	Background

In 1993, we reported that USAID had not adequately managed changes in  its overseas workforce and recommended that USAID develop a  comprehensive workforce planning system to better identify staffing needs  and requirements. USAID’s  workforce, particularly its U.S. direct-hire foreign service officers, has  decreased over the years; but in recent years program dollars and the  number of countries with USAID activities have increased. USAID Faces Challenges in Workforce Planning

Since 1990, USAID has continued to evolve from an agency in which U.S.  direct-hire foreign service employees directly implemented development  projects to one with a declining number of direct-hire staff who oversee  the contractors and grantees carrying out most of its day-to-day activities. As a result of the decreases in U.S. direct-hire foreign service staff levels,  increasing program demands, and a mostly ad-hoc approach to workforce  planning, USAID now faces several human capital vulnerabilities. For  example, the attrition of its more experienced foreign service officers, its  difficulties in filling overseas positions, and limited opportunities for  training and mentoring have sometimes led to the deployment of direct- hire staff who do not have essential skills and experience and the reliance  on contractors to perform many functions. In addition, USAID lacks a  “surge capacity” to enable it to respond quickly to emerging crises and  changing strategic priorities. As a result, according to USAID officials and  a recent overseas staffing assessment, the agency is finding it increasingly  difficult to manage the delivery of foreign assistance. USAID’s Workforce Planning Efforts

In response to the President’s Management Agenda, USAID has taken  steps toward developing a comprehensive workforce planning and human  capital management system that should enable the agency to meet its  challenges and achieve its mission, but progress so far is limited. USAID’s Operating Expense Account Does Not Reflect the Full Cost of Delivering Foreign Assistance

USAID’s operating expense account does not fully reflect the agency’s cost  of delivering foreign assistance, primarily because the agency pays for  some administrative activities done by contractors with program funds. Because USAID’s cost of doing business is not always separated from its  humanitarian and development programs—the original intent behind  establishing the separate operating expense account, the amount of  program funds that directly benefits a foreign recipient is likely overstated.
Why GAO Did This Study

USAID oversees humanitarian and economic assistance--an integral part of the U.S. global security strategy--to more than 160 countries. GAO recommended in 1993 that USAID develop a comprehensive workforce plan; however, human capital management continues to be a high-risk area for the agency. GAO was asked to testify on how changes in USAID's workforce over the past 10 years have affected its ability to deliver foreign aid, the agency's progress in implementing a strategic workforce planning system, and whether its reported operating expenses reflect the full costs of delivering foreign aid.

What GAO Found

USAID has evolved from an agency in which U.S. direct-hire staff directly implemented development projects to one in which U.S. direct-hire staff oversee the activities of contractors and grantees. Since 1992, the number of USAID U.S. direct-hire staff declined by 37 percent, but the number of countries with USAID programs doubled and, over the last 2 years, program funding increased more than 78 percent. As a result of these and other changes in its workforce and its mostly ad-hoc approach to workforce planning, USAID faces several human capital vulnerabilities. For example, attrition of experienced foreign service officers and inadequate training and mentoring have sometimes led to the deployment of staff who lack essential skills and experience. The agency also lacks a "surge capacity" to respond to evolving foreign policy priorities and emerging crises. With fewer and less experienced staff managing more programs in more countries, USAID's ability to oversee the delivery of foreign assistance is becoming increasingly difficult. USAID has taken steps toward developing a workforce planning and human capital management system that should enable the agency to meet its challenges and achieve its mission, but it needs to do more, such as conducting a comprehensive skills assessment and including its civil service and contracted employees in its workforce planning efforts. USAID's reported that operating expenses do not always reflect the full costs of administering foreign assistance because the agency pays for some support and oversight activities done by contractors with program funds. As a result, the amount of program funds directly benefiting foreign recipients is likely overstated.