oversight

Central America: Humanitarian Assistance to the Nicaraguan Resistance

Published by the Government Accountability Office on 1990-11-14.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                                                     .,   /
                       .--- linitt4   States General Accourlting   Office
                            Ikqxrt       to CongY-essional Cornrnittees                   ’




                            CENTRAL AMERICA
                           Humanitarian
                           Assistance to the
                           Nicaraguan Resistance



                                                                            142649




(;AO,/NSIAII)-!)I -7
-
National Security and
International Affairs Division

B-237240
November 14,lQQO
The Honorable Patrick J. Leahy
Chairman, Subcommittee on Foreign
  Operations
Committee on Appropriations
United States Senate
The Honorable Christopher J. Dodd
Chairman, Subcommittee on Western
  Hemisphere and PeaceCorps Affairs
Committee on Foreign Relations
United States Senate
The Honorable David R. Obey
Chairman, Subcommittee on Foreign
  Operations, Export Financing and
  Related Programs
Committee on Appropriations
Houseof Representatives
The Honorable GeorgeW, Crockett, Jr.
Chairman, Subcommittee on Western
  Hemisphere Affairs
Committee on Foreign Affairs
Houseof Representatives
In responseto your request, we reviewed the Agency for International Development’s
administration of $49.76 million to provide assistanceto the Nicaraguan Resistance.These
funds were appropriated under Public Law 101-14 for the period of April 18, 1989, to
February 28,lQQO.
We are sending copies of this report to other interested congressionalcommittees; the
Administrator, Agency for International Development; the Secretary of State; and the
Director, Office of Managementand Budget. Pleasecontact me at (202) 276-4128 if you or
your staff have questions concerning this report. Major contributors to this report are listed
in appendix II.




Joseph E. Kelley
Director, Security and International
  Relations Issues
liihcutive Summary


                     The Congresshas been concernedthat assistanceprovided to the
Purpose              Nicaraguan Resistancein Central America be spent according to legisla-
                     tive intent. As a result, four congressionalsubcommitteesasked GAO to
                     examine the Agency for International Development’s (AID) administra-
                     tion of $49.76 million in humanitarian assistanceto this group. GAO'S
                     objectives were to determine whether AID had (1) provided only author-
                     ized assistanceand (2) established adequate procedures to administer
                     procurement and monitor deliveries of goods,services,and payments.

                   /’ Public Law 101-14(Apr. 18, 1989) authorized the transfer of $49.76 mil-
Background            lion in unobligated Department of Defensefunds to AID to provide
                      humanitarian assistanceto the Nicaraguan Resistancefrom April 18,
                      1989, to February 28,lQQO.These funds reflected the third phase of
                      humanitarian assistanceadministered by AID to this group. As of July
                      31,1990, AID had obligated about $42.8 million and, as authorized under
                      Public Law lOl-llQq(Oct. 21, 1989), transferred $6 million to support
                      elections in Nicaragua. AID will return the remaining $900,000 and any
                      unexpended obligated funds to the U.S. Treasury.

                     In August 1989, the presidents of five Central American countries estab-
                     lished the International Commissionfor Support and Verification, con-
                     sisting of the SecretariesGeneral of the United Nations and the
                     Organization of American States,to overseethe demobilization of the
                     Resistanceand to assumeresponsibility for delivering humanitarian
                     assistance.The Commissionbegan operating in May 1990. By June 29,
                     1990, AID had disbanded the task force responsible for administering its
                     assistanceprogram and, in accordancewith AID disposition regulations,
                     had transferred equipment and other items to the Commission.

                     AID  and its contractors generally provided only authorized types of
Results in Brief     assistanceand established controls to administer procurement and mon-
                     itor deliveries. During the third phase of the assistanceprogram, AID
                     (1) adjusted assistancelevels to reflect changesin the Resistancepopu-
                     lation, (2) established a food reserve, and (3) contracted for additional
                     air support to facilitate deliveries. Also, AID and its medical contractor,
                     the International Medical Corps, improved medical assistance,and AID'S
                     training contractor, Creative AssociatesInternational, Inc., expanded its
                     training program.




                     Page 2                                          GAO/NSIADW-7 Central America
                           ExeeutIve Summary




                           A few ineligible people received food or medical treatment and the Inter-
                           national Medical Corps did not maintain adequate records during a vac-
                           cination program. Also, AID purchased someinappropriate medicines,
                           and AID and the International Medical Corps’ subcontractor, Kraus Inter-
                           national, Inc., lacked required documentation for a large purchase of
                           medicines and other items.


Principal Findings

Compliance With            In accordancewith the law, AID and its contractors generally provided
Legislative Requirements   only authorized assistance.Of the estimated 60,000 people fed during
                           the third phase,GAO found that the Resistancedistributed food rations
                           to 18 people that were ineligible for assistance.As a result, AID directed
                           the Resistanceto discontinue these rations and monitored food distribu-
                           tion more closely.


Changesin Program          AID adjusted the quantities of food distributed to Resistancemembers in
Operations                 Honduras to reflect periodic changesin troop strength resulting from
                           the relocation of units within Honduras and the reentry of units into
                           Nicaragua. To avoid interruptions in deliveries, AID established a
                           l-month reserve supply of food rations in Honduras. Further, AID
                           resumed the use of fixed wing air support to conduct airdrops of food
                           and supplies to remote sites and, to facilitate deliveries to new camp
                           sites, contracted for additional helicopter support.
                           AID  and its contractors improved medical facilities and servicesand
                           expanded training, For example, AID made physical improvements to a
                           recuperation center in Costa Rica, and the International Medical Corps
                           managedthe construction of a field clinic and upgraded a rehabilitation
                           center in Honduras. Also, Kraus International, under its subcontract
                           with the International Medical Corps, developed a comprehensivereha-
                           bilitation program for disabled Resistancemembers.
                           Creative Associatesestablished a maternal and child health care pro-
                           gram and expanded its training program to include civic education and
                           other classesdesignedto prepare Resistancecombatants and family
                           membersin Honduras for their return to civilian life.




                           Page 3                                          GAO/NSIAD-91-7Central America
Controls Over     AID and its contractors generally established controls to monitor pro-
Procurement and   curement and deliveries; however, GAO found someminor problems. For
                  example, the International Medical Corps paid about $33,000 to provide
Deliveries        medical care in the United States to 27 Resistancemembers and Resis-
                  tance family memberswho were not eligible for stateside medical care.
                  This number represents a very small portion of the over 60,000 people
                  who received medical care during the assistanceprogram. Thesepeople
                  were ineligible becausethey already lived in the United States and AID
                  permitted only those patients medically evacuated from Honduras and
                  Costa Rica to receive stateside treatment. Further, the International
                  Medical Corps did not maintain adequate patient records during a vacci-
                  nation program that served about 22,000 people at a cost of about
                  $110,000. Thus, many people had to be revaccinated.
                  Further, a pharmacologist’s analysis of Resistancemedical needsand
                  medicine inventories showed that AID had purchased several medicines
                  from US, sources,valued at about $230,000, that were of questionable
                  therapeutic value, inappropriate for Resistanceneeds,or duplicative. As
                  a result, AID eliminated these medicines from a subsequentorder. Fur-
                  ther, AID and the International Medical Corps’ subcontractor purchased
                  medicines and other items, valued at $316,000, in Costa Rica without
                  fully documenting the processfor obtaining price quotations and
                  selecting suppliers, as required by AID procurement guidelines.

                  GAO makes no recommendationsin     this report.
Recommendations

                  In their oral commentson a draft of this report, AID officials generally
Agency Comments   agreedwith GAO'S findings and conclusionsand suggestedminor modifi-
                  cations, which GAO has incorporated in the report where appropriate.




                  Page 4                                            GAO/NSIADSl-7CentralAmerica
Page 5   GAO/NSIABBl-‘7 Central America
Contents


Executive Summary
Chapter 1                                                                                   8
Introduction        Elements of Assistance
                    Program Obligations
                                                                                            9
                                                                                           10
                    Program Completion and Disposition of Equipment                        12
                    Objectives,Scope,and Methodology                                       13

Chapter 2                                                                                  16
Changesin Program   Adjustments in Assistance Levels
                    Establishment of Food Reserveand Addition of Air
                                                                                           15
                                                                                           16
Operations              support
                    Improvements in Medical Facilities and Services                        16
                    Expansion of Training                                                  17

Chapter 3                                                                                  19
Compliance With     Compliance With Public Law 101-14
                    Establishment of Controls
                                                                                           19
                                                                                           20
Legislative
Requirements and
Establishment of
Controls
Appendixes          Appendix I: AID’s Obligations for Humanitarian                         24
                       Assistance
                    Appendix II: Major Contributors to This Report                         26

Tables              Table 1.1: AID’s Obligations for Humanitarian Assistance
                        Provided Under Public Law 101-14
                    Table 2.1: Training Provided to ResistanceCombatants                   18
                        and Family Members



                    Abbreviations

                    AID       Agency for International Development
                    GAO       General Accounting Office
                    IMC       International Medical Corps


                    Page6                                        GAO/NSIABBl-7 Central America
Page 7   GAO/NSIADBl-7 Central America
Chapter 1

Introduction


               In February 1989, five Central American presidents’ signed an agree-
               ment calling for, among other things, development of a plan for volun-
               tary demobilization, repatriation to Nicaragua, or relocation to third
               countries of membersof the Nicaraguan Resistanceand their families. In
               exchange,the Nicaraguan government agreedto hold free elections by
               February 26, 1990. In August 1989, the presidents established the Inter-
               national Commissionfor Support and Verification, composedof the Sec-
               retaries General of the United Nations and the Organization of American
               States,to implement and verify the repatriation process.
               On March 24,1989, the President and Congresssigned the Bipartisan
               Accord on Central America, which outlined U.S. policy objectives and
               called for continued support to the Nicaraguan Resistanceuntil the time
               of the Nicaraguan elections. Public Law 101-14(Apr. 18, 1989) imple-
               mented the Accord and authorized the transfer of $49.76 million to the
               Agency for International Development (AID) from unobligated Depart-
               ment of Defenseappropriations to provide humanitarian assistanceto
               the Nicaraguan Resistancefrom April 18,1989, to February 28,199O.

               The legislation also provided AID with up to $5 million to pay for oper-
               ating expensesand $7.69 million for transportation expenses.2Further,
               it stipulated that none of the funds could be spent to provide or trans-
               port military assistance,and prohibited assistanceto any group that
               retained in its ranks an individual found to engagein human rights vio-
               lations, drug smuggling, or significant misuse of public or private funds.

               The $49.76 million reflected the third phase of humanitarian assistance
               funding administered by AID. The first phase, authorized under Public
               Law loo-276 [Apr. 1, 1988), provided $17.7 million from April 1988 to
               September 1988.,Public Law loo-463 (Oct. 1, 1988) authorized $27.14
               million for the secondphase from October 1988 through March 31,1989.
               We issued reports on our review of expenditures for the two prior
               phases.3


               ‘Includes the presidents of Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.
               ‘The legislation also authorized the transfer of $4.17 million to AID for a medical program to be
               administered by the Catholic Church in Nicaragua. However, the Nicaraguan government did not
               permit the use of these funds, and, according to AID officials, the funds expired at the end of fiscal
               year 1989.
               3Centrsl America: Humanitarian Assistance to the Nicaraguan Democratic Resistance (GAO/
                      _ 9 _162, June 1,198Q) and Central America: Humanitarian Assistance to the Nicaraguan
               Democratic Resistance (GAO/NSIAD-90-62, Jan. 23,lQQO).



               Page 8                                                             GAO/NSIA.BBl-7 Central America
                  chapter 1
                  Introduction




                  During the first phase of assistance,AID established a Task’Force on
Elements of       Humanitarian Assistance in Central America, with headquarters in
Assistance        Washington, D.C., and field offices in Honduras and Costa Rica to imple-
                  ment the assistanceprogram. As in prior phases,auditors from AID’S
                  Office of the Regional Inspector General and the private accounting firm
                  of Price Waterhousemonitored and audited program activities in Hon-
                  duras and Costa Rica during the third phase.

                  Since the assistanceprogram began in April 1988, AID has provided the
                  following types of assistanceto Resistancemembers and their families
                  at camps and other sites in Honduras and a recuperation center in Costa
                  Rica:
              l Food. AID provided monthly food rations to about 60,000 Resistance
                members and family members. Resistancemembersreceived a full
                ration, basedon nutritional requirements, of 29 items including rice,
                meats, and vegetables.AID provided supplementary rations, consisting
                of eight items, to family members.
              l Clothing. AID distributed civilian clothing at the recuperation center in
                Costa Rica and patient clothing at Resistancemedical facilities in Hon-
                duras, AID also procured standard military attire for Resistancemem-
                bers in Honduras, including boots, shirts, trousers, and field packs, and
                transported these items from the United States on U.S. military aircraft.
              9 Shelter. AID provided tents and plastic sheeting to Resistancemembers
                for shelter at camps in Honduras.
              l Medical. AID procured medicines for the Resistancemedical corps in
                Honduras and provided medical servicesto residents of a recuperation
                center in Costa Rica. During the first phase, AID contracted with the
                Dooley/INTERMED Foundation to provide technical assistanceto the
                Resistancemedical corps. During subsequentphases,AID contracted
                with the International Medical Corps (IMC~to provide technical assis-
                tance, managemedical evacuation and rehabilitation programs, and pro-
                cure medicines, equipment, and supplies. IMC also upgraded Resistance
                medical facilities and managedconstruction of a field clinic. During the
                third phase, AID’S training contractor, Creative Associates,implemented
                a maternal and child health care program in Honduras.
              . Training. Creative Associatesprovided nonmilitary training during the
                secondand third phases.This training included classesin literacy, ware-
                housing, health and sanitation practices, and such vocational skills as
                  41nAugust 1989, AID contracted with Kraus International, Inc., a U.S. consulting firm, to provide
                  technical assistance to IMC. In November 1989, IMC contracted directly with Kraus for continued
                  assistance, but terminated the contract in March 1990 due to illegal activities involving both a Kraus
                  and AID official.



                  Page 9                                                            GAO/NSIAIMl-7 Central America
                          chaptm 1
                          Introduction




                        computer operation, road maintenance, shoemaking, and carpentry. The
                        contractor estimated that about 9,300 people attended training classes
                        in Honduras and Costa Rica. During the secondand third phases,AID
                        also awarded grants to the Nicaraguan Association for Human Rights
                        and the Resistanceto provide instruction in human rights issuessuch as
                        treatment of civilians and the Resistance’ssystem of military justice.
                        These organizations trained a total of about 19,000 people. Further,
                        during the third phase, AID contracted with a Costa Rican government
                        institute to provide specialized vocational training to disabled Resis-
                        tance membersin Costa Rica.
                      . Cash payments. AID managedtwo cash payment programs. It provided
                        family assistancepayments totaling about $362,000 per month to about
                        2,700 senior Resistancemembersto defray living expenses.AID also pro-
                        vided periodic cash-for-food payments in Nicaraguan currency, called
                        cordobas,to Resistanceforces inside Nicaragua. This currency, provided
                        to a maximum of 3,600 Resistancemembersper payment, was to be
                        used to purchase essential goods,such as food. During the three phases,
                        AID spent about $3.2 million to purchase cordobas.
                      l Program support. AID funded Resistanceadministrative and support
                        costs, such as office and housing rent, utilities, and office supplies.
                      l Communications. During the first phase, AID provided radios and bat-
                        teries to Resistancecombatant units. During subsequentphases,AID pro-
                        vided only replacement batteries for existing communications
                        equipment.
                      l Road maintenance. AID provided funds to upgrade drainage structures
                        on existing roads to facilitate food deliveries to Resistancecamps in
                        Honduras.
                      . Reintegration and relocation support. During the third phase, AID
                        authorized Creative Associatesto provide civic education and vocational
                        coursesdesignedto prepare Resistancemembers and their families for
                        returning to civilian life in Nicaragua. About 6,700 members attended
                        these courses.AID also transferred about $3.1 million to the Interna-
                        tional Commission for Support and Verification for use in beginning the
                        Commission’sprogram.

                          During the three phases,AIDobligated about $81.6 million for humanita-
Program Obligations       rian assistance.Appendix I provides a detailed breakdown of obliga-
                          tions over the three phases.As of July 1990, of the $49.76 million
                          authorized for the third phase under Public Law 101-14,AID had obli-
          ”               gated $42.86 million for humanitarian assistanceand transferred $6 mil-
                          lion to support an election assistanceprogram in Nicaragua authorized



                          Page 10                                      GAO/NSIAD-91-7Central America
                                         under Public Law 101-l 19 (Oct. 21, 1989).6According to AID officials,
                                         the remaining $900,000 and any obligated funds that remain
                                         unexpended after all program debts are liquidated will be returned to
                                         the U.S. Treasury. Table 1.1 shows the breakdown of the third phase
                                         obligations.
Table 1.1: AID’s Obligations for
Humanitarian Aasirtance Provided Under   Tota, aval,ab,e
Public Law 101-14 (As of July 9, 1990)                                                                                               $49,750,000
                                         Less: obligations
                                         Food                                                                                        $10,509,133
                                         Clothina                                                                                      4.604,705
                                         Shelter                                                                                          97,665
                                         Medical services and supplies                                                                10,476,197
                                         Trainina                                                                                      1586.963
                                         Cash payments
                                            Family assistance                                                                           3,491,665
                                            Cash-for-food                                                                               1,666,874
                                         Proaram supoort                                                                                2,007.981
                                         Communications                                                                                    56,116
                                         Road maintenance                                                                                 258,369
                                         Reintegration and relocation support                                                           8,094,1048
                                         Total                                                                                      $42.849.772
                                         Transferred to Nicaraguan elections                                                           $6,000,000
                                         Amount not obligated                                                                            $900,228
                                         aFigure reflects $4,474,599 for training, $3,090,000 transferred to the International Commission for Sup-
                                         port and Verification, and $529,505 for program termination costs.

                                         As of July 31, 1990, AID had obligated $3.64 million of the $5 million
                                         available for operating expensesand $5.82 million of the $7.69 million
                                         available for transportation expenses.The respective remaining unobli-
                                         gated funds and unexpended obligated funds will be returned to the U.S.
                                         Treasury.




                                         %blic Law 101-l 19 also authorized AID to transfer $3 million from unexpended funds available
                                         from the first phase of assistance. We reported on AID’s administration of funds transferred for the
                                         election progr& in our report, Central knerica: Assistance to Promote Democracy and National Rec-
                                         onciliation in Nicaragua (GAO/NSIAD-gu-246 -    , Sept. 24, 1990).



                                         Page 11                                                             GAO/NSIAJI-91-7Central America
                     chapter 1
                     Introduction




                     In their August 1989 agreement,the five Central American presidents
Program Completion   established the International Support and Verification Commissionto
and Disposition of   overseedemobilization of the Resistanceand to assumeresponsibility
Equipment            for delivering humanitarian assistance.In the fall of 1989, AID began
                     meeting with Commissionofficials to discussarrangements for coordi-
                     nating the transition. AID planned to terminate its program by March 31,
                     1990; however, the Commissiontook longer than AID expected to
                     develop a plan and did not becomeoperational until May 1, 1990. Thus,
                     AID extended its program until April 30, 1990.6

                     On April 6,1990, AID transferred $3 million to the Commissionto cover
                     initial costs. On April 30, 1990, AID ceaseddeliveries, and on May 1,
                     1990, the Commissionbecameoperational in Honduras through the
                     United Nations High Commissionerfor Refugeesand in Nicaragua
                     through the Organization of American States. The High Commissioner’s
                     office used its existing organization to administer assistanceand also
                     contracted with AID’S contractors--1lurcand Creative Associates,to con-
                     tinue their medical programs in Honduras. The Organization of Amer-
                     ican States used its existing organization and the Pan American Health
                     Organization to administer assistancein Nicaragua.

                     To easethe transition, AID contributed a sufficient quantity of food to
                     the High Commissioner’soffice at the end of April 1990 to feed 7,0007
                     people during May 1990. Further, to provide care for disabled Resis-
                     tance membersuntil arrangements for their return to Nicaragua became
                     final, AID extended its contracts with IMC and Creative Associates.Thus,
                     AID permitted IMC to continue managing the Resistance’srehabilitation
                     center in Honduras through July 31, 1990. It also permitted Creative
                     Associatesto manage a recuperation center in Costa Rica until the
                     residents completed an ongoing training program, up to September30,
                     1990.
                     During May and June 1990, AID disposedof equipment and other items,
                     and by the end of June 1990, had disbanded its task force. AID estab-
                     lished a disposition policy requiring task force, contractor, and grantee
                     assetsto be used, as appropriate, to support the repatriation process.
                     Any item not neededfor this purpose would be offered to AID missions in


                     %nder Public Law 101-14, AID had to cease obligating humanitarian assistance funds by February
                     26,1900, but could provide assistance beyond that date.
                     7This figure reflects AID’s estimate of the number of people remaining in Resistance camps in
                     southern central Honduras as of April 30,lOOO.



                     Page 12                                                          GAO/NSIADQl-7 Central America
                        chaptar 1
                        lntroiluctlon




                        the region and, if not needed,would be sold with the proceedsreverting
                        to the U.S. Treasury.
                        AID  transferred the task force’s assets,consisting primarily of office
                        equipment, to AID missions in Nicaragua and Honduras, and authorized
                        IMC and Creative Associatesto retain equipment, materials, and supplies
                        to use in supporting the High Commissioner’soffice.8 These items
                        included office furniture, computers, medicines, and operating tables.
                        With AID grants, the Resistanceand the Nicaraguan Association for
                        Human Rights had purchased video cameras,television sets, and other
                        equipment for human rights training. AID distributed items purchased by
                        the Resistanceto the AID mission in Nicaragua and authorized the
                        Association to use its assetsfor training programs in Nicaragua. At the
                        Resistance’srequest, AID shipped specialized medical equipment and
                        supplies in the Resistance’spossession,with an estimated value of $1.6
                        million, to Nicaragua for use in the repatriation effort?

                        At the request of the Chairmen, Subcommitteeson Foreign Operations,
Objectives, Scope,and   Senateand HouseCommittees on Appropriations; Subcommittee on
Methodology             Western Hemisphere and PeaceCorps Affairs, SenateCommittee on For-
                        eign Relations; and Subcommittee on Western Hemisphere Affairs,
                        House Committee on Foreign Affairs, we reviewed AID’S managementof
                        funds provided during the third phase of humanitarian assistanceto the
                        Nicaraguan Resistance.Our objectives were to determine whether AID
                        provided only authorized goodsand servicesand established adequate
                        procedures to procure and deliver goods and services.
                        We met with officials from the AID Task Force and the Department of
                        State and reviewed pertinent documentation on the assistanceprogram
                        in Washington, DC., and at the U.S. embassiesin Tegucigalpa, Hon-
                        duras, and San Jose,Costa Rica. We also met with auditors from AID’S
                        Office of the Regional Inspector General and the private accounting firm
                        of Price Waterhouse,and with representatives of the Nicaraguan Resis-
                        tance, IMC, Creative Associates,Kraus International, and the Nicaraguan
                        Human Rights Association at field sites in Tegucigalpa and other loca-
                        tions in Honduras and in San Jose,Costa Rica. Further, we met with

                        8AID also authorized IMC to donate some medical instruments and equipment to a private voluntary
                        organization that provided medical care to Resistance members in eastern Honduras.

                        ‘This shipment consisted of items such as x-ray machines, crutches, and wheelchairs belonging to the
                        Resistance medical corps. AID shipped these items under the auspices of the U.S. embassy in Nica-
                        ragua to the Nicaraguan govemment agency responsible for overseeing the repatriation process.



                        Page 13                                                         GAO/NSIA.BfJ1-7Central America
Chapter 1
Introduction




representatives of IMC and the Miami Medical Team in Miami, Florida. At
these locations, we reviewed records and observedthe delivery of goods
and services.
To determine whether AID provided only authorized goods and services
and established adequate controls, we made numerous trips to field sites
to observe deliveries and inspect warehouses.We also reviewed finan-
cial records, purchase orders, and audit reports. Further, we reviewed
AID and Resistanceprocedures for cash payments and inventorying and
distributing goods.
We did not obtain written agency commentson this report. However, we
did obtain oral comments from AID officials on a draft of this report.
They generally agreed with our findings and conclusionsand suggested
someminor modifications, which we have incorporated in the report
where appropriate.
We conducted our review from April 1989 to June 1990 in accordance
with generally acceptedgovernment auditing standards.




Page 14                                       GAO/NSIAD-91-7Central America
Chapter 2

Changesin Program Operations


                        AID instituted somechangesin program operations during the third
                        phase. Due to the periodic relocation of Resistanceunits, AID adjusted
                        food deliveries. It also established a system for maintaining reserve food
                        supplies and contracted for additional air support to facilitate deliv-
                        eries. Further, AID and its medical contractor improved medical facilities
                        and services,and AID’S training contractor established maternal and
                        child health care centers and expanded its training program to include
                        civic education and additional vocational courses.

                        During the third phase, the Resistancerelocated its troops several times.
Adjustments in          In August 1989, the Resistanceestablished additional camps in Hon-
Assistance Levels       duras and dispersed its troops following the meeting of the five Central
                        American presidents. Further, many Resistancemembersreturned to
                        Nicaragua after the meeting and in January and February 1990, prior to
                        the elections held on February 26,199O. As a result of these movements,
                        the location and numbers of Resistancemembersin Honduras fluctuated
                        during the third phase.
                        AID closely monitored changesin the combatant population and adjusted
                        food deliveries in Honduras accordingly. Each month, the Resistance
                        reported the numbers of combatants in Honduras and Nicaragua. Using
                        this information, AID identified increasesor decreasesfrom the prior
                        month and revised subsequentpurchase orders for food to reflect these
                        changes.Although the number of combatants reentering Nicaragua peri-
                        odically increased,AID did not increasethe number or amount of cash-
                        for-food payments provided to Resistanceforces in Nicaragua becauseit
                        had established a limit on these payments, in consultation with congres-
                        sional representatives.

                        During the third phase, AID established procedures for maintaining a
Establishment of Food   l-month reserve supply of food for Resistancecombatants in Honduras.
Reserve ad Addition     The food reserve, established in June 1989, supplemented regular
of Air Support          monthly rations and was stored at Resistancewarehousesin southern
                        and eastern Honduras. It consistedof nine basic items, such as tortillas
                        and dried milk, and was replaced every 1 or 2 months to avoid spoilage.
                        According to AID, the reserve was established to prevent interruptions in
                        the food supply resulting from market shortagesof certain products,
                        delivery problems such as impassableroads or bridges during the rainy
                        season,or unexpected emergencies.




                        Page 15                                        GAO/NSIAD91-7 Central America
                         ChaDtm 2
                         changes ill Program opcratIon8.




                         AID  also arranged for additional helicopter support and resumed the use
                         of fixed wing aircraft to facilitate deliveries to the Resistance.During
                         the first phase, AID contracted with Air Logistics International, Inc., a
                         U.S. company, to provide two helicopters to transport AID officials, food,
                         and supplies to Resistancecamps. It also contracted with a private Hon-
                         duran cargo company to provide a fixed wing aircraft to airdrop food
                         and supplies to camps located in remote areas.
                         In February 1989, the fixed wing aircraft crashed and, to compensate
                         for the loss, AID increasedthe use of the two helicopters. In July 1989,
                         AID contracted with Fowler Aeronautical Services,a US. company, for a
                         replacement aircraft. The airdrops resumed in August 1989. In
                         November 1989, AID authorized Air Logistics to operate a third heli-
                         copter to meet additional air support needsbecausethe Resistancehad
                         deployed units to several new locations in remote areas within Hon-
                         duras that were inaccessibleby road or airdrop.

                         During the third phase, AID and its contractors improved medical facili-
Irnprovements in         ties and rehabilitation and health care services.At a recuperation center
Medical Facilities and   in Costa Rica, AID installed additional wash basins, a new drainage
Services                 system, and partitions for dining and living areas, and purchased phys-
                         ical therapy and other rehabilitation equipment. In Honduras, IMC
                         upgraded facilities at the Resistance’srehabilitation center, referred to
                         as Ranch0 Grande, for disabled Resistancemembers.Improvements
                         included construction of ramps and walkways, improved plumbing, and
                         installation of electricity.
                         IMC also managedthe     construction of a clinic that served the medical
                         needsof most Resistancemembers and their families in southern central
                         Honduras This project included construction of four wooden buildings
                         and installation of water, sewage,and electrical systems.The buildings
                         consisted of various facilities such as two operating rooms, two patient
                         wards with a loo-bed capacity, a pharmacy, a warehouse for medicines
                         and medical supplies, and a laboratory. Construction began in July 1989
                         and by November 1989, the clinic was sufficiently complete for the
                         Resistancemedical corps to begin performing surgeries. The construc-
                         tion project cost a total of about $260,000.
                         At Ranch0 Grande, IMC’S subcontractor,.Kraus International, Inc., estab-
                         lished a rehabilitation program for disabled Resistancecombatants
                         during the third phase. Prior to this time, IMC had hired a physical thera-
                         pist and other professional staff to provide rehabilitative care; however,


                         Page 16                                         GAO/NSJAD91-7Central Amerka




                                                                                               i;
                        chapter 2
                        Changesin Program Operations




                        the staff had not developed a coordinated plan and left the program in
                        September 1989. In September 1989, a Kraus rehabilitation consultant
                        recommendedseveral improvements, including development of a work
                        plan. By December1989, a secondKraus consultant had developed a
                        detailed plan and identified staffing needs,and IMC hired new staff.
                        During the remainder of the phase, this consultant and the staff pro-
                        vided rehabilitative care and developed a profile of each patient that
                        identified their capabilities and rehabilitative needs.
                        Creative Associatesimplemented a health care program to addressthe
                        medical needsof Resistancewomen and children. In December1989, the
                        contractor established four maternal and child health care centers in
                        southern central Honduras and assignedtwo full-time physicians to pro-
                        vide medical care and vaccinations. In addition, four social workers and
                        several Resistancehealth promoters circulated among the population to
                        monitor health conditions, refer patients to the centers for treatment,
                        and provide health and sanitation education. As of April 1990, the
                        center staff had treated about 7,660 patients and vaccinated about 80
                        percent of the Resistancechildren under the age of five. Creative Asso-
                        ciates officials believe that this health care program contributed signifi-
                        cantly to improving the health of the Resistancecommunity.

                        Creative Associatesexpanded its training program to include classes
Expansion of Training   designedto prepare Resistancemembers and their families for eventual
                        return to civilian life. During the secondphase, the contractor focused
                        its training program in Honduras primarily on improving Resistance
                        members’ administrative skills used in distributing assistanceand pro-
                        vided training in such subjects as accounting, computer operations, and
                        inventory control. Classesin literacy, environmental sanitation, and
                        vocational skills, such as equipment operation and radio maintenance,
                        were also provided. In Costa Rica, Creative Associatesprimarily pro-
                        vided health and rehabilitation training, including first aid and occupa-
                        tional therapy classes.
                        BecausePublic Law 101-14 authorized reintegration and relocation sup-
                        port, Creative Associates,at AID’s request, expanded its program in Hon-
                        duras during the third phase to include Resistancefamily members and
                        offered civic education and additional vocational classes.To reach as
                        many people as possible, the contractor trained Resistancecommanders
                        in civic principles and teaching methodologies.These commandersacted
                        as trainers and conducted civic awarenesscampaigns in their own units



                        Page 17                                         GAO/NSIADBl-7 Central America
                                   chapter 2
                                   cbangealnRogramoperations




                                   and in the community. Creative Associatesstaff and the trained com-
                                   manders also conducted seminars for Resistancetroops that included
                                   instruction in such topics as democratic values, the function of munic-
                                   ipal and national government, the Nicaraguan constitution, the right to
                                   vote in free elections, and the rights and responsibilities of individuals
                                   in a democratic society.
                                   Creative Associatesalso expanded vocational training to include courses
                                   in carpentry, leather working, road maintenance, sewing and home eco-
                                   nomics, and provided classesin literacy, health and sanitation practices,
                                    and rural skills such as farming and animal husbandry. To maximize
                                   training benefits, the contractor trained selectedResistanceand family
                                   membersin teaching methodologies so that they could train others in the
                                   Resistancecommunity. For example, those trained in basic first aid and
                                   diseasecontrol conducted educational seminars for others on these sub-
                                   jects. According to Creative officials, trainees also used their skills to
                                   repair roads, build latrines, and make other improvements in living
                                   conditions.

                                   During the third phase, 8,272 Resistancecombatants and family mem-
                                   bers, including 7,643 in Honduras and 729 in Costa Rica, attended
                                   training classesas shown in table 2.1.
Table 2.1: Training Provided to
Resistance Combatants and Family   Type of class                                                                    Number trained
Members                            Civic education                                                                              3,335
                                   Vocational skills                                                                            2,409
                                   Rural skills                                                                                   262
                                   Literacv                                                                                       592
                                   Health and sanitation                                                                        1,674
                                   Total                                                                                        8,272


                                   According to Creative Associates,its training program in Honduras
                                   benefitted a significant number of people other than those that attended
                                   training classes.Thesebeneficiaries included about 7 1,000 people who
                                   had received training from class graduates and about 72,000 people who
                                   had experienced improvements in living conditions.’



                                   1According to Creative Associates, the numbers shown in thii paragraph reflect the number of
                                   training instances and not the actual number of people because one person may have benefitted from
                                   several activities.



                                   Page 18                                                        GAO/NSIAD-91-7Central America
Compliance With Legislative Requirements and
Establishment of Controls

                    AID and its contractors provided only authorized types of assistanceand
                    established adequate controls to administer procurement and monitor
                    deliveries; however, we noted a few minor problems. Of the estimated
                    60,000 people fed during the third phase, the Resistancedistributed
                    food rations to 18 ineligible people working at food distribution sites in
                    Honduras. IMC funded unauthorized medical treatment for 27 Resistance
                    membersliving in the United States; this represents a very small frac-
                    tion of the over 60,000 people who received medical care during the
                    assistanceprogram. Further, IMC did not maintain adequate records
                    during a vaccination program. Also, AID procured someinappropriate
                    medicines from U.S. sources,and AID and IMC'S subcontractor lacked
                    required documentation for medicines and other items purchased in
                    Costa Rica.

                    Public Law 101-14 authorized AID to provide only certain types of
Compliance With     humanitarian assistanceto the Resistanceand specifically prohibited
Public Law 101-14   the delivery or transportation of any military assistance.Further, the
                    legislation prohibited AID from providing assistanceto any group
                    retaining in its rank any individual convicted of human rights violations,
                    drug smuggling, or significant misuse of public or private funds.
                    AID and its contractors provided only authorized types of assistance
                    except that 18 ineligible people received food rations. These people
                    worked at various sites in Honduras and assistedin distributing food
                    each month to Resistancefamily members.Although employed by the
                    Resistance,these workers were not Resistancemembersor Resistance
                    family members. In August 1989, we found that the Resistancehad been
                    distributing food rations to the workers during AID'S monthly distribu-
                    tions to Resistancefamilies. AID officials agreedthat the 18 people were
                    ineligible. They stated that they were unaware that these ineligible
                    people were receiving rations and did not know how long this practice
                    had occurred.

                    To addressthe problem, AID issued a policy statement to the Resistance
                    reemphasizing eligibility guidelines and began more closely monitoring
                    food distributions. According to AID officials, as of September 1989, the
                    Resistancehad removed the names of the 18 ineligible people from dis-
                    tribution lists and ceaseddistributing rations to these people.




                    Page 19                                        GAO/NSIAD-91-7Central America
                        Chapter 8
                        timpliance With LegMative Requirement-m
                        and Eatablihnent of controle




                             and its contractors established various controls to administer pro-
Establishment of        AID
                        curement and monitor deliveries of commodities to the Resistance.AID
Controls                officials reviewed and approved contractor budgets and major
                        purchases,and routinely visited field sites to observe contractor activi-
                        ties. Further, AID established procedures requiring full documentation of
                        each procurement action, such as information on price quotations
                        obtained and the basis for selecting suppliers.
                        In addition, auditors from AID’S Office of the Regional Inspector General
                        and the private accounting firm of Price Waterhouseclosely monitored
                        program activities and expenditures, including accompanying deliveries,
                        observing cash payments, and verifying inventory records. During the
                        third phase, Price Waterhousereported no significant problems with AID
                        or contractor procedures. We also found procedures to be adequate, but
                        noted someproblems in the delivery of medical servicesand procure-
                        ment of medicines.


SomeResistanceMembers   Under its contract with AID, IMC assumedresponsibility, in November
ReceivedUnauthorized    1988, for funding a program to evacuate Resistanceand family members
                        who had medical conditions that could not be treated in Honduras or
Medical Treatment       Costa Rica to the United States for treatment. People already living in
                        the United States were not eligible for treatment. A team of doctors,
                        nurses, and other medical personnel in Miami, Florida, referred to as the
                        Miami Medical Team, provided medical treatment and arranged for hos-
                        pital care. The team selectedpatients for evacuation during periodic
                        visits to Resistanceclinics in Honduras and based on referrals from
                        Resistancedoctors in Honduras and AID’S field director in Costa Rica.
                        The program ceasedin February 1990 and, as of that time, IMC had
                        spent about $401,400 and 64 people had received medical care.
                        We found that IMC paid about $33,400 from November 1988 to
                        November 1989 for medical expensesof 27 Resistancemembersand
                        Resistancefamily memberswho already lived in the United States. At
                        the request of the Resistance,the Miami Medical Team arranged for
                        medical care; however, these individuals were not eligible for stateside
                        medical treatment becausethey had not been medically evacuated. Over
                        60,000 people received medical care during the assistanceprogram. The
                        expensesincurred for the ineligible recipients represented 8.3 percent of
                        IMC’S total expenditures for the medical evacuation program. According
                        to AID and IMC officials, they were not aware that the Miami Medical
                        Team had been treating these Resistancemembers and family members.



                        Page 20                                        GAO/NSIAB91-7 Central America
                           Chapter 8
                           Compliance With Legielative Requlrementa
                           and Eaablbhment of Controls




                           Until December1989, AID and IMC exercised only limited oversight of the
                           evacuation program and thus, in most cases,the Miami Medical Team
                           and Resistanceselectedpatients for treatment without consulting with
                           AID and 1MC.l Further, IMC did not closely monitor the eligibility of
                           patients treated in Miami prior to paying medical bills. In December
                           1989, concernedabout the evacuation program costs,AID and IMC began
                           to more closely monitor the program. In January 1990, IMC implemented
                           procedures that required the Miami Medical Team and the Resistanceto
                           obtain IMC approval on all medical bills and AID approval before Resis-
                           tance and family members already living in the United States could be
                           treated.


Lack of Adequate Record-   During the secondand third phases,IMC conducted an 8-month vaccina-
Keeping Results in         tion program for Resistancemembers and their families in Honduras. In
                           September 1989, during the third phase, AID requested Creative Associ-
Duplication of Effort      ates to survey the health status of the Resistancepopulation in central
                           Honduras. The contractor’s staff interviewed Resistancecombatants
                           and family members and reviewed medical records, including vaccina-
                           tion data compiled by the IMC doctor. Basedon survey results, AID
                           authorized Creative Associatesto implement a maternal child health
                           care program, including a vaccination component.
                           IMC contracted with  a doctor to administer its vaccination program and
                           spent about $110,000, including $16,000 for the doctor’s salary and the
                           remainder for vaccinesand supplies. From February 1989 to September
                           1989, the doctor had vaccinated about 22,000 people. However, the
                           doctor did not sufficiently document who had received vaccinations and
                           the number of injections administered. For example, in many cases,the
                           records did not reflect the full name of patients or whether an entire
                           series2of vaccinations had been completed. Somerecords showed that a
                           patient had received a seconddosage,but did not reflect whether a first
                           or third dose had been administered.
                           From December1989 to April 1990, Creative Associatesvaccinated
                           about 1,600 children under 6 years old and 10,000older children and
                           adults at an estimated cost of about $12,000. According to a Creative

                           1We found that the team and Resistance obtained approval from AID’s field diiector in Costa Rica
                           and AID headquarters officials prior to evacuating patients from Costa Rica.

                           %ecause some vaccines, such as polio, must be administered in a series of wections at specific time
                           intervals, detailed records are necessary to emmre individuals have received complete sets of
                           vaccinations.



                           Page 21                                                         GAO/NSlAB91-7 CentraI America
                            chaptma
                            Compllmcs With LeEprlative lUquirement8
                            and Eetabliehment of Controla




                            Associatesphysician, these people likely included many who had
                            received vaccinations during the IMC program becauseCreative Associ-
                            ates could not fully rely on IMC records. If any question existed as to
                            whether a person had been properly vaccinated, the physician stated
                            that the person was revaccinated.

                            We also found that, in April 1989, IMC destroyed about 1,100 vials of
                            vaccine used to prevent tetanus and hepatitis. These items, valued at
                            about $8,200, were unusable becausethey had not been properly
                            refrigerated.


Analysis of Medicine        In August 1989, a pharmacologist, employed by Kraus International,
Procurement Reveals Some    which had contracts with AID and IMC,began evaluating Resistancemed-
                            ical needsand reviewing prior AID and IMC purchasesof medicines and
Inappropriate Purchases     medical supplies. By November 1989, the pharmacologist, using World
                            Health Organization standards, had determined the types of illnesses
                            likely to afflict the Resistanceand developed a list of essential medicines
                            and supplies.
                            The pharmacologist reported that AID had purchased someinappro-
                            priate medicines.Specifically, of 187 medicines purchased by AID in two
                            orders through the U.S. Veterans Administration during 1989, the Kraus
                            official found that 37 items, or 20 percent, were of questionable thera-
                            peutic value, inappropriate for Resistanceneedsor duplicative, and rec-
                            ommendedchangesto AID'S final order. The items were valued at about
                            $230,000 and represented about 10 percent of the total $2.3 million
                            spent for medicines during the third phase. AID subsequently revised its
                            final order to eliminate these medicines.

                            During the prior phases,AID and IMC officials focused on screeningResis-
                            tance requests for medicines to eliminate duplication. By the end of the
                            secondphase,they had significantly reduced the number of medicine
                            types requested. During the third phase, the pharmacologist analyzed
                            the appropriateness of the medicines requested. If this type of analysis
                            had been performed earlier in the program, AID could have avoided
                            purchasing inappropriate medicines.AID officials agreedthat further
                            analysis during the prior phaseswould have been appropriate.


Lack of Dochentation for    During January and February 1990, AID purchased medicines and med-
Purchase of Medical Items   ical and dental supplies in Costa Rica valued at about $315,000. Because
                            the Kraus pharmacologist was familiar with the market, AID relied on


                            Page 22                                        GAO/NSIAD-91-7 Central America
chnpt.4~
      a
Compllanee With I.q#elative Requirements
and Establishment of Controls




this official to identify potential suppliers and obtain price quotations
and to assist its project and procurement officers in finalizing
purchasing and shipment arrangements. By mid January 1990, the
pharmacologist and AID officials had obtained price information and
selecteda Costa Rican firm to act as a consolidating agent. This firm
purchased items from several suppliers and prepared consolidated
shipments.
Although AID guidelines required full documentation of procurement
actions, we found no formal price analysis or record documenting the
basis for selecting the consolidating agent and suppliers. AID officials
and the Kraus pharmacologist maintained notes regarding the purchase
of medicines and medical and dental supplies, but did not have a com-
plete record of actions taken. The pharmacologist had prepared a partial
analysis of quotations obtained for dental supplies; however, the anal-
ysis did not specifically identify the suppliers contacted or basis for
pricing. As a result, sufficient information is not available to determine
whether AID obtained the best prices. AID officials agreedthat more com-
plete documentation should have been maintained.




Page 23                                         GAO/NSLAD-91-7 Central America
Appendix I

AID’s Obligations for HumtiMm                                                 Assistance
(As of July 1990)

                                                   Phase 1            Phase 2             Phase 3              Total
                                              (A r. 1988 to      (Oct. 1988 to       (Apr. 1989 to     (Apr. 1988 to
                                                Pept. 1988)        Mar. 1989)          June 1990)        June 1990)
               Funds available                  $17,700,000        $27.140,000        $49,750,000        $94,590,000
               Obligatlons
               Food                               5,187,714          5539,106           10,509,133        21,235,953
               Clothina                          33.724.168          4.209.654           4.604.705        12.538.527
               Shelter                               80,856            389,155              97,665           567,676
               Medical services and
                  supplies                         2,911,242          6,119,llO         10,476,197        19,506,549
               Trainina                                    0          2.168.020          1.586.963         3.754.983
               Cash payments
                 Family assistance                 1,831,559         2,198,077           3,491,665          7,521,301
                 Cash-for-food                       615,863           913,395           1,666,874          3,196,132
               Proaram support                       388.218           413,241           2.007.981          2.809,440
               Communications                      1,495,765            55,289              56,116          1,607,170
               Road maintenance                            0           504,779             258,369            763,148
               Reintegration and
                 relocation support                         0                  0         8,094,104          8,094,104
               Total                           $18,235,385        $22,509,826         $42,849,772       $81,594,983
               Funds transferred to
                 election assistance                        0                  0        $6.000,000        $6.000,000
               Funds returned to U.S.
                 Treasury                        $1,464,615         $4,630,174                  0         $6,094,789
               Funds remainina                             0                  0          $900.228”          $900.228
               BAccording to AID officials, these funds and any unexpended obligated funds will be returned to the
               U.S. Treasury after all program debts are liquidated.




               Page 24                                                             GAO/NSIAD91-7 Central America
Appendix II

Major Contributors to This &port


                        Stewart L. Tomlinson, Assistant Director
National Security and   Sharon L. Pickup, Evaluator-in-Charge
International Affairs   Jose M. Pena, Evaluator
Division,               Kellie 0, Schachle,Evaluator
Washington, D.C.




(468786)                Page 26                                    GAO/NSIAD-91-7 Central America
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