Note: This document may not always reflect the actual appropriations determined by Congress. Final budget allocations for USAID's programs are not determined until after passage of an appropriations bill and preparation of the Operating Year Budget (OYB).
MANAGEMENT IMPROVEMENTS
Since May 1993, when USAID became one of two "reinvention laboratories" as part of the Vice President's National Performance Review, the Agency has sought to remake itself by:
* improving its strategic focus on fewer but more attainable goals;
* linking resource allocation more directly to program performance;
* reducing redundancy in management and empowering employees;
* instilling critical values of customer service, teamwork, results orientation, empowerment and diversity into the organization's corporate culture;
* supporting the new values with reformed operating systems that simplify and streamline USAID's work; and
* bolstering new operating systems with modern technology that will improve accountability and better track USAID's program and financial performance.
The goal of these management reforms is to make USAID a more responsive, effective and efficient organization in delivering assistance resources.
Promoting the new management vision and introducing new ways of doing business have been affected by resource shortages that have driven both the pace and content of the reform effort. These include cuts since FY 1993 in operating expenses, the program budget (excluding Egypt and Israel), and U.S. direct-hire staff.
These cuts have focused agency efforts on restructuring overseas operations. To maintain the agency's comparative advantage in its overseas presence, in the aftermath of major staff reductions over the past two years (including a reduction in force), USAID has begun to take stock of its remaining human and physical resources to achieve a new equilibrium between its mission and its management capacity.
USAID is embarking on the next phase of management reform. This includes agency efforts to deepen earlier reforms and tackle some difficult management areas -- such as human resources and work force information management -- as it seeks to support smaller, more focused field missions in managing for results.
Achievements in Agency Business Areas
USAID is making major progress in most of its core business areas and administrative support systems.
Operations. Changes in how the agency plans, delivers and monitors its assistance have been the most dramatic. In September 1997, USAID issued its strategic plan, prepared in close coordination with the Department of State. In addition, almost all agency operating units have strategic plans in place supported by management contracts. Most field missions have formed and operate within strategic objective teams with increased authorities. About 80% of all agency operating units have performance monitoring systems in place with established baseline data for at least one of their strategic objectives.
Procurement. Procurement (contracts) and assistance (grants and cooperative agreements) are two of the major ways though which USAID translates its development objectives into performance.USAID has been part of the overall federal effort to make procurement more user friendly, while administering resources responsibly. USAID has concentrated on two key areas: communication and training, and use of innovative contracting techniques, such as performance-based contracting. USAID is one of the leading agencies in using a contractor's past performance in the award of future contracts.
Improving communications with the contractor and grantee community is an important part of USAID's reform effort. In 1997, USAID used its internet website to post contract information on virtually all solicitation documents. Most of the queries on USAID's website involve procurement topics and issues.
Within USAID, however, there was acknowledgement that the processes involved in assistance and acquisition needed serious reform. A task force was formed in late 1997 to recommend ways to do this. The recommendations focused on more training for program management personnel, improved "teamwork" between contract and program management personnel, and increased delegations of warrant authorities. Implementation of these recommendations has already started.
Organizational Management and Human Resource Development. USAID has been going through a critical period for staffing and organizational restructuring. Driven by severe budget cuts, the agency revamped its overseas presence, reducing U.S. direct-hire staffing in field missions by 35% compared to FY 1992 (excluding the Office of Inspector General's staff). In addition, 28 missions have been closed since FY 1992.
In late 1997, another task force, which was formed to look at workforce planning issues, was asked to make recommendations about the size and composition of USAID's direct-hire staffing. The task force's primary concern was that the agency maintain a sufficient number of U.S. direct-hire employees overseas in order for USAID to continue to have its on-the-ground comparative advantage in development. Their recommendations favored preserving current overseas staffing, trimming Washington staff through attrition, increasing funds for staff training, and discussing alternative ways for managing USAID overseas missions.
Improvements in other areas of personnel management were in employee evaluation and the assignments process. A revamped employee evaluation program was put into use in 1996 and further streamlined in 1998. That program ties employee work objectives to strategic objectives of USAID's operating units and, more broadly, to the agency's goals. It focuses employees and raters on "results" and achievements rather than process, and heavily values teamwork. Also, a new assignments process has been put in place that reduces the time it takes to assign foreign service officers by an average of 50%.
Information Resources Management. A critical element to making agency core values succeed is effective information and communication systems. An integrated information system, as envisioned by the new management system (or NMS), empowers employees by providing ready access to shared information and by improving accountability through better record-keeping systems.
USAID has improved its ability to communicate internally and externally with both employees and customers. The last two years witnessed development of a variety of channels for reaching employees and customers alike, including: USAID internet and intranet with links to agency documents, policies and announcements in Washington and 40 of the agency's largest field missions; publication of On Track, a monthly reengineering digest; disseminating USAID Automated Directives System and supplementary references on CD-ROM as well as its access on internet; and USAID's Center for Development Information and Evaluation (CDIE) Reengineering Best Practices Series and Performance Monitoring and Evaluation TIPS available through "CDIE On-Line." All these media are supported by electronic help desks, so that all employees now have access to at least one channel of management support for management and policy queries.
USAID has also enhanced its use of information technology to improve its outreach to customers and stakeholders. It is estimated that the USAID corporate web page reaches 40 million people worldwide. Organizations and individuals are able to access procurement policies and business opportunities from nearly anywhere in the world. In 1997, for example, USAID's website for procurement information and business opportunities received over 500,000 hits.
The most serious challenge that USAID faces in information management is in introducing a fully functioning NMS worldwide. The system was rolled out on October 1, 1996 in 43 field missions and in Washington. Its success promised resolution to the agency's long-standing material weakness of lacking an integrated financial accounting system, greater efficiencies in budgeting, reporting program results, and managing financial resources. Initially, the system processed $1.6 billion in contracts and grants, as well as the $1.2 billion Israel cash transfer. In addition, 14,500 records from financial accounting and contract information management systems were "migrated" to the new system's data base.
Following initial rollout of the NMS, unanticipated problems emerged. Specific concerns about the new system included poor integration between the different modules, difficulty in generating summary reports, and data reconciliation. Following a report issued by USAID's Office of the Inspector General in late 1996, the agency took several management actions. First, an NMS group of senior agency personnel was formed in mid-1997 to diagnose and prioritize the measures needed to address the system's problems. An acting chief information officer was named with significant available time to devote to information resource management matters. A new director of information resources management was appointed, and an experienced USAID employee was brought from the field to serve as NMS program manager. As a result of these efforts, a comprehensive external assessment of the NMS has recently been completed. This assessment provides the necessary foundation of information for the agency to select the most cost-effective way to fix the NMS problems.
At the same time, staff and resources have been redeployed to ensure that the NMS and all other USAID systems will comply fully with federal year 2000 (Y2K) requirements. Most systems have already been fully assessed for Y2K compliance and necessary remedial actions are under way.
Financial Management. USAID has improved aspects of its financial management as it seeks to meet compliance standards of the Chief Financial Officers Act. In the area of accountability, increased use of automation has permitted the agency to streamline its cash reconciliation process. Also, increased use of electronic systems means that USAID pays 99% of its personnel through electronic fund transfers. Moreover, through use of the electronic certifying system, 96% of domestic vouchers are paid electronically, one of the highest rates of any U.S. Government agency.
Limited progress was made in correcting the material weaknesses related to internal accounting and administrative controls. The most critical weakness -- lack of a single, integrated financial management system -- remained outstanding. Correcting this critical weakness, and most of the others, depends on the development and full implementation of a new accounting system, which is under way. An interim evaluation of progress and possible strategic corrective changes is just being completed. A strategy for a worldwide integrated financial management system will be finalized, based on the results of the evaluation.
In the area of credit management, the agency has established a credit management improvement action plan which lays out a number of actions to correct identified problems with the management of credit resources. A series of milestones for completing the actions have been agreed with the Office of Management and Budget (OMB). A critical element in the action plan is the outsourcing of financial servicing and accounting for the credit activities. After the milestones have been achieved, OMB is expected to certify that the agency has established an effective credit management system, which will then permit the agency to exercise its new authority to transfer appropriated funds to the Development
Credit Authority. This authority will significantly expand USAID's ability to leverage private sector resources in support of its sustainable development objectives.
In the area of audit, there has been a concerted effort to enhance the agency's working partnership with the Office of the Inspector General (OIG). An audit resolution program has been developed that closely tracks and works to resolve outstanding recommendations that have exceeded six months.
Administrative Services. The most significant administrative event of 1996-1997 was the consolidation of USAID' headquarters operating units into a single office building at Federal Triangle. USAID has now relocated from eleven separate sites to one. This will improve productivity by eliminating employee transit between buildings and by facilitating contacts among the different bureaus and offices.
Work has also begun between USAID and the State Department management bureaus to consolidate overseas and Washington-based administrative functions, where practical. The old system of assigning overseas support costs between foreign affairs agencies (known as FAAS) has been replaced by a new, more accountable system called International Cooperative Administrative Support Services (ICASS). The objective of ICASS is quality service at U.S. Government field posts at the lowest cost. This is accomplished by more closely aligning the costs of delivering management services with the demand for these services. Equity is achieved by having agencies pay their fair share of administrative costs based on usage. Also, ICASS adopts the concept of customer service standards and accountability against which service providers are evaluated and held responsible.
The new system is being implemented over three years. In FY 1996, it was tested at four pilot posts, two of which (Warsaw and El Salvador) had a USAID presence. An assessment conducted in April 1996 made adjustments necessary prior to worldwide introduction in FY 1997. Full implementation of ICASS began October 1, 1997.
Conclusion
The objective of USAID's reform of its management systems since 1993 has been to improve responsiveness, effectiveness and efficiency in delivering development resources. As the agency's global mission has become more complex, responding increasingly to transnational problems, countries in transition, and natural and man-made emergencies, its management systems have similarly been challenged to respond in different ways. After what was an overly ambitious start, USAID is examining options recently recommended by an independent assessment team to correct problems with the new management system, particularly its financial components. USAID remains committed to an integrated financial and information system that will support the agency's operations in the years ahead. Changes in the international operating environment, and in USAID staff levels, demand management approaches which may not call for a traditional USAID field mission model, in some cases. Successful management responses are being increasingly measured by their ability to adapt to and be effective in a variety of development situations.
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