Department of State's Report to Congress and U.S. Oversight of Civilian Assistance to Pakistan Can Be Further Enhanced

Pakistan is a key U.S. ally in the effort to combat terrorism and violent extremism. Taliban, al Qaeda, and other terrorists have used parts of Pakistan to plan and launch attacks on Afghan, U.S., and NATO security forces in Afghanistan, as well as on Pakistani citizens and security forces in Pakistan. Enhancing the effectiveness of civilian assistance to Pakistan is one of the U.S. government's top foreign policy and national security priorities. Foreign assistance is vital to help the government of Pakistan overcome the political, economic, and security challenges that threaten Pakistan's long-term stability. Since 2002, the United States has provided over $18 billion in foreign assistance and reimbursements to Pakistan, about two-thirds of which has been security-related. In October 2009, Congress passed the Enhanced Partnership with Pakistan Act of 2009, which authorizes up to $1.5 billion a year for development, economic, and democratic assistance (henceforth referred to as "civilian assistance") to Pakistan for fiscal years 2010 through 2014. In the act, Congress declares that the United States requires a balanced, integrated, countrywide strategy to support Pakistan's efforts that does not disproportionately focus on security-related assistance. The act authorizes civilian assistance for a wide range of activities, including projects to build the capacity of government institutions, promote sustainable economic development, and support investment in people through education and health programs. The act also encourages, as appropriate, the use of Pakistani organizations to provide this assistance. In several reports and testimonies since 2008, GAO identified the need to improve planning, monitoring, documentation, and oversight of U.S. assistance to Pakistan. For example, in previous reports we have noted the need to increase oversight and accountability for Pakistan's reimbursement claims for Coalition Support Funds and to improve planning, performance, and monitoring documentation of U.S. development assistance to Pakistan's Federally Administered Tribal Areas (FATA). The Enhanced Partnership with Pakistan Act of 2009 requires the Department of State (State) to develop several monitoring and strategy reports for U.S. assistance to Pakistan, including the Pakistan Assistance Strategy Report and the Semi-Annual Monitoring Report. The act also directed the Comptroller General to provide: (1) a review of, and comments addressing, State's Pakistan Assistance Strategy Report; (2) an assessment of the impact of the civilian assistance on the security and stability of Pakistan; (3) a detailed description of the expenditures made by Pakistan with Foreign Military Financing (FMF) grants; and (4) recommendations relating to any additional actions the Comptroller General believes could help improve the efficiency and effectiveness of U.S. efforts to meet the objectives of the act. This report addresses these issues.

(1) First, while the report describes plans related to program monitoring and impact evaluation research, it does not contain plans specifically related to operations research as defined in the act as "the application of social science research methods, statistical analysis, and other appropriate scientific methods to judge, compare, and improve policies and program outcomes, from the earliest stages of defining and designing programs through their development and implementation, with the objective of the rapid dissemination of conclusions and concrete impact on programming." Second, the report did not include a projection of levels of assistance to be provided to Pakistan under the act for all 17 of the Millennium Challenge Account eligibility indicators, as the act requires. This section of the report did not contain information on 7 of the Millennium Challenge indicators, including, for example, natural resource management, business start-up, trade policy, and inflation control. (2) As of December 31, 2010, the full impact of the fiscal year 2010 civilian assistance could not be determined because most of the funding had not yet been disbursed. According to a State document, it will take some time before significant outcomes of the civilian assistance can be measured. Furthermore, performance indicators, targets, and baselines had not yet been established for all of the civilian assistance. USAID, for example, is in the process of establishing new indicators across all sectors. (3) Since fiscal year 2002, a total of $2.11 billion has been appropriated for FMF grants to Pakistan. Of that amount, Pakistan has used about $1.86 billion to acquire various defense articles, services, or training. Some of these funds have been used to refurbish or upgrade defense articles that were given to Pakistan under the Excess Defense Articles program, including Cobra helicopters, armored personnel carriers, and the frigate U.S.S. McInerney. As of the end of calendar year 2010, Pakistan still had approximately $250 million available to purchase U.S defense articles, services, or training. According to agency documents, some of these funds will be used to acquire naval surveillance aircraft, communications equipment, upgrades to TOW missile launchers, and additional helicopters. (4) To supplement the Pakistan Assistance Strategy Report so that information reported to Congress complies with all requirements of the Enhanced Partnership with Pakistan Act of 2009, we recommend that the Secretary of State take the following two actions: (1) include information on plans for operations research, as defined in the act, in its forthcoming Semi-Annual Monitoring Report; and (2) deliver to Congress a projection of the levels of assistance to be provided to Pakistan under the act, broken down into the 17 Millennium Challenge categories listed in the act. To enhance the accountability of U.S. civilian assistance to Pakistan, we recommend that the USAID Administrator should ensure that U.S. assistance to Pakistani organizations identified as high- or medium-risk be provided through contracts, grants, or agreements that require these organizations to address weaknesses identified in their preaward assessment that would improve the accountability of U.S. funds. These measures can include such steps as implementing a conflict of interest policy, recruiting more qualified internal audit and procurement staff, embedding approved CPA staff, and participating in a capacity-building program.