[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
 U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT: MANAGEMENT CHALLENGES AND 
                          STRATEGIC OBJECTIVES

=======================================================================


                                HEARING

                               before the

                 SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
                     ORGANIZATION, AND PROCUREMENT

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 28, 2009

                               __________

                           Serial No. 111-50

                               __________

Printed for the use of the Committee on Oversight and Government Reform


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                               index.html
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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                   EDOLPHUS TOWNS, New York, Chairman
PAUL E. KANJORSKI, Pennsylvania      DARRELL E. ISSA, California
CAROLYN B. MALONEY, New York         DAN BURTON, Indiana
ELIJAH E. CUMMINGS, Maryland         JOHN M. McHUGH, New York
DENNIS J. KUCINICH, Ohio             JOHN L. MICA, Florida
JOHN F. TIERNEY, Massachusetts       MARK E. SOUDER, Indiana
WM. LACY CLAY, Missouri              TODD RUSSELL PLATTS, Pennsylvania
DIANE E. WATSON, California          JOHN J. DUNCAN, Jr., Tennessee
STEPHEN F. LYNCH, Massachusetts      MICHAEL R. TURNER, Ohio
JIM COOPER, Tennessee                LYNN A. WESTMORELAND, Georgia
GERALD E. CONNOLLY, Virginia         PATRICK T. McHENRY, North Carolina
MIKE QUIGLEY, Illinois               BRIAN P. BILBRAY, California
MARCY KAPTUR, Ohio                   JIM JORDAN, Ohio
ELEANOR HOLMES NORTON, District of   JEFF FLAKE, Arizona
    Columbia                         JEFF FORTENBERRY, Nebraska
PATRICK J. KENNEDY, Rhode Island     JASON CHAFFETZ, Utah
DANNY K. DAVIS, Illinois             AARON SCHOCK, Illinois
CHRIS VAN HOLLEN, Maryland
HENRY CUELLAR, Texas
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
PETER WELCH, Vermont
BILL FOSTER, Illinois
JACKIE SPEIER, California
STEVE DRIEHAUS, Ohio
------ ------

                      Ron Stroman, Staff Director
                Michael McCarthy, Deputy Staff Director
                      Carla Hultberg, Chief Clerk
                  Larry Brady, Minority Staff Director

  Subcommittee on Government Management, Organization, and Procurement

                 DIANE E. WATSON, California, Chairman
PAUL E. KANJORSKI, Pennsylvania      BRIAN P. BILBRAY, California
JIM COOPER, Tennessee                AARON SCHOCK, Illinois
GERALD E. CONNOLLY, Virginia         JOHN J. DUNCAN, Jr., Tennessee
HENRY CUELLAR, Texas                 JEFF FLAKE, Arizona
JACKIE SPEIER, California            ------ ------
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 28, 2009...................................     1
Statement of:
    Walsh, Michael, former director of procurement, USAID 
      Insidengo; James Kunder, former Deputy Administrator, USAID 
      & Bureau had for Iraq and Afghanistan Programs; Thomas 
      Melito, Director, International Affairs and Trade, U.S. 
      Government Accountability Office; and George Ingram, 
      Academy for International Development......................     6
        Ingram, George...........................................    61
        Kunder, James............................................    40
        Melito, Thomas...........................................    47
        Walsh, Michael...........................................     6
Letters, statements, etc., submitted for the record by:
    Ingram, George, Academy for International Development, 
      prepared statement of......................................    63
    Kunder, James, former Deputy Administrator, USAID & Bureau 
      had for Iraq and Afghanistan Programs, prepared statement 
      of.........................................................    42
    Melito, Thomas, Director, International Affairs and Trade, 
      U.S. Government Accountability Office, prepared statement 
      of.........................................................    49
    Walsh, Michael, former director of procurement, USAID 
      Insidengo, prepared statement of...........................     9


 U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT: MANAGEMENT CHALLENGES AND 
                          STRATEGIC OBJECTIVES

                              ----------                              


                        TUESDAY, APRIL 28, 2009

                  House of Representatives,
            Subcommittee on Government Management, 
                     Organization, and Procurement,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9 a.m., in 
room 2154, Rayburn House Office Building, Hon. Diane E. Watson 
(chairwoman of the subcommittee) presiding.
    Present: Representatives Watson, Connolly, Cuellar, Hodes, 
Bilbray, and Duncan.
    Staff present: Bert Hammond, staff director; Valerie Van 
Buren, clerk; Adam Bordes, professional staff; Dan Blankenburg, 
minority director of outreach and senior advisor; Adam Fromm, 
minority chief clerk and Member liaison; Ashley Callen and 
Daniel Epstein, minority counsels; and Glenn Sanders, minority 
Defense fellow.
    Ms. Watson. I would like to call to order the hearing of 
the Subcommittee on Government Management, Organization, and 
Procurement. We also include Government oversight. We will come 
to order.
    Today's hearing will examine the short and long term 
management challenges and strategic objective of the U.S. 
Agency for International Development as it contends with its 
ever increasing portfolio of foreign assistance needs and 
geopolitical objectives.
    Without objection, the Chair and the ranking minority 
member will have 5 minutes to make opening statements, followed 
by opening statements, not to exceed 3 minutes by any other 
Member who seeks to be recognized.
    Without objection, Members and witnesses may have 5 
legislative days to submit a written statement or extraneous 
materials for the record.
    Today we are holding this hearing on the U.S. Agency for 
International Development [USAID], its management challenges 
and its strategic objectives.
    USAID is the lead Federal agency that directs and manages 
U.S. development assistance programs. Over the past decade, 
USAID's role has been expanded to meet the many new challenges 
of the post-cold war and 9/11 world. Reflecting the newfound 
importance of our Nation's foreign assistance programs, USAID's 
budget and responsibilities have been significantly enhanced 
over the past decade. Furthermore, the growing importance of 
the Agency's mission is articulated in the President's 
elevation of development to theoretically equal footing with 
defense and diplomacy as part of the three Ds of U.S. national 
security policy.
    The question arises as to whether USAID is equipped to meet 
the new set of challenges. Many believe it is not and that the 
Agency lacks a clearly defined development strategy, and 
suffers from significant management and human capital 
challenges, and program duplication and overlap.
    I am struck, for example, by the number of U.S. Government 
agencies that plan and implement foreign assistance programs. 
They have become so numerous that the Department of State and 
USAID control a little over half of the U.S. foreign assistance 
budget. Taken alone, USAID, it is my understanding, manages 
just over 40 percent of the total U.S. foreign assistance 
budget. The proliferation of foreign assistance programs 
throughout the U.S. Government has resulted in a patch-work of 
different programs with different strategic objectives. Many, 
if not most, of these programs are important and beneficial, 
but I am concerned that there is a lack of coordination to 
ensure that the full benefits of these programs are realized.
    If USAID were in counseling, I would observe that it is a 
patient that suffers from serious identity issues. In effect, 
USAID has become everything to everyone. Each year USAID is 
given new marching orders and budget authority. The problem is 
that there is no programmatic consistency for meeting the 
Agency's long term strategic goals and objectives. Programs may 
take years to implement on the ground, but the Agency's 
legislative authority may not reflect the realities of 
implementing programs on the ground.
    USAID's development strategy and strategic objectives may 
be further blurred by the semi-merger, in 2006, of the 
Department of State and USAID. As a result of the creation of 
the ``F'' Bureau and the Director of Foreign Assistance at 
State, USAID and State share identical strategic goals. The 
question arises: are USAID's strategic goals too broad and 
oversized? Are we muddling foreign policy objectives with 
development objectives?
    Clearly, USAID's problems, if we are completely honest, are 
in part the making of ourselves, the Congress. Many of us are 
aware that Congress has not passed a foreign assistance 
authorizing bill since 1985. In effect, the authorizing 
committee has been marginalized. I applaud and fully support 
Foreign Affairs Committee Chairman Berman's efforts to overhaul 
the antiquated Foreign Assistance Act of 1961 and to 
reinvigorate the authorization process. I believe the success 
of these efforts will have direct bearing on the future 
viability and success of the program.
    To date, the administration has not named a new 
Administrator for USAID. It is my sincere hope that the 
administration will name the new Administrator as soon as 
possible. Let me assure my colleagues on the subcommittee that 
I intend to hold a followup hearing on USAID and invite the new 
Administrator to testify once he or she has been put in place.
    Finally, I want to thank all the witnesses that are here 
today for taking time to appear before our subcommittee. Most 
of them have decades of experience working at USAID and have 
devoted their careers to development work. I look forward to 
their comments on an issue that is sometimes overlooked by 
Congress but is nonetheless an essential element of our 
Nation's foreign security status.
    All right, the ranking member.
    Mr. Bilbray. Thank you, Madam Chair. Madam Chair, to 
expedite the process I would like to introduce my opening 
statement in a written form, please.
    Ms. Watson. No objection.
    Mr. Bilbray. Without objection, thank you.
    Let me just say, though, briefly that I think USAID has a 
long history of service around the world. I think that, 
frankly, historically it has taken what is thrown at them and 
responded as best they could.
    Let me say, though, getting back to this issue of building 
on the concept of teaching people to fish rather than giving 
them fish, my biggest concern is that there may be a lot of 
fault for USAID for problems that we face today. A lot of it 
may not be rightfully pointed out at the organization because, 
like the Chair pointed out, there is a whole lot of other 
agents out there under the guise of USAID.
    I think that one of the things that I would ask us to take 
a look at is where we are going long range with this. Let me 
just say this to the gentlemen here: You have a Democrat and 
Republican standing in front of you. We have a new 
administration that doesn't even have a head yet. I would like 
these hearings to be set as a proactive process rather than a 
reactive judgment.
    The proactive process is pointing out to the new 
administration the pitfalls and the mistakes in the past, and 
the opportunities and successes of the past, so they can avoid 
those pitfalls and take advantage of the opportunities. I hope 
all of you approach this with the attitude that here is a 
chance for your information and your experience, both positive 
and negative, to be contributed to help this new administration 
maximize those opportunities and avoid the pitfalls.
    I think that is one thing Republicans and Democrats can do 
on this Oversight Committee now, rather than waiting for a 
couple of years and then having Republicans find ways of 
attacking the new administration and finding fault, is for 
Democrats and Republicans to work together to point out 
problems and challenges so that the new administration can 
avoid them.
    Let me just say that one of the things that I feel really 
concerned about is that a lot of our foreign aid goes in under 
the guise of teaching capitalism, teaching independence, and 
teaching productivity. What we end up doing, then, is teaching 
them corruption, mismanagement, and all the negative things 
that we point to other countries about.
    Many times this is the only face except for the military 
that parts of the world know. And the last thing we want them 
to think is that what America is about is big guns and stupid 
Government programs or inefficiency and corruption. I think 
that is the big challenge. You just have to admit, around the 
world, some of them have to shake their head in how could 
America be as successful as it is if this is what it is all 
about.
    So I just have to tell you frankly, my perceptions--and I 
do not blame USAID alone on this--my perceptions of the 
greatest challenges we face today in Afghanistan are not 
military. I think the front line failure in Afghanistan has 
been in our inability to go in and appropriately apply aid 
during the period of opportunity we had over the time. I say 
this to the Bush administration. As big as a supporter as I 
have been on certain issues, I think that the USAID program in 
Afghanistan has been a disaster. There are always reasons for 
that.
    Believe me, I was a mayor when I was 27. I know it is easy 
for those who have never done anything to second guess those 
who are in there. Those who have never done anything have never 
made a mistake. But what I really would ask you to do is point 
out how we could have done it better in places like Afghanistan 
so that the new administration can figure out how to avoid the 
problems, so that our men and women who are fighting over there 
won't have to fight this war again, and so it will actually be 
a success.
    I think the success, Madam Chair, in our last two 
interventions is not going to be counted by the men and women 
who won the war. It is going to be counted by the economic and 
social success that we leave behind. Our USAID programs are 
actually going to be the ones that pull that off.
    With that, I yield back, Madam Chair.
    Ms. Watson. Thank you, Congressman Bilbray.
    Now I will yield to Congressman Cuellar.
    Mr. Cuellar. I don't have a statement. Thank you, Madam 
Chair.
    Ms. Watson. All right.
    Congressman Connolly, do you have a statement to make?
    Mr. Connolly. Thank you, Madam Chairwoman.
    Last week, Secretary Clinton testified before the Committee 
on Foreign Affairs, of which I am a member. I was pleased to 
hear that the State Department is pursuing a more comprehensive 
approach to diplomacy, one that will consist of something more 
than reaching for the holster.
    In the last 8 years, USAID has been hollowed out. We need 
to restore USAID to being the premier development agency of the 
U.S. Government. An ambitious foreign aid agenda is the 
necessary complement to this more thoughtful approach to 
diplomacy.
    As we learned and continue to learn from Afghanistan, it is 
essential to maintain a level of trust among the general 
populations in which the United States has a national security 
interest. Only in the context of widespread fear and distrust 
of the United States can regimes such as the Taliban emerge and 
consolidate power. We witness similar problems now in Pakistan 
where the Taliban has unfortunately a growing influence.
    Since prior to the Soviet invasion, we have invested 
billions of dollars in military aid for various factions and 
governments in Afghanistan and Pakistan. Yet those countries 
are now controlled or in danger of falling under the control of 
factions whose raison d'etre is opposition to U.S. influence. 
Clearly, our aid has not been as efficacious as it could have 
been.
    I would suggest that our foreign aid must be closely linked 
to our national security objectives but must not be perceived 
as entirely self-interested. This necessitates investing in 
countries where there is not necessarily an immediate and clear 
national security interest.
    Moreover, aid should not be based on political alliances 
with certain parties of politicians. When we were funding 
Afghan revolutionaries in the 1980's, we did not anticipate 
that they would use their newfound skills to attack America two 
decades later. Our aid to Israel may be a model. Regardless of 
which party has been in power, the United States has provided 
aid to Israel with great effect.
    Within this context of depoliticizing aid on one level so 
that it actually reflects our national agenda, I greatly 
appreciate the testimony we will hear today. James Kunder notes 
in his testimony that we should have a more comprehensive 
strategic vision to guide our distribution of aid. It is kind 
of a long term strategic planning could help avoid reactionary 
programs such as political interventions that sometimes end up 
being counterproductive.
    Michael Walsh emphasizes the importance of maintaining 
USAID connections to small contractors because these non-
governmental organizations are often closest to the people we 
want to serve. If we are attempting to build trust with 
populations in areas that are important to our national 
security, then this is an important ingredient of success.
    Again, I want to thank you, Chairwoman Watson, for holding 
this hearing. I look forward to our ongoing efforts to enhance 
the efficacy of USAID.
    Ms. Watson. Thank you. If there are no additional 
testimony, the subcommittee will now go to the witnesses before 
us today.
    It is the policy of the Committee on Oversight and 
Government Reform to swear in all witnesses before they 
testify. I would like to ask all of you to please stand and 
raise your right hands.
    [Witnesses sworn.]
    Ms. Watson. Let the record reflect that the witnesses 
answered in the affirmative. Now let me begin again by 
welcoming and thanking our distinguished expert panelists for 
agreeing to be with us this morning.
    First, Mr. Michael F. Walsh is the director of Programs for 
Finance, Grants, and Contracts at InsideNGO, an association for 
chief financial officers and grants and contract managers for 
non-governmental organizations working in international 
development and humanitarian relief programs. He previously 
served in various roles for two decades at the Agency for 
International Development and most recently worked as USAID's 
Chief Acquisition Officer and Procurement Executive.
    Then, Mr. James Kunder is a founding member of the Kunder/
Reali Associates, an Alexandria-based consulting firm focusing 
on international development and reconstruction issues. He is a 
senior resident fellow in economic policy at the German 
Marshall Fund of the United States. Since 1987, he has served 
in multiple senior positions at USAID both domestically and 
abroad, and until January 2009 was Acting Deputy Administrator. 
In addition, he has published numerous articles on 
international humanitarian issues, peacekeeping, and crisis 
management.
    Mr. George Ingram is the executive director of the 
Education Policy and Data Center in the Academy for Educational 
Development. The Center works to improve education policies and 
programs in developing countries through better access, use, 
and analysis of education data and information. He also serves 
as president of the U.S. Global Leadership Campaign, an 
alliance of more than 400 companies and NGO's that promote 
greater resources for U.S. engagement in international affairs. 
Prior to his work in the private sector, Mr. Ingram was a 
senior staff member of the House of Representatives Committee 
on Foreign Affairs responsible for international economic and 
development issues.
    Then, Dr. Thomas Melito is a Director in the International 
Affairs and Trade team at GAO. In this capacity, he is 
primarily responsible for GAO work involving the management of 
development assistance by the U.S. agencies and multi-lateral 
organizations. Over the past 10 years, Mr. Melito has been 
focusing on a wide range of issues including U.N. management 
reform, peacekeeping procurement, the efficacy of international 
food assistance, and combating human trafficking. Mr. Melito 
holds an M.A. and Ph.D. in economics from Columbia University 
and a B.S. in Industrial and Labor Relations from Cornell 
University.
    I welcome all the witnesses and we look forward to your 
testimony. I would ask that each of the witnesses now give a 
brief summary of their testimony and try to keep this summary 
under 5 minutes if you can. Your complete written statement 
will be included in the hearing record.
    So Mr. Walsh, we will start with you. Please proceed.

 STATEMENTS OF MICHAEL WALSH, FORMER DIRECTOR OF PROCUREMENT, 
  USAID INSIDENGO; JAMES KUNDER, FORMER DEPUTY ADMINISTRATOR, 
 USAID & BUREAU HAD FOR IRAQ AND AFGHANISTAN PROGRAMS; THOMAS 
    MELITO, DIRECTOR, INTERNATIONAL AFFAIRS AND TRADE, U.S. 
 GOVERNMENT ACCOUNTABILITY OFFICE; AND GEORGE INGRAM, ACADEMY 
                 FOR INTERNATIONAL DEVELOPMENT

                   STATEMENT OF MICHAEL WALSH

    Mr. Walsh. Thank you. I would like to thank the 
subcommittee for taking the time to look into these important 
issues and for the opportunity to share my perspective. This 
morning, I would like to speak to you about the opportunities 
and challenges facing USAID and the broader NGO community.
    As I was leaving USAID in 2007, an estimated 50 percent of 
USAID foreign service officers were eligible for retirement. As 
they leave, their years of experience leave with them. Since 
then, approximately 50 percent of the USAID officers have less 
than 5 years experience with USAID.
    These newly minted officers represent a new USAID. This is 
a new USAID that: one, must bridge the experience gap by 
bringing in more mid-level foreign service officers and 
providing the entire work force with better training and 
supervision; two, do more than just award grants and contracts 
but support their procurement system with more staff and 
funding to update policies and procedures and to roll out 
worldwide systems; and three, address real operational issues--
those identified by a formal committee of USAID, NGO, and 
contractor operational professionals--with congressional 
support to look at the actual nuts and bolts of implementing 
foreign assistance. Now is the time to commit to change.
    Regarding my first recommendation, USAID staff need more 
technical and professional training. They have simply lost 
their technical edge. Beyond classroom training and Web-based 
training, they need knowledge management systems, conferences, 
and other opportunities for professionals to share ideas and 
experiences, especially with experts in the broader sector. 
Also, USAID needs the authority to hire mid-level staff to 
narrow the technical and experience gap.
    Until this can be done, USAID will continue to bundle 
larger awards made through limited competition. As a 
consequence, small and medium sized organizations have 
difficulty competing. The large get larger and the others 
don't. The resulting concentration of the sector means fewer 
new ideas and approaches to address the challenges of 
development.
    The burden of over regulation and multiple layers of audit 
coupled with staff with limited experience result in a 
compliance oriented, risk avoidance approach to management. We 
heard of a technical representative who tracked all grantee 
travel and field trips with a matrix to carefully ensure that 
they performed as proposed. He didn't have time to visit the 
field sites to get a firsthand look at the work. We have to get 
beyond auditing to the penny and support managing to the 
dollar, risk management rather than risk avoidance.
    The contracting officers I supervised in east Africa flew 
into souther Sudan and saw firsthand the challenges of working 
there. The terminal is often just a cluster of thorn trees and 
the roads are only notional. Yet the NGO's working there must 
still comply with Buy American, Fly American, and Drive 
American while documenting every penny and every partner. I 
expect my COs, my contracting officers, to understand this 
context and manage it appropriately within the rules and 
regulations.
    USAID's experienced procurement policy and support staff 
have this development perspective as well, yet they are 
overwhelmed. At this point, there is one person responsible for 
all grant policies at USAID, which represents approximately $4 
billion annually. Another specialist is responsible for 
personnel services contracts, which is the employment mechanism 
used to engage half of USAID's work force, especially overseas. 
Only four people are available to negotiate overhead and that 
is probably the largest ratio of negotiators to cognizant 
agencies of any other civilian agency in the Government. Just 
four people conduct audits around the world.
    They need help, especially if USAID is to move forward with 
a new work force and a new Foreign Assistance Act. As you 
address issues in the Foreign Assistance Act, please do not 
neglect to increase the efficiency and effectiveness of 
implementation. The fly by Drive American requirements come 
from another area. The importance of development to national 
security suggests that Congress should consider tradeoffs 
between tied aid and the effective use of the development 
dollar.
    Further, the approvals associated with these requirements 
are very cumbersome, requiring, for example, every single 
international trip to have prior approval and a protracted 
waiver process to purchase laptops and right hand drive 
vehicles because none are made in the United States.
    We encourage Congress to consider establishing a formal 
advisory committee of USAID, NGO, and contractor 
representatives and an operations issues review committee to 
examine longstanding impediments to efficient and effective 
implementation. We ask for congressional support to assure that 
the new USAID and its contractors and grantees are not saddled 
with encumbrances from the old USAID. Development is simply too 
important to tolerate this any longer.
    I spent 3 years as the Director of OAA trying to update 
policies, roll out systems, and upgrade the skills of our staff 
with budgets that were regularly cut. It doesn't work. USAID 
represents so much to the world, they must be supported with 
adequate funding and renewed support for efficient and 
effective aid delivery.
    I am happy to respond to your questions and look forward to 
working with you as you undertake this important endeavor. 
Thank you.
    [The prepared statement of Mr. Walsh follows:]
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    Ms. Watson. Thank you so much, Mr. Walsh.
    Now, Mr. Kunder, you may proceed.

                   STATEMENT OF JAMES KUNDER

    Mr. Kunder. Thank you, Madam Chair. I want to jettison my 
prepared remarks because I have had the honor of testifying 
many times before the House of Representatives and I have to 
say that I just think that the opening statements have captured 
many of the issues perhaps better than I have every heard them 
captured in opening statements before.
    I think the lesson of USAID, the history of USAID and our 
country's foreign aid program, is a story of recapturing the 
same lessons over and over again. During the height of the cold 
war, we understood that if America's foreign policy was going 
to work we were going to have to reach the hearts and minds of 
people in Africa, Asia, and Latin America. That is why we built 
up something like the U.S. foreign aid program that had about 
10,000 employees at that time.
    Then, during the 1990's with the breakup of the Soviet 
Union, with moves toward greater Government efficiency, we 
decided we really didn't need all these tools of foreign 
policy. We let the number of USAID foreign service officers--
the American technical experts that we send to Africa, Asia, 
and Latin America--decline to just over 1,000 scattered across 
85 countries of the developing world. Now I think once again, 
in the context of Afghanistan and the many other threats to our 
national security in the developing world, we understand once 
again that this is a capacity that we have needed and 
desperately need today.
    So the four points I touch on in my testimony, Madam Chair, 
are simply these: First, we do need a comprehensive strategy. 
We do not have a consensus within the U.S. Government between 
the Congress and the administration, the previous one or this 
one, on what exactly we want to accomplish with our foreign aid 
program. Do we want to help our friends or do we want to 
eliminate illiteracy and disease from the face of the earth?
    I would respectfully submit that if the Congress ordered 
the U.S. Agency for International Development to eliminate 
illiteracy from the face of the earth in the next 20 years and 
said we don't care where you give the money, we don't care how 
much money our friends get, we just want you to eliminate 
illiteracy, they would eliminate illiteracy. But the problem is 
they are told to eliminate illiteracy, protect mountain gorilla 
habitat, give money to our friends, and about 20 other 
objectives. That is what causes confusion in our foreign aid 
program.
    Second, we do need to rebuild the staffing. As I mention, 
we have had about an 80 percent decline in our foreign service 
officer work force at USAID. It strikes me as very telling that 
our Nation has recently made a decision that potential 
instability in Africa is critically important and therefore has 
created U.S. Africa Command, a new U.S. military command to 
treat problems of instability in Africa.
    I have nothing against the U.S. military; I was proud to 
wear the American military uniform myself. But it strikes me 
that at AFRICOM headquarters in Stuttgart, Germany, we have 
1,600 personnel. We have 1,600 American personnel there because 
we care about instability in Africa. USAID has 460 officers 
scattered across all of Africa actually working in the African 
countries to address instability. So somehow we have let our 
numbers and our toolkit get distorted over the last couple of 
years.
    The third point I make in my testimony is that, as a number 
of the Members have said, we do have a proliferation of more 
domestic agencies getting involved in the foreign aid program. 
I take a somewhat iconoclastic point of view, Madam Chair. I 
don't think you can put the genie back in the bottle. I don't 
think you can tell the U.S. Environmental Protection Agency, 
don't think about Africa or don't think about Latin America, 
because these environmental problems are global. We have the 
same thing with Centers for Disease Control. Obviously, today 
the headlines are Swine Flu. We can't let health care 
protection stop at the national boundaries.
    We need to pay attention to what is going on globally but 
we do need to create, I argue, a new set of coordination 
mechanisms under the USAID Administrator so that all cylinders 
are firing together and all parts of the U.S. Government that 
have some overseas responsibilities are coordinating their 
efforts.
    Then the fourth point, which a number of Members also 
touched on already, is that this question of consolidation 
between State and USAID. I touch on the security issues. What 
distinguished the U.S. foreign aid program positively during 
much of its history was the people to people aspect of it with 
American technical experts reaching out to Africans, reaching 
out to Asians, reaching out to Latin Americans. In our current 
security environment, what we are doing is instead of having 
these folks out in the rice paddies and out in the farmers' 
fields, more and more we are consolidating our development 
experts, out of security concerns, in these fortress embassies 
around the world.
    Whereas before a women's group in Africa or a farmers' 
group could walk up to the USAID office building, knock on the 
door, and actually meet some Americans and find out we don't 
all have horns, now they can hardly get past the Marine guard 
detachment to actually meet any Americans. So I think there are 
some real challenges in this consolidation of State and USAID 
that I think are undercutting our attempts to increase American 
influence in the developing world.
    I just want to add, as Mr. Walsh said, I really appreciate 
the committee taking an interest in this because it is an area 
that most folks don't pay much attention to. But it is 
critically important to our Nation's foreign policy.
    Thank you, Madam Chair.
    [The prepared statement of Mr. Kunder follows:]
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    Ms. Watson. Thank you so much.
    Now we are going to go to Dr. Melito. You may proceed.

                   STATEMENT OF THOMAS MELITO

    Mr. Melito. Madam Chairwoman and members of this 
subcommittee, I am pleased to be here to discuss the challenges 
currently facing the U.S. Agency for International Development 
in establishing a strategic acquisition and assistance work 
force plan.
    USAID's total foreign assistance has more than doubled 
since fiscal year 2002 from about $5 billion to about $11 
billion in fiscal year 2008. Most notably, obligations overseas 
increased by 600 percent from about $1 billion in fiscal year 
2002 to about $6 billion in fiscal year 2008. Given USAID's 
reliance on non-governmental organizations to implement its 
activities, it is vital that the Agency effectively manage 
those activities, especially overseas.
    My testimony today is based on a report we issued in 
September 2008. I will focus on three topics. First, I will 
discuss USAID's capacity to develop and implement a strategic 
acquisition and assistance work force plan. Second, I will 
describe the extent to which USAID can evaluate its acquisition 
and assistance function. Finally, I will summarize our recent 
recommendations as well as the actions that USAID has taken in 
response.
    Regarding the first issue, in September 2008 we reported 
that USAID lacked the capacity to develop and implement an 
acquisition and assistance strategic work force plan. We found 
that the Agency lacked sufficiently reliable and up to date 
overseas staff level data, including information on their 
competencies. USAID staff are responsible for monitoring 
activities of recipients to provide reasonable assurance that 
the funds provided are used in accordance with applicable 
regulations and sound business practices. Without sufficiently 
reliable and up to date data on its overseas staff levels and 
their competencies, USAID cannot identify its critical staffing 
needs and adjust staffing patterns to meet those needs.
    We witnessed this weakness during our field visits to seven 
USAID missions last year. At five missions we visited, the 
number of staff with the necessary competencies were 
considerably less than adequate. At two missions they were more 
than adequate. For example, mission officials in Mali said they 
had delayed time sensitive seasonal agricultural projects 
because staff was not available when needed to approve 
contracts.
    Our survey of acquisition and assistance staff overseas 
supported these findings from our field work. For example, 
about 70 percent of respondents overseas reported that it was 
somewhat or very difficult to alter staffing patterns to meet 
the demands of changing workloads.
    USAID has launched some ad hoc attempts to address 
weaknesses in its acquisitions and assistance work force. 
However, these efforts lack critical elements of a strategic 
work force plan, particularly comprehensive information on its 
staff overseas.
    I will now turn to my second topic. USAID has not 
implemented an evaluation mechanism to provide adequate 
oversight of its acquisition and assistance function. Such 
oversight is essential for ensuring adherence to USAID 
regulations and policies, especially overseas.
    In fiscal year 2007, USAID developed an annual scorecard 
evaluation as a mechanism for assessing weaknesses in 
operations. The scorecard would also function as a risk-based 
approach to determine locations for onsite visits. While USAID 
has finished piloting the scorecard evaluation, it has not 
implemented it. Without implementing this mechanism, USAID 
cannot certify the overall adequacy and effectiveness of 
management controls for its acquisition and assistance 
function.
    To address the concerns I just summarized, we recommended 
in our September 2008 report that the Administrator of USAID 
develop and implement a strategic acquisitions and assistance 
work force plan that matches resources to priority needs such 
as the evaluation function. USAID agreed that it needed to put 
in place a strategic work force plan that includes all of 
USAID's acquisition and assistance staff at overseas missions.
    While USAID officials informed us that they have improved 
guidance to missions for preparing staffing data, they cannot 
ensure that all missions are accurately capturing these data or 
instituting procedures to ensure that the data reported from 
overseas missions are reliable. In addition, USAID officials do 
not expect to begin collecting competency information for 
overseas staff until 2011 at the earliest.
    Finally, USAID has increased its staff for evaluations from 
four in fiscal year 2008 to nine as of April 2009. However, it 
has not implemented the evaluation mechanism and has completed 
evaluations of only two missions since the time of our report. 
USAID officials said that they have been unable to make further 
advances due to other priorities.
    Madam Chairwoman and members of the subcommittee, this 
concludes my prepared statement. I would be happy to answer any 
questions you may have.
    [The prepared statement of Mr. Melito follows:]
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    Ms. Watson. Thank you very much.
    Now, Mr. Ingram, you may proceed.

                   STATEMENT OF GEORGE INGRAM

    Mr. Ingram. Madam Chair and members of the subcommittee, I 
am going to focus on the strategic aspects and the strategic 
infrastructure that is necessary to get to those management 
challenges and changes. I have provided a rather detailed 
statement but I am going to follow the outline that occurs at 
the back of it in the last three pages, which tries to set out 
an overall picture of the steps that are necessary to bring a 
coherent, elevated development function to the U.S. Government.
    One is leadership. The U.S. Government needs to be 
structured with strong leadership that has the ability to speak 
with a single voice on development issues, and that therefore 
can leverage and maximize the impact of U.S. investment in 
development.
    Two, as Mr. Kunder said, we need a plan. We need a global 
development strategy that is constructed in an open, 
transparent fashion that articulates a coherent, realistic set 
of objectives and priorities for U.S. assistance and how we 
will accomplish them.
    Three, that strategy should contribute to an executive 
branch-legislative branch agreement on the purposes and 
objectives of foreign assistance. It should be codified in a 
new statute that replaces the Foreign Assistance Act and 
provides a clear statement of the goals and priorities, lines 
of authorities and accountability, and that allows the managers 
of our assistance programs the flexibility that is needed to 
respond to the opportunities in developing countries.
    Four, all core development activities should be streamlined 
into a single organizational entity built on the best practices 
of all the component parts. Some functions may maintain their 
unique characteristics and identity, such as the MCC and 
PEPFAR. Others may remain independent, such as OPIC and TDA and 
regional foundations, but are brought into a close coordination 
with the core development organization.
    This development function needs to be both independent and 
integrated with the rest of the U.S. Government. It needs a 
degree of separation from the demands of other U.S. Government 
policies in order to preserve the programs that will address 
the long term nature of development. But it also needs to be 
integrated to ensure that development programs are consistent 
and support U.S. foreign policy objectives.
    The mechanisms to accomplish this duality include, on the 
independence side, USAID having strong respected leadership 
that is empowered to lead the U.S. Government on development 
issues. And USAID needs a direct reporting line to OMB.
    On the integrated side, USAID must operate under the 
foreign policy of the Secretary of State. There needs to be a 
Government-wide global development strategy to lead what all 
Departments are doing in the development area. USAID country 
missions must operate as part of the U.S. Government country 
teams under the direction of an ambassador.
    And there would be joint staffing including, I would 
suggest, that responsibility for multi-lateral assistance and 
policy toward development-related international organizations 
should be brought into a new USAID office of multi-lateral 
development that is jointly staffed by professionals from 
USAID, the Treasury Department, and the State Department.
    Finally, the Agency needs its systems and processes and 
staffing rebuilt and redesigned along the lines that my 
colleagues have spoken of.
    Thank you.
    [The prepared statement of Mr. Ingram follows:]
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    Ms. Watson. I want to thank all of the witnesses for your 
testimony. We are going to now move to the question period and 
proceed under the 5-minute rule.
    I am going to begin with questioning Mr. Kunder and then I 
would like all of you to address this particular question. Mr. 
Kunder, you stated in your testimony that establishment of a 
comprehensive set of strategic goals for the U.S. foreign aid 
program is management challenge No. 1 and should be the 
centerpiece of any effort to rewrite foreign aid legislation in 
this Congress. What elements or point do you think should be 
incorporated into a strategic plan for USAID and should a new 
set of strategic goals be the centerpiece of any foreign aid 
rewrite? Then the others can chime in when you finish.
    Mr. Kunder. Thank you, ma'am. We could obviously have 3 day 
workshop on that question.
    I think our Nation understands that it is in our strategic 
interests to help our allies at one level, and that at another 
level to take on the global scourges that make people 
discouraged, distraught, and become terrorists around the 
world. Obviously, there are a lot of suffering people around 
the world who give up, who are desperate, and who are attracted 
by extremist ideologies.
    Conceptually, what we need to do is run a foreign policy 
that operates at both levels. We need to help our strategic 
friends but we also need to take on these long term issues that 
afflict mankind which lead to hurting our Nation in the long 
run.
    The British system has recognized this explicitly. They 
have both the Department of Foreign Affairs and then the 
Department for International Development. So they have 
explicitly taken both challenges on within the structure of 
their executive branch. We have not done that. We don't have a 
department for international development.
    But I would argue that what this strategy should do is 
explicitly give USAID the function of taking on the long term 
challenges. Have them take on the health care challenges, take 
on the unemployment challenges, the desperation challenges, and 
the lack of literacy.
    In a place like Afghanistan, probably more than half of the 
population can't even read. So here we are trying to convince 
folks of a certain world view that supports our foreign policy 
when they can't even read information that we distribute in the 
country. So you have to take on that level of issues.
    So my argument would be to create a strategic plan embedded 
in the Foreign Assistance Act that does take into account the 
priorities of the Congress and the administration but gives 
USAID the task of eliminating illiteracy, eliminating disease, 
and making sure that people have access to credit around the 
world so they can get a decent job.
    I would agree with what Mr. Bilbray said earlier. This 
can't all be a Government function. We need to work directly 
with people, with private sector organizations, as well as 
Government.
    Those would be, we could go into more detail, but those 
would be what I would consider the core elements of a long term 
strategic plan for our foreign aid program.
    Ms. Watson. Mr. Walsh.
    Mr. Walsh. I would simply add that these strategic 
aspirations need to be properly resourced. If you speak to 
these, getting micro-finance to the villagers and what have 
you, you need to have mechanisms and a staff that can actually 
do that. So I just plead that you don't neglect the resourcing 
aspects of this strategy. Thank you.
    Ms. Watson. Dr. Melito.
    Mr. Melito. I would add that USAID's management structure 
is sort of very decentralized when it comes to overseas. They 
don't have a good handle of the staff levels overseas. 
Actually, they can't even really control them very much in 
terms of certain staff functions overseas. So if it does 
something at headquarters in a strategic manner, it needs to 
confront the decentralized leadership it has overseas.
    Ms. Watson. Mr. Ingram.
    Mr. Ingram. I would just add that I think there are a 
couple of aspects of the global development strategy that are 
important.
    First, there should be a focus on local capacity building. 
Almost all of our programs should focus on helping the people 
in-country own the programs that are being carried out and 
buildup their own capacity.
    Second, I think there should be an emphasis on innovation 
and risk taking. I would love to see a message sent from the 
Congress to the managers of our foreign assistance programs 
that we expect you to take risks. We don't expect corruption 
and misuse of money, but we expect you to take programmatic 
risks and to find those new, innovative interventions that are 
going to make a difference.
    Ms. Watson. Your testimony said that USAID's technical 
tools are lacking like georeferencing systems, the ability to 
teleconference, the ability to call in security assets, and so 
forth. How can USAID improve in this area?
    Mr. Kunder. The Agency has, in my view, a strange 
appropriations account structure vis-a-vis the Congress. That 
is to say it is given what are called program funds, the money 
to actually run the health care programs, the education 
programs, and so forth, and then given a separate operating 
expense budget. This has been a series of decisions over the 
last decades, both by the administrations and by the Congress 
under both Democratic and Republican leadership on both sides.
    In my view, we have simply under-resourced the 
organization. The operating expense budget has resulted in an 
80 percent decline in staffing. The argument I was making, 
Madam Chair, is that I don't think that we need a million 
people running foreign aid. I think it should be a relatively 
small, highly trained cadre of people. But that is why I made 
the point that if we are going to put 1,300 people in 
Stuttgart, Germany just for AFRICOM headquarters, we certainly 
need more than 1,000 officers scattered around the entire world 
because you do have to get out and talk to people.
    But the particular point I was making is that if we are 
going to send these officers out to the field, they need world 
class technological systems. If they find a disease in a 
village, they should be able to take a blood sample, plug it 
into their computers, transmit the data back to headquarters, 
and find out what is going on. It is cost effective to magnify 
the impact of each of these small number of officers by giving 
them the technological capability that they need.
    That is something that, because of year after year having 
very constrained operating expense budgets at USAID, I would 
agree with Mr. Walsh, they simply don't have the technological 
edge they once did. These were the folks who brought the world 
the green revolution back in the 1970's. They were at the 
technological cutting edge at one point. As Mr. Ingram just 
said, they are no longer there. That is what I was arguing in 
my testimony. We need to reinvest in these people.
    Ms. Watson. Thank you.
    Let me just throw this out to Mr. Ingram. You are a former 
Capitol Hill staffer with years of experience in the Foreign 
Affairs Committee. It is my understanding that you were the 
principal lead staffer on a massive rewrite of the Foreign 
Assistance Act over a decade ago. What is the single most 
important factor or element, in your opinion, that needs to be 
included in a successful Foreign Assistance rewrite?
    Mr. Ingram. Thank you, Madam. I think it starts with 
getting broad ownership in rewriting the act. When we tried to 
rewrite the act, and we did 20 years ago in the House Foreign 
Affairs Committee, it passed the House but we never garnered 
the interest or the support of the Senate or the 
administration. I would love to see this next rewrite started 
with a joint drafting committee by the House, the Senate, and 
the executive branch.
    I think your committee getting interested in this, getting 
other committees interested in it, will broaden the ownership 
and involvement of Members of Congress to create a critical 
mass that would allow you to get this through final enactment.
    I think the other quick thing I would say is that the 
congressional leaders in this need to set out a vision and the 
principles for what they expect to be in this act. I use the 
example of the Millennium Challenge account where the President 
set out a clear vision with parameters on what was going to be 
in it. The players, both in the Congress and in civil society, 
stayed within those parameters and kept certain negative 
aspects out of that legislation.
    Ms. Watson. Thank you so much.
    I now recognize our ranking member, Mr. Bilbray for his 5 
minutes.
    Mr. Bilbray. Thank you.
    Mr. Kunder, thank you very much for pointing out this issue 
that we need to understand the end game. I guess one of the 
things that those of us in the First World forgot was the great 
struggles that we have had in the last century of eliminating 
infant mortality. Infant mortality being eliminated or reduced 
substantially, we thought it was a great thing. But we did that 
and didn't develop the economic backbone to be able to support 
an economy to support the increased population. Then we are 
upset about how many people are starving in the Third World. So 
I think outcome does matter.
    Any of us that grew up in neighborhoods like I grew up in 
know that you only want to live in a Government built society 
if the private sector society isn't available. I think public 
housing is a good example. None of us would wish that on 
somebody unless it was just a last ditch chance. So I think we 
have to remember that outcome is a strong social/economic 
structure for the community wherever we are working.
    I have a question for you. We have how many agents in 
Africa right now?
    Mr. Kunder. We have 460 American foreign service officers. 
USAID does one very excellent thing around the world. That is, 
if you were to go to one of our offices in Africa, we hire a 
lot of African technical experts. So that is a feature, but I 
am talking about the 460 USAID American foreign service 
officers across Africa.
    Mr. Bilbray. I have an Australian cousin so actually it 
worked with the American side of this thing. What do we have in 
Central America right now? Do you have any idea what we have 
south of Mexico and north of Colombia?
    Mr. Kunder. Less than that, sir.
    Mr. Bilbray. Substantially less?
    Mr. Kunder. One of the unfortunate aspects when you squeeze 
the staffing was that we actually diverted staff to Asia and 
Africa because that is where the terrorist threat was. One of 
the horrible outcomes is we have stripped our staff from the 
western hemisphere.
    Mr. Bilbray. Madam Chair, I only bring this up because this 
really has been an issue, that we have ignored our own 
backyard. Just in the last 2 months, we have lost two 
governments that were very pro-United States and very pro-
private investment. They have gone totally south on us because 
we sort of ignored our friends in our own backyard. So I just 
wanted to raise that as we raise this issue.
    I hope that there is an awareness that a lot of the 
challenges we have in the United States are directly related to 
Central America. We just look totally past it. The Bush 
administration did it, too. We talk about Colombia and talk 
about Brazil, but my God, it just seems like we totally ignore 
countries like Nicaragua, and El Salvador, and Costa Rica, and 
Panama.
    Let me go over to Mr. Walsh. I have a question for you. 
What happens when a non-profit ends up claiming to have planted 
crops to get a grant and they certify their grant? In fact, let 
me say this because young people are here. We all know that in 
Alexandria if somebody said, I planted almonds in Alexandria, 
you would give the address. They are at this location. Most 
young people don't know that in the Third World, there are no 
addresses. In fact, most of the time, there are no street names 
except for highway names. We know how you would identify in it 
Alexandria. How would you identify a field in Kandahar?
    Mr. Walsh. I understand that in places like Afghanistan and 
southern Sudan and many places where the NGO community is 
working, they rely on GPS data. In fact, I believe that the 
Office of Foreign Disaster Assistance has routinely requested 
that kind information because the refugee camps are oftentimes 
moving and such. So they have tried to capture that data, 
although I cannot say that it is comprehensive and complete. I 
can give you more detail.
    Mr. Bilbray. That obviously is the kind of new technology 
we not only should be using but that we have to use. What you 
run into, Madam Chair, is you run into somebody who will get a 
grant and get credit for it, and they will actually have photos 
of somebody else's orchard field plugged in as the 
documentation. As you pointed out, there is this issue of we 
want to know was the arborist who planted the trees made in 
America, but nobody ever goes out to see if the trees were ever 
planted in the field at the GPS location they pointed out.
    I am glad to hear you say that because that is one of those 
great breakthroughs we have had. Around the world, one of the 
biggest problems is you don't know how to tell somebody how to 
get somewhere because they don't have addresses. The great 
thing is now the GPS location, those two lines of five digits, 
are going to be our addresses in the future. It is a great 
breakthrough. I am glad to hear you say that.
    The big question I have, though, and I will say this again, 
Mr. Walsh, is I think that the amount of money we threw in 
Afghanistan in the non-profits was a very large amount for how 
much oversight we had. How can we crack down on this? A good 
example was in 2008, we had USPI charged with conspiracy and 
fraud in connection to services rendered in Afghanistan. What 
does the Inspector General have to do to make sure that we 
eliminate that kind of fraud in our programs? We talk so much 
about the for-profit problems, but it is almost as if somebody 
files and becomes a non-profit they are exempt from all the 
temptations that apply to for-profit.
    Mr. Walsh. In fact, I would offer that the non-profit world 
is sensitive about the care with which they manage not only the 
taxpayers' money but the donations that they receive from 
private citizens. They have a track record of preserving that 
and managing that as effectively as they can because it is one 
thing to have a disallowance in an audit under a grant with 
USAID, but it is another thing to have in the paper that the 
donations that are going to this organization are being used to 
finance a tennis court in Kandahar or something like that. That 
kind of publicity doesn't work for these NGO's. They are very 
careful about how they spend the money.
    Now, having said that, we recognize that there are always 
going to be risks. So their challenge has been to manage risk 
in a highly compliance oriented environment and also a very 
risk adverse environment where not only do you have the issues 
that I mentioned, but also the auditors that are there and the 
investigators that are more than eager to look for malfeasance 
and such. They are very self conscious about this.
    Their challenge is trying to do it in the same sort of 
resource constrained environment as USAID. They have pressures 
on their overhead, they have pressures on their direct costs, 
and they are trying to do, basically, development on the cheap 
as well everybody else.
    Afghanistan is a huge challenge. I believe it was moving 
quickly and probably they weren't fully resourced on the 
operational side. So you are just going to have these kinds of 
vulnerabilities.
    Mr. Bilbray. Let me just tell you that from my personal 
observation, not just as Congressman but as somebody who spent 
some time in the Third World with the locals, that the non-
profits tend to stick in their faces even more than the 
government operations. The feedback is that you have non-
profits that are using resources in a manner that the locals 
see as flaunting just huge amounts of wealth. I just found a 
lot of resentment for the non-profits.
    I think the problem is, because there may be non-profits 
managing here in the United States, they are not spending 
enough time down looking at exactly how the money is being 
spent out in the Third World. The people on the front lines, 
the citizens of these Third World countries, they see it right 
along. They see it when some young kid goes by in a huge yacht 
with a big non-profit name across it. They are saying, you 
know, my God, that could be 100 pongas used to help to feed 10 
villages.
    So that concern of oversight is something that I think that 
we have not focused enough on, that non-profit oversight. I 
hope to be able to see us do that.
    I would like, and this is what I was saying when I started 
this off, I would really, really like to ask how we help this 
new administration avoid those pitfalls and focus on that. I 
think that too many of us have had the problem that with for-
profit we had a certain mind set, and for non-profit, we had a 
separate mind set. I think we need to put it back together and 
understand the potential for problems exist in both of these 
vehicles. We need to make sure we have the oversight.
    You have real problems here and we can talk about that in 
the future, about your transition with your experience. We can 
put up tag teams where you have experienced guys and new guys 
going in so there is a learning process. The way we phaseout 
law enforcement is we always made sure that we tried to put the 
more experienced officer with the less experienced officer so 
that gets transferred through use.
    I yield back, Madam Chair.
    Ms. Watson. Thank you.
    I now recognize Mr. Connolly.
    Mr. Connolly. Thank you, Madam Chairwoman.
    It seems to me in listening to the testimony that we sort 
of have three broad problems with USAID. One is, what is its 
purpose and what is its mission in the post-cold war era? The 
second is its capacity, that it has been hollowed out. The 
third is sort of that it is an orphan. To whom does it report? 
Is it an adjunct of the State Department or is it a free 
standing agency? We have sort of gone back and forth over the 
decades as to what is the proper model. Let me start with that 
third piece for a second.
    Secretary Rice created the Office of DFA. I last was up 
here 20 years ago and I worked with George Ingram and I worked 
with Margaret and some others on the Foreign Aid Bill. In fact, 
I think we were the last crowd to pass a foreign aid 
authorization bill. I don't understand what motivated the 
Secretary to create this Office when you had a USAID 
Administrator. How did it work? What is the relationship 
between the USAID Administrator and the DFA? Should we change 
that as we are looking at this overhaul?
    Mr. Ingram? Any of you can answer but I will start with 
George.
    Mr. Ingram. Thank you. I think administrations for 20 years 
have been coming up with new programs and new initiatives and 
have looked at USAID and said, that is a mishmash; I am not 
sure what it is and I don't know if it can manage this so I 
want a new entity to manage it. This has gotten out of hand 
over recent years.
    The Director of Foreign Assistance was created in the State 
Department, as I understand it, because the Secretary could not 
obtain the knowledge she wanted on what was happening in 
democracy. So she said, we are going bring together the 
information and consolidate. What happened was it turned into 
not just an information center, but a decisionmaking center. 
Decisions were taken from the field and from USAID and put in 
this Washington-centric entity that was unfortunately removed 
from what was going on in the field.
    The second problem with it is that it really only had 
jurisdiction over a large part of USAID and part of the State 
Department, but not over a lot of foreign assistance that other 
agencies do nor even parts that the State Department does.
    So absolutely the effort to reform, to consolidate, and to 
streamline needs to include the Office of the Director of 
Foreign Assistance. The State Department clearly needs the 
capacity to look at foreign assistance from a strategic point 
of view and from a foreign policy point of view, but it needs 
to, as it did in the 1960's and 1970's and even 1980's, I would 
argue, respect the role of the implementing organization to set 
the policies and to manage the programs.
    Mr. Connolly. Mr. Kunder.
    Mr. Kunder. Sir, first of all I basically agree with what 
George said. Secretary Rice famously asked one meeting about 
how much money we are giving to Pakistan. The folks from the 
International Narcotics and Law Enforcement Bureau raised their 
hands and said what they were doing. Then the folks from the 
Bureau for Democracy, Human Rights, and Labor raised their 
hands and said what they were doing. And USAID raised its hand. 
She finally pounded her fist and asked, well, who has the total 
number. Of course, the answer was nobody did.
    So it was, as George said, seen as a reform where we can 
get all the numbers on the right page and have some clear cut 
hierarchical system for allocating the resources. I think what 
has happened, sir, is that two things have gotten confused 
here. One is a perfectly natural desire to have transparency in 
the budget. As George said, you can create a budget shop that 
adds up all the numbers and makes sure they all add up. That 
has gotten confused with a bureaucratic tendency on the part of 
the State Department, which has been at least in the last 8 
years buffeted by DOD, to pull aid ever closer to itself.
    Part of that is, in my view, misguided efficiency moves: 
Wouldn't it be better if we had one paper copier Lilongwe, 
Malawi rather than two? Some of it is just small bureaucratic 
thinking. Part of it is that State has felt overwhelmed by DOD 
and probably the biggest thing that they have going for them to 
have a face, a visibility, is a humanitarian implement though 
USAID.
    So I think two things have gotten unfortunately confused in 
this whole DFA process. That is my interpretation, sir.
    Mr. Connolly. Let me just ask a followup to that. One of 
the concerns I have always had about that kind of consolidation 
within the State Department is that you are melding an 
operational agency, or at least it once was an operational 
agency, they actually did things, Mr. Bilbray pointed out that 
in the local government we actually do things, we build things, 
we provide services and so forth, whereas State Department is a 
policy shop. So you now have an operational agency coming ever 
closer within the bosom of an agency that frankly isn't 
operational in that sense. I just think that is a clash of 
cultures that doesn't work very well.
    Mr. Ingram. I think we would absolutely agree with you.
    Mr. Kunder. Sir, I had the honor of serving in the U.S. 
Marine Corps and for 200 years the U.S. Army said, it would be 
a lot more efficient if we just moved the Marine Corps into the 
Army. I felt the same way at USAID. There are always some 
budgetary reasons why we can save a few dollars but 
unfortunately what you do is undercut our Nation's foreign 
policy toolbox by bringing these organizations together.
    Mr. Connolly. Mr. Chairman, my time is up. I hope we will 
have another round because I have a lot more to go into. But I 
certainly would hope that on our agenda and on the Foreign 
Affairs Committee's agenda, as we look a rewrite of Foreign 
Aid, with the best of intentions we have to look at sort of the 
structure that we are inheriting. It doesn't seem to be very 
functional.
    Mr. Hodes [presiding]. Thank you.
    I recognize myself for 5 minutes. In reading the GAO report 
and talking about the difficulties with overseeing the A&A 
process, I note the growth from $5 billion to $11 billion. What 
I want to ask about is this: In the ideal world, if you could 
fashion our international assistance and development efforts 
from scratch, what model would we best follow? Would it be a 
model where we were supervising contractors, a model where the 
agency in whatever form, assuming in an appropriate form, 
itself undertook the operations, or some form of both? Mr. 
Melito, do you want to start?
    Mr. Melito. I am hesitant to say what is the best model 
because I don't know if there is a best model. I do want to 
stress, though, that whatever model you choose, you need to 
implement it fully and take oversight very seriously.
    When we began work, USAID had only four individuals 
responsible for overseeing all of the contracts and assistance 
agreements worldwide. At that time, it was $10 billion overseen 
by four people. That was their evaluation function. The IG at 
the time said that they were basically only able to visit nine 
missions overseas over a 3-year period. So I don't think USAID 
had any capacity to say that it was able to control its money, 
to know that its systems were in place, or that it actually had 
any assurance that any particular regulations, any concerns it 
had over the proper use of money, were actually implemented. 
That is not to say that it wasn't, that money was stolen or 
anything, just that they had no way of assuring that itself.
    So I would say that whatever model you choose, please make 
sure that oversight and evaluation is a part of that model. I 
do think there is recent evidence that USAID is taking that 
seriously. They have pushed up that staff from four to nine. 
But it is $11 billion and 60 percent of it occurs overseas. But 
I am not sure what the right number is and I am not sure 
exactly how they are going to do that. But it is not yet the 
priority it needs to be.
    Mr. Hodes. Are there any other thoughts from the panel? Mr. 
Walsh.
    Mr. Walsh. Yes, I would like to offer that one of the 
challenges the U.S. Government has in general is in sustaining 
a technical edge because it is very expensive to invest in the 
training and to take people offline considering the work force. 
So the best model would be, in terms of achieving or utilizing 
technical excellence, to rely on the commercial or the private 
sector. Then, hopefully, the expectation is that the Government 
would have the ability to define the requirement and monitor 
accomplishment. But the technical excellence is usually in the 
private sector. It is sort of more efficient to sustain that.
    Mr. Hodes. Mr. Ingram.
    Mr. Ingram. I would just say that you answered the question 
yourself when you said both at the end. USAID needs a larger 
number of better trained and skilled staff who have the 
technical capacity and experience to design programs and to 
manage and oversee programs that are carried out in the field 
by non-profit and for-profit organizations that have more 
detail specific expertise.
    They also, you need to understand that with that expertise 
of USAID staffers, they spend a lot of time engaging with their 
counterparts in developing countries in ministries and other 
institutions. That is part of the development process. In that, 
USAID staff needs to be sufficiently knowledgeable that they 
can transfer information to those senior officials that they 
are dealing with.
    So they play both. They design the projects and oversee 
them but they also provide advice.
    Mr. Hodes. Mr. Kunder.
    Mr. Kunder. Sir, I thank you for asking that question. This 
is what I spent a good bit of my time wrestling with the last 7 
years.
    My view is that clearly there has to be some balance 
between making use of the enormous capacity in the American 
private sector in universities, private businesses, and so 
forth and on the other hand having enough people internally, as 
Dr. Melito is saying, to oversee this. Because if you don't 
know what you are talking about, then the private sector is 
going to snooker you sometimes. So I think the pendulum has 
swung a bit too far on the side of not having enough oversight 
within the Government. That is why Dr. Melito is talking about 
these pathetically small numbers, four versus nine. Come on, we 
have to get serious about this. We are managing billions of 
dollars of the taxpayers' money.
    We have a locust plague reliably every 17 years in Africa. 
We do not need to have world class entomologists on staff 
waiting for 17 years. When we need them, we should hire them 
from the private sector. But certainly we need people on staff 
who can oversee the technical specialists that we hire.
    Right now, the pendulum has swung way too far and we don't 
have enough bodies to oversee the taxpayers' dollars.
    Mr. Hodes. Thank you. I yield back both my time and the 
gavel.
    Ms. Watson [presiding]. The ranking member and I were just 
discussing how best to manage because it is management, I 
think, that is really important. I really feel that the non-
profits, the people on the ground that have been there in the 
villages and so on, let us take Africa, for instance, can 
relate better to the circumstances.
    But in some places they might be too young and in some 
places they might be too irrelevant. I do know that in more 
traditional societies, you really have to go to the chief. At 
my station, it was Aman Marqui [phonetic], someone who could 
really interpret. Could I hear some comment about that?
    I don't think one pattern fits the global environment if we 
are going to restructure. I think we have to go region by 
region. I would like to get some response from any of you who 
would like to speak to that. How do we manage these programs? 
How do we supervise them and who should?
    Mr. Walsh. I would offer that there are many different 
approaches among the NGO's as to their intervention and how 
they relate to the villages and what have you. There are some 
that have numerous expatriates, for example, operating from the 
country level down and they may have a presence in the village. 
There are others where they don't, where they have purely local 
nationals managing the country office and they just have 
headquarters staffing them.
    I think everybody who has worked in development and has 
been out to those villages realizes, we hope, and appreciates 
that one of the skills that you have to bring is the ability to 
relate effectively with the villages and the beneficiaries. So 
every organization that is engaged in these sort of activities 
is operating a little bit differently or is structured a little 
bit differently, but I hope that they would have that standard 
of effective engagement with the beneficiaries. If there are 
exceptions to that, I don't have an explanation.
    Ms. Watson. Dr. Melito.
    Mr. Melito. The model that USAID uses is a hybrid model of 
using a number of individuals hired in the country that are 
providing the services as well as a cadre of international, 
American-led staff. It works very well in certain cases. In 
some instances, it doesn't work well at all.
    Part of my other work is looking at food assistance. We 
were struck when we visited Zambia a couple of years ago that 
for the projects that we were visiting, no American USAID 
official had visited there in several years. It turns out that 
there had only been nine monitors for food assistance for a $2 
billion budget worldwide. So there were concerns with 
timeliness. We had also cases where food basically had rotted. 
So definitely there were concerns we were raising.
    Part of what we were finding was that there was not a good 
information flow from the field back to headquarters on how to 
address these things. So there needs to be the right balance 
between having permanent staff who can monitor as well as 
people hired in the field who actually have good working 
knowledge.
    Ms. Watson. Mr. Ingram.
    Mr. Ingram. There is a whole section of my statement where 
I talk about the importance of analysis. It is not just having 
different operating mechanisms by region. It is by whether or 
not you are working at the community level or the national 
level. It depends upon whether or not you are in a middle 
income country or you are in Sudan or Somalia. So what you have 
to do is, before you get involved in an activity, you have to 
be very careful in analyzing the dynamics in that community, in 
that country, in that situation. Then gear your interventions 
according to is the decisionmaker the chief; is the 
decisionmaker the church in that entity; do you need to bring 
community organizers in there just to bring the community 
together to begin with to see what their interests are. So you 
have to have multiple mechanisms. But it starts with good 
analysis.
    Ms. Watson. I am going yield to the ranking member, Mr. 
Bilbray.
    Mr. Bilbray. To followup on this, Mr. Ingram, a good 
example is when we send somebody in and an NGO feels, OK, we 
are in Afghanistan so we will go into Kabul and hire somebody 
to be our liaison. If you send somebody from Kabul into 
Kandahar to talk to a Pashtun and not go to the chief, the 
chief now sees that the agent that we are using is a competitor 
to his authority. That creates a whole new dynamic that creates 
a lot of problems. We have seen this happen again and again. We 
take our First World mentality and try to apply it there.
    I was just telling the chairwoman that one of the first 
things you do in a Polynesian or Micronesian island is to go 
and meet with the chief of the island so you get permission. 
Even when you go to places like the San Blas Islands in Panama, 
you always go to the elder. We bypass that to a large degree 
because we have gone to Kandahar and think that an Afghan is an 
Afghan is an Afghan.
    How do we avoid this in the future? I am open to comments 
on that. If you think this is a wrong observation, I would 
encourage you to state it.
    Mr. Walsh. I would say that in my statement, I emphasize 
the need to improve the technical capacity of USAID. I also 
should have said that we need to improve the cultural knowledge 
and the regional knowledge of the staff, and to improve their 
language capabilities.
    I think a mistake we have made, both when we went into Iraq 
and when we went into Afghanistan, is we didn't listen to some 
of our old hands who had been around those parts of the world 
for 20 and 30 years and really knew the culture and the 
political dynamics. We need to spend more resources and more 
time planning on some of that cultural and political analysis.
    Mr. Bilbray. Mr. Walsh, how much of this could have been, 
though, the State Department's and the military's concept in 
Afghanistan of wanting to reinforce the authority of the 
central government because there had been such a lack of 
central authority in Afghanistan? How much of this could have 
been a direct, conscious effort at strengthening the new 
government rather than trying to work with the traditional 
structure?
    Mr. Walsh. I simply don't know the circumstances. But I 
would offer that most of the people who work with these NGO's 
are country directors that have been there in programs 
oftentimes for 5, 10, or 15 years. So I have no explanation as 
to why there was a cultural disconnect. More often than not, 
the NGO's have been there before USAID showed up and before 
there was an intervention. They should have some cultural 
sophistication but there are no guarantees on that. But I don't 
know to what extent the politics that drove it.
    Mr. Kunder. Mr. Bilbray, to defend my USAID colleagues a 
little bit, I think they fully well understand that an Afghan 
is not an Afghan is not an Afghan. The problem in my view, 
respectfully, has been one of resources. Twenty years ago, when 
USAID sent somebody upcountry in Laos they spoke Lao. They 
probably had been trained in all the kinds of things you are 
correctly pointing out in terms of cultural awareness and 
anthropological mapping and all that. The reality is, with the 
breakup of the Soviet Union, USAID was sent into a lot more 
countries in central Asia. We went into more countries, as Dr. 
Melito pointed out, and handed more dollars to programs in more 
program areas, the environment and so forth, while the whole 
time the staff was shrinking by 80 percent.
    With all due respect, the kind of assignments we made were 
if we had a warm body, we sent him to Anbar Province or Ghazni. 
We didn't have the time to give them the language training. So 
to me, the question you are raising, and it is a very profound 
question, is directly related to the resourcing issue.
    USAID needs more staff because then they will have time to 
do the language training and the cultural awareness training. 
You are pointing out a critical point. But you give them 1,100 
officers around 85 countries and with the demand right now, we 
need more people in the PRTs in Afghanistan. We need more USAID 
officers to advise our military officers. Well, do I have time 
to send them to Pashtun training? Of course not. I mean not me 
anymore, but the guys who are there now. Anyway, I see this as 
directly related to the resources, sir.
    Ms. Watson. Mr. Hodes, do you have additional questions? 
Then we will have Mr. Connolly. Mr. Hodes.
    Mr. Hodes. Thank you, Madam Chair. I want to talk a little 
bit about the problem of coherence and vision. Throughout the 
testimony of the panel, it is clear to me at any rate that not 
only do we need a coherent national security strategy but one 
in which development assistance and our smart power is 
integrated as an essential part of an overall national security 
strategy. Within the realm of our assistance and aid, it 
strikes me that we need to establish priorities and come up 
with a coordinating vision that will guide our efforts.
    One of the things that I note is the spread of our 
development efforts across the governmental agencies with 53 
percent USAID and the rest spread through multiple agencies. So 
somebody in a foreign country who wants to deal with a 
development issue may go to the Agriculture Department for one 
thing, the Department of Energy for another, and may come to 
USAID people for another.
    How do we get a handle on this in the intervening time, 
starting now, between where we are and ultimately where we want 
get to with the rewrite of the bill and all that? What do we do 
now in order to get a handle on this and start coordinating our 
development efforts amongst all these governmental agencies? Is 
that an impossible idea? Mr. Kunder, do you want to start?
    Mr. Kunder. Sir, it is a very critical question. I would 
point out that the answer to it lies in part in what Mr. Ingram 
said. U.S. foreign policy and U.S. foreign aid are coordinated 
partially in Washington and they are coordinated partially at 
our embassies around the world. So you have to address it, I 
would argue, at both ends.
    I have argued, and I have touched on this in my statement, 
that we need to create a new set of coordination mechanisms. 
That is why I mentioned that I didn't think the genie could be 
put back in the bottle. You can't tell the Energy Department, 
in our globalized world, that they have nothing to do with the 
international arena and have to stay here. Of course they are 
going to be involved. EPA is going to be involved. CDC is going 
to be involved.
    So my view is that you would create under the USAID 
Administrator a new administration development coordination 
council where each of the Assistant Secretaries from the 
relevant domestic departments would attend. There would be some 
shared information. We would establish across the Government 
strategic goals. Then at the country level you would have, 
again under the USAID mission director in that country, you 
would write a country strategic plan. What are the United 
States of America development objectives in this country? Is it 
family planning; is it education; is it health care? Then all 
of the Government agencies present in that country would be 
working together toward that set of goals.
    So my view is that both in Washington and in the field we 
need to create, and I would say this should be put into the 
rewrite of the Foreign Assistance Act, some new set of 
coordination mechanisms that simply don't exist now. When the 
Foreign Assistance Act was written, we didn't have this kind of 
globalization of the domestic departments so we didn't perceive 
the need for these kinds of mechanisms. Today, we desperately 
need such new coordination mechanisms.
    Mr. Hodes. Are there any other thoughts from the panel? Mr. 
Ingram.
    Mr. Ingram. Let me just use your question to make a point 
because Jim answered your question nicely. That is, and I think 
you recognize it in the way you posed the question, that 
coordination an important, useful, second best solution. You 
first consolidate as much as you can so that like programs are 
brought together under common management and then you don't 
have the coherence problem. Those programs that aren't core to 
USAID or the development function, or that you decide should 
remain independent, they get coordinated. But if you 
consolidate as much as possible that makes rational sense, then 
you have less of a coordination problem.
    Mr. Hodes. Taking off from what you said, do you know 
adequately what all the programs are? Is there a central 
repository of this knowledge that says here are all the 
programs that need to be either consolidated and/or 
coordinated? Do we know what all the programs are, Mr. Melito?
    Mr. Melito. I would suggest that we do not know. I would 
say, though, we have an ongoing study on U.S. efforts to fight 
global hunger. We have thus far identified 10 different U.S. 
agencies which have that as one of their missions. We have a 
lot of work ahead to see exactly how they overlap, how they 
differ, how they coordinate. But that was a surprising number 
for us that there were 10 agencies.
    Mr. Hodes. So it strikes me that the first question is, let 
us get a handle on what all the programs are and which agencies 
are doing what. That seems to be job No. 1.
    My question about a coordinating council is that in order 
first to deal with the consolidation issue, I am not sure that 
a coordinating council is the body that could deal with the 
consolidation issue. So it strikes me that there needs to be 
some responsibility--and tell me if I am wrong--maybe in the 
State Department or maybe somewhere else, but some 
responsibility at a top level to order the review and 
consolidation of various programs across agencies. Then we can 
deal with the coordination as the second step.
    Am I on track with that?
    Mr. Ingram. Yes. I would say that you have to raise it to 
the highest levels of Government. That mandate has to come from 
the Congress and the President.
    Mr. Hodes. OK, thank you. I yield back.
    Ms. Watson. Mr. Connolly.
    Mr. Connolly. Thank you, Madam Chairwoman. If I could have 
my 2 cents, I think we need to be loud and clear that the lead 
development agency of the U.S. Government is USAID. It is not 
the EPA; it is not CDC; it is not the Department of Labor, 
though they may all have pieces of it. The lead agency has to 
be USAID or its successor. Otherwise we are floundering around 
and we lack the coherence my colleague, Mr. Hodes, just 
referred to.
    I want to go back to mission for a minute. I know Mr. 
Ingram and his colleagues are involved in trying to rewrite the 
Foreign Assistance Act to make it more coherent. I was 
intrigued, Mr. Kunder, with your suggestion that maybe what we 
need to do is focus on a task. Let us end malaria; let us end 
illiteracy. That has a certain attraction to it.
    But let me ask this: Certainly Congress is as guilty as 
anybody, since the forming of foreign assistance as we know it, 
in encrusting the Foreign Assistance Act with multiple 
purposes. Biodiversity, I can remember was one that I was part 
of myself. All of them are noble causes and I don't know how 
you resist that.
    Does it make sense to have a more streamlined agency that 
is focused on a handful of things and only those things? Or do 
we need to preserve the flexibility to understand that in the 
real world, USAID and/or its successor agency is going to serve 
a multiplicity of purposes?
    Mr. Kunder. Sir, I have suggested that if we were a 
business, we would have gone out of business a long time ago 
because we have tried to stay in every business sector known to 
mankind. We have 50 or 60 different kinds of programs around 
the world including, literally, mountain gorilla habitat. You 
can't do that. You have to operate in the real world, as you 
correctly point out.
    My view is that such a strategy would have to have three 
elements. First, you would have to define some of the broad 
strategic objectives like the Millennium Development goals or 
like ending illiteracy, just some very broad strategic 
objectives. Second, you would have to supplement that with some 
sort of opportunities fund because things are going to pop up 
that nobody can foresee and there are going to be political 
pressures to contribute to some multi-lateral effort to take on 
a new disease. You can't hamstring the whole problem so you 
need some sort of supplementary opportunities fund. Third, you 
need to refresh the system every couple of years.
    I have testified that I would respectfully recommend that 
if the Congress is going to rewrite the Foreign Assistance Act, 
they build into it something like the Department's of Defense 
quadrennial defense review. You can't say now and forever the 
answer is illiteracy or now and forever the answer is malaria. 
But what the Defense Department does is manage an interagency 
quadrennial review of the current strategic threats. Then we 
reorient our defense programs to those strategic threats. But 
at least we achieve a consensus every 4 years. I think such a 
flexible model might be applicable to the foreign aid arena as 
well.
    Mr. Ingram. Representative Connolly, as you have pointed 
out, I think the Congress is part of the problem. I don't know 
how to get around that part of the problem because most of 
those congressional interests in specific areas, as you say, 
are quite legitimate and important. You also have a problem on 
the ground in that every country has different interests.
    But what does come to the fore for me is that when you look 
at the history of foreign assistance and you look at where the 
successes are, the successes are where USAID, where the U.S. 
Government, or where the international community has tackled a 
particular problem for 10 years. Look at the green revolution, 
oral rehydration, and polio. That leads you to the direction to 
choose a few priorities and focus our resources on those. But 
development is much more complicated and much more complex than 
tackling a few clear problems.
    I guess if I had my druthers, I would like to see a foreign 
assistance program that tackles five global problems with 70 or 
80 percent of our assistance devoted to tackling those in 
public/private partnerships for 10 years. Then the other 30 
percent, or whatever percent you choose, goes to deal with a 
lot of these other more complicated human aspects of 
development.
    Mr. Connolly. I have two points about that. The problem is, 
with the best of intentions, the way bureaucracies work. If you 
don't write it into the law, we don't do it. We generally don't 
act flexibly. So if you list that these are the 10 things we 
are going to do, by God, if an 11th comes up that isn't 1 of 
the 10, we are not going to do it even if we should be. So I 
think that is potentially a problem with that approach, but it 
may be worth it.
    Mr. Ingram. Can I respond to that?
    Mr. Connolly. Certainly.
    Mr. Ingram. As you will note, the Foreign Assistance Act is 
700 pages. I would suggest to you that most of what is in the 
Foreign Assistance Act is not followed by the bureaucracy. In 
fact, it is so complicated and so complex that people in the 
bureaucracy seldom pick it up. When you come to rewriting the 
Foreign Assistance Act, keep it short and sweet and put in 
there what you really care about and what you really care about 
making the bureaucracy accountable for.
    Mr. Connolly. Yes. Although I know you know this, having 
helped write the Foreign Assistance Act, the problem with 
foreign aid is that it is an orphan up here. So one of the 
reasons it is so barnacle encrusted is because you are trying 
to pull together a coalition of support. If biodiversity is 
important to this Member of Congress, we will put it in if we 
can get his or her vote.
    I have a final question, Madam Chairwoman, if I may. You 
characterized USAID as a risk averse culture. Mr. Ingram, I 
heard you talk about the need for Congress to show some 
flexibility in actually encouraging risk. I think there are a 
lot of reasons, perhaps, why we have evolved into a risk 
adverse culture. But let me ask you, Dr. Melito, aren't you 
part of the problem?
    In my own experience, when I wrote the Foreign Assistance 
Act on the other side of the House, I often would get audit 
reports from GAO or from the IG that were very thoughtful and 
really helped illuminate problems. But sometimes we got some 
that frankly took no cognizance of how difficult this work is, 
no cognizance of the fact that you are in a work environment 
that may be engaged in a civil war or huge natural disaster or 
just adverse conditions that boggle the mind. They are doing 
the best they can and the fact that they didn't produce eight 
widgets, they only produced seven, is not quite the ding you 
think it is. Training auditors and IGs to actually understand 
this working environment I think is a challenge. I just 
wondered if would comment on it.
    Mr. Melito. GAO places balance and fairness as a very high 
priority of ours. I stress with my staff, we go in country and 
part of why we go in country is not just to see what is going 
on but actually to really appreciate more how difficult this 
is. I think we do a very good job of that. Part of what we are 
trying to do, though, is to help maximize the effectiveness of 
these programs and also get the most for the taxpayers' money. 
It is a very difficult balance that we are trying to achieve. I 
think that we have a very productive and very positive working 
relationship with USAID.
    Mr. Kunder. Could I say something very briefly, sir? I 
agree with George that the message does have to come from the 
Congress. I have no problem with the work that GAO does and 
never did. But if you are a USAID officer and you are sent off 
to Afghanistan, you are seeing what is going on. First of all, 
the size of our own internal Inspector General staff has 
increased every year. Then on top of that, the Congress has 
created both the Special Inspector General for Iraq and now a 
Special Inspector General for Afghanistan. You are just being 
told by the Congress--our people are highly intelligent--you 
are being told to be cautious.
    There is nothing wrong with being cautious. I am going to 
say something because I really believe this deeply: Considering 
the environments USAID officers work in--and I know there are 
occasional scandals because I dealt with every one of them in 
the last 7 years--but by and large, we are giving the taxpayer 
a level of oversight in these kinds of difficult environments 
that is comparable to what we are getting in the city of 
Alexandria where somebody just pulled $170,000 from the parking 
meters. You can't catch everything. But the problem is the 
message is clearly one of don't take any chances. And you can't 
succeed in Afghanistan without taking some chances.
    Ms. Watson. It appears that might be a vote. We are 
checking on it. I think that the ranking member has one final 
word. I will go to the ranking member.
    Mr. Bilbray. Thank you. Mr. Ingram, there are two different 
kinds of consolidations that we need to talk about. In 1948, 
there was the concept that all aviation should be controlled by 
the Air Force. Maybe the Marine Corps didn't need it anymore 
because airplanes are airplanes. But the tasks for those 
airplanes were different. That is why to this day we have close 
support within those ground based operations and the Naval 
operations aren't consolidated. So we get into that. We have 
hit it now with the unmanned vehicle. The Air Force doesn't 
like them but the guys on the ground love them.
    Let me sort of throw out to you the concept of using the 
outcome. Rather than literacy in a country that doesn't read 
the Qur'an because they can't translate it into their native 
tongue, a task that I think we ought to be looking at in 
Afghanistan is the elimination of the opium economy and the 
return to the orchards of the 1950's, 1960's that the opium 
economy ended up destroying. Because, let us face it, you don't 
worry about your orchards if you don't think you are going to 
be alive in the next couple of months.
    But that would include the use of biological herbicides and 
the appropriate way of using those herbicides, as the 
destruction of the opium crop over a period of years rather 
than a total destruction to where people start realizing the 
Americans are killing their crops. Let me talk to you about 
this. Let us just say that the Armed Forces went in and wiped 
out the opium crop the way that some people are purporting 
while our USAID pack is there. The children of Afghanistan are 
learning that Americans and their country are destroying 
daddy's crop rather than seeing that Americans in Afghanistan 
are helping dad plant the new orchard that is going to feed 
them in the future.
    Do you see how this isn't as simple? Because if we were 
tasked with this transformation, the military application and 
some of the non-USAID activities have to be totally coordinated 
with that aspect. I point that out. I think that is the kind of 
goal, not looking at literacy in itself in isolation, but the 
outcome of a new economy.
    Do you think the coordination could be brought under a 
thing like the Director for Foreign Assistance working with the 
Department of Defense in that kind of coordinated activity or 
do you think that we need to leave some of this out of a 
coordinated effort like the Director of Foreign Assistance? Is 
that the person you were picturing as being the czar or are you 
talking about creating a new czar for this oversight?
    Mr. Ingram. No, I wasn't thinking about creating a czar. I 
was thinking about putting as many of the development functions 
of the U.S. Government in, let us say, USAID with a global 
development strategy that cuts across the whole U.S. Government 
and probably gets lead by the NSC, USAID, and the State 
Department. They lead the formulation of that. But it includes 
the military in there, and EPA, and CDC, and whatnot in 
formulating a broad global development strategy.
    Then when it comes to a country like Afghanistan, it is 
really under the direction of the Ambassador and his 
appropriate senior folks in Washington who have to drive the 
U.S. foreign policy interests in that country. If it is the 
elimination of opium, then you need to put together a U.S. 
Government-wide strategy, part of which might be the military 
and a large part of which might be helping with the economic 
and social evolution and dynamics, which would come under the 
rubric of USAID. But not all of that might fall under the 
expertise of USAID. You might have to get EPA involved in 
there. If there was a health component, you might have to get 
CDC.
    So it is not that you fold everything into USAID. It is 
that USAID is the Government agency that has the expertise and 
knowledge for how you carry out development programs in a 
country in terms of social, economic, and political 
development. It then reaches out to the rest of the U.S. 
Government and pulls it in as their expertise and experience 
are needed.
    Mr. Bilbray. Madam Chair, I appreciate this hearing. I 
guess the challenge to the successors of Mr. Walsh, I really 
think--you know, I spent 18 years in local government and I 
learned one thing, which is that the way to bridge the huge gap 
between the theory of how you think things are going to work 
and how they are actually going to work is to actually 
implement them on task orientation so you learn that there are 
little things, like support aircraft are needed by the Marine 
Corps--I think the two challenges we have are one in 
Afghanistan and the other in Central America. How do we use our 
aid to replace the drug economy and the lack of economy in 
certain parts of the world and be able to transition it?
    We have to learn by doing and keep that flexibility because 
the outcome is what matters, not the structure or the process. 
I think that we need to be able to modify that process. The 
only way to know if it is working or not is seeing if you are 
moving toward the outcome.
    I think our problems right now in Afghanistan and in Latin 
America are reflective of the fact that we need to get more to 
the outcome rather than just following a procedure. Right now, 
your argument is so compartmentalized there is no way to follow 
the ball because it bounces in too many different locations.
    Thank you very much, Madam.
    Ms. Watson. Thank you so much. Our time is really winding 
down. We have a ceremony in Emancipation Hall that many Members 
want to attend. So let us do this: We are going to have to have 
a subsequent hearing. I am going to have the staff send you a 
memorandum because I would like to hear more about what we do 
in high threat environments. How do we have programs? What kind 
of programs can we have? I would like to know how we work in 
the Peace Corps with these programs and so on. But we are going 
to put in writing a memorandum to you. You can respond and we 
will include those in the record.
    We will have a followup hearing because I think we were 
just getting into the meat of the restructuring. There is a 
tremendous need for restructuring and reorganizing so that we 
don't duplicate so many of these efforts that we are trying to 
make.
    If we are going toward peace, if we are moving into that 
era, how do we do it? We will specifically ask you these 
questions and you can write back. We will make them a part of 
the record and then we will followup and have a final hearing.
    With that, the meeting is adjourned. Thank you so much for 
your testimony.
    [Whereupon, at 10:53 a.m., the subcommittee was adjourned.]

                                 
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