Missions Are Reengineering Their Operations in Line With USAID Reforms

Overseas missions have changed their processes to streamline the way they provide assistance in support of USAID’s strategic goals. We could not fully assess the impact of the missions’ operational changes for the following reasons: (1) missions are at varying stages of implementing changes; (2) the impact of these changes may not be seen for several years, especially those that affect the design of new projects; and (3) the missions we visited had not established baseline information on the efficiency or effectiveness of their management operations before reengineering their processes and therefore could not demonstrate many measurable improvements. To date, only a few new projects have been started. Many of the mission’s indicators for its economic growth objective had focused on results at the national level and not specifically on areas targeted in USAID’s activities. USAID is working to develop better ways to measure the extent of its contribution to a country’s development. Other observers have recently noted USAID’s difficulty in demonstrating its impact on broad development indicators. We noted that in these cases “it may be important to supplement performance measurement data with impact evaluation studies to provide an accurate picture of program effectiveness.”
Systematic evaluations of how a program was implemented can provide managers with important information about a program’s success or failure. Mission Performance Is Being Linked to Resource Allocation

USAID has begun using program performance in its resource allocation process in a more systematic manner. However, the process continues to evolve, and resource allocation decisions are affected primarily by foreign policy considerations of the executive branch and congressional priorities. New Management System Is Not Working

Although USAID will have spent about $100 million by the end of fiscal year 1998 to develop its New Management System (NMS), the system does not work as intended and has created serious problems in mission operations and morale. The system is designed to consolidate USAID’s accounting, budget, personnel, procurement, program operations, and property management into a single, integrated network that the agency’s missions and offices worldwide can access and to aid in the effective management and monitoring of its programs. In March 1997, USAID’s Inspector General reported that the system’s premature deployment had increased the risk of fraud and abuse, had not met users’ needs, and did not meet basic federal financial system requirements. Conclusions

It is too early to discern the full extent of the impact of reengineering efforts at USAID missions, as they have only recently made the investment and operational changes necessary to bring about long-term change. However, USAID’s reengineering efforts have produced some tangible benefits in the areas of planning, implementing, and monitoring assistance projects. Directed and Undirected Funds for Development Assistance and Related Accounts, Fiscal Years 1995-97

Chronology of USAID Reforms

	March: Strategies for sustainable development announced

	March: Agency strategic implementation guidelines issued

September:  One-year experiment on reengineered program  operation processes completed September:  Agency strategic framework and indicators for FY  1995-96 issued October:   New program operations procedures issued October:  Agency Automated Directives System implemented October:  Partial deployment of New Managment System  (NMS)

	March: Reengineering best practices report issued (based on test of reengineered processes in 10 missions)

July: NMS activated in Washington, D.C.
October:  NMS deployed worldwide February:  REFORM Advisory Group visits selected missions to  assist with reengineering 3 mission closings planned Staff reduced by 417 (as of  6/30/97)
April: Two modules of NMS suspended at missions  $5.9 billion (estimated) 7,609  employees  (as of  6/30/97)

Comments From the U.S. Agency for International Development

Major Contributors to This Report

	National Security and International Affairs Division, Washington, D.C.

	Office of General Counsel, Washington, D.C.

Ernie E. Jackson The first copy of each GAO report and testimony is free.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the effect of the U.S. Agency for International Development's (USAID) reforms on its overseas missions' operations and delivery of assistance, focusing on how: (1) USAID missions have reengineered their operations; (2) reengineering has affected the content of USAID's assistance program; (3) USAID monitors and evaluates the results of its projects; (4) USAID allocates funds for its projects; and (5) USAID's New Management System supports mission operations.

What GAO Found

GAO noted that: (1) in reengineering the way assistance is delivered, USAID missions have only recently made the investment and operational changes necessary to bring about long-term change; (2) to date, USAID's reengineering efforts to improve its delivery of assistance have shown some benefits in the areas of planning, implementing, and monitoring projects; (3) notwithstanding this progress, USAID still has major obstacles to overcome in deploying its New Management System and establishing valid and reliable performance measures; (4) overseas missions have changed the way they manage assistance in support of USAID's strategic goals; (5) however, because missions had no baseline data on operations management prior to reengineering their processes, neither they nor GAO can identify measurable increases in efficiency or effectiveness of the delivery of assistance; (6) USAID missions have, to varying degrees, begun to establish more results-oriented indicators and report the results of their projects annually; (7) however, the missions still have difficulty linking their activities to the broad indicators of development--such as a country's rate of economic growth; (8) one way to provide a more complete picture of program performance could be to supplement performance measurement data with impact evaluation studies; (9) although the relative performance of mission programs is clearly a factor in USAID's resource allocation decisions, these decisions are still largely driven by other considerations, such as contributions to foreign policy and agency priorities, country need and commitment, and funding priorities of the executive branch and Congress; (10) USAID's New Management System, one of the agency's key tools in reforming its operations, is not working as intended; (11) this computer system, which is expected to cost at least $100 million by the end of fiscal year 1998, was designed to enable the agency to manage its resources and monitor results more effectively by consolidating accounting, budgeting, personnel, procurement, and program operations into a single, integrated network that can be accessed worldwide; (12) despite warnings that the system had not been tested and did not meet basic federal requirements, USAID activated the system in July 1996 in Washington and deployed it in October 1996 in its missions; (13) USAID suspended much of the system's operation in April 1997, after it failed to work properly; and (14) correcting system deficiencies will be critical to continued progress of the agency's reform effort.