Commission Recommends Increased Assistance and Identifies U.S. In 2004–2005, USAID and  State used a competitive process to select grantees. As the table shows, USINT plays an important role in implementing State  and USAID democracy assistance focused on Cuba. Table 4 summarizes State and USAID awards from 1996–2005. Grantee Selection Was Based on Unsolicited Proposals until 2004

Our analysis showed that about 95 percent ($61.9 million) of USAID’s total  awards were made in response to unsolicited proposals. Recipients of U.S. humanitarian and material assistance, training, and  information included human rights activists, political dissidents,  independent librarians, journalists, and political prisoners and their  families. Dissidents we interviewed in Cuba said that they appreciated the range  and types of U.S. democracy assistance, that this assistance was useful in  their work, and that this aid demonstrated the U.S. government’s  commitment to democracy in Cuba. Grantees Provided Four Types of Assistance in 2005

In 2005, the 10 grantees we reviewed reported activities in four categories:  (1) providing humanitarian and material assistance and training to  independent civil society groups and individuals; (2) disseminating  uncensored information to, within, and from Cuba; (3) increasing  international criticism of the Cuban regime by highlighting its human and  workers’ rights violations; and (4) planning for a future transition to  democracy by sponsoring conferences and publishing studies. Some grantees have taken steps to reduce the risk of loss—due to theft or  confiscation by the Cuban government—of assistance shipped to Cuba. Monitoring and Oversight of Cuba Program Grants Did Not Provide Adequate Assurance That Funds Were Used Properly

USAID’s internal controls over both the awarding of Cuba program grants  and the oversight of grantees do not provide adequate assurance that the  grant funds are being used properly or that grantees are in compliance  with applicable laws and regulations. The agency’s preaward reviews of grantees often were not  completed prior to grant awards, and USAID auditors did not adequately  follow up to correct deficiencies after grant awards. Grant Agreements Did Not Support Program Accountability

We performed a detailed review of four cooperative agreements and one  grant agreement that USAID signed between 1997 and 2005 for democracy  assistance for Cuba. We identified several weaknesses in the  USAID Cuba program office’s oversight and monitoring of grantees’  implementation of grants and cooperative agreements, including the lack  of policies and procedures for identifying at-risk grantees, formal  oversight of grant implementation, and a framework for monitoring cost  sharing. In addition, USAID does not have a formal process for  reviewing this reporting. USAID and Grantees Have Focused on Measuring and Reporting Program Activities

USAID and its grantees have not routinely collected and reported data and  other information about the results or impact of the democracy assistance  they have provided. The quarterly reports submitted by 10 grantees  in 2005 consistently provided data about program activities. These include:  Increasing staff expertise and meeting more regularly with grantees. Appendix I: Objectives, Scope, and Methodology

This report examines (1) the roles and objectives of the agencies  implementing U.S. democracy assistance targeted at Cuba and the  characteristics and selection of the grantees receiving Department of  State (State) and U.S. Agency for International Development (USAID)  awards; (2) the types, amounts, beneficiaries, and methods used to deliver  assistance for selected grantees in 2005; (3) USAID’s monitoring and  oversight of these grantees; and (4) the availability of data to evaluate  whether U.S. assistance has achieved its goals. For 10 grantees, we reviewed the internal controls and  related residual fiscal accountability risk.
Why GAO Did This Study

U.S. law authorizes aid for nonviolent democratic change in Cuba. From 1996-2005, the Department of State (State) and the U.S. Agency for International Development (USAID) awarded grants totaling $74 million to support such change. A presidential commission recently recommended increasing funding for these efforts. This report examines (1) agency roles in implementing this aid and selection of grantees; (2) types of aid, recipients, and methods of delivery reported in 2005; (3) oversight of grantees; and (4) data about the impact of this aid. To address these objectives, we analyzed the activities and internal controls, and USAID's oversight and management of, 10 grantees with about 76 percent (in dollars) of total active awards for Cuba democracy aid. Our review focused on USAID because State's first awards were not made until mid-2005.

What GAO Found

The Department of State State and USAID implement U.S. democracy assistance for Cuba through an interagency process. However, communication between these agencies was sometimes ineffective, most critically about grantees' on-island activities. About 95 percent ($62 million) of USAID's total awards were made in response to unsolicited proposals; however, after 2004, both USAID and State used formal competition to select grantees. Dissidents in Havana said that U.S. assistance provided moral support and enhanced their ability to work for democracy. In 2005, the 10 grantees we reviewed delivered humanitarian and other aid, training, and information to human rights and political activists, independent librarians and journalists, and political prisoners and their families. Assistance shipped to Cuba included food, medicine, clothing, office equipment and supplies, shortwave radios, books, and newsletters. Grantees also conducted international advocacy for human and workers' rights in Cuba and planned for a future democratic transition. Given the Cuban government's repressive policies and opposition to U.S. democracy assistance, grantees employed a range of discreet delivery methods that varied in terms of security, flexibility, and cost. The U.S. Interests Section in Havana, Cuba, a State post, has played an important role in distributing the aid provided by some grantees. Internal controls--both over the awarding of Cuba program grants and oversight of grantees--do not provide adequate assurance that the grant funds are being used properly and that grantees are in compliance with applicable laws and regulations. Preaward reviews of grantees were not always completed before awards, and USAID did not follow up adequately after awards to correct weaknesses in grantee policies, procedures, and accounting systems identified by these reviews. In addition, standardized grant agreements did not provide sufficient details to support program accountability or the correction of the weaknesses identified by preaward reviews. The Cuba program office also did not adequately manage at-risk grantees and lacked formal review or oversight procedures for monitoring grantee activities. We performed limited testing for 10 grantees and identified questionable expenditures and significant internal control weaknesses with 3 grantees that USAID had not detected. The Cuban government's active opposition to U.S. democracy assistance presents a challenging operating environment for State and USAID. Although USAID and its grantees have some evaluation and anecdotal information about program results, they have focused on measuring and reporting program activities, such as the volume of food, medicine, or books sent to Cuba. USAID recently took several steps to collect better information about program results, such as increasing staff expertise and meeting more regularly with grantees.