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

Executive Summary

The GAO review highlights a major operational shift and oversight risk for U.S. assistance in the West Bank and Gaza: USAID obligations funded by FY 2022–2024 ESF ($624 million; 37 prime awards) largely ended, State assumed administration of remaining activities in July 2025, and only support to the East Jerusalem Hospital Network remains active. Congress has appropriated additional ESF (FY 2025) and NSIP (FY 2026) funds that State may use if it meets oversight requirements. GAO found that USAID largely complied with its anti‑terrorism policies but identified leading practices — such as mandatory award provisions and audit timelines — that State has not yet fully adopted for future programming.

Contractors across International Development, Foreign Assistance, Water Infrastructure, Education, Healthcare Services, Economic Development, and Humanitarian Assistance should pay attention now. State’s Bureau of Near Eastern Affairs (NEA) is still developing anti‑terrorism policies and procedures for these programs, and regional conflict has delayed that work. Contracting opportunities and award structures could be shaped by how quickly State formalizes and applies oversight measures (including vetting and audit timelines) and by whether those measures extend to other State components that may administer future funding. Firms that prepare now to meet enhanced anti‑terrorism certification, vetting, and audit expectations will be better positioned when solicitations and management responsibilities are clarified.

Impact Matrix

International Development

• Risk Level: High
• Opportunity: Continued programming potential tied to ESF and NSIP appropriations if oversight conditions are satisfied. Specific opportunities TBD pending solicitation language. Relevant NAICS codes (from Tags): 541611, 541618, 541990.
• Timeline: State took over administration in July 2025; additional appropriations available (ESF FY 2025, NSIP FY 2026) contingent on oversight requirements.
• Action Required: Prepare proposals and compliance materials that demonstrate anti‑terrorism risk mitigation, vetting procedures, and readiness for compliance audits. Monitor NEA and State guidance for award terms.
• Competitive Edge: Develop and document robust anti‑terrorism compliance programs and propose explicit audit timelines in bids to align with GAO‑recommended leading practices.

Foreign Assistance

• Risk Level: High
• Opportunity: Potential for future awards managing economic/recovery programs if State assigns management responsibility and meets oversight requirements. Specific opportunities TBD pending solicitation language. Relevant NAICS codes (from Tags): 541611, 541618, 541990.
• Timeline: Timeline TBD for State policy rollout; appropriations exist but use contingent on meeting oversight requirements.
• Action Required: Engage with State/NEA outreach channels, align internal controls to anticipated anti‑terrorism certification and vetting expectations, and document corrective‑action processes for audits.
• Competitive Edge: Offer program designs that embed mandatory award provisions and internal audit schedules, reflecting GAO’s recommended practices to reduce sponsor risk.

Water Infrastructure

• Risk Level: Medium–High
• Opportunity: Past ESF awards included water infrastructure; future infrastructure work could resume pending State oversight decisions. Specific opportunities TBD pending solicitation language. Relevant NAICS codes (from Tags): 237110, 221310.
• Timeline: Timeline TBD pending State policy development and decisions on program responsibility.
• Action Required: Ensure project proposals incorporate anti‑terrorism vetting of partners and subawardees, and be ready to accept mandatory award provisions and audit schedules.
• Competitive Edge: Present integrated compliance plans (vetting, audit cadence, corrective actions) alongside technical proposals to reduce procurement risk for State.

Education

• Risk Level: Medium
• Opportunity: Education was a funded sector under FY 2022–2024 ESF; future programs possible if State proceeds. Specific opportunities TBD pending solicitation language. Relevant NAICS codes (from Tags): 611710; supportive professional services codes: 541611, 541990.
• Timeline: Timeline TBD pending State determinations.
• Action Required: Prepare documentation for anti‑terrorism compliance, vetting of local partners, and audit readiness. Monitor NEA guidance for award clauses.
• Competitive Edge: Propose measurable compliance milestones and audit timelines to demonstrate program manageability under the anticipated oversight regime.

Healthcare Services

• Risk Level: Critical
• Opportunity: East Jerusalem Hospital Network remains the only continuing award; there may be follow‑on or related healthcare programming if State assumes further responsibility. Specific opportunities TBD pending solicitation language. Relevant NAICS codes (from Tags): 622110; plus professional services 541611, 541990.
• Timeline: Ongoing support to East Jerusalem Hospital Network remains active; other healthcare timelines TBD pending State policy and decisions.
• Action Required: Prioritize strict anti‑terrorism compliance, vetting, and audit-readiness for clinical and hospital partners; document how funds and activities will be insulated from diversion risk.
• Competitive Edge: Demonstrate prior experience managing donor-funded health programs under intensive compliance regimes and propose mandatory award language and audit timelines to reassure State oversight.

Economic Development

• Risk Level: High
• Opportunity: State planning has identified potential early recovery and economic development programming, but management responsibility has not been determined. Specific opportunities TBD pending solicitation language. Relevant NAICS codes (from Tags): 541611, 541618, 541990.
• Timeline: Planning identified but responsibility TBD; use of FY25 ESF and FY26 NSIP contingent on oversight requirements.
• Action Required: Position teams to support rapid program startup with compliance frameworks; develop partner vetting and monitoring plans.
• Competitive Edge: Package economic interventions with built‑in compliance audits and mandatory award clauses to meet GAO‑recommended practices and shorten State’s decision cycle.

Humanitarian Assistance

• Risk Level: High
• Opportunity: Humanitarian assistance has been a component of past support and may be included in future programming if oversight frameworks permit. Specific opportunities TBD pending solicitation language. Relevant NAICS codes (from Tags): 541990, 541611.
• Timeline: Timeline TBD pending State policy development and regional security considerations.
• Action Required: Ensure contingency plans for security‑driven operational delays and document stringent vetting and monitoring procedures. Be prepared to adapt implementation schedules based on State guidance.
• Competitive Edge: Offer flexible, compliance‑centric implementation models that allow rapid scale‑up while meeting anti‑terrorism oversight requirements.

Cross-Segment Implications

• Oversight readiness is a gating factor across all segments: State’s ability to adopt leading practices (mandatory award provisions; audit timelines) will influence whether and how ESF/NSIP funds are obligated and which segments receive programming.
• Healthcare is a focal point now because the East Jerusalem Hospital Network is the lone continuing activity; lessons from healthcare oversight may set precedents for other sectors.
• Delays in NEA policy development and the regional conflict create cascading schedule and operational risk for infrastructure, economic development, education, and humanitarian activities; contractors should expect compressed implementation windows once State finalizes responsibilities.
• If State’s NEA policies do not apply to other State components, responsibility shifts could change compliance expectations and award terms across segments, increasing procurement complexity for firms working across multiple segments.