Introduction Statement of the Administrator USAID Organization Chart Assisted Countries - World Map Summary of FY 2003 Budget Request Program Highlights Management Improvements Operating & Administrative Expenses Capital Investment Fund Working Capital Fund Operation Expenses of the Inspector General Foreign Service Retirement and Disability Fund Summary Tables Regions     Africa     Asia & the Near East     Europe & Eurasia     Latin America & the      Caribbean Central Programs Glossary Abbreviations and Acronyms Wednesday, 29-May-2002 18:53:12 EDT

Overview

USAID has initiated a number of management reforms aimed at streamlining operations and conserving operating costs. USAID is focused on ensuring appropriate staffing of its overseas operations to deliver the most effective programs for the U.S. Government. With the transfer of budget operations to the Bureau for Policy and Program, USAID is beginning a more intensive review of operating expense as a part of its regular program budget reviews. Workforce planning and expanded recruitment efforts in FY 2001 enabled the Agency for the first time in a decade to replace the number of employees who departed through retirement or resignation. As with the Department of State, cutbacks in U.S. staffing simply went too far, thereby imperiling effective program delivery, management, oversight, and risk management. The Agency plans to increase direct-hire staffing by 3% in FY 2002, and will hold constant in FY 2003.

At the same time, the costs associated with maintaining even the current staff levels in overseas posts have risen considerably during the past two years, and this year security costs have increased significantly, particularly after September 11. This includes security costs associated with new building needs, with upgraded security in current locations as well as computer security. Delay is not an option.

USAID requests $586.1 million in Operating Expenses (OE). This new budget authority, combined with $51.1 million from local currency trust funds and other funding sources, will provide a total of $637.1 million to cover the Agency's operating expenses. The Agency is also requesting $95 million for a new Capital Investment Fund (CIF) for FY 2003. This fund will include $82 million to collocate USAID in new embassy compounds (funds for this were previously requested in the Department of State Overseas Building Operations account), and $13 million for information technology (IT) capital costs.

The total USAID-managed program funding budget request is 9% over FY 2002 appropriated levels; however, OE and the CIF/IT investments increase by only 2.6%. The requested OE and CIF/IT funds represent less than 7.5% of the funds managed by the Agency.

This small component of Agency funding is crucial for effective implementation of programs that advance the country's national security and foreign policy objectives, and at the same time assure accountability and impact of programs being implemented in increasingly complex settings. Direct costs of the Agency's overseas presence, including U.S. salaries and benefits, represent over 50% of the requested OE costs. The Agency's overseas presence is indispensable to the effective management of the Agency's programs, the delivery of U.S. foreign assistance, improved situational awareness, and increased programmatic and financial oversight. It strengthens the U.S. Government's country knowledge base, providing alternative and valuable perspectives to U.S. policymakers. The request reflects the minimum funding required to effectively manage the Agency's programs. It will not permit USAID to expand staff or the number of posts where the Agency maintains a presence.

OPERATING EXPENSES

(Thousand Dollars)

USAID requests $586.1 million in Operating Expenses (OE). This new budget authority, combined with $51.1 million from local currency trust funds and other funding sources, will provide a total of $637.1 million to cover the Agency's operating expenses.

The Agency's budget request includes the estimated costs of implementing the administration's proposal to fully reflect the costs of future retirees, including retiree health care benefits. Agency budgets reflect these costs so that budget choices for program managers and budget decisionmakers are not distorted by incomplete cost information. The amount calculated to implement the proposal in FY 2003 for USAID is $13.9 million. The budget tables also provide comparable cost information for FY 2001 and FY 2002.

Sources of Funding for Operating Expenses

USAID's operating expenses are financed from several sources, including new budget authority, local currency trust funds, reimbursements for services provided to others, recoveries of prior year obligations, and unobligated balances carried forward from prior year availabilities. Details are provided in the table "Funding Sources for Operating Expenses" below.

Local currency trust funds are predicted to level off for FY 2003 after several years of decline. Anticipated funds available in FY 2003 are estimated at $27.6 million compared with $26.6 million in FY 2002. Conversely, after two years (FY 1999 and FY 2000) of intensive reviews and de-obligation of unliquidated prior year obligations, recoveries of prior year funds are expected to drop back to historic levels in FY 2003. Estimated recoveries during FY 2002 available for use in FY 2003 are anticipated at $12.0 million, compared to $10.7 million in FY 2001 and $26.1 million in FY 2000. While recoveries for FY 2002 are projected to increase slightly, the aggregate level of non-appropriated funds has declined precipitously from FY 2001 to FY 2003. This drop in non-appropriated funds makes it critical that the full OE request be provided.

Use of Operating Expenses

The OE budget is broken down into sections dealing with U.S. direct hire (USDH) salaries and benefits; allocations to field missions and Washington offices and bureaus; field mission facility relocations; security; information technology; Washington rent, utilities, and support costs; staff training; and other Agency expenses. The table below shows the funding levels from FY 2000 through FY 2003 and USDH workforce levels, followed by a brief description of each category and explanation of the FY 2003 funding request.

U.S. Direct Hire Salaries and Benefits

About 38% of the OE budget goes to fund salaries and benefits of U.S. direct hire (USDH) employees. Costs under this category include salaries and the Agency share of benefits, such as retirement, thrift plan, social security, and health and life insurance. Major reasons for the $6.1 million increase over FY 2002 include:

• full year funding of the January 2002 Federal pay raise (only 9 months funded in FY 2002);
• the impact of an anticipated January 2003 Federal pay raise; and
• the larger share of the Agency's total workforce now under the new retirement systems, which are more expensive to the Agency.

Allocations to Field Missions and Washington Offices and Bureaus

This category represents the cost of maintaining field missions plus travel, administrative supplies, and contract support for Washington offices and bureaus. It comprises 40% of total OE funding in FY 2003. Major expenditure categories include:

• Salaries and benefits for foreign service national (FSN) direct hire, personal service contractors (PSCs), and U.S. PSCs. For FY 2003 mission-funded salary and benefit costs will be about $102.4 million, or 41% of total funding made available to offices, bureaus, and missions. Other than a small amount for OE funded PSCs (less than $1 million) in Washington under the expanded PSC authority enacted in FY 2001, all of these costs are associated with field missions.
• Residential and office rents, utilities, security guard costs, and communications. The Agency will require about $48.3 million in FY 2003 to fund these costs-19% of total allocations to organizational units. As with mission-funded salaries and benefits, these costs are mandatory over the short-term and with given workforce levels.
• International Cooperative Administrative Support Services (ICASS). ICASS is the cost of administrative support provided to missions by other U.S. Government agencies (generally the Department of State). This support will cost an estimated $23.1 million in FY 2003. Operation of the Working Capital Fund (WCF), which finances the costs associated with USAID's provision of services to other agencies under the ICASS, is described later in this section.
• Operational and training travel. This category includes essential travel to visit development sites, work with host country officials, and participate in training, as well as other travel of an operational nature, including travel to respond to disasters. This request is for $19.5 million in FY 2003.
• Supplies, materials, and equipment. This category includes the cost of replacing worn out office and residential equipment, official vehicles, information technology hardware and software, and general office and residential supplies and materials. It also includes funds for the purchase of some security-related equipment. It is estimated that $18.4 million will be required in FY 2003 to for these requirements.
• Mandatory travel and transportation. This category includes travel and transportation expenses for post assignment, home leave, rest and recuperation, and shipment of furniture and equipment, and is estimated to cost $14.2 million.
• Contractual support. Mission requirements for voucher examiners, data entry assistance, and other administrative support provided through contracts will cost about $13.4 million in FY 2003.
• Operation and maintenance of facilities and equipment. In FY 2003, $14.4 million is required to fund the cost of operating and maintaining facilities and equipment at overseas missions.

Field Mission Facility Relocation Costs

In addition to recurring support requirements, OE funds are required for moving into interim office facilities and the purchase or construction of interim office buildings. These funds will be used for office relocation at priority security threat posts where the USAID mission is not collocated with the embassy. These funds are separate from the proposed CIF account, which will be used exclusively for new office building construction on embassy compounds.

Security

The USAID security (SEC) budget request for FY 2003 represents a continuing effort to protect USAID employees and facilities against global terrorism, and national security information against espionage. This budget request focuses on improving the security of USAID field missions where they cannot be collocated with U.S. embassies. The FY 2003 budget request will improve security by enhancing physical security measures, improving emergency communications systems, providing armored vehicles, and conducting security awareness training to protect classified information. The USAID security effort in Washington will concentrate on public access controls in the Ronald Reagan Building and the protection of national security information.

Physical security includes all costs associated with (1) overseas security enhancement projects, including design, procurement, shipment and physical installation of certified systems, materials, and barriers to deter intruders to USAID facilities; (2) upgrading emergency and evacuation (E&E) voice radio systems; and (3) the procurement of armored vehicles. This category also includes security costs associated with USAID headquarters in Washington, DC.

• USAID anticipates completing two major physical security enhancement projects at overseas posts where USAID field missions cannot collocate with U.S. embassies because of insufficient space and there are no current plans to construct new embassies.
• To ensure that USAID employees have a dependable means of accessing U.S. embassy E&E voice radio networks, communications system upgrade projects are planned for eight USAID missions. Those systems will include residential and vehicle radios, base stations, and repeaters that will provide employees with 24?hour communications while at work, at home, and during transit. The costs include procurement, testing, calibration, equipment repair, shipment, and installation.
• The Agency plans to provide one fully armed vehicle and lightly armor three USAID vehicles at posts where the threat of terrorism, war, or civil disturbance is considered critical or high. Two defensive-driving training courses will be conducted for USAID armored vehicle drivers to enhance their driving skills and ability to respond properly to emergency conditions.
• For USAID/Washington, this category includes costs for guards in the USAID portion of the Ronald Reagan Building to protect personnel, safeguard facilities, and protect sensitive and national security information. Costs for maintenance and repair of security equipment, such as electronic card access systems, locking devices, and closed-circuit television surveillance systems, are also included.

Personnel security includes all costs associated with the conduct of background and periodic update investigations in accordance with the provisions of Executive Order (EO) 10450, "Security Requirements for Government Employment," and EO 12968, "Access to Classified Information." All USAID personnel occupying USDH positions (Foreign Service, General Schedule, and Administratively Determined) must be investigated and granted a Top Secret or Secret security clearance before being hired. Pre-employment investigations and security clearances or employment authorizations are also required for USAID contractors who will work in USAID office space.

Information Security includes expenses associated with the protection of national security and sensitive information, one of the Agency's highest priorities. EO 12958, EO 12968, and Information Security Oversight Office Directive 1 require USAID to establish and maintain a security awareness program to ensure that classified national security information is properly prepared, transported, safeguarded, and eventually destroyed. This category includes expenses to continue the development of an ongoing, Agency-wide inter-active computerized training course to satisfy annual training requirements established by EO 12968.

In addition to funds identified in the security budget request, the $82 million identified for new office construction within the Agency's capital investment fund request will demonstrably increase overseas security.

The USAID information technology (IT) budget request for FY 2003 provides operational support for Agency staff. The FY 2003 USAID IT budget represents a reduction of $4.5 million from the FY 2002 level (from $68.9 million in FY 2002 to $64.4 million). This reduction, in part, represents the realignment of FY 2003 costs associated with supporting IT improvements in a separate Capital Investment Fund (CIF). Thus, while the IT FY 2002 budget contains both operational and improvement costs, the FY 2003 IT request contains only operational expenses.

Major components of the FY 2003 IT budget request include:

• Telecommunications. This component includes ongoing expenses to support bandwidth needs, the Department of State's communications system charges, and other telephone service charges. FY 2003 increases are, as in FY 2002, due to additional bandwidth charges to support the upgraded mission telecommunications network.
• Systems Maintenance. System maintenance expenditures include costs to maintain financial, procurement, human resources, and other legacy computer systems. This includes costs for maintenance of the commercial off-the-shelf (COTS) core accounting system and cost for maintenance of the Acquisition and Assistance subsystem of the legacy New Management System (NMS).
• Technical Support. FY 2003 expenses include the direct support given to Agency staff to ensure client based computer processors and applications are functioning properly, and assistance to end users to ensure their effective use of those tools. This category also includes funds used to support enterprise architecture development, the Agency's IT security program, the validation and verification program for project oversight, and the systems integration contractor management team. For FY 2003, as in FY 2002, the IT security program will: (1) improve course work for, and provide staff training on, security awareness and procedures; (2) enhance capabilities for and continue systems certification and accreditation; (3) increase evaluation of security practices; (4) support Agency encryption activities; and (5) improve security engineering to better design and implement improved secure systems.
• Equipment Operations and Maintenance. This category includes all costs associated with the operations and maintenance of the processing infrastructure. This includes server operations, network management services, cable room operations, the network monitoring system, and maintenance costs for equipment and software. For FY 2003, operations efforts will address legislatively mandated security requirements, and security related audit findings to improve the level of Agency systems and data protection.
• IT Purchases. For FY 2003, this category includes small purchases for network, end user, and processor hardware and software necessary to maintain operations.
• All Other IT. This category includes all costs associated with use of the General Services Administration's Federal System Integration and Management Center (FEDSIM) to assist in technology acquisition management, costs for space to house the technical contractor staff, and costs for the contractor program management team. The cost increases from FY 2001 through FY 2003 are due to acquisition planning and contract transition efforts anticipated to be implemented in early FY 2003.
• Systems Development. FY 2003 funds for systems development are requested in the CIF. In FY 2002 this category included the capital improvement costs associated with the accounting system upgrade, the Business Transformation Study, Acquisition and Assistance (A&A) system enhancement, and other small systems improvements. The allocation of funds is as follows:

In FY 2002, the Business Transformation Study will involve conducting an analysis of agency business processes with the goal of proposing rapid implementation of USAID business systems improvements. The FY 2002 funding to support the Agency's accounting system will allow for an upgrade to the newer version of the COTS application, and modifications to allow the mission-based accounting system to provide better reporting by strategic objective. The A&A system enhancement will provide needed software changes to allow linkage to the Agency's accounting system, and to improve A&A system functionality.

Washington Rent, Utilities, and Support Costs

In FY 2003, payments for office rent, utilities, and guard services for public areas in the Ronald Reagan Building and warehouse space in the metropolitan area will cost about $31.8 million, 76.2% of this budget category. The remainder is also relatively fixed, required for building and equipment maintenance and operations costs, postal fees, bulk supplies, transit subsidies, and other general support costs for headquarters personnel.

Staff Training

The FY 2003 request level of $7.331 million is a 19% increase from the FY 2002 level of $6.141 million.

This centrally funded budget pays for training of Agency staff in five strategic areas: (1) executive and senior leadership; (2) supervision; (3) acquisition and assistance management; (4) managing for results; (5) technical and professional training for technical staff; and (6) new entry professionals. Strategic programs piloted in these areas in FY 2001 and FY 2002 will be expanded in FY 2003 with the objective of providing training to a critical mass of employees. This training is key to the Agency's successful change management and cultural transformation. Additional resources will be required to support a new Agency program to meet professional competency standards by training staff in four management reform areas: procurement, information technology, human resources, and financial management.

Approximately 40% of the FY 2003 staff training budget request is for fixed recurring requirements, including funding for language skills training, short courses to meet specific office and employee needs, and operation of a training facility and an employee-training library within the Ronald Reagan Building.

Other Agency Costs

This budget request covers primarily mandatory costs, the largest being payments to the Department of State for administrative support and dispatch agent fees, and to the Department of Labor for employee medical and compensation claims relating to job-related injury or death. This category also includes mandatory costs such as retirement travel for Foreign Service officers retiring from Washington, costs associated with the Foreign Service panels, costs associated with retirement processing for Foreign Service officers, and funding for medical, property, and tort claims.

Department of State administrative support costs will increase by approximately $2 million from FY 2002 to FY 2003 due to a change in the allocation of diplomatic pouch costs to agencies with overseas presence and to increases in the DOS overseas administrative support platform. Under the Interagency Cooperative Administrative Support System (ICASS), agencies that receive support from this platform bear increased costs proportionate to new resources contributed by DOS.

Also subsumed within this category are legislative and public affairs support including the costs of publications such as Front Lines, support for Operation Days Work, and Lessons Without Borders.

Use of Operating Expenses by Object Class Code and USAID Operating Expenses tables are currently not available online.