USAID gets an “A” from SIGAR

In July 2020, the Special Inspector General for Afghanistan Reconstruction (SIGAR) released an evaluation report reviewing the status of the recommendations it made to the United States Agency for International Development (USAID) over the past five years. In his quarterly report to Congress, the head of SIGAR, John Sopko, reported that of the 201 recommendations that SIGAR made to USAID, the Agency implemented 167 of them (an impressive 83 percent), 22 remained open, and only 12 were not implemented and closed. Contrast that with the Department of Defense’s (DOD) performance during the same period during which the Department “implemented less than 40 percent of SIGAR’s audit and inspections recommendations and [did] not have a system for tracking them” according to SIGAR’s April 2020 Report.

Specifically, between May 1, 2014 and July 31, 2019, SIGAR issued 86 reports[1] to USAID. Of these, 68 reports contained a total of 201 recommendations. About 80 percent of the recommendations aimed at enhancing contract oversight and nine percent intended to improve program effectiveness.

The recommendations resulted in USAID redirecting $66 million from the Afghanistan Road Infrastructure Program for the Afghan Ministry of Public Works to better use[2]. SIGAR’s concern was that “the Afghan Parliament might not pass the legislation [to establish independent authorities to manage road construction] and that, even if legislation were passed, the road management authorities might not be independent.”

SIGAR has also recommended that USAID “review and recoup, as appropriate, more than $87 million in questioned program costs.” It is worth noting that for the $87 million, USAID’s Contracting Officers in Afghanistan have not yet sustained any cost disallowances, i.e. have not agreed that questioned costs should not be charged to the Government. Based on the historical record of agencies making disallowances in response to SIGAR’s recommendations, the likelihood of any funds being disallowed is around six percent. In its quarterly report to Congress, SIGAR summarized that out of $440 million in questioned costs identified by SIGAR’s financial audits since 2012, funding agencies have disallowed only $27.5 million.

There is a forthcoming report on an evaluation that SIGAR initiated in January 2020 to summarize completed financial audits and identify common contracting and oversight issues across the Department of State, USAID, and DOD that led to questioned costs. It will be interesting to see how USAID compares to other agencies operating in an environment with similar difficulty.

Additionally, SIGAR found that unlike DOD, USAID has a system to track recommendations and has appointed a top-level audit follow-up official to oversee the implementation of recommendations. This is in line with sections 5 and 7(c) of the OMB Circular A-50, which outlines agency requirements for handling recommendations made by Inspectors General. The only deviation from federal laws that SIGAR discovered during the evaluation was that USAID’s directive differed from the Federal Acquisition Streamlining Act (FASA) of 1994 by allowing six additional months for the agency to take final actions. Sec. 6009 “Prompt Resolution of Audit Recommendations” of FASA[3] requires agencies to submit a management decision within six months and take final actions to implement recommendations within twelve months of an inspector general issuing a final report.

While USAID took less than 12 months to resolve 82 percent of closed recommendations, it took an average of about twenty-three months to complete final action for the remaining eighteen percent of recommendations. Frequent staff turnover at USAID and SIGAR together with unrealistic targets set by SIGAR were listed as reasons for the implementation delays.

To comply with FASA, SIGAR recommended, and USAID implemented within a record time of two months, an update to USAID’s directive to reflect the 12-month recommendation resolution timeline.

[1] These 86 reports consist of 17 performance audits, 8 inspections, 59 financial audits, and 2 alert letters.

[2] Funds that could be put to better use include funds that are used more efficiently because an agency de-obligates them from their original program or operation to avoid incurring unnecessary expenses or costs.

[3] Federal Acquisition Streamlining Act of 1994, as amended, 5 U.S.C. App. §5 note. (Sec. 810 of National Defense Authorization Act (NDAA) for 1996.)