USAID, NED, and State Roles and Responsibilities Related to Democracy Assistance Overseas

Multiple bureaus and offices in USAID and State, as well as NED, provide  funding for democracy assistance programs, as shown in table 2. Under USAID  guidance, a public international organization is an international  organization composed principally of countries or other related  organizations designated by USAID. USAID Obligated $5.5 Billion in Democracy Assistance through Contracts, Grants, and Cooperative Agreements

			USAID Obligated About Two- Thirds of Its Democracy Assistance Funding through Contracts and Cooperative Agreements, and One-Third through Grants to Public International Organizations

USAID obligated $5.5 billion in democracy assistance funding during  fiscal years 2012 through 2016, about 31 percent through contracts;  about 33 percent through cooperative agreements; about 4 percent  through grants, excluding grants to public international organizations  (PIO); and about 32 percent through grants to PIOs. We deemed data from these three bureaus unreliable because the data  were incomplete, nonstandard, or inaccurate. Federal internal  control standards call for agencies to use quality information from reliable  sources to achieve intended objectives and to effectively monitor  activities. Without reliable democracy assistance data from all relevant  bureaus, State cannot effectively monitor its democracy assistance  programming and report reliable data externally. USAID Generally Lacked Complete and Timely Documentation of Award-Type Decisions

USAID generally did not document award-type decisions in a complete  and timely manner for the awards in our sample. Specifically, USAID  provided complete and timely documentation of the award-type decision  for 5 of the 41 awards we reviewed. For the remaining 36 awards, the  documentation was either incomplete, not timely, or both. However, the  documentation for these 4 awards did not address the decision to use a  contract rather than a grant or cooperative agreement, including a  rationale based on the requirements outlined in the Federal Grant and  Cooperative Agreement Act, as required by ADS 304. Without this, we could not determine whether the  award-type decisions were documented prior to solicitation or before  USAID initiated communications with a potential sole source recipient. This document was finalized at the end of the award process. USAID has taken steps to improve documentation for award-type  decisions by updating its guidance and templates but has not assessed  whether these updates have resulted in timely and complete  documentation of award-type decisions. It is important that USAID document the  award-type decision before it publishes a solicitation for the award  because award-type decisions impact other award elements, such as the  requirements for competition and oversight and whether profit is  permissible under the award. USAID and State together have allocated about $2 billion  annually for democracy assistance in fiscal years 2012 through 2016. The quality of democracy assistance award data  provided by 10 State bureaus and offices varied, and three of these  bureaus were unable to provide reliable data. In their written comments, both State and  USAID concurred with our recommendations. Appendix I: Objectives, Scope, and Methodology

This report (1) examines funding that the U.S. Agency for International  Development (USAID), National Endowment for Democracy (NED), and  U.S. Department of State (State) obligated for democracy assistance  through contracts, grants, and cooperative agreements; (2) evaluates  USAID documentation of award-type decisions; and (3) compares USAID  contracts with grants and cooperative agreements across selected award  elements. These awards were selected based on  characteristics, such as award type, DRG program area, and place of  performance. Appendix II: USAID’s Use of Various Award Types for Democracy Assistance by Place of Performance during Fiscal Years 2012 through 2015

Our nongeneralizable sample of U.S. Agency for International  Development (USAID) awards was limited to fiscal years 2012 through  2015 and to the 14 countries for which USAID obligated the most  democracy funding, which accounted for over 70 percent of USAID’s  democracy assistance funding.
Why GAO Did This Study

Supporting efforts to promote democracy has been a foreign policy priority for the U.S. government. In recent years, USAID and State have allocated about $2 billion per year toward democracy assistance overseas. Congress required USAID and State to each establish guidelines for and report on the use of contracts, grants, and cooperative agreements for certain democracy programs.
GAO was asked to review U.S. democracy assistance. This report (1) examines funding USAID, NED, and State obligated for democracy assistance primarily through contracts, grants, and cooperative agreements and (2) evaluates documentation of USAID award-type decisions, among other objectives.
GAO analyzed USAID, NED, and State democracy assistance award data for fiscal years 2012–2016. GAO also reviewed relevant regulation and agency policies and analyzed documentation for a nongeneralizable sample of USAID awards selected based on factors such as award type, program area, and country.

What GAO Found

In fiscal years 2012–2016, the U.S. Agency for International Development (USAID) obligated $5.5 billion and the National Endowment for Democracy (NED) obligated $610.2 million in democracy assistance funding. The total funding the Department of State (State) obligated for democracy assistance could not be reliably determined. One-third of all USAID obligations were provided through public international organizations (PIOs), which under USAID guidance are composed principally of countries or other organizations designated by USAID; 94 percent of PIO obligations were provided to the World Bank for democracy assistance projects in Afghanistan. The remaining two-thirds of USAID obligations were provided through contracts, grants (excluding PIOs), and cooperative agreements. Of the 10 State bureaus providing democracy assistance, 3 were unable to provide reliable funding data for fiscal years 2012–2016. Data from these bureaus were incomplete, nonstandard, or inaccurate. Federal internal control standards call for agencies to use quality information from reliable sources to achieve intended objectives and to monitor activities. Without such data, State cannot effectively monitor its democracy assistance programming and report reliable data externally.
For the awards GAO sampled, USAID generally did not document decisions about whether to award a contract, grant, or cooperative agreement (known as award-type decisions) in a complete and timely manner. According to applicable USAID guidance, agency officials were required to (1) document the final award-type decision with their written determination, including a rationale based on the requirements of the Federal Grant and Cooperative Agreement Act, and (2) complete this documentation before award solicitation occurs or, for noncompetitive awards, before USAID initiated communications with a potential sole-source awardee. However, USAID provided both complete and timely documentation of the award-type decision for 5 of the 41 awards GAO sampled. For the remaining 36 awards, the documentation was either incomplete, not timely or timeliness was indeterminate, or both (see table). While USAID has taken steps to improve documentation for award-type decisions by updating its guidance and templates, it has not assessed whether these updates have resulted in complete and timely documentation. It is important that USAID document these decisions in advance of solicitation because the selection of an award type may affect requirements for administering the award, including competition and oversight requirements and whether or not profit is permissible.

What GAO Recommends

State should improve the reliability and completeness of its democracy assistance funding data, and USAID should assess whether steps taken are resulting in complete and timely documentation of democracy assistance award-type decisions. State and USAID concurred with GAO's recommendations and described actions planned or under way to address them.