Why We Did This Audit
Russia has conducted an intensive campaign to destroy Ukrainian electricity infrastructure since its full-scale invasion of Ukraine in February 2022. To respond to the wartime needs of Ukrainians for electricity, gas, and heating, USAID’s Mission in Ukraine (USAID/Ukraine) modified its largest energy sector award, the Energy Security Project (the Project). The Project shifted from its pre-invasion focus on facilitating market reforms and energy diversification to a focus on procuring energy equipment and materials to support the Government of Ukraine’s energy sector stabilization efforts.
Since November 2022, USAID/Ukraine has increased the Project’s value from $85 million to $920 million and extended its period of performance from June 2023 to June 2025. Tetra Tech, a global consulting and engineering firm, implements the Project for USAID.
Given substantial increases in funding for the Project and the shift toward energy-related procurements, we conducted this audit to (1) assess USAID/Ukraine’s oversight of the Project’s procurement process and (2) determine the extent to which USAID/Ukraine verified that the Project delivered equipment and materials to recipients as intended.
What We Found
USAID/Ukraine did not define requirements to receive procurement information essential to its oversight of the Energy Security Project and did not perform a mandatory assessment of a Ukrainian government-controlled company. While USAID/Ukraine provided oversight of Tetra Tech’s subcontracting practices, it received little to no advance notice from Tetra Tech for seven subcontracts in our sample with a total value of $67.5 million, limiting its ability to identify and resolve any issues prior to subcontract signature. Additionally, USAID/Ukraine did not receive an internal Tetra Tech procurement compliance report until 11 months after the company completed it. Lastly, USAID/Ukraine did not conduct an Agency-required assessment for a $17.5 million subcontract with a Ukrainian government-controlled company with known vulnerabilities. Without timely and complete information, USAID/Ukraine is not positioned to effectively address procurement issues.
USAID/Ukraine verified the delivery of sampled energy equipment and materials, but information gaps exist, and not all inventory and property requirements were met. USAID/Ukraine verified the delivery of energy equipment and materials through several monitoring efforts. However, we found gaps in these efforts that limited the information available for Agency oversight. In particular, we found that monitoring efforts were limited geographically and focused primarily on a few types of equipment, such as generators. In addition, we found that Tetra Tech had not fully resolved issues that monitors identified with inventory, branding, and property transfer documentation as of June 2024. Without a unified delivery monitoring system to capture information from multiple reporting mechanisms, USAID/Ukraine may miss opportunities to correct delivery issues promptly.
What We Recommend
We made five recommendations to improve USAID/Ukraine’s oversight of the Project’s procurement processes and monitoring of equipment and material deliveries. The Agency agreed with all five.