exceptions, USAID began expending disaster recovery funds
from the supplemental appropriation in January 2000, about 7 months
after the supplemental appropriation of $621 million was
approved.[Footnote 11] (See fig. 7 for a timeline illustrating USAID‘s
expenditures.) Some of this time was used to notify the Congress about
how the supplemental funds were to be expended.[Footnote 12] In most
cases, the funds were available during July and August of 1999. USAID
then had to complete its contracting processes and ensure that program
management and oversight were in place.
Figure 7: Timeline Illustrating USAID‘s Disaster Recovery Expenditures
Funded by the May 21, 1999, Supplemental Appropriation, through
December 31, 2001:
[See PDF for image]
Source: GAO analysis of USAID data.
[End of figure]
During 1999, before the supplemental funds were available for use,
USAID missions used $189 million in other funds for emergency relief
and initial reconstruction programs, such as food-for-work activities
to rebuild infrastructure in hurricane-affected areas.[Footnote 13]
During this time, USAID missions were also operating with the staff
resources allocated based on their regular programs, and they also had
to deal with the rotation of several senior-level staff during the
summer of 1999.
Start-up Challenges and Obstacles Slowed Program Initiation:
Before Hurricane Mitch, the Honduran and Nicaraguan missions were
managing annual programs of about $23 million and $30 million,
respectively. The Honduran mission had recently been considerably
reduced in size and it took many months to fill the positions needed to
oversee the disaster recovery program. In particular, the Honduran
mission did not have a permanent contracts officer--it had been sharing
one with the Nicaraguan mission--until October 1999, a year after
Hurricane Mitch. Other missions also shared contracts officers. As
noted in appendix II, the missions in Honduras, Nicaragua, and the
Dominican Republic said the absence of full-time contracts officers led
to delays.
The number of USAID direct-hire staff in general, and contracts
officers in particular, has declined in recent years and USAID had
difficulty finding qualified personnel to manage this large-scale
emergency program on an expedited basis. This problem was compounded by
some USAID senior-level staff (for example, contracts and
administrative officers) rotations during the summer of 1999. Although
USAID‘s headquarters office attempted to ease the burden by providing
temporary staff in the hurricane-affected countries, the missions
lacked needed continuity, and, according to the Honduran mission, the
lack of travel funds precluded timely assistance for some activities.
The Honduran mission emphasized that the need to obtain qualified staff
more quickly is one of the most important lessons learned from the
hurricane reconstruction program.[Footnote 14]
USAID also does not have any procedures to expedite the hiring of
personal services contractors. As a result, acquiring personal services
contractors with the requisite language and technical skills to manage
the reconstruction program often took 6 months to more than a year. The
process involves revisions in position descriptions and scopes of work,
internal and external position announcements, screenings, interviews,
and medical and security checks. For example, the Nicaraguan mission
experienced major delays in security clearances--one person accepted a
job elsewhere after waiting more than a year for a clearance. The
hiring and clearance process also precluded the timely arrival of in-
country staff from other U.S. departments and agencies to conduct their
programs. Because contractor and other U.S. agency staff provided much
of the day-to-day management of the program, these delays were
burdensome for the USAID staff on board and slowed the pace of
implementation.
In addition to building up staffing levels, the missions in some
countries decided to implement certain accountability measures prior to
program implementation. For example, before it began its host country
contracting programs for major infrastructure projects, the USAID
mission in Honduras advertised for and selected a U.S. engineering and
project management firm to oversee the technical aspects and a third-
party accounting firm to handle disbursements to the Honduran
government.
Although USAID missions had the authority to waive full and open
competition for awarding contracts and grants, it was used sparingly.
The Honduran mission used the waiver authority to bypass the normal
requirement to advertise in the Commerce Business Daily, which saved 60
days in awarding some contracts. In many instances, missions amended
existing cooperative agreements and contracts to accelerate the
procurement process. However, although using sole source awards would
have speeded up the award process, it may have precluded U.S. firms
from being awarded contracts. The Honduran mission, for example,
redesigned much of its municipal water and sanitation program to allow
U.S. firms to compete, resulting in a later start date.
The involvement of numerous other U.S. government departments and
agencies presented a challenge for which the USAID missions were
unprepared. Mission staff told us that, at the beginning of the
program, coordinating with officials from other agencies, helping them
with their work plans, and facilitating their administrative needs took
considerable time away from their already busy workload. The burden
eased as some agencies assigned in-country personnel, but it took
considerable time for these people to arrive because their positions
had to be approved by the embassy and they needed security clearances.
Some U.S. entities did not assign staff in country and USAID had to
coordinate temporary duty tours for these personnel as well.
Program Observations from USAID and Other U.S. Departments and
Agencies:
During our review, USAID and the other U.S. government entities
provided their observations on lessons learned and some ideas for
improving the delivery of disaster recovery assistance in the future.
USAID and the other agencies almost unanimously agreed that the
December 31, 2001, deadline was a major factor in how they planned,
designed, and implemented their disaster recovery activities, and it
also affected the extent to which sustainability could be built into
the program. USAID missions suggested limiting the number of other U.S.
government entities involved, using umbrella agreements and indefinite
quantity contracts to hasten the procurement process, avoiding host
country contracting, and relying on organizations that are already
working with USAID in the country. Other U.S. government entities noted
that they had learned much about coordinating an interagency program
overseas and had come to appreciate the complexities of working in
developing countries. Some noted the need for a simpler method of
dealing with administrative costs while in country--one suggestion was
for USAID to create one account for charging all administrative,
logistical, financial, and procurement services for future emergency
programs. (As previously noted, see apps. II and III for more detailed
summaries of the responses from the USAID missions and other U.S.
departments and agencies.):
USAID‘s Proposals to Improve Response Capability:
USAID officials in the overseas missions and in USAID‘s Washington,
D.C., headquarters generally agreed with our observations on the
obstacles it faced in getting the disaster recovery program off the
ground. They emphasized that the lead role that USAID was expected to
perform in planning and implementing the disaster recovery program was
a significant challenge.
In mid-2000, USAID‘s Bureau for Latin America and the Caribbean drafted
a ’lessons learned“ analysis of the disaster recovery program‘s start-
up and offered recommendations for the systemic and procedural changes
needed for a similar response in the future. It suggested options for
funding flexibility, staff mobilization, program design and planning,
accountability, and the role of other U.S. government agencies and the
private sector. The USAID administrator subsequently formed the
Emergency Response Council to conduct an agencywide review of its
experiences with international emergencies.
In December 2001, the council proposed several program and procedural
reforms to provide more flexibility in planning and implementing
activities in post-crisis or post-emergency situations. In particular,
the memorandum proposed that USAID:
* missions include in their development strategies and implementation
instruments (such as contracts, grants, and cooperative agreements) a
’crisis modifier“ clause to provide resources more quickly;
* consider funding alternatives in the absence of supplemental
appropriations, such as increased borrowing authority to use available
USAID resources programmed for other activities;
* develop a package of procurement waivers for reconstruction
activities, allowing, among other things, the purchase of certain
commodities without regard to source and origin;
* develop strategies for addressing legislative authorities to obtain
more flexibility in reconstruction programming; and:
* develop a skills database of internal resources available for
deployment on reconstruction design teams.
In May 2002, the USAID administrator approved the council‘s
recommendations in the areas of strategic planning and programming,
funding alternatives, and staffing. In addition, also in May 2002, a
USAID contractor hired to independently assess the agency‘s response to
Hurricanes Mitch and Georges outlined numerous and sometimes detailed
actions that USAID can take to improve its response to future
reconstruction programs. These recommendations included options for
program design, staff mobilization, procurement, interagency
coordination and administrative support, and accountability.
Conclusions:
USAID and the other U.S. departments and agencies provided disaster
recovery assistance that helped the affected countries recover from the
devastating effects of Hurricanes Mitch and Georges. USAID‘s programs
and projects and those of the other U.S. government entities spanned
all sectors and affected countries, helping to rebuild infrastructure,
restore economic activity and access to basic services, and mitigate
the effects of future disasters. Increased oversight of the disaster
recovery program helped ensure that funds were spent for intended
purposes and not misused.
However, USAID faced numerous obstacles and challenges. Primarily,
USAID did not have the flexibility to readily replace key staff--
primarily contracts officers--or the ability to expeditiously hire
personal services contractors to help plan for and initiate the
disaster recovery program. Available USAID mission staff were also
involved in providing emergency relief, initial reconstruction
assistance, and continuing regular development programs. USAID missions
in some countries also implemented certain measures to help ensure
accountability over the assistance funds prior to program
implementation. In addition, coordinating with and helping the other
U.S. departments and agencies develop their programs was burdensome and
time-consuming for the missions. As a result, the initial pace of
implementation was slowed as USAID took steps to obtain adequate staff,
incorporate oversight and accountability measures, and coordinate the
activities of other U.S. government entities.
USAID will likely be called upon to deliver and oversee disaster
recovery assistance again as natural and man-made disasters continue to
occur. The proposal for USAID to oversee and implement a rebuilding
program in Afghanistan after more than two decades of war is the most
immediate but not the only example.[Footnote 15] USAID‘s Emergency
Response Council and an independent contractor have examined USAID‘s
response to Hurricanes Mitch and Georges and made numerous
recommendations and proposals for improving the agency‘s response to
disaster recovery programs. Our review further demonstrates that more
flexible mechanisms and better interagency coordination procedures are
needed to facilitate initiation of large-scale disaster recovery
programs and could allow USAID to improve its response time in future
similar situations while maintaining adequate oversight and
accountability.
Recommendations for Executive Action:
We recommend that the USAID administrator expedite implementation of
the Emergency Response Council‘s proposals approved in May 2002 to help
ensure that USAID has the flexibility and resources needed for a timely
response to future disaster recovery and reconstruction requirements.
To further improve USAID‘s ability to respond in similar situations, we
recommend that the administrator develop and implement procedures that
would (1) allow USAID to quickly reassign key personnel, particularly
contracts officers, in post-emergency and post-crisis situations; (2)
allow missions to hire personal services contractors to augment staff
on an expedited basis; and (3) facilitate coordination of efforts with
other U.S. departments and agencies that may be involved in future
programs.
Agency Comments and Our Evaluation:
USAID provided written comments on a draft of this report, noting that
the report is comprehensive and constructive (see app. V). USAID
concurred with the report‘s findings and conclusions on both the
success of the program and the challenges and impediments faced by
USAID, particularly in the initial phases. USAID stated that it has
carefully considered the lessons learned from the reconstruction
experience in Latin America and will continue to identify changes in
its structure and functioning to make it more flexible in responding to
future similar crises.
USAID did not comment on our recommendations. USAID elaborated on
recent steps taken to address three of the five council recommendations
in the areas of strategic planning and programming, funding
alternatives, and staffing. We note, however, that these efforts are
just beginning and that USAID did not address the other two council
recommendations on expanded procurement waivers and legislative
authorities. We further note that these efforts do not address our
recommendations to develop procedures to (1) expedite the reassignment
of key direct-hire personnel, such as contracts officers, in post-
emergency situations and (2) facilitate coordination with other U.S.
departments and agencies. As our report demonstrates, these are
important issues for future emergency response situations and we urge
USAID to address these areas.
In addition to USAID, we requested comments from the nine U.S.
departments and agencies that responded to our questionnaire summarized
in appendix III. The Centers for Disease Control and Prevention, the
Department of Agriculture, and the Department of Housing and Urban
Development suggested minor technical clarifications that we have
incorporated into the report as appropriate. The other departments and
agencies had no comments.
We will send copies of this report to interested congressional
committees as well as the Administrator, USAID; the Director, Office of
Management and Budget; and the heads of other U.S. departments and
agencies that participated in the disaster recovery assistance program
in Latin America. We will also make copies available to others upon
request. In addition, this 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 about this report, please
contact me at (202) 512-4128 or at FordJ@gao.gov. Other contacts and
staff acknowledgments are listed in appendix VI.
Jess T. Ford, Director
International Affairs and Trade:
Signed by Jess T. Ford:
[End of section]
Appendixes:
Appendix I Scope and Methodology:
To determine whether the program and projects funded by USAID and the
other U.S. departments and agencies addressed the intended purposes of
disaster recovery and reconstruction, we conducted work at the
headquarters offices of USAID and other U.S. government entities and
made more than 30 trips to the countries affected by Hurricanes Mitch
or Georges.[Footnote 16]
* In Washington, D.C., we held frequent meetings with officials of
USAID‘s Bureau for Latin America and the Caribbean to discuss program
oversight and the status of USAID‘s activities. We coordinated with
USAID‘s Office of the Inspector General (and its regional office in El
Salvador) to minimize duplication of effort and share information. We
also attended the April 1999 meeting of USAID‘s mission directors from
Mitch-affected countries at which they discussed their respective
disaster recovery strategies and we reviewed program strategy
documents. We met with officials from the other U.S. departments and
agencies to discuss and document how the USAID-provided funds were
being spent and the status of their programs.[Footnote 17] We
coordinated with the Office of Management and Budget regarding its
oversight and attended meetings it held in June 2001 with USAID and
most of the other U.S. departments and agencies to review the status of
their activities and the pace of their expenditures as the December 31,
2001, deadline approached. We also visited the Centers for Disease
Control and Prevention in Atlanta, Georgia, and the U.S. Army Corps
of Engineers in Mobile, Alabama, for the same purposes.[Footnote 18]
* To conduct the overseas work, we made 11 trips each to Honduras and
Nicaragua, 7 trips to the Dominican Republic, 2 trips each to El
Salvador and Guatemala, and 1 trip each to Costa Rica and Haiti. In
each country, we reviewed USAID‘s strategies, work plans, and
applicable contracts, grants, and cooperative agreements and discussed
with USAID and other U.S. officials how their respective programs
addressed reconstruction needs. We monitored USAID‘s activities in all
sectors in all hurricane-affected areas, including the remote Caribbean
coast regions of Honduras and Nicaragua. We also visited projects
implemented by other U.S. departments and agencies. In many instances,
we visited and photographed sites before the projects began, during
implementation, and after completion to provide a basis for comparison.
During these trips, we interviewed representatives of contractors,
nongovernmental organizations, and other entities responsible for day-
to-day project implementation. Our Spanish-speaking staff interviewed
the intended recipients of U.S. assistance. We asked how their homes,
livelihoods, and communities had been affected by the hurricanes and
how the U.S.-funded projects were helping them rebuild their
infrastructure, restore their livelihoods, and provide basic services.
We also reviewed USAID‘s procedures for oversight and financial
controls and met regularly with the personal services contractors,
firms, and organizations hired by USAID to provide program oversight.
We followed up with USAID mission staff and the other U.S. departments
and agencies to determine whether concerns raised by us and others were
being addressed.
To determine whether USAID coordinated with other U.S. departments and
agencies and other international donors, we met with USAID officials in
Washington, D.C., and at the overseas missions to discuss their
procedures for incorporating the activities of the other agencies into
their programs and coordinating with multilateral and other bilateral
donors. We also met with officials of the other U.S. agencies involved
in the program to get their perspectives on agency coordination.
Through
documentation provided to us and our field visits, we reviewed the
activities of all the U.S. departments and agencies to ensure that they
did not duplicate one another. For the other international donors, we
attended the consultative group meetings for Honduras in February 2000
and for Nicaragua in May 2000 and reviewed the documentation from other
key donor meetings. We met with officials from the Inter-American
Development Bank and the World Bank and several donor countries. We
discussed their respective programs and reviewed their documentation.
Finally, we met with host government officials, including mayors and
other local officials, to discuss their procedures for ensuring donor
activities did not conflict or overlap and their views on donor
coordination.
To determine what USAID did to help the affected countries strengthen
their institutional capability to resist corruption, we interviewed the
Controllers General in the Dominican Republic, El Salvador, Guatemala,
Honduras, and Nicaragua. We discussed the organization and resources of
their offices and their relationship to other entities in the national
government. Although USAID also funds other anticorruption and
financial management efforts at host country institutions, we did not
include these activities within our scope.[Footnote 19] We also met
with officials from USAID and the Inter-American Development Bank in
Honduras and Nicaragua to discuss the status of the financial
inspection units.
In addition to the above efforts, we sent a ’pro forma“ set of
questions to six USAID missions and to the nine U.S. departments and
agencies that were most closely tied to USAID‘s program to obtain their
views on the lessons learned in planning, implementing, coordinating,
and overseeing the disaster recovery program.
We conducted our work between April 1999 and May 2002 in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: Summary of Disaster Recovery Experiences: USAID Missions:
As the disaster recovery assistance program was coming to a close, we
asked USAID‘s missions for their views on how the program proceeded. To
help provide a framework for answering our questions, we developed a
pro forma questionnaire and sent it to the USAID missions in the
Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, and
Nicaragua.[Footnote 20] All six replied. We grouped their responses
into five broad topics: (1) program planning and implementation, (2)
staffing, (3) accountability, (4) coordination, and (5) lessons learned
that could be applied in future disaster recovery and reconstruction
situations. Our analysis of their responses shows that all the missions
had similar experiences, but the three missions that received the
largest amounts of funding--Honduras, Nicaragua, and the Dominican
Republic--encountered some unique problems and issues. The following is
a summary of their responses.
Program Planning and Implementation:
All six USAID missions reported that they made certain planning and
implementation decisions based on the December 31, 2001, expenditure
deadline and took actions to reduce start-up time. These actions
generally helped ensure that the program would be completed by the
deadline. However, missions reported that, in some instances,
nongovernmental organizations and host governments were unprepared to
meet the demands of the disaster recovery program and its relatively
short time frame.
* All six missions reached agreements with organizations that were
already in these countries and with which they had previously worked or
actively engaged in the mission‘s regular development programs. In
doing so, the missions were confident that projects would be
implemented by organizations familiar with USAID and with proven
capabilities and track records. However, the Nicaraguan mission entered
into some agreements that called for organizations to undertake
activities they had not done before. This led to some problems. For
example, one nongovernmental organization agreed to rehabilitate rural
roads. After some initial work, we and several others pointed out that
the roads were unlikely to stand up to normal traffic and weather. The
organization subsequently hired engineers and the quality of the
rehabilitated roads improved substantially.
* Two missions--Nicaragua and Haiti--reported that they combined
relatively small activities that could have been awarded separately
into larger agreements. This helped streamline the start-up process
because the paperwork was reduced and USAID staff only had to deal with
one organization rather than several. The mission in Haiti also
reported that having one grantee enhanced communication, reporting, and
accountability.
* The Nicaraguan mission transferred $16.6 million--nearly one-fifth of
its total disaster recovery funding--to USAID‘s Bureau for Global
Programs, Field Support, and Research.[Footnote 21] This allowed the
mission to bypass the process for soliciting and reviewing proposals
and negotiating agreements. The mission acknowledged, however, that
while using such global agreements is faster and the program quality is
high, the services provided are generally more expensive than
separately funded agreements.
* The Honduran mission used host country contracting--a mechanism
whereby USAID transfers funds to the host government, which then enters
into contracts with implementing organizations--for some large
infrastructure projects in an attempt to speed up implementation.
However, USAID regulations for host country contracting required
numerous approvals and were difficult to mesh with Honduran government
regulations. The mission also said that some host country counterpart
ministries were bureaucratic and inefficient.
* The Guatemalan mission noted that, due to the deadline, it limited
its monitoring and reporting to project outputs during implementation
and did not seek to measure impact as it would have for a longer-term
effort. The mission added that, for its watershed rehabilitation
activities, a period of more than 2 years is required to assess impact.
Staffing:
The three USAID missions that received the largest amounts of
reconstruction funding--Honduras, Nicaragua, and the Dominican
Republic--reported staffing problems, primarily the absence of a
contracts officer at critical times during the disaster recovery
program. In contrast, the three missions receiving smaller amounts of
funding--El Salvador, Guatemala, and Haiti--reported no staffing
problems. Problems noted by the missions included the following.
* The Honduran mission reported that the absence of a permanent
contracts and grants officer until October 1999 was a serious
constraint due to the important role that a contracts officer plays
during the life of a program, particularly during the start-up phases.
The mission noted that a contracts officer is needed for negotiating
and signing agreements and providing valuable advice during the design
process on issues such as the selection of appropriate implementation
mechanisms and acquisition instruments.
* The Nicaraguan mission reported that the absence of a contracts
officer was a problem during the closeout phase.[Footnote 22] In
particular, although temporary-duty contracts officers were sent from
headquarters, their efforts did not prevent some activities from
slowing down as the program approached the December 31, 2001, deadline.
* The mission in the Dominican Republic reported that the absence of a
permanent contracts officer greatly affected its program. Some actions
were delayed because the local-hire assistant contracts officer was
also responsible for the mission‘s regular program contracts and for
contracting actions at the USAID mission in Jamaica.
* The mission in the Dominican Republic reported that the majority of
staff hired for its reconstruction effort had no prior USAID
experience. As a result, initial implementation slowed as new staff
learned the USAID management system.
* The Honduran and Nicaraguan missions reported that getting qualified
staff on board was a lengthy process. The Honduran mission noted that
the process to hire staff was long and burdensome and that nearly all
activities had delays or start-up difficulties due to staff shortfalls.
The Nicaraguan mission reported that it experienced major delays in
obtaining security clearances for staff it had hired. In one instance,
the mission selected a person who eventually accepted a job elsewhere
after waiting more than a year for a security clearance.
* The Honduran mission reported it did not have the flexibility to
reassign existing mission staff to some reconstruction activities. In
addition, the mission had difficulties in obtaining temporary staff for
its education activities because USAID headquarters either did not have
the staff available or it lacked travel funds.
Accountability:
All USAID missions reported that they took certain actions to ensure
accountability for disaster recovery assistance funds. Some missions
cited minimizing the funds provided directly to host governments as an
example. Missions noted that the extensive audit and oversight coverage
required a substantial commitment from mission staff already heavily
involved in planning and implementing reconstruction projects.
* The Dominican Republic mission reported that it limited funds
provided directly to the Dominican government to speed up the
implementation process and reduce potential misuse of funds. It noted
that the host government required more time to plan its budget and
disburse funds. For example, government-funded potable water and
sanitation systems for several housing projects were delayed when
contractors did not receive payment from government institutions.
* The USAID missions in Honduras and Nicaragua hired consulting and
management firms to handle funds and provide program oversight. The
Honduras mission used eight organizations to provide oversight and
technical assistance over various components of its disaster recovery
program. The Nicaragua mission also hired several firms to provide
oversight but one firm encountered problems in doing so. Specifically,
the Nicaragua mission hired a U.S. management and consulting firm to
oversee about $3.6 million provided to the Nicaraguan government for
more than 20 small municipal infrastructure projects. However, the
firm‘s lack of engineering expertise and experience led to substantial
delays in several projects. Ultimately, about half the projects were
canceled and only $2.1 million was expended. The remaining funds were
reprogrammed and used for other reconstruction efforts.
Coordination:
USAID missions noted numerous problems resulting from working with the
other U.S. departments and agencies. They did not cite any problems in
coordinating with other international donors.
* The missions in the Dominican Republic, Honduras, and Nicaragua
reported that integrating the programs of the other U.S. entities was
time-consuming and burdensome for USAID staff. The mission in the
Dominican Republic further noted that coordination and implementation
were challenging because the other departments and agencies did not
have sufficient staff in country and did not spend enough time during
visits.
* The USAID missions in Honduras and Nicaragua also reported that
problems arose because some U.S. departments and agencies lacked an
understanding of the complexities of working in a developing country
environment and overseas missions--some agencies developed
reconstruction plans without reference to local conditions. The
Honduran mission further noted that providing administrative support
for some agencies was particularly cumbersome and required the
establishment of a separate mechanism for cost sharing, even though the
program was relatively short-lived.
Lessons Learned:
All USAID missions reported numerous lessons learned and indicated
these lessons could be applied in future disaster reconstruction
situations. Some examples follow.
* The missions in Honduras and the Dominican Republic reported delays
in getting qualified contractor staff on board and the Nicaraguan
mission reported major delays in obtaining U.S. and local security
clearances for its contracted staff. The Dominican Republic mission
suggested that the ability to hire personal services contractors and
other staff--and get them to the mission--more quickly would be a great
help in rapidly designing and implementing future emergency response
and disaster assistance programs.
* All missions emphasized that a longer implementation period would
have better ensured project sustainability. In addition, the Honduran
mission reported that it had avoided activities involving institutional
development and other complex reforms that would have required more
time to complete. It also noted that, by paying relatively little
attention to policy issues and emphasizing construction, it was unable
to adequately address some of the underlying issues that had prevented
Honduras from being prepared to respond adequately to disasters. The
mission in the Dominican Republic acknowledged that it selected some
types of activities that it knew could be completed by the expenditure
deadline. It did so despite recognizing that other activities might
have achieved greater sustainability, especially those with more cost
sharing with the host government and other implementing organizations.
* Reaching agreements with established organizations with an in-country
permanent presence with whom USAID had previously worked was a good
mechanism that generally resulted in expediting program start-up and
ensuring project quality and financial accountability.
* According to the Honduran mission, host country contracting should be
used with caution in a disaster recovery program with relatively short
time frames because these projects generally took longer to be
completed.
* The Guatemala mission reported that using fixed amount reimbursable
contracts was a very efficient implementation mechanism through which
the implementing organization was periodically reimbursed for
activities it had successfully completed only after the activities were
inspected and certified by USAID-selected personnel. The mission also
noted that this mechanism limits the likelihood of corruption and
increases transparency when concurrent audits are also conducted.
* The missions in Honduras and the Dominican Republic reported that
certain types of agreements with other U.S. departments and agencies
worked better than others. The Honduran mission noted that
participating agency services agreements worked better than interagency
agreements. Such agreements allowed the mission to define the terms of
reference, which helped make other U.S. government programs more
compatible with the broad objectives of USAID‘s reconstruction program
and local conditions. The Dominican Republic mission reported that
agencies working under participating agency services agreements and
interagency agreements were more receptive to coordination and teamwork
than those agencies that had their funds directly transferred to them
by USAID.
* The mission in Honduras reported that USAID needs to do a better job
in immediately identifying staff with the skills needed for
reconstruction activities, rather than relying on staff within the
mission or region. The mission further suggested including a human
resources specialist in the first response team who could also assist
the mission in filling staffing needs.
* The Honduras mission reported that its authority to redirect
reconstruction funds within its own mission program contributed to
successful project implementation. The mission noted that, based on
progress and the changing needs of certain projects, it moved funds
from some activities into others and strongly stated that all missions
should retain this flexibility and authority.
[End of section]
Appendix III: Summary of Disaster Recovery Experiences: Other U.S.
Departments and Agencies:
As we did with USAID‘s missions, we asked the other U.S. departments
and agencies that implemented reconstruction activities for their views
on how the program proceeded. We provided a pro forma questionnaire to
nine U.S. departments and agencies.[Footnote 23] All nine replied. We
grouped the responses into five broad topics: (1) program planning and
implementation, (2) staffing, (3) accountability, (4) coordination, and
(5) lessons learned that may apply to future disaster recovery efforts.
In general, the agencies encountered a variety of problems and issues
but noted that they gained valuable experience in implementing disaster
recovery and reconstruction programs overseas. The following is a
summary of their responses.
Program Planning and Implementation:
The ability of the other U.S. departments and agencies to plan and
implement their programs was affected by various factors, particularly
the December 31, 2001, deadline. For some, the deadline had little
effect on design and planning decisions but they could have used more
time for training or to reinforce efforts to make their programs more
sustainable. Other agencies reported that they designed their
activities around the deadline. Other factors that affected project
planning and implementation included administrative delays and host
country conditions.
* NOAA reported that if the deadline had not been in place, it would
have designed similar activities but would have included more training
and sustainability-related activities. NOAA further noted that it did
not have enough time at the beginning of the project to do a complete
needs assessment to determine and prioritize activities. DOT also
reported that, while the deadline did not affect the initial planning
and designing of its program, other uncontrollable local factors, such
as land acquisition and weather conditions, delayed some phases of
DOT‘s projects. USGS said that it could have used more time for
additional feedback and to reinforce the methods and concepts of the
training it provided.
* USDA reported that the deadline affected the design of its program
technically and administratively. USDA had to identify projects that
were feasible within the time frame and partners with sufficient
capacity to successfully undertake the work. In addition, various
administrative and bureaucratic delays, such as hiring staff to manage
the program, hindered initial project implementation. HUD also reported
that it would have designed its disaster mitigation activities somewhat
differently if the deadline had not been imposed.
Staffing:
Most agencies did not report staffing problems, although USDA reported
that deploying permanent staff took some time and was a constraint in
starting up its program. USGS, NOAA, USDA, HUD, and INL reported that
they had full-time personnel in country, especially in the countries
where they had larger programs. CDC, EPA, FEMA, and DOT used
contractors and grantees or permanent staff that traveled on temporary
duty to carry out their work. USGS had full-time staff in Honduras and
Guatemala and relied on temporary duty personnel in other countries.
USDA had full-time personnel in Honduras and Nicaragua--both USDA
direct-hire staff and personal services contractors. USDA also used
temporary duty personnel in all countries in which it worked.
Accountability:
USAID‘s Bureau for Latin America and the Caribbean and mission staff,
the Office of Management and Budget, and we conducted most of the
oversight and review of the other U.S. departments and agencies. DOT
and FEMA were the only agencies that were audited by their respective
inspectors general--both reported positive audit outcomes. Staff from
USAID‘s Bureau for Latin America and the Caribbean conducted most of
the oversight of interagency agreements. In general, agencies reported
that the oversight and reviews did not adversely affect program
implementation and were, in fact, helpful.
* Most agencies reported adequate oversight of their programs and added
that the reviews did not affect program design or the pace of
implementation. An exception was FEMA, which reported that
responding to inquiries, mostly from its inspector general‘s office,
took time away from project activities.
* Most agencies reported that the oversight and reviews provided
valuable input. For example, USDA reported that the additional
oversight by USAID and us was not overly intrusive and was welcomed by
division management. USGS also noted that meetings and field visits
allowed its staff to discuss expectations with auditors and comply with
regulations. However, EPA noted that, although the oversight helped
ensure accurate recordkeeping, it received little feedback on its
performance.
Coordination:
Eight of the nine agencies, including the six agencies that had
interagency agreements with USAID, reported that they designed their
program to complement and supplement USAID‘s program and that USAID had
provided valuable assistance in helping them formulate their
strategies. The same agencies reported that they also received a
significant amount of logistical and administrative support from USAID
and several noted that their programs would not have been as successful
without USAID‘s programmatic and administrative assistance.[Footnote
24] However, one agency reported that its contractor encountered some
problems in coordinating with USAID.
* Most agencies reported that they took into account USAID‘s expertise
and guidance in planning and implementing activities. USGS reported
that its program was developed in consultation with USAID missions and
that it had made significant changes in its initial design in response
to suggestions from USAID. FEMA noted that it would not have been as
successful without the support and guidance it received from USAID‘s
Bureau for Latin America and the Caribbean. However, CDC‘s contractor
for its laboratory equipment and training project reported that
sometimes the missions‘ priorities differed from those of the health
ministries or the national laboratories and the contractor had to
change its approach.
* Several agencies reported that they provided technical expertise that
complemented USAID‘s program. DOT implemented a port damage assessment
project that focused on the entire transportation network supporting
international trading ports in Honduras and Nicaragua. According to
DOT, USAID did not have the capability to deal with transportation
matters on a regional basis and DOT filled the void.
* Eight of the nine agencies reported that they received in-country
logistical or program support from USAID missions. However, CDC‘s
laboratory equipment contractor reported that administrative
coordination with USAID missions was sometimes difficult because each
mission required different information for issues such as country
clearances and this created confusion for the contractor.
Lessons Learned:
All nine departments and agencies reported that they learned lessons
that could be applied in future disaster assistance programs. Most
noted the constraints imposed by the December 31, 2001, deadline and
suggested that future efforts include time for follow-on activities,
such as training, to ensure more sustainability. Several also suggested
that USAID develop an easier method of charging for administrative
activities. In addition to working with USAID, several agencies noted
the importance of good coordination among the various U.S. government
entities providing disaster recovery assistance.
* Three agencies reported that the limited time for project
implementation was a constraint, especially for follow-on activities
and project sustainability efforts. HUD reported that the deadline did
not allow enough time to complete efforts to train local entities in
finding other sources of funding for continuing activities in a
resettlement community in Honduras. According to NOAA, future projects
should have follow-on activities to assess implementation of the
technical guidance and training provided. NOAA further noted that more
time and resources should have been devoted to training host country
counterpart organizations. CDC had to obtain extensions for two
training programs beyond the December 31, 2001, deadline to ensure that
enough epidemiologists were trained and that laboratory equipment would
be used and maintained properly.
* Three agencies reported that they would have preferred to have a
different manner of dealing with administrative expenses in
country.[Footnote 25] Each suggested that USAID create a funding
citation to charge each agency for all administrative, logistical,
financial, and procurement services for future emergency programs. CDC
and USDA recommended that USAID keep a portion of the funding before
signing interagency agreements and that USAID provide all of the
logistical and administrative support for the agencies, noting that
this would allow for greater transparency and less confusion. Also,
FEMA was not aware that administrative expenses were additional and had
not budgeted for these costs.
* FEMA and USDA reported that a major constraint in overall planning
was that the disaster recovery funds were not available prior to
signing the interagency agreement to fund diagnostic, assessment, and
planning activities. According to USDA, this led to significant delays
in start-up activities. USDA suggested that USAID establish a rapid
assessment fund, which it could use to reimburse other U.S. government
agencies for their expenses.
* HUD reported that local community members are invaluable in locating
work sites and then determining appropriate activities. Similarly, EPA
reported that it learned to identify local partners to assist with
logistics and technical support.
* EPA, INL, and CDC reported that they learned about working with host
governments. EPA noted that it was important to get the host country
governments involved from the very beginning and keep them involved
throughout the program to help ensure sustainability. Staff responsible
for INL efforts in El Salvador noted that projects work better if based
on requests from host governments rather than on ideas developed in
Washington, D.C. They added that one of INL‘s projects in El Salvador,
which now is on track, might have avoided some initial problems if more
attention had been given to country conditions. CDC noted the
importance of ensuring that U.S. agency priorities do not conflict with
the concerns of host governments.
* USGS and CDC reported that they had learned more about working with
other U.S. departments and agencies. USGS conducted a multidisciplinary
program both within its agency and among other U.S. entities. USGS
found that working with other agencies allowed it to share data among
projects and programs, leading to more efficient and cost effective use
of resources. CDC noted that clear coordination and communication from
the very outset was important because agencies interpreted information
differently. In addition, EPA suggested that greater efforts be made to
help U.S. agencies create integrated programs in the same communities.
* HUD reported that it learned techniques and approaches to planning
construction programs in poor communities that will allow for faster
and more efficient reconstruction programs in the future.
[End of section]
Appendix IV: Disaster Recovery Assistance Budgeted and Expended:
The emergency supplemental appropriated $621 million to USAID and it
was the primary agency responsible for carrying out the U.S. disaster
recovery assistance program. In turn, USAID transferred almost
$96 million[Footnote 26] to 12 other U.S. departments and agencies
that, for the most part, planned and implemented their own programs.
USAID transferred funds in two ways as authorized by section 632 of the
Foreign Assistance Act of 1961, as amended. Under 632(a), USAID has
minimal responsibility for approving how the funds will be used, and
program monitoring and evaluation is the responsibility of the
receiving department or agency. Under 632(b), USAID and the receiving
department or agency negotiate and agree on how the funds will be used,
and USAID is responsible for program monitoring and evaluation; such
transfers are implemented through interagency agreements. Table 2 shows
the status of the disaster recovery funds through December 31, 2001, by
the department or agency implementing the activities.
Table 2: Status of Disaster Recovery Assistance Funds through December
31, 2001:
[See PDF for image]
[End of section]
Appendix V: Comments from the U.S. Agency for International
Development:
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT:
JUN 2 8 2002:
Mr. Jess T. Ford Director International Affairs and Trade U.S. General
Accounting office 441 G Street, N.W.
Washington, D.C. 20548:
Dear Mr. Ford:
I am pleased to provide the U.S. Agency for International Development‘s
(USAID) formal response on the draft GAO report entitled ’Foreign
Assistance: Disaster Recovery Program Addressed Intended Purposes But
USAID Needs Greater Flexibility to Improve Its Response Capability“
(June 2002).
USAID appreciates the comprehensive and constructive nature of this
report. The positive role which the GAO has played during the course of
the implementation of the Central American and Caribbean Emergency
Disaster Recovery Fund (CACEDRF), created by Congress in May of 1999,
has been very important to the success of this program. The level of
cooperation and support between the GAO, USAID/Washington and our field
missions has been exceptional.
The magnitude and scope of the U.S. government‘s supplemental
reconstruction program, and USAID‘s leadership of it, were as
unparalleled as Hurricanes Mitch and Georges themselves. It involved a
massive job of coordination and decision-making among the international
donors, twelve other U.S. departments and agencies, nine different
countries and hundreds of local communities. Overcoming the planning,
logistical and institutional obstacles was that much more significant
given the widespread debilitation of country capacity and the
commitment to ’build back better.“:
Moreover, efforts to establish an exceptional number of oversight and
accountability mechanisms added to the challenge. We appreciate your
confirmation of the importance of USAID‘s critical role in this process
and that U.S. objectives were achieved.
While USAID is proud of what it accomplished under these difficult
circumstances, your report correctly observes that over a period of
years prior to the inception of the CACEDRF reconstruction program,
USAID had downsized its staff and reduced its ’surge capacity“ to the
point where meeting the emergency and post-disaster requirements posed
by these events involved a near heroic response. This stretched USAID‘s
human resources beyond anything previously encountered. We carefully
considered the lessons learned from the reconstruction experience and
have identified and will continue to identify changes in our structure
and functioning which will make USAID more agile in responding to
future similar crises. As the report also notes, the critical
constraints were identified by USAID‘s own Hurricane Mitch Working
Group and Emergency Response Council (ERC). We are pleased to inform
you that the Council subsequently took the initiative to develop
funding and staffing options and to put forward key program reforms to
facilitate reconstruction activities in the future. In May of this
year, the USAID Administrator approved all of the Council‘s
recommendations for reconstruction activities in the areas of funding
alternatives, staffing for design and implementation, and strategic
planning.
On funding, the Administrator approved initiation of discussions within
the Administration on ’bridge financing“ mechanisms for reconstruction
activities. Large-scale infrastructure and other reconstruction
activities usually require additional, extraordinary funding (which in
the past has often come from supplemental appropriations). However, the
time gap between the disaster relief phase and the receipt of the
additional funds for moving to the reconstruction stage often spans
several months, and the lengthy uncertainty about funding availability
tends to hamstring planning and preparations in the interim. We are
interested in pursuing a mechanism that would bridge this gap with
assured funding.
To overcome staffing constraints, a USAID working group has identified
several existing mechanisms that could make human resources more
readily available for design, implementation, and oversight of
reconstruction activities. For procuring such services quickly, the
working group has identified two contracting mechanisms that are
available
to operating units throughout the Agency. One is an Indefinite Quantity
Contract for procuring short-term services. We have used it extensively
and successfully for emergency activities. The other is an existing GSA
contract for engaging both short-and long-term human resources. It has
provided us with flexibility and quick turnaround time in procuring
these
services. In addition, to facilitate availability of USAID staff for
reconstruction activities, we have contracted with a firm to establish
a skills database of all Agency personnel, who would be available on
short notice for deployment to the field.
The third area of reform, programming, involves guidance to the field,
especially in ’crisis-prone“ countries, on the inclusion of a ’crisis
(or program) modifier“ in country strategies. The crisis modifier has
been used successfully in Eritrea and Ethiopia to avoid lengthy delays
in revising USAID country plans, notifying the Congress of the changes,
and negotiating these changes with host governments and other partners.
The ’crisis modifier“ approach anticipates the need for redirecting
USAID resources toward areas most affected by a disaster of either slow
or rapid onset, and it ensures the necessary approvals long before the
crisis occurs. The drafting of the guidance, for inclusion in USAID‘s
Automated Directives System, on the use of this mechanism by field
missions will begin soon.
In sum, this has been an extraordinarily successful reconstruction
program with positive implications for USAID‘s future role in post-
crisis reconstruction. We thank you for the opportunity to respond to
the GAO draft report and for the courtesies extended by your staff in
the conduct of this review.
Sincerely,
John Marshall:
Assistant Administrator Bureau for Management:
Signed by John Marshall:
[End of section]
Appendix VI: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Albert H. Huntington, III (202) 512-4140
Audrey E. Solis (202) 512-3042:
Acknowledgments:
In addition to those named above, David Artadi, Lyric Clark, John
DeForge, Francisco Enriquez, E. Jeanette Espinola, Phillip Herr, José
R. Peña, and George Taylor made key contributions to this report. Janey
Cohen, Martin de Alteriis, Mark Dowling, Kathryn Hartsburg, and Jim
Michels also provided technical assistance.
FOOTNOTES
[1] Public Law 106-31, enacted May 21, 1999, also provided recovery
funds for countries affected by other natural disasters, including $10
million for Colombia in the aftermath of a January 1999 earthquake. In
addition, USAID allocated $6.1 million for several Caribbean islands
affected by Hurricanes Floyd and Lenny in the fall of 1999.
[2] The legislation also provided $1.5 million to USAID‘s Office of the
Inspector General for additional audit coverage.
[3] Costa Rica, El Salvador, Guatemala, and Haiti.
[4] USAID extended part of its urban water and sanitation program due
to a suspension of five contracts in February 2001 while the USAID
Inspector General investigated how they were awarded. The contracts
were eventually withdrawn. USAID is negotiating with the Honduran
government for a new unit to implement the program. The program is
currently extended through February 2003; USAID plans to request an
additional extension.
[5] USAID defines its work force as comprising those individuals with
whom it has an employer-employee relationship. The Federal Acquisition
Regulations define a personal services contract as one that makes the
contractor appear as a government employee by the nature of the
relationship that is established. USAID is authorized by section
636(a)(3) of the Foreign Assistance Act of 1961, as amended, to
contract with individuals for personal services abroad. USAID‘s
personal services contractors may be U.S. citizens, host country
nationals, or third country nationals.
[6] Statement of Everett L. Mosley, Inspector General, and Timothy E.
Cox, Regional Inspector General, USAID, before the House Committee on
Appropriations, Subcommittee on Foreign Operations, March 21, 2001.
[7] Besides the $621 million in disaster assistance, the supplemental
appropriation also reimbursed the Department of Defense and USAID‘s
Office of Foreign Disaster Assistance and Office of Transition
Initiatives nearly $300 million for assistance provided immediately
after the hurricanes, such as water, food, shelter, and transportation.
[8] For Honduras, the initial Stockholm Group of 5, formed in May 1999,
consisted of Canada, Germany, Spain, Sweden, and the United States. It
expanded to the Group of 15 with the addition of four international
financial institutions, the European Union, the United Nations
Development Program, and four bilateral donors. In Nicaragua, the
bilateral donor group consisted of Canada, France, Japan, Spain,
Sweden, and the United States; multilateral institutions also
participated in donor group meetings.
[9] H. Rept. 106-143.
[10] USAID designated $3.2 million for Honduras and $1 million for
Nicaragua.
[11] According to USAID, about $10 million in supplemental program
funds had been spent as of December 31, 1999, but had not been
disbursed.
[12] The supplemental legislation required USAID to notify the Congress
on how it planned to use the supplemental funds. If the Congress did
not contact USAID regarding a particular notification within 15 days,
the funds were available for expenditure.
[13] USAID conducted emergency relief and initial reconstruction
activities with funds from its Office of Foreign Disaster Assistance
and its Office of Transition Initiatives. Missions also redirected
funds from other sources, such as child survival programs.
[14] Having the right people in the right positions at the right time
has been a continuing concern for USAID. In 1993, we reported that
USAID had not taken the steps needed to restructure its work force to
reflect changing responsibilities and priorities. We recommended that
the USAID administrator develop and implement a comprehensive work
force planning process and management capability as a systematic,
agencywide effort. See our report entitled Foreign Assistance: AID
Strategic Direction and Continued Management Improvements Needed (GAO/
NSIAD-93-106, June 11, 1993).
[15] USAID is implementing a $170 million earthquake recovery
assistance program in El Salvador after two earthquakes struck the
country in January and February 2001.
[16] Based on discussions with congressional staff, we did not conduct
field work to monitor the use of $10 million provided for earthquake
reconstruction activities in Colombia or the $6.1 million in funding
redirected for the Bahamas and several Caribbean islands affected by
Hurricanes Floyd and Lenny in the fall of 1999. However, we did review
the quarterly reports and tracked the expenditures of these programs to
determine if they were on schedule to meet the December 31, 2001,
deadline.
[17] We met with officials from the Departments of Agriculture, Housing
and Urban Development, State, and Transportation; the Environmental
Protection Agency; the Federal Emergency Management Agency; the
National Oceanic and Atmospheric Administration; and the U.S.
Geological Survey. We did not review the activities of the Peace Corps,
the Export-Import Bank, or the Overseas Private Investment Corporation
because their funding amounts were relatively low, their programs were
independent of USAID, the pace of their programs appeared adequate
based on their expenditure rates, and they were experienced in overseas
operations.
[18] The Corps‘ Mobile office is responsible for programs in Latin
America and part of the Caribbean. The Corps‘ activities in the
Antilles (including the Dominican Republic and Haiti), Puerto Rico, and
the U.S. Virgin Islands are supervised by its Jacksonville, Florida,
office. In Mobile, we met with the project director for the Corps‘
programs in the Dominican Republic and Haiti.
[19] For example, see our report entitled Foreign Assistance: U.S. Rule
of Law Assistance to Five Latin American Countries (GAO/NSIAD-99-195,
Aug. 4, 1999).
[20] USAID does not have a mission in Costa Rica. USAID‘s regional
office in Guatemala hired a personal services contractor, posted at the
U.S. embassy in Costa Rica, to oversee the education program financed
with disaster recovery funds.
[21] The bureau maintains open agreements, called indefinite quantity
contracts, with numerous organizations worldwide; USAID missions have
the option of ’buying-in“ to these agreements where appropriate.
[22] During the start-up phase a permanent contracts officer was at the
mission. He left in June 2001 and was not replaced.
[23] We sent our questions to the six agencies that had interagency
agreements with USAID--the Environmental Protection Agency (EPA), the
Centers for Disease Control and Prevention (CDC), the Federal Emergency
Management Agency (FEMA), the National Oceanic and Atmospheric
Administration (NOAA), the U.S. Department of Agriculture (USDA), and
the U.S. Geological Survey (USGS). We also sent our questions to three
agencies that received direct transfers from USAID and participated in
the June 2001 meetings with the Office of Management and Budget--the
Department of Housing and Urban Development (HUD), the Department of
Transportation (DOT), and the State Department‘s Bureau for
International Narcotics and Law Enforcement Affairs (INL). We did not
send the questions to the Export-Import Bank, the Overseas Private
Investment Corporation, or the Peace Corps. Their programs were
independent of USAID and they did not participate in the June 2001
meetings.
[24] Staff responsible for the INL program in El Salvador reported that
coordination and interagency relationships did not apply to its office.
INL‘s program, which focused mostly on counternarcotics and law
enforcement efforts, was managed by the embassies‘ political affairs
and/or narcotics affairs sections.
[25] The U.S. government provides and shares the cost of common
administrative support at overseas posts through the International
Cooperative Administrative Support Services program. All agencies
operating overseas are required to participate.
[26] This amount does not include funds paid for participating agency
service agreements that USAID entered into with the U.S. Army Corps of
Engineers, USDA, USGS, NOAA, DOT, and the Peace Corps; these funds
totaled $29 million and are included in USAID‘s overall totals.
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