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Hearing Of The State, Foreign Operations And Related Programs Subcommittee Of The House Appropriations Committee - U.S. Agency For International Development

Chaired By: Rep. Nita Lowey (D-Ny)

Witness: Alonzo Fullgham, Acting Administrator, Chief Operating Officer, United States Agency For International Development
(USAID)

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REP. LOWEY: (Sounds gavel.) The Subcommittee on State, Foreign Operations and Related Programs will come to order. And today we are delighted to welcome Alonzo Fullgham, acting administrator of the U.S. Agency for International Development.

Thank you for joining us today. And while we really do appreciate your efforts to move the agency forward during this transition, we're anxiously awaiting -- as I'm sure you are -- (laughs) -- the appointment of the USAID administrator who can work closely with the secretary of State and articulate the importance of long-term development within the administration.

As I noted last week, the president's FY 2010 budget calls for a dramatic increase in USAID operating expenses and provides for a significant boost in humanitarian and development assistance. It totals $1.438 billion for operating expenses, a $384 million increase over the fiscal year 2009 level, including the funding requested in the FY '09 supplemental. This request would support an additional 350 Foreign Service officers to keep us on track to double the USAID Foreign Service work force by 2012. In addition, it includes $245 million for additional spaces in embassies and missions around the world to accommodate increased personnel.

I hope that you can provide insight into how USAID is ensuring that the new hires have technical skills that reflect the program priorities, including climate change, agriculture, gender sensitivity and basic education. What training programs are being put in place to ensure that the new Foreign Service offices are oriented toward local engagement with nongovernmental organizations and developing country governments with a focus on building local capacity and providing smaller grants with more targeted goals and outcomes?

Finally, how is USAID coordinating its projected growth with the State Department? And do you have a joint operations plan that takes into account security, space needs of the new employees requested in both USAID and State budget?

Among significant increases in critical development areas, I was pleased that $1 billion was requested for basic education. That's pretty amazing. As you know, providing an education opens doors for young men and women and benefits the individual, their community and the world. I look forward to working with the administration to ensure that U.S. government resources support quality education and that USAID-supported schools serve as an anchor of stability and support in communities.

Just last month I spoke with Queen Rania of Jordan about the need to establish a new multilateral global fund for education. During development of the 2010 budget request, did the administration consider the merits of such a fund? Can you provide me insight into those discussions?

The $1.2 billion request for climate change initiatives includes ($)579 million for adaptations and clean energy programs, a $309 million increase over the FY '09 level.

Mr. Israel's ears perked up with that.

Clearly, the administration has structured its request to address the climate change crisis the world is facing. Though USAID does not currently have extensive expertise in this area and the current staffing plan calls for only 21 new offices in the field, how then does USAID intend to provide proper oversight management of this new initiative? How will USAID programs be coordinated with efforts made to multilateral funds and with the State Department? And who's taking the lead on the post-Kyoto negotiations.

As you know, I believe that successful programs have maximum impact when efforts are well coordinated. The budget includes $1.3 billion for food security and agriculture. How will USAID coordinate with other efforts funded by private foundations such as the Alliance for a Green Revolution and a multilateral organization such as the International Fund for Agriculture and the World Food Program? And how will USAID programs build upon the agriculture investments made by the Millennium Challenge Corporation?

I'm also concerned that gender considerations must be factored into all aspects of development assistance, especially agriculture programs where women often make up the majority of laborers but receive little outside technical assistance. What steps are you taking to ensure that gender is taken into consideration during every phase of USAID's assistance programs?

I noted last week my concern that health funding is not keeping pace with needs. While I understand the president has announced his intention to provide $63 billion over six years, I'm disappointed in the nominal increase for core maternal and child health, as well as family planning.

I am looking forward to our discussion today and to working with you. Before we move to your testimony, let me turn to Ms. Granger, the ranking member, for her opening statement.

REP. KAY GRANGER (R-TX): Thank you, Madame Chair. I'm glad to join you as we continue the hearings on the administration's fiscal year 2010 budget request.

I'm pleased that Mr. Alonzo Fullgham is here. And I understand just recently there is a -- you had a common career interest in my hometown of Fort Worth, Texas and was glad to meet and talk to you about that.

The administration's request for the State foreign affairs -- foreign -- State foreign operations bill totals $52 billion. As you said, a large increase -- 42 percent increase over the fiscal year 2009 regular appropriation, excluding emergency appropriation.

Such a large increase in foreign assistance comes at a time when USAID is still working to hire the staff it needs to manage its existing workload. This subcommittee appropriated the resources USAID is using toward this hiring effort begun by the previous administration. I look forward to an update on the progress made thus far to hire, to train and to deploy these new officers overseas.

The administration's budget has been called a "smart power" budget. I've long supported the concept of smart power as a national security strategy and I understand that USAID will play a key role.

Thank you for being here with us today, and I look forward to your testimony.

REP. LOWEY: Acting Administrator Fullgham, please proceed. Your entire statement will be placed in the record. You may summarize.

MR. FULLGHAM: (Off mike) -- and a Senior Foreign Service officer with over 20 years of experience serving my country at home and abroad. I'm honored and humbled to testify in support of the president's fiscal year 2010 foreign operations budget request. I look forward to discussing the important role the United States Agency for International Development will play in undertaking critical missions and sustainable development programs in support of our nation's foreign policy and national security interests.

As the acting administrator I proudly represent more than 1,200 Foreign Service officers, civil servants FSN employees who serve the USAID with honor, often under very trying circumstances throughout the developing world.

I also want to take this opportunity to recognize Secretary Clinton and her leadership team for their engagement with and the dedication to development issues and USAID. Since her second day on the job when she came to USAID headquarters to address our staff, Secretary Clinton has made clear her commitment to see development properly established as the third pillar of U.S. foreign policy, alongside diplomacy and defense, a commitment that is reflected in the budget request before you.

The president's fiscal 2010 budget request for USAID managed accounts equals ($)36.7 billion, including food aid. This funding will put the U.S. government on the path to double U.S. foreign assistance by 2015 and to double the number of USAID Foreign Service officers over the next several years.

Thanks to the critical support that we have received from the Congress, and from your subcommittee in particular, USAID has already begun the process of rebuilding and regaining development leadership in the global arena.

With fiscal 2009 resources, USAID will add an additional 300 Foreign Service officers to its total work force under the Development Leadership Initiative. In addition, the president's fiscal 2010 request also includes funding for 350 new Foreign Service officers.

As members of this committee well understand, diversity is central to the strength of any organization as a high priority for USAID.

I'm proud to report that minorities represent 32 percent of (the first five ?) classes of our DLI.

Madame Chair, let me assure you that you will begin to see positive change at USAID. We will improve our business processes, perform more functions in-house, using contractor technical services more appropriately. Overseas USAID officers will spend more time with their projects and school and health clinics and small business in poor communities.

A centerpiece of the fiscal 2010 budget request is a significant increase in funding for civilian assistance programs in Afghanistan and Pakistan.

USAID is staffing up to serve these critical missions and participating fully in the whole-of-government approach to achieving positive results.

It is USAID's work to address the many complex threats confronting the world we live in: global poverty, food insecurity, pandemic diseases, climate change, post-conflict instability and both man-made and natural disasters.

As such, USAID will take the lead in implementing a number of presidential priorities.

First -- your love: basic education. The president's request of a 50 percent increase over the fiscal 2009 request will assure that the United States remains in the forefront of programs for all girls and boys in developing countries to increase access to basic education.

Next: global health. The fiscal 2010 request is $7.6 billion and part of a $63 billion over six years to undertake a new, integrated approach to global health.

The president's Global Health Initiative will build upon ongoing success in reducing deaths from HIV/AIDS and malaria and tuberculosis. It will increase investment in safe motherhood and reduce infant mortality.

The initiative will target for elimination certain tropical diseases afflicting millions and support -- improve health care services delivery.

Leading to food security: President Obama announced at the recent G-20 summit his intention to request a doubling of U.S. funding for agricultural development in developing countries.

USAID will support poverty reduction by boosting poor farmers' access to seed, fertilizer, credit, linking small producers to markets, strengthening farmers' cooperatives, working with land grant universities and encouraging private investment in agribusiness.

Another key priority would be climate change. The fiscal 2010 budget requests ($)581 million for critical issues on climate change. USAID programs will help those developing countries most vulnerable to the impact of climate change become more adaptive and resilient.

Finally, I would like to mention the Rapid Response Fund, a $76 million initiative that will provide our government with the flexibility to respond quickly to unforeseen opportunities to help shore up fragile democracies. This fund will enhance our ability to respond to unbudgeted but critical windows of opportunity and demonstrate meaningful peace dividends to local populations.

Madame Chair, with that I will conclude, and again, I thank you for the support to USAID and for this opportunity to brief this committee.

I welcome your questions.

REP. LOWEY: Thank you, and thank you again for your leadership.

And we'll proceed to questions. (Off mike.)

In a recent hearing Secretary Clinton lamented that lack of USAID capacity and adequate staffing had strained USAID into a, quote -- (off mike) -- agency.

This statement reflects the concerns that we've heard from nongovernmental organizations that USAID is moving away from -- (off mike) -- grants to large, directed grants due to the lack of adequate staff to be innovative and creative -- (off mike).

In the past two years, as you know, this committee has worked with USAID to -- (off mike) -- to support the hiring of an additional 420 officers to the FY '10 request will bring us to a total of 770 new Foreign Service officers.

These young officers will all be sent to the field to be able to address some of the concerns raised by Secretary Clinton and the NGO community.

Couple of questions (off mike). What has USAID done to ensure that the expertise of the new officers reflects the priorities that the administration has outlined in the fiscal year 2010 budget?

Where will the new employees be assigned?

I understand that USAID has worked with the State Department to develop a structure and rehabilitation plan to ensure that these new employees have office space. Are you satisfied with the outcome of these discussions? And will these facilities be completed prior to the deployment of the new officers?

And lastly -- (off mike). How do you envision this impacting the operating model for USAID programs? Do you expect that USAID will begin to award smaller grants to local nongovernment organizations?

MR. FULLGHAM: Okay. That's a mouthful.

Madame Chair, thank you.

I think that through your leadership and this committee's leadership AID has clearly recognized that the situation that we're in didn't just happen overnight. It's been an erosion of our abilities over the last 15 years. And thanks to the generous support of this committee, we've started to rebuild that agency.

The key for us right now is people. We need to get back to basics, working in the communities side by side -- as I stated in my opening statement -- providing assistance at the grass-root level and also identifying ways to provide more contracting opportunities that allow for smaller contracts -- or grants, excuse me.

What we're going to have to do as an agency is we're hiring about 170 new project development officers. We're going to be hiring 111 contracting officers. We've got a significant number of compliance and development officers who will be able to manage these smaller grants and also implement those grants.

That's going to be the key. We've got to get the work force up to a level where we can get away from these large omnibus contracts. Those contracts were put in place because of the necessities -- lack of management, talent -- so you had to bundle them. So now we're in the process of de-bundling a lot of those processes and creating opportunities at the smaller level.

There was I believe a $50 million earmark last year and the year before that was put on by the Senate side which we've addressed and supported overwhelmingly. But the key to being able to do smaller contracts is going to be devoted to getting more officers in the field, more compliance officers, contracting and lawyers in place to support you.

On the space --

REP. LOWEY: (Off mike.)

MR. FULLGHAM: I'm sorry. On the space side, we have been working very close with the Department of State and Deputy Secretary Lew. Just last week there was a (alt act ?), which is a cable worldwide to all the missions asking them to prepare for the 25 percent in the State Department and the doubling of the USAID over the next three years.

There's a task force that's been put together with USAID and State Department colleagues who are working through these issues to ensure that there are enough desk and training opportunities when these new officers arrive in the field.

REP. LOWEY: All right. Okay.

I'll ask a -- I have a quick question that I've been concerned about.

I'm puzzled by the presence of two separate requests for flexible funding: ($)76 million for a Rapid Response Fund through the USAID's Office of Transition Initiatives and ($)40 million for a stabilization bridge fund to support the deployment of Civilian Stabilization Initiative staff.

These mandates seem very similar. I'm not sure why they're both needed. How are they distinct from the existing OTI mandate that has been successful?

MR. FULLGHAM: Okay. Our staffs have been working very closely to try and refine this process. But I think it's very clear -- and you have been a strong voice in the argument that we need to get the military out of doing these quick or CERP-type projects.

This fund will allow for us on the ground when we're in crisis to be able to address the issues in the short term until we can put these programs into the regular budget process.

The OTI fund is a much smaller fund, similar to what we used in Serbia -- in southern Serbia when those communities were all disparate and falling apart. We had small grants that were put into those communities to try to bridge and putting those communities back together.

What we're looking at with this Rapid Response Fund is a much larger capacity to be able to address critical needs on the democracy side, on the health side and on the economic growth side.

REP. LOWEY: To be continued.

MR. FULLGHAM: Yes, ma'am.

REP. LOWEY: Ms. Granger.

REP. KAY GRANGER (R-TX): Thank you.

Thank you. I'm going to continue -- (laughs) -- because on the Rapid Response Fund, I don't see a clear purpose or a plan. So I want to go back to that and ask you very specifically, why can't the administration not use its existing programming authorities to meet these emerging needs? What criteria will be used to determine which countries qualify for the rapid response assistance? And give me a country or regional example of where such a fund would be needed?

MR. FULLGHAM: Case in point would be, let's say, Kenya. We're already in the 2009 cycle. Things spiral out of control. New government comes into place. Our current structure or our current programs that are in place might not address some of the issues that the new government might need to put into place.

Maybe they're having a significant amount of problems on the health side or economic growth side. How could we put in programs immediately until the regular budget cycle would catch up in order to fund those programs? It's an emergency bridge to help countries that are in need.

It's flexible, and I know that that term flexible makes folks a little nervous, but in this world that we live in now and the fact that we're trying to create space and help governments who are trying to move forward, we have to have the flexibility and the money available to help these countries in need on an emergency basis.

And the key here, it's an emergency basis. And with the advice and consent of Congress, this fund will not be used every year. It's a set-aside in case of emergencies. And you've seen over the last few months the number of emergencies that we've been dealing with. And having access to a fund like this will allow for us to have bridge funding until the regular budget appropriations can catch up.

And it also will help us to alleviate the need for additional supplementals, IHO (ph), in regards to providing this bridge funding.

REP. GRANGER: All right. I want to -- I'm going to come back to that in a few minutes, but the other thing I want to ask you about, the Congress appropriated $245 million to support microenterprise and microfinance efforts.

The administration's requesting ($)167 million for 2010. That's a $77 million decrease. In my experience, those funds have been very successful financing successful businesses and developing economies. Just like we have to educate people, we also have to give them a chance in those countries.

You highlighted microfinance in your testimony, but could you explain why the administration cut funds for the microenterprise by $77 million from its FY 2009 level?

MR. FULLGHAM: Ms. Granger, I don't have a full answer for you, but I do recognize that our microfinance pipeline at this time is moving along pretty well. There are countries that are at a point now where they're at saturation on some of our microfinance programs. And also we need to be able to get more officers in the field to manage these programs.

You are absolutely correct that it's been very successful over the years, but some of the programs are moving to saturation. Some of our most successful programs have now spun off into banks.

And what we're trying to do is refine, improve the product and change some of the implementations in some of the countries that we're working in and at this point, we felt as though the pipeline that we had for 2010 was adequate to get us through that cycle. It may spike again in 2011 and go back up again --

REP. GRANGER: Okay --

MR. FULLGHAM: -- but we felt that -- the administration felt at this point in time --

REP. GRANGER: (Inaudible) -- be involved in that?

MR. FULLGHAM: I would love to brief you again.

REP. GRANGER: The other thing I'm -- back to what we were talking about before with the rapid response fund, I have many of the same questions about the Civilian Stabilization Initiative. It's been billed as a civilian counterpart to military responses, as you were talking about, but the details are pretty sketchy.

Is there an adequate consultation between State and USAID on the development of CSI? When will the committee receive a joint spending plans that's required for the FY 2009 fund? What part of the FY 2010 request will USAID implement? Can you give us some more details on that?

MR. FULLGHAM: Yes. There, as you know, we've been trying to put together a civilian response corps for the U.S. government to respond to crisis over the last four years.

There has been significant consultation under CSI. The State Department, I can't speak for their portion completely, but it's set up as a unit that is the (belly button ?) for the civilian government so that the Defense Department will have someone to relate to when there's a crisis. And they're responsible for coordinating the rest of the interagency.

The fund that they've set up is basically used for deployment only, when they deploy their forces, whereas with ours it's set up specifically to -- for operational purpose. So I see the State Department as the policy and coordination unit and then USAID as the implementation arm of our civilian response corps.

As for the joint spend plan, it's currently with OMB and they're going through the numbers right now and we hope to have that in the next week or so.

REP. GRANGER: Thank you.

REP. LOWEY: Ms. Lee?

REP. BARBARA LEE (D-CA): Thank you very much, and good morning.

Let me ask you just a couple of things. You talked a little bit about the de-bundling of the larger contracts.

MR. FULLGHAM: Good morning, how are you?

REP. LEE: It's good to see you. And I ask this question and the former administrator -- Fore, was it? "Foray"?

MR. FULLGHAM: Henrietta Fore.

REP. LEE: Fore. I asked this issue when it came to minority contracting and minority hiring, and one of the responses that I received was that due to the particular nature of USAID's operations in developing countries, most small firms didn't have specialized and technical experience to compete for USAID grants or contracting. That was her response, you know, as a result of my inquiry.

What I wanted to find out is do you all have goals and targets for minority and woman-owned businesses? If you do, what are they and how does this de-bundling now of contracts fit into that?

I understand the small-business piece, but in addition, you know, we have -- (inaudible) -- program and all of the other minority- business requirements.

MR. FULLGHAM: Very good question. I have to admit in the past our numbers have been woeful.

One of the things we did over the last year after Ms. Fore had her meeting with you, we hired a true professional who really understands small business and minority businesses and what effect they could have on our business. And on one year we went from 2.6 percent up to 4.8 percent. The goal for SBA is 5 percent, so we missed it last year by .2 percentage points. And --

REP. LEE: Was this for minority, small or what?

MR. FULLGHAM: Yes, minority, small, disadvantaged businesses.

REP. LEE: Total?

MR. FULLGHAM: Total. The goal is 5 percent, so we came pretty close to meeting that. And I'm not proud of that. I think we could do much better.

One of the things that we're doing now is providing more workshops on a quarterly basis for new contractors to come in and get a better understanding of how USAID works and how you get a contract with AID.

And I think also one of the keys that we've been able to do is to start identifying any contractor over $100,000 that's here in the Washington area that can actually go to a small business and get away from these larger contracting --

REP. LEE: But you know what? There's a difference, though, between small businesses and then small and economically disadvantaged businesses --

MR. FULLGHAM: That's correct.

REP. LEE: And so the 4.8 percent is that small, minority, women- owned?

MR. FULLGHAM: That's small, minority-owned disadvantaged businesses.

REP. LEE: Okay.

MR. FULLGHAM: That's the SBA definition.

REP. LEE: That's the SBA?

MR. FULLGHAM: That's the SBA definition.

REP. LEE: Okay.

MR. FULLGHAM: So, as I said, we've moved significantly further. We've got more work to do, but it's something that's gone on for a long period of time and we're slowly but surely making progress. And I think that your senior staffer met with Mauricio Vera, who has really moved the agency forward in this regard.

And to get back to my point that we're now putting rules and regulations in place that provide a level playing field and that's the key, to provide a level playing field that will allow for small and disadvantaged businesses to compete adequately at the levels that they can compete at. And I'm very proud of what we've been able to do over the last year in that regard.

REP. LEE: Are you providing any technical expertise or any type of support for companies --

MR. FULLGHAM: (Inaudible) -- programs that we've set up. In fact, that we're inviting -- we'd like to invite you. I'm going to publicly embarrass you a little bit and ask you to come on August 6th -- (laughs) -- for a monthly vendor outreach session to give a keynote address for our small and disadvantaged partnering program that we're putting together.

So there are a lot of things being put in place right now that are going to allow for us to do a better job of it.

REP. LEE: Thank you very much.

Madame Chair, I think it's really important, because remember when we were in Ghana we took a -- were on a codel and we saw many U.S. companies, part of Millennium Challenge Account compact efforts, other USAID projects, personnel, and many Americans were there, but we saw very few minority companies and minority Americans.

MR. FULLGHAM: One of the numbers that I'm really proud of is that over the last two years, 93 percent of our task orders, which is a request for business opportunities -- out of $88 million dollars, 93 percent went to small businesses.

REP. LEE: Good.

MR. FULLGHAM: Ninety-three percent of those contracts. And we're doing very well on the global health side. Anything over $100,000 we're trying to find opportunities for minorities and small and disadvantaged --

REP. LEE: Okay. And if it's appropriate, if you could give us a list of the minority-owned companies that you do business with, I'd like to see that list and the type of contracts that they're doing.

MR. FULLGHAM: (Inaudible.) But I think we have a -- we potentially have a good story to tell on this.

REP. LEE: Good. Good. Good.

Okay, and then the other piece that I'm hearing, (rumor, rumor ?), it's just the reorganization of the EEO office. What's going on with that?

MR. FULLGHAM: Yes, ma'am. I want to be very clear on this. We're an agency that is growing by 100 percent over the next three years. We have the same infrastructure in place that we had 30, 40 years ago. To me, from a logical perspective, anything we can do to provide better support to our employees we should be doing. By expanding and creating an Office of Civil Rights similar to what the State Department has is not decreasing our ability to help our employees; it's increasing our ability to help them.

And so the change has come about because we recognize that we have this tremendous growth spurt and we've got to be able to better support our employees. Right now we have a diversity council, we have an EOP office. They are all spread out in different places and we decided -- and have decided to bring them all together and create an office of civil rights that's similar to the State Department. So we're trying to do more for our employees versus less.

REP. LEE: Thank you very much. Good to meet you.

Thank you, Madame Chair, very much.

REP. LOWEY: Thank you. And I think you raised this point and we had some in-depth discussions about it and when you're talking about contracting you're not just talking about contracting here, you're talking about abroad because that's where it was very evident.

MR. FULLGHAM: Abroad, right.

REP. LEE: Thank you.

Mr. Rehberg.

REP. DENNIS REHBERG (R-MT): Thank you, Madame Chairman.

And welcome.

MR. FULLGHAM: Thank you, sir.

REP. REHBERG: For local and regional food purchase purposes, is there a difference between the rapid response in emergency when it comes to your -- either pilot project or your $300 million request for emergency assistance?

MR. FULLGHAM: The rapid response program is in an -- it's a program that's been put together after the last couple years we've been dealing with so many different emergencies and we recognized there are two things that have to happen when you have an emergency. You've got to respond quickly and you have to look at the cost.

Purchasing goods regionally provides for the rapid deployment of the food to the people who are most desperately in need.

REP. REHBERG: So you're suggesting there is no difference between your definition of an emergency and the rapid response?

MR. FULLGHAM: No, there is a difference.

REP. REHBERG: There is a difference?

MR. FULLGHAM: There is a difference.

REP. REHBERG: In looking at the list of where regional and local purchases have occurred, I see countries like Somalia, Ethiopia, Kenya and Zimbabwe, Tajikistan, Kyrgyzstan, Nepal and Pakistan. How many of those countries have had more than one year of emergency food purchases at the local or the regional level?

MR. FULLGHAM: I'd have to get back to you on that statistic.

REP. REHBERG: Would you please?

MR. FULLGHAM: I don't have that. I'd have to come and brief you. I don't have those statistics right in front of me.

REP. REHBERG: Because my point is as I start looking at the justification of your budget and your budget increases, I'm starting to see a trend of moving away from the definition of emergency -- or rapid response for all intents and purposes -- to one of a decision to purchase locally in an attempt to perhaps -- from my perspective, I have to justify to my taxpayers why we're taking money out of a farmer's pocket in Montana paying taxes to send over to USAID to purchase food products from somebody other than America and introducing a "buy American." I have to have a justification.

I can understand flexibility and I can understand an emergency. But if we start seeing a developing trend toward purchasing overseas, then we're going to put the red flag up. And it's not just local agricultural producers. The unions are particularly upset from the maritime industries because all of the sudden they're not seeing their ships going overseas developing -- or delivering the food in the areas. And so we're starting to get nervous about a trend developing.

MR. FULLGHAM: Congressman, as a rural American, the last thing I want to do is put our farmers out of business. I think when you look at this program, it really is for rapid response in regards to real emergencies where people potentially could die if we use the standard approach in responding to their crisis.

When you look at the amount that we've set aside, I believe it's $300 million, it's a very small amount in --

REP. REHBERG: And quite an increase over the past budget dollars, so it throws up a red flag as to why -- and again, don't get me wrong. I'm not suggesting that you want to put any individual at risk when it comes to starvation, hunger or famine and such.

What I'm going to be looking particularly closely at is are you seeing that Somalia shows up one, two, three, four years in a row for emergency aid for local purchases when if -- with a little planning on USAID's part, or the Department of Agriculture's, we just know it's going to occur and we get it in the pipeline and we don't use as an excuse rapid response or emergency.

MR. FULLGHAM: Point well taken, Congressman.

REP. REHBERG: Could you tell me the coordination between the Department of Agriculture and USAID? You know, in the farm bill there was an additional authorization and I still haven't gotten an answer -- and I did ask this question earlier -- from the State Department, is just exactly -- is the authorization -- the $300 million authorization through the life of the farm bill and then how you're going to coordinate? Or is it anticipated it's going to be a $300 million-per-year authorization?

MR. FULLGHAM: Okay. I'll have to get back to you on that point. On the coordination: The coordination between USAID, the State Department and USDA has never been better. I think we have a real team effort, especially looking at food securities issues throughout the world. And we've been working very close on a task force to deal with some of the issues regarding food security in some of the most troubled nations in the world right now.

REP. REHBERG: I'd appreciate that if you could get back to me with the countries, you know, go back five years.

MR. FULLGHAM: That's a fair request, sir. I'd be happy to get back to you.

REP. REHBERG: Do you also have the data on other humanitarian food assistance by other countries? We can't be the only ones shipping food or vouchers to Somalia, Ethiopia.

MR. FULLGHAM: I couldn't agree more, but that's a discussion with the secretary at the diplomatic level on what we're doing to try to encourage our donor colleagues to be more supportive of some of these crises that we continue to pick up sometimes on our own.

REP. REHBERG: You just don't have that information?

MR. FULLGHAM: No, sir. I don't have it right now.

REP. REHBERG: Thank you, Madame Chairman.

REP. LOWEY: Thank you.

Mr. Israel.

REP. STEVE ISRAEL (D-NY): Thank you, Madame Chair.

Mr. Fullgham, welcome. You have heard the subcommittee's concerns -- (inaudible) -- microfinance. I believe that there's a special nexus between microfinance and renewable energy programs throughout the world. There are models where -- sustainable business models where microfinance is assisting in the deployment of solar lanterns, solar flashlights, solar cookers and other renewable technologies.

Can you give me a sense of exactly what USAID is doing -- the extent to which USAID is supporting microfinance programs on renewable energy?

MR. FULLGHAM: I couldn't give you a full breath of the activity, but be happy to get you a list of those things. But I think you're absolutely correct. In looking at our climate change strategy, we're going to have to use innovation similar to this to get countries, especially where we have large economic issues in -- with forestation and farming, things of that nature, we've got to be able to bring the country side into the game and get them to better understand why this is important for the longevity of their country.

The overall climate change strategy is going to try to get at some of those things as we work closely with countries to come up with a strategy on adaptation and implementation of these programs. We have not been as creative and there have been some missions that have some real forward thinkers who are tying to identify ways to address this. But we collectively have not come up with a strategy in the microfinance office.

As you know, the whole climate change bill, and your support for that, has just been most recently. So now we've got to reconfigure and re-gear our operations to better address those issues. But as we start to put together the strategies for the country, this will be an integral part of bringing, especially, the countryside into play in addressing this issue.

REP. ISRAEL: Well, that's pleasing to hear. I know that you are seeking an increase of $309 million to fight global climate change in developing countries. And in your testimony you talk about funding being used to -- for deployment of tools for Earth observations, geospatial information hubs and early warning systems. I understand that. That's pretty sophisticated and somewhat scientific.

But let me share with you a more basic model that I am hopeful that USAID will pursue, and I met with some of your folks before on this. This is a solar flashlight. You can buy one of these in the gift shop in the visitor center. This solar flashlight is being deployed throughout the developing world. There's a model that the subcommittee has heard me talk about repeatedly, and I won't torture them anymore by going -- by repeating it again.

But there's a model in the Sudabons (ph) in India where you have a small sustainable microfinance program. Six women have a solar panel. They are using that to charge solar lanterns. They're renting solar lanterns. They're lighting the village.

The Department of Defense would argue that to have stability and security and prosperity you need a $550 billion defense budget. In the Sudabons (ph) we're doing it for $35,000 with technologies like this. So I am very hopeful -- this is my number one priority on this subcommittee is working with you and other agencies to accelerate the deployment of simple technologies like this which light an entire village.

And I'm hopeful that we can work together on that and would just like to hear your -- I have not had the opportunity to speak with you personally about it, but at first blush, at least, do you think that this is consistent with USAID's mission, particularly with this ramp- up and coming for climate change activities?

MR. FULLGHAM: I think that the -- as I said before, the strategy is evolving. We're looking at innovative ways to address these issues. We're clearly going to continue to look at the ecosystems and the forest land usage within these countries, and we've got to look at appropriate technology as well.

So it's a package, and I think that once the new political leadership is on board in our EGAT Bureau and our new administrator these are going to be some of the things that we focus on as we look to increase the climate change budget, I hope, for the future to address a lot of these issues.

REP. ISRAEL: My last question: One of the frustrations that I've had, and I've shared this with Chairman Lowey, is USAID has its mission; we also have a Department of Energy that has an international assistance program that is meant to deploy technologies like this. To what extent do you actually coordinate with the Department of Energy to make sure that you're not duplicating and in fact coordinating efforts to deploy technologies like this in the developing world?

MR. FULLGHAM: As you know, there is an interagency working group right now that's looking at these issues and there's an IPC -- what they call an interagency policy coordinating group -- and there's more of a whole-of-government approach. There's more inclusion. And as we began to develop our new strategy to move forward in these particular areas, it's being shared in the interagency to ensure that there's not duplication in these areas. In these times of tight budgets we have to be very careful not to duplicate what we're doing with other agencies.

REP. ISRAEL: My time has expired. As the new -- as you said -- political leadership shapes up, I look forward to working with them to advance.

MR. FULLGHAM: Look forward to working with you as well.

REP. LOWEY: I'd just like to emphasize again that I've had many conversations with the secretary about the issue of coordination, because wherever we go -- we call it stovepipes of excellence. We're not complaining -- (laughter) -- that people aren't doing excellent work. But there is often -- in fact, Ms. Lee mentioned Ghana and we've asked the ambassador to bring together everybody, whether it was the foundations of the countries, World Bank -- everybody who is doing work in that area. And they were delighted because they had an opportunity to meet each other. They really didn't even know each other.

So I know this is a key priority. The secretary is going to keep priorities on line --

MR. FULLGHAM: And the deputy.

REP. LOWEY: (Laughs.) And the deputy, for sure, because it is essential, especially at a time with tough resources, and for more effectiveness, that we coordinate and that that is the standard procedure.

Mr. Crenshaw, thank you.

REP. ANDER CRENSHAW (R-FL): Thank you, Madame Chairman.

And welcome to you. I want to ask you a couple of questions about human trafficking. It's kind of the dirty little secret that goes on around the world. It even happens in our own country as well. And people don't talk about it very much because, frankly, it's pretty disgusting.

I mean, it's just hard to believe in the 21st century that people are being bought and sold for different activities. And people just find it outrageous, but I guess it's something people don't want to talk about. You see it on TV every now and then, you read a report, but then it kind of goes back.

And as you know, I think it was in 2000 when President Clinton was president, before I came to Congress, that they passed a law to try to kind of confront all this. And part of that law, every year the secretary of State has to file a report -- a so-called TIP report -- that looks at human trafficking as it goes around the world, as well as own country. And I understand the law allows us to kind of sanction countries that we provide assistance to when they're not complying with the law.

And I wonder, do you know, I mean, what is being done at USAID to kind of monitor that each year when that TIP report comes out? Do we ever withhold assistance? Do we monitor that? Do we inform the countries that they're not meeting the standards?

It seems to me when we'll travel and I'll ask some leader, they'll always -- they'll just say, well, we're working on it kind of thing.

What -- can you give me some of your views on that?

MR. FULLGHAM: Yeah. Sir, as a father with two daughters, this is probably one of the most reprehensible things that's happening in the world. And I think that we recognize that this is happening mostly to people from vulnerable populations.

It's all about political will. You've got to have countries and leadership in those countries who were willing to take the tough stands.

I think the -- our country has put in a tier process. If you reach tier three -- tier one, then you are put on the list of no-go, that your funding will stop. And that has happened to some countries.

I think we've been very vigilant with the TIP program and with the State Department in ensuring that if a country is not living up to that -- the tier process that we will intervene and make a case that they should not receive any more finding from the United States government.

Overall, you know, we're continuing to increase and monitor these programs. We're doing more outreach. We're providing housing. We're trying to do more from counseling and sheltering process.

And also, one of the things we have to do from a development perspective is get at the root causes of poverty in these communities. The more you can educate girls, the better off they are at understanding there're economic opportunities out there and a better way forward for them.

And I think those are some of the basic things that we can continue to do. We've worked very closely with international programs, the MTV program, which is a foundation, and doing lots of messaging, especially in Southeast Asia and some of the problematic areas from transit to departure points, and also trying to do better job of forcing governments to recognize that they should not be involved in this process either.

And when I was in Serbia -- this was a major transit point when I was there. And we put a tremendous amount of pressure on the government to shut down the transit point between Serbia and Montenegro. And there were some really good efforts done through the Serbian government. And then we had coming in another way from Italy.

So it's always a constant point -- always a constant pressure on these governments to try and change their ways. But you have to continue to be vigilant at all times. But it's not going to go away easily, because it's such a profitable industry.

REP. CRENSHAW: So you do monitor that, the progress they're making? And you actually sit down and -- you don't necessarily condition the aid, but you -- if you --

MR. FULLGHAM: If go to tier one, your aid is cut off, if you go to tier one. Tier two, you get a warning, you get a -- (word inaudible) -- the aid directors and the foreign ministers office saying that if you go to tier one then your aid will essentially be cut off.

REP. CRENSHAW: well, that's very encouraging, because, you know, if we've made this effort to really try to confront that, it's really encouraging to that you're making those kind of efforts.

Thank you very much.

REP. LOWEY: Thank you.

Mr. Chandler.

REP. BEN CHANDLER (D-KY): Thank you, Madame Chairman.

Mr. Fullgham, good to see you. I apologize for having to step out of the room. I missed some of the questions, and I hope I won't duplicate some of the things that have been asked of you.

First of all, I want to applaud you and your fellows in the Foreign Service and with USAID for everything that you guys do. It's utterly critical to the future of our country, I believe. Of course, I think you'll get general agreement on this committee as to that notion. But our national defense, in my view, absolutely depends on what you all do.

And I'm very pleased to see more emphasis placed on this area, on the whole idea of development and smart power, soft power, whatever you want to call it.

I've got a couple of questions that I think maybe have not been asked. One, I'm curious about what USAID is doing in the way of developing markets.

We -- the chairlady led us on a trip earlier this year to Central and South America. And we were in Peru. And I think we were all very impressed by some activities in rural Peru to, of course, work on finding alternatives for people who had been producing coca in the past.

And one of the new developments, I understood, was, before we would just help them with crops, but nobody helped them find a market. There wasn't any way to get some kind of monetary reward for the efforts that they had made.

So if you could illuminate us a little bit on where that effort is going, how you're expanding it and so forth.

And then the second thing is a little bit different. USAID in the past has had a significant focus on preserving forests. And this seems to have been broadened significantly in the FY '10 budget to include new landscapes.

Can you give a little rationale behind the changing in strategy there?

Thank you.

MR. FULLGHAM: Okay. On the first question, I'm happy to say that USAID has been involved in creating markets for the last 30, 35 years, especially on the agriculture side.

But I think your question is more specific in Latin America and the coca region.

REP. CHANDLER: Well, there seems to be a little bit of an increase in emphasis on it. It seemed to me --

MR. FULLGHAM: Yes. I'm going to get to that point. I think that if we are going to address unemployment and increase economic growth in these countries, we have to do a better job of this by creating the foundation and the infrastructure that's needed in order to move the economic growth in these particular countries. So that means you need a market-based program that goes from soup to nuts, basically.

You have -- from the time the crop goes into the ground, it comes out of the ground, it's packaged, it's market -- and then there's a market that it's going to in a particular region. That takes infrastructure from the government. It takes private sector involvement. And it takes donor involvement. And you need all three of those working together. But that doesn't come together in a year or two.

As you noticed, we had a significant amount of funding going into that region, and we're really just now starting to show fruit from those investments. And now, the government is now taking over some of these activities and funding them themselves.

That's when you know that development is really working in those communities. And we're going to try to replicate that in Afghanistan and in Africa and other continents and other parts of the world as well, because we see agriculture as the way to creating economic growth and job opportunities in these rural communities.

In regards to your question on forests and broadening it significantly, we're recognized that under climate change that we have to look at all avenues to diversify our programs to address the key issues that are affecting these communities that we're working in.

Forestry is a huge issue for us. As you know, a lot of the countries we work in, they're slashing and burning and cutting down a lot of their forestry at the behest of the agriculture within those countries. And so, we're trying to provide additional advice. We're bringing in additional officers on the science side -- environmental officers -- we're going to hire 40 over the next three years.

And also, one of the great things that we have right now is that we've had quite a few environmental officers who've gone off to do other things who now want to come back to the environment (cone ?) because there's additional funding.

So we're just looking at expanding our horizons and our ability to Effect change in these communities. And we're going to bring science and technology to a lot of the thinking that we're doing in this regard.

REP. LOWEY: Thank you.

Ms. McCollum.

REP. BETTY MCCOLLUM (D-MN): Thank you.

It's good to see you again.

MR. FULLGHAM: Nice to see you again as well.

REP. MCCOLLUM: And I would like to take a second to thank all of the employees of USAID and recognize the bravery of those Americans, those unarmed servicemen and women who represent our country so valiantly.

You put yourself in harm's way to perform your missions of mercy that are vital to our national security. USAID employees take serious risks and all too often have given their lives for their country, with little attention paid to the public sacrifice.

So on behalf of myself and, I know, other members of this committee, we thank you for your service.

Now, turning to the budget request here for 2010, I applaud the administration for making a strong and long-overdue commitment to fight hunger around the world through agricultural development.

You and Mr. Rehberg had a good conversation about relief, but this is about development focus that the president's working on.

We know that agriculture is a proven strategy to reduce hunger. It raises incomes and it builds broad-based economic growth. It's development that works. And America has tried fighting chronic hunger with emergency assistance, as Mr. Rehberg was pointing out, and it's a flawed strategy and has fallen short.

So new president, new strategy.

And it's a smart investment. And I know it's going to pay huge dividends. So I'd like you -- and part of -- I have another question, but part of what I'd like you to talk about is how USAID plans to program the significant increases in -- requested in the budget and how USAID's going to fit in this whole role with the State Department on the new -- on a new strategy.

And then I have another issue I'd like to bring up. And this is an issue in the budget where I have to admit I'm frankly very disappointed, and that's the budget with this administration -- their request for the area of child survival.

I believe we're missing a tremendous opportunity. As we're all aware, more than 6 million children under the age of five died needlessly every year from preventable, treatable diseases -- over 9 million under-five deaths per year. So I'm -- you know, 9 million children under age five per year.

During my eight years in Congress, that would mean 50 million children had needlessly died from conditions like diarrhea, measles and pneumonia, which USAID and other partners have the experience, and you have the expertise to prevent it today if we choose to do so, if we choose to give you the tools you need to do that.

Now, the impact of the global economic crisis on developing companies is expected to result in an additional -- an additional -- 400,000 children in poor countries dying this year.

Now, we can do something if we choose to do something about it. The report released in April said that the U.S. saved 1.2 million lives with PEPFAR since 2003 with billions of dollars. I want to save 1.2 million children's life every single year.

And I know it's not in the president's budget, but I know he is concerned about maternal child health. So I would like you to tell us how we can work together to achieve this goal and start making a smart investment. And the opportunity that we're missing is saving children's lives for literally, as the chair and members of this committee know, for pennies.

Thank you.

REP. LOWEY: Thank you.

Those are two big questions. We could be here the rest of the afternoon. (Laughter.)

REP. LOWEY: It's a big world. (Laughter.)

MR. FULLGHAM: It's a big world. Absolutely, ma'am. Absolutely.

Let me just try to tackle the food security quickly. Right now we have a billion people living in poverty and hunger in the world, and this number continues to rise, and we recognize that. And I think the president's new strategy, by doubling the amount of assistance to agriculture, provides the lead in trying to address that issue.

When you look at agriculture as a productivity issue, we've got to provide more seeds, more fertilizer, and improved irrigation. And we've got to link the producers to the markets and improve infrastructure in the rural areas, provide better storage and removal of the trade barrier, as I discussed previously.

The other parts of the strategy, which I think are equally as important, is that we're coordinating, for the first time, as a government. There's a task force that's being led by -- (name inaudible) -- in the State Department where all the key players in the interagency -- USDA, USAID, the State Department -- are all coming together in order to plan out how we move forward with our new strategy.

One of the things that we've done -- and I think -- we've not done, but we've left out in this process is we've left out the land grant institutions. We've got to get them back involved in this process. They were part of the green revolution 15, 20 years ago. And we've kind of defunded them or they've become nonexistent. We've got to get them back into the game.

Also, it's private investment that's going to make a huge difference -- public/private investment. We can't solve this problem by government to government and other donors. It's going to take a private sector/public sector involvement in order for this to move forward and work.

And then I agree, we have to continue to focus on nutrition for children under two. And I think by creating a larger agricultural base in these countries we can get at that. But we have to work at that from a regional perspective.

And then, the greater attention to the role of women -- I could not agree more. We've got to do more to support women and create opportunities for them for finance and credit and also a role in the agricultural sector within the country.

On the child proviso issue, for lack of a better way of saying it, the budget, the way I see it, over the next six years is a huge number. And I think the administration is looking at this from a macro perspective. We want to get at a lot of other things that are important to the overall sector.

I know the number's down a little bit this year, but I think that we will -- the amount of money that's been provided by the administration adequately allows us in fiscal 2010 to maintain the momentum that's been created by this committee over the last few years.

I don't think one year makes a story. I'd like to really look at this again two years from now or three years from now and see where our numbers are. But there's nobody in this room probably more committed than Madame Chair on this issue. And we've heard from her vigilantly about the fact that we want to see those numbers up.

But I really look at this budget from a holistic perspective. In the out years I think we'll do a much better job. But right now there are a lot of things crowding out some of these issues. And I think that in the out years we'll be able to make up for it.

REP. MCCOLLUM: Madame Chair, if I could -- if the gentleman from Illinois would indulge me just a second to talk to the committee.

I think we need to look -- I'm not -- I've been a strong supporter of PEPFAR, but I think we need to look at the outlays and what's going on with PEPFAR and the billions of dollars being spent versus the millions of dollars that could be spent to save more lives and have more children being able to enter schools successful and healthy with all the school programs that the administration is working on.

So I think that this committee should really take a look at it. And I know you're going to be driving for efficiencies. And I think we'll be able to do that. And for the record, I'd like to enter a couple of pages from a report from Save the Children talking about many of the same things that director -- acting director talked on, spoke to.

Thank you.

REP. LOWEY: Thank you.

Mr. Jackson.

Oh, we're delighted to accept the report for the record. (Laughter.)

REP. JESSE JACKSON JR. (D-IL): Thank you, Madame Chair.

Let me first begin by offering an apology to the chair and to members of the committee for my tardiness and certainly to you, Mr. Fullgham.

This morning is my son's school was a unit of discovery where he had to have his parents there to kind of share, with his classmates and with his parents, a little bit about himself. And I just couldn't miss it.

I want to follow up very quickly on Mrs. McCollum's question about agriculture and be a little bit more poignant.

Given the president's ambitious agricultural agenda globally, does USAID have the capacity and the agricultural experts to ramp up so dramatically across so many regions in just one year?

And I wanted to hear your answer, Mr. Fullgham, to that question. And I also want to raise a question -- I think I'm going to get them out of the way at one time -- about global health.

Last week, the president announced his commitment that his budget will provide a total of ($)63 billion between fiscal year 2009 and 2014 for global health programs. In the announcement, the fiscal year 2010 budget is highlighted as a down payment on this commitment.

Yet, the budget only requests an increase of ($)406 million for global health and HIV and AIDS programs, and only ($)106 million of the committee-approved $300 million is ultimately approved. This represents only a 1.4 percent increase over fiscal year '09.

A major obstacle to reducing maternal mortality is the shortage of doctors, nurses, midwives and midlevel health workers who are skilled birth attendants. In sub-Saharan Africa and large parts of Asia, fewer than half of births are attended by a skilled birth attendant.

USAID's maternal and child health strategy includes an increase of at least 100,000 in the number of community health workers and volunteers. What is USAID's strategy to reach this goal?

And further, there is a broad recognition that a volunteer model for community health workers is unsustainable and leads to high levels of attrition. What measures will USAID take to ensure that these 100,000 community health workers are fairly compensated?

Thank you.

MR. FULLGHAM: On your first question, Mr. Jackson, I think it's a -- earlier I talked about the rebuilding of the agency. And one of the things that we're doing -- we have depleted our agricultural staff over the last 15 years. And we're now in the process of replenishing that staff. We're looking at hiring about 93 agricultural officers over the next three years. We've got about 20 in the system right now.

And our major programs would have adequate attention, but we cannot expand rapidly in various parts of the country -- in various parts of the world, excuse me -- because of our inability to get the officers in the right places at the right times.

I think, clearly, over the next couple of years you will see a significant ramp-up in this area that will allow us to do more on the agricultural side.

We will continue, however, to have contractors in place in countries that are in desperate need of this technical support but eventually moving those contractors out with direct-hire assistance.

On the global health issue, I don't have an answer for you that would stand the test here. I think we'd have go back and look at the poignant points of your question and get back to you and brief you on how we propose to address that.

I agree, volunteer support -- after working in Afghanistan as a mission director in 2005 and 2006 -- volunteerism doesn't work. You've got to have a sustainable system in place. But I think what happened is, when you set these systems up you hope to be able to bring in a more sustainable system. And it didn't stand up as quickly as it should have. So let me come back to you, if you will allow me, Congressman, with a more poignant answer. And I'd be happy to brief you on it once I have the answer.

REP. JACKSON: I appreciate that.

Let me -- I'm afraid -- one last question --

REP. LOWEY: Okay.

REP. JACKSON: I think I should have a minute or so.

The lack of access to safe drinking water and sanitation has a significant impact on the lives of millions of people every day. Providing safe drinking water not only improves heath outcomes, but it also has an economic benefit for families and communities.

Over the past few years, Congress has requested that USAID fund water programs in a sustainable way.

Can you give us some sense of what USAID's water strategy is?

And in fiscal year 2010, the MCC has requested significant funding for a water and sanitation-oriented compact with Jordan. Can you give us some sense of the role in the water sector of Jordan and tell us how the MCC compact builds on USAID's prior commitment in that country?

MR. FULLGHAM: Actually, I can give you a little bit on that. I led the delegation to the World Water Conference in Istanbul about six weeks ago.

Clearly, we recognize that water is going to be one of the biggest issues we face over the next 10 years. There are going to be countries that will probably run out of water before we run out of oil. And we're talking about massive populations potentially having to move to try to find that water. I believe it's over 260 waterways that more than two countries are attached to in the world. So clearly, this is a mega issue for us.

We are ramping up our water programs at USAID. We are -- and Jordan is the example that you just gave -- is probably one of the more exemplary programs. But we still have problems there.

It's about governance. It's about costing. It's about technology.

But we have been working very closely with the Jordanians. Right now they have, out of their 10 aquifers, eight are in trouble. And we're trying to find a way to move forward to allow for them -- yes I will -- (laughs) -- the mission director of Jordan is sitting right there -- (laughter) -- make sure I get this right.

The point I'm trying to make is that we've been working with Jordan over the last 20 years on water and conservation and costing.

This new compact that Jordan is putting together with the MCC will be built on USAID programming. So we're maximizing our investment here and allowing for us to create an environment where in Jordan they are doing the things they need to do to make the critical decisions to ensure that they have water in the future.

But this is just not Jordan. We have significant problems on the continent of Africa with water. And we've got to get back basic programs and identifying ways for governments to plan and strategize and come together with public/private partnerships once again. It's not going to be just development dollars that make a difference in these countries; it's going to be public and private and also donors coming together to come up with resources and strategies to affect their water in these countries.

REP. LOWEY: Thank you.

And thank you for your time.

This concludes today's hearing of the U.S. Agency for International Development's fiscal year 2010 budget request. (Off mike.) Thank you very much. (Sounds gavel.)


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