Investigation raises questions over USAID oversight of UN awards

The U.S. Agency for International Development has failed to provide consistent, comprehensive oversight of its multilateral partners — such as the World Food Programme, UNICEF, and the World Bank — according to a new investigation released by the agency’s oversight body, the Office of Inspector General for USAID. Though multilaterals — which were referred to in the report as public international organizations, or PIOs — receive billions of dollars from USAID, the OIG said the agency’s standards of scrutiny were low. “By not performing appropriate pre- and post-award due diligence, USAID limits its insight and ability to oversee this PIO funding, potentially leading to serious issues including diversion of funds or goods,” the report stated. The report looked at USAID’s work between 2019 to 2022, a period of time where the agency’s funding to multilateral organizations skyrocketed by nearly 300%. Over the four-year period, USAID channeled $45.9 billion to 67 different organizations. The report came just as WFP and USAID launched investigations of their own. On Wednesday, Reuters revealed that the agencies were looking into fraud allegations against two of WFP’s top officials in Sudan, and assessing claims that WFP staff were hiding the restriction of aid by Sudan’s army. Those allegations come a year after Devex exclusively broke similar news — that in Ethiopia, police were investigating WFP staffers for widespread food theft. That aid diversion triggered a nationwide pause in assistance, one that stripped food aid from the country for six months. With USAID being WFP’s largest donor, both cases of fraud have placed the U.S. government’s oversight of multilateral institutions into scrutiny. “It’s a damning report,” said Charles Pope, a former senior contracting officer for USAID who now leads Pope International, which focuses on international development contracting. “But it doesn’t surprise me.” Due to their intergovernmental compositions, multilateral agencies aren’t subject to the same levels of scrutiny USAID applies to its other partner organizations, the report explained. Instead, the agency is expected to conduct pre- and post-award due-diligence activities before granting additional money. That includes organizational capacity reviews, which USAID is required to conduct on each multilateral institution every five years. By researching an organization’s publicly available materials, the reviews are meant to shed light on a potential partner’s operational, managerial and organizational capacity, and provide recommendations to ensure funds are utilized properly. But from 2019 to 2022, the report found that USAID failed to conduct pre-award organizational reviews on 73% of the organizations they worked with, opting to use other forms of assessment instead. That included some of USAID’s biggest partners, such as UNICEF, WFP, and the World Health Organization. Though all three organizations’ capacity reviews lapsed in 2018, they received more than $16.8 billion in USAID obligations from 2019 to 2022, according to data from the investigation. “Although these desk reviews [utilized by USAID staff] generally included required factors and analysis, when they identified issues and offered recommendations, the Agency had no mechanism to track whether it took corrective actions,” the report stated. Even when organizational capacity reviews were completed, USAID often lacked the formal mechanisms to track and address any recommendations it made, the report found. The Office of Inspector General also noted issues with post-award spot checks, stating that USAID rarely performed such reviews on cost-type awards, the type of agreements that are typically struck with multilateral institutions. Of the 17 cost-type awards reviewed by the Office of Inspector General, only two had received spot checks, the investigation found. The other 15 — totaling some $263 million in USAID funds — had either received a spot check that failed to meet the agency’s requirements, or had not received a spot check at all. “USAID provided limited guidance for conducting post-award spot checks,” the report stated, adding that “without clear guidance, staff may be less likely to perform post-award spot checks and may miss identifying serious issues.” Still, the investigation did not mention any specific cases of fraud, abuse, or waste at the multilateral institutions they surveyed, as looking into such issues wasn’t within the scope of the report. That’s something Peter Yeo, the president of the Better World Campaign, highlighted in an email to Devex. “There is no evidence that U.S. taxpayer dollars were wasted as a result of USAID failing to abide by their own guidelines,” Yeo said. “The report makes the point explicitly that USAID invests in the UN because they have the reach, expertise and agility to move quickly to address global humanitarian challenges.” For Pope, the issues are emblematic of two different, long-entrenched problems at the agency: staffing issues, and the difficulties of working with multilateral institutions. For years, Pope described how difficult it was to work with agencies laden with bureaucracies of their own — a challenge that was especially difficult to tackle when teams felt stretched. “This is yet another symptom of the greater disease of gross understaffing,” Pope told Devex. “It’s not that [US]AID staff don’t want to oversee what’s going on, but something has to give … And this is the something that gives, because the PIO arrangement is so loose.” As part of the report, the Office of Inspector General issued three recommendations to USAID, including developing a process to track organizational capacity reviews and their updates; creating a formal follow-up mechanism to track the resolution of any recommendations included in those reviews; and developing guidance on post-award spot checks to ensure they happen. USAID agreed with the first and third recommendation while partially agreeing with the second. Roman Napoli, USAID’s deputy assistant administrator in the Bureau for Planning, Learning and Resource Management, said in his written response to the OIG that USAID had improved its system to track organizational capacity reviews in response to the investigation, noting an enhanced standard operating procedure “to ensure continuity and tracking.” In response to the third recommendation, Napoli stated USAID will develop guidance to better inform its staff about spot checks, including information such as definitions, possible processes, and examples. But given it is not required for USAID to make recommendations in organizational capacity reviews, Napoli said creating a formal follow-up mechanism to track the resolution of such recommendations was unnecessary. Still, the report mentioned USAID had created a tracker to follow up on recommendations made during the review process.