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Law360 (March 29, 2021, 10:05 PM EDT) -- The U.S. Government Accountability Office said Monday that the U.S. Agency for International Development did not ensure subawards made under a former Palestinian assistance program were vetted for terrorist links, urging USAID to improve oversight if the program is revived.
Between fiscal years 2015 and 2019, USAID ensured that it checked prime, or direct, awardees of grants and assistance under a former bilateral assistance program for Palestinians in the West Bank and Gaza to avoid links to terrorism and included mandatory anti-terrorism clauses in those agreements before handing out funding, according to the GAO report.
But the agency did not ensure that assistance funding passed on by prime awardees under subawards were also compliant with anti-terrorism requirements, the watchdog said, and should make changes to ensure compliance if, as it has suggested, the Biden administration moves to revive that assistance program.
"Should [related] funding resume, verifying that prime awardees have such procedures and conducting post-award compliance reviews in time for corrections would better position USAID to reduce the risk of providing assistance to entities or individuals associated with terrorism," the GAO said.
Thirteen of 86 USAID compliance reviews analyzed by the GAO had raised at least one instance of a prime awardee not including provisions intended to prevent financial support for terrorism in their subawards, according to the watchdog.
Although USAID provided preaward training to prime awardees regarding flowing those anti-terrorism requirements down to subawardees, it didn't follow through to verify that those awardees had procedures in place to actually comply, the GAO said.
Also, post-award reviews of those awards sometimes occurred after the relevant subawards had already expired, meaning the agency couldn't take corrective action to fix issues, the watchdog said.
The assistance program was launched in 1993 to help promote peace in the Middle East and provided more than $6.3 billion in assistance before funding was suspended at the end of January 2019, amid what the GAO called a "combination of complex political and legal actions."
The Palestinian Authority, for example, had declined further U.S. assistance following the 2018 passage of the Anti-Terrorism Clarification Act, a bill intended to make it easier for American victims of terror attacks to sue those deemed to have provided support for terrorists.
The PA was concerned that recipients of funding under the Economic Support Fund, a program to provide foreign aid that is deemed to advance U.S. political and strategic interests and the basis of the assistance program, could be subject to U.S. litigation under the new law, the GAO said.
But the Biden administration has said it intends to revive assistance programs for the Palestinians, with the State Department announcing Thursday that USAID had provided $15 million in COVID-19 relief assistance to help with "urgent, life-saving humanitarian needs," the first such American assistance since January 2019 — although that funding was directed through a nongovernmental organization rather than the PA.
The GAO made two recommendations for if the West Bank and Gaza assistance program resumes, saying that USAID needs to make sure that prime awardees have procedures in place to ensure their subawards include the required anti-terrorism provisions, and that any post-award reviews it conducts are timely enough to correct any mistakes before those subawards expire.
A representative for USAID was not immediately available for comment late Monday.
But in a response included with the report, the agency agreed with the GAO's recommendations, saying that should funding for the program resume, it will establish a process to ensure prime awardees have a compliance procedure in place before they make any subawards.
USAID will also conduct compliance reviews of prime awardees and their subawards within 18 months of award, which will "allow for an adequate and comprehensive review as mobilization and start of sub-award implementation will be sufficiently underway," the agency said.
--Editing by Andrew Cohen.
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