Why We Did This Audit
Since 2004, the Millennium Challenge Corporation (MCC) has awarded approximately $17 billion in grants to over 46 countries for development programs targeted at reducing poverty and stimulating economic growth. The Agency provides funding to eligible countries through compacts, which are 5-year grant agreements between MCC and the countries to fund specific projects.
MCC is committed to country ownership, which is when partner countries take the lead in all aspects of compact development, implementation, and closeout. Partner country accountable entities—also known as Millennium Challenge Accounts (MCAs)—solicit, award, and administer program contracts. MCC oversees the compacts’ procurement processes with the goal of ensuring that contracts are open, transparent, free of corruption, implemented as intended, and provide the best value to American taxpayers. Prior oversight work has identified internal control weaknesses in MCC’s procurement and project oversight, including a lack of guidance and process documentation.
Given these weaknesses, OIG initiated this audit to (1) determine the extent to which MCC conducted oversight of MCAs’ pre-award procurement process for select compacts and (2) examine MCC’s actions, and their effects, to address risks identified through the post-award oversight of select MCC-funded compact procurements.
What We Recommend
We made two recommendations to improve the Agency’s pre- and post-award oversight of compact procurements. MCC disagreed with both recommendations.
What We Found
MCC did not consistently conduct or document oversight of MCAs’ pre-award procurement processes for select compacts. In addition, the Agency’s oversight varied in focus and did not include independent verification of source documents. While MCC procurement directors reviewed MCA procurement files for compliance with MCC’s Program Procurement Guidelines, the Agency did not require these reviews or provide guidance on how or when to review procurement files. Further, MCC procurement directors generally certified their reviews of the completeness and accuracy of procurement performance reports. However, the focus of their reviews varied by director. In addition, when reviewing the MCAs’ contractor eligibility verifications, MCC procurement directors did not independently verify source documentation because the Agency did not require them to do so.
MCC did not consistently use post-award oversight tools to document and retain site visit reports and address risks to select compacts. MCC staff regularly visited the select compact countries to provide post-award project oversight. However, the Agency did not require staff to document these visits. Further, when MCC staff did document site visits, they did not have a repository for storing the site visit reports. In addition, MCC did not follow its internal guidance on the use of risk registers—which are used to document, monitor, and track certain risks that require the Agency’s close attention—or assign response deadlines for addressing identified risks.