The State Department's Office of Inspector General found significant management challenges in how regional bureaus have absorbed foreign assistance programs following the 2025 closure of the U.S. Agency for International Development and subsequent departmental reorganization.
An evaluation initiated in 2025 identified gaps in planning, staffing, and monitoring that increased risks of fraud, waste, and poor program outcomes. The State Department reorganized regional bureaus in July 2025 with the intention of aligning non-security foreign assistance with policy priorities, inheriting some foreign assistance programs and funding from USAID.
The inspector general found that the department had not established clear guidance on the roles and responsibilities of regional bureaus, regional assistance hubs, and individual embassies. The department's stated plan for regional bureaus to lead non-security foreign assistance was unclear in practice, and the authorities and management roles between chiefs of mission at individual embassies and those at embassies hosting regional assistance hubs had not been clearly delineated.
The department also shifted from country-specific budgets to proposal-driven processes for allocating assistance funds. This change created uncertainty among regional bureau and hub staff about the types and amounts of funding they would manage. Additionally, the department converted former USAID staff to Foreign Service positions, raising questions about their preparation for new roles and how existing Foreign Service officers would transition into foreign assistance leadership positions.
Staff shortages also limited comprehensive monitoring and evaluation of active foreign assistance awards, increasing the risks of fraud, nonperformance, and undesirable outcomes.
The inspector general made 14 recommendations to improve the department's management of foreign assistance. The department concurred with 11 recommendations, partially concurred with one, and neither agreed nor disagreed with two. The office considered 13 recommendations resolved and one unresolved.