Why We Did This Audit
Since 2003, USAID has assisted Iraq in strengthening and diversifying its economy, including boosting the private sector to create jobs and businesses. USAID and the Department of State developed a joint strategy for the Middle East and North Africa with six interconnected goals, two of which address regional security and strengthening economic growth. In Iraq, these efforts include diversifying the country’s economy and boosting the private sector.
USAID/Iraq had four active projects contributing to these economic development goals, the largest being the Durable Communities and Economic Opportunities project (DCEO). One of the main components of DCEO is the Business Competitiveness and Job Creation Initiative (the Initiative), which seeks to foster economic growth, job creation, and business development. The Initiative, which started in June 2020, sought to secure $25 million in investments and create over 3,000 jobs.
We conducted this audit to assess the extent to which USAID/Iraq monitored the Initiative’s efforts to achieve its goals. To do so, we evaluated the extent to which USAID/Iraq had processes in place to identify and correct compliance issues, monitored required performance indicators, and used its third-party monitor to track performance outcomes.
What We Found
USAID/Iraq ensured that compliance issues identified by its third-party monitor were corrected. USAID/Iraq used its third-party monitor to assess and report on compliance issues such as branding and marking during regular site visits. We determined that the nine compliance issues identified by the third-party monitor were adequately addressed by USAID/Iraq.
USAID/Iraq failed to monitor some contractually required performance indicators. USAID/Iraq ensured that the contractor reported results of the nine required performance indicators in fiscal year (FY) 2021 but failed to ensure that the contractor reported results for six of the nine indicators in FY 2022 and 2023. As a result, USAID/Iraq missed an opportunity to gauge the Initiative’s progress towards its economic development goals.
USAID/Iraq did not use its third-party monitor to gauge programmatic performance. USAID/Iraq did not use its third- party monitor to conduct performance monitoring for the Initiative and failed to implement other mechanisms to fill gaps in performance monitoring. For example, USAID/Iraq did not have mission staff conduct site visits to provide oversight of the activity, inspect implementation progress, or verify monitoring data. In addition, USAID/Iraq did not contract with another third-party monitor that could better meet its performance monitoring needs. Instead, the mission used its third-party monitor to focus on the contractor’s compliance with USAID policies and regulations on branding and marking and environmental standards. Without regular performance monitoring, USAID/Iraq lacks the information needed to assess progress toward the Initiative’s goals and make informed decisions about resource allocations.
What We Recommend
We made two recommendations to improve and strengthen USAID/Iraq’s contract and project monitoring processes. USAID agreed with both recommendations and took corrective action to implement them.