[Senate Hearing 113-]
[From the U.S. Government Publishing Office]


 
  STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS APPROPRIATIONS FOR 
                            FISCAL YEAR 2014 

                              ----------                              


                          TUESDAY, MAY 7, 2013

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:17 a.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Patrick J. Leahy (chairman).
    Present: Senators Leahy, Durbin, Graham, Coats, Blunt, 
Johanns, and Boozman.

               U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

STATEMENT OF DR. RAJIV SHAH, ADMINISTRATOR
ACCOMPANIED BY MICHAEL G. CARROLL, DEPUTY INSPECTOR GENERAL

             OPENING STATEMENT OF SENATOR PATRICK J. LEAHY

    Senator Leahy. Good morning. We're here to hear testimony 
from Dr. Raj Shah, the Administrator of the U.S. Agency for 
International Development (USAID). Dr. Shah, you're no stranger 
to this subcommittee and we're delighted to have you here.
    We have several new members of the subcommittee, and I know 
you've been in contact with them. I appreciate that. Those of 
us who have been here for a long time know that you're an 
articulate, passionate advocate for USAID and its mission.
    I don't envy you in this job. When you first came to USAID 
I offered you congratulations and condolences. You're managing 
an agency of thousands of people located in more than 70 
countries, including many where the governments are corrupt and 
poverty and lawlessness are rampant, and civil society 
organizations are persecuted.
    Some question why USAID exists in the first place, even 
though 99 percent of the Federal budget goes to domestic 
programs or the Department of Defense. I think sometimes people 
don't understand that USAID's budget is about protecting the 
American people and our ability to compete in the world and to 
project American ideals. What happens in North Africa or 
Indonesia or Chechnya affects us, directly or indirectly. I 
know you are trying to deal with the biggest challenges to 
USAID's mission.
    But I'm worried that as important as the mission is we may 
not be doing as good a job as we should. I'll give you three 
examples.
    First, governments in many of the countries where USAID 
works, including some whose leaders were democratically 
elected, either are not serious or have no realistic strategy 
to address the causes of poverty, injustice and insecurity.
    We should not use taxpayer dollars to try to buy the 
cooperation of government officials who care more about 
enriching themselves than improving the lives of their own 
people.
    I go to these countries and see appalling poverty and 
government officials driving around in limousines, living in 
palaces, living with affluence that you couldn't even dream of 
in most places in this country, while one mile away people are 
living on dirt roads with raw sewage going down the side of the 
road.
    Second, we hear a lot about the incapacity of foreign 
nongovernmental organizations (NGOs). Nobody doubts they need 
help. But I'm also concerned that this lack of local capacity 
is being used as a justification to continue the foreign aid 
business model that benefits big contractors and international 
NGOs.
    There are lots of foreign NGOs doing outstanding work. They 
don't need more seminars and PowerPoints by high-priced 
consultants who make a life out of coming in and saying we 
discovered poverty and now we will give you a PowerPoint 
presentation before moving on to the next place.
    Third, we have to rethink what we can realistically 
accomplish in war zones or places where security costs are 
prohibitive and there are questions about the sustainability of 
our investments.
    You have to question what we're doing in places where USAID 
employees are barricaded inside fortified embassies, can only 
go out in heavily armed convoys and it's virtually impossible 
to know who they can trust.
    Although it is a different branch of government doing it, 
when we are training soldiers in a country that is supposedly 
our ally, and they turn around and shoot us, we should ask 
ourselves what in the world we are doing.
    These are some of the things that are on my mind. I'll 
yield to Senator Graham, who has worked as hard on this 
subcommittee as anyone I know.

                  STATEMENT OF SENATOR LINDSEY GRAHAM

    Senator Graham. Well, thank you, Mr. Chairman, and it's 
been a pleasure working with you.
    Rajiv, I think you've done a very good job handling a 
difficult portfolio, and I'd like to hear about Syria, about 
what's awaiting the world. The Arab Spring has sort of taken a 
sour turn here, and we've got so many balls to juggle.
    But I just want to echo what you said, Mr. Chairman, that 
this is 1 percent of the entire foreign assistance, 1 percent 
of the budget, and every time we can solve a problem without 
using our military, the security benefits of being involved in 
Africa--we don't have a whole lot of a military presence--of 
improving life there is a real blow to radical Islamists. You 
know, if you can provide schooling, a health clinic, clean 
drinking water, that really is a blow to their agenda.
    On the agriculture side, you may transfer the food program 
over here, but you didn't avoid the ag people. They're here in 
abundance. I spent 2 years on the Agriculture, Nutrition and 
Forestry Committee and I know it's very complicated, but I'm 
with these guys. So good luck. Thanks a bunch.
    Senator Leahy. I've spent a number of years on the 
agriculture committee, and I recall when we wrote the 5-year 
farm bill, when I was chairman, it was a very complex bill. 
This was when the organic farm program began, as well as 
environmental set asides, conservation reserve, and things like 
that.
    At the bill signing, I recall I was standing behind 
President George H.W. Bush. He was signing the bill and he 
turned to me and said, have you read every word of this? I 
said, you're the one signing it. I've read about as much as you 
have.
    So, please, Dr. Shah, go ahead.

                  SUMMARY STATEMENT OF DR. RAJIV SHAH

    Dr. Shah. Thank you, Chairman Leahy, Ranking Member Graham, 
Senator Blunt, and Senator Johanns.
    I am honored to have the opportunity to be here and want to 
start by expressing my personal appreciation for the time and 
energy you have personally offered to myself, to our team, and 
the counsel that your very talented staffs have offered to us 
on a regular basis. We are very appreciative of that deep 
partnership and look forward to continuing that partnership.
    We do believe this is an important moment for development. 
We are drawing down from a decade of war, rethinking how to 
project American power and values around the world in a manner 
that, as everyone on this panel has noted, is part of our 
national security and foreign policy strategy, while also 
improving our economic competitiveness, especially relative to 
other countries that are making big investments in Africa, in 
parts of Asia, and in parts of Latin America.
    One of the most moving moments for me in this role has been 
the opportunity to work on and help lead the relief efforts 
during the Somali famine about 18 to 20 months ago, and 
visiting the Dadaab Refugee Camp and seeing children who either 
had passed away and were wrapped in blankets on cots or were 
just on the verge of death, but being resuscitated by science, 
food products and medical support that very brave and 
courageous NGOs and others were providing was a moment of real 
inspiration.
    We now know that 165,000 children younger than the age of 5 
died during that famine, and we ask ourselves could we have 
done better, could the international community--Al-Shabaab was 
the culprit here in terms of limiting access, attacking food 
convoys, and killing humanitarian workers--but we still ask 
ourselves could we do better?
    And, more recently, I had a chance to visit Mogadishu and 
see a more optimistic vision of the future as you suggested, 
Chairman Leahy, a government that's just taking hold and 
sending the right signals about its commitment to develop a 
strategy to own its own future, to welcome private investment 
and to avoid both corruption and physical trappings of power, 
as limited as they might be today in Mogadishu.
    So we do believe that we have an opportunity to craft a new 
approach. We've seen this new approach work with respect to the 
Feed the Future Program, which is now active in 19 countries. 
Each of those countries has an extreme poverty-reduction rate 
of 5.6 percent, more than twice the rate in similar countries 
that are not Feed the Future partners.
    In those countries, we're reaching 7 million farm 
households. I know that some of you--Senator Graham, certainly, 
have visited some of those farm households and have seen the 
impact of public-private partnership coupled with real policy 
reform and efforts to fight corruption and what that means in 
those contexts.
    We're working to end preventable child death around the 
world, because we believe, along with 170 other countries, that 
this is now possible to achieve within just about a decade-and-
a-half to two decades. And we've seen the rate of children 
younger than the age of 5 dying go down from 7.6 million to 6.9 
million. And we will work relentlessly until it gets to the 
statistical equivalent of zero.
    We continue to prioritize the results-oriented approach in 
education and in water.
    And all of these efforts are driven by the USAID Forward 
reforms that you have championed and supported, and we thank 
you for your personal commitment and leadership.
    As part of those reforms, we've helped rebuild our staff 
over the last several years, especially in technical staffing 
areas, and repositioned our people to places where they're most 
needed around the world.
    We've helped bring about transparency in evaluation, so 
that people can see and learn what we're doing and what we're 
learning in the process.
    And we've tried to focus on directing more resources to 
local solutions, solutions that are often lower cost, smaller 
scale, often more tied to the communities in which they work. 
Last year, we moved $750 million to provide support to 1,200 
local organizations around the world.
    The signature reform that we've proposed in the President's 
budget is an effort to reform food assistance, and I look 
forward to taking your questions on that.
    I'd just like to conclude with a thank you to our staff. 
This has been a difficult year. We lost one of our own, Ragaei 
Abdelfattah, in Afghanistan.
    Every day our staff comes in and whether it's trying to do 
food aid in a way that can reach 4 million additional people in 
need or trying to end preventable child death or trying to 
promote our national security interests in Afghanistan or the 
Middle East, they're doing their very best in a spirit of real 
service and commitment, and we've seen that service be honored, 
as appropriate, over the last few days in recognizing Ragaei's 
passing, and some of his colleagues at the State Department as 
well.
    So thank you. I look forward to taking your questions.
    I recognize that this budget request is a 6-percent 
reduction compared to the fiscal year 2012 enacted level, 
cognizant of the times we live in, but we still believe if we 
continue down the path of reform and improve our overall 
management and performance we can achieve great things in 
development on behalf of our country. Thank you.
    [The statement follows:]
                  Prepared Statement of Dr. Rajiv Shah
    Thank you Chairman Leahy, Ranking Member Graham, and members of the 
subcommittee. I am pleased to join you to discuss the President's 
fiscal year 2014 budget request for USAID.
    In his State of the Union Address, President Obama called upon our 
Nation to join with the world in ending extreme poverty in the next two 
decades. Today, we have new tools that enable us to achieve a goal that 
was simply unimaginable in the past: the eradication of extreme poverty 
and its most devastating corollaries, including widespread hunger and 
preventable child and maternal deaths.
    The President's fiscal year 2014 budget request responds to this 
call and the most critical development challenges of our time. It 
supports important global partnerships, including the New Alliance for 
Food Security and Nutrition and the Child Survival Call to Action, by 
increasing and focusing investments in food security and maternal and 
child health. It builds resilience in areas besieged by recurrent 
crisis and natural disaster, with a focus on the Horn of Africa and 
Sahel regions. And it advances a comprehensive food aid reform package 
that will enable us to feed 2 to 4 million additional people each year.
    The President's request enables USAID to strategically advance our 
national security priorities by implementing critical economic growth, 
democracy, human rights, and governance programs in the Middle East and 
North Africa, as well as in support of the Administration's Asia-
Pacific Rebalance. It also focuses activities in Afghanistan, Pakistan, 
and Iraq at an appropriate level to sustain the gains we have made in 
those countries over the last decade. And it strengthens economic 
prosperity, both at home and abroad.
    I want to highlight how the investments we make in foreign 
assistance, which represents just 1 percent of the Federal budget, help 
our country respond to the global challenges we face and how we have 
modernized our Agency to deliver results that shape a safer and more 
prosperous future.
   a new model for development: partnerships, innovation, and results
    The fiscal year 2014 request for USAID managed or partially managed 
accounts is $20.4 billion, 6-percent less than the total enacted 
funding for fiscal year 2012. In this tough budget environment, USAID 
is committed to maximizing the value of every dollar. We have made 
tough choices so that we are working where we will have greatest 
impact, and shifting personnel and funding resources towards programs 
that will achieve the most meaningful results. Since 2010, regional 
program areas have been reduced by 29 percent, Feed the Future 
agriculture programs have been phased out of 22 countries, and USAID 
global health program areas have been phased out of 23 countries.
    The President's fiscal year 2014 request continues to build on 
gains we have made over the past year to work smarter and more 
effectively through a suite of ambitious reforms called USAID Forward. 
Through USAID Forward, the Agency has fostered new partnerships, 
placing a greater emphasis on innovation, and a relentless focus on 
results. These reforms have formed the foundation of a new model for 
development that continues to define the way we work around the world.
    The fiscal year 2014 budget provides funding to mobilize a new 
generation of innovators and scientists. Through our Development 
Innovations Ventures, we invite problem-solvers everywhere to 
contribute a cost-effective and cutting-edge idea that could scale to 
reach millions.
    It provides funding for Grand Challenges for Development, 
capitalizing on the success of previous challenges to accelerate 
reductions in maternal and child mortality, promote childhood literacy, 
power agriculture through clean energy, and raise the voices of all 
citizens through technology. We have received more than 500 
applications per challenge, with almost 50 percent of innovations 
coming from developing and emerging economies. For example, through All 
Children Reading: A Grand Challenge for Development, nearly three dozen 
organizations--half of them local--are pioneering a range of novel 
approaches to education, from helping children in India learn to read 
with same language subtitling on movies and TV to bringing fully 
stocked e-readers to rural Ghana.
    The request accelerates advances of USAID's Higher Education 
Solutions Network, a constellation of seven development innovation labs 
on university campuses that work with a global network of partners to 
provide solutions for key development challenges, leveraging tens of 
millions of dollars of university and private-sector financing.
    The fiscal year 2014 request also allows us to work more 
effectively with a range of partners, from faith-based organizations to 
private sector companies. A new focus on leveraging private sector 
resources has enabled us to dramatically expand our Development Credit 
Authority--unlocking a record $524 million in fiscal year 2012 in 
commercial capital to empower entrepreneurs around the world. Last year 
alone, we increased our contributions to public-private partnerships by 
almost 40 percent, leveraging an additional $383 million.
    This funding also allows us to rigorously measure and evaluate our 
work so we know which of our development efforts are effective and 
which we need to scale back or modify. Since the launch of our 
evaluation policy, 186 high-quality evaluations have been completed and 
are available on our Web site or through a mobile ``app'' that is 
easily downloaded. Half of these evaluations have led to mid-course 
corrections and one-third has led to budget changes.
    A new emphasis on supporting local solutions has enabled us to 
shift $745 million in funding to local institutions, firms, and 
organizations in the last year alone--helping replace aid with self-
sufficiency. When we partner with developing country institutions, we 
use sophisticated tools to assess their financial management capacity 
and safeguard U.S. resources.
    As part of our new model, we're insisting our partners make policy 
reforms and fight corruption in order to meet the conditions of our 
assistance. Through new models of partnership that demand mutual 
accountability--including the New Alliance for Food Security and 
Nutrition and the Tokyo Mutual Accountability Framework for 
Afghanistan--we are creating incentives for governments to strengthen 
their own institutions.
    Across our work, we are moving from a traditional approach of top-
down development to a new model that engages talent and innovation 
everywhere to achieve extraordinary goals. In education, a core 
development objective, we are harnessing this new approach to help 
close the gaps in access and quality of education. We know that 
globally 171 million people could be lifted out of poverty if all 
students in low-income countries gained basic literacy. Our strategy 
for basic education is focused on improving reading skills for 100 
million children in primary grades by 2015 and increasing equitable 
access to education in crisis and conflict environments for 15 million 
learners by 2015.
                            food aid reform
    At its foundation, our new model of development shares the bedrock 
principles of effectiveness and efficiency that serve as the clarion 
call for government today.
    There is perhaps no better example of this fundamental imperative 
than the food aid reform package proposed in this year's budget 
request, which would enable us to feed 2 million to 4 million more 
hungry men, women, and children every year with the same resources, 
while maintaining the valuable contribution of American agriculture to 
this mission.
    Through Public Law 480 title II, or Food for Peace, America's 
agricultural bounty and generosity have fed well over a billion people 
in more than 150 countries since 1954. But while the world has changed 
significantly since title II was created, our hallmark food assistance 
program has not. The current program limits our ability to use the 
appropriate tools for each humanitarian situation--tools we know will 
help people faster and at a lesser cost.
    Buying food locally can speed the arrival of aid by as many as 14 
weeks--making up precious time when every day can mean the difference 
between life and death. It can also cost much less--as much as 50 
percent less for cereals alone. In complex environments such as Syria 
and Somalia, which are increasingly the kind of crises where we need to 
provide assistance, these more flexible tools are invaluable.
    The more agile, flexible, and modern approach laid out in the 
President's budget request pairs the continued purchase of the best of 
American agriculture with greater flexibility around interventions such 
as local procurement, cash transfers, and electronic vouchers. The 
President's proposal maintains the majority of our emergency food aid 
funds--55 percent in 2014--for the purchase and transport of American 
commodities. That means we're going to keep working with soy, wheat, 
pulse, and rice farmers and processors across America who help feed 
hungry children from Bangladesh to the Sahel--often in the form of 
specialized high nutrition products.
    At a time of urgent human need and budget constraints, we can save 
more lives without asking for more money.
    The proposal also reaffirms our commitment to development partners 
who receive title II funding, enabling them to provide the same types 
of development programs at a lower cost. These programs strengthen our 
ability to reduce chronic poverty, build resilience, and help prevent 
future crises.
                            feed the future
    Ending hunger and creating a food secure world are vital components 
of the fight to end extreme poverty. Launched in 2009 by President 
Obama, Feed the Future is unlocking agricultural growth, helping 
transform developing economies and ending the cycle of food crises and 
emergency food aid. Although the initiative is still in its early days, 
we are beginning to see significant results.
    In Rwanda, we have reached 1.6 million children under five with 
nutrition programs that reduced anemia, supported community gardens, 
and treated acute malnutrition. In Bangladesh, we helped more than 
400,000 rice farmers increase yields by 15 percent through the more 
efficient use of fertilizer, which led to the first-ever rice surplus 
in the country's poorest state. In fiscal year 2012, we helped more 
than 7 million farmers across the world apply these kinds of new 
technologies and practices, four times the number we reached the 
previous year.
    The fiscal year 2014 request provides $269 million for the 
President's G-8 commitment to the New Alliance for Food Security and 
Nutrition, which aims to lift 50 million people in sub-Saharan Africa 
out of poverty in the next decade. Since its inception at last year's 
G-8 Summit, we have helped leverage more than $3.75 billion in 
commitments from more than 70 global and local companies. In Tanzania, 
Yara International is constructing a fertilizer terminal at the 
nation's largest port, and, in Ethiopia, DuPont is expanding seed 
distribution to reach 35,000 smallholder maize farmers and increase 
productivity by 50 percent.
    At the same time, participating African governments have committed 
to serious market-oriented reforms. Tanzania has removed its export ban 
on staple commodities, Mozambique eliminated permit requirements for 
inter-district trade, and Ethiopia no longer imposes export quotas on 
commercial farm outputs and processed goods.
                             global health
    Thanks to strong bipartisan support we are on track to provide 
life-saving health assistance to more people than ever before. The 
fiscal year 2014 Global Health request supports our goals of creating 
an AIDS-free generation, ending preventable child and maternal death, 
and protecting communities from infectious diseases.
    Across our global health portfolio, we are aligning our budgets to 
the areas of greatest need. Now, 90 percent of USAID bilateral maternal 
and child health funding is in the 24 USAID priority countries that 
account for three-quarters of maternal and child deaths.
    The request supports the continuation and scale-up of high-impact 
HIV/AIDS prevention, care, and treatment tools in pursuit of an AIDS-
free generation. The request also provides $1.65 billion under PEPFAR 
for the U.S. contribution to the Global Fund to Fight AIDS, 
Tuberculosis, and Malaria.
    In June, USAID co-hosted a Call to Action to accelerate progress 
and end preventable child death. A powerful example of how our new 
model of development can rally diverse partners behind ambitious but 
achievable goals, the Call to Action has encouraged more than 170 
countries, 200 civil society organizations, and 220 faith-based 
organizations to sign a pledge to help reduce child mortality. This 
global effort builds on an 8 percent reduction we have seen from 2008 
to 2011 in child mortality in countries where the U.S. Government 
provides assistance.
    We will continue to fund critical efforts in voluntary family 
planning, immunizations, nutrition, malaria, tuberculosis, and 
neglected tropical diseases--cost-effective interventions that save 
lives, while preventing the spread of disease.
  supporting strategic priorities and strengthening national security
    Across the world, we are strengthening democracy, human rights, and 
governance, with a special emphasis on marginalized populations, 
including women and youth. Support for democratic and economic 
transitions enables the rise of capable new players who can help solve 
regional challenges and advance U.S. national security.
    Since January 2011, the State Department and USAID have allocated 
more than $1.8 billion to support democratic transitions in the Middle 
East and North Africa and respond to emerging crisis needs in the 
region. The President's request of $580 million for the Middle East and 
North Africa Incentive Fund provides support to citizen demands for 
change, improves our ability to respond adroitly to new challenges and 
opportunities, and begins to address the imbalance between our security 
and economic assistance in the region.
    The budget request supports our humanitarian assistance work around 
the globe in places where the need is greatest. This is particularly 
true in Syria, where at least 4 million people are in need of 
humanitarian assistance and 2 million are displaced. To date, State and 
USAID have provided nearly $385 million in humanitarian relief to the 
Syrian people.
    In Iraq, Afghanistan and Pakistan, USAID continues to work closely 
with interagency partners including the State and Defense departments, 
to move toward long-term stability, promote economic growth, and 
support democratic reforms, including the rights of women. Despite the 
challenges, we have seen a number of positive gains. For example, over 
the past decade in Afghanistan, we have increased access to education, 
resulting in dramatic increases in primary school enrollment from 
900,000 boys in 2002 to 8 million students in 2012, 37 percent of whom 
are girls. In Iraq, USAID-funded legal clinics have supported more than 
1,700 legal cases on behalf of vulnerable individuals, including 
internally displaced persons and ethnic and religious minorities.
    The President's budget request supports the administration's Asia-
Pacific Rebalance by increasing funding for the region to address 
critical gaps in core programs to renew U.S. leadership, deepen 
economic ties, promote democratic and universal values, and strengthen 
diplomatic engagement. In addition, we are seizing new opportunities 
for partnership in Asia, including in Burma, a nation undertaking 
political and economic reform.
             global climate change and building resilience
    As a result of global climate change, natural disasters are 
becoming more frequent and more severe. With a new emphasis on helping 
vulnerable communities build resilience to disasters, the Global 
Climate Change Presidential Initiative invests in developing countries 
to accelerate transitions to climate-resilient, low-emission economic 
growth, while incentivizing private sector investment to scale impact 
and sustain progress. For example, we are partnering with the Consumer 
Goods Forum--which represents about 400 companies and $3 trillion in 
market value--to reduce tropical deforestation from key commodities, 
like palm oil and timber.
    Drawing on lessons learned during last year's food crisis in the 
Horn of Africa--as well as decades of experience responding to 
disasters--USAID is pioneering a fundamental new approach to help 
communities strengthen their resilience in the face of crises. In 
Ethiopia, for instance, we're working with international firms like 
Swiss Re and local businesses to develop index-based livestock 
insurance--a new product that uses satellite data to protect 
pastoralists from drought-related losses.
                               conclusion
    When people around the globe cannot feed their families, when young 
adults find themselves without education or a source of income, and 
when parents watch their children die of preventable illnesses, the 
world is inherently less secure. The fiscal year 2014 budget request 
will continue our work to combat these causes of instability and end 
extreme poverty.
    These investments aren't just from the American people; they're for 
the American people. By promoting sustainable growth in the developing 
world, we spur new markets abroad and energize our economy here at 
home. By driving innovations in agriculture, education, and global 
health, we strengthen global stability and advance our national 
security. And by delivering aid in the wake of natural disasters and 
humanitarian crises, we express the generosity and goodwill that unite 
us as a people.
    Thank you.
                                 ______
                                 
                Prepared Statement of Michael G. Carroll
    Chairman Leahy, Ranking Member Graham, and members of the 
subcommittee, I am pleased to provide this written statement to the 
subcommittee on behalf of the Office of Inspector General (OIG) for the 
U.S. Agency for International Development (USAID). In the following 
pages, I address critical challenges that USAID faces in administering 
development assistance activities abroad and concerns we have 
identified in our oversight of USAID programs and activities.
              usaid office of inspector general oversight
    In 1980, USAID OIG was established to combat waste, fraud, and 
abuse and promote economy, efficiency, and effectiveness in USAID 
programs and activities. The scope of our congressionally mandated 
oversight responsibilities has since grown to encompass the full 
portfolio of programs and activities at USAID, the Millennium Challenge 
Corporation, the U.S. African Development Foundation, and the Inter-
American Foundation. Last year, OIG oversaw approximately $22 billion 
in USAID funds for development assistance in more than 80 countries. 
For fiscal year 2013, our oversight covers approximately $21 billion in 
funding for USAID. Our oversight of these funds extends beyond 
frontline states like Afghanistan and includes a broad range of 
programs designed to promote improvements in health, education, 
infrastructure, governance, and other areas.
    We employ 219 Foreign Service and Civil Service auditors, criminal 
investigators, and management and legal staff who are assigned to our 
10 regional and country offices and to our headquarters in Washington, 
D.C., to oversee these foreign assistance activities. We also draw on 
the expertise and skills of 39 Foreign Service national auditors, 
investigators, and administrative staff. USAID OIG personnel have 
demonstrated great diligence and commitment to help improve 
stabilization, reconstruction, and development activities and 
strengthen program integrity. Our personnel are frequently called to 
serve in challenging and dangerous environments and many work in 
conflict zones and areas beset by natural disasters. Their dedication 
to our mission and firm resolve in the face of these challenges are to 
be commended.
    Across our oversight portfolio, we conduct performance audits and 
reviews of programs and management systems, audits on grantees' and 
contractors' financial accountability, and agency financial statements. 
We supervise third-party audits of U.S.-based companies and grantees 
and work with local audit firms and host government audit agencies to 
audit the expenditure of U.S. Government funds by local and host 
government implementing partners. OIG oversees these audit activities 
by setting audit standards, determining the eligibility of local public 
accounting firms to perform financial audits of agency funds, ensuring 
that audits are conducted in line with established quality standards, 
and reviewing and approving resulting reports prior to issuance.
    OIG also conducts investigations into possible violations of 
Federal laws, rules, and regulations to preserve and protect the 
integrity of the programs and activities that we oversee. Domestically, 
our criminal investigators employ the full complement of law 
enforcement authorities in pursuing allegations of waste, fraud, and 
abuse of U.S. foreign assistance funds. Abroad, we do so subject to 
constraints of foreign law. We also work with host country authorities 
to prosecute crimes in local courts when appropriate.
    Under our mandate to fight fraud, waste, and abuse, USAID OIG is 
analyzing programs implemented by the top 40 contractor recipients of 
USAID funds to identify regional, programmatic, and/or contractor-
specific vulnerabilities that fall under our investigative purview. We 
plan to use the findings from this study to inform the allocation of 
investigative resources and improve the effectiveness of our 
investigative efforts in this time of budget restraint. This analysis 
is also reflective of the proactive approach we are taking to identify 
programs where fraud, waste, and abuse are likely before allegations 
are made.
    OIG's outreach and coordination are also important elements of the 
oversight process, and we engage extensively in these activities. We 
maintain hotlines, both here and abroad, in English and other 
languages, to gather information on alleged misconduct and other 
irregularities in foreign assistance activities, and conduct fraud 
awareness briefings to alert participants to fraudulent practices and 
schemes. Our auditors provide training to Agency personnel, host 
government audit authorities, and local audit firms on cost principles 
and Federal audit and accountability procedures and requirements.
    We also participate in task forces and work with interagency groups 
to coordinate oversight efforts in key areas, such as U.S. assistance 
in southwest Asia, global health, and procurement fraud. In addition, 
we have initiated work with a group of oversight offices for 11 
bilateral donors to improve transparency and accountability of 
assistance delivered through multilateral organizations and to address 
other issues of mutual interest.
                    audit and investigative results
    Our oversight activities have yielded significant results. Last 
year, we issued 686 audit reports with 1,478 recommendations for 
improving foreign assistance programs. These audits identified $154 
million in questioned costs and funds to be put to better use, of which 
$47.7 million has been sustained. We maintained a vigorous 
investigative program, opening 171 investigations. Our investigative 
efforts led to 26 referrals for prosecutorial consideration, 7 arrests, 
19 indictments, 3 convictions, and 101 administrative actions 
(including 137 suspension and debarment actions) and yielded $50 
million in savings and recoveries. Our outreach efforts included 164 
fraud awareness briefings in 31 countries for 4,144 participants.
    In Afghanistan and Pakistan, our work over the last decade has 
produced considerable results. To date, we have issued 223 audits of 
foreign assistance activities in these countries with 568 
recommendations for improvement. Our financial audit work has covered 
almost $2.3 billion in expenditures, and together with our performance 
audit efforts, identified more than $190 million in sustained 
questioned costs and funds to be put to better use. Our 307 
investigations in Afghanistan and Pakistan have, in turn, yielded 161 
administrative actions, 150 prosecutorial referrals, 13 convictions, 
and approximately $267 million in savings and recoveries.
                            usaid challenges
    In addition to reinforcing the integrity and efficiency of foreign 
assistance efforts, our oversight work has highlighted significant 
challenges that USAID faces in administering programs and activities. 
These management challenges affect USAID's ability to deliver 
assistance efficiently and effectively. Current challenges facing USAID 
include operating in high threat environments, sustainability, the 
execution of USAID's Implementation and Procurement Reform, performance 
management and reporting, management of information technology, 
preserving audit access to United Nations records, accomplishing audits 
of U.S.-based for-profit contractors, and financial management issues.
                 operating in high-threat environments
    USAID performs a significant amount of work in high threat 
environments such as Afghanistan, Pakistan, Haiti, and South Sudan. The 
insecurity, instability, weak governance, and high levels of corruption 
in fragile states create difficulties in implementing programs. OIG 
audits have found deficiencies in contract and grant management, 
planning for program sustainability, internal controls, and compliance 
with laws, regulations, and other legally binding requirements.
    Continuing violence in these settings makes it challenging for 
USAID to implement programs and conduct needed program monitoring 
activities. In Afghanistan, 40 percent of our reports from October 1, 
2010, through June 30, 2012, identified contractor or project 
management deficiencies and noncompliance with relevant procedures or 
regulations. Internal control weaknesses were also noted in 40 percent 
of these reports. More than a third of these reports indicated that 
security problems hampered project implementation or monitoring and a 
similar percentage raised questions about the sustainability of program 
benefits. Similarly in Pakistan, more than 40 percent of the reports 
during this period identified contract or project management 
deficiencies. Likewise, more than 4 in 10 found internal control 
weaknesses and noncompliance with relevant procedures or regulations.
    Our audit of the $160 million Afghanistan Stabilization Initiative 
for the southern region found that the project had been delayed by the 
failure to apply timeliness standards in evaluating implementer 
performance, adverse security conditions, a lack of formal work 
planning, inadequate USAID oversight, staffing difficulties, and poor 
quality subcontractors. To address difficulties in these areas, USAID/
Afghanistan expects to continue to use on-site monitors. It is also 
considering the use of third-party monitors to help train program 
participants and report on project progress.
    In Pakistan, the Energy Efficiency and Capacity Program, a 3-year, 
$23.5 million program, did not achieve any of its planned results in 
key areas. The program focused on providing subsidies to farmers for 
more efficient irrigation well pumps with the aim of replacing 11,000 
pumps over 2 years. However, after 18 months, only 963 pumps had been 
replaced. More realistic planning and closer monitoring would have 
produced more effective results.
    In South Sudan, travel restrictions due to insecurity have impeded 
USAID project implementation and monitoring. Lack of experienced staff 
in South Sudan has limited the ability of USAID to perform on-site 
financial reviews, and few local public accounting firms are qualified 
to perform audits of USAID recipients when more in-depth oversight is 
needed. USAID has also been limited in its ability to coordinate 
programs because of weak South Sudan government institutions. 
Insecurity, insufficient financial monitoring, and low host government 
capacity were also indicated in a USAID OIG audit on road upgrading 
activities in South Sudan. While the road being built was over budget 
and behind schedule, the sections of road that were completed were well 
built, and increases in traffic showed that the road had successfully 
linked South Sudan with Uganda and other countries to the south. 
However, increased traffic volumes led to more accidents. Wait times at 
the border increased from 3 hours to 3 days because the Government of 
South Sudan did not upgrade its customs operations at the border with 
Uganda.
    Haiti is a high risk environment with weak government institutions, 
limited capacity of local non-governmental organizations, and 
widespread corruption. To mitigate related risks, USAID/Haiti has 
channeled 98 percent of U.S. Government funding to U.S. contractors and 
non-governmental organizations. USAID OIG audits and program reviews 
have found, however, that USAID's programs in Haiti are falling short 
of planned results and have identified problems with program 
implementation, internal control weaknesses, and poor monitoring and 
oversight. For example, USAID/Haiti's cash-for-work activities reached 
fewer beneficiaries than initially planned and only had a modest 
stabilizing effect on the intended population. Because of planning 
weaknesses and various delays, USAID/Haiti's transitional shelter 
activities did not meet their goal of substantial shelter construction 
prior to the hurricane season.
                             sustainability
    USAID has experienced difficulties in ensuring that national 
governments and community organizations are committed to or have the 
capacity to sustain the benefits of USAID assistance programs. In more 
than one in six of our recent performance audits, we have identified 
problems with project sustainability. For example, between 2003 and 
2011, USAID spent $73.2 million on information technology systems for 
the Government of Iraq. We found that most of the systems were not 
completed, not functional when delivered, or not used as intended. In 
some cases, the Government of Iraq did not support the systems or was 
not prepared to begin using them, and in other cases, USAID's 
implementing partners did not deliver completed or functional systems. 
In a $100 million infrastructure program in West Bank and Gaza, USAID 
did not assess a government ministry's ability to maintain and operate 
new and renovated schools and facilities once they were completed. To 
improve performance in this area, USAID has issued new procedures that 
require sustainability objectives to be incorporated into every project 
design and has developed corresponding analytical tools and training 
for its staff.
              implementation and procurement reform (ipr)
    USAID's IPR initiative is intended to make its assistance programs 
more efficient, effective, and sustainable and to enhance project 
management and implementation capacity so that development assistance 
is no longer necessary. One of the objectives of IPR is to increase the 
use of host country systems and institutions. This approach poses 
several risks. The current state of management and implementation 
capacity of the relevant host governments and local private and 
nonprofit organizations may be sufficiently lacking so as to call into 
question their ability to use these funds effectively and protect them 
from fraud, waste, and abuse. Moreover, USAID has indicated that its 
missions abroad will need additional staff to work more closely with 
local organizations to help mitigate risk.
    Our audits have noted difficulties in the Agency's implementation 
of on-budget assistance in Afghanistan. We found, for example, that 
USAID's first six ministerial assessments conducted from 2007 through 
2010 did not provide reasonable assurance of detecting significant 
vulnerabilities. When we examined USAID's on-budget assistance to 
Afghanistan's Ministry of Public Health we observed that these funds 
increased the use of health facilities and reduced mortality. However, 
because 94 percent of the country's health care expenditures were donor 
supported, the ministry's ability to sustain the current level of 
coverage over the long term was questionable.
    In Pakistan, USAID did not prioritize or follow up on significant 
vulnerabilities identified in its pre-award assessments and disbursed 
funds before verifying that the weaknesses had been addressed. When 
USAID provided cash payments to support a Government program to help 
alleviate poverty, the Government of Pakistan transferred U.S. funds 
into its general budget account without authorization from USAID. USAID 
was unaware of this transfer because it did not receive needed 
information from the Government of Pakistan and therefore could not 
adequately monitor the program. In Jordan, USAID did not monitor funds 
spent on specific development activities and $1.2 million in funds were 
used for prohibited activities, such as military spending.
    Our investigative experience abroad, including our unique focus on 
fraud and other violations in local settings, serves as a strong 
indicator of challenges to come in promoting accountability as more 
foreign assistance funds are delivered through host country systems. 
Although we have developed effective relationships with local law 
enforcement in a number of countries, investigative cooperation is 
sometimes hampered by developments in local politics and the larger 
bilateral relationship with the United States. Some foreign law 
enforcement agencies have required financial and logistical support in 
order to advance investigations that OIG has started. Where foreign-
based implementers overseas cannot be readily compelled to appear in 
our courts, they can evade U.S. jurisdiction and U.S. justice. Foreign 
courts can be an alternative, but foreign judicial procedures, customs, 
practices, and rules of law are at varying stages of development in the 
countries where USAID works. Moreover, while prosecuting cases 
overseas, certain foreign judicial systems have at times required 
documentation and testimony from U.S. Government employees that would 
subject them to partial waivers of diplomatic immunity from foreign law 
claims by prosecuted parties. These conditions may expose USAID 
programs to greater vulnerability when implemented through host country 
systems and institutions.
    While USAID's IPR initiative aims to increase the percentage of 
USAID development assistance delivered through host country systems, 
other IPR objectives may involve additional risks. For example, one of 
the objectives of IPR is to increase the number of fixed price 
contracts and decrease the use of ``high risk'' procurement methods, 
including single source contracts, large indefinite quantity contracts, 
and cost reimbursement contracts. Under the same objective, USAID hopes 
to establish cost containment measures for contractors and grantees, 
reduce reliance on its Contract Review Board, and elevate the status of 
procurement officials within USAID through better defined career paths 
that can lead to Senior Foreign Service and Senior Executive Service 
appointments. The OIG expects to examine several of these planned 
reforms as part of its fiscal year 2014 audit plan, which is currently 
in development.
                  performance management and reporting
    USAID performance management challenges involve weaknesses in 
project design, planning, and monitoring. For example, in Senegal USAID 
relied on the national health system to distribute commodities and 
treat beneficiaries. However, due to the size of the program (14 
regions, 76 health districts, and 16,000 health outlets), oversight was 
challenging and our audit identified several monitoring weaknesses 
including a lack of inventory records. In part as a result of 
monitoring weaknesses, the program failed to distribute treated bed 
nets according to the mission's expectations, and some health posts did 
not receive drugs for over a year. In Afghanistan, ineffective 
communications and an absence of documentation detailing important 
discussions and decisions led to drastically different understandings 
about when the implementer could begin the second phase of the Skills 
Training for Afghan Youth Project.
    Quality, reliability, and sufficiency of program data are essential 
to assess whether projects have the intended impact. Even though USAID 
has extensive guidance on the performance management of projects, the 
Agency continues to struggle to report accurate and supported results. 
More than a third of our recent performance audits and reviews have 
identified data quality problems. In many instances, required data is 
not collected, data collection methods are improper or inconsistent, or 
definitions for the specific data to be collected are inadequate. In 
Ethiopia, the USAID mission lacked the baselines and targets necessary 
to determine whether Feed the Future activities were performed 
satisfactorily. In Tajikistan, an agriculture program had no measures 
for its most significant activity and had no targets for those 
indicators it did track. In Haiti, loan information associated with 
USAID Development Credit Authority activities was outdated, incomplete, 
and inaccurate.
                  management of information technology
    USAID conducted a study for consolidating its information 
technology infrastructure with the Department of State at approximately 
70 locations worldwide and identified potential risks to system 
security and projected savings. Data collected from three pilot sites 
in Peru, El Salvador, and Guatemala identified several technical, 
governance, and security issues. The move toward cloud-based software 
and information technology infrastructure by USAID and the Department 
of State could reduce the expected cost benefits of consolidation. 
USAID continues to work with the State Department to consolidate 
information technology infrastructure.
    In response to the ``WikiLeaks'' disclosures, a series of U.S. 
Government reviews were conducted to assess Federal efforts to 
safeguard classified information against improper disclosure. These 
included an examination of USAID policies and procedures in this area. 
A USAID self-assessment of the handling of its own classified material, 
an external review by the Information Security Oversight Office and the 
Office of the National Counterintelligence Executive, and a review by 
the OIG all identified areas where USAID needed to strengthen its 
ability to safeguard classified material.
      audit provisions applicable to united nations (un) agencies
    Since at least 2002, USAID's standard audit provisions for 
inclusion in awards to UN agencies have provided for U.S. Government 
audit access to UN records where USAID was the sole contributor to the 
program. In 2011, USAID redrafted these provisions, expanding U.S. 
Government audit access to programs in which USAID was not the sole 
contributor. The UN objected to these new provisions, leading USAID to 
issue a temporary blanket deviation for awards to UN agencies pending 
further negotiations with the UN. The deviated audit provisions do not 
provide for any U.S. Government audit access to UN records. During 
negotiations between USAID, the UN Secretariat, and four UN agencies in 
February 2012, the UN refused to permit any U.S. Government audit 
access to UN records under any circumstances. The UN has offered to 
permit USAID to request audits by the UN's internal auditors or the UN 
board of auditors but the UN would decide whether or not to perform 
these audits based on its sole discretion.
    USAID OIG objects to the UN position because there is no assurance 
that USAID-funded programs implemented by UN agencies will be audited 
at all, except as part of the annual audit of the recipients' financial 
statements. If those programs are not material in relation to the 
amounts in the financial statements, there could be no testing at all 
of expenditures under USAID programs. In addition, it is difficult to 
assess the degree to which UN auditors are independent and perform 
their work in accordance with applicable auditing standards because 
relatively little information about their operations is publicly 
available.
    USAID OIG has discussed this concern with USAID on many occasions 
since February 2012 and we understand that the Agency is prepared to 
acquiesce to the UN's position. If USAID does so, the U.S. Government 
will no longer have audit access to UN records under any circumstances. 
This arrangement places U.S. taxpayer funds at risk of fraud, waste, 
and abuse without recourse to U.S. Government oversight.
                audits of u.s.-based for-profit entities
    USAID typically relies on the Defense Contract Audit Agency (DCAA) 
to conduct financial audits of the for-profit entities with which it 
works. Due to delays in USAID requests for audits and DCAA's slow 
response to these requests, USAID had a backlog of about 365 cost-
incurred audits at the end of the second quarter of fiscal year 2013. 
To help address this backlog, USAID provided $3.2 million in funding 
for audits of for-profit contractors during fiscal year 2013 and has 
scheduled 123 audits to be completed by the end of the year, with 105 
of these audits performed by DCAA. USAID also funded a liaison position 
within DCAA to monitor audits requested by USAID, to bring issues to 
the attention of DCAA officials for resolution, and to ensure that 
USAID receives periodic status reports on applicable DCAA audits.
                          financial management
    In November 2012, OIG issued a qualified opinion on USAID's 
principal financial statement for fiscal year 2012, based on the 
significant gap between the ``Fund Balance with Treasury'' recorded in 
its financial accounting system and the balance reported by the 
Department of Treasury. Auditors also reported on $3.2 billion in 
unsupported adjustments to the Agency's general ledger accounts.
    While USAID faces several critical challenges, we will continue to 
provide comprehensive oversight to help foreign assistance programs 
operate more effectively, provide assurance that program costs are 
reasonable and necessary, and aid in the prevention and detection of 
fraud and abuse. Thank you for this opportunity to address the 
subcommittee. We greatly appreciate your interest in our work.

    Senator Leahy. Thank you, Dr. Shah. You mentioned the food 
aid program and shifting funding from Public Law 480 to the 
State, Foreign Operations, and Related Programs bill to be 
managed by USAID. This is something I referred to earlier 
regarding my past experience as chair of the Senate 
Agriculture, Nutrition and Forestry Committee.
    As I understand it, you want to end what you feel is an 
inefficient practice of monetization replaced with cash for the 
same development purposes and target populations. This proposal 
would shift $1.1 billion to international disaster assistance 
to provide a more flexible response in food emergencies. The 
administration requests a total of $1.4 billion for emergency 
food aid.
    Of course, we've heard what will this do to farmers or 
shippers here. We're concerned about those jobs. But we also 
want to be sure that our tax dollars are being used to prevent 
hungry people living abroad from starving.
    So let me ask you this: How many more people could we feed 
by doing away with monetization in its current form? How many 
more people could we feed through local and regional purchases 
of food?
    Dr. Shah. In total, Sir, the proposal allows us to reach 4 
million additional children with food across those two areas of 
reform. The rough breakdown would depend very much on the costs 
and the disasters that we deal with.
    Senator Leahy. Of course.
    Dr. Shah. But 4 million is on a base of about 40 million to 
45 million, and I would just note that, over the last decade, 
this program has been essentially shrinking and becoming less 
relevant to the world around us because of the changing 
structural economics. Shipping costs have more than tripled. 
Commodity costs have increased.
    Before, we used to reach almost 90 million people. Today, 
we're down to half that, and we project this number will 
continue to diminish in terms of both the scale of this effort 
and its relevance to the crises of our times like opposition-
controlled parts of Syria or Shabaab-controlled parts of 
Somalia during the famine because of the security threats that 
really do threaten and render somewhat ineffective the more 
traditional model of trucking in foreign food.
    Senator Leahy. I remember years ago working with two of my 
colleagues, Senator Robert Dole and Senator George McGovern, of 
opposite parties and philosophies, but they strongly supported 
feeding hungry people.
    I think they felt that it was as much a moral issue as an 
issue of national interest. I think it's a moral issue, too, 
when you're representing the wealthiest, most powerful nation 
in the world. You spoke about 4 million people who wouldn't get 
food otherwise.
    Now, someone said that we should make sure that starving 
people should see bags of food stamped with the USAID logo so 
they know it's from the United States. But under the current 
system you have millions of people who don't get food at all. 
Isn't that correct?
    Dr. Shah. That's correct, Sir, and I would also suggest 
that our experience, since the Bush administration, we've been 
implementing a pilot program with local and regional 
procurement. When we buy that food, we bag it in bags that say 
USAID from the American people. That's what we did after the 
Pakistani floods, and we saw awareness of American relief 
efforts peak.
    After the floods, people clearly recognized the food came 
from the American people because it was in bags that were 
labeled ``from the American people,'' because the American 
people did, in fact, buy and deliver them. We were just doing 
it in a more efficient and more timely manner, in fact, 
reaching communities in need about 14 weeks faster than the 
alternative.
    Senator Leahy. In your testimony, you said this would save 
shipping costs. So how do we calculate the shipping costs? Is 
it just the transport on the high seas or ground transport or 
something else?
    Dr. Shah. The shipping costs include both of those two 
elements, transport on ocean freight, which is about 18 percent 
of the total costs of the title II program, as well as 
transport from port to country, which is about 7\1/2\ percent. 
So it comes together to be about 25 percent of the total 
program spent on both ocean freight and then transport to 
country overland.
    Senator Leahy. How does this compare to transporting food 
locally or regionally?
    Dr. Shah. Yes. Well, when we buy the food locally or 
regionally we still do have some costs to transport it to where 
it's specifically needed. So if you compare the two straight up 
you find that it's about 20 to 25 percent cheaper in total with 
local and regional procurement.
    And the reason we know this is, thanks to the commitment of 
this committee, we've had multiple years of experience 
implementing the local and regional procurement program through 
the IDA account and we have hundreds of millions of dollars 
that have been programmed in that manner, so we have real data 
backing this up. This isn't a projection. This is actual 
programmatic experience for the Food for Peace team that has 
been working at USAID to implement these programs.
    Senator Leahy. Is it an oversimplification to say that for 
the same number of dollars you're feeding more hungry people?
    Dr. Shah. Absolutely, sir, and when we model what this 
proposed reform, which would still allow for a strong 
partnership with American agriculture by having 55 percent of 
the total program still connected to purchasing and 
distributing American food, even with that, the flexibility 
would allow us to reach 4 million additional children around 
the world.
    Senator Leahy. We are now hearing about the impact on 
maritime jobs. What's the effect on U.S. maritime jobs?
    Dr. Shah. The proposal includes an increase to the Maritime 
Support Program. Our work with the Department of Transportation 
and the Office of Management and Budget indicates there are 
really only about eight to ten ships that we use that would not 
benefit from other forms of Federal support.
    And so on those eight to ten ships, there are about 300 
total employees, and that's out of a total industry base of 
about 15,000 people. For those 300, of course, we expect that 
those ships will have other business activities, some of which 
will come from DOD and some of which will come from elsewhere, 
that they can pursue. So we don't have an estimate of job 
losses.
    We've been very, very sensitive to make sure that any 
impacts to the maritime industry are really seriously 
mitigated, and we believe this proposal, which includes the 
Maritime Support Program plus up, does, in fact, achieve that 
goal.
    Senator Leahy. Lastly, you have USAID programs in Iraq and 
Afghanistan. I know you also have them in other conflict zones, 
but let's just focus on those two. What are some of the lessons 
you've learned? What would you do differently if you were put 
in that situation again?
    I worry about the danger to our people, the inefficiencies, 
the corruption by foreign officials in Iraq and Afghanistan. I 
have read what the USAID's inspector general and the other 
special inspectors general have found in these countries.
    Dr. Shah. I think if there's one significant lesson I've 
taken away it would be to demand more of our in-country 
partners, particularly the governments, earlier in the process.
    Under the Obama administration, we've implemented real 
conditionality for our assistance. In last year's Tokyo 
conference, we convinced and worked with the rest of the world 
to commit $16 billion to Afghanistan over the next 4 years, but 
we made that commitment conditional on something we call the 
Tokyo Mutual Accountability Framework. If the Afghan Government 
pursues free and fair democratic elections, and fight 
corruption and increase customs collections at the border to 
offset aid reductions over time, then they will get those 
resources.
    If they do not, then we will withhold, with our partners, 
those additional investments. And I think that kind of 
conditionality and that demanding partnership approach could 
have been implemented, many, many years ago, but, certainly, 
we're doing that now.
    Senator Leahy. Thank you. Senator Johanns.
    Senator Johanns. Mr. Chairman, thank you.
    Dr. Shah, it's good to see you again, and let me just echo 
what others have said. I have no quarrel with the job you're 
doing over there. I think it's a complex agency that you're 
heading up, and I think you and your team are doing a very, 
very nice job.
    I hadn't planned on being at this hearing, as you know, but 
I wanted to stop by and say a couple of things about the food 
aid proposal that you have.
    You raise a very good point. When I was secretary of 
agriculture, we saw the same identical issues that you are 
seeing. On one hand, when there was a famine or war or 
something in another part of the world and families were dying 
and children were dying, we wanted to do everything we could to 
get food aid there as fast as we could do it.
    And yet you would see the span of time that would pass 
because you would have to go out there and make the 
procurement. You would have to ship. It just, you know, it 
would just take a period of time, and in that period of time, 
innocent people were dying, and that wasn't acceptable.
    On the other hand, Dr. Shah, as you know, one of the 
reasons why we have had such strong support for food aid is 
because the agricultural community in the United States can 
look at this program and they say to themselves, you know, I'm 
doing something positive here. I'm raising food to feed the 
world. I am happy about doing that, and if a part of what I'm 
raising goes to help families in another part of the globe, I 
couldn't be more excited about that.
    They support the program for humanitarian reasons, and, of 
course, it's never a bad idea to have a market to sell your 
food. The maritime people support it because of the shipping.
    So you get these conflicting things going on. I've always 
worried that if food aid just becomes a cash program some of 
that support dwindles and it becomes just another part of the 
budget that gets cut.
    So here's where I would start on this, and I said this at a 
hearing a few weeks ago, I think in a bipartisan way 
Republicans and Democrats should agree that when it comes to 
foreign food aid, that's a program we shouldn't cut. It's just 
you see so much benefit from it, and it's a less costly program 
to buy food versus bullets, if you know what I'm saying. I 
would rather help people and create a positive feeling toward 
our country versus responding to chaos when chaos erupts. So I 
just think supporting food aid is absolutely the right thing to 
do.
    When I was Secretary of Agriculture, we made a proposal. I 
think that kind of morphed into the pilot program. Now, you 
have some information, you have some data. Here's what I would 
say: There's another step here, but I think this proposal, 
going as far as it does, it's just going to be impossible to 
get done. I just--I've been down this road that you've been 
down, and I carry some scars for it.
    I think there's a case we can make here, but I don't want 
to cut farmers out. I don't want to cut the producers in the 
United States out of this.
    So what I would say is what I've said to you directly. I am 
willing to work with my colleagues on the other side of the 
aisle, on my side of the aisle. I am willing to work with you 
to come up with an idea that the administration would find 
acceptable that doesn't cut American agriculture out of this 
program.
    I think we are great partners and great cheerleaders for 
what you are trying to do. Now, whether that means more 
prepositioning or whatever, because I think that's one way of 
handling it. You buy the food. You preposition it in parts of 
the world where you think you're going to need it.
    Now, of course, you're still going to have some 
transportation costs, but I think transportation costs may be a 
part of what we bear to make sure that this doesn't become just 
another cash program that gets cut every time we deal with a 
continuing resolution or a budget around here.
    So that's what I wanted to stop by and say. I appreciate 
you reaching out to us. I think we're going to have more 
conversations on this. I welcome that. I'm a willing partner in 
trying to find a solution to the problem that we recognized. 
Every administration has recognized this. Doesn't matter if 
you're a Republican or Democrat, we've got to do this in a way 
where we're saving lives. Does that make sense to you?
    I got a little longwinded there, but I wanted to say those 
things because I think it's important.
    Dr. Shah. Senator, thank you very much for your comments 
and for your leadership, both in this role, but also, of 
course, as the Secretary of Agriculture who created the pilot 
programs that provided us with the data that we're now 
referencing and using to justify this proposal.
    I would just say a few things. The first is, as Senator 
Leahy pointed out, about 15 percent of the gains in efficiency 
come from ending monetization and about 85 percent come from 
flexibility in emergency response.
    So we do seek greater flexibility in how we do emergency 
response, in large part because the world we live in just 
demands that we work in more insecure environments, like 
opposition-controlled Syria.
    I'd say, second, I fully appreciate and want to take your 
points as guidance and fully agree with the desire to renew the 
partnership with American agriculture that has served us well.
    I started in this administration at the Department of 
Agriculture, and am proud that Tom Vilsack has had such strong 
and effective comments on this reform proposal.
    I've been pleased that the National Farmers Union, many of 
the traditional agricultural company CEOs, smaller firms like 
Mana, in Georgia, which are creating some of the high-nutrition 
products have come out in favor of this approach.
    And I believe there's a potential to expand that, 
especially as we look at where in the world we can develop new 
high-nutrition food products, like rice bars that would speak 
to the rice community specifically, but also produce an 
evidence-based, science-based product that can help save 
children's lives at times of need.
    We also think that the capacity to do things like 
prepositioning has come to its limits. We use about 10 percent 
of the program in that mechanism today. I think, again, because 
of your leadership as Secretary of Agriculture, that made a big 
difference, and it still does, but we just simply don't have 
the capacity or the resources. It's more expensive and getting 
the product mix right many years in advance is just too 
difficult to do.
    So we do seek flexibility in order to achieve the goal of 
reaching four million additional people, in part, to renew 
American leadership on food around the world. This is a 
partnership that started in the 1950s, and, unfortunately, in 
the last decade, has waned significantly.
    So we would appreciate the opportunity to work more closely 
with you and think through how we achieve that flexibility on 
the emergency program through whatever mechanisms that can help 
renew the partnership with American agriculture.
    Senator Johanns. Well, I'll just wrap up. Thank you for 
those comments. We recognize this is kind of a bipartisan 
problem. We saw it. We tried to do some things to deal with it, 
probably didn't get as far as we wanted to get in the Bush 
administration, but did some things.
    You see it again. I mean, you're seeing the very same 
issues we were seeing. This really is a program about saving 
lives, good will for the United States.
    But I want to walk away from this being able to say the 
American farmer and rancher is with us on this. They are 
supporting what we are trying to do, because I think they're 
great allies in your desire to be efficient and to provide food 
to people who are starving and desperately need it, and that's 
a high purpose here. And I think every Republican and Democrat 
wants to be a part of that. So thank you.
    Dr. Shah. Thank you, Senator.
    Senator Durbin [presiding]. Senator Johanns, Senator Leahy 
stepped out and asked me to take over and I said I'm taking the 
gavel and never giving it back. No, he was kind enough to let 
me say a few words.
    I thank you for what you said, because as former secretary 
of agriculture, you know more about this than most of us who 
sit on this panel, and you certainly understand the politics 
and the policy part of this debate.
    And maybe I'm off a little bit here, but when this Food for 
Peace program started with Senators McGovern and Dole and 
others, they really tried to say it's going to be a win/win 
situation. We're going to clear our agricultural surpluses by 
sending them to people who need to eat around the world, and we 
struck a bargain.
    And the liberal side of the political spectrum said we're 
doing the right thing for suffering people. The more business-
oriented part of the spectrum said and we're clearing 
surpluses. So that has to be good for farmers and ranchers and 
those who ship it.
    And I think what Dr. Shah is now suggesting is step back 
now, 50 years later, take a look at it again and let's see 
where it stands today.
    And here's what I found when I went to Djibouti recently 
and went to a warehouse where they had just offloaded a huge 
shipment under these programs. We gave some flexibility in 
shipping cost to them, not requiring that all of this be 
transported on American bottoms.
    Two things happened. The overall shipping costs for the 
food that was sent into this part of Africa were cut by 40 
percent when they could ship on any vessel, and then it turned 
out, beyond that, these same American vessels were charging 
less to transport it. So there was more actual value in terms 
of the people who needed it in that part of Africa at the end 
of the day.
    I understand the argument here that says if we insist on 
shipping American agricultural commodities, we have to, of 
course, harvest it, bag it, transport it, and that has a cost 
associated with it, which diminishes how much aid is given, and 
then it can distort the local agricultural economy as this 
influx of American agricultural produce comes in.
    Most of us have, at some point in our speeches, said, you 
know, rather than give a person a fish to eat, teach them how 
to fish, and I think that's part of this argument here is that 
it discourages some agricultural production.
    So let me go to an agriculture question for you. If I'm 
going to face my corn growers and soybean growers in Illinois 
and say to them this is no longer a question of clearing your 
surplus--they've had some pretty good years recently--but what 
do you measure or have you measured as the U.S. agricultural 
impact of what you are suggesting as a change?
    Dr. Shah. Thank you, Senator, and thank you for your clear 
and longstanding leadership on this and the full range of 
humanitarian issues.
    I would just say a few things. First, the cost structure of 
the program has meant that, whereas, 10 years ago we bought and 
shipped 5\1/2\ million metric tons of food, today, it's only 
1.8 million metric tons and it continues to go down.
    At that level, it's about 0.56 percent of the value of U.S. 
agricultural exports in 2011, and, as Secretary Vilsack has 
noted, there are other buyers of those commodities. In a world 
where there are no surplus commodities, there's significant 
energy demand for American grain and those values are, 
relatively speaking, over a 4-year period, high compared to 
historical levels.
    Senator Durbin. May I just press that question. So what I 
hear you say is one half of one percent----
    Dr. Shah. One half of 1 percent is the total value of the 
purchase by U.S. export value. If you model the difference of 
going from the current level of 81 percent tied to 55 percent 
tied which is the proposal, we think the net change would be 
closer to 0.2 percent of total value of agricultural exports.
    Senator Durbin. So it is one-fifth of 1 percent----
    Dr. Shah. Correct. Correct. And, Sir, as Secretary Vilsack 
has noted, I think it wouldn't be accurate to imply that no one 
is going to buy that one fifth of one percent. I think the 
thinking is there are many other sources of market demand 
today.
    Senator Durbin. Okay. Let's go to the second part of the 
equation, the shippers, who argue that this is going to 
disadvantage them because they won't be transporting. What is 
the impact on the American shipping industry?
    Dr. Shah. Well, shipping costs in the program have tripled 
over the last 10 years. The proposal includes a $25 million 
increase to the Maritime Support Program to handle some of the 
vessels that are considered militarily useful, but, otherwise, 
wouldn't get that support.
    The total net impact, after you factor that out, is on 
about 8 to 10 ships, and those 8 to 10 ships have about 300 
mariners on them.
    Again, there's a strong sense that those 8 to 10 ships will 
be able to find other sources of business, either in the 
Federal shipping business through DOD and others, or through 
support programs that exist through Maritime Administration or 
on the private market.
    Senator Durbin. So I'm trying to measure, obviously, 
American domestic economic impact/jobs of this proposal as 
opposed to feeding 4 million more children on the other side.
    And what you're saying to me is the impact on clearing 
surplus ag commodities in the United States is roughly one 
fifth of one percent, and there may be some replacement 
purchasing where others would step in and buy part of that, 
lessening the impact even more.
    And then when it comes to the shipping, I don't know what 
eight to ten vessels, 300 employees--total or 300 per vessel? 
What----
    Dr. Shah. No, I'm sorry. Three hundred total over those 8 
to 10 vessels, and the denominator for the industry is 15,000 
mariners, but I don't want to create the impression that those 
300 would lose their jobs. There's a sense there as well that 
there's substitute activity for those ships to engage in.
    Senator Durbin. Well, the question is how specific is the 
administration when it comes to saying to the shipping industry 
even those eight to ten are not going to lose out on this 
proposal? How specific are you?
    Dr. Shah. We've been very specific, and the lead partner is 
MarAd, which will receive $25 million a year as an increase in 
their maritime support program precisely to be able to work 
with ships that would have to deal with transitions because of 
this policy reform.
    Senator Durbin. So if this literally does not impact 99.8 
percent of agricultural production or maybe----
    Dr. Shah. Export value.
    Senator Durbin. Export value, and we are trying our best to 
say to the shipping industry we're covering your impact, it 
strikes me that feeding four million more and providing an 
incentive for local agricultural producers in many of these 
countries is a fair tradeoff in it.
    But I'm going to explore it more because coming from an ag 
state and voting the way I do, I want to make sure I've got all 
the elements that are part of it. But I thank you for answering 
these questions.
    Dr. Shah. Thank you, Senator.
    Senator Leahy [presiding]. Senator Coats.
    Senator Coats. Thank you, Mr. Chairman. Well, this is an 
interesting conversation we're having here, I think, and I 
think a lot of us are learning about this program. I haven't 
been on the Appropriations Committee before, but--or the 
agriculture committee, so--I have a State, obviously, that's 
interested.
    We talked about the shippers and the impact on that, and we 
talked about the growers and the impact on that.
    I've been approached by several of the NGOs who basically 
support the spirit and objective of this. I mean, obviously, 
they're in that business to try to get as much food into as 
many mouths as possible, and this holds the potential to do 
more. So they support it from that standpoint.
    Their concern, however, is that by shifting this program 
basically to an appropriations process it might not have the 
continuity and become maybe just a tool in a shell game as we 
struggle with shrinking budgets.
    And some of the statements here that have been made 
relative to the miniscule impact on certain groups that 
normally would support it would be, okay, if you're right on 
that, I didn't realize that. Well, we don't need to take a 
position on that. We're not going to go and fight for it.
    So I'd like to get your response to this. I think some of 
the world relief programs and the Catholic Social Services and 
others that are engaged in these kind of things have some real 
concerns about this not being reauthorized and given continuity 
that will support the appropriation in the future. Could you 
address that?
    Dr. Shah. Thank you, Senator, and thank you for your 
thoughtfulness and leadership on this issue.
    I would note that many NGOs have signed a statement of 
principles that are endorsing the basic package of reforms in 
this context, that the World Food Program, as the largest 
partner, has come out very supportive. You are absolutely 
right; there are concerns about whether we can maintain the 
political support over the long term.
    And, in that context, I would point first to CARE, 
International, a very well-respected international NGO. They 
made the decision years ago to stop taking monetized food 
assistance, because, by their analysis, they were harming the 
farmers they were ultimately trying to help with their NGO 
programs by selling food in those small, closed markets to 
raise funds for their program. And they decided it was 
counterproductive and gave up about $45 million of revenue and 
said we're going to focus on delivering results.
    I'd also point to so many of the groups like Oxfam and the 
Baltimore based international faith-based NGOs that have been 
very supportive.
    There are one or two groups that are concerned about the 
long-term piece of this but at the end of the day, we've seen a 
track record where we have not only had the local and regional 
procurement program in the IDA account funded by this committee 
continue to be substantiated, but it's grown since it was 
created many years ago.
    And we believe that the best way to defend our humanitarian 
activities is to prove that we're doing them with a very strong 
focus on efficiency, results, measurement, and learning.
    And the data, we've learned, has been quite clear that we 
will reduce the cost structure by 20 to 25 percent. We'll reach 
four million additional kids. I think that's a conservative 
estimate--and that we will cease the counterproductive practice 
of reducing the market incentives for local farmers that you're 
then trying to help with the NGO programs.
    Senator Coats. Yes, to the extent that we continue to work 
off the base of the benefits of this and the potential, those 
who have questions about the potential negative impact, along 
the lines of what Senator Johanns has said relative to 
agriculture, getting everybody onboard, to the extent that we 
can, I think, is important in maintaining the support for that, 
and it has received bipartisan support in the past, but, as you 
know, we're living in a different time right now. Sequester is 
just one example.
    And so we're having to use the scalpel in terms of or more 
in terms of dealing with our budget issues. And having the 
necessary support to keep a valued program like this in place 
is important to do.
    So I thank you for your work and leadership. I thank you 
for coming by my office and explaining the program. And we look 
forward to continue to work with you, and I hope that we can, 
in the spirit of what Senator Johanns said, draw on his 
experience, as former Secretary of Agriculture, to address that 
issue also. So thank you.
    Dr. Shah. Thank you, Senator.
    Senator Leahy. Senator Graham.
    Senator Graham. Thank you. Director Shah, as to the person 
lost in line of duty, our heart goes out to their family, and I 
hope it reminds those of us in the Congress that your people 
are in the middle of combat just as much as anybody else.
    But Senator Leahy brought up a very good point. How do you 
deliver aid when security is basically nonexistent? So would 
you give me, a minute overview of what you see going on in 
Afghanistan from a security point of view?
    You know, we're supposed to reduce forces dramatically by 
2014. I support that as long as there's a residual force left. 
Do you believe we're on track to produce the security in 
Afghanistan that would allow you to continually to be 
effective?
    Dr. Shah. Thank you, Senator, and thank you for your very 
clear and inspiring concern for the staff there. They've valued 
your personal visits and the time you've spent with them, and I 
want to personally recognize and thank you for that.
    In practice, we currently spend somewhere around 15 percent 
of total costs in Afghanistan on security. About a third of our 
90 partners there require security through a mechanism called 
the Afghan Public Protection Force and about 12 other partners 
have waivers to have expat-based security to support their 
efforts.
    And then a lot of our partners just use deep community 
engagement without armed services to help make sure they have 
access. However, it is particularly dangerous for U.S. 
personnel to be out visiting programs, and especially in 
dangerous parts of the country.
    So we are concerned about the security picture. We do think 
it will evolve as U.S. troops draw down. We have a very joint 
shared civilian military plan, and I've worked specifically 
with General Dunford. We were on the video conference just a 
week ago.
    Senator Graham. So you believe you can effectively provide 
aid and change outcomes?
    Dr. Shah. We absolutely do. There's a whole range of 
examples, but the National Solidarity Program, which now 
reaches more than 30,000 local communities, is an aid and 
assistance program that's been studied by MIT and Harvard and 
proven to be very successful at supporting community governance 
and community development.
    Even our large infrastructure construction projects, which 
often become the targets of security-related incidents, have, 
at the end of the day, enabled significant economic growth.
    More than 1,800 kilometers of road have been built. Energy 
access has more than tripled, from a low base, from 8 percent 
to 24 percent. And we're committed to completing some of those 
larger projects like the Kajaki Dam.
    But we're only going to be able to do that if we have a 
constant and shared strategy with our military colleagues, and 
that's why the partnership with General Dunford is so 
important.
    Senator Graham. Their future presence matters. I mean, they 
have to be there in some form to help you do your job--do you 
agree with that?--at least for years to come anyway.
    Dr. Shah. At least for this transition period.
    Senator Graham. Yes.
    Dr. Shah. And if it's not active service U.S. personnel, 
then some clear security strategy that enables access.
    Senator Graham. Well, I think Senator Leahy and I are both 
very concerned about a State Department army. We don't want to 
go down that road.
    Okay. Now, let's go to Africa. The results we've achieved 
in PEPFAR, malaria, are you pleased?
    Dr. Shah. I'm very pleased. PEPFAR has reached more than 6 
million patients. The malaria program--we know because Boston 
University did an independent study--helps save about 220,000 
kids every year.
    Senator Graham. And you have a plan, I think, to get 
countries who are able to transition where the country--and 
like South Africa is going to take over. They're going to bear 
the burden of fighting AIDS, right?
    Dr. Shah. That's right. The President's approach has been 
to develop an integrated health system that allows countries to 
take on more direct financial responsibility.
    Senator Graham. And I want our colleagues to know that. Our 
goal is not just to write checks forever, but actually get the 
country in question so they can deal with it themselves. So 
there's light at the end of the tunnel there.
    Dr. Shah. Absolutely, and in our global health portfolio 
overall we've actually graduated out of 22 countries. We've 
seen infant mortality, child mortality, maternal mortality and 
communicable disease control improve and seen those countries 
take more direct responsibility.
    Senator Graham. Are the people in Africa appreciative of 
what we do?
    Dr. Shah. Without question. Former Secretary of Agriculture 
Dan Glickman said it best when he said he was standing at the 
intersection of George Bush Highway and President Clinton Road.
    Senator Graham. And I think President Obama has continued, 
too. I want to give credit to this administration.
    Dr. Shah. Thank you.
    Senator Graham. Well, at the end of the day, I believe it's 
been a good investment, and I worry about radical Islam 
migrating to Africa and trying to radicalize Muslim minority 
populations.
    I think the good work we're doing through USAID and the 
private sector--and I want to compliment you on working with 
faith-based groups--the Gates Foundation. One, faith-based 
groups, the whole partnership between the public and private 
sector. We'll be going to Africa to visit that, and I think 
that's the way to go.
    From sequestration point of view, if this doesn't get 
changed and we fully implement sequestration over the next 
decade, what would it do to the programs we've created and our 
ability to project soft power?
    Dr. Shah. It would be very detrimental to that objective. I 
would just point out that, in the short term, already, we have 
had to significantly reduce the ability in country to get out 
to see projects and programs.
    And what I want to avoid is the sort of pennywise, pound 
foolish approach of not being able to provide the kind of 
adequate accountability and oversight which we've worked very 
hard, with your support to build staff capability and to have 
new systems for evaluation and assessment over the last few 
years.
    Senator Graham. Yes. I would just like to say that, Senator 
Leahy, I think we've got a good partnership. I've really 
enjoyed working with you, Senator, about how to do this.
    Talking about being pennywise and pound foolish, to me, the 
king of Jordan could be a victim of the Syrian civil war if we 
don't watch it. And I know Senator Leahy met with the king.
    And what can we do to help Jordan deal with the refugee 
problem, and the whole region, quite frankly? What could we do? 
And do we need to do more? And if we do, how much more and how 
quickly?
    Dr. Shah. Well, sir, America is already doing a tremendous 
amount with Jordan. The king has pointed out that 9 percent of 
their population is now Syrian refugees, about 450,000 
refugees. Forty-two thousand Syrian kids are being incorporated 
into Jordanian schools.
    We've provided $300 million of extraordinary support to the 
Government of Jordan to absorb and deal with the services 
required to service those communities.
    But, in addition to that, we've also had a longstanding 
program that, for example, has just completed a water-
infrastructure program for the northern part of that country 
that reaches 1.9 million people with water services and 
actually provides the water in the Al-Za'atari Camp that I know 
so many have visited.
    The longstanding partnership is just as important as the 
extraordinary commitments we're making now. The focus for us 
going forward is going to be to get other international 
partners to recognize that the Syrian crisis is a regional one 
and it requires a regional response, and partners like Turkey 
and Jordan need different types of support, but they need 
accelerated partnership from all.
    Senator Graham. Thank you, Mr. Chairman.
    Senator Leahy. Thank you. Both Senator Graham and I have 
approached all of this on a non-partisan basis and consider 
what's best for the United States' interests and our allies.
    I was glad to hear you mention Jordan. I think Jordan has 
taken on an extraordinary burden, and I think you'll find 
strong bipartisan support here for any help we can give them.
    Senator Boozman, you've been waiting patiently.
    Senator Boozman. Thank you, Mr. Chairman. I've enjoyed 
listening to the conversation about the agriculture situation. 
And I think the good thing there is that, in listening, 
everyone is concerned about protecting food security for the 
poorest of the poor that really have no constituency. So I 
think that's very positive.
    I think there's a difference of opinion as to how we 
protect that long term, but, again, I think the positive is 
that people are genuinely concerned about that area.
    I want to thank you for coming to Arkansas to the Clinton 
School of Public Service. You did a great job and your ability 
to talk to young people, and I think, after those talks, it 
touches their hearts and minds and they actually make a 
commitment to public service, and that's really what things are 
all about.
    I want to follow up a little bit on Senator Graham. He 
mentioned that--in fact, my notes say that regional programs, 
you've cut back 29 percent, Feed the Future Program is being 
phased out in 22 countries. USAID Global Health phased out in 
23 countries. Can you talk a little bit about that?
    To me, that's a great success story, because these are 
areas, for the most part, that we've withdrawn because our 
programs have actually worked.
    Dr. Shah. Well, thank you, Senator. I want to thank you for 
your personal partnership and friendship and your efforts to 
help connect us to great companies, like WalMart, that are 
increasingly a part of our public-private partnerships that 
help us deliver some of these successes.
    You know, the difficult tradeoffs that you just referred to 
have to do with our efforts to focus and concentrate our 
efforts, so we can generate the best results, and to graduate 
out of programs in countries that don't really need our 
assistance as much.
    So in our signature Feed the Future Program, we've cut and 
ended agricultural investments in 22 countries, to focus our 
staff and our resources in 19 places where we think we can 
deliver better results or where the countries, like many in 
Eastern Europe, have essentially graduated, are producing crop 
yields that approximate OECD averages and really don't need the 
kind of technical support that we offer any longer. So that 
effort has freed up resources and allowed us to focus.
    And, as a result, in a few weeks, we'll publish a progress 
report that will show that we now reach 7\1/2\ million farmers 
with specific resources, improved food-production technologies, 
some technical support, and that the net impact of that is that 
12 million children are moving out of a condition of chronic 
under-nutrition as their families produce more food, have more 
income and diversify their diets.
    Senator Boozman. Well, we appreciate your focus on results, 
and I think that's really what it's all about.
    You've done a lot of comprehensive reforms, USAID Forward, 
new partnerships, a great deal of focus on results versus just 
sending money. Can you talk about some of the progress of the 
reforms in that regard?
    Dr. Shah. Thank you. Our efforts around USAID Forward focus 
on three core elements. One is a new form of partnership to 
work with lower-cost, more sustainable providers, often deeply 
local institutions and partners.
    We've had a chance to visit Project Mercy. They're a 
partner with us now as part of USAID Forward in Ethiopia.
    Actually over the last year, we've found and identified 
1,200 such partners and have helped move more resources to 
them, both because they can deliver sometimes more results for 
lower cost, and that return on investment is our guiding 
principle, but also because, as local institutions, the more we 
can build them up, the more we have an exit strategy over time.
    And I've taken pride in visiting some of our Latin America 
programs and visiting institutions we helped create years and 
years and years ago that now we no longer support, but they 
generate investment from domestic sources and they're well run, 
and, because they've grown, USAID no longer has to have an aid 
program in those places.
    Senator Boozman. So that allows you to leverage your 
funds----
    Dr. Shah. Absolutely, and, in fact, in Latin America, in 
particular, when we make investments, we get the highest 
leverage ratio because we do so much work in the context of 
public-private partnerships.
    Senator Boozman. Very good. Thank you, Mr. Chairman. Again, 
we appreciate your being here.
    Dr. Shah. Thank you, Senator.
    Senator Leahy. Thank you very much. To wrap up here I'd 
like to discuss the so-called USAID Open Initiative. I'm 
worried that we end up with NGOs sometimes that have some very 
good and innovative ideas, but they're not part of the groups 
that have usually worked with USAID, even if some of those 
groups haven't been all that successful.
    If they haven't worked with USAID before--these are 
universities or small businesses and others--they can't even 
get their phone calls returned.
    Now, you've begun this USAID Open Initiative in an attempt 
to open up that closed door. If I'm a U.S. NGO operating in a 
foreign country, how do I use USAID Open to see if there's a 
way I can partner with USAID?
    Dr. Shah. Thank you, Senator. I believe in my first 
hearing, you highlighted the need for USAID to be a more open 
institution to new ideas and to new partners.
    Senator Leahy. In full disclosure, some of these small 
groups I've heard from are very innovative ones from my own 
little State of Vermont, and so I share their frustration.
    Dr. Shah. And you were absolutely right then, and we have 
focused on several efforts to open up USAID. One is the 
Development Innovation Ventures Fund that allows us to provide 
support to small, innovative partners. And we've seen hundreds 
of new proposals come in from people who've never worked with 
us before and I think now have supported nearly 50 partners.
    Another is an effort we call the Grand Challenges in Global 
Development. Every time we do a call for proposals through that 
mechanism, we get more than 300, 400, 500 proposals, as opposed 
to the traditional mechanisms that get maybe 10 or 12 in from 
more traditional colleagues and partners.
    And we've, of course, had the local sustainability efforts 
that have allowed us to support smaller-scale programs in 
countries.
    But I would point out, as you mentioned, we are launching 
USAID Open. This will be an online interface tied to a customer 
service team that will underpin it and will essentially have 
points of contact in each of our missions and will allow us to 
track incoming, unsolicited requests, so that we can both 
provide a good user interface for people and make sure that 
people don't slip through the cracks, and so that we can learn 
from their ideas, which may be unique and may not come to us 
through traditional channels.
    We will have this system up and running fully by July 1, 
but there are some elements we're going to start testing over 
the next few weeks to make sure that when we get to July 1st 
the thing works.
    But I'm very excited about this effort, because I think it 
will change the felt experience of partners who try to reach 
out to us.
    Senator Leahy. Keep me posted on that, because I go into 
different countries and I see some of the establishment NGOs, 
some of which do a very good job, some of which seem more 
interested in PowerPoint presentations, driving expensive SUVs, 
and with comfortable offices in the capital cities.
    I have to think that there are others who may, for the type 
of problem in that particular country, have some specific 
expertise that might be helpful, and I want them to have a 
chance.
    This afternoon, Bill Gates is coming by to talk to me and 
any members of the subcommittee who want to be there about his 
efforts to stop polio.
    A few weeks ago he pledged an additional $1.8 billion to 
combat polio. USAID will come up with $32 million this year. 
It's an interesting thing. One person comes up with 
$1,800,000,000, and we come up with $32 million.
    He thinks we're finally at the point of being able to 
eradicate the disease. I, of course, share a concern about it 
existing in a couple of countries where the Taliban and others 
want to block anybody from inoculating against polio. We did 
away with smallpox. Wouldn't it be wonderful if we could do 
away with polio?
    If we have an individual able to come up with $1.8 billion, 
shouldn't we be doing more than $32 million?
    Dr. Shah. Yes. Thank you, Senator. I have been deeply 
involved with----
    Senator Leahy. I know you have.
    Dr. Shah [continuing]. Those efforts in this regard, and I 
think they're extraordinary and commendable.
    I would just point out that our approach to this has been 
to partner more deeply with our colleagues at the Centers for 
Disease Control and look at this as a whole-of-government 
exercise.
    We have, in fiscal year 2012, committed $191 million total 
to polio eradication, and in fiscal year 2014, the President's 
Budget increases that modestly to $195 million.
    We are making some allocation shifts, so that it'll be a 
little bit less of economic support funds and global health 
program funds out of USAID and a little bit more funding 
that'll go through CDC.
    But we conduct this program in deep partnership with CDC, 
and, in fact, they've stood up in their disease-control 
efforts--I don't know if Tom Frieden will allow me to call it 
this, but they've stood up a war room that is like a situation 
room where they're tracking and sharing data on polio cases, 
particularly in Pakistan and Nigeria and in Afghanistan.
    So we're very committed. We've also very clearly 
communicated with our colleagues in Pakistan, Afghanistan and 
Nigeria, UNICEF, and the World Health Organization that should 
they have additional needs, we will make additional resources 
available. And about every four to 6 months we specifically 
reach out to the country leaders for the polio eradication 
efforts.
    As you know, sir, in Pakistan, in particular, polio 
immunization workers, young women who are often part of our 
programs, the Lady Health Worker Programs, have been targeted 
and killed in some settings, and they told us at that setting 
that they don't immediately need from us more resources, but 
that they are going to come back to us when they get this 
program accelerated again in a safe way.
    Senator Leahy. You know, my wife and I tell our children 
and now our grandchildren about what it was like when we were 
younger and we had to worry about polio. Municipal swimming 
pools would close and things like that during polio season. We 
usually get a response like, did they have cars back then? Was 
that before they invented the airplane or afterward? But it was 
frightening.
    Now, my point is our children and our grandchildren grow up 
not having to worry about it. Wouldn't it be wonderful if all 
the rest of the world could be the same way?
    Senator Boozman, if you had nothing further, I'm just going 
to close.
    Senator Boozman. No, the only thing I would say is that I 
think that is a great example of $1 billion, and because of his 
contribution there'll be others, you know, that fall in line, 
not only in our country, but throughout the world.
    And, you know, when you think about it, that is the 
greatness of America. He's an individual, but when you think of 
all the church groups that they might not--you know, the 
individuals might not be contributing $1 billion, but what they 
do contribute, you know, the regular, hardworking, you know, 
American will dig deep, you know, for these----
    Senator Leahy. Tim just reminded me about Rotary 
International and others.
    Senator Boozman. Exactly.
    Senator Leahy. I've visited a number of these programs in 
different parts of the world, and I look at it through my eyes, 
but also through my wife's eyes, a nurse, and it's amazing what 
happens.

                     ADDITIONAL COMMITTEE QUESTIONS

    We'll keep the record open until 5 o'clock on Friday for 
further questions.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
                 Questions Submitted to Dr. Rajiv Shah
            Questions Submitted by Senator Patrick J. Leahy
    Question. The USAID Inspector General's testimony refers to 
concerns regarding their ability to access records of United Nations 
agencies that receive funding from USAID. According to the Inspector 
General, they do not currently have access to UN records, and instead 
the UN has offered to provide USAID with audits conducted by the UN's 
internal auditors or the UN board of auditors.
    The Inspector General says there is no guarantee that UN programs 
funded by USAID would be audited.
    Does USAID plan to agree with the UN proposal? How will USAID 
ensure that funds provided to the UN will be appropriately used and 
safeguarded from fraud, waste, and abuse?
    Answer. USAID has had a number of discussions with the United 
Nations (UN) regarding accountability and transparency, including the 
ability to access a UN entity's internal audit reports. Historically, 
the United States and other member states have not been granted regular 
and consistent access to internal UN audit reports. However, due to 
pressure by a number of member states, including the U.S., several UN 
entities such as UNDP, UNICEF, and UNOPS have recently changed their 
internal audit disclosure policies so that they are now publicly 
available on their website.
    As it relates to the ability of donors to request external audits 
of UN programs, USAID has worked closely with the Office of the 
Inspector General (OIG) in an attempt to obtain program-specific audits 
on a case-by-case basis. USAID has researched the types of financial 
arrangements of other donors to the UN, including the World Bank, the 
European Commission, the United Kingdom, and Norway, and is working 
with the UN to agree to a provision that gives USAID the same rights as 
any other donor to work with the UN to engage an audit on a case-by-
case basis to meet the donor's needs.
    As a significant member state to these organizations, the U.S. 
Government will continue to press for increased accountability and 
transparency at the board level. At the operational level, USAID will 
continue to oversee our programs and make specific audit requests to 
the UN based upon the level of risk presented.
    Question. The President's fiscal year 2014 request includes a 
proposal to restructure USAID's overseas presence. I understand that 
USAID proposes to downsize or close 10 overseas missions and establish 
a USAID presence in 10 countries. In addition, USAID is proposing to 
reduce staff in Europe, Eurasia, Latin America, Afghanistan, and 
Pakistan and increase staffing in Africa, the Middle East, and Asia.
    How did you determine in which missions and regions to increase 
USAID's presence and which ones should be decreased?
    Answer. The President's fiscal year 2014 budget request required 
difficult tradeoffs due to the current budget realities and encompasses 
the resources necessary for effective development programs. USAID has 
prioritized resources to countries and programs where they are most 
needed, most cost-effective, and can lead to long-term, sustainable 
results.
    In order to meet those priorities within this budget environment, 
we restructured our presence overseas. Several factors were taken into 
account for the initial restructuring including:
  --Development need based on several indicators including per capita 
        income;
  --Weak policy performance based on International Bank for 
        Reconstruction and Development and Millennium Challenge 
        Corporation indicators and assessments;
  --Challenging operating environments due to programmatic and 
        political uncertainty; and
  --Regional and sectoral strategic priorities.
    These factors were balanced with foreign policy priorities and the 
geopolitical importance through extensive consultations within USAID 
and the Department of State.
    Through these consultations, we finalized the restructuring and 
staffing decisions in the President's budget.
    Question. USAID received a qualified opinion on its financial 
statement for fiscal year 2012 due, in part, to a significant 
difference between the records at the Treasury Department and the 
records in USAID's financial system. According to the USAID Inspector 
General, USAID made $3.2 billion in unsupported adjustments to the 
agency's financial records.
    This is a concern not only because this may be an indication that 
USAID is not appropriately managing U.S. taxpayer money, but also 
because it could weaken USAID's credibility as it works with other 
governments to improve their financial management and accountability.
    What is USAID doing to address the concerns and discrepancies noted 
in the 2012 financial statement audit?
    Answer. In fiscal year 2012, the USAID Management Bureau, Office of 
the Chief Financial Officer (M/CFO) performed reconciliations of 
USAID's financial records to ensure they were complete and accurate. As 
a result, the M/CFO identified a potential material error in the USAID 
general ledger advance balances and posted an adjustment to correct 
that error in August 2012.
    Between the fiscal year-end and before the statements issuance date 
of November 16, 2012, M/CFO continued its analysis. Shortly before the 
financial statements were issued, M/CFO determined that the advance 
adjustment was incorrect and required further analysis; this was 
disclosed to the OIG and in Footnote 20 of USAID's fiscal year 2012 
Financial Statements.
    During fiscal year 2013, the M/CFO office initiated a comprehensive 
and detailed review of the actions related to this issue. M/CFO has 
corrected the underlying process and re-performed the advance 
reconciliation. In June 2013, USAID calculated restated amounts for the 
fiscal year 2012 ending balances on the fiscal year 2013 comparative 
statements. USAID has maintained constant communication with OIG staff 
throughout the year to provide information on our approach and the 
progress being made to address the finding.
    USAID is working to further improve and develop a more 
comprehensive reconciliation process to ensure better consistency 
between the Budget Execution and the general ledger (GL) portions of 
its accounting system. This process advances the Agency's recent 
progress to improve procedures related to reconciling the GL cash 
balance with Treasury cash balances. In fiscal year 2011, we improved 
our cash reconciliation procedures for charges made against our 
appropriations at Treasury by third-parties on our behalf. In fiscal 
year 2012, we implemented a new tool, the Cash Reconciliation Tool 
(CART) that allows USAID's Central Accounting Division to monitor the 
outstanding cash reconciliation items of the almost 100 worldwide USAID 
paying stations, each of which reconciles its own portion of USAID's 
cash transactions at Treasury. In addition, USAID has moved to the new 
Treasury system that enables more efficient accounting for Inter-agency 
Payments and Collection transactions and will soon do the same for 
collections.
    Question. There was a New York Times article on April 28 entitled, 
``With Bags of Cash, C.I.A. Seeks Influence in Afghanistan''. The 
article says that tens of millions of dollars have flowed from the 
C.I.A. to President Karzai and other top officials over the past 
decade. The article describes how, in the view of some U.S. officials, 
``the cash has fueled corruption and empowered warlords, undermining 
Washington's exit strategy from Afghanistan'', and cites one Afghan 
official saying: ``The biggest source of corruption in Afghanistan was 
the United States.''
    If these allegations are accurate, what consequences does this have 
for USAID's efforts, funded by this subcommittee, to combat corruption 
and build accountable government institutions in Afghanistan?
    Answer. USAID's efforts to combat corruption and build accountable 
government institutions in Afghanistan are largely focused on core 
governance and rule of law capacity development activities designed to 
strengthen transparency, accountability and effectiveness in the most 
critical functions of national and sub-national government. For 
example, since 2004, USAID has been working to empower the Afghan 
Parliament to represent constituents and fulfill its role under the 
Afghan constitution as the main legislative body and as a counter-
balance to executive authority. Between 2008 and 2011, the number of 
parliamentary amendments to the government's proposed budget increased 
six-fold and, in 2011, parliament rejected the government's draft 
budget twice. Parliament also signed an agreement with civil society 
organizations formalizing a transparent framework for Afghans to 
oversee and inform the work of their elected representatives.
    USAID has also provided crucial elections assistance to 
Afghanistan. The 2014 elections will provide Afghan citizens with the 
opportunity to strengthen accountability and the rule of law and are a 
crucial element of the transition through 2014. Important steps have 
been taken by the Afghan Government--both legislative and executive--to 
bring about on-time, credible and inclusive elections. Recently, 
Parliament passed and President Karzai signed both the Independent 
Electoral Commission (IEC) Structure Law and the Electoral Law, which 
establish the legal framework for the elections, and President Karzai 
has appointed new commissioners to the IEC. The United States strongly 
requested these actions at the July 3 Tokyo Senior Officials meeting in 
Kabul. USAID is a significant donor to UNDP Elect, which is providing 
international support for the 2014 elections in Afghanistan. USAID's 
planned additional assistance to UNDP Elect, notified in June 2013 to 
Congress as part of CN #65, is critical to ensure a credible, 
legitimate election.
    There are additional ways in which USAID is working to strengthen 
Afghan Government accountability, as well as accountability in the use 
of U.S. taxpayer funds. At the Tokyo Conference in July 2012, the 
United States and the international community committed to supporting 
the economic growth and development of Afghanistan through a process of 
mutual accountability in achieving jointly decided goals as laid out in 
the Tokyo Mutual Accountability Framework (TMAF). Through the TMAF, the 
Afghan Government committed to combat corruption, conduct credible, 
inclusive and transparent elections in support of representational 
democracy, and protect the rights of all Afghan citizens under the 
Afghan Constitution.
    During the 1-year follow-up meeting held in Kabul in July 2013, the 
U.S. Government announced it is setting aside up to $175 million in 
development assistance over the next two fiscal years to encourage more 
progress on reform commitments. These incentive funds will be released 
only as the Government fulfills the commitments it made in Tokyo, 
including efforts to combat corruption and increase accountability.
    USAID also emphasizes oversight and accountability in on-budget 
assistance. On-budget assistance to support the Afghan Government's 
development goals is coordinated directly with the Afghan ministries, 
strengthens service implementation, increases public confidence in the 
Afghan Government, increases development project sustainability, and 
incentivizes improvements in public financial management. When USAID 
implements development programs with the Afghan Government, it does so 
subject to stringent accountability and oversight measures.
    Moreover, in addition to the regular oversight USAID undertakes in 
all countries with which it works, USAID has developed the Accountable 
Assistance for Afghanistan initiative (A3) to further protect 
assistance dollars from being diverted from their development purpose. 
Through A3, USAID has enhanced its safeguards for development 
assistance in the following four categories:
  --Award Mechanisms.--We are utilizing assistance awards that provide 
        the most visibility of project costs and limiting layers of 
        subcontracts.
  --Partner Vetting.--We are conducting security checks on non-U.S. 
        companies and key personnel potentially working on USAID 
        projects. USAID has reviewed 1,955 cases, including primes, 
        subs, and key personnel, and as a result of this process, there 
        have been 34 ineligible determinations to date that have kept 
        approximately $33 million of taxpayer funds from falling into 
        the hands of malign actors.
  --Financial Controls.--We are requiring electronic funds transfers 
        for all payment to subcontractors and aim to audit 100 percent 
        of all locally incurred costs as extra measures to identify 
        fraud and abuse.
  --Project Oversight.--We are performing additional project oversight 
        in high-risk areas and utilizing multiple monitoring 
        techniques.
    USAID has achieved development successes in Afghanistan by refining 
and reforming how it does business in Afghanistan. We have learned some 
hard lessons over a decade of work in Afghanistan. That is why a 
central priority of our efforts is oversight and accountability. This 
is an area in which USAID's leadership has focused intensively, and 
which continues to represent a key part of our Agency's reform agenda 
and its work in Afghanistan.
                                 ______
                                 
            Questions Submitted by Senator Frank Lautenberg
    Question. I strongly supported President Obama's rescission of the 
Mexico City Policy, also known as the Global Gag Rule, upon taking 
office.
  --What steps has USAID taken since the rescission of the Global Gag 
        Rule to undo the damage done to women's reproductive health 
        services around the globe while this policy was in place?
  --What specific steps is USAID planning to take in President Obama's 
        second term to further support family planning and reproductive 
        health programs?
    Answer. USAID is committed to advancing women's health as a key 
development intervention, and continues to invest in voluntary family 
planning and reproductive health (FP/RH) programs. USAID family 
planning programs aim to expand access to voluntary family planning 
information and services, which is the most effective way to prevent 
unintended pregnancies and, therefore, abortion. As a result of the 
rescission of the Mexico City Policy, USAID is able to work with 
organizations with large global family planning service delivery 
networks, such as International Planned Parenthood Federation, Marie 
Stopes International, and others.
    In President Obama's second term, USAID is implementing FP/RH in 
the context of Ending Preventable Maternal and Child Deaths and 
advancing the goal of achieving an AIDS-Free Generation. Post-partum 
family planning and community-based services are reaching women with 
high unmet need and in hard-to-reach areas. USAID-supported FP/RH 
programs in assisted countries are also playing an important role in 
contributing to Family Planning 2020, a global effort to enable 100 
million more women to access and use modern contraception by the year 
2020. Family Planning 2020 was launched at the 2012 London Family 
Planning Summit, which raised $2.6 billion in pledges from donors and 
foundations. Even with these increased commitments from other sources, 
USAID remains the largest bilateral donor of international family 
planning assistance, and the Obama Administration's fiscal year 2014 
budget request strongly supports this important work.
    Question. I am pleased President Obama issued a January 2013 
Presidential Memorandum to promote gender equality and women's 
empowerment. In March 2013, several of my colleagues joined me in 
writing a letter to the administration highlighting the tremendous 
action already taken in President Obama's first term to ensure that the 
advancement of women and girls is integrated into all aspects of U.S. 
foreign policy.
  --How is the Office of Global Women's Issues at the State Department 
        and USAID coordinating to develop new policies and programs for 
        President Obama's second term to promote gender equality and 
        women's empowerment around the globe?
  --What steps has USAID taken to implement the directives in the 
        January 2013 Presidential Memorandum? In particular, what is 
        the status of the guidance required to be provided to the USAID 
        Administrator on identifying, developing, and advancing key 
        priorities for U.S. development assistance?
    Answer. USAID greatly appreciates the bipartisan support for our 
work on gender equality and women's empowerment. The Office of Global 
Women's Issues at the Department of State and USAID's Senior 
Coordinator for Gender Equality and Women's Empowerment, with 
colleagues from throughout the Agency, coordinate closely and consult 
regularly on the implementation of the U.S. National Action Plan on 
Women, Peace and Security, the U.S. Strategy to Prevent and Respond to 
Gender-Based Violence Globally, and other issues related to the 
implementation of the State Directive and USAID Policy on Gender 
Equality and Female Empowerment. Priorities for the next year include 
increased coordination on women, peace, and security and gender-based 
violence objectives through their respective U.S. interagency gender 
working groups; expanded access to targeted tools and technical 
assistance for colleagues at Post and USAID Missions; and the 
institutionalization of gender integration within programmatic sectors.
    USAID has taken several steps to implement the directives in the 
January 2013 Presidential Memorandum. The Senior Coordinator for Gender 
Equality and Women's Empowerment position is well established and USAID 
is represented on the Inter-Agency Working Group on Gender. USAID has 
prepared and presented to Assistant and Deputy Assistant Administrators 
as well as Mission Directors a review of the first year of 
implementation of the suite of USAID gender equality policies and 
strategies. This report details progress that USAID Missions and 
Bureaus have made in the last year, including drafting Mission Orders 
on Gender Integration and appointing gender advisors, but also 
indicates a few areas to prioritize in coming years, including gender-
based violence prevention and response. A public report will be 
disseminated at the end of summer.
    Question. Over the past 3 years, I have written to the 
administration several times regarding the distribution of aid in Haiti 
after the January 2010 earthquake and the importance of support for 
local businesses and nongovernmental organizations (NGO). However, 
reports indicate that a majority of U.S. aid for Haiti has gone to 
American entities. Recent USAID Inspector General reports have also 
criticized Haiti reconstruction and loan programs for weak monitoring 
and evaluation systems.
  --How much of the total U.S. aid distributed to Haiti has gone to 
        Haitian NGOs and local businesses?
  --What have been the major challenges preventing USAID from 
        distributing more aid directly to Haitian companies and NGOs?
  --How is USAID working to strengthen local contracting and make local 
        businesses more competitive?
  --In light of recent Inspector General reports, what is USAID doing 
        to improve its monitoring and evaluation systems for the 
        distribution of aid in Haiti?
    Answer. USAID is committed to building the capacity of local 
organizations so more of them can be effective implementers of U.S. 
assistance. Haitian partners bring unique and diverse perspectives that 
enhance our programming. With more Haitian partners, we can better 
promote the sustainability of our efforts to build a more prosperous 
and secure Haiti.
    In fiscal year 2012, the USAID Haiti Mission obligated 
approximately $10.9 million to Haitian organizations. While the 
majority of assistance since the earthquake has, by necessity gone 
primarily to U.S. or other international partners, multiple USAID 
operating units have, through contractor and grantee sub-awards, worked 
with more than 400 Haitian NGOs and firms and hundreds of local 
vendors. As of fiscal year 2012, more than $50 million has been 
disbursed directly to approximately 200 Haitian organizations in the 
form of sub-contracts and sub-grants.
    Obligating funds to Haitian entities has been challenging because 
few have the internal controls in place to ensure compliance with U.S. 
Government terms and conditions. Moreover, many Haitian organizations 
operate only in the informal sector. These factors hinder the 
capacities of both the public and private sectors in Haiti.
    USAID is strengthening local organizations in a number of ways. For 
example, we are educating Haitian businesses and firms about USAID 
procurement procedures, providing financial services to our partners, 
and working with them to build their financial capacity so that they 
can receive direct awards. In addition, a recent USAID award requires 
the awardee to identify local organizations that they will work with to 
qualify as the primary implementers and to be eligible to receive 
direct awards from USAID or face financial consequences.
    USAID is also making deliberate efforts to build the capacity of 
these sub-awardees to receive U.S. funds directly in the future. USAID 
is conducting regular ``How to Do Business with USAID'' seminars in 
areas throughout the country. These popular pre-award conferences 
normally attract up to 50 individuals from varied organizations, 
including Government of Haiti (GOH) representatives. USAID is also 
working to strengthen local firms' financial capacity. Additionally, 
USAID conducts assessments of local NGOs in order to provide technical 
assistance to build their organizational capacity to receive direct 
awards.
    Improving USAID monitoring and evaluation (M&E) systems is an 
important component in ensuring the success of U.S. assistance to 
Haiti. Toward that end, USAID uses a variety of M&E tools and 
specialized analyses to inform budget and programmatic decisions. All 
projects are required to develop indicators, track results against 
targets, and report results on a regular basis. Projects undergo 
performance evaluations during the midterm and/or at the project's 
conclusion. This allows USAID to determine the project's impact, cost-
effectiveness, update current project implementation, and inform future 
program design. Some recent examples of how these mechanisms have 
helped improve our programming include:
  --In fiscal year 2012, USAID evaluated its local governance program 
        to inform the design of a follow-on program. The findings 
        influenced inclusion of the development of standard operating 
        procedures for municipalities to be done in coordination with 
        the GOH Ministry of the Interior.
  --An assessment of contracting and fiduciary mechanisms of the GOH 
        Ministry of Health was used to inform the design of new health 
        projects, including health systems strengthening, health 
        service delivery and health information systems.
    USAID's M&E efforts in Haiti are complemented by increased 
oversight by a USAID Regional Inspector General (RIG) team. In fiscal 
year 2012, USAID established an anti-corruption hotline so that anyone 
who witnesses potential fraud in any USAID program can pass information 
to RIG for investigation.
    Question. I am pleased USAID's Climate Change and Development 
Strategy includes the objective of integrating climate change across 
USAID's development activities. Integrating climate change assessments 
into all development programs will ensure that our development dollars 
are spent wisely. What successful outcomes of such integration has 
USAID already seen?
    Answer. Since the release of USAID's Climate Change and Development 
Strategy, the Agency has been working to promote the integration of 
climate change into other programs, emphasizing complementarities to 
ensure that tax dollars are well spent and efficiently directed to 
their highest impact uses. Two years ago, USAID released its first call 
for integration pilot projects that aim to integrate climate change 
into already existing programs, and we currently have 10 projects 
underway. As a result, more missions have explicitly acknowledged the 
need for integration in their programs and consequently led to the 
design and delivery of the well-received joint Feed the Future and 
Climate Change integration training course in Washington. Furthermore, 
USAID has been working with missions on five-year Country Development 
Cooperation Strategies ensuring that climate change issues and trends 
are integrated into their development portfolio. As a result, 67 
percent of approved strategies have moderately or extensively 
integrated climate change.
    Question. How will USAID further support the effective integration 
of climate change in its activities, and how can this integration be 
accurately monitored?
    Answer. USAID will continue its efforts to support effective 
integration of climate change in its activities through ongoing 
technical guidance of future Country Development Cooperation 
Strategies, continued support for integration pilot proposals, and 
through the continued thought leadership of USAID climate change 
experts via specialized climate change courses. Specifically, the 
Agency has developed monitoring mechanisms with up-to-date information 
on the status and review process of Country Development Cooperation 
Strategies and a system of ranking approved strategies in terms of the 
level of climate change integration. Furthermore, the integration 
pilots, from start to finish, have comprehensive monitoring and 
evaluation components from which the Agency derives overarching lessons 
learned and best practices. Finally, USAID has a suite of climate 
change courses, with a portion of these related to integration. These 
courses are regularly reviewed, evaluated and updated.
    Question. How will climate change vulnerability assessments and 
resilience planning tools be used in integration efforts?
    Answer. USAID has already initiated the process of using climate 
change vulnerability assessments and resilience planning tools for 
integration efforts. For instance, in Jamaica, adaptation assessment 
methodologies are being used to help the government revise its approach 
to addressing climate change across key sectors in the economy. 
Specifically, USAID worked with multiple ministries and stakeholders to 
help them identify which sectors are particularly vulnerable to climate 
change impacts and which have the opportunity to reduce future 
emissions. The Jamaican Government is also developing an overarching 
climate change policy that will lead to the revision of sectorial 
policies that address both adaptation and mitigation. Similar efforts 
are being replicated in Kazakhstan, a major central Asian wheat 
producer, whose role in regional food security is extremely important. 
Vulnerability assessments are also key components of the Country 
Development Cooperation Strategies, allowing targeted high-impact 
efforts that combine effectively with other sectoral programs. 
Additionally, USAID's Resilience Policy places a large emphasis on the 
need for climate adaptation in development programming across 
disciplines.
    Question. I understand USAID has now integrated seven output and 
outcome indicators on gender equality, female empowerment, and gender-
based violence that are used to track progress and measure programmatic 
impact.
  --What progress has USAID tracked since these indicators have been 
        incorporated into fiscal year 2013 Performance Reports?
    Answer. In 2011-2012, the Department of State and USAID revised the 
Master Indicator List to include seven cross-cutting indicators that 
cover gender equality, women's empowerment, and gender-based violence. 
In 2012, two cross-cutting indicators were added for women, peace, and 
security (see table below). These indicators are designed to measure 
the results of foreign assistance efforts across Program Areas and 
Elements in the Standardized Program Structure. Missions have begun to 
collect data on these indicators and will report for the first time in 
the Program Performance reports that will be submitted at the end of 
this calendar year. Some or all of these indicators will be used in 
reports beginning in fiscal year 2014.




------------------------------------------------------------------------

GNDR------------------------------Gender Equality and Female Empowerment
------------------------------------------------------------------------
GNDR-1..........................  Number of laws, policies, or
                                   procedures drafted, proposed or
                                   adopted to promote gender equality at
                                   the regional, national or local level
GNDR-2..........................  Proportion of female participants in
                                   United States Government (USG)-
                                   assisted programs designed to
                                   increase access to productive
                                   economic resources (assets, credit,
                                   income or employment)
GNDR-3..........................  Proportion of females who report
                                   increased self-efficacy at the
                                   conclusion of USG supported training/
                                   programming
GNDR-4..........................  Proportion of target population
                                   reporting increased agreement with
                                   the concept that males and females
                                   should have equal access to social,
                                   economic, and political opportunities
------------------------------------------------------------------------
GNDR                              Gender-Based Violence
------------------------------------------------------------------------
GNDR-5..........................  Number of laws, policies or procedures
                                   drafted, proposed, or adopted with
                                   USG assistance designed to improve
                                   prevention of or response to sexual
                                   and gender based violence at the
                                   regional, national or local level
GNDR-6..........................  Number of people reached by a USG
                                   funded intervention providing GBV
                                   services (e.g., health, legal, psycho-
                                   social counseling, shelters,
                                   hotlines, other)
GNDR-7..........................  Percentage of target population that
                                   views Gender-Based Violence (GBV) as
                                   less acceptable after participating
                                   in or being exposed to USG
                                   programming
------------------------------------------------------------------------
GNDR                              Women, Peace, and Security
------------------------------------------------------------------------
1.6-6...........................  Number of local women participating in
                                   a substantive role or position in a
                                   peacebuilding process supported with
                                   USG assistance
1.3-9...........................  Number of training and capacity
                                   building activities conducted with
                                   USG assistance that are designed to
                                   promote the participation of women or
                                   the integration of gender
                                   perspectives in security sector
                                   institutions or activities.
------------------------------------------------------------------------


    Question. The fiscal year 2014 budget request includes $580 million 
for a Middle East and North Africa Incentive Fund to support Arab 
Spring countries in their efforts to undertake democratic and economic 
reforms. How will USAID use these funds to support programs that 
promote the inclusion of women in political processes and government in 
the region?
    Answer. All USAID programs are guided by the Agency's Gender 
Equality and Female Empowerment Policy, which calls upon us to ensure 
that the challenges and opportunities to promote women's equality and 
empowerment are taken into consideration in our strategies and programs 
across USAID development sectors--economic, social, and political. As 
such, USAID will seek to utilize the MENA IF to support women's 
empowerment in our long-term investments, including women's leadership 
and political participation throughout our bilateral and regional 
programs.
    Countries in the MENA region face daunting social, economic, and 
political challenges. At present our ability for nimble response and 
long-term positive impact is severely constrained. The MENA IF will 
capitalize on opportunities presented by the Arab Spring, and provide 
much needed flexibility for the United States to respond to emerging 
crises and opportunities as they arise.
    Achievement of lasting stability, security, and prosperity in a 
region critical to U.S. interests requires committing the resources 
commensurate to influence positively the democratic, institutional, and 
economic reforms underway. USAID recognizes the critical role of 
women's participation and leadership and the stabilizing influence 
women's economic and political empowerment can have for these 
transitions. Therefore the Agency actively seeks to ensure the 
inclusion of women in political processes and government.
    To help MENA countries face the challenges this fund would support:
  --Immediate Transition/Stabilization Support for new transitions 
        (political and economic) and security stabilization activities 
        implemented primarily through existing mechanisms and programs.
  --Long-term Investments/Incentives with a focus on governance and 
        economic reform initiatives based on incentives and pre-
        established conditions.
  --Regional Program Platforms: Resources would also support base 
        funding for the State Department's Middle East Partnership 
        Initiative, $75 million, and USAID's Middle East Regional 
        Program, $30 million.
    In these efforts, USAID and the Department of State will utilize 
the fund to continue our implementation of the U.S. National Action 
Plan on Women, Peace, and Security, which emphasizes the importance of 
women's participation and leadership in political transitions and in 
peace building. We will continue to provide support for women's 
participation in economic opportunities and political processes such as 
national dialogues, elections, and constitutional drafting in countries 
experiencing democratic transitions. To date, USAID has used programs, 
such as those managed by our Office of Transition Initiatives, and 
funds such as its Global Women's Leadership Fund (GWLF) to support 
women's participation in key international consultations, provide 
training on advocacy skills, and promote the registration of women to 
vote.
    Question. The United Nations has warned that sexual violence is 
being used as a ``weapon of war'' in Syria, and there are increasing 
reports of Syrian girls and young women in refugee camps being forced 
to marry men in exchange for money for their families. What steps is 
USAID taking to prevent sexual violence both in Syria and in 
neighboring refugee camps?
    Answer. The protection and needs of women and girls is a priority 
for the U.S. Government in all humanitarian settings. U.S. Government 
assistance supports Syrian women, girls, and their families, both 
inside Syria and in refugee camps and host communities in neighboring 
countries.
    Inside Syria, USAID works through United Nations (UN) agencies--
UNICEF, the World Health Organization, and the World Food Programme--
and non-governmental organizations to provide women and girls with 
life-saving medical care, water, food, shelter, and other essential 
support, such as clothing, blankets, and hygiene kits. USAID requires 
that humanitarian partners incorporate measures to identify and 
mitigate protection risks to all beneficiaries, promote the overall 
wellbeing of beneficiaries and ensure their unique and diverse needs 
are addressed in the provision of assistance. Partners are also raising 
awareness of violence, exploitation, and abuse in communities affected 
by the crisis, training frontline workers on the importance of the 
prevention of sexual violence, and providing safe learning and play 
spaces for girls and boys affected by the crisis. Through this 
combination of efforts, USAID and its partners reduce the vulnerability 
of women and girls to violence, exploitation, and abuse, while also 
mitigating Syrians' need to employ negative coping strategies--such as 
early marriage--due to financial, social, and other stresses 
exacerbated by the continuing instability.
    As protection concerns inside Syria increase, USAID continues to 
identify opportunities to further expand prevention efforts in Syrian 
communities affected by conflict. USAID deployed two protection experts 
to Turkey and Jordan in April and May to assess protection needs and 
responses and identify ways to strengthen and expand protection 
programming.
    USAID, through provision of emergency food rations for more than 
one million Syrians inside Syria and neighboring countries, is helping 
beneficiaries cope with reduced livelihoods and savings, increasingly 
expensive food in markets, and the need to purchase other household 
supplies--stresses which raise the risk of early marriage, 
exploitation, and abuse. Families that have reliable and continuous 
access to nutritious foods are not forced to send their children out 
into potentially dangerous situations in search of food, nor do they 
feel as pressured to marry off their daughters in order to improve the 
household economy. Families with access to food have more time to focus 
on other productive endeavors, such as education for their children and 
income generation, which reduce their likelihood of employing negative 
coping mechanisms.
    In addition, a new USAID funded program in Jordan will support the 
Government of Jordan and the Jordanian people as they cope with the 
impacts of the Syria crisis, including the influx of hundreds of 
thousands of refugees into Jordanian communities. The program, which 
will focus on women, children, and female-headed households, will 
support an awareness-raising campaign in host communities, that may 
host large numbers of Syrian refugees to reduce or prevent early 
marriage, human trafficking, child labor, and sex and gender-based 
violence. This complements programs implemented by the United Nations 
and other humanitarian partners for Syrian refugees, many of which are 
funded by the U.S. Department of State.
    Question. What is USAID doing to help the survivors of such 
violence?
    Answer. USAID is working closely with its partners in Syria to 
ensure that women and girls, including survivors of sexual violence, 
have access to basic assistance and services--such as sanitation 
facilities, clean water, shelter, healthcare and hygiene materials--and 
to address their need for specialized services and support. These 
efforts include:
  --Ensuring that healthcare providers and other first responders have 
        needed materials and training to provide sensitive and 
        appropriate care for survivors of sexual violence.
  --Supporting community spaces that give women access to psychosocial 
        care, referrals to other essential forms of assistance, and 
        opportunities to engage with peers, learning, and empowerment.
  --Assisting highly vulnerable displaced women and their children with 
        rent support in order to secure access to safe and sustained 
        shelter.
    Programs that seek to protect and support children also play a 
vital role in responding to violence, exploitation, and abuse of women 
and girls. Indeed, it is well documented that the majority of those 
affected by sexual violence in conflict are under the age of 18. In 
recognition of this, USAID and its partners in Syria are currently:
  --Providing girls and boys with access to healing and learning spaces 
        that offer a safe, stable, and nurturing environment where they 
        can learn and play.
  --Training community-members in basic social work and case management 
        skills, so they may identify girls and boys at risk and connect 
        these children and their families with available care and 
        support.
  --Leading parent support programs aimed at equipping mothers, 
        fathers, and other caretakers with the knowledge and skills to 
        cope with psychosocial stress and provide appropriate and 
        protective care for their girls and boys.
    In countries hosting refugees, the United Nations High Commissioner 
for Refugees (UNHCR), with U.S. Government support implements programs 
to prevent and respond to gender based violence, including sexual 
violence.
    Question. How can the U.S. work to better include women in the 
preparation for and planning of a post-Assad Syria?
    Answer. The U.S. Government--as evidenced by the issuance of the 
U.S. National Action Plan on Women, Peace and Security, the U.S. 
Government Strategy to Prevent and Respond to Gender Based Violence 
Globally and various other documents--takes the issue of women's 
inclusion throughout the conflict to post-conflict and relief to 
development continuum seriously. The U.S. Government strives to ensure 
that efforts to prepare and plan for a post-Assad Syria are both fully 
inclusive of women's views and incorporate women in decisionmaking 
authority for such planning. On the diplomatic front, the U.S. 
Government regularly engages with Syrian Opposition Coalition 
personnel, bilateral donors, and multi-lateral institutions on the 
importance of a peace and future planning process that is fully 
inclusive of women.
    The following is an illustrative list of actions that are taking 
place:
  --Official launch of the Syrian Women's Network (SWN).--The goal of 
        SWN is to serve as a voice for Syrian women, with its members 
        collectively working towards a shared vision of women's equal 
        inclusion in the transitional process and the rebuilding of a 
        post conflict democratic Syria.
  --Training and Capacity Building.--In order to develop a cadre of 
        trained women to participate in a democratic Syria, USAID has 
        undertaken a series of trainings for women.
    --The Center for Civil Society and Democracy in Syria recently 
            completed two of three planned Training of Trainers (TOT) 
            workshops for Syrian women in coalition building, advocacy, 
            networking, leadership, and peace-building. The first TOT's 
            in Gaziantep (April 8-12 & May 4-8), reached more than 30 
            women from eight governorates. These women will return to 
            their communities and train 10 women each who will develop 
            and serve on local peace-building councils.
    --The Syria Emergency Task Force (SETF) will identify and train 
            women to run as candidates for local civil administrative 
            councils. The project will also increase the capacity of 
            women to effectively serve on locals councils. SETF will 
            conduct four five-day workshops for women from across 
            Syria, (15-20 participants per training).
    Question. I am pleased the Obama Administration has made a strong 
financial commitment to assist Jordan in dealing with the growing 
number of Syrian refugees coming across the border. Additionally, 
Jordan continues to face major development challenges, and I am pleased 
USAID has made the implementation of development programs there an 
important priority. In addition to providing increased support for 
Syrian refugees in Jordan, what further steps will the U.S. take to 
assist Jordan in confronting the major challenges the Kingdom must 
address, including support for economic reform and growth, water sector 
development, and climate change mitigation programs?
    Answer. The U.S. Government is working with the Government of 
Jordan (GOJ) to address the Syrian refugee crisis and reaffirm the 
strategic partnership and cooperation between our countries. During the 
President's recent visit to Jordan, the administration committed to 
increase USAID's assistance to Jordan through: (1) an additional pledge 
for $200 million in general budget support; and, (2) a commitment to 
develop a sovereign loan guarantee to support the reforms necessary for 
Jordan's economic stability and development. USAID has also identified 
additional sources of funding and adapted other bilateral projects to 
respond to the impact of the Syrian crisis on Jordanian communities. 
These include:
  --$20 million to support community-based water collection, storage, 
        and conservation, as well as to repair water pipelines and 
        other water infrastructure in northern communities.
  --$11 million to support basic education, by increasing school 
        construction and rehabilitation work in the northern 
        governorates, expanding an early grade reading program in 
        schools with large numbers of children requiring remedial 
        learning support, and training teachers to better integrate 
        Syrian refugee children.
  --$1 million to provide assistance to torture victims, many of whom 
        are refugees. Services include mental health assistance for 
        physical therapy patients and training for healthcare 
        providers.
  --$700,000 to support an awareness-raising campaign targeting both 
        refugees and host communities to reduce early marriage, human 
        trafficking, child labor, and sexual and gender-based violence.
  --$50 million for a new community engagement project designed to 
        alleviate stresses on communities by strengthening local 
        capacity to identify and address high priority issues that have 
        the potential to lead to conflict, such as access to services 
        or gender issues.
  --Renovated, equipped, and furnished the obstetric and neonatal wards 
        at 25 hospital departments over the past 8 years, six of which 
        are in the North, where most Syrian refugees are located. These 
        infrastructure improvements, combined with capacity building 
        projects, have been critical to the GOJ's ability to meet the 
        increased demand for healthcare services.
  --Completion of five new schools in northern Jordan that currently 
        serve over 4,500 students. Current activities include 
        renovating and expanding 61 additional schools across the 
        country, some in regions with large Syrian student populations. 
        Future school infrastructure activities will prioritize 
        geographic areas addressing burgeoning school populations.
    Jordan's challenges, however, are broader than the stresses due to 
the Syrian refugee influx. The USAID/Jordan bilateral portfolio is 
important in and of itself and helps foster peace and stability in the 
region by focusing on the four areas identified in USAID's Jordan 
development strategy: broad-based, inclusive economic development; 
increasing democratic accountability; improving public essential 
services; and, enhancing gender equality and female empowerment.
                          economic development
    USAID projects promote sustainable, inclusive economic development 
through a more competitive private sector, increased access to credit 
for small and medium enterprises, legal and regulatory reform, 
workforce development, job creation, energy efficiency and renewable 
energy. Projects that expand employment opportunities and assist the 
GOJ to improve the environment for doing business respond directly to 
King Abdullah II's desire to address public pressure for reforms that 
promote economic development, including increased employment 
opportunities. Some examples of these efforts include:
  --A five-year $40 million fiscal reform project that and provides 
        technical assistance to Jordan's Ministry of Finance on budget, 
        tax, and other fiscal issues.
  --Technical assistance and recommendations on electricity tariff 
        reform, which is helping improve operating efficiency in 
        Jordan's National Electric Power Company, as well as develop 
        the GOJ's plan to compensate low-income Jordanians for the 
        recent removal of fuel subsidies. USAID is also helping the GOJ 
        develop a public outreach strategy on energy subsidy reform.
  --USAID is helping the GOJ undertake legal and regulatory reforms 
        that will improve the environment for doing business and 
        thereby promote competitiveness and private sector investment. 
        In addition, USAID is supporting public-private partnerships 
        that will promote the growth of high value service sectors, 
        workforce development projects, and industry-level efficiency 
        and innovation through applied research.
  --USAID workforce development projects are supporting competitiveness 
        in knowledge-driven industries, added employment opportunities, 
        as well as increased available financing for new small and 
        medium-sized businesses, particularly for vulnerable groups 
        such as women and youth.
Water Sector and Global Climate Change
    Jordan is an extremely water-scarce country, a fact that is 
exacerbated by climate change and rapid population growth, fueled in 
part by refugees from regional crises. USAID supports activities to 
develop the capacity of key institutions within Jordan's water sector 
in order to improve rural household water supplies, reduce expensive 
urban water losses, and promote consumer habits that conserve water. 
They include:
  --$20 million (referenced earlier) for the Community-Based 
        Initiatives for Water Demand Management Project which helps to 
        collect, store and conserve water, as well as to repair water 
        pipelines and other water infrastructure in northern 
        communities. Activities are funded through revolving loans made 
        through community-based organizations, grants to community-
        based organizations with proven record of performance, and 
        grants to the Yarmouk Water Company to assist with 
        rehabilitating the municipal water system.
  --USAID completed the Zatary pumping station and a 48-kilometer 
        pipeline system in the north of Jordan, which by 2014 will 
        bring water from southern Jordan to the north. It constitutes 
        the backbone of the water supply system in northern Jordan, 
        where most Syrian refugees are located.
  --USAID is assisting the GOJ to design, build, and upgrade water and 
        wastewater systems in specific cities, including the northern 
        city of Mafraq, as well as sponsoring community-based 
        initiatives to help local organizations establish loan funds in 
        poor rural areas for household-level improvements such as 
        harvesting rainwater and re-using water.
    USAID's efforts to enhance energy efficiency and promote renewable 
energy are designed, in part, to address the impacts of global climate 
change, butfocus on promoting economic development. Climate change 
considerations are being considered and incorporated into new activity 
designs in the area of water. In addition, USAID is considering 
potential adaptation and mitigation activities in the water sector.
    Question. In my questions last year on the fiscal year 2013 budget, 
I asked what role USAID will play in Afghanistan after our troops have 
left the country. USAID indicated that we cannot set ``unrealistic 
goals'' in our efforts to make progress in development and governance.
  --What are realistic goals for our progress in development and 
        governance in Afghanistan in the next 10 years? In particular, 
        what are realistic goals for the U.S. to achieve in our efforts 
        to strengthen transparency and accountability in Afghan 
        Government institutions, as well as to make progress in the 
        advancement of women, particularly in the education sector, and 
        the reduction of gender-based violence?
    Answer. USAID's work in Afghanistan is focused on the realistic 
goals of sustaining the development gains that have been made over the 
last 11 years, including in women's rights; mitigating the economic 
impact to Afghanistan of the troop draw down; and fostering 
increasingly legitimate and effective Afghan governance.
    USAID has adjusted its operating model to facilitate an Afghan-led 
and sustainable transition in the following ways:
  --In line with our USAID Forward agenda, USAID continues to increase 
        the percentage of our programming provided through on-budget 
        assistance to the Afghan Government, with an emphasis on 
        building Afghan capacity to effectively manage and oversee 
        development programs;
  --USAID is focusing more of its assistance on Regional Economic Zones 
        (REZs) and at the sub-national level of governance that cover 
        major population centers; these REZs will drive regional trade 
        and will generate investment opportunities;
  --USAID is developing a monitoring mechanism that, along with other 
        monitoring and evaluation efforts, will provide continued 
        visibility over our projects in the field; and
  --USAID is transforming its investment approach in Afghanistan to one 
        of mutual accountability, working in close partnership with the 
        Afghan Government and its people and closely monitoring 
        progress on reform.
    Sustainable economic growth and a favorable regulatory environment 
for business and trade generate increased public revenue for the Afghan 
Government. As public revenues increase, the government should be able 
to take increasing responsibility for funding essential services that 
are currently supported by donor funding, but for which donor funding 
will decline over time. These essential services, especially health and 
education, are the services that Afghans tend to rate most highly in 
terms of government effectiveness. Afghan Government delivery of 
essential services and provision of security and rule of law should 
ultimately generate increased confidence in the legitimacy and 
effectiveness of the government, and in turn strengthen stability.
    Development achievements to date include:
  --Afghan Government revenues have grown almost 20 percent per year 
        since 2002. In 2011/12, domestic revenue reached an estimated 
        $2.1 billion or 11.3 percent of GDP. Revenue from customs has 
        been the fastest growing segment, increasing over 400 percent 
        since 2006. USAID has helped the Afghan Government develop a 
        centralized customs collection system, contributing to the 
        sharp increases in annual customs revenues.
  --Despite the ongoing challenges for women in Afghanistan, USAID's 
        work has helped Afghan women take on larger roles in society 
        and shown extraordinary results:
    --Almost 20 percent of Afghans enrolled in higher education are 
            women;
    --The Afghan Government is committed to ensuring at least 30 
            percent of government employees are women;
    --Currently, 27 percent of seats in Parliament, one governor, three 
            cabinet, and 120 judicial positions are held by women; and
    --Multiple women's organizations are working to end violence and 
            discrimination against women.
  --USAID has helped Afghanistan rebuild an education system that was 
        severely degraded by years of conflict. In 2002, only an 
        estimated 900,000 boys were in school and virtually no girls. 
        Now, there are approximately 8 million students enrolled in 
        school, more than a third of whom are girls. University 
        enrollment has increased from 8,000 in 2001 to 77,000 in 2011. 
        USAID has supported these gains by building 605 schools, 
        training 54,000 teachers, providing community-based education 
        programs for 42,000 children, and developing university 
        teaching degree programs.
  --Access to basic health services (ability to reach a health facility 
        within 1 hour by foot) has risen from 9 percent in 2001 to more 
        than 60 percent today, and more than 22,000 health workers have 
        been trained. According to the Afghanistan Mortality Survey 
        2010, the results of this investment are remarkable:
    --Life expectancy has increased from 42 years in 2002 to over 62.
    --The child mortality rate has decreased from 172 to 97 deaths per 
            1,000 live births.
    --The maternal mortality ratio declined from 1,600 per 100,000 
            births to 327 per 100,000 births.
    --The number of functioning primary healthcare facilities increased 
            from 498 in 2002 to over 1,970 in 2010.
    --More than 45,000 Afghans receive healthcare services daily 
            through clinics and outreach workers in the 13 provinces 
            supported by USAID.
  --USAID has been a leading donor to the World Bank-run National 
        Solidarity Program, which has been rigorously evaluated by an 
        independent third-party and found to be overall quite 
        successful. Through the promotion of good local governance, the 
        National Solidarity Program works to build the local 
        governmental capacity of rural communities throughout 
        Afghanistan. Through this program, more than 30,000 rural 
        communities have elected local councils and these councils in 
        turn have planned, managed, and monitored over 68,000 local 
        reconstruction and development projects in every Afghan 
        province and over 350 provincial districts.
  --USAID has been working since 2004 to empower the Afghan Parliament 
        to represent constituents and fulfill its role under the Afghan 
        constitution as the main legislative body and as a counter-
        balance to executive authority. Between 2008 and 2011, the 
        number of parliamentary amendments to the government's proposed 
        budget increased six-fold and, in 2011, parliament rejected the 
        government's draft budget twice. Parliament also signed an 
        agreement with civil society organizations formalizing a 
        transparent framework for Afghans to oversee and inform the 
        work of their elected representatives.
  --In 2002, only 6 percent of Afghans had access to reliable 
        electricity. Today 18 percent do, including more than 2 million 
        people in Kabul who now benefit from electric power 24 hours a 
        day. In addition to building hydro-electric and solar 
        facilities, USAID assistance has helped put the Afghan national 
        power company (DABS) on a path to become fully self-sustaining. 
        DABS collected $220 million from the sale of electricity in 
        2012, an increase of 67 percent from 2010. Continuing at this 
        rate, and with appropriate continued support, DABS could reach 
        commercial viability in 3 years.
  --USAID has fostered a thriving independent media in Afghanistan that 
        was completely dismantled during the Soviet occupation and 
        Taliban regime. USAID has trained 2,432 media professionals, 
        supported 53 Afghan-owned and operated radio stations, 
        supported four provincial TV stations, and helped open an 
        Afghan journalism training institute that has an enrollment of 
        over 150 students for a 2-year journalism diploma program. In 
        addition, USAID launched Arman FM as well as Tolo TV, which has 
        a 45 percent market share and is one of the most popular Afghan 
        television stations.
    Among USAID's highest programmatic priorities is preserving the 
gains women have made over the last decade. The new USAID-funded 
``Promote'' project, expected to begin in late 2013, will target 
educated women between the ages of 18 to 30 to help them develop 
technical skills, management and leadership abilities that will promote 
entry and advancement into mid-to-high level positions across all 
sectors. The results anticipated from this 5-year, $416 million project 
(with U.S. contributions expected to be up to $216 million and 
additional opportunities for other donor funding) include:
  --Directly benefit 75,000 women--helping them achieve leadership 
        roles in the political, social, and economic arenas.
  --Support the Afghan Government in achieving a rate of 30 percent 
        female Afghan Civil Service as they committed to in Tokyo.
    USAID is also in the procurement process in implementing another 
new activity, the Strengthening Tertiary Education Program--University 
Partnerships (STEP-UP), which will provide technical assistance to the 
Ministry of Higher Education and will improve the quality and relevance 
of academic courses in 10 of Afghanistan's leading universities. A goal 
of the program is to achieve gender parity in all activities and to 
increase the number of females in university leadership positions. 
STEP-UP supports the Afghan Government's National Action Plan for the 
Women of Afghanistan. Technical assistance to the Ministry of Higher 
Education will enable it to complete the gender strategy begun with 
prior USAID support and will help enable its implementation, thereby 
strengthening institutional gender policies and mechanisms.
    While much of the U.S. Government's efforts to reduce gender-based 
violence is undertaken by the Department of State, Bureau of 
International Narcotics and Law Enforcement Affairs, USAID's 
investments in this area are integrated throughout our health programs. 
USAID programming has both direct and indirect impacts on gender-based 
violence by addressing urgent problems through provision of basic 
health and essential hospital services to women in 13 provinces and 
supporting midwifery training programs. Because healthcare providers 
are in a unique position to change societal attitudes about violence 
against women, USAID has funded the adaptation of a gender-based 
violence training manual for health providers to raise their awareness 
regarding gender-based violence and its relation to women's health.
    In the future, USAID will continue to build capacity within the 
Ministry of Public Health to plan and coordinate gender based violence 
trainings for health providers. It will also maintain other health 
programs that contribute to women's empowerment in Afghanistan by 
facilitating safe childbirth, supporting healthier adolescent girls and 
women, building training and job opportunities in health for women, and 
offering women more family planning choices.
    In order to maintain gains for women as well as the other 
development achievements listed above, USAID is implementing guiding 
policies:
  --Mutual Accountability.--At the Tokyo Conference in July 2012, the 
        Afghan Government committed to the Tokyo Mutual Accountability 
        Framework (TMAF). Under TMAF, USAID has committed to directly 
        link 10 percent of its funds to explicit progress on Afghan 
        reforms. Mutual accountability means predictable, aligned, on-
        budget assistance from donors with transparent progress on 
        reforms by the government--reforms critical to ensure both 
        public support in donor nations and an effective enabling 
        environment for providing assistance.
  --Sustainability Guidance.--USAID held two portfolio reviews during 
        2012-13, including with the broader United States Government 
        (USG) and with the Afghan Government, to ensure compliance with 
        the guidance. The February 2013 review focused on on-budget 
        assistance, monitoring and evaluation, and reinforcing 
        development gains through the transition.
  --Monitoring.--USAID is continuing to enhance its multi-layered 
        approach. It is developing a monitoring mechanism that, along 
        with other increased monitoring and evaluation efforts, will 
        provide continued visibility over projects in the field, even 
        as our field staff decrease. Mobile technology, already 
        covering 80 percent of the population, will be a key tool in 
        this effort.
    It is important to keep in mind when considering the challenges our 
efforts face in Afghanistan that it remains one of the poorest 
countries in the world. Real development gains remain fragile because 
Afghanistan is a high-risk environment. Nonetheless, we are committed 
to a continued joint effort, working closely with Congress, the Afghan 
Government, and international partners to sustain and improve on the 
development investments made during the past decade.
                Questions Submitted by Senator Roy Blunt
    Question. Food for Peace has benefited from decades of domestic 
support from stakeholders in the agriculture, maritime, and private 
voluntary communities. A valid concern of this new proposal is its 
short-sighted vision of food aid in the years to come. There is a 
legitimate possibility that funding would continuously decline over 
time without a domestic support network, particularly in times of 
budget restraints. There are many who believe cuts to foreign aid 
should be the path to a balanced budget. I strongly believe in 
America's role as the principal food donor in the world and want to 
make sure we maintain that global diplomatic presence. Looking at long-
term U.S. engagement in international assistance, why would you propose 
to eliminate a program that enjoys broad support and has maintained 
consistent funding over the years?
    Answer. Responding to crisis and urgent human need around the world 
is a clear demonstration of U.S. values and generosity. USAID greatly 
appreciates and values the support that the Congress, private voluntary 
organizations, agriculture partners, and ocean freight carriers have 
given food aid programs over the years. Through this partnership, Food 
for Peace has, since its inception, responded to the needs of over 
three billion hungry people.
    However the world has changed since Food for Peace's creation in 
1954 and there are new methods to respond to global food emergencies in 
more efficient and effective ways. With this in mind, the President's 
Food Aid Reform proposal sought to add new tools to Food for Peace's 
toolbox, increasing the ability of the United States to use local and 
regional procurement of commodities, food vouchers and transfers, in 
addition to U.S. commodities, in its humanitarian response. This 
flexibility will allow USAID to respond to each distinct crisis with 
the most appropriate and effective tool. Further, the savings gained by 
increasing the use of local and regional procurement, transfers and 
vouchers would allow us to reach 2-4 million more people each year with 
the same level of funding and respond much more quickly to crisis.
    Under the reform proposal, USAID will continue to purchase more 
than half of commodities and enhanced nutritional products in the 
United States. There will be continued involvement of U.S. commodity 
groups and carriers under the proposed changes to food aid reform. 
Several key agriculture groups--including suppliers such as Cargill and 
Mana Nutrition as well as the National Farmers Union--have publicly 
stated their support for food aid reform. This show of support 
reinforces USAID's belief that these groups will continue to support 
food assistance programs both because of the continued linkages that 
will exist between U.S. stakeholders and these programs, and because it 
is the right thing to do.
    Our response to ending hunger and responding to humanitarian 
disasters has always been a visible symbol of the United States' 
generosity. USAID believes that feeding more people in need, with the 
same resources, will help sustain support for this deserving program.
    Question. What specific changes would you make within Food for 
Peace that would not jeopardize program support from these groups?
    Answer. As stated in the President's proposal, the agriculture and 
carrier communities will remain important partners of USAID, with no 
less than 55 percent of the requested $1.4 billion in total funding for 
emergency food assistance in International Disaster Assistance to be 
used for the purchase, transport, and related costs of U.S. 
commodities. We believe this 55 percent floor, combined with increased 
production of specialty food products used to address specific 
nutritional needs of vulnerable populations, will maintain support from 
these groups. Our ability to serve more hungry people and better target 
our response is a compelling one and several key agricultural groups, 
conservative and liberal think tanks, and USAID's critically important 
implementing partners from the non-governmental organization community, 
have come out in support of the reform proposal. We believe as more 
groups understand the continued, necessary role of U.S. agriculture and 
carriers in food aid under the reform proposal, more will join the call 
for reform that can save millions more lives.
    Question. The International Disaster Assistance and Development 
Assistance programs currently serve a complimentary role to Food for 
Peace, and there are numerous success stories as a result--the ongoing 
response to the Syrian humanitarian crisis being one example. When U.S. 
commodity donations are not appropriate, USAID utilizes another one of 
its existing tools to address the appropriate need. Instead of 
eliminating funding for Food for Peace to offset the additional funding 
for these programs, why did USAID not prioritize its funding requests 
in other programs to find savings to offset these additional resources?
    Answer. The President's proposal to reform food aid builds on 
success stories such as the response to the Syrian crisis by proposing 
an expansion of USAID's ability to use the right tools to meet various 
emergency food needs and chronic hunger. The proposal would not 
eliminate funding for Food for Peace, but rather shift funding sources 
for the Office of Food for Peace from title II to International 
Disaster Assistance (IDA) to align the program better with modern 
needs. The proposal aims to maximize the impact of each taxpayer dollar 
dedicated to food assistance by reducing inefficiencies. By finding 
efficiencies within our food assistance program, USAID was able to 
avoid cuts to other critical assistance programs.
    Syria is a prime example of where title II commodities were not the 
most appropriate response given the security risks in trying to get 
commodities into Syria itself. In this case, regionally-procured 
commodities were more appropriate. Without cash resources, USAID would 
not have been able to effectively respond to needs inside Syria nor to 
refugee needs. Most refugees in Turkey and Jordan are more effectively 
served by providing vouchers so they can access food in the well-
functioning markets. Many are urban based. Because of our predominantly 
cash-based response for the growing emergency in Syria, we have had to 
reduce cash-based responses in other countries, where cash, vouchers or 
locally-procured food would be more appropriate.
    We face difficult choices under constrained budget realities. The 
President's proposal would give the U.S. Government the ability to feed 
millions of additional people with comparable resources, through more 
efficient food assistance leading to long-term, sustainable results.
    Question. Can you please detail the agency's strategy for 
determining the eligibility and oversight requirements of assistance to 
be provided through local and indigenous partners, as well as how that 
assistance will impact or reduce assistance provided through U.S.-based 
partners?
    Answer. One of the key objectives of our reform effort, USAID 
Forward, is to increase funding to more and varied local partners, so 
we can create true partnerships, build local, sustainable capacity and 
begin to create the conditions where aid is no longer necessary in the 
countries where we work.
    The selection of the implementer--whether a local government or 
non-governmental organization, U.S. or international contractor or 
grantee, other donors--is driven by country context and development 
needs as laid out in a mission's Country Development Cooperation 
Strategy and Project Design documents.
    Selection is also done in accordance with legal and policy 
requirements, such as assessing a potential recipient's fiduciary, 
administrative and technical capacities, and competition requirements 
for awards to non-governmental organizations.
    USAID is committed to accountability, transparency and oversight of 
U.S. Government funding and we have a number of mechanisms for ensuring 
that resources are not lost to waste, fraud or abuse throughout the 
procurement process. For awards to local non-governmental 
organizations, including local not-for-profit and commercial 
organizations, we have an extensive process in place as follows:
  --Pre-Award.--Contracting and Agreements Officers (CO/AO) make an 
        eligibility determination whether a contractor/recipient is 
        sufficiently responsible in terms of financial capabilities to 
        account for funding, and that they have the ability to carry 
        out or perform the work under an award. This process is known 
        as ``a pre-award responsibility determination''. This process 
        has been customized to identify issues and concerns particular 
        to local non-governmental organizations (the Non-U.S. 
        Organization, Pre Award Survey, or NUPAS). As part of the 
        Request for Proposal/Application process, CO/AOs also ensure 
        that regulatory language enabling oversight and performance 
        monitoring is included in each award. This language comes from 
        the Federal Acquisition Regulation, the OMB Circulars and/or 
        Agency operational policy. Awards can also be made subject to 
        ``special award conditions,'' which are designed to address any 
        responsibility issues and build specifically identified 
        capacities in recipients. Finally, performance indicators and 
        metrics linked to the desired results are also included in the 
        awards.
  --Post-Award.--During the period of performance for an award, USAID 
        performs a myriad of oversight activities to ensure award 
        compliance. Contracting/Agreement Officer's Representatives 
        COR/AORs approve awardee vouchers for invoices submitted, 
        conduct site visits and enable third-party program and project 
        evaluations. They also monitor performance through reporting, 
        meetings and general involvement with the work being performed. 
        COR/AORs formally document any material deficiencies in 
        performance. This documentation triggers immediate action by an 
        Agency CO/AO which may ultimately include recommending that the 
        vendor not be paid. Additionally, we use financial systems and 
        controls, as well as internal and independent audits to enable 
        the Agency to effectively manage, track and safeguard funds 
        before they are disbursed.
  --Award Close-out.--Like other Federal agencies, USAID uses the 
        Contractor Performance Assessment Reporting System (CPARS) to 
        formally record data about contractor performance. CORs are 
        responsible for compiling and entering past performance data 
        into CPARS annually. Additional USAID mechanisms are also in 
        place to evaluate contractor performance including the post-
        performance audit process and the Office of the Inspector 
        General to whom any instances of suspected waste, fraud, or 
        abuse are promptly referred.
    Further, missions are reminded that any resulting partnership with 
local government entities or local organizations is not an end of 
itself. Rather it is the result of strategic planning, project design, 
identification of a development objective, and a determination of 
which, among several modalities--contracts and grants to U.S. or 
international organizations included--is the best fit for the project 
design and to achieve the development objective.
    USAID always retains the unilateral right to suspend or terminate 
such assistance if any issues arise and, when necessary, USAID will 
seek to recover unallowable costs.
    Based on the specific country context, it is expected that 
development assistance will be provided through a variety of mechanisms 
that best meet the needs of a country at any given time including 
working with local organizations, U.S.-based contractors and grantees, 
and partner governments where deemed feasible. It is expected that 
U.S.-based partners will continue to partner with us as well as with 
local organizations to provide higher quality development assistance 
while concurrently striving towards increased sustainability.
    Question. Can you please describe the agency's participation in the 
U.S. response to the ongoing humanitarian crisis in Syria, as well as 
the agency's contingency plans for the kind of role it anticipates 
playing in the event that Bashar Assad is forced from office?
    Answer. Regardless of the political situation inside Syria, USAID 
will remain flexible in its provision of humanitarian assistance, while 
seizing upon opportunities to address political transition and 
stabilization needs. USAID's Office of Foreign Disaster Assistance 
(OFDA) has the lead on the humanitarian assistance response to the 
crisis in Syria, while the U.S. Department of State's Bureau of 
Population, Refugees, and Migration leads the U.S. Government response 
on refugee issues in neighboring states.
    As the conflict in Syria continues to grow in magnitude and 
complexity, USAID has developed strategies for ensuring that 
humanitarian assistance reaches the populations most in need in 
opposition, contested, and regime-controlled areas. USAID, through the 
offices of U.S. Foreign Disaster Assistance and Food for Peace, is 
providing $180 million in humanitarian assistance inside Syria in 
fiscal years 2012 and 2013, despite volatile and constantly-changing 
security conditions. USAID assistance includes emergency food aid, 
medical care, relief supplies, clean water and improved sanitation, as 
well as psychosocial activities and protection for vulnerable 
populations, including women and children.
    Working through international and non-governmental organizations 
(NGOs) with networks inside Syria, local organizations, and U.N. 
agencies, USAID provides humanitarian assistance to populations based 
on need, not political affiliation. This multi-pronged approach, based 
on humanitarian principles, helps ensure that USAID-funded humanitarian 
assistance remains flexible and reaches vulnerable populations in the 
midst of the constantly evolving crisis in Syria.
    To date, USAID assistance has helped 2.2 million people inside 
Syria. This includes performing more than 84,000 surgeries, vaccinating 
more than 650,000 children, and providing relief supplies--such as 
heavy-duty plastic sheeting, blankets, and warm clothing that helped 
conflict-affected Syrians survive the winter--for nearly 925,000 people 
in need. USAID also supports disease surveillance and response, basic 
repair and rehabilitation of water facilities, basic shelter repair, 
psychosocial activities, humanitarian logistics, and information 
coordination.
    USAID is the largest donor of emergency food assistance for the 
Syria crisis supporting approximately one-third of a U.N. World Food 
Programme (WFP) operation, which is feeding 2 million people in all 14 
Syrian Governorates and an additional 800,000 Syrian refugees in 
Jordan, Lebanon, Turkey, Iraq, and Egypt. USAID, through an NGO 
partner, also provides food to more than 250,000 people daily in hard-
hit Aleppo Governorate, while the U.S. Department of State's Bureau of 
Population, Refugees, and Migration provides food aid to an additional 
300,000 Syrians each month through the International Committee of the 
Red Cross (ICRC). In total, more than 3 million Syrians, about 15 
percent of the population, are currently receiving food that is funded 
wholly or in part by the U.S. Government.
    USAID works closely with WFP to ensure adequate stockpiling of 
food, both inside Syria and in neighboring countries, in preparation 
for various scenarios, including closure of current delivery corridors, 
and we continue to seek opportunities to provide additional food aid in 
areas not currently accessed by WFP. USAID continues to expand existing 
humanitarian programs, develop programs with new partners, and increase 
the range of assistance we provide to better help meet the needs of 
those so deeply affected by the ongoing crisis in Syria.
    USAID is providing transition assistance to the Syrian opposition 
at the national and local levels, from local councils in liberated 
areas to civil society, to enable these groups to plan for the future 
while providing essential services and extending the rule of law inside 
liberated areas of Syria now. In addition, USAID is developing 
contingency plans for programming in a post-Asad Syria, which would 
involve supporting non-sectarian, moderate actors seeking to build 
inclusive and accountable governance structures that reflect the will 
and needs of the Syrian people. USAID is also providing transitional 
and stabilization assistance in Syria to help communities in crisis 
reduce conflict, increase transparency and accountability, and foster 
positive political change. Post-Assad activities could focus on 
reconciliation to maintain national cohesion, countering violent 
extremist influence, addressing political issues surrounding a 
continued humanitarian crisis, and increased conflict resolution 
efforts to mitigate the threat of retaliation against members of the 
regime. USAID is ready to provide robust support for all kinds of basic 
governance functions, including ministries, parliament, local 
administrative councils and justice and security sector actors in a 
post-Assad Syria. USAID has also been actively involved in planning for 
a post-Assad Syria.
    USAID also continues to participate in international donor/Syrian 
meetings and maintains regular contact with technical counterparts in 
donor organizations including the Friends of the Syrian People (FOSP) 
to exchange and share information on key essential services sectors 
that will allow coordination on infrastructure maintenance and 
rehabilitation in a post-Assad environment.

                          SUBCOMMITTEE RECESS

    Senator Leahy. Thank you very much.
    Dr. Shah. Thank you, Senator.
    [Whereupon, at 11:22 a.m., Tuesday, May 7, the subcommittee 
was recessed, to reconvene subject to the call of the Chair.]
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