March 4, 2003

Mr. Chairman and Members of the Committee,

The American Foreign Service Association (AFSA) and its 23,000 active-duty and retired members of the Foreign Service appreciate the opportunity to share our views on the proposed legislation to create both the Millennium Challenge Account (MCA) and the Millennium Challenge Corporation (MCC). The Association is both the professional organization and the recognized bargaining agent of the Foreign Service. We thus represent over 1,000 Foreign Service Officers who work at United States Agency for International Development (USAID) and who make up one half of the U.S. government corporate memory on international development.
We applaud the innovation and foresight that has sought new ways of helping the poor of the world through different approaches to delivering U.S. foreign assistance in these changing times. USAID and its employees have proven themselves expert at conforming a world-wide set of unique country development strategies with a broad array of administration and legislative priorities and mandates. It is with this 40 years of development experience and expertise developed "on the ground" that we view the proposed legislation and wish to share our concerns with you.

THE ADMINISTRATOR OF USAID SHOULD BE ADDED TO THE BOARD OF DIRECTORS OF THE MILLENNIUM CHALLENGE CORPORATION.

While the Board of Directors of the Millennium Challenge Corporation, the administering body of the MCA, is designed to have cabinet level Directors, AFSA believes that this proposal is sorely deficient and that the Administrator of the United States Agency for International Development should also be a member of the Board because of the specialized expertise and perspective that he can provide during important deliberations on general policy, directions, and programs.
The assistance provided through the MCA is to be additional to existing assistance activities, and regular U.S. programs will continue even in MCA-participating countries. Certainly as both programs exist in a country, a commonality of goals, strategy and policy coherence and coordination between both the MCA and the regular assistance programs will be required. The Administrator of USAID provides a unique nexus for the MCC board in that the Administrator will be able to inform the Board of current programs in a country and particular problems that may be encountered, help to assure the complimentary nature of both MCA and regular programs in a particular target country, and issue policy guidance to USAID.
AFSA believes a sound relationship between the MCA and USAID is essential to the success of both programs and to this Nation's overall foreign assistance effort, and we urge the Committee to include the Administrator of the United States Agency for International Development on the Board of the Millennium Challenge Corporation. The Board should not be limited to a certain level of rank, but rather should be determined by what each of the Directors can add to the success of the effort.

STAFFING ISSUES.
With a central mandate of the MCA requiring performance, results and accountability, a key requirement of the Millennium Challenge Corporation will be the ability to effectively monitor the programs in the target countries. The Corporation is to have a staff of 100 people, largely detailed from other agencies, to maintain this oversight and accountability standards over a $3 billion program in Fiscal Year 2004, and what will eventually become a $5 billion program.
AFSA firmly believes the Foreign Service of USAID is uniquely skilled, experienced, and positioned to do this work, and should be an integral part of the Washington staff and the effort around the world.
USAID Foreign Service has developed the expertise in formulating coordinated country strategies and implementation of programs. They are skilled in performance management and host-country fiscal responsibility that meet the most rigorous standards. In those few instances when the safeguards failed, it was USAID that "sounded the alarm" and sought the help of investigators. Today, much of the work of USAID is that of a contracting agency that works through a vast network of educational and other non-government grantees and private contractors both large and small. These are the skills needed by the staff of the Corporation, and these are the skills that USAID's Foreign Service has developed over years of "doing the work" of international development.
Further, while USAID will not be managed by the MCA, it is likely that its staff, especially those located in MCA participant countries, will play a strong supporting role. They will be in place in these countries, and they will have the developed skills and experience to provide a constant presence and perspective that a "fly-in, fly-out" staff person from the MCC's Washington headquarters will not have. However, this will present another challenge to the in-country USAID Foreign Service Officer. Because these countries will have both MCC programs and regular, on-going USAID development programs, AFSA is concerned that the support required by the MCA, both programmatic and administrative, will diminish the ability of an already "thinly stretched" staff to continue managing regular assistance programs that they are also responsible for. Certainly the Foreign Service has worked under such conditions before and they have thrived from challenges, but such conditions also take their toll in burn-out and morale, and the Committee should be aware of this. After years of such working situations in the Department of State, and after several serious warnings in a number of important studies, the State Department, under the leadership of Secretary of State Powell, developed the Diplomatic Readiness Initiative to meet a serious personnel shortfall in the State Department.

THE NEED FOR WORKFORCE PLANNING AT USAID
While it is certainly not the responsibility of legislation creating the MCA and the MCC, personnel issues at USAID will influence the success of the MCA.
For USAID to handle its present duties, as well as potential emerging tasks with the MCA, the rebuilding of Iraq and the enhanced Global Health Initiative, it is essential that USAID have the staffing and operating budget needed to do its job. USAID is struggling to recruit Foreign Services Officers at the rate of attrition. However, it is still falling short and not even meeting attrition. AFSA believes the personnel budget and staffing levels provided fall far short of real requirements and that the same workforce planning review that gave rise to the State Department's seminal Diplomatic Readiness Initiative is required at USAID. USAID suffers staffing gaps, lacks a training float, and has too many categories of non-direct hire employees that seriously impacts the work of the Foreign Service at USAID.
Mr. Chairman, as the Committee considers the important skills, talents, experience, and perspective that the Foreign Service can provide to the success of this important MCA initiative, AFSA urges that in later legislation, the Committee also consider the personnel needs of the Foreign Service at USAID.
CONCLUSION
Mr. Chairman and Members of the Committee, the MCA initiative brings needed additional resources and a different, and important approach to the United States' international development efforts. However for this program to fully succeed, the American Foreign Service Association believes and strongly urges the Congress to include the Administrator of the United States Agency for International Development as a member of the Board of Directors of the Millennium Challenge Corporation as it develops the implementing legislation. Further, AFSA believes that the Foreign Service of USAID is experienced, expert, certainly talented and well position in this area to play an important role, both in Washington and abroad, in performing the necessary work to meet the objectives of the MCA. AFSA encourages the Administration and the Congress to fully utilize this cadre of dedicated men and women to bring the goals of the MCA to fruition.
The Foreign Services welcome the challenges and opportunities before us as the MCA moves from a concept announced by the President at the Inter-American Development Bank last March to reality, and we thank again the Committee for this opportunity to share our views and concerns with you.