Department of State's Report to Congress and U.S. Oversight of Civilian Assistance to Pakistan Can Be Further Enhanced
Gao ID: GAO-11-310R February 17, 2011In Process
(1) First, while the report describes plans related to program monitoring and impact evaluation research, it does not contain plans specifically related to operations research as defined in the act as "the application of social science research methods, statistical analysis, and other appropriate scientific methods to judge, compare, and improve policies and program outcomes, from the earliest stages of defining and designing programs through their development and implementation, with the objective of the rapid dissemination of conclusions and concrete impact on programming." Second, the report did not include a projection of levels of assistance to be provided to Pakistan under the act for all 17 of the Millennium Challenge Account eligibility indicators, as the act requires. This section of the report did not contain information on 7 of the Millennium Challenge indicators, including, for example, natural resource management, business start-up, trade policy, and inflation control. (2) As of December 31, 2010, the full impact of the fiscal year 2010 civilian assistance could not be determined because most of the funding had not yet been disbursed. According to a State document, it will take some time before significant outcomes of the civilian assistance can be measured. Furthermore, performance indicators, targets, and baselines had not yet been established for all of the civilian assistance. USAID, for example, is in the process of establishing new indicators across all sectors. (3) Since fiscal year 2002, a total of $2.11 billion has been appropriated for FMF grants to Pakistan. Of that amount, Pakistan has used about $1.86 billion to acquire various defense articles, services, or training. Some of these funds have been used to refurbish or upgrade defense articles that were given to Pakistan under the Excess Defense Articles program, including Cobra helicopters, armored personnel carriers, and the frigate U.S.S. McInerney. As of the end of calendar year 2010, Pakistan still had approximately $250 million available to purchase U.S defense articles, services, or training. According to agency documents, some of these funds will be used to acquire naval surveillance aircraft, communications equipment, upgrades to TOW missile launchers, and additional helicopters. (4) To supplement the Pakistan Assistance Strategy Report so that information reported to Congress complies with all requirements of the Enhanced Partnership with Pakistan Act of 2009, we recommend that the Secretary of State take the following two actions: (1) include information on plans for operations research, as defined in the act, in its forthcoming Semi-Annual Monitoring Report; and (2) deliver to Congress a projection of the levels of assistance to be provided to Pakistan under the act, broken down into the 17 Millennium Challenge categories listed in the act. To enhance the accountability of U.S. civilian assistance to Pakistan, we recommend that the USAID Administrator should ensure that U.S. assistance to Pakistani organizations identified as high- or medium-risk be provided through contracts, grants, or agreements that require these organizations to address weaknesses identified in their preaward assessment that would improve the accountability of U.S. funds. These measures can include such steps as implementing a conflict of interest policy, recruiting more qualified internal audit and procurement staff, embedding approved CPA staff, and participating in a capacity-building program.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Charles M. Johnson Jr Team: Government Accountability Office: International Affairs and Trade Phone: (202) 512-7331GAO-11-310R, Department of State's Report to Congress and U.S. Oversight of Civilian Assistance to Pakistan Can Be Further Enhanced
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GAO-11-310R:
United States Government Accountability Office:
Washington, DC 20548:
February 17, 2011:
Congressional Committees:
Subject: Department of State's Report to Congress and U.S. Oversight
of Civilian Assistance to Pakistan Can Be Further Enhanced:
Pakistan is a key U.S. ally in the effort to combat terrorism and
violent extremism. Taliban, al Qaeda, and other terrorists have used
parts of Pakistan to plan and launch attacks on Afghan, U.S., and NATO
security forces in Afghanistan, as well as on Pakistani citizens and
security forces in Pakistan. Enhancing the effectiveness of civilian
assistance to Pakistan is one of the U.S. government's top foreign
policy and national security priorities. Foreign assistance is vital
to help the government of Pakistan overcome the political, economic,
and security challenges that threaten Pakistan's long-term stability.
Since 2002, the United States has provided over $18 billion in foreign
assistance and reimbursements to Pakistan, about two-thirds of which
has been security-related.
In October 2009, Congress passed the Enhanced Partnership with
Pakistan Act of 2009,[Footnote 1] which authorizes up to $1.5 billion
a year for development, economic, and democratic assistance
(henceforth referred to as "civilian assistance") to Pakistan for
fiscal years 2010 through 2014. In the act, Congress declares that the
United States requires a balanced, integrated, countrywide strategy to
support Pakistan's efforts that does not disproportionately focus on
security-related assistance. The act authorizes civilian assistance
for a wide range of activities, including projects to build the
capacity of government institutions, promote sustainable economic
development, and support investment in people through education and
health programs. The act also encourages, as appropriate, the use of
Pakistani organizations to provide this assistance. In several reports
and testimonies since 2008, GAO identified the need to improve
planning, monitoring, documentation, and oversight of U.S. assistance
to Pakistan. For example, in previous reports we have noted the need
to increase oversight and accountability for Pakistan's reimbursement
claims for Coalition Support Funds[Footnote 2] and to improve
planning, performance, and monitoring documentation of U.S.
development assistance to Pakistan's Federally Administered Tribal
Areas (FATA).[Footnote 3]
The Enhanced Partnership with Pakistan Act of 2009 requires the
Department of State (State) to develop several monitoring and strategy
reports for U.S. assistance to Pakistan, including the Pakistan
Assistance Strategy Report and the Semi-Annual Monitoring Report. The
act also directed the Comptroller General to provide: (1) a review of,
and comments addressing, State's Pakistan Assistance Strategy Report;
(2) an assessment of the impact of the civilian assistance on the
security and stability of Pakistan; (3) a detailed description of the
expenditures made by Pakistan with Foreign Military Financing (FMF)
grants; and (4) recommendations relating to any additional actions the
Comptroller General believes could help improve the efficiency and
effectiveness of U.S. efforts to meet the objectives of the act. This
report addresses these issues. We provide information on Pakistan's
use of FMF grants in enclosure I, and our recommendations to improve
the efficiency and effectiveness of U.S. efforts are included later
under "Recommendations for Executive Action."
To conduct this work, we reviewed relevant legislation and agency
documents, including the Pakistan Assistance Strategy Report issued on
December 14, 2009, Quarterly Progress and Oversight Reports, spending
plans, contracts, grants, and bilateral agreements. We interviewed
officials from State, the U.S. Agency for International Development
(USAID), and the Department of Defense in Washington, D.C. Further, we
also interviewed officials in Islamabad, Pakistan, from State, USAID,
and the Office of the Defense Representative to Pakistan, as well as
officials from the government of Pakistan. We also analyzed funding
and expenditure data. We conducted this performance audit from June
2010 to February 2011, in accordance with generally accepted
government auditing standards. Those standards require that we plan
and perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our findings and conclusions based on
our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit
objectives.
The U.S. Pakistan Assistance Strategy Report Included or Partially
Included All Required Provisions:
The Pakistan Assistance Strategy Report mandated by the Enhanced
Partnership with Pakistan Act describes U.S. policy and strategy for
the civilian assistance to Pakistan. The act mandates that the report,
submitted by the Secretary of State to Congress in December 2009,
include seven reporting requirements. We reviewed the report to assess
whether each of the seven required items was included. We found that
the report included five and partially included two of the required
provisions, as shown in figure 1.
First, while the report describes plans related to program monitoring
and impact evaluation research, it does not contain plans specifically
related to operations research as defined in the act as "the
application of social science research methods, statistical analysis,
and other appropriate scientific methods to judge, compare, and
improve policies and program outcomes, from the earliest stages of
defining and designing programs through their development and
implementation, with the objective of the rapid dissemination of
conclusions and concrete impact on programming."[Footnote 4]
Furthermore, the act requires that the plans on program monitoring,
impact evaluation research, and operations research in the Pakistan
Assistance Strategy Report be updated every 180 days in the Semi-
Annual Monitoring Report. To date, updated versions of these
monitoring reports have not included plans for operations research.
Agency officials stated that failure to include information on
operations research does not indicate that it is not being done and
provided GAO with some examples of USAID's use of operations research.
Second, the report did not include a projection of levels of
assistance to be provided to Pakistan under the act for all 17 of the
Millennium Challenge Account eligibility indicators, as the act
requires. This section of the report did not contain information on 7
of the Millennium Challenge indicators, including, for example,
natural resource management, business start-up, trade policy, and
inflation control. We make recommendations to enhance the Pakistan
Assistance Strategy Report under "Recommendations for Executive
Action."
Figure 1: GAO Assessment of the Pakistan Assistance Strategy Report:
[Refer to PDF for image: illustrated table]
Section 1: Principal Objectives:
Describes three key objectives for civilian assistance: (1) improve
Pakistan‘s capacity to address critical infrastructure needs, (2) help
Pakistan address basic needs and provide improved economic
opportunities in areas most vulnerable to extremism, and (3)
strengthen Pakistan‘s capacity to pursue economic and political
reforms that reinforce stability.
GAO Assessment: included.
Section 2: Programs:
Describes three broad categories for the assistance and their
respective funding levels for fiscal year 2010 through fiscal year
2014: (1) High-Impact, High-Visibility Infrastructure programs–-$3.5
billion, (2) Focused Humanitarian and Social Services-–$2 billion, and
(3) Government Capacity Development-–$2 billion.
GAO Assessment: included.
Section 3: Plans for Program Monitoring, Operations Research, and
Impact Evaluation Research:
Describes activities related to (1) increasing U.S. government
staffing to manage and monitor programs, and (2) strengthening U.S.
audit and investigative capabilities. However, this section lacked
information on plans for operations research.
GAO Assessment: partially included.
Section 4: Role of Pakistani Officials and Leaders:
Describes U.S. efforts to (1) align assistance with Pakistani
priorities, (2) incorporate Pakistani input into U.S. planning, and
(3) increasingly implement programs through a broad range of Pakistani
institutions, both governmental and nongovernmental.
GAO Assessment: included.
Section 5: Prohibit Assistance to Individuals or Entities Affiliated
with Terrorist Organizations:
Describes some of the guidelines and required procedures, including
those specifically used by USAID and State, to prevent U.S. assistance
from being awarded to terrorist organizations or their supporters.
GAO Assessment: included.
Section 6: Projection of the Levels of Assistance Organized by the
Millennium Challenge Account Categories:
Organizes 10 of the 17 indicators the Millennium Challenge Account
uses to determine the eligibility of its candidate countries into the
three broad program categories described in section 2 of the report.
However, 7 of the indicators were not addressed.
GAO Assessment: partially included.
Section 7: An Analysis for the Replacement of Pakistani Helicopters:
Summarizes the findings and recommendations of a review of the
Pakistani Army‘s aviation needs.
GAO Assessment: included.
Source: GAO analysis of State report.
[End of figure]
Most of the Fiscal Year 2010 Funding Has Not Been Disbursed;
Therefore, the Full Impact of the Assistance Could Not Be Determined:
* As of December 31, 2010, the full impact of the fiscal year 2010
civilian assistance could not be determined because most of the
funding had not yet been disbursed (see figure 2). According to a
State document, it will take some time before significant outcomes of
the civilian assistance can be measured. Furthermore, performance
indicators, targets, and baselines had not yet been established for
all of the civilian assistance. USAID, for example, is in the process
of establishing new indicators across all sectors.
Figure 2: Fiscal Year 2010 Civilian Assistance to Pakistan (as of
December 31, 2010):
[Refer to PDF for image: photograph and vertical bar graph]
Appropriated funds: $1.512 billion;
Unobligated balance: $171.2 million;
Obligated balance: $1.163 billion;
Disbursement: $179.5 million.
Source: GAO analysis of USAID and State data (chart). USAID (photo).
[End of figure]
For fiscal year 2010, just over $1.5 billion in appropriated funds was
allocated to carry out civilian assistance activities authorized by
the act.[Footnote 5] According to U.S. officials, civilian assistance
to Pakistan includes programs funded through the following
appropriation accounts: (1) Economic Support Funds--$1.3 billion; (2)
Global Health and Child Survival--$30 million; (3) International
Narcotics Control and Law Enforcement--$170 million; and (4)
Nonproliferation, Antiterrorism, De-mining, and Related Programs--$22
million.[Footnote 6] According to USAID, there are two common ways in
which it obligates these appropriated funds: bilateral obligation and
direct obligation. For bilateral obligations, USAID first develops a
bilateral assistance agreement with the government of Pakistan, in
which the detailed projects and activities are typically not yet fully
developed. USAID considers these funds obligated once the assistance
agreement is signed. If USAID directly implements activities under
this assistance agreement, USAID then further "sub-obligates" the
funds by signing grants, contracts, agreements, or other instruments.
For direct obligations, funds are obligated directly through
contracts, grants, or agreements on a case-by-case basis for specific
implementers' activities.
Of the approximately $1.5 billion allocated for civilian assistance in
fiscal year 2010, State and USAID information indicates that there was
$1.2 billion in an obligated balance as of December 31, 2010. Most of
the civilian assistance to Pakistan was not obligated until late
September 2010, when USAID signed a bilateral assistance agreement
with the government of Pakistan for up to $831 million to support
programs in the following general areas: democracy and governance,
health, education, economic opportunity, agriculture, and energy--as
well as targeted programs implemented in FATA and the Khyber
Pakhtunkhwa province.[Footnote 7] USAID is currently in the process of
fully developing projects and activities for this assistance and has
already "sub-obligated" some of these funds through contracts, grants,
and agreements. Additional plans for fiscal year 2010 civilian
assistance from State's Bureau of International Narcotics and Law
Enforcement Affairs include rule of law programs, aviation support,
counternarcotics programs, as well as police training, infrastructure,
and equipment. Recently, State has indicated that up to $500 million
of this assistance will be used to provide flood relief and fund
recovery efforts.[Footnote 8]
According to State and USAID, as of December 31, 2010, $179.5 million
has been disbursed for the following programs and projects:
* Benazir Income Support Program ($75 million): U.S. funds will be
used to provide cash income supplements to approximately 600,000
beneficiaries through a cash transfer to Pakistan's flagship social
support program.
* Higher Education Commission ($45 million): U.S. funds transferred
directly to the commission will be used for various initiatives, for
example, to support centers of excellence at Pakistani universities.
* Flood Assistance ($23.3 million): U.S funds were used to support a
broad range of flood relief and recovery activities, including
agriculture recovery, emergency relief supplies, reproductive health
kits, immunizations for children, water and sanitation activities, and
support for Pakistan's National Disaster Management Authority.
* Fulbright Program ($19.5 million): U.S. funds will provide
scholarships to Pakistani students to obtain postgraduate degrees from
American universities.
* International Narcotics Control and Law Enforcement programs ($8.4
million): U.S. funds were used for an aviation support contract and
program development.
* Sindh Agricultural Recovery Program ($6.3 million): U.S. funds will
be used to help flood-affected farmers in the Sindh province cultivate
sunflowers by providing seed, fertilizer, and technical assistance.
* Antiterrorism Training and Program Management ($2.0 million): U.S.
funds will be used to provide training to Pakistani law enforcement
officials on a wide range of issues, including tactical operations,
investigations, support infrastructure, and institution security.
USAID's Efforts to Oversee Civilian Assistance Awarded to Pakistani
Organizations Can Be Further Enhanced:
USAID is planning to shift its program implementers from U.S.-based
partners to Pakistani organizations, including local, provincial, and
federal government and nongovernmental organizations. According to
agency officials, approximately half of all fiscal year 2010 civilian
assistance will be implemented through these Pakistani organizations,
some of which may initially lack the capacity to efficiently and
effectively implement and monitor U.S.-funded projects. State and
USAID have noted that the limited institutional capacity of new
implementing partners is a potential challenge and that USAID intends
to take steps to identify and address weaknesses in these
organizations. USAID described a number of risk mitigation strategies
and steps it has already undertaken or intends to take to improve the
capacity of Pakistani organizations that do not meet minimum standards
for managing U.S. funds. Figure 3 provides an illustration of these
steps.
Figure 3: Assessment and Capacity Building of Pakistani Organizations
Implementing U.S. Assistance:
[Refer to PDF for image: illustration]
Pakistani organization identified by USAID to implement program;
Pakistani CPA firm conducts preaward assessment:
* High or medium-risk:
Capacity-building program;
Embed CPA staff;
Annual Assessment;
* Low-risk:
Annual Assessment.
Source: GAO analysis of USAID information.
[End of figure]
Risk mitigation and strategies by USAID include the following:
* Pakistani organizations receiving U.S. funding for the first time
would undergo a preaward assessment of their internal controls and
financial management systems conducted by Pakistani Certified Public
Accounting (CPA) firms that have been approved by USAID's Office of
the Inspector General to conduct financial audits.[Footnote 9] The CPA
firms would identify vulnerabilities and make recommendations for
actions to address these vulnerabilities before USAID provides funding.
* Organizations identified as high-risk or medium-risk by the
Pakistani CPA firms would still receive U.S. funds but would be
expected to participate in a capacity-building program intended to
provide training in key areas, such as financial management, human
resources, and monitoring and evaluation. Organizations may also be
required to meet other conditions, such as setting up a separate
account for U.S. funds.
* In cases where an organization requires additional support, staff
from a Pakistani CPA firm would be embedded within the organization to
provide accelerated capacity-building by developing policies and
procedures, training staff, and providing management support.
* In addition to the initial preaward assessments for first-time
funding recipients, all Pakistani organizations would undergo an
annual assessment to determine their current risk level. Organizations
identified as high-risk or medium-risk would participate in a capacity-
building program and/or have staff from an approved CPA firm embedded
within their organization.
* USAID would require CPA firms to validate all payment requests from
Pakistani organizations implementing U.S.-funded programs before
providing funds.
As per USAID's guidance, the preaward assessments must be used when
making the determination to award funds to an organization new to
USAID. However, USAID guidance on preaward assessments does not
contain information on whether weaknesses identified in the preaward
assessment must be addressed or whether the assessment's
recommendations to enhance the accountability of U.S. funds must be
implemented. For Pakistani organizations that were required to undergo
a preaward assessment, GAO reviewed their respective contracts,
grants, or agreements for fiscal year 2010 assistance as well as the
assessment's results. Our analysis indicated that not all of these
contracts, grants, and agreements required these organizations to
address the weaknesses identified in their preaward assessment. For
example, a grant with a Pakistani organization that had been
identified as medium-risk did not include any specific provisions to
address any of the recommendations made in the preaward assessment for
mitigating identified risks, which, among others, included the need to
implement a conflict of interest policy and recruit more qualified
internal audit and procurement staff.
Conclusions:
Proper congressional oversight of assistance programs requires
complete and accurate information. While the Pakistan Assistance
Strategy Report included most of the required information, it did not
include (1) plans for operation research and (2) a projection of the
levels of assistance to be provided to Pakistan for 7 of the 17
Millennium Challenge Account categories. This information should be
made available to Congress in a timely manner. Furthermore, given
prior deficiencies identified in the monitoring and evaluation of U.S.
assistance to Pakistan, it is important that future implementation of
U.S. assistance have proper oversight and meet U.S. standards for
internal controls. Additional risk may be incurred by increasingly
providing U.S. assistance through Pakistani organizations, some of
which may initially lack the capacity to efficiently and effectively
implement and monitor U.S.-funded projects. To help prevent waste,
fraud, and abuse of U.S. funds, it is important that USAID effectively
implement and monitor efforts to address the weaknesses and enhance
the capacity of these organizations, particularly those that are
identified as having a high-risk or medium-risk of not meeting
standards for managing U.S. funds.
Recommendations for Executive Action:
To supplement the Pakistan Assistance Strategy Report so that
information reported to Congress complies with all requirements of the
Enhanced Partnership with Pakistan Act of 2009, we recommend that the
Secretary of State take the following two actions:
* include information on plans for operations research, as defined in
the act, in its forthcoming Semi-Annual Monitoring Report; and:
* deliver to Congress a projection of the levels of assistance to be
provided to Pakistan under the act, broken down into the 17 Millennium
Challenge categories listed in the act.
To enhance the accountability of U.S. civilian assistance to Pakistan,
we recommend that the USAID Administrator should ensure that U.S.
assistance to Pakistani organizations identified as high-or medium-
risk be provided through contracts, grants, or agreements that require
these organizations to address weaknesses identified in their preaward
assessment that would improve the accountability of U.S. funds. These
measures can include such steps as implementing a conflict of interest
policy, recruiting more qualified internal audit and procurement
staff, embedding approved CPA staff, and participating in a capacity-
building program.
Agency Comments and Our Evaluation:
We provided a draft of this report to the Departments of Defense and
State and USAID. State and USAID provided written comments, which are
reprinted in enclosures II and III. All three agencies provided
technical comments, which we incorporated throughout the draft as
appropriate.
In commenting on a draft of this report, State agreed with our
recommendations to include information on plans for operations
research in a future Semi-Annual Monitoring Report and noted that
operations research to track performance and impact program design and
implementation for civilian assistance is already ongoing. State also
agreed with our recommendation to provide Congress with a projection
of the levels of assistance to be provided to Pakistan under the
Enhanced Partnership with Pakistan Act, broken down into the 17
Millennium Challenge categories listed in the act.
Further, both State and USAID agreed with our recommendation made to
USAID to ensure that U.S. assistance being implemented by Pakistani
organizations identified as high-risk or medium-risk be provided
through contracts, grants, or agreements that require these
organizations to address weaknesses identified in their preaward
assessment. State noted that there are USAID mechanisms in place to
address weaknesses identified in preaward assessments, and USAID
provided examples of steps taken to address the weaknesses identified.
USAID also stated that all contracts, grants, and agreements awarded
to high-risk or medium-risk recipients take into consideration
weaknesses identified in the preaward assessments and requested
closure of this recommendation. However, as previously noted, our
analysis indicated that not all contracts, grants, and agreements
required high-and medium-risk Pakistani organizations to address the
weaknesses identified in their preaward assessment. We reiterate our
recommendation that USAID take steps to ensure that all future
contracts, grants, and agreements with high-and medium-risk Pakistani
organizations include provisions that address the weaknesses
identified in their preaward assessment that would improve the
accountability of U.S. funds.
We are sending copies of this report to the appropriate congressional
committees, the Secretaries of Defense and State, the Administrator of
USAID, and other interested parties. The report also is available at
no charge on the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staff members have any questions about this report,
please contact me at (202) 512-7331 or johnsoncm@gao.gov. Contact
points for our Offices of Public Affairs and Congressional Relations
may be found on the last page of this report. GAO staff who made key
contributions to this report are listed in enclosure IV.
Signed by:
Charles Michael Johnson, Jr.
Director, International Affairs and Trade:
Enclosures (4):
List of Congressional Committees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable John Kerry:
Chairman:
The Honorable Richard Lugar:
Ranking Member:
Committee on Foreign Relations:
United States Senate:
The Honorable Howard McKeon:
Chairman:
The Honorable Adam Smith:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable Ileana Ros-Lehtinen:
Chairman:
The Honorable Howard Berman:
Ranking Member:
Committee on Foreign Affairs:
House of Representatives:
The Honorable Daniel Inouye:
Chairman:
The Honorable Thad Cochran:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
United States Senate:
The Honorable Patrick Leahy:
Chairman:
The Honorable Lindsey Graham:
Ranking Member:
Subcommittee on State, Foreign Operations, and Related Programs:
Committee on Appropriations:
United States Senate:
The Honorable C.W. Bill Young:
Chairman:
The Honorable Norman Dicks:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives:
The Honorable Kay Granger:
Chairwoman:
The Honorable Nita Lowey:
Ranking Member:
Subcommittee on State, Foreign Operations, and Related Programs:
Committee on Appropriations:
House of Representatives:
[End of section]
Enclosure I: Foreign Military Financing Grants to Pakistan:
GAO Objective:
To provide a detailed description of the expenditures made by Pakistan
with FMF grants.
FMF Background:
The Foreign Military Financing (FMF) program, pursuant to Sec. 23 of
the Arms Export Control Act (22 U.S.C. § 2763), provides grants to
eligible countries for the acquisition of U.S. defense articles,
services, or training.
According to the Department of State (State), the goals of FMF grants
to Pakistan are to promote closer security ties between the United
States and Pakistan, enhance the institutional capacity of Pakistan's
military, and support force modernization. FMF supports broader U.S.
strategy designed to enhance regional stability, combat terrorist
groups that threaten the stability of Pakistan and the region, and
promote Pakistani participation in stability operations.
According to agency officials, the Defense Security Cooperation Agency
is responsible for formulating and administering security cooperation
programs. It acts as the executive agent for administering the FMF
program on behalf of State.
Pakistan Has Used $1.86 Billion in FMF Grants to Acquire Various
Items, Including Aircraft Modernization, Radios, Ammunition, and
Training:
Since fiscal year 2002, a total of $2.11 billion has been appropriated
for FMF grants to Pakistan. Of that amount, Pakistan has used about
$1.86 billion to acquire various defense articles, services, or
training (see figure 4). Some of these funds have been used to
refurbish or upgrade defense articles that were given to Pakistan
under the Excess Defense Articles program, including Cobra
helicopters, armored personnel carriers, and the frigate U.S.S.
McInerney. As of the end of calendar year 2010, Pakistan still had
approximately $250 million available to purchase U.S defense articles,
services, or training. According to agency documents, some of these
funds will be used to acquire naval surveillance aircraft,
communications equipment, upgrades to TOW missile launchers, and
additional helicopters.
Figure 4: Items Purchased by Pakistan with FMF Grants as of 12/31/10:
[Refer to PDF for image: illustrated table]
Description and (quantity): P-3C Avionics Maritime Patrol Aircraft
Upgrades and Related Support (7 aircraft);
Year(s)[A]: 2003, 2005, 2006, 2008;
Value: $507.6 million.
Description and (quantity): F-16 Mid-Life Updates (35 jets);
Year(s)[A]: 2006;
Value: $476.4 million.
Description and (quantity): TOW IIA Anti-Tank Missile Launchers and
Missiles (121 launchers, 6,212 missiles);
Year(s)[A]: 2005, 2007, 2010;
Value: $215.5 million.
Description and (quantity): Harris Radios (2,335 radios);
Year(s)[A]: 2004, 2005, 2007, 2010;
Value: $213.1 million.
Description and (quantity): TPS-78 Radar Systems (6 systems);
Year(s)[A]: 2004;
Value: $96.9 million.
Description and (quantity): Technical Support Team at Shahbaz Air
Force Base;
Year(s)[A]: 2010;
Value: $82.1 million.
Description and (quantity): C-130E Transport Aircraft Refurbishments
(6 aircraft);
Year(s)[A]: 2003;
Value: $75.9 million.
Description and (quantity): U.S.S. McInerney Frigate Refurbishment;
Year(s)[A]: 2010;
Value: $58.8. million.
Description and (quantity): Cobra Helicopter Refurbishments and
Support (12 helicopters);
Year(s)[A]: 2003, 2004;
Value: $53.5 million.
Description and (quantity): Self-Propelled M-109A5 Howitzers (115
howitzers);
Year(s)[A]: 2006;
Value: $52.5 million.
Description and (quantity): Aircraft Training;
Year(s)[A]: 2002;
Value: $7.6 million.
Description and (quantity): Frigate Training;
Year(s)[A]: 2010;
Value: $6.0 million.
Description and (quantity): 20 mm Ammunition (600,000 cartridges);
Year(s)[A]: 2009, 2010;
Value: $5.2 million.
Description and (quantity): Helicopter Spare Parts;
Year(s)[A]: 2004;
Value: $2.6 million.
Description and (quantity): Electronic Warfare Equipment (signal
jammers, expendable chaff, flares, etc.);
Year(s)[A]: 2002;
Value: $1.9 million.
Description and (quantity): PVS-7 Night Vision Devices (300 devices);
Year(s)[A]: 2004;
Value: $1.5 million.
Description and (quantity): Aircraft Spare Parts;
Year(s)[A]: 2003[B];
Value: $1.3 million.
Total committed: $1.858 billion.
Source: Department of Defense.
[A] This represents the year(s) officials from both the U.S. and
Pakistani governments signed the agreement and the initial payment was
deposited for the defense articles, services, and training.
[B] This case was initially implemented in 1984 and was amended in
2003.
Source: Department of Defense.
[End of figure]
[End of section]
Enclosure II: Comments from the Department of State:
United States Department of State:
Chief Financial Officer:
Washington, D.C. 20520:
February 9, 2011:
Ms. Jacquelyn Williams-Bridgers:
Managing Director:
International Affairs and Trade:
Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548-0001:
Dear Ms. Williams-Bridgers:
We appreciate the opportunity to review your draft report,
"State Department's Report to Congress and U.S. Oversight of Civilian
Assistance to Pakistan Can Be Further Enhanced," GAO Job Code 320829.
The enclosed Department of State comments are provided for
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact
James Thrower, Foreign Affairs Officer, Bureau of South and Central
Asian Affairs at (202) 736-7906.
Sincerely,
Signed by:
James L. Millette:
cc: GAO ” Charles Johnson:
SCA ” Robert Blake:
State/OIG ” Evelyn Klemstine:
[End of letter]
Department of State Comments on GAO Draft Report:
Pakistan Assistance Strategy: State Department's Report to Congress
and U.S. Oversight of Civilian Assistance to Pakistan Can Be
Further Enhanced (GAO-11-310R, GAO Code 320829):
The Department of State appreciates the opportunity to comment on
GAO's draft report entitled "Pakistan Assistance Strategy: State
Department's Report to Congress and U.S. Oversight of Civilian
Assistance to Pakistan Can Be Further Enhanced."
Recommendation: To supplement the Pakistan Assistance Strategy Report
so information reported to Congress complies with all requirements of
the Enhanced Partnership with Pakistan Act of 2009, the Secretary of
State should: include information on plans for operations research, as
defined in the act, in its forthcoming Semi-Annual Monitoring Report;
and deliver to Congress a projection of the levels of assistance to be
provided to Pakistan under the act, broken down into the 17 Millennium
Challenge categories listed in the act.
Response: The Department concurs with the GAO's recommendation to
include information on plans for operations research (described as
"the application of social science research methods, statistical
analysis, and other appropriate scientific methods to judge, compare,
and improve policies and program outcomes, from the earliest stages of
defining and designing programs through their development and
implementation, with the objective of the rapid dissemination of
conclusions and concrete impact on programming") in future Semi-Annual
Monitoring Reports. The Department notes that, as described in the GAO
draft report itself, operations research to track performance and
impact program design and implementation for civilian assistance is
already ongoing and information on such plans can be included in
monitoring reports beginning in 2011. The Department will also
separately provide a one-time projection of the levels of assistance
to be provided to Pakistan under the act, broken down into the 17
Millennium Challenge categories listed in the act.
Recommendation: To enhance the accountability of U.S. civilian
assistance to Pakistan, the USAID Administrator should ensure that
U.S. assistance to Pakistani organizations identified as medium or
high risk be provided through contracts, grants, or agreements that
require these organizations to address weaknesses identified in their
pre-award assessment that would improve accountability of U.S.
funds. These measures can include such steps as implementing a
conflict of interest policy, recruiting more qualified internal audit
and procurement staff, and embedding approved Certified Public
Accounting staff and/or participation in a capacity-building program.
Response: The Department concurs with the recommendation in principle,
as ensuring accountability of civilian assistance to Pakistan is a
high priority, but notes that USAID mechanisms are already in place to
address weaknesses identified in pre-award assessments in award
agreements. In particular, pre-award assessment recommendations are
incorporated into activity agreements by the USAID Mission, based on
judgments about how best to strengthen accountability and control and
facilitate the smooth execution of the program.
[End of section]
Enclosure III: Comments from the U.S. Agency for International
Development:
USAID:
From The American People:
Charles Michael Johnson Jr.
Director, International Affairs and Trade:
U.S. Government Accountability Office:
Washington, DC 20548:
Dear Mr. Johnson:
I am pleased to provide the U.S. Agency for International
Development's (USAID) formal response to the GAO draft report entitled
U.S. Pakistan Assistance Strategy Report (GAO-11-310R).
The enclosed USAID comments are provided for incorporation with this
letter as an appendix to the final report.
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 audit
review.
Sincerely,
Signed by:
Sean Carroll:
Chief Operating Officer:
U.S Agency for International Development:
Enclosure: a/s:
[End of letter]
USAID Comments on GAO Report on "U.S. Pakistan Assistance Strategy
Report" GAO-11-310R.
In response to the referenced draft audit report, please find below
the management response:
Recommendation I: We recommend that the USAID Administrator ensure
that U.S. assistance to Pakistani organizations identified as medium
or high risk be provided through contracts, grants, or agreements that
require these organizations to address weaknesses identified in their
pre-award assessment that would improve the accountability of U.S.
funds. These measures can include such steps as implementing a
conflict of interest policy, recruiting more qualified internal audit
and procurement staff, embedding approved Certified Public Accounting
staff and/or participation in a capacity-building program.
Response: USAID agrees with this recommendation. All contracts,
cooperative agreements, and grants awarded to medium to high risk
recipients take into consideration weaknesses identified in the pre-
award assessments and identify requirements necessary to address them.
Weaknesses emanate from areas such as: (1) conflict of interest, (2)
formation of audit committees, (3) compliance capability with
applicable laws, (4) roadmap for the implementation of policies and
procedures including capacity building, (5) development of policies
and (6) embedding approved CPA firm for the capacity building of the
organization, etc.
The USAID Mission in Pakistan has already taken the steps to address
the weaknesses identified. These steps include: issuance of conflict
of interest policy directive (attached at annex 1); execution of two
contracts for implanting of CPA firms in two implementing partners
viz., Federally Administered Tribal Areas (FATA) Secretariat and
Provincial Reconstruction, Rehabilitation & Settlement Authority
(PaRRSA) (attached at annex 2); increasing Mission financial
management and procurement staff from 22 in September 2009 to 51 in
January 2011; and establishing the Mission's Assessment and
Strengthening Program (ASP) through three cooperative agreements with
local implementing partners to (1) conduct pre-award assessments on
potential recipients' financial, procurement and administrative
management and internal controls, (2) build institutional capacity of
local implementing partners, and (3) provide training in financial,
procurement and management to local implementing partners. ASP will
provide required institutional support for enhancing accountability
and building partner organization capacity to effectively manage U.S.
Government resources. The Mission has a comprehensive financial
management strategy in place which establishes a risk mitigation
approach and provides a framework for all the efforts that the Mission
is undertaking to address accountability and reduce vulnerabilities.
Accordingly, USAID requests closure of this recommendation.
[End of section]
Enclosure IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Charles Michael Johnson, Jr., (202) 512-7331, or johnsoncm@gao.gov:
Staff Acknowledgments:
Major contributors to this report were Hynek Kalkus, Assistant
Director; Claude Adrien; Erin O'Brien; David Dayton; Virginia Chanley;
and Mary Moutsos.
[End of section]
Footnotes:
[1] Pub. L. No. 111-73, 123 Stat. 2060 (Oct. 15, 2009).
[2] GAO, Combating Terrorism: Increased Oversight and Accountability
Needed Over Pakistan Reimbursement Claims for Coalition Support Funds,
[hyperlink, http://www.gao.gov/products/GAO-08-806] (Washington, D.C.:
June 24, 2008).
[3] GAO, Combating Terrorism: Planning and Documentation of U.S.
Development Assistance in Pakistan's Federally Administered Tribal
Areas Need to Be Improved, [hyperlink,
http://www.gao.gov/products/GAO-10-289] (Washington, D.C.: Apr. 15,
2010).
[4] Pub. L. No. 111-73, 123 Stat. 2060, 2061 (Oct. 15, 2009), codified
at 22 U.S.C. § 8401.
[5] Funds were appropriated through the Consolidated Appropriations
Act, 2010, Pub. L. No. 111-117, 123 Stat. 3034 (Dec. 16, 2009) and the
Supplemental Appropriations Act, 2010, Pub. L. No. 111-212, 124 Stat.
2302 (July 29, 2010).
[6] The amount of time the funds from these appropriation accounts
remain available for obligation depends on the appropriation account
from which they originate. The Economic Support funds; International
Narcotics Control and Law Enforcement funds; Global Health and Child
Survival funds; and Nonproliferation, Antiterrorism, De-mining, and
Related Programs funds appropriated in the 2010 annual appropriations
act remain available until the end of fiscal year 2011. The Economic
Support funds and International Narcotics Control and Law Enforcement
funds appropriated in the 2010 supplemental act remain available until
the end of fiscal year 2012.
[7] The Khyber Pakhtunkhwa province was previously known as the
Northwest Frontier Province.
[8] In late summer 2010, monsoon rains caused massive flooding
throughout Pakistan.
[9] According to USAID's Office of the Inspector General, while the
CPA firms used to conduct the preaward assessments were approved to
conduct financial audits, they were not approved for non audit work
such as consulting or other non audit services. USAID used the list of
approved audit firms to choose its consultants as a means of ensuring
a minimum level of quality.
[End of section]
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