This is an archived USAID document retained on this web site as a matter of public record.
Testimony of Administrator J. Brian Atwood
Before the House International Relations Committee
Washington, D.C., March 5, 1998
U.S. Agency for International Development
Chairman Gilman, Congressman Hamilton, and other members of the
Committee, it is a pleasure to appear here today to present the President's fiscal year
1999 budget request for foreign assistance programs. The Administration's 1999
budget request includes $20.1 billion for programs in international affairs. The U.S.
Agency for International Development (USAID) will manage $7.3 billion of that total
-- or 36 percent of the international affairs account -- including both USAID programs
and programs administered by USAID in cooperation with other agencies.
I would like to thank the members of this Committee for all they have done to
preserve America's international leadership in recent years. It was the bipartisan
work of this, and our other oversight committees, that helped reverse the dangerous
downward trend in funding for international affairs. Clearly, America's role in the
world is more important than ever, and I am hopeful that this bipartisanship on the
key issues we face will continue. Many members of this Committee have worked
very hard to help educate constituents and opinion leaders about the benefits of
engagement and a robust foreign policy. I think that message has begun to resonate
with the public due, in large part, to your efforts.
The request for fiscal year 1999 programs managed by USAID represents an
increase of $300 million over fiscal year 1998 funding. This is a very modest
increase in terms of overall federal spending, yet it is funding that will have a crucial
impact in promoting U.S. interests in developing countries around the globe vital to
our future. Highlights of this request include:
* Three new initiatives, the Africa Trade Reform and Growth Initiative and the
Americas Summit Initiative, for which the Administration is requesting $30
million and $20 million respectively under the Development Assistance and
Child Survival accounts, and the African Great Lakes Justice Initiative, for
which the Administration is requesting $35 million under the Economic Support
Fund.
* An additional $155 million for programs in the New Independent States of the
former Soviet Union;
* $94 million more for the Economic Support Fund;
* A separate request of $503 million for the Child Survival and Disease Program;
* A $15 million increase in International Disaster Assistance for transition
initiatives for countries coming out of crisis;
* An increase of $94 million for other worldwide development assistance
programs; and,
* Economic growth activities aimed at improving food security in Africa to help
feed the hungry and support for agricultural research through the agency's
central Global Bureau.
On balance, this budget represents less than one half of one percent of the
federal budget. In many respects, this is a bare-boned and balanced approach to
development and humanitarian programs that will significantly contribute to achieving
the administration's foreign policy objectives. In this request, the agency's operating
expense budget remains essentially level. With the exception of two increases for
initiatives and an increase in our environment strategic goal area, the 1999 request for
Development Assistance is basically a straightline of our 1998 appropriated level. I
am confident that this budget mirrors the growing consensus with the Congress
regarding the best role for foreign assistance programs in advancing U.S. foreign
policy.
As Secretary Albright noted in June 1997, "In the wake of the Cold War, it is
not enough to for us say that Communism has failed...we must heed the lessons of the
past, and take advantage of the opportunity that now exists to bring the world together
in an international system based on democracy, open markets, law, and a commitment
to peace." USAID is doing its part to meet these historic challenges.
I would like to take a moment to urge the Congress to move forward on both
the International Monetary Fund replenishment and payment of United States arrears
to the United Nations. Both these matters are vital to the national interest and have
unfortunately become entangled in the thorny debate over voluntary international
family planning programs. The debate over family planning programs is a legitimate
one, and deserves to stand or fall on its own merits. However, this discussion has no
relationship to either the International Monetary Fund or U.N. arrears -- these are
entirely separate issues. It is regrettable that these issues of bipartisan concern, such
as our response to the Asian financial crisis, would founder upon the rocks of an
unrelated ideological dispute.
In looking at the broad range of the agency's programs, I am most proud of the
direct impact USAID's programs have on people -- from saving lives to building more
prosperous societies to creating jobs for the American people. For example, USAID
emergency relief programs provided food and other assistance to more than 28 million
disaster victims in 1996. Our health and child survival programs helped save more
than five million lives last year alone. Severe food shortages were averted in seven
African countries, thanks to USAID efforts to establish regional capacities to anticipate
and prevent famine. U.S. exports to developing countries, most of them former or
current aid recipients, grew by $155 billion from 1990 to 1996, supporting roughly
1.5 million additional jobs in the United States.
We responded rapidly to support transitions from crises, helping Guatemala
implement a historic Peace Accord and demobilize former combatants. Our programs
in Eastern Europe and the New Independent States helped privatize more than 26,000
state-owned enterprises in 1996 alone. In addition, we supported free and fair
elections in 14 countries around the globe and assisted in the drafting and adoption of
new constitutions in three countries. More than a million people received USAID
microenterprise loans last year, and more than half of those clients were women. We
helped farmers in Latin America choose alternatives to growing drugs, and cut the
acreage in Peru devoted to coca production by 27 percent.
We took a major step toward the worldwide eradication of polio with our
support for national immunization days in Africa and Asia. The agency continued to
help finance innovative public-private partnerships, such as the one that helped create
vaccine vial monitors -- simple heat-sensitive tags that indicate when vaccines have
become unusable, resulting in health savings in excess of $10 million a year. Our
international family planning programs provided millions of couples the option to use
family planning for the first time. And USAID contributed significantly to improving
conservation on over 21,000 square miles of land in 14 different countries.
The Congress and the American taxpayer have every right to demand results
for the dollars they put into foreign assistance, and I feel USAID is doing a better job
than ever before in producing results that make a difference in today's world.
The Budget Squeeze
I would like to take a moment to deal with an issue that perennially causes deep
headaches in the management of sound development programs. As you are well
aware, the agency is called on from many quarters to work on a wide range of issues
around the world. Every day we are faced with challenges that could consume our
entire budget: the 800 million people who face hunger around the globe, the millions of children who die from easily preventable causes, the 1.3 billion people who live on
less than a dollar a day, the emergence of new strains of deadly diseases, and the tens
of millions of refugees from war and conflict.
Clearly each of these, and many other issues, are stark problems that deserve
every attention. Equally clearly, every issue has passionate proponents who make
convincing arguments that their issue is the single most important element of the
development challenge. However, as an agency, we cannot be all things to all people.
But what we can do is develop sound, integrated strategies that holistically attack the
largest development problems at their roots, and focus our efforts in countries that
show a commitment to reform. Unfortunately, our ability to implement cogent overall
approaches to the most severe development problems is often hindered by earmarks,
directives and other limitations that constrain our flexibility. These limitations are
entirely well-intentioned, but still make it difficult to carry out our work.
Both the Government Performance and Results Act and this Committee -- in its
1989 report on foreign assistance authored by the Chairman and Ranking Member --
directed that the foreign assistance program be driven by strategic focus and by
results. At USAID, we have embraced this emphasis on results. But as your 1989
report sagely noted, "With extensive earmarking, USAID's experienced and
committed personnel do not have responsibility for the program, and cannot utilize
their talent and creativity. In contrast, given today's challenges, the premium should
be on ideas, leverage, and long-term problem solving. This requires flexibility, better
use of talent, and concentration on central, long-term issues."
When we look at the walls that have been set around regional allocations, we
see how they have squeezed our development assistance programs in Asia where huge
numbers of people are still in poverty. Yes, popular programs in Africa and Latin
America are protected, but equally popular microenterprise and basic education
programs for Asia will be cut. Just in Bangladesh, agribusiness investment and
employment will be put aside, microenterprise lending likely will be eliminated for
1,100 businesses, and the start-up of fisheries will be delayed. In the Philippines, we
will lose an opportunity to work with non-governmental organizations and local
governments in the Mindanao area, the primary location of the Philippines' lingering
civil unrest.
When overall budgets are cut and earmarked items remain intact, or when
earmarks increase faster than the overall budget increases, important development
programs are jeopardized. A case in point is Indonesia, where beginning in 1995 the
combination of decreased Operating Expense funds and the scarcity of program funds
for economic growth activities led to the decision to curtail USAID's large and diverse
policy and institutional reform programs. This included the early termination of
programs that provided, among other things, advisors to the Security and Exchange
Commission to improve the regulatory framework for capital markets, and advisors to
the Ministries of Plan and Finance.
This is not to suggest that USAID could have prevented Indonesia's financial
crisis. But we would have been in a much better position to respond to the crisis if
our advisors had stayed engaged in promoting the financial sector reforms that were
needed. The further irony, of course, is that the scarcity of funds for economic growth
activities was in part the result of our mutual commitment to ensure adequate funding
for child health programs. Sadly, Indonesia today faces a potential child health crisis
as millions of family wage-earners find themselves out of work, food supplies are
disrupted and basic health services are curtailed.
Similarly, we have tremendous work we could be doing in agriculture and other
areas of economic growth, but these areas are pinched between the constant
competition for our limited resources. The regional squeeze put on allocations is just
one example of the many pressures USAID's budget has fallen under in recent years.
There are many other examples that I will not single out. I also want to acknowledge
that not all pressures on our budget come from the Congress, and that the difficult
choices are also of our own making. However, I do feel that retaining some leeway
in the discretionary budget is a crucial part of an effective development program. We
must let our development experts on the ground drive the development process, using
their best judgment. Solutions imposed from Washington do not make the best recipe
for success.
Account Structure
This year's budget request brings with it a slightly different account structure.
Reflecting both strong support within the Administration and the Congress, USAID is
requesting 1999 funding for a separate Child Survival and Diseases account at a level
of $502.8 million. The account includes $226 million for child survival activities,
$121 million to combat AIDS, $30 million for infectious diseases and $27 million for
related health activities that complement our activities in child survival and infectious
disease. Also included is $98.2 million in basic education programs. Education
programs are one of the most powerful means we possess to promote lasting social
and economic progress in the developing world.
This request of $502.8 million compares to a 1998 appropriated level of $550.0
million. But let me be clear: this decrease is not meant to signal a reduction in the importance USAID places on child survival programs. Indeed, it has been our
experience that to effectively combat both infant mortality and the spread of disease,
we also need to address the underlying social and economic conditions that allow child
mortality and infectious diseases to flourish, such as poverty, malnutrition, illiteracy,
poor sanitation, overcrowding and environmental degradation.
For example, our urban programs that work in some of the worlds' largest and
increasingly crowded mega-cities are not considered part of the child survival account.
Yet these programs are helping provide clean water and waste treatment facilities to
millions of poor families, an effort that clearly improves the lives of children and
reduces the spread of disease. Or consider education programs that appear in this
account but do not fall under a strict definition of child survival programs: research
shows that the children of a mother who has even a single year of education, has a 9
percent better chance to live to the age of five. Gains increase substantially with each
additional year of schooling. So when you look at our programs in terms of child
survival, I think we need to focus on their broad impact.
The Development Assistance Account: The Africa Trade and Investment Initiative and
the Summit of the Americas
President Clinton's upcoming trip to Africa offers an excellent opportunity for
the world to focus on the immense potential and considerable challenges on the
continent. USAID is glad to be an active partner in Africa's future. I feel that this
trip will offer ample evidence of what I have long argued: Africa is the world's last
great developing market. As part of the Partnership for Economic Growth and
Opportunity in Africa, announced in June 1997, USAID will help Africa integrate into
the world markets through increased openness to international trade and investment.
This type of reform and assistance program has already been proven to be a major
ingredient in the recipe for economic progress and growth in other parts of the
developing world.
The Partnership includes the following USAID components:
-- Technical assistance to help African governments liberalize trade and improve
the investment environment for the private sector;
-- Assistance to catalyze relationships between U.S. and African firms through a
variety of business associations and networks; and,
-- Funding of non-project assistance in conjunction with other bilateral and
multilateral donors to help alleviate the budget crunch in nations embracing
aggressive, market-friendly reforms.
The second regional initiative included in the Development Assistance account
focuses on Latin America. As part of our effort to capitalize on regional cooperation,
the budget proposal includes funds to support the initiatives to be endorsed at the
second Summit of the Americas planned for April 1998. USAID helped to define the
agenda for the upcoming Summit, where the region's 35 presidents will focus on
regional challenges, including economic integration, education, democratic institution
building and poverty alleviation through microenterprise activities. USAID is
requesting $20 million to support initiatives aimed at achieving these goals which will
help remove the barriers to the participation of the poor in the national life of the 34
democracies represented at the second Summit of the Americas.
The Development Assistance Account: Climate Change, Biodiversity and the
Development Credit Authority
The Development Assistance account also includes an increase of $44 million
for environment programs to address biological preservation in Africa, and for the
President's Initiative on greenhouse gases in the Asia region, including India,
Philippines, Indonesia and through the U.S. Asia Environmental Partnership. In June
1997, at the United Nations General Assembly Special Session on Environment,
President Clinton announced that the United States would devote at least $1 billion
over the next five years to help developing nations achieve clean growth. USAID is
making our nation's commitment a reality through its Climate Change Initiative.
Beginning in fiscal year 1998, USAID will devote at least $150 million in non-credit assistance per year, for five years, to climate change-related programs. These
programs will emphasize energy and land use sector efforts that promote "climate
friendly" development, and activities to promote developing country participation in
the Framework Convention on Climate Change. Activities will be focused in nine key
countries and three regions: Brazil, Mexico, India, Indonesia, the Philippines, Russia,
Ukraine, Poland, South Africa, Central Asia, Central America and Central Africa.
I was extremely pleased with the enactment of Development Credit Authority
in the fiscal year 1998 Foreign Operations Appropriations legislation. I want to thank
this Committee and the Appropriations Committee for your leadership in passing this
authority in H.R. 1486. I know that your support helped our efforts. With this
authority we can now analyze projects to see if they can be better served by loans or
loan guaranties. While this flexibility surely saves U.S. foreign aid dollars, it also serves to introduce financial discipline into these developing countries and moves them
a step further toward graduation.
One area that is well suited for this type of funding is in the environmental
sector. As part of USAID's approach to climate change, we will complement our
grant assistance with a credit program in the fiscal year 1999 budget, to be funded
through transfer of up to $10 million from the Development Assistance account.
Projects that promote clean energy production as well as environmentally sound
infrastructure and industry are good candidates for our credit programs. We are also
developing projects in Central and Eastern Europe and the New Independent States
where opportunities for credit-worthy projects are more likely as these countries
transition to market-based economies and attract private capital.
We understand that the Congress is concerned about the financial soundness of
future USAID credit assistance activities under the Development Credit Authority. We
have taken steps to meet these concerns, and I will guarantee that no money is
obligated under this authority until we have the capacity to manage it and the Office
of Management and Budget certifies this capacity.
An Increased Emphasis on Agriculture and Education
During this last year, the agency heightened its strategic focus on two important
areas of development: agriculture and education. Agriculture is now being pursued as
a part of USAID's economic growth goal by refocusing on the links between
agriculture, economic growth and food security. As part of this effort, USAID, at the
World Food Summit in November 1996, highlighted the continuing food security
issues of the over 800 million chronically undernourished people in the developing
world. The proposed budget allocations for food aid are part of this Administration
focus. Education has been promoted to the level of one of the agency's primary
goals. USAID is working to improve basic education for both girls and boys,
particularly in the poorer countries of sub-Saharan Africa. An important part of this
effort is our continued focus on advocating that no children should be denied access to
an education because of their gender, ethnicity or social status.
Increased Transition Activities
Within USAID's 1999 budget is a $15 million increase to the International
Disaster Assistance Account for Office of Transition Initiatives (OTI) efforts. This
will increase the U.S. government's capacity to bring fast, direct, flexible assistance to
priority countries in their transition from conflict, by addressing fundamental needs.
The United States continues to face the challenge of responding to increasing numbers of countries with complex emergencies. Many of these complex emergencies have
come to be high priority foreign policy concerns of this Administration, such as those
in Haiti, Bosnia, Congo, Liberia and Angola. Although relatively new and with
limited resources to date, OTI has demonstrated a successful track record in assisting
transitional countries: demobilizing 5,000 soldiers and developing 2,400 community
governance projects in Haiti; reaching 1.9 million people with mine awareness and
helping create 590 projects in 270 villages in Angola; and implementing 650 grants in
Bosnia to promote independent media and democratic reconciliation.
Experience has shown that having the resources and the flexibility of the
International Disaster Assistance account in place to deal with these crises is an
invaluable, innovative and cost-effective means to advance U.S. interests in these very
dynamic settings. I also want to assure the Committee that by increasing the funding
for OTI, we in no way, shape or form are lessening the ability of our agency to
provide immediate life-saving humanitarian relief through our Office of Foreign
Disaster Assistance -- still one of the world's premier organizations for providing such
assistance on the ground.
Infectious Diseases
For fiscal year 1998, Congress authorized funding for USAID to take part in a
global initiative to combat infectious diseases, joining with other U.S. Government
agencies in this effort. USAID has developed a strategy for the initiative as an
important complement to the other four objectives leading to USAID's goal to stabilize
world population and protect human health, particularly efforts in child survival,
maternal health and AIDS prevention. USAID's strategy has been developed in
consultation with a wide cross section of global health experts, including staff from
other U.S. government agencies, UNICEF, the World Health Organization, non-governmental organizations, academia and the private sector. In the spirit of true
collaboration, these discussions with other agencies brought consensus about the
directions for USAID in this endeavor, and clarification about USAID's role and
contributions.
USAID's strategy has four technical elements:
-- Slowing the emergence and spread of antimicrobial resistance, targeted at the
principal microbial threats in the developing world: pneumonia, diarrhea,
sexually transmitted diseases, tuberculosis and malaria.
-- Testing, improving and implementing options for tuberculosis control.
-- Implementing new and effective disease prevention and treatment strategies
focused on malaria and other infectious diseases of major public health
importance.
-- Strengthening health surveillance systems by building capacity at the country
level to help create a global early warning system for disease.
USAID's strategy is being finalized with further extensive consultations with
our partners. Programming of the funds into specific activities will follow shortly.
The Centers for Disease Control and Prevention, the World Health Organization and
UNICEF, among others, will certainly play key roles in our program, and a new
Infectious Diseases objective has been included in the health portion of our request.
Economic Support Funds
This budget request includes an additional $94 million for Economic Support
Funds, with $70 million of this increase being slated for Haiti. The 1999 request for
Haiti is in addition to the worldwide Economic Support Fund request, and it does not
come at the expense of other programs in Latin America and the Caribbean. The
transition in Haiti remains vital to our regional interests and is a key part of securing
lasting democracy in the Americas. Haitians are undergoing a difficult process in
which they are working to establish a democratic government with a freely elected
Parliament and Executive, and trying to decide on the allocation of power within a
democracy. It has taken Haiti longer than anticipated to work through this process.
We underestimated the time and pace needed to secure reforms and the democratic
transition.
However, it would be wrongheaded to stand back and do nothing and let Haiti
slide toward chaos and internal conflict. The cost of responding to Haiti would be far
greater if we do nothing than if we act today to find long-term solutions to Haiti's
many problems. Our assistance would be directed at helping local communities and
decentralizing and strengthening Haiti's institutional and political structures.
During this uncertain period, we want to significantly increase support to help
generate short-term economic activity and reform to maintain the momentum for
change. We also plan to provide for basic human needs by responding directly to
individuals and local institutions, and by building local capacity. Haiti has extremely
weak institutions which we are trying to strengthen over time. We want the benefits of
the still ongoing democratic transition to be felt tangibly by the poorest populations by
expanding services and jobs through local entities. We believe that in this way we can help keep Haiti from sliding back into autocratic and violent behavior under the
pressures of modernization.
The Administration is requesting $35 million under the Economic Support Fund
for the African Great Lakes Justice Initiative. The objective of the Great Lakes Justice
Initiative is to contribute to efforts in the Democratic Republic of the Congo, Rwanda,
and Burundi to bring an end to the culture of impunity. Recognizing that justice is
one critical element, the initiative is designed to support an expanded effort to help the
public and private sectors in those nations to develop justice systems that are
impartial, credible, and effective, and to help promote inclusivity, coexistence, and
security. The balance of the increase in Economic Support Funds will be used to
support other high priority Administration foreign policy initiatives, particularly in
Africa and the Middle East.
A Historic Transformation Continues
The historic transformations occurring in Central and Eastern Europe and the
former Soviet Union remain critical to U.S. national interests, and our requests for the
Support for East European Democracy (SEED) and FREEDOM Support Act accounts
reflect this high priority. These nations with who we were once in a dangerous,
expensive and ever-escalating arms race, are now emerging partners in the global
economy. In Central Europe, we are seeing some of our allies successfully make the
transition toward membership in NATO and the European Union. Across the region
we are helping these nations create democratic societies and market economies which
are increasingly based on Western values, and linked to us through trade and
investment and through people-to-people, grassroots relationships.
In Central and Eastern Europe, the SEED request is focused on continuing our
commitment to support the Dayton Peace Accords in Bosnia and Croatia. We are
promoting reconciliation on the ground through economic revitalization efforts, job
creation and democracy building efforts. It will take time to deepen and solidify this
process. We are also supporting police monitors and police reform in Bosnia, a
program critical to our ability to facilitate the return and reintegration of refugees and
displaced persons into their communities. Our work in Serbia represents a new focus:
support for nascent democracy elements that will strengthen them to become a force
for regional stability. We plan a growing program in Serbia, but we will carefully
monitor political conditions to ensure these funds can be usefully applied.
In partnership with a number of pre-eminent American foundations, we are
proposing to begin in the next fiscal year a $100 million trust -- with half, or $50
million, to be funded over four years by the U.S. government -- to promote deeper and more enduring civil societies in Eastern and Central Europe. We are joining with
Rockefeller Brothers, Ford, Soros, Mott and others to create an evenly matched
public-private endowment to encourage a range of economic think tanks, professional
societies, chambers of commerce, interest groups and the like to be focussed and self-sustaining. Our goal ultimately is to stimulate an educated, activist citizenry that
demands accountability and value from its government. Also, by breathing life and
vibrancy into these new democracies, we can more readily count on their durability.
With Congressional concurrence, our initial contribution would be $12.5 million from
SEED funds, and we will be consulting with you on the best mechanisms for
Congressional oversight of this process.
In the New Independent States, we are requesting an increase in FREEDOM
Support Act funds of $155 million above the 1998 level to expand the Partnership for
Freedom initiative in Russia and across the New Independent States. In the 1998
budget, Congress endorsed the Partnership for Freedom's new focus on economic
growth, civil society, and partnerships which create bonds between non-governmental
organizations, businesses, universities, hospitals, professional associations and a
myriad of grassroots organizations in the United States and in the region.
FREEDOM Support Act funds will also help us redouble our efforts in Central
Asia to further develop the business, legal and regulatory environment necessary to
underpin the massive oil and gas investment which is likely over the next decade.
Central Asia and the Caucasus are critical to U.S. strategic interests and world energy
supplies. We will continue supporting the Administration's TransCaspian initiative to
facilitate appropriate East-West transport routes and environmentally sustainable
approaches to energy development through bilateral and regional technical assistance.
This will also allow us to fund reforms to promote energy restructuring, energy
efficiency and other actions to address global climate change. A third of the top focus
countries for USAID climate change activities are in the New Independent States,
including Russia, Ukraine and the Central Asian Republics. In Central Asia, we will
also increase efforts focussed on infectious disease and other health issues, including
tuberculosis. We plan to increase funding for health programs by $40 million.
An important part of our work throughout Central and Eastern Europe and the
New Independent States will be our anti-corruption efforts. USAID's assistance in the
area of crime and corruption addresses the underlying causes of corruption, and
complements the efforts of U.S. law enforcement agencies -- the Federal Bureau of
Investigation and the Departments of State, Treasury and Justice -- to address specific
crime and law enforcement needs. USAID helps set the rules of the road for
business, and opens up to public scrutiny government's regulatory processes and
businesses' decision-making. This means reducing inappropriate discretion exercised by government, so that opportunities for arbitrary, capricious or corrupt government
actions are reduced. This also means improving the transparency of commercial
transactions so corporate decisions are open to stockholder and public oversight and
helping to foster an independent media to inform public decision-making.
USAID Management
USAID continues to introduce management reforms designed to deliver
assistance faster and achieve results more cost-effectively. I want to underscore the
importance that USAID has been placing on managing for results and improving
program effectiveness. We were committed to this performance-based budgeting long
before Congress passed the Government Performance and Results Act (GPRA) in
1993, reflecting our belief that Congress and the American people must see the
specific results of our programs if these activities are to continue to receive your
support. Some of USAID's activities -- such as reducing the spread of infectious
diseases in developing countries -- are easier to quantify. Other equally important
interventions -- such as assisting host governments to take steps to move toward a
stable, market-based economy -- take more time to achieve. We are committed,
however, to measuring, assessing, and reporting to Congress on the results of all of
our program activities.
During this last year, we have also continued to improve our working
relationships with the Department of State now that the debate over consolidation is
behind us. Foreign policy and development strategy are better coordinated at the
policy level than ever before. USAID's Strategic Plan supports specific U.S. national
interests as defined in the International Affairs Strategic Plan -- a document which the
Department of State and USAID worked in close cooperation to prepare. USAID and
the Department of State have also agreed upon ways to streamline and better align
operations ranging from how we manage facilities to how we coalesce around specific
country objectives.
We recently submitted to Congress the initial version of USAID's Fiscal Year
1999 Annual Performance Plan. This plan provides specific benchmarks against
which our performance can be assessed at the end of fiscal year 1999. We will also
submit our self-assessment of performance through fiscal year 1999 at the end of
March 2000 through our Annual Performance Report. Our Performance Report will
comment on why we think our approaches did or did not work and what we will do to
improve our performance. These plans and reports are important tools for helping our
agency, and you, to determine the degree to which we have achieved the results that
we had set out for ourselves. We look forward to consulting with you on our
performance measuring and planning efforts.
USAID, in conjunction with the Department of State and other agencies having
an overseas presence, implemented the International Cooperative Support Services, or
ICASS, system effective October 1, 1997. Under this system, administrative support
services at overseas posts will be provided by the agency best able to provide effective
service at a reasonable cost. While any major change such as this is likely to face
problems in the first year of implementation, the changeover from the old Foreign
Affairs Administrative Support system to ICASS appears to be going very smoothly.
All agencies, including USAID, are working to ensure that this new system is a
success and that it will result in the end in better administrative support for all
agencies at a lower cost.
The move of USAID headquarters to the Ronald Reagan International Trade
Center was completed last year. While the move was obviously a sizable logistical
challenge, by and large agency employees appear to be very satisfied with the new
location. I am particularly pleased that, for the first time in the agency's history, we
are all in one building. Teamwork and collaboration among employees have greatly
improved due to the move, and I've run into a lot of people who had communicated
via e-mail for years and who were happy to finally meet their colleagues face-to-face.
Also on the management front, two USAID task forces identified ways to
streamline procurement processes and to better align our workforce to projected needs
in developing countries. Our workforce planning task force recommended reducing the
Washington staff over the next three years to meet tight Operating Expense levels
while protecting the USAID field presence and permitting expanded staff training.
These moves would not entail a reduction in force, but it is clear that managing
Washington with a reduced staff will require streamlined processes and greater
efficiency. The task force recommended that USAID field staff not be cut any
further, and that staffing remain at approximately 700 U.S. direct hires in the field.
However, we will be looking at how to more effectively manage our field presence.
The three areas to be addressed via an initial action plan for procurement
include strengthened teamwork, operational goals and administrative streamlining.
We are reestablishing the Procurement Policy Advisory Panel which will provide for a
wider vetting and understanding of procurement and assistance policies.
Our operational goals are intended to establish benchmark time periods for effecting
actions, such as procurement planning and operational year budget allocation and
distribution which will hopefully stimulate earlier action on procurement and
assistance actions, thereby evening out the workload over the fiscal year.
Over the coming year, we will seek to further improve USAID's unique
comparative advantage to rapidly and innovatively respond to diverse development and humanitarian needs. A further streamlining of USAID work processes could increase
the amount of time available to build and nurture partnerships and coalitions with
those willing to collaborate on development problems. It will also ensure that USAID
maintains the technical breadth and on-the-ground developing country expertise in
preparing responses closely attuned to local conditions.
USAID's recognized excellence as a pre-eminent bilateral development
organization will serve the United States well as we continue to lead other
development actors. This leadership helps create a shared vision on development
goals and approaches across the U.S. government, among donors, within the
nongovernmental and business communities and with the countries in which we work.
As hosts of the upcoming 30th anniversary Tidewater meeting of development
ministers, we now turn our energies to jointly implementing the Development
Assistance Committee 21st Century Strategy. Similarly, as part of the New
Transatlantic Agenda of the European Union and the United States, USAID is now
working closely with the European Commission on more than 60 joint development
activities.
The New Management System
I would like to address an issue that has been of particular concern, the
agency's New Management System (NMS). Last April, I made the difficult decision
to suspend overseas operations of two modules of the New Management System.
Communications problems, difficulties in transferring data and system problems,
particularly with the USAID Worldwide Accounting and Control System (AWACS)
financial management module, were forcing the agency to expend an inordinate
amount of time responding to problems, particularly at our overseas missions. Many
expressed disappointment over this decision because it was already becoming clear that
NMS had the potential to make our work easier and our management reforms more
meaningful.
USAID contracted in the fall with a top-notch consulting team recommended by
the general Services Administration, and led by IBM, to conduct a thorough
assessment of the NMS. This independent assessment by the consulting team was
completed in January and has been shared with Committee staff. This analysis
identified the coding and software flaws that have plagued NMS, particularly the
AWACS module, and also identified areas where we could strengthen the management
of our information systems.
The report also carefully assessed the options for moving forward to complete
the initial four modules of NMS for the agency to comply with the Government Performance and Results Act and other government-wide standards. The report
recommended options for modifications of the operations, budget and assistance and
acquisition modules, and replacement of the financial management module with one of
the now-available commercial off-the-shelf financial packages that would be modified
to meet agency needs and integrated with the other modules.
Agency staff have put a lot of work into making the NMS system function and
I deeply appreciate their labors. It was not a wasted effort. The business area
analysis process established a solid base for the development of each of the NMS
modules. The vision of an integrated financial and information management
system that would meet our needs into the 21st Century was, and remains, the correct
vision. It is now clear, however, with the advantage of hindsight, that we were too
ambitious. We knew that our old systems were inadequate so we rushed the effort to
reach full compliance with government standards and with the business needs
identified in the business area analysis. Basically, we tried to do too much, too fast,
and did not adequately test the system before it was launched in October 1996.
I would also point out that, when we began this process in 1993 at the start of
the Administration, everyone from the Office of Management and Budget to Congress
agreed that the agency's financial information systems were badly flawed and that
immediate action needed to be taken. At that time, no commercial off-the-shelf
packages existed that would meet our financial information systems needs. Our
intentions were good in overhauling the agency's financial information systems, but
our method was flawed. For that I accept responsibility.
Regarding next steps, we have completed our assessment of the consultant's
report and are defining a comprehensive plan that will assure us that the mission
critical systems will meet the year-2000 compliance standards. The second priority is
to have in place a financial management system that complies with federal standards
that can produce an auditable consolidated financial statement. Third, we must
complete the basic functionality for all modules of NMS and provide for data
integration among them.
Our Management Bureau, in collaboration with the Capital Investment Review
Board, has laid out internal management and external contracting strategy to achieve
these goals. We are in the process of sharing that approach with this Committee, and
our other oversight Committees. We have invested significant resources in NMS
development, and it is disappointing that we are not where we had hoped to be. The
independent assessment, however, provides an invaluable analysis of our current
situation and a clear description of the steps that we must take to achieve the original
vision of the NMS. We now find ourselves with the opportunity to resolve our difficulties with the NMS and create a system that will allow you the transparency and
accountability that should be the standard for government operations.
In Conclusion
We cannot pursue our values as a nation without an effective international
cooperation program. Ultimately, development assistance administered by USAID
improves people's lives in the developing world and helps to strengthen their
institutional capacity to mobilize local resources and take ever greater responsibility
for their own destinies. Foreign assistance constitutes one of the best tools we have in
the United States to build relationships among peoples and institutions that can endure
and advance our interests.
USAID bolsters U.S. domestic and foreign policy interests by capitalizing on
the challenges and opportunities inherent in increased globalization and
interdependence. When we look at issues like the Asian financial crisis, we see how
important USAID's development work is to this country. In Asia, we have seen
countries that embraced aggressive economic reforms, but were slower to embrace the
issues of open and transparent governance that are also critical to long-term economic
growth and foreign investment. At USAID, we are investing in the institutional
structures, market reforms and grassroots development programs that lead to long-term stability and growth. Indeed, when we look at the world today, we see that the
end of the Cold War has made such programs more important to America, not less.
In this environment, referring to USAID's programs as foreign aid is
increasingly anachronistic. Neither the world's problems nor America's economic
opportunities stop at our borders. Indeed, exports accounted for over one-third of
America's growth during the past four years. In turn, developing and emerging
market countries accounted for more than half of that growth in exports. All spheres
of activity in the United States demand an international reach, whether it be health,
crime, environmental protection or job creation. The benefits of international
cooperation are obvious.
I am very optimistic about the future of our development assistance program, in
part because of the increasing support from this body for so many of our efforts and
activities. Very high on my list of priorities for the coming years is working with you
to achieve as complete a consensus as possible between the Congress and the
Administration on the mission and strategy underlying our assistance efforts. I look
forward to working with you, and appreciate the opportunity to appear today. Thank
you.
This is an archived USAID document retained on this web site as a matter of public record.
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Last Updated on: July 18, 2001
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