Potential shortcomings in USAID–State Department merger plan raise concerns

The State Department Office of Inspector General on Monday issued a report highlighting possible issues with the Trump administration’s planning process for folding the U.S. Agency for International Development into the foreign relations department. 

Nearly all USAID employees will be laid off under reduction in force procedures on July 1 or Sept. 2 as part of an effort to shutter the agency. 

Because State is absorbing USAID’s functions, the department plans to bring on 308 U.S. direct-hire staff, 370 locally employed staff and 40 personal services contractors. In comparison, in fiscal 2024, USAID had nearly 4,500 domestic direct-hire staff, 5,000 local staff and more than 1,000 contractors. 

While investigators reported that State consulted with its bureaus and offices on the hiring numbers, they noted that the decision-making was not driven by a strategic workforce plan. 

The Government Accountability Office recommends that “[s]trategic workforce planning should precede any staff realignments or downsizing, so that changed staff levels do not inadvertently produce skills gaps or other adverse effects that could result in increased use of overtime and contracting.”

Auditors also emphasized that the USAID realignment is happening at the same time as a review of U.S. foreign aid and as State is undergoing its own reorganization. 

“Although they are being executed separately, the review of foreign assistance and the department reorganization are interconnected,” the report’s authors wrote. “Consequently, failure to successfully implement the realignment may increase the risk that other reforms could be adversely impacted.” 

Investigators also reported that State, as of May 1, did not finish an implementation plan for all efforts needed to transfer USAID to the department, even as it began the consolidation. 

“Without a complete implementation plan, the department’s efforts to realign USAID functions will lack transparency and accountability and fail to provide stakeholders with insight regarding intended results and how to achieve those results,” they wrote. “Moreover, the department increases its risk that actions taken prior to implementation plan completion may need to be revised or adjusted.” 

The report also warned about the planned closure on or around July 1 of the Assistance Transition Working Group, which is composed of nine department officials who are overseeing the initial realignment. Those officials said the goal is to shift responsibility to State bureaus. 

Investigators recommended that the secretary of State delegate responsibility of the transfer to the deputy secretary for Management and Resources as well as ensure that bureaus have appropriate resources to handle their new responsibilities. They also suggested that the department complete the realignment implementation plan and develop a strategic workforce plan for the reform efforts. 

The department generally agreed with the recommendations, and the OIG said the matters are resolved pending documentation that they have been implemented.