West Bank and Gaza: State Should Incorporate Leading Practices and Lessons Learned into Anti-Terrorism Oversight

TL;DR

GAO found that USAID allocated $624 million in Economic Support Fund (ESF) assistance for the West Bank and Gaza for FY 2022–2024, funding 37 prime awards across sectors such as water, education, and health, and that with a few exceptions USAID complied with its anti‑terrorism policies and procedures. State assumed administration of this ESF funding from USAID in July 2025, and all 37 awards have ended except support to the East Jerusalem Hospital Network. Congress appropriated ESF funding in FY 2025 and National Security Investment Programs (NSIP) funding in FY 2026 that State may use for West Bank and Gaza assistance if oversight requirements are met. State’s Bureau of Near Eastern Affairs (NEA) is managing remaining activities but has not finalized replacements for USAID’s anti‑terrorism policies and procedures and has not determined responsibility for potential future programming. GAO recommends State incorporate leading practices and USAID lessons learned—specifically mandatory award provisions and timelines for compliance audits—to strengthen oversight and reduce risk of diversion to terrorist ends. Immediate implications: follow‑on funding is possible but contingent on State establishing robust anti‑terrorism oversight; contractors with International Development, Foreign Assistance, Water Infrastructure, Education, Healthcare Services, Economic Development, and Humanitarian Assistance capabilities should verify they can meet enhanced vetting and compliance expectations and should prepare capture/proposal pipelines accordingly.

Key Points

• What happened: GAO reported on USAID’s FY 2022–2024 ESF program for the West Bank and Gaza ($624M, 37 prime awards), found general compliance with USAID anti‑terrorism procedures, and noted that State assumed administration in July 2025 with most awards closed except East Jerusalem Hospital Network support.
• Who is affected: Market segments include International Development, Foreign Assistance, Water Infrastructure, Education, Healthcare Services, Economic Development, Humanitarian Assistance; NAICS codes in scope per segmentation: 923140, 541990, 541611, 541618, 622110, 237110, 221310, 611710; agencies: USAID and State.
• Timeline: USAID funding covered FY 2022–2024; State assumed administration in July 2025; Congress appropriated ESF (FY 2025) and NSIP (FY 2026) funds that State may use if oversight requirements are met.
• What contractors should do NOW: Immediately inventory existing compliance capabilities (anti‑terrorism certification, vetting procedures, compliance audit readiness), update capture and pipeline priorities to reflect potential State‑managed follow‑on funding, and configure Cabrillo Signals to monitor State policy development and advertised solicitations.

Who Is Affected

• Affected market segments: International Development; Foreign Assistance; Water Infrastructure; Education; Healthcare Services; Economic Development; Humanitarian Assistance.
• Specific NAICS codes: 923140, 541990, 541611, 541618, 622110, 237110, 221310, 611710 (from segmentation).
• Affected agencies: USAID; State (including NEA).
• Contract vehicles: Specific contract vehicles pending source review.

Frequently Asked Questions

Q: Has State already assumed responsibility for the West Bank and Gaza ESF program?

A: Yes. State took over administration of the ESF funding from USAID in July 2025. NEA is managing the remaining activities, though responsibility for potential future programming has not been determined.

Q: Is funding available for new awards?

A: Congress appropriated ESF funding in FY 2025 and NSIP funding in FY 2026 that State can use for West Bank and Gaza assistance if applicable oversight requirements are met. Whether and when State will obligate those funds for new awards is pending State policy development and oversight decisions.

Q: What compliance changes should contractors expect?

A: GAO identified leading practices State could adopt—mandatory provisions in award agreements and timelines for compliance audits—so contractors should be prepared for stricter anti‑terrorism certification, enhanced vetting procedures, and audit timelines. Specific policy language and requirements are pending State’s finalized policies.

Definitions

• Economic Support Fund (ESF): U.S. foreign assistance funding mechanism cited in the report that supported West Bank and Gaza programming for FY 2022–2024.
• National Security Investment Programs (NSIP): Appropriations cited in the report (FY 2026) that State may use for West Bank and Gaza assistance if oversight requirements are met.
• Bureau of Near Eastern Affairs (NEA): The State Department bureau identified as managing the remaining activities in the West Bank and Gaza.
• Anti‑terrorism policies and procedures: The set of controls, certifications, vetting, and oversight practices referenced by GAO as central to ensuring assistance is not diverted to terrorist ends.

Intelligence Response

• Cabrillo products to leverage:
• Cabrillo Signals War Room — Already detected this GAO event and delivered this briefing; continue monitoring for State policy releases, GAO follow‑ups, and solicitation notices.
• Cabrillo Signals Match Engine — Rescore active opportunity pipelines and capture lists to prioritize opportunities impacted by State’s assumption of administration and by potential ESF/NSIP follow‑on funding.
• Cabrillo Signals Intelligence Hub — Track USAID and State (NEA) activity, the listed NAICS codes, and saved searches for follow‑on solicitations and award notices.
• Proposal Studio (Proposal OS) and Proposal Studio Workflow Tracker — Prepare compliance matrices, incorporate mandatory award provisions and audit timelines into proposal templates, and run a 9‑gate capture workflow for any near‑term solicitations.
• Who to notify:
• Capture/BD Leads — to reprioritize pipelines and align resourcing.
• Proposals/Win Teams — to update compliance matrices and proposal language.
• Security/Compliance Officer — to validate anti‑terrorism certifications, vetting procedures, and audit readiness.
• Program Directors for affected market segments — to assess delivery and partner readiness.
• First 48‑hour playbook:
• Hour 0–4: War Room alert and briefing distribution; run saved searches in Intelligence Hub for State/NEA notices and set high‑priority alerts for ESF/NSIP keywords.
• Hour 4–12: Match Engine rescore current opportunities; flag bids with West Bank/Gaza relevance and assign capture leads.
• Hour 12–24: Compliance team to inventory anti‑terrorism certifications, vetting processes, and audit documentation; Proposal Studio to generate/update compliance matrices reflecting mandatory award provisions and audit timelines.
• Hour 24–48: Convene capture stand‑ups with notified stakeholders; begin drafting bid/no‑bid decisions and update 9‑gate Workflow Tracker milestones for targeted opportunities.

Primary hub: Winning Federal Contracts Guide (/insights/winning-federal-contracts)

Related guides: CMMC (Cybersecurity Maturity Model Certification) Compliance Guide (/insights/cmmc-compliance-guide); CUI (Controlled Unclassified Information)-Safe CRM Guide (/insights/cui-safe-crm-guide)