Foreign Assistance: Middle East Partnership Initiative Offers	 
Tools for Supporting Reform, but Project Monitoring Needs	 
Improvement (08-AUG-05, GAO-05-711).				 
                                                                 
In December 2002, the U.S. Department of State (State)		 
established the Middle East Partnership Initiative (MEPI) to	 
promote democracy in the Middle East and North Africa. MEPI	 
provides assistance for political, economic, and educational	 
reform and women's empowerment. In fiscal years 2002-2004, State 
and the U.S. Agency for International Development (USAID)	 
reviewed U.S. bilateral economic assistance programs in the	 
region to ensure they were aligned with the new U.S. policy focus
on promoting democracy and reform. In this report, GAO (1)	 
describes MEPI's structure for managing projects and allocating  
funding, (2) examines MEPI's uses of the reviews, and (3)	 
evaluates MEPI's project monitoring.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-711 					        
    ACCNO:   A32297						        
  TITLE:     Foreign Assistance: Middle East Partnership Initiative   
Offers Tools for Supporting Reform, but Project Monitoring Needs 
Improvement							 
     DATE:   08/08/2005 
  SUBJECT:   Foreign aid programs				 
	     Foreign economic assistance			 
	     International agreements				 
	     International relations				 
	     Performance measures				 
	     Program evaluation 				 
	     Program management 				 
	     Democracy-building programs			 
	     Middle East Partnership Initiative 		 

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GAO-05-711

United States Government Accountability Office

GAO

                       Report to Congressional Requesters

August 2005

FOREIGN ASSISTANCE

Middle East Partnership Initiative Offers Tools for Supporting Reform, but
                      Project Monitoring Needs Improvement

GAO-05-711

[IMG]

August 2005

FOREIGN ASSISTANCE

Middle East Partnership Initiative Offers Tool for Supporting Reform, but
Project Monitoring Needs Improvement

                                 What GAO Found

MEPI has worked with U.S. embassies, USAID headquarters in Washington,
D.C., and USAID missions overseas to manage projects and obligate funding.
In turn, MEPI and its partners have negotiated agreements with
nongovernmental organizations, the private sector, and other U.S. agencies
to implement the projects. MEPI has obligated about 45 percent of the $129
million that it received for fiscal years 2002-2003, and its partners have
obligated the remainder.

MEPI used the State and USAID reviews of existing U.S. bilateral economic
assistance programs in the Middle East and North Africa in two ways.
First, in response to the reviews, MEPI targeted reform activities in the
Middle East and North Africa that were not being addressed by other U.S.
agencies. For example, responding to the reviews' finding that little
progress had been made in supporting women's political involvement, MEPI
provided funds to assist women candidates. Second, MEPI shaped its
strategy in response to the reviews, particularly regarding the need to
monitor projects' short-term results and hold project implementers
accountable for project performance.

Despite its strategic emphasis on monitoring projects' performance, MEPI's
monitoring has been limited by unclear communication of roles and
responsibilities and a lack of complete project information. MEPI has
acknowledged these deficiencies and begun to address them; in July 2005,
State and USAID agreed on a framework for project monitoring roles and
responsibilities. Without the ability to evaluate its projects'
performance with certainty and access to complete information, MEPI's
capacity to meet its strategic goals of producing tangible results and
making results-based decisions is limited.

                           MEPI's Area of Operations

Source: MapArt (image).

                 United States Government Accountability Office

Contents

Letter

Results in Brief
Background
MEPI and Administrative Partners Have Overseen Activities and

Obligated Funding Reviews Identified New Reform Opportunities and Helped
Shape

MEPI's Strategy Reviews Have Helped Shape MEPI's Results-Based Strategy
Unclear Roles and Responsibilities and Incomplete Information

Have Inhibited MEPI's Project Monitoring Conclusion Recommendations for
Executive Action Agency Comments and Our Evaluation

                                       1

                                      3 6

                                       11

                                     15 19

20 25 25 26

Appendix I Objectives, Scope, and Methodology

Appendix II	The Office of Middle East Partnership Initiative's
Organizational Structure

     Appendix III          Comments from the Department of State           31 
                                       GAO Comments                        35 
     Appendix IV        Comments from the U.S. Agency for International 
                                        Development                     
      Appendix V           GAO Contact and Staff Acknowledgments        

Figures

Figure 1: MEPI's Area of Operations 7 Figure 2: MEPI Reform Pillars and
Reform Goals 8 Figure 3: MEPI Budget, Fiscal Years 2002-2005 9 Figure 4:
MEPI's Relationships with Administrative Partners and

Project Implementers 12

Figure 5: Obligation of Fiscal Years 2002-2003 Funds by MEPI and
Administrative Partners 13 Figure 6: Funding Obligations within MEPI's
Area of Operations,

Fiscal Years 2002-2003 15 Figure 7: Moroccan Products for Export 17 Figure
8: MEPI Mother-Child Home Education Program

Participants in Bahrain 18 Figure 9: Bahraini Participants in U.S.
Business Internships for Young Arab Women 19

Abbreviations

MEPI Middle East Partnership Initiative
MOA memorandum of agreement
NEA Department of State's Bureau of Near Eastern Affairs
NGO nongovernmental organization
OIG Office of Inspector General
USAID U.S. Agency for International Development

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
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separately.

United States Government Accountability Office Washington, DC 20548

August 8, 2005

The Honorable Tom Davis
Chairman
Committee on Government Reform
House of Representatives

The Honorable Christopher Shays

Chairman

Subcommittee on National Security, Emerging Threats, and International
Relations Committee on Government Reform House of Representatives

According to the United Nations, many Middle Eastern and North African
countries face enormous deficits of human development, including limited
political and personal freedoms and low economic growth. Because of
concern that these issues could sharpen extremism and increase the risk of
terrorist activities originating from an already unstable region, the U.S.
government has shown a growing interest in improving socioeconomic and
political conditions in the region. In December 2002, the U.S. Department
of State (State) announced the establishment of the Middle East
Partnership Initiative (MEPI) as a presidential initiative to support the
administration's new policy of promoting democracy and reform in the
Middle East and North Africa. MEPI, which has received about $293 million
for fiscal years 2002-2005,1 provides assistance in four reform areas, or
pillars-political, economic, and educational reform and women's
empowerment.2

In 2002, at the request of the Deputy Secretary of State, State and the
U.S. Agency for International Development (USAID) undertook reviews of
existing U.S. bilateral economic assistance programs in the Middle East

1MEPI's budget is authorized for a period of 2 consecutive fiscal years.
The funds must be obligated within this period and spent within 5 years
after the end of the second fiscal year.

2MEPI operates in Algeria, Bahrain, Egypt, Israel, Jordan, Kuwait,
Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Tunisia, the United Arab
Emirates, the West Bank and Gaza, and Yemen.

and North Africa3 to ensure that they reflected the U.S. government's new
policy emphasis on promoting democracy and reform. These reviews were
conducted for Egypt, Jordan, Morocco, the West Bank and Gaza, and Yemen.
According to State officials, State initiated an interagency process to
develop MEPI's strategy, objectives, and goals, including the objective of
providing close monitoring of projects4 to achieve tangible results and to
facilitate results-based management decisions. In this report, we (1)
describe MEPI's structure for overseeing projects and obligating funds,5
(2) examine MEPI's uses of the reviews of U.S. bilateral economic
assistance in the region, and (3) evaluate MEPI's monitoring of its
projects.

We examined reviews and supporting documentation provided by the State
Department and USAID and reviewed documents describing MEPI and USAID
activities and funding mechanisms. We also analyzed project agreement
documentation and project performance reports for 25 MEPIand
USAID-administered projects, representing MEPI's four reform pillars, that
we selected on the basis of their funding amount and their countryspecific
or regionwide status.6 Although our audit generally covered MEPI
activities from December 2002 through May 2005, in reviewing MEPI's budget
information and project monitoring, we focused on data for fiscal years
2002-2003 because the data for those years were most complete.7 In
addition, we conducted structured interviews with representatives of some
of MEPI's implementing organizations. We also conducted interviews with
officials at State and USAID headquarters in Washington,

3These programs included those operated by USAID in Egypt, Jordan,
Lebanon, Morocco, the West Bank and Gaza, and Yemen.

4Performance monitoring is the periodic tracking of selected measures of
project performance and the regular reporting of these measures to
managers and other specified audiences. Objective information is thus
provided to managers and policymakers to improve decision making and
strengthen performance and accountability. [See J. S. Wholey, H. P. Hatry,
and K. E. Newcomer, Handbook of Practical Program Evaluation, 2nd ed. (San
Francisco: Jossey-Bass, 2004), p. 99.]

5In this report, "obligating funds" refers to the awarding of MEPI funds
by MEPI and its administrative partners (i.e., embassies; USAID
headquarters in Washington, D.C.; and USAID missions overseas).

6Although our selection of MEPI projects covered 63 percent of total
project funding for fiscal year 2003, these results cannot be projected to
all MEPI projects. For more information, see appendix I.

7We determined that the budget data were sufficiently reliable for the
purposes of this audit.

Results in Brief

D.C.; officials representing embassies and USAID missions in 9 of the 14
MEPI countries; and officials administering MEPI programs in the
territories of West Bank and Gaza.8 To assess MEPI's mechanisms for
monitoring its activities, we focused on relevant areas of MEPI's
management control system, including (1) roles and responsibilities of
MEPI staff and administrative partners9 in Washington, D.C., and overseas
and (2) information flow. We performed our work in the United States,
Bahrain, Egypt, Germany, and Morocco from July 2004 through May 2005 in
accordance with generally accepted government auditing standards. Appendix
I provides a more detailed description of our scope and methodology.

MEPI has worked with U.S. embassies, USAID headquarters in Washington,
D.C. (USAID/Washington), and USAID missions overseas to oversee projects
and obligate funds for fiscal years 2002-2003. In turn, MEPI and these
U.S. government entities have negotiated agreements with nongovernmental
organizations (NGOs), the private sector, and other U.S. agencies to
implement the projects. MEPI funds have been obligated as follows:

o  	MEPI has directly obligated about 45 percent of the approximately $129
million that it received for fiscal years 2002-2003, with 33 percent going
to NGOs and the private sector and 12 percent to U.S. government
implementers.

o  	The embassies have obligated about 1 percent of the 2002-2003 funds
through MEPI's small-grants program, awarding short-term grants of up to
$25,000 to local organizations to build their capacity.

o  	USAID/Washington has obligated about 40 percent of the 2002-2003
funds, including funding for many of MEPI's largest projects, primarily
through preexisting agreements between the U.S. government and
implementing

8We conducted interviews with U.S. officials who administer programs in
Algeria, Bahrain, Egypt, Israel, Jordan, Kuwait, Morocco, the United Arab
Emirates, the West Bank and Gaza, and Yemen. (MEPI assistance to Gaza and
to Arab-Israelis in Israel is supported by the U.S. Embassy in Israel;
projects in the West Bank are supported by the U.S. Consulate in
Jerusalem.)

9In this report, "administrative partners" refers to U.S. government
entities-embassies, USAID headquarters, and USAID missions-to which MEPI
has delegated project administration responsibilities.

organizations.

o  	USAID missions have obligated about 15 percent of MEPI's 2002-2003
funds.

According to the State Department, the reviews of bilateral assistance
programs in the Middle East and North Africa were used to identify new
reform opportunities for MEPI to target and to shape MEPI's strategy.

o  	In response to the reviews as well as other U.S. entities' input, MEPI
targeted reform activities in the Middle East and North Africa that were
not being addressed by other U.S. agencies. For example, responding to the
reviews' observation that little progress had been made in political
reform, especially regarding women's political participation, MEPI
provided funds to assist with elections and help women candidates.

o  	In response to the reviews-in particular, a review of the USAID/Egypt
mission in fiscal years 2002-2003-MEPI officials included the close
monitoring of projects as a primary objective of MEPI's strategy.
According to State officials, the 2002-2003 review noted that USAID/Egypt
did not monitor its projects closely or frequently enough to obtain the
performance information needed for short-term results-based funding
decisions. In response, MEPI specified in its September 2004 project
monitoring and management plan that all project agreements should include
benchmarks and performance goals based on pillar-specific objectives and
that MEPI staff should monitor project development and implementation.

Unclear communication of monitoring roles and responsibilities and a lack
of complete project information have limited MEPI's ability to provide the
project monitoring needed to measure results. MEPI has not clearly
communicated the roles and responsibilities of its administrative partners
for project monitoring, and many MEPI projects have not received the
intended level of monitoring. Officials from 9 of the 14 U.S. embassies
supporting MEPI projects stated that they were uncertain of their roles
and responsibilities for monitoring MEPI projects and that MEPI had not
yet specified their monitoring duties. Further, USAID mission officials in
one country that we visited stated that they were not monitoring some
USAID-administered MEPI projects because they had not been instructed to
do so. On July 14, 2005, MEPI signed an agreement with USAID that
established a framework for the roles and responsibilities, including
monitoring, of MEPI and USAID officials in Washington and in the region.
In addition, although MEPI was seeking to acquire software that would
facilitate the tracking of project performance, MEPI's ability to monitor

performance was limited by (1) a lack of baseline information, (2)
inconsistency among projects' performance reporting requirements, (3)
unverified project information, (4) inconsistent communication of project
information, (5) incomplete project records, and (6) lack of access to
project information.

To bolster MEPI's ability to monitor and evaluate project performance, and
to help ensure that it achieves its goals of producing tangible results
and making results-based decisions, we are recommending that the Secretary
of State ensure that MEPI managers clearly delineate, document, and
communicate roles and responsibilities for monitoring; that they
systematically obtain, maintain, and communicate complete information
about all MEPI projects; and that they monitor progress in this regard.

State and USAID agreed with our recommendations. State disagreed with the
extent of our finding that it could not with certainty evaluate its
projects' performance, but it did not point out specific aspects of that
finding with which it disagreed. State's comments acknowledged our
recommendations regarding bolstering its ability to monitor and evaluate
project performance. State's comments laid out general steps that, if
taken, would help ensure more comprehensive project monitoring, including
steps to guarantee complete and accurate project information. State and
USAID also provided technical comments that we incorporated as
appropriate.

Background 	From the 1950s through 2001, U.S. bilateral economic
assistance to the Middle East and North Africa focused primarily on
promoting regional stability by providing funding for large bilateral
military and economic programs, chiefly in Egypt, Israel, and Jordan, and
by fostering development. In December 2002, the State Department announced
the creation of MEPI, which has expanded U.S. assistance to other
countries in the region and includes programs focused on democracy and
reform. Figure 1 shows MEPI's area of operation.10

10Although Iraq is not included in MEPI's area of operation and MEPI
currently has no plans to implement projects in Iraq, MEPI has provided
funding for Iraqi citizens to attend several regional training programs.

Figure 1: MEPI's Area of Operations

Source: MapArt (image).

According to the administration, MEPI comprises a new approach to foreign
assistance for the region, aimed at linking Arab, U.S., and global
private-sector businesses, NGOs, civil society elements, and governments
to develop innovative policies and programs that support reform in the
region. MEPI is also an important element of the administration's
counterterrorism and public diplomacy strategies. MEPI projects are
organized under its four reform pillars (see fig. 2).

Figure 2: MEPI Reform Pillars and Reform Goals

                          Source: Department of State.

MEPI's budget of $293 million for fiscal years 2002-2005 was derived from
supplemental appropriations and annual foreign operations legislation. 11
Figure 3 shows MEPI's budget for fiscal years 2002-2005.

11In fiscal year 2002, MEPI received an initial $29 million of fiscal year
2002 funding, of which $20 million came from an emergency supplemental
appropriation, $5 million from the U.S.-Middle East Democracy Fund, and $4
million from the U.S.-North African Economic Partnership. In fiscal year
2003, MEPI received a total of $100 million, $90 million of which came
from an emergency supplemental appropriation, $4 million from the
U.S.-Middle East Democracy Fund, $3 million from the U.S.-North African
Economic Partnership, and $3 million reprogrammed within Economic Support
Fund. In fiscal year 2004, MEPI received a $90 million appropriation,
which was reduced to $89.4 million after the rescission (P.L. 108-199). In
fiscal year 2005, MEPI received $75 million, which was reduced to $74.4
million after the rescission (P.L. 108-447).

Figure 3: MEPI Budget, Fiscal Years 2002-2005

Budget (in $ millions) 100

100

90

80

70

60

50

40

30

20

10

0 2002 2003 2004 2005 Fiscal year

Source: GAO analysis of Department of State data.

Note: Numbers do not sum to $293 million because of rounding.

The Office of Regional Affairs within State's Bureau of Near Eastern
Affairs (NEA) in Washington, D.C., administered MEPI activities during
MEPI's first 6 months. The office worked with USAID, which managed the
long-standing bilateral economic assistance programs in the Middle East
and North Africa, to implement most of its initial projects. The office
also worked with the embassies in the region to implement projects funded
through small grants. In June 2003, State established the Office of the
Middle East Partnership Initiative within NEA to manage MEPI policy and
projects and work closely with agencies across the U.S. government. The
Deputy Secretary of State serves as Coordinator for MEPI. In August 2004,
MEPI set up two regional offices in Tunisia and the United Arab Emirates.
(See app. II for more details of MEPI's organizational structure as of May
2005.)

In fiscal years 2002-2004, State and USAID formally reviewed existing bilateral
           economic assistance programs in the Middle East and North

12

Africa.

o  	From June 2002 to May 2003, State and USAID jointly conducted an
indepth review of U.S. bilateral assistance to Egypt, one of USAID's
largest programs, including assessing the programmatic and financial data
for the seven strategic objectives in USAID/Egypt's program.

o  	From September to December 2003, State and USAID conducted an
abbreviated review of USAID's program in West Bank and Gaza.

o  	In 2003, State participated in USAID's periodic strategy reviews of
its programs in Jordan, Morocco, and Yemen.

In 2003 and 2004, State also considered information from U.S. embassies
and from other U.S. government agencies with programs in the region to
identify areas where MEPI could provide assistance.13 During this period,
MEPI staff responsible for each of MEPI's four reform pillars organized
meetings with the other U.S. government agencies. In addition, State
relied on several secondary sources to supplement the information received
from formal reviews of USAID programs and input from embassies and other
U.S. government agencies. Finally, State officials met with donors such as
the World Bank and the European Union to learn about their activities in
the region.

State and USAID have used the reviews of existing U.S. bilateral economic
assistance programs, as well as information obtained from other U.S.
entities providing assistance in the region, to realign many existing
programs, strategic plans, and coordination mechanisms to conform to the
new U.S. policy of promoting democracy and reform in the Middle East and
North Africa.

12In support of this effort, from June 2003 to February 2004, USAID
conducted reviews of democracy and governance in Algeria, Bahrain, Jordan,
Morocco, Tunisia, and Yemen. In addition, USAID organized technical
workshops on rule of law, parliamentary strengthening, and political
parties and elections and commissioned a report on Morocco's technical
assistance needs for the negotiation and implementation of its Free Trade
Agreement with the United States.

13These agencies included, among others, USAID and the Departments of
Agriculture, Commerce, Education, and the Treasury.

MEPI and Administrative Partners Have Overseen Activities and Obligated
Funding

In fiscal years 2002-2003, MEPI and its administrative partners-U.S.
embassies, USAID/Washington, and USAID missions-oversaw MEPI projects.
MEPI and its administrative partners also obligated MEPI funds, with MEPI
obligating about 45 percent of its fiscal years 2002-2003 funding and its
administrative partners obligating the remainder.

MEPI Directly Oversaw Some Projects and Used Administrative Partners to
Oversee Others

MEPI oversaw some of its projects directly in fiscal years 2002-2003 and
partnered with U.S. embassies, USAID/Washington, and USAID missions to
oversee other projects. (See fig. 4.) MEPI and its administrative partners
negotiated agreements with NGOs, the private sector, and other U.S.
government entities to implement more than 100 projects.14

14The U.S. government entities that implement MEPI projects include the
Departments of Agriculture, Commerce, Education, Labor, and the Treasury;
Customs and Border Protection; the Environmental Protection Agency; the
Food and Drug Administration; and the Patent and Trademark Office.

Figure 4: MEPI's Relationships with Administrative Partners and Project
Implementers

MEPI administrators

Project implementers Project administration
Delegation of project administration
Source: GAO analysis of Department of State and USAID data.

MEPI and Administrative MEPI and its administrative partners have
obligated the $129 million that Partners Have Obligated MEPI received for
fiscal years 2002 and 2003. MEPI has directly obligated 2002-2003 Funds
about 45 percent of the funds; MEPI's administrative partners have

                     obligated the remainder (see fig. 5).

Figure 5: Obligation of Fiscal Years 2002-2003 Funds by MEPI and
Administrative Partners

                        $129 m (fiscal years 2002-2003)

                                USAID/Washington

1%

U.S. embassies

                                      MEPI

NGOs/Private sector (33%) U.S. government implementers (12%)

                              USAID/Field missions

               Source: GAO analysis of Department of State data.

Note: According to State and USAID officials, USAID obligations in fiscal
year 2004 decreased to approximately 15 percent of total MEPI funds.

o  	MEPI: MEPI has obligated about 45 percent ($58 million) of its
2002-2003 funds directly to NGOs, the private sector,15 and U.S.
government entities.

15MEPI has distributed funding to NGOs and the private sector through
cooperative agreements and various grants. Applications for continuation
grants funded under these awards beyond the initial budget period are
considered on a noncompetitive basis for an additional year, subject to
availability of funds, satisfactory progress of the grantee, and a
determination that continued funding would be in the best interest of the
U.S. government.

o  	NGOs and the private sector: MEPI has obligated 33 percent ($42.8
million) of the funds in various grants directly to American or locally
based NGOs or private companies. According to MEPI, these grants are
intended to support innovative ideas that can be implemented quickly to
produce concrete results, such as increasing women's political
participation. MEPI officials say that they would like to obligate more
MEPI resources directly, but they acknowledge that such a shift would
require MEPI staff to shoulder a significant administrative burden in
monitoring these projects.

o  	U.S. government implementers: Through interagency acquisition
agreements, MEPI has obligated about 12 percent ($15.2 million) of its
2002-2003 funds to U.S. government entities with specific expertise in the
areas of reform that MEPI supports. These entities implement projects,
such as the Department of the Treasury's technical assistance project to
develop expertise in surplus and debt management in Algeria.

o  	U.S. embassies: Embassies have obligated about 1 percent ($1.4
million, or $100,000 per country) of MEPI's 2002-2003 funds through its
small-grants program. A central objective of the program is to build the
capacity of local organizations, such as the Ibn Khaldun Center, which,
among other things, introduces concepts of economic opportunity to young
women in two of Egypt's rural and urban areas to enable them to improve
their living conditions. The embassies use the funds to award local
organizations small, short-term grants of up to approximately $25,000. The
MEPI office approves all small-grant decisions, and embassy staff perform
grant administration.

o  	USAID/Washington: USAID/Washington has obligated about 40 percent
($50.8 million) of MEPI's fiscal years 2002-2003 funds, including funding
for many of MEPI's largest projects. According to USAID and MEPI
officials, many of these projects have been implemented through
preexisting cooperative or contractual agreements between the U.S.
government and U.S. NGOs or contractors.

o  	USAID missions: USAID missions have obligated about 15 percent ($18.7
million) of MEPI's 2002-2003 funds, according to budget data provided by
USAID and MEPI. These funds have been used to complement USAID's existing
efforts, such as civil society capacity building and local political party
training.

Figure 6 shows the obligation of MEPI funds to Middle Eastern and North
African countries and West Bank and Gaza in fiscal years 2002-2003.

Figure 6: Funding Obligations within MEPI's Area of Operations, Fiscal
Years 2002-2003

Morocco 16.1 Yemen

Jordan Algeria Bahrain

                                                                      Tunisia
                                                                        Egypt
                                                                        Qatar
                                                                 Saudi Arabia
                                                               West Bank/Gaza
                                                                      Lebanon
                                                                         Oman
                                                                       Kuwait

0 5 1015

Dollars in millions

Reviews Identified New Reform Opportunities and Helped Shape MEPI's
Strategy

Source: GAO analysis of Department of State data.

Note: This graph represents funding for projects in individual countries
as well as the West Bank and Gaza, but it does not show funding for small
grants or for regionwide and multicountry projects. MEPI funding to Israel
is not shown, because MEPI funds only small grants to Arab-Israelis in
that country. Regionwide and multicountry funding accounted for a majority
of total MEPI funding obligated in fiscal years 2002-2003. Amounts shown
are State Department estimates.

According to State, the reviews of U.S. bilateral economic assistance have
been used to (1) identify new reform areas that were not previously
addressed and (2) develop a results-based strategy for implementing and
evaluating the performance of MEPI activities.

Reviews and Other Information Have Led MEPI to Target New Reform
Opportunities

Responding to the reviews of U.S. bilateral economic assistance in the
region, as well as information provided by other U.S. entities, MEPI has
initiated reform activities that were not being addressed by U.S. agencies
in the region, including countries where USAID does not operate. For
example:

o  	Political reform: The reviews found that in many countries where MEPI
operates, little progress had been made in political reform, including
women's political involvement. In response, MEPI has provided funds to
help increase the number of women candidates and assist them through
activities such as improving their media presentation techniques.

o  	Economic reform: The reviews revealed that although limited assistance
was being provided to increase trade capacity within the region, U.S.
agencies were not addressing the need to increase the access and capacity
of small and medium-sized enterprises in countries such as Morocco.
Regionally, MEPI has supported a program that aims to, among other things,
increase managerial and entrepreneurial skills in several countries. MEPI
also funds efforts to teach business people and managers of small and
medium-sized enterprises how to take immediate advantage of U.S. bilateral
free trade agreements by initiating export sales, acquiring new
technology, and developing joint ventures and other strategic alliances
with U.S. firms (see fig. 7).

Figure 7: Moroccan Products for Export

Source: GAO.

o  	Educational reform: U.S. agencies operating in the region identified
gaps in education for the impoverished and for students in primary and
secondary grade levels. MEPI funds implementers that provide Arabic books
for elementary school children in Jordan, Lebanon, and Bahrain and

teach Bahraini mothers and preschool-age children living in poverty. (See
fig. 8.)

Figure 8: MEPI Mother-Child Home Education Program Participants in Bahrain

Source: Mother Child Education Program.

o  	Women's empowerment: U.S. agencies identified the lack of gender
equity as an impediment to reform in the region. To create more
opportunities for women, MEPI funds projects that provide young women from
the Middle East and North Africa unique opportunities to learn management
and business skills in the classroom and while working for U.S. companies.
(See fig. 9.)

Figure 9: Bahraini Participants in U.S. Business Internships for Young
Arab Women

Source: GAO.

The 2002 and 2003 reviews of U.S. bilateral economic assistance in the
Middle East and North Africa have significantly influenced MEPI officials'
development of MEPI's results-based strategy, including the objective of
providing close monitoring of MEPI projects. In particular, according to
State, the comprehensive USAID/Egypt review cited weaknesses in
USAID/Egypt's mission performance monitoring system that limited the
mission's ability to strategically reallocate resources away from programs
that were not achieving their objectives.16 According to one of the
review's principal authors, USAID/Egypt did not monitor its projects
closely or

Reviews Have Helped Shape MEPI's Results-Based Strategy

16State reported the results of the State-USAID review of USAID/Egypt's
assistance program to Congress in May 2004, in accordance with the
directive issued by the House Committee on Appropriations report
accompanying the 2003 Foreign Operations, Export Financing, and Related
Programs Appropriations Bill. H.R. Rep. No. 107-663, at 43 (2002).

frequently enough to obtain the performance information needed. State
recommended that USAID make changes to the performance monitoring system,
including engaging consultants and producing more rigorous, succinct, and
integrated qualitative and quantitative measurements of performance at all
levels of activity.

MEPI officials told us that these observations made MEPI management aware
of the need to monitor projects' short-term performance and hold project
implementers accountable for results. MEPI's September 2004 project
monitoring and management plan indicates that all project agreements
should include benchmarks and performance goals that reflect the results
MEPI hopes to attain, based on pillar-specific objectives. The plan also
states that, to prevent negative impacts on project outcomes, staff should
ensure that project implementers are on the right track at all stages of
project development and implementation. However, neither MEPI's general
strategy nor its monitoring and management plan provides specific guidance
regarding project monitoring.

MEPI's ability to monitor the performance of its projects and measure
results has been limited by (1) unclear communication of monitoring roles
and responsibilities and (2) a lack of complete project information.

Unclear Roles and Responsibilities and Incomplete Information Have
Inhibited MEPI's Project Monitoring

Unclear Communication of MEPI has not clearly communicated roles and
responsibilities for project
Roles and Responsibilities monitoring in accordance with federal standards
for management
Has Limited Project control,17 and as a result, not all projects have
received the level of

monitoring needed to measure results. According to MEPI officials,
MEPIMonitoring project monitoring responsibilities generally would include
participation in project activities, regular review and assessment of
implementer

17According to federal management control standards, organizations should
clearly communicate key areas of authority and responsibility. See GAO,
Standards for Internal Control in the Federal Government,
GAO/AIMD-00-21.3.1 (Washington, D.C.: Nov. 1, 1999) and Internal Control
Management and Evaluation Tool, GAO-01-1008G (Washington, D.C.: Aug. 1,
2001).

performance reports, and regular feedback to implementers on project
performance. However, we found that some MEPI administrative partners,
particularly those overseas, have been confused about their roles and
responsibilities for project monitoring and that some MEPI activities have
been monitored sporadically or not at all. Officials from 9 of the 14 U.S.
embassies supporting MEPI projects stated that they were uncertain of
their roles and responsibilities for monitoring MEPI projects and that
MEPI had not yet specified their monitoring duties. USAID/Washington
officials told us that USAID mission staff were expected to assist
USAID/Washington in monitoring MEPI projects that it administers. However,
USAID mission officials in Rabat, Morocco, told us that MEPI projects
administered by USAID/Washington were not being monitored and that they
had not received instructions for monitoring these projects. Officials at
USAID/Washington acknowledged that it had not performed many of its
monitoring duties in the field and stated that USAID/Washington is
currently working to ensure better communication and provide instructions
to the missions regarding their support of project monitoring. In
addition, MEPI and USAID officials in Washington, D.C., as well as MEPI
regional office, embassy, and USAID mission office staff, said that they
were uncertain of the role that the MEPI regional offices would play in
monitoring MEPI projects. Although MEPI officials generally expect that
regional office staff will lead the monitoring of projects that MEPI
directly administers, currently only one of MEPI's two regional offices
has a monitoring specialist on staff.

In April 2004, the Department of State's Office of Inspector General (OIG)
expressed concern that MEPI was communicating inconsistent priorities and
causing confusion among a number of embassies. MEPI and USAID officials in
Washington, D.C., acknowledged that confusion exists regarding roles and
responsibilities for project monitoring. MEPI officials stated that they
were still defining, and working toward agreement with USAID and other
parties regarding, MEPI and its administrative partners' respective roles
and responsibilities. MEPI officials also stated that on July 14, 2005,
they signed an addendum to an October 2004 memorandum of agreement (MOA),
establishing a framework for project management roles and
responsibilities-including monitoring-of MEPI and USAID officials in
Washington and in the Middle East and North Africa.

Incomplete Information Has Limited Project Monitoring

MEPI's monitoring of project performance, in accordance with federal
standards for management control,18 has been limited by (1) a lack of
baseline information, (2) inconsistency among projects' performance
reporting requirements, (3) unverified project information, (4)
inconsistent communication of project information, (5) incomplete project
records, and (6) lack of access to project information.

o  	Lack of baseline information: Our examination of a selected sample of
MEPI project documents showed that for most of these projects, MEPI lacked
baseline information against which to measure their performance. According
to MEPI's strategy, baseline data are necessary for measuring future
progress on its projects, and MEPI officials told us that it was important
to establish these measurements at the beginning of each project as the
basis for determining project performance. However, of the project
agreements we received from MEPI and USAID for the 25 projects in our
selected sample, only three project agreements contained a requirement to
establish a baseline, and none of the projects reported baseline
measurements. MEPI officials told us that they were aware that they had
not required baseline measurement in all of their project agreements but
said that they planned to do so in future agreements.

o  	Inconsistent reporting requirements: MEPI project agreements do not
consistently require that implementers report on quantitative, measurable
performance indicators. As a result, some implementing organizations
report general project information instead of the measurable indicators of
performance that MEPI has stated are needed to manage a results-based
program. According to one MEPI official, some of the reports are therefore
too vague to be useful in monitoring project performance. In our selected
sample of 25 projects, a substantial majority of the performance
indicators required in project agreements were qualitative in nature
rather than the quantitative indicators of project performance that MEPI
has stated are necessary for managing MEPI as a results-based program.
Further, a February 2005 report by USAID's OIG reported that 6 of 17
USAID/Morocco MEPI projects did not have indicators to measure project
performance.19 One MEPI official told us that they sometimes negotiate
requirements for additional indicators informally over the telephone and
in

18Federal management control standards require the maintenance and
communication of relevant, reliable, and timely project performance and
financial data[0]. See GAO/AIMD-00-21.3.1 and GAO-01-1008G.

19USAID Office of Inspector General, Audit of USAID/Morocco's Management
of Activities Under the Middle East Partnership Initiative, 6-608-05-001-P
(Cairo, Egypt: 2005).

e-mail after signing a project agreement. However, these informally
negotiated requirements are not formally documented, readily available, or
tracked by MEPI or the implementers. MEPI officials said that they are
seeking to acquire grant-tracking software that would facilitate the
documenting of agreed-on indicators and closer monitoring of implementers'
reporting on these indicators.

o  	Unverified project information: MEPI's ability to verify the
information reported in implementers' quarterly reports and to provide
detailed performance feedback to implementers has been limited, because
MEPI and its administrative partners have not consistently observed
project activities. In the sample we analyzed, only 8 of the 19
implementers we interviewed said that MEPI and its administrative partners
had made onsite visits to discuss and observe project activities.
According to embassy, MEPI, and USAID mission staff, they often do not
have time to monitor MEPI projects, including visiting or observing
project activities, because of conflicting demands on staff time. USAID
OIG's February 2005 report stated that, primarily because of limited
resources, the USAID/Morocco mission had not validated the performance
data reported by implementers.

o  	Inconsistent communication of project information: MEPI has
inconsistently communicated project information, particularly to embassies
and USAID missions overseas. Overseas embassy and USAID officials stated
that MEPI had not always informed them of important project information,
including when new projects were to begin in their country of operation.
USAID'S OIG February 2005 report noted that MEPI and USAID/Washington had
not always notified USAID/Morocco when they awarded regional activities
taking place within the country. As a result, in some cases, embassy
officials have had little or no knowledge of some of the implementer's
activities. Officials from two embassies and one USAID mission told us
that MEPI project implementers had arrived in country expecting embassy
and USAID assistance, although the embassies and USAID missions had
received little or no prior notice of the projects' start or the
implementers' needs. In another example, in one country we visited, we
arrived expecting to meet with a particular project implementer but found
that embassy officials there were unaware of the project or the
implementer's operations in country. Further, when embassies have
communicated with MEPI, MEPI has not always been responsive. Three
embassies stated that, since MEPI's inception, MEPI had provided no
response or guidance in response to their regular reports on MEPI
activities. However, according to MEPI officials, embassies have not
always responded to MEPI's communications. For example, according to one
senior MEPI official, after the summer 2003 awarding of small grants
through the embassies, the majority of embassies administering MEPI

projects did not respond to December 2003 requests from MEPI for basic
evaluative descriptions of the projects the embassies were administering.
According to this senior official, the embassies' failure to respond to
MEPI resulted, in some cases, in MEPI's lacking records of actual
activities conducted and descriptions of successes and lessons learned.

o  	Incomplete project records: MEPI and USAID have not maintained
complete records for all of the projects that they administer, which has
limited their ability to monitor project performance. We found gaps in
records that the MEPI office in Washington, D.C., maintained for the
projects that it administered. For example, in our selected sample of 25
projects, MEPI's files for fiscal year 2003 projects that it administered
directly contained 44 percent of quarterly reports that project
implementers were to have submitted. MEPI officials said that the
granttracking software they sought to acquire would enable them to track
the submission of implementers' quarterly reports. Without such software,
the MEPI office has managed project data on Excel spreadsheets and office
calendars, using the incomplete copies of quarterly reports that it has
maintained since the program's inception. MEPI officials in the past have
asked implementers to provide copies of records missing from their files.
In addition, we found that USAID had incomplete records for the projects
that it administers for MEPI. For example, in our selected sample, USAID's
files for the fiscal year 2003 projects that it administered contained 63
percent of MEPI project agreements with implementers and 62 percent of the
quarterly reports that project implementers were to have submitted. USAID
officials stated that their records were scattered in many locations-in
the various bureaus in Washington, D.C., that administer MEPI projects20
and at USAID missions in the Middle East and North Africa. In other cases,
USAID has had to obtain copies of the records from the implementing
organizations themselves.

o  	Lack of access to project information: MEPI has lacked ready access to
information on USAID-administered MEPI projects, which has limited its
ability to monitor those projects' performance. According to MEPI's
strategy and officials, MEPI is responsible for ensuring the performance
of all projects that it funds, including those administered by USAID.
However, MEPI and USAID have maintained separate performance and financial
records, and MEPI and USAID officials stated that prior to the July 2005
signing of the MOA addendum regarding monitoring roles and

20USAID's Bureau for Asia and the Near East; Bureau for Democracy,
Conflict, and Humanitarian Assistance; and the Bureau for Economic Growth,
Agriculture, and Trade administer MEPI projects at USAID.

Conclusion

Recommendations for Executive Action

responsibilities, they had not reached agreement on the sharing of these
records. Further, USAID officials stated that USAID has not maintained
records for MEPI projects separately from its records for non-MEPIfunded
projects. Some USAID implementers responsible for implementing MEPI
projects have included MEPI performance reporting in their general
reporting on the region, making USAID's extraction of information on MEPI
projects more difficult and time consuming. MEPI and USAID officials said
that they expected the recently signed addendum to the 2004 MOA to
facilitate the sharing of performance and financial information.

In accordance with the U.S. foreign policy of promoting democracy and
reform in the Middle East and North Africa , State established MEPI to
design and fund projects supporting political, economic, and educational
reform and the empowerment of women. However, despite MEPI's strategic
emphasis on monitoring projects' performance, a failure to clearly
communicate roles and responsibilities and a lack of complete project
information have hampered MEPI's monitoring of its projects. In July 2005,
subsequent to receiving our preliminary findings regarding the need to
communicate project monitoring roles and responsibilities to its
administrative partners, State finalized an agreement with USAID that
establishes a framework for roles and responsibilities and coordination
between the agencies. Although these guidelines represent progress in
clarifying roles and responsibilities, it remains essential that specific
monitoring duties be established for, and communicated to, all parties
involved in each MEPI project. Without the ability to evaluate its
projects' performance with certainty, and lacking access to complete
information, MEPI's capacity to meet its strategic goals of producing
tangible results and making results-based decisions is limited.

To bolster MEPI's ability to monitor and evaluate project performance, and
to help ensure that MEPI achieves its goals of producing tangible results
and making results-based decisions, we are making three recommendations to
the Secretary of State. We recommend that the Secretary of State ensure
that MEPI managers

o  	clearly delineate, document, and communicate roles and
responsibilities for project monitoring;

o  	systematically obtain, maintain, and communicate complete information
regarding all MEPI projects, including performance and financial data; and

o  	regularly assess MEPI's progress in communicating roles and
responsibilities and obtaining, maintaining, and communicating key
information.

                                Agency Comments
                               and Our Evaluation

We provided a draft of this report to the Secretary of State and the
Administrator of USAID for their review and comment. Both officials
provided written responses, which we have printed in appendixes III and

IV. State and USAID also provided technical comments that we incorporated
as appropriate.

Although State and USAID agreed with our recommendations, State disagreed
with the extent of our finding that it could not with certainty evaluate
its projects' performance; however, it did not point out specific aspects
of that finding with which it disagreed. State's comments acknowledged our
recommendations regarding bolstering its ability to monitor and evaluate
project performance. In its comments, State said that its July 2005
agreement with USAID regarding project management should improve the
management, information flow, documentation, and monitoring of
USAID-administered MEPI projects. In addition, State said that it would
implement a monitoring and evaluation timetable for every project,
identify projects that require on-site monitoring in the next year and
assign responsibility to the appropriate MEPI action offices.

State's comments also laid out other general steps that, if taken, would
help ensure more comprehensive project monitoring, including two steps to
guarantee complete and accurate project information: (1) ensuring that
files on every project are complete and (2) implementing an integrated
grants and project management database system. In addition, State said
that it would provide ongoing training in grants and project management
for staff both in MEPI Washington and at MEPI regional offices and engage
outside consultants to provide project monitoring support where necessary.

State did not comment on our recommendation that it monitor progress on
clearly delineating, documenting, and communicating roles and
responsibilities for monitoring and systematically obtaining, maintaining,
and communicating complete information about all MEPI projects.

As agreed with your offices, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days from
the date of this letter. At that time, we will send copies of this report
to

interested congressional committees and to the Secretary of the State and
the Administrator of USAID. We also will make copies available to others
upon request. In addition, the report will be available at no charge on
the
GAO Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please contact
me
at 202-512-4128 or [email protected]. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of this report. GAO staff who made major contributions to this report are
listed in appendix IV.

David Gootnick
Director
International Affairs and Trade

Appendix I: Objectives, Scope, and Methodology

In this report, we (1) describe MEPI's structure for administering
projects and obligating funds, (2) examine MEPI's uses of the reviews of
U.S. bilateral economic assistance in the region, and (3) evaluate MEPI's
monitoring of its projects.

To describe the administration of MEPI projects and obligation of MEPI
funding, we examined budget and programmatic documentation provided by
State and USAID. This documentation included information on funding levels
and project administration for fiscal year 2002 and 2003 projects. We also
interviewed State and USAID officials familiar with MEPI budget and
project administration, in particular for fiscal years 2002 and 2003.
Although our audit generally covered MEPI activities from December 2002
through May 2005, in reviewing MEPI's budget information and project
monitoring, we focused on data for fiscal years 2002-2003, because they
were the most complete data that MEPI could provide.

To describe MEPI's uses of the 2002-2004 reviews of U.S. bilateral
economic assistance to the region, we examined (1) State's and USAID's
joint reviews of programs in Egypt and West Bank and Gaza; (2) USAID's
reviews of democracy and governance for Algeria, Bahrain, Jordan, Morocco,
Tunisia, and Yemen; and (3) other supplemental information provided by
U.S. embassies and USAID missions in the region, including mission
performance plans and USAID country strategies. We also conducted
interviews with officials at State and USAID headquarters in Washington,
D.C.; officials representing embassies and USAID missions in 9 of the 14
MEPI countries; and officials administering MEPI programs in the
territories of West Bank and Gaza.

To assess MEPI's mechanisms for monitoring its activities, we obtained
information from MEPI on all of its fiscal year 2003 projects, including
information on each project's pillar, MEPI partner, implementing
organization, funding level, project location, and project type
(countryspecific or regionwide). From this information, we selected a
nonprobability sample1 of 25, or approximately 34 percent, of the 73 MEPI
projects funded in fiscal year 2003. This sample also represented about 63
percent of MEPI's $100 million in fiscal year 2003 project funding. We
used the sample to examine project monitoring performed by MEPI and its

1The limitations of a nonprobability sample are that results cannot be
used to generalize to a population, because some elements of the
population being studied have no chance or an unknown chance of being
selected as part of the sample.

Appendix I: Objectives, Scope, and Methodology

administrative partners and reports provided by project implementers. Our
sample included regionwide projects and projects from the countries we
would be visiting, projects with the highest funding levels for fiscal
year 2003, projects administered both by MEPI and USAID, and projects from
each of the four MEPI pillars.

The documentation that we reviewed included project proposals, project
agreements, scopes of work and work plans, and quarterly reports for the
25 projects. Our analysis of these documents clarified the nature of
MEPI's monitoring and reporting requirements and supplemented and
validated information that we obtained through interviews. We developed a
structured interview instrument to systematically collect data on the 25
projects, which included questions on implementer reporting requirements,
the use of performance baselines and indicators, and feedback and
verification by MEPI and its administrative partners. We analyzed the
interview data by developing categories for each relevant response, using
the categories to code the data, and tallying the codes to obtain the
number of projects to which each response was applicable. We also
interviewed officials from MEPI, USAID, U.S. embassies, and implementing
organizations in the United States, Bahrain, Egypt, and Morocco regarding
MEPI project monitoring. We selected these MEPIparticipating countries
because (1) Bahrain is a high-income country and does not have a
traditional U.S. bilateral assistance program; (2) Egypt, a
lower-middle-income country, is one of the largest recipients of U.S.
bilateral development funding; and (3) Morocco, a lower-middle-income
country, was the largest recipient of fiscal year 2003 MEPI funding. We
also traveled to Germany during a MEPI regional conference, where we met
with embassy and USAID officials responsible for project monitoring in 8
of the 14 MEPI countries and in the West Bank and Gaza. In addition, we
used U.S. government internal control standards to assess relevant areas
of MEPI's management control system that affected project monitoring,
including (1) roles and responsibilities of MEPI staff and administrative
partners in Washington, D.C., and overseas and (2) information flow.

We conducted our fieldwork in Washington, D.C., and in Bahrain, Egypt,
Germany, and Morocco from July 2004 to May 2005 in accordance with
generally accepted government auditing standards.

Appendix II: The Office of Middle East Partnership Initiative's Organizational
Structure

                          Source: Department of State.

Appendix III: Comments from the Department of State

Note: GAO comments supplementing those in the report text appear at the
end of this appendix.

Appendix III: Comments from the Department of State

                                 See comment 1.

Appendix III: Comments from the Department of State

                                 See comment 2.

                                 See comment 3.

Appendix III: Comments from the Department of State

Appendix III: Comments from the Department of State

GAO Comments

The following are our comments on the Department of State's letter dated
July 22, 2005.

1. 	State commented that it agreed with GAO's conclusion that the
Department of State has effectively launched MEPI reform programs.
However, GAO did not audit the effectiveness of MEPI projects and did not
present such a conclusion in this report.

2. 	State commented that our report recognized that MEPI had established
effective partnerships with other bureaus at State, with other U.S.
government agencies, and with a wide range of nongovernmental
organizations (NGOs), including the private sector. However, our report
did not present such a conclusion. Our report describes rather than
assesses the relationships between MEPI and other U.S. government and
nongovernment entities.

3. 	State said that it disagreed with the extent of our finding that MEPI
cannot with certainty evaluate its projects' performance, but it did not
specify aspects of that finding with which it disagreed. State's comments
acknowledged our recommendations regarding bolstering its ability to
monitor and evaluate project performance and laid out general steps that,
if taken, would help ensure more comprehensive project monitoring. For
example, State said that it would ensure the completion of every project's
files, to allow for periodic reviews of activity status and project
outcomes and shortcomings; engage outside consultants to provide project
monitoring and evaluation support, where necessary; and implement an
integrated grants and program management database system. In addition,
State pointed out that, subsequent to receiving our preliminary findings
in May, it finalized, on July 14, 2005, an addendum to an October 2004
memorandum of agreement (MOA) with USAID on USAID's administration of MEPI
projects. This MOA addendum establishes a framework for roles and
responsibilities and coordination between State and USAID. In its
comments, State said that this agreement should improve the management,
information flow, documentation, and monitoring of USAID-administered MEPI
projects.

                      Appendix IV: Comments from the U.S.
                      Agency for International Development

Appendix IV: Comments from the U.S. Agency for International Development

Appendix V: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

(320287)

David Gootnick (202) 512-3149

In addition to the individual named above, Zina Merritt (Assistant
Director) as well as David Dornisch, Suzanne Dove, Reid Lowe, Grace Lui,
and Addison Ricks made key contributions to this report.

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