Foreign Assistance: State Department Should Take Steps to Improve Timeliness of Required Budgetary Reporting

State and USAID were responsible for managing $33.7 billion in foreign assistance funds in fiscal year 2018. Section 653(a) of the Foreign Assistance Act of 1961 mandates the President to report to Congress, on an annual basis, funding allocations by foreign country and category of assistance within 30 days of Congress appropriating certain funds. State, in coordination with USAID, makes decisions on how to allocate the funds, taking into consideration congressional instructions, the administration's priorities, and country-specific foreign assistance needs.

GAO was asked to review State and USAID's process to respond to Section 653(a). This report examines (1) the extent to which State met the mandates under Section 653(a) for fiscal years 2015 through 2018 and (2) factors that affected State's ability to address the mandates. GAO reviewed annual appropriations acts and Section 653(a) reports submitted during fiscal years 2015–2018, and met with State, USAID, and Office of Management and Budget officials in Washington, D.C.

The Department of State (State), through its Section 653(a) report, has provided Congress with information on the allocation of U.S. foreign assistance funds to foreign countries and international organizations by category of assistance as mandated, but the reports were not submitted within the mandated time frame. Specifically, in fiscal years 2015 through 2018, State submitted Section 653(a) reports from 80 to 230 days past the 30-day mandate, as shown in the figure.

Multiple factors contributed to delays in submitting the Section 653(a) report.

First, State has developed a multistep process for responding to hundreds of congressional instructions each year, while also reflecting administration priorities, which is not designed to meet the mandated time frame. This process involves coordination with the U.S. Agency for International Development (USAID), about 200 bureaus and overseas posts, and the Office of Management and Budget. Even though State's process is complex and does not meet the mandated time frame, State has not systematically reviewed its process since it revised the process in fiscal year 2016. State officials said that the process is necessary to address congressional instructions and administration priorities and because they use the allocations in the report as a basis for spend plans required to obligate funds.

Second, a key part of State's process, involving data collection, has weaknesses that lead to discrepancies and hinder efficiency. According to federal internal control standards, agency data systems should provide quality data that is free from errors. However, State's mechanism for collecting information is a spreadsheet-based system susceptible to human errors, and State does not have appropriate controls in place to ensure data consistency.

Third, in fiscal year 2018, staffing gaps also affected the development of the Section 653(a) report. State's two offices primarily responsible for managing the Section 653(a) process had 15 of 54 full-time equivalent positions vacant, which contributed to delays in submitting the Section 653(a) report, according to State officials. GAO has identified the filling of staffing gaps as a high-risk area that agencies should address. Unless State and USAID take steps to address these factors, they will continue to face challenges meeting their Section 653(a) requirements within the currently mandated time frame.

GAO is making three recommendations to State: (1) conduct a systematic review of the Section 653(a) process to identify inefficiencies and determine the amount of time needed to prepare the Section 653(a) report, and if it exceeds 30 days, request that Congress extend the mandated time frame; (2) improve data collection; and (3) develop a plan to address staff vacancies, in consultation with USAID as appropriate. State concurred with these recommendations.

The Department of State (State) and U.S. Agency for International  Development (USAID) are responsible for managing tens of billions of  dollars in foreign assistance funds appropriated annually. Section 653(a)  of the Foreign Assistance Act of 1961 (Foreign Assistance Act) mandates  the President to notify Congress of each foreign country and international  organization intended to receive any portion of funds appropriated to  carry out any provision of the Foreign Assistance Act or the Arms Export  Control Act. These “Section 653(a) reports” are to be submitted to  Congress no later than 30 days after the enactment of any law  appropriating such funds. The reports provide summary financial data of  the assistance types and amounts of foreign assistance funds to be  allocated to countries and international organizations. Foreign assistance  appropriations include a number of legally binding requirements  concerning how Congress intends for the funds to be made available.

In fiscal year 2018, State and USAID reported on roughly $33.7 billion in  foreign assistance funds in the Section 653(a) report. State’s Office of  U.S. Foreign Assistance Resources, which is staffed by State and  USAID-funded personnel, manages the process to develop and submit  the Section 653(a) reports, in close consultation with USAID’s Office of  Budget and Resource Management.

You asked us to review the Section 653(a) reporting process. This report  examines (1) the extent to which State met the data notification and  timeliness mandates under Section 653(a) of the Foreign Assistance Act  for fiscal years 2015 through 2018, and (2) the factors that affected  State’s ability to address the Section 653(a) mandates for fiscal years  2015 through 2018.

To examine the extent to which State has met the mandates under  Section 653(a), we analyzed guidance documents and reports that  officials developed to provide Congress with the mandated data on  foreign assistance allocations within the mandated time frame, during  fiscal years 2015 through 2018. In addition, we interviewed officials from  State, USAID, and the Office of Management and Budget (OMB) to better  understand how the agencies address the mandates. To examine the  factors that affected State’s ability to address Section 653(a) mandates,  we reviewed Department of State, Foreign Operations, and Related  Programs Appropriations Acts for fiscal years 2015 through 2018 to  identify the amount of the appropriations and requirements in the acts that  outline how the agencies should allocate funds. In addition, we  interviewed State, USAID, and OMB officials involved in the Section  653(a) process to obtain their perspectives on factors that may have  affected their compliance with mandates, such as submitting the reports  within 30 days. We also interviewed officials responsible for managing  foreign assistance funds about the potential effects that result from delays  in fulfilling Section 653(a) mandates. A full description of our scope and  methodology can be found in appendix I.

We conducted this performance audit from December 2018 to September  2019 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate, evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

Congress first enacted Section 653(a) in the Foreign Assistance Act of  1971. According to Section 653(a), “not later than thirty days after the  enactment of any law appropriating funds to carry out any provision of this  Act (other than section 451 or 637) or the Arms Export Control Act, the  President shall notify the Congress of each foreign country and  international organization to which the United States Government intends  to provide any portion of the funds under such law and of the amount of  funds under that law, by category of assistance, that the United States  Government intends to provide to each.” To provide Congress with the  mandated data within the mandated time frame, State and USAID officials  review the annual appropriations act and the accompanying joint  explanatory statement to identify the congressional instructions contained  within them.

Although State has the delegated authority to approve the programming  of foreign assistance funds and is charged with submitting the Section  653(a) report to Congress, State and USAID have shared responsibilities  regarding the administration of certain foreign assistance accounts.  Throughout this report we refer to the congressional instructions in the  annual appropriations acts and those allocation tables within the joint  explanatory statements that are incorporated by reference into the act as  “requirements,” and we refer to Congress’s instructions to the agencies  presented as additional language in the joint explanatory statement as  “directives.”

Foreign Assistance Appropriations Accounts

Congress funds foreign assistance by appropriating funds to 16 accounts,  each of which has a distinct purpose and specific legal requirements,  such as the number of years the funds are available for obligation. Table  1 provides a summary of these 16 accounts. These accounts are  generally administered individually by State or USAID, or jointly by both  agencies. In addition, the period of availability for obligation for these  accounts ranges from 1 to 5 years, or in some cases, until funds are  expended.

Appropriations Requirements and Directives and Administration Priorities

The annual appropriations acts have hundreds of specific instructions— both requirements and directives—attached to many of the foreign  assistance accounts that State and USAID address in the Section 653(a)  report. According to State officials, the annual appropriations acts have  become more detailed since the addition of the Section 653(a) mandates  in the Foreign Assistance Act of 1971. For example, State officials said  that when the Section 653(a) reporting mandate began the annual  appropriations act contained fewer requirements and directives. The  Foreign Assistance and Related Programs Appropriations Act, 1971,  appropriated $2.2 billion in foreign assistance and was 18 pages in  length. By contrast, the relevant portion of the annual appropriations act  for fiscal year 2018 appropriated $33.7 billion in foreign assistance and  was 138 pages in length. In addition, the accompanying joint explanatory  statement was 9 pages in 1971 and 31 pages in 2018.

As shown in table 2 below, during the 4 fiscal years covered by our  review, the total number of requirements and directives addressed in the  Section 653(a) reports has varied depending on congressional  instructions within the annual appropriations acts and corresponding joint  explanatory statements. For example, fiscal year 2016 had 1,056 total  requirements and directives, while fiscal year 2018 had 657.

The total number of requirements and directives has also varied by  account. For instance, the Economic Support Fund, which was  appropriated roughly $3.9 billion in fiscal year 2018, had 107  requirements and directives that instructed agencies how to allocate  about $2.9 billion. Other accounts appropriated funds in fiscal year 2018  had fewer requirements and directives. For example, the International  Disaster Assistance account, which was appropriated about $4 billion in  fiscal year 2018, had three requirements and directives.

The requirements and directives also vary in their specificity. For  instance, of the $8.6 billion appropriated for Global Health Programs in  fiscal year 2018, the joint explanatory statement required that $829.5  million be allocated toward maternal and child health. State and USAID  were also required to make funds allocated for the Global Health  Programs available in specific amounts, such as making $755 million  available for activities addressing malaria in fiscal year 2018. State and  USAID also balance the requirements and directives with administration  priorities. For example, officials from OMB said that they review the  Section 653(a) report to ensure that allocations for certain countries— such as Israel and Jordan—are consistent with the administration’s  financial commitments to those countries. The text box below provides  examples of the types of requirements and directives found in the fiscal  year 2018 appropriations act.

Foreign Assistance Requirements and Directives  Congress includes a variety of instructions to the agencies managing foreign assistance funds in statutes, such as the annual  appropriations acts, and in legislative history, such as the joint explanatory statements. These instructions come in two broad  categories.

Requirements: Congress’s instructions to agencies as contained in the annual appropriations act, including mandatory and  non-mandatory spending, and tables within the joint explanatory statement that are required by statute.

Directives: Congress’s instructions to agencies presented as additional language in the joint explanatory statement that are  not required by statute.

Examples  Mandatory requirement detailed in law: “Of the funds appropriated by this Act, not less than $400,000,000 shall be made available for  water supply and sanitation projects pursuant to the Senator Paul Simon Water for the Poor Act of 2005 (Public Law 109-121), of  which not less than $145,000,000 shall be for programs in sub-Saharan Africa, and of which not less than $15,000,000 shall be made  available to support initiatives by local communities in developing countries to build and maintain safe latrines.”

Mandatory requirement referenced in law but detailed in the joint explanatory statement:  Law: “For necessary expenses to carry out the provisions of chapter 4 of part II of the Foreign Assistance Act of 1961,  $1,816,731,000, to remain available until September 30, 2019.”

Joint explanatory statement: “Funds for certain programs under this heading are allocated according to the following table:”

Ambassador-at-Large for Global Women’s Issues  Conflict and Stabilization Operations  Disability Programs Disability Programs  Family Planning/Reproductive Health    (U.S. Agency for International Development)  House Democracy Partnership  Organization of American States  Polio  Reconciliation Programs  Trade Capacity Building  1,900,000  9,000,000  7,500,000  12,000,000  10,000,000  Nonmandatory requirement detailed in law: “Of the funds appropriated by this Act under the heading ‘Economic Support Fund,’ up to  $112,500,000 may be made available for assistance for Egypt, of which not less than $35,000,000 should be made available for  higher education programs including not less than $10,000,000 for scholarships for Egyptian students with high financial need to  attend not-for-profit institutions of higher education.”

Nonmandatory directive detailed in the joint explanatory statement: “The State Department Secretary and U.S. Agency for  International Development Administrator are directed to provide no assistance to the central Government of the People’s Republic of  China under Global Health Programs, Development Assistance, and Economic Support Fund, except for assistance to detect,  prevent, and treat infectious diseases.”

In addition, requirements and directives can be specific to a country or organization, specific to a sector, or be cross-cutting such that  they may be applicable across multiple countries and accounts—as the examples above demonstrate.

State submitted Section 653(a) reports that provided mandated data  notifications on how foreign assistance funds are allocated by country and  account; however, State did not submit the reports within the mandated  time frame during fiscal years 2015 through 2018. During the years  covered in our review, State’s Section 653(a) reports provided information  to Congress on the tens of billions of dollars for foreign assistance  accounts specified in the annual appropriations act. In addition to  detailing the category of assistance by account, the Section 653(a)  reports further delineated funding by the countries and international  organizations to which the foreign assistance was directed. State also  included supplemental spreadsheets with the reports that outlined how  the various requirements and directives in the annual appropriations act  were to be addressed.

In fiscal years 2015 through 2018, State submitted Section 653(a) reports  an average of 169 days after the enactment of the annual appropriations  act (or 139 days late). During those 4 fiscal years, State submitted  Section 653(a) reports from 80 to 230 days past the 30-day mandated  time frame for reporting, as shown in figure 1.

During the 4 fiscal years covered by our review, State took the longest  amount of time to submit the Section 653(a) report in fiscal year 2015.  State officials explained that in fiscal year 2015 and prior years it  generally took them longer to submit the report because they first  submitted a draft Section 653(a) report to the House and Senate  appropriations committees. According to State officials, the appropriations  committees’ majority and minority staff then engaged in negotiations with  each other and with State on the draft to reach agreement on the final  allocation of funds. In addition, the fiscal year 2015 appropriations act  allowed State to propose deviations from the requirements in the joint  explanatory statement. Thus, the agencies submitted the draft report to  the appropriations committees with allocations that, in some cases, varied  from the levels Congress included in the tables in the joint explanatory  statement. State submitted the draft Section 653(a) report for the fiscal  year 2015 appropriations act in April 2015 with the proposed deviations  and engaged in a 5-month negotiation process to finalize the allocation of  funds in September 2015.

According to State, Congress changed the Section 653(a) reporting  requirements in the fiscal year 2016 appropriations act to forestall the  months-long negotiation process with the appropriations committees that  had occurred in prior years. The fiscal year 2016 appropriations act  authorized State and USAID to deviate in their allocations by up to 5  percent from the mandated amounts in the tables of the joint explanatory  statement. This change allowed State to submit the report in a more  timely fashion than in fiscal year 2015. By specifying how much leeway  State and USAID were allowed in their allocations, the agencies were  able to develop their plans without submitting a draft Section 653(a)  report and seeking further agreement from the appropriations  committees. As a result, officials submitted the 2016 report in 110 days,  compared with 260 days in 2015.

State’s Timeliness in Submitting Section 653(a) Reports Was Affected by Its Complex Process, Data Collection Weaknesses, and, in Fiscal Year 2018, Staff Vacancies

We found that delays in submitting the Section 653(a) report were  primarily attributable to State’s complex process to address appropriation  requirements and directives while also reflecting administration priorities,  as well as to data collection weaknesses. Nevertheless, State has not  reviewed its process to identify and address such issues and other  potential inefficiencies. Absent such a review, State is not in a position to  improve its process to meet the 30-day mandate. In fiscal year 2018,  State officials noted that reaching agreement on priorities within the new  administration and staff vacancies also adversely affected the timeliness  of the Section 653(a) report submission.

State Has a Multistep Process for Responding to the Section 653(a) That Is Not Designed to Meet the Mandated Time Frame

State has a multistep process to provide the mandated Section 653(a)  report.

Pre-appropriation preparatory work. According to State  documentation, the process for responding to Section 653(a)  mandates begins with State and USAID developing notional allocation  estimates in a spreadsheet before the upcoming fiscal year’s annual  appropriations act is passed.

Allocation analysis and development. After the act is passed,  USAID and State review their allocation estimates against the  requirements and directives in the act and adjust their spreadsheet  containing allocation estimates as necessary, taking into  consideration policy direction from State and USAID leadership.  According to State and USAID officials, detailed congressional  instructions for particular accounts can limit the agencies’ ability to  allocate funds according to the administration’s priorities and to  consider country-specific foreign assistance needs. For example,  Congress appropriated $876 million in fiscal year 2018 for the  Nonproliferation, Anti-Terrorism, Demining, and Related Programs  account and included 40 associated requirements and directives.

State and USAID officials added that in order to satisfy all the  requirements and directives they sometimes have to allocate  appropriated amounts to address more than one requirement or  directive. For instance, in the fiscal year 2018 Section 653(a) report,  some of the funds allocated to meet an appropriation requirement for  conventional weapons destruction were also designated as an  allocation to satisfy a different requirement for humanitarian demining.  Further, some amount of those funds satisfied a more specific  requirement for humanitarian demining in Laos. State officials noted  that by allocating appropriated amounts to more than one requirement  or directive, they have greater flexibility to address administration  priorities, while also meeting congressional instructions.

Allocation negotiation, review, and agreement. State and USAID  ensure that input from all the various parties is taken into  consideration when further developing allocations. About 200 State  and USAID bureaus and overseas posts review the allocations and  propose changes in their copies of the spreadsheet that are then  returned to State’s Office of U.S. Foreign Assistance Resources.  According to State and USAID officials, they consider the proposed  changes in light of emerging issues in selected foreign countries that  may lead to the redirection of or changes to the proposed allocation of  funds. State and USAID also review the proposed changes with  agency leadership.

OMB review and Section 653(a) report finalization and  transmission. Once State and USAID agree on changes to the  allocations, State submits the Section 653(a) report to OMB to be  reviewed against the policy direction of the Executive Office of the  President. State officials indicated that OMB feedback must be  resolved before finalizing allocations. Concurrent with OMB’s review,  State begins the process of finalizing allocation levels. Once State  and USAID’s allocations are complete, State provides final allocation  levels to bureaus and overseas posts and submits the Section 653(a)  report to the relevant appropriations subcommittees.

Given its complexity, State’s process is not designed to meet the  mandated 30-day time frame. For example, in fiscal year 2018, State  planned to complete the Section 653(a) process in 85 days. Figure 2  below outlines the stages of the Section 653(a) report development  process and the targeted number of days for each stage during fiscal year  2018.

The data developed for the Section 653(a) report plays a critical role in  the obligation of tens of billions of dollars in foreign assistance funds  appropriated annually. According to State and USAID officials, the  agencies are constrained from obligating funds until the report is  completed because a number of pre-obligation requirements are based  on allocations in the Section 653(a) report. While the submission of the  Section 653(a) report does not legally affect State’s ability to obligate  foreign assistance funds, according to State and USAID officials,  consultations, spend plans, and congressional notifications cannot be  completed until allocation amounts are finalized through the Section  653(a) process. As a result, State and USAID officials said the amount of  time it takes to submit the Section 653(a) report affects the obligation of  funds.

Data Collection Weaknesses Lead to Data Discrepancies and Hinder Efficiency of State’s Process

State officials indicated that their process for collecting appropriations- related feedback and information from various offices, bureaus, and  overseas posts necessitates significant staff time to correct data entry  errors. Throughout the Section 653(a) process, State officials use a  spreadsheet to consolidate information. For example, after State  develops its initial allocations in the spreadsheet, it sends the  spreadsheet out to about 200 bureaus and overseas posts to review and  make appeals related to account and country allocations, which State and  USAID then take into consideration as they continue to modify the  allocations.

According to State officials, reviewing suggested changes to allocations  from about 200 bureaus and overseas posts is time consuming. This  process is further complicated when they sometimes find mistakes in the  returned spreadsheets, such as incorrect formulas and currency formats.  Occasionally, returned spreadsheets also include additional data columns  that were not in the original documents. Such discrepancies make it  difficult to merge and process all of the suggested changes and identify  how the changes interact with the various requirements and directives.

State officials said that these discrepancies occur because they do not  have controls in place to prevent modification of the spreadsheet. For  example, the formulas and format of the spreadsheet can be manipulated  by the various individuals reviewing the document. In addition, the  spreadsheet does not automatically verify that the changes proposed by  the bureaus and overseas posts comply with the requirements and  directives. Instead, officials have to individually compare the changes with  the requirements and directives and ensure that they are in compliance.

State officials indicated that it takes them time and resources to discover  and correct the errors, merge all of the spreadsheets, and ensure  compliance, which contributes to delays in developing the Section 653(a)  report.

According to State’s Foreign Affairs Manual, State must maintain effective  systems of management control that are designed to provide reasonable  assurance regarding the prevention of or prompt detection of errors and  irregularities. State officials indicated that while they do correct errors  and validate the data in the Section 653(a) report for accuracy before final  submission, it takes time and resources to do so, which adds to the total  amount of time it takes to produce the report. Given the individual account  and country allocations, and number of stakeholders involved in providing  feedback, State officials acknowledged that their spreadsheet-based  system is inadequate for the complexity of the task.

State officials said that their existing data information system—the  Foreign Assistance Coordination and Tracking System Info Next  Generation—could potentially be modified to automate the distribution  and collection of appropriations-related feedback from their offices and  overseas posts, as well as to ensure that the changes comply with the  annual appropriations act’s requirements and directives. Currently, State  uses this system during the last phase of the Section 653(a) process to  input the final allocations and share the Section 653(a) report with  bureaus and overseas posts and the appropriations committees. While  State officials said that they are exploring options to improve this process,  they have not yet decided how to address weaknesses in their data  collection system.

State Views Its Current Section 653(a) Process as Necessary but Has Not Reviewed It to Identify Potential Inefficiencies

State officials said that the Section 653(a) process that they developed is  necessary to address congressional instructions and administration  priorities and because they use the allocations in the report as a basis for  spend plans required for the obligation of funds. Federal standards for  internal control state that management should set objectives to meet the  requirements of applicable laws and regulations. State officials noted  that it might be possible to meet the 30-day mandate but that doing so  would be inefficient because the subsequent report would need major  revisions before finalizing allocations. According to officials, that  alternative process, while it would meet the 30-day mandate, would be  likely to further delay the development of spend plans and obligation of  funds. State officials told us that they have informally suggested to the  congressional appropriations committees that the mandated time frame  for delivering the report should be extended, but they said they have not  formally requested that Congress amend the 30-day reporting mandate.  State officials said that they would also need to engage in conversations  with authorizing committees responsible for making changes to the  reporting mandate in the Foreign Assistance Act.

GAO’s guidance on business process reengineering states that agencies  should model their processes to identify problem areas and non–value- added activities that need to be changed or eliminated, such as excessive  reviews. State officials said that, while they have made adjustments to  improve their Section 653(a) process, they have not conducted a  systematic review of their process since it changed in fiscal year 2016.  Such a review could identify changes to expedite the completion and  submission of the mandated report. Given that State’s process is not  designed to meet the Section 653(a) 30-day reporting mandate, absent  changes to its processes or Section 653(a), State is unlikely to meet the  30-day reporting mandate in the future.

In Fiscal Year 2018, State Officials Noted That Agreeing on Administration Priorities and Staff Vacancies Also Affected Timeliness in Submitting the Section 653(a) Report

According to State officials, reaching agreement on administration  priorities affected the timeliness of their Section 653(a) report in fiscal  year 2018. The current Secretary of State and USAID Administrator both  had their first experience with the Section 653(a) process during fiscal  year 2018, which led to more detailed review within both agencies than in  previous years, according to State officials. In addition, State officials said  that USAID recommended unanticipated and significant changes to the  proposed allocations before OMB’s review. USAID officials said that  significant changes were necessary since USAID disagreed with the  allocations State proposed for USAID’s appropriations within the Global  Health Programs, Development Assistance, and the Economic Support  Fund accounts. In fiscal year 2018, it took State and USAID 110 days to  complete the allocation negotiation, review, and agreement step of the  Section 653(a) process. According to State and USAID officials, they  used 46 of the 110 days to reach agreement on the changes that USAID  proposed.

OMB officials noted that they needed to resolve policy issues concerning  the administration’s foreign assistance priorities, which also contributed to  delays. Once State sent the report to OMB in August 2018, OMB officials  said that they approved the report after 36 days. In previous years, OMB  officials explained that they usually approved the report within 15 days.  However, they said that they were working to resolve a policy issue with  other offices in the Executive Office of the President, and were therefore  delayed in approving the fiscal year 2018 report. In total, it took State and  USAID 189 days to produce the Section 653(a) report in fiscal year 2018.

In fiscal year 2018, State planned to complete the Section 653(a) process  in about 85 days after the enactment of the appropriations act—which  exceeds the 30-day reporting, as shown in figure 3.

In 2018, staffing gaps in State’s Office of U.S. Foreign Assistance  Resources also affected the development of the Section 653(a) report.  State’s Office of U.S. Foreign Assistance Resources is staffed by State  and USAID-funded personnel and provides supervision and direction of  State and USAID’s foreign assistance funding and programs. While the  development of the Section 653(a) report is a critical task for the Office of  U.S. Foreign Assistance Resources, the office and its staff are also  responsible for developing a U.S. foreign assistance strategy, annual  country-specific assistance operational plans, consolidated strategic and  program plans, and operational budgets.

State’s Office of U.S. Foreign Assistance includes two subordinate offices  involved in developing the Section 653(a) report, both of which had  vacancies in 2018. Within the Office of U.S. Foreign Assistance, the  Resources and Appropriations office has primary responsibility for  reviewing and identifying the Section 653(a) requirements and directives,  but in 2018, five of 13 full-time equivalent positions, or 38 percent, were  vacant. In addition, 10 of 41 full-time equivalent positions within the  Regional and Global Affairs office, or 24 percent, were vacant. This office  provides geographic and functional expertise to help develop and  adjudicate allocations for the report. According to State officials, these  vacant positions affected the timeliness of the Section 653(a) report in  2018 because the staff in both these offices assist with developing the  report throughout the Section 653(a) process. As previously shown in  figure 3, most of the delays in the fiscal year 2018 process occurred  during the allocation negotiation, review, and agreement phase—which  relies heavily on officials from the offices experiencing staffing gaps.

According to State officials, the staff shortfall affecting the development of  the fiscal year 2018 Section 653(a) report was due to the State hiring  freeze that affected the entire agency, as well as vacancies among  USAID personnel assigned to State’s Office of U.S. Foreign Assistance  Resources. State’s hiring freeze took effect in January 2017 and was  lifted in May 2018. In addition, State officials said that USAID has not  filled USAID-funded vacancies within State’s Office of U.S. Foreign  Assistance Resources. In fiscal year 2018, nine of the 13 full-time  equivalent positions in State’s Resources and Appropriations office were  funded by USAID, of which four were vacant, and 21 of the 41 full-time  positions in Regional and Global Affairs office were funded by USAID, of  which six were vacant.

Our 2019 High-Risk Series report calls for agencies to design and  implement action plans for closing skills gaps, which can include when an  agency has an insufficient number of people to complete its work. The  report states that the action plan should define the root cause of all skills  gaps within an agency and provide suggested corrective measures,  including steps necessary to implement solutions. State officials said that  they have received permission to fill the vacant State positions, and  USAID has provided permission to advertise two vacant USAID positions  within State’s Office of U.S. Foreign Assistance Resources. Thus, that  office is requesting additional State full-time equivalent positions. Despite  these efforts, State and USAID officials said that they do not have an  action plan to address the vacancies. Without a plan to fill these  vacancies, a lack of staff resources will likely continue to impact the  timeliness of the Section 653(a) reports.

Congress appropriates tens of billions of dollars for foreign assistance  annually and mandates the President to report to Congress on how the  U.S. government will allocate funds for foreign countries, by category of  assistance, within 30 days of the enactment of the annual appropriations  act. State and USAID have developed a complex process to balance how  their allocations will meet the detailed requirements and directives within  the annual appropriations acts, the administration’s priorities, and  country-specific foreign assistance needs. However, State has been  unable to meet the mandated time frame for submitting the Section  653(a) report for various reasons. Most importantly, State’s process for  completing the various phases of the Section 653(a) process is not  designed to meet the mandated 30-day deadline. Moreover, State  officials have not systematically reviewed their process since it changed  in fiscal year 2016, to identify areas that can be streamlined or eliminated  to expedite the completion and submission of the report. Additionally,  State’s system for collecting input on foreign assistance allocations from  its various offices, bureaus, and overseas posts is prone to data entry  errors that take extra time to correct, contributing to delays in submitting  the Section 653(a) report. Further, State’s two offices primarily  responsible for managing the Section 653(a) process had a substantial  number of positions vacant in 2018 but did not have a formal plan to  address the resulting skills gaps. Absent addressing these challenges,  State and USAID will likely continue to be in violation of their legal  mandate for submitting Section 653(a) reports to Congress within 30 days  after the annual appropriations act is enacted.

We are making a total of three recommendations to State.

The Secretary of State should ensure that the Director of State’s Office of  U.S. Foreign Assistance Resources conducts a review of the Section  653(a) process to identify process steps that can be streamlined or  eliminated and determine the time frame needed to prepare the annual  Section 653(a) report. If State determines that the time frame exceeds 30  days, the office should coordinate with other appropriate officials to  submit a legislative proposal to Congress to extend the mandated time  frame for submitting Section 653(a) reports. (Recommendation 1)

The Secretary of State should ensure that the Director of State’s Office of  U.S. Foreign Assistance Resources improves the data collection from the  many sources contributing to the Section 653(a) reports, such as by  enhancing their data information systems. (Recommendation 2)

The Secretary of State should develop a plan to address vacancies within  State’s Office of U.S. Foreign Assistance Resources, consulting with the  USAID Administrator as appropriate. (Recommendation 3)

We provided a draft of this report to State, USAID, and OMB for review  and comment. State and USAID provided written comments about the  draft, which are reprinted in appendix II and appendix III, respectively.  State also provided technical comments about the draft report, which we  incorporated as appropriate. OMB did not provide comments on the draft  report.

State concurred with our three recommendations. USAID concurred with  our first two recommendations; however, USAID’s written comments  indicate that they do not believe staffing shortages at State were  responsible for the chronic delays in the submission of the Section 653(a)  report. While we do not report that staffing gaps were the primary reason  for State not meeting reporting deadlines, we did find them to be a  contributing factor to the delays in fiscal year 2018. State officials  indicated that staffing gaps in their Office of U.S. Foreign Assistance  Resources affected the development of the Section 653(a) report,  contributing to delays.

We are sending copies of this report to the appropriate congressional  committees, the Secretary of State, the Administrator of USAID, the  Acting Director of OMB, and other interested parties. In addition, the  report is available at no charge on the GAO website at  http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-6881 or bairj@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made key contributions to this report are  listed in appendix IV.

Appendix I: Objectives, Scope, and Methodology

This report examines (1) the extent to which the Department of State  (State) met the data notification and timeliness mandates under Section  653(a) of the Foreign Assistance Act of 1961 (Foreign Assistance Act) for  fiscal years 2015 through 2018, and (2) the factors that affected State’s  ability to address Section 653(a) mandates for fiscal years 2015 through  2018.

To examine the extent to which State has met the data notification and  timeliness mandates under Section 653(a) of the Foreign Assistance Act,  we reviewed State’s Section 653(a) reports for fiscal years 2015 through  2018 to assess whether they documented the amounts of U.S. foreign  assistance to be provided to each foreign country and international  organization, as well as the amounts provided by category of assistance.  To determine the timeliness associated with the development and  submission of State’s Section 653(a) reports for fiscal years 2015 through  2018, we also reviewed documentation to identify when the Department  of State, Foreign Operations, and Related Programs Appropriations Acts  were enacted, the mandated submission dates, and compared those  dates with the dates that State submitted the reports to Congress. We  used this information to generate a figure that shows the actual  submission time frames for Section 653(a) reports during those years  compared with the 30-day reporting mandate. We also interviewed  officials from State, the U.S. Agency for International Development  (USAID), and the Office of Management and Budget (OMB) to better  understand how the agencies address the Section 653(a) mandates.

To examine the factors that affected State’s ability to address Section  653(a) mandates for fiscal years 2015 through 2018, we reviewed State  and USAID documents. We also interviewed State, USAID, and OMB  officials to get their views on what factors, if any, affected the timeliness  of the Section 653(a) reports. For those factors that we identified, we  requested and analyzed additional information as described below.

In reviewing State’s Section 653(a) process, we analyzed State and  USAID guidance documents and reports developed to address Section  653(a) mandates. We reviewed State’s analyses that identified the  requirements and directives in the annual appropriations acts and joint  explanatory statements for fiscal years 2015 through 2018. These  requirements and directives outline how the agencies should allocate the  funding for programs and for countries and international organizations. In  addition, we reviewed State’s and USAID’s guidance documents that  outlined the Section 653(a) process. Based on this information, we  summarized State’s process and developed a figure that shows the major  steps of State’s process, as well as the amount of time that each step  lasted during the development of the fiscal year 2018 Section 653(a)  report. We assessed State’s process against federal standards for  internal control, which state that management sets objectives to meet the  requirements of applicable laws and regulations. We also assessed the  process against GAO’s guidance on business process reengineering,  which outlines best practices on how agencies should model their  processes.

To examine the quality of the data State collects during development of  the Section 653(a) reports, we reviewed whether State’s analyses  followed State’s Foreign Affairs Manual requirement that State must  maintain effective systems of management control programs designed to  provide reasonable assurance regarding the prevention of or prompt  detection of errors and irregularities. We analyzed State’s reports on the  requirements and directives in the annual appropriations acts from fiscal  year 2015 through 2018. In addition, we validated a judgmental sample of  the requirements and directives that State identified to ensure that they  were in the applicable appropriations act, joint explanatory statement, and  reports from the appropriations committees in the Senate and House of  Representatives. Although we identified an error in the appropriated  amount recorded for the fiscal year 2016 International Narcotics Control  and Law Enforcement account, we did not find errors specific to the  requirements and directives State identified. Therefore, we concluded that  the analyses were sufficiently reliable for our purpose, and we used  State’s analyses to determine the total number of requirements and  directives. Moreover, we reviewed the fiscal year 2015 through 2018  appropriations acts to identify the amounts appropriated for the accounts  included in the corresponding Section 653(a) reports. We also identified  the purpose and the time frame during which the appropriations for each  account were available for obligation in the fiscal year 2018  appropriations act.

To examine the issue of staff vacancies in fiscal year 2018, we received  data from State and USAID on staff vacancies in key offices involved in  the development and submission of the Section 653(a) report. In addition,  we interviewed State and USAID officials about vacancies and whether  they had developed plans to address the vacancies. We assessed  whether State had designed and implemented action plans for closing  skills gaps, which could include gaps caused by having an insufficient  number of people to complete its work—as described in our 2019 High- Risk Series report.

Appendix II: Comments from the Department of State

Appendix III: Comments from the U.S. Agency for International Development

In addition to the contact named above, Thomas Costa (Assistant  Director), Mason Thorpe Calhoun (Analyst in Charge), Katya E.  Rodriguez, Ashley Alley, Faisal Amin, David Dayton, Neil Doherty, Justin  Fisher, and Melissa Wolf made key contributions to this report.

The State Department and U.S. Agency for International Development were responsible for managing $33.7 billion in foreign assistance in fiscal year 2018.

We found that State submitted required reports to Congress detailing how these funds were allocated to foreign countries and international organizations. However, State submitted the reports 80 to 230 days past the mandated 30-day time frame in fiscal years 2015-2018.

Several factors contributed to State’s delays. We made 3 recommendations, including that State identify any inefficiency in its review process and work with USAID to address staffing vacancies.