GAO-09-165 Foreign Assistance: Continued Efforts Needed to Strengthen USAID's Oversight of U.S. Democracy Assistance for Cuba

Agency for International Development's (USAID) Cuba Program provides assistance to support human rights and promote nonviolent democratic change in Cuba. From 1996 through 2008, the program awarded grants totaling about $83 million to nongovernmental organizations (NGO) and universities providing democracy assistance through a wide range of activities, such as the provision of humanitarian aid, human rights training, uncensored books and newsletters, and advocacy for human and workers' rights. The program's funding has been allocated between USAID and the Department of State, with the administration requesting $20 million for Cuba democracy assistance in 2009. USAID's Cuba Program has faced challenges in its management and oversight, including the extensive use of noncompetitive awards and grant modifications, as well as oversight weaknesses that increased the risk of grantees' improper use of grant funds and noncompliance with U.S. laws and regulations. In 2006, the Government Accountability Office (GAO) identified these problems and made several recommendations related to USAID's oversight of the assistance. In response, USAID said that it was taking steps to address the recommendations and improve its management and monitoring of democracy assistance for Cuba. However, misuse of grant funds by employees of organizations with the two largest USAID Cuba Program grants was reported in 2008. In response to this issue, USAID took several steps, including suspending the two grantees pending the results of criminal investigations. USAID also accelerated planned reviews of program grantees' procurement systems and initiated audits of their incurred cost. The program's other grants remained active pending the results of these reviews and audits. The GAO analyzed USAID and grantee records, conducted limited reviews at five grantees, and interviewed agency and grantee officials to assess USAID's actions since 2006 to improve its award and oversight of the Cuba Program's grants. The GAO found that USAID has taken steps to improve awards and oversight of Cuba democracy assistance, but staffing for oversight is not yet complete. USAID has competitively awarded all Cuba Program grants since 2006, hired more staff for the program office, and contracted for financial services to enhance oversight of grantees. However, the GAO also found that USAID has not staffed the Cuba Program at the level the agency has determined is needed for appropriate oversight. As of October 2008, the program office had five staff, compared with the 11 recommended in two USAID assessments. The GAO recommends that USAID ensure that the Cuba Program is staffed at the level needed to fully implement planned monitoring activities and periodically assess the program's overall efforts to reduce grantee risks. USAID has acknowledged the need to improve staffing for the Cuba Program and has stated that it will take steps to periodically assess the program's overall efforts to address grantee risks. The GAO's recommendations aim to strengthen USAID's oversight of the Cuba Program and ensure that the agency is effectively managing and monitoring democracy assistance for Cuba.