(U) Review of Ukraine Foreign Assistance Coordination and Oversight

ISP-I-23-18
    Report Contents
    Sensitive But Unclassified

    (U) Summary of Review

    (U) Since Russia’s full-scale invasion of Ukraine on February 24, 2022, Congress has appropriated a combined total of approximately $45.4 billion to the Department of State (Department) and the U.S. Agency for International Development (USAID) to aid Ukraine. This funding supports Ukraine’s military operations, provides humanitarian relief, and ensures the continuity of Ukrainian government operations. The Office of Inspector General’s (OIG) objectives in this review were to determine whether the Department and Embassy Kyiv established a strategy for Ukraine to inform and guide foreign assistance programs and whether the Department and Embassy Kyiv exercised their foreign assistance coordination and oversight responsibilities. A companion classified report addresses Embassy Kyiv’s operating status, focusing on staffing, facilities, and security issues.1

    (U) OIG found that Embassy Kyiv had not updated its Integrated Country Strategy (ICS) due to staffing limitations related to the embassy’s closure and subsequent operations in wartime conditions. The ICS is a whole-of-government strategic planning document that establishes goals, objectives, and sub-objectives for an embassy. Without an updated ICS, Department bureaus and other agencies lacked guidance for designing programs and performance indicators aligned with common strategic goals. During OIG’s review, the Department began to draft a Ukraine assistance strategy for 2023–2025 and the embassy began to update its ICS. OIG also found the Department and Embassy Kyiv prepared multiple Ukraine-related strategic planning documents to guide the allocation of foreign assistance. However, each of these planning documents lacked some or all of the required elements for strategy documents outlined in 18 Foreign Affairs Manual (FAM) 301.2-4(A) and in 18 FAM 301.2-4(B), including a hierarchy of goals and subordinate objectives with clear desired results and associated performance indicators.

    (U) With respect to foreign assistance coordination, OIG found that the embassy and the Bureau of European and Eurasian Affairs’ Office of the Coordinator of U.S. Assistance to Europe and Eurasia (EUR/ACE) carried out their coordination responsibilities in accordance with statutory requirements and Department standards. However, Department bureaus reported significant challenges in conducting monitoring and evaluation because of security restrictions and the limited number of staff at the embassy. Responding to the monitoring challenges, many program managers employed remote monitoring methods and developed other methods to verify that goods and services were used as intended, including one bureau that introduced an innovative smartphone application to securely document the delivery of equipment.

    (U) OIG observed that challenges to the oversight of unprecedented levels of foreign assistance will continue until the circumstances stabilize. Staffing level increases at the embassy may enable more site visits and improved monitoring. Over the longer run, particularly as the Department plans to assist Ukraine’s recovery and reconstruction, corruption in the Ukrainian government and private sector poses risks to the effectiveness of U.S. foreign assistance that requires robust oversight.

    (U) This report contains one recommendation. In its comments on the draft report, Embassy Kyiv concurred with the recommendation. OIG considers the recommendation resolved. The embassy’s response and OIG’s reply can be found in the Recommendation section of this report. The embassy’s formal written response is reprinted in its entirety in Appendix B.

     

    1(U) See OIG, Review of Embassy Kyiv’s Operating Status (ISP-S-23-18, report not yet released).

    Recommendation Number
    1
    Closed Implemented

    Embassy Kyiv, in coordination with the Bureau of European and Eurasian Affairs, the Bureau of Budget and Planning, and the Office of Foreign Assistance, should update its Integrated Country Strategy.