Cover Letter
October 5, 2007
INFORMATION MEMO FOR THE ACTING ADMINISTRATOR
FROM:
|
Donald A. Gambatesa
Inspector General
|
| SUBJECT: |
U.S. Agency for International Development's (USAID) Most Serious
Management and Performance Challenges |
This memorandum summarizes what the Office of Inspector General (OIG) considers to
be the most serious management and performance challenges facing USAID.
The Reports Consolidation Act of 2000 (Public Law 106-53 1) requires that agency
performance and accountability reports include a statement prepared by each agency's Inspector
General that summarizes what the Inspector General considers to be the most serious
management and performance challenges facing the agency and an assessment of the agency's
progress in addressing those challenges. Our statement for inclusion in USAID's fiscal year
2007 performance and accountability report is attached.
We have discussed the management and performance challenges summarized in this
statement with the responsible agency officials. If you have any questions or wish to discuss this
document fbrther, I would be happy to meet with you.
Attachment
Office of Inspector General’s (OIG) Fiscal Year 2007 Statement on USAID’s Most Serious Management and Performance Challenges
USAID continues to face management and performance challenges in the following areas: - Financial Management
- Managing for Results
- Acquisition and Assistance
- Human Capital Management
- Information Technology Management
OIG has been reporting challenges in these five areas since 2001.
Financial Management
USAID continues to improve its financial management systems. For example, in last
year's statement, OIG reported problems with reconciliations of USAID's fund balance with the
U.S. Treasury and the extensive use of manual processes that limited agency compliance with
Federal financial management system requirements. However, these have been removed from
this year's statement.
Accrual Accounting and Reporting
Accrual accounting and reporting remains a significant challenge for USAID. Over the
past several years, USAID's accrual system has generated erroneous information that has limited
the ability of cognizant technical officers (CTOs) to accurately calculate estimates of accrued
expenditures and accounts payable for recording in USAID's general ledger. More specifically,
USAID's accruals system has not always produced obligation information with the level of detail
or reliability necessary for USAID's CTOs to make informed quarterly accrual estimates.
Further, notwithstanding the obligation information provided electronically, some USAID CTOs
have manually generated incorrect or inaccurate information in making their quarterly accrual
estimates. As a result, USAID's accrued expenditures and accounts payable have continued to
contain inaccuracies, and OIG has recommended millions of dollars of adjustments to USAID's
financial statements to more accurately reflect USAID's accrual activity. Although USAID has
taken several steps throughout the years to improve its accrual system, including training CTOs
and revamping its electronic processes for producing obligation information, inaccuracies
continue to be found and OIG continues to closely monitor the Agency's progress during annual
financial statement audits.
Managing for Results
Managing a complex and diverse portfolio of worldwide activities is an inherent
challenge for USAID managers. As reported in last year's performance and accountability
report, USAID implements programs in 88 countries. These programs promote a wide range of
objectives related to economic growth, agriculture and trade, global health, democracy, conflict
prevention, and humanitarian assistance. Federal laws, such as the Government Performance
and Results Act of 1993, require that Federal agencies develop performance measurement and
reporting systems that establish strategic and annual plans, set annual targets, track progress, and
measure results. In addition, Government-wide initiatives, such as the President's Management
Agenda, require that agencies link their performance results to budget and human capital
requirements.
USAID managers continue to make improvements in this area. For example, each
quarter the Office of Management and Budget (OMB) scores each agency's status and progress
towards implementing the President's Management Agenda (PMA). OMB developed a scoring
system based upon the colors green, yellow, and red. A "green" rating indicates success and a
"yellow" rating signifies mixed results, while a "red" rating is unsatisfactory. For the quarter
ending June 30, 2007, OMB rated USAID's current status and progress in the performance
improvement initiative1 as "yellow," which, for the current status rating, is a downgrade from the
previous "green" rating. However, the "yellow" rating applies only to this one aspect of
managing for results. Therefore, although USAID is making some progress towards meeting its
performance improvement goals, more work remains to be done.
USAID's primary method for reporting the results of its activities was previously through
its Annual Report Application System, whereby each USAID operating unit provided
information on the results attained with USAID resources; requested additional resources; and
explained the use of, and results expected from, these additional resources. In January 2006, the
Secretary of State announced a major change in the way the U.S. Government directs foreign
assistance by creating the Office of the Director of Foreign Assistance (State/F) to centralize the
structure for rationalizing and coordinating U.S. foreign assistance policy, planning, and
oversight. Organizationally, State/F is within the Department of State. However, the Director of
Foreign Assistance (DFA) serves concurrently as the Administrator of USAID. In June 2006,
the DFA approved the development of a system to support foreign assistance monitoring,
budgeting, and information requests–the Foreign Assistance Coordination and Tracking System
(FACTS). FACTS is intended to provide a single repository for data and a common planning and
reporting tool for foreign assistance resources across U.S. Government agencies implementing
programs with foreign assistance funds. The intent is for all foreign assistance resources to be
coordinated, appropriately linked to foreign policy objectives, supportive of integrated country
strategies, and designed to collect standardized data about foreign assistance programs.
Although FACTS became operational on December 10, 2006, its ability to adequately
manage programs for results is still questionable.
OIG continues to monitor USAID's progress in improving its performance management
and reporting systems in Washington, as well as overseas. For performance information reported
in the Management's Discussion and Analysis section of USAID's 2006 performance and
accountability report, an OIG review found that, while USAID took actions to improve its
controls over data management, it needs to improve these controls. Specifically, the Agency
needs to ensure that data submitted to headquarters is accurate and adequately supported and that
required data quality assessments are performed. In addition, during the past year, the OIG
issued 31 audit reports that included 74 recommendations pertaining to issues involving data
quality, performance indicators, reporting of results, and supporting documentation.
Acquisition and Assistance
The majority of USAID's development activities are implemented by contractors,
grantees, and recipients of cooperative agreements. Because of the innate complexities in
Federal acquisition and assistance—which include adherence to numerous laws, regulations,
policies, procedures, and definitions—USAID faces challenges in its acquisition of supplies and
services, as well as in its delivery of foreign assistance. In the area of competitive sourcing for
example, for the quarter ending June 30,2007, OMB's scorecard reported that USAID is
making some progress in implementing the President's Management Agenda for competitive
sourcing. Nevertheless, the scorecard rated the status of USAID's competitive sourcing as
"red" or unsatisfactory, which reflects no change since the last report in March 2007.
During the past year, OIG issued one performance audit report2dealing with acquisitions
and assistance, and another audit is ongoing. The completed audit was conducted to determine
whether USAID's Supply Chain Management System achieved its key activities in its first year.
This system was established in September 2005 to provide global procurement and distribution
for essential. HIVIAIDS medicines and supplies funded under the President's Emergency Plan
for AIDS Relief. The performance audit determined that USAID generally achieved the
planned activities for its first year, such as the development of procurement strategies and
policies for the supply system. The ongoing audit, entitled "Follow-up Audit on
Recommendations Included in the Audit of Selected USAID Bureaus' Training, Use and
Accountability of Cognizant Technical Officers, Audit Report No. 9-000-03-009-P, dated
September 22, 2003," will be completed in early FY 2008.
Although USAID faces serious challenges in this area, it continues to take steps to
improve its procurement processes and systems. For example, USAID is currently developing
and implementing two new systems—the Global Acquisition System (GLAS) and the Joint3
Assistance Management System (JAMS)—to improve USAID's acquisition and assistance functionality worldwide through advanced technology and business process improvements. The success of these systems, however, remains to be seen and recently completed audit of GLAS
indicates that USAID did not always follow industry best practices in its development of this
system.4
OIG intends to conduct several audits in fiscal year 2008 on GLAS, JAMS, and other
acquisition and assistance subjects. These will include audits of the procurement and
distribution of commodities for the President's Emergency Plan for AIDS Relief, the
procurement and handling of commodities for avian influenza activities, and USAID's
debarment and suspension process.
Human Capital Management
From fiscal year 2001 to 2003, the Agency's programmatic responsibilities and spending
nearly doubled, while its direct hire workforce and operating expense budget have remained
essentially flat. Since then, the new demands of rebuilding Afghanistan and Iraq and addressing
the prevention, care, and treatment for victims of HIVIAIDS have compounded USAID's
challenges. As a consequence, USAID today faces growing human capital gaps, as identified by
an annual all-employee survey. They include the following items:
- A lack of surge capacity to meet emerging needs
- A workforce that is rapidly aging, has a void in the midmanagement ranks, and is
losing skills and "institutional memory"
- Chronically vacant or understaffed positions and accumulating backlogs of work
A bureaucratic and cumbersome performance appraisal process that is perceived
to be lacking fairness: honesty, transparency, and linkages between results and
rewards
- Morale and "burnout" problems and perceptions that USAID is not an employeefriendly
work environment
- Perceived barriers to equal employment opportunity
- Insufficient capacity in human resources functions to recruit and develop an
effective 21st century workforce
Additionally, the PMA identifies the strategic management of human capital as one of
five government-wide areas that needs improvement. As of June 30, 2007, OMB gave USAID
a "yellow" rating, reflecting mixed results for its overall status in the area of human capital
management.
In response to the PMA's initiative on human capital and to address its own human
capital challenges, USAID has undertaken a major effort to improve and restructure its human
capital management. For example, in September 2007, USAID issued a self-assessment report
that focused on civil service merit staffing, foreign service recruitment, and diversity. USAID and the Department of State have also formed a human resources working group that is tasked
with identifying human resources policies, processes, and initiatives that will have to be changed
implemented as USAID and the Department of State work to consolidate administrative support
services at new embassy compounds overseas.
The OIG believes that USAID needs to continue to implement its workforce planning to
close skill gaps through recruitment, retention, training, succession planning, and other
strategies. An audit of USAIDys succession planning is intended for fiscal year 2008.
Information Technology Management
USAID has made progress towards addressing weaknesses in its information technology
management. However, USAID faces the following management challenges:
Implementing Homeland Securitv Presidential Directive — HSPD-12
The inherent challenges for integrating and coordinating with other Federal agencies
represent only some of the numerous challenges USAID is likely to face in implementing
Homeland Security Presidential Directive (HSPD-12).
This directive, signed by the President on August 25, 2005, is entitled "Policy for a
Common Identification Standard for Federal Employees and Contractors." It requires the
development and agency implementation of a mandatory, Government-wide standard for secure
and reliable forms of identification for Federal employees and contractors5 in gaining physical
access to Federal facilities and logical access to Federal information systems. HSPD-12 is being
implemented in two phases: OMB required agencies to begin complying with phase I by
October 27, 2005, and phase I1 by October 27, 2006.
OIG first reported the implementation of HSPD-12 in fiscal year 2006 as one of the most
serious management and performance challenges facing USAID. In an ongoing audit initiated
in fiscal year 2007, the OIG identified that USAID complied with OMB's phase I selected
requirements for obtaining background checks of its employees; however, USAID will not meet
the phase I1 implementation dates for gaining access to USAID facilities and information
systems. According to USAID, it lacks the resources needed to carry out this Government-wide
initiative. The potential challenges that USAID will likely face include the following:
- Tailoring an implementation plan for USAID's Washington and overseas posts
(USAID intends to rely on the Department of State's implementation plan until
one can be developed for USAID)
- Obtaining resources to adequately define and develop access interfacing
mechanisms to USAID's facilities and information systems
- Defining an overall framework and policy for coordinating issues between
USAID and the Department of State in support of HSPD-12
- Defining and coordinating the managerial, operational, and technical integration
aspects between USAID and the Department of State for implementing physical
and logical access
A final OIG report of the ongoing audit is expected by the first quarter of fiscal year
2008.
Information Technology Governance
In fiscal year 2006, OIG reported that Information Technology (IT) governance is a
management challenge for USAID. IT governance involves not only the duties and functions
within the Office of the Chief Information Officer, but that of all bureaus, divisions and offices in
USAID. As such, IT governance is an Agency-wide challenge rather than merely a Chief
Information Officer challenge. IT governance provides the structure that links Agency-wide
strategies and objectives to IT processes, resources, and information.
In the area of IT governance, an OIG audit6 that assessed USAID'S Phoenix Overseas
Deployment and Procurement System Improvement Program (PSIP) projects reported that, among
other things, USAID needs to take certain corrective actions:
- Develop an enterprise architecture
- Enhance and klly utilize the capabilities of its Program Management Office
- Develop complete policies and procedures governing its IT projects
Moreover, OMB identified 15 USAID IT projects on its high-risk investments list in its
quarterly report ending June 30, 2007. This number of USAID projects increased from two on last
year's list.
According to USAID management, the following steps have been taken to correct the IT
governance weaknesses: - With respect to enterprise architecture, USAID published the Data Architecture for
Program Management and Results Reporting
- USAID completed its reorganization of the Office of the Chief Information Officer,
which--among other things--combined the Program Management Office and the
Office of Information Resources Management
- Regarding policies and procedures, USAID published a standard IT Project Life
Cycle Methodology that prescribes the recommended IT project baselines and
government reviews
In a recent status report, USAID management reported that the corrective action plans will
be revised because of the disbandment of the Program Management Office. However, to date the
OIG has not received USAID's revised corrective action plans. The OIG will continue to monitor
USAID's progress in addressing these weaknesses, as it is still a major challenge for USAID to
acquire, implement, and deploy systems.
SummaryIn conclusion, we continue to work with the Agency in these five areas, and as described
above, the Agency is taking steps to address these management challenges.
Back to Top ^ | < Previous Page | Next Page >
|
