Where $17 billion hits the road: Four reasons to continue USAID’s procurement reforms

By Justin Fugle
October 5, 2020

During his two and half years at the helm of USAID, Administrator Mark Green launched a number of reforms based on the expertise of USAID’s career staff and refined through numerous open dialogues with the development community. These bipartisan/nonpartisan improvements deserve the support of USAID’s current and future leadership. Among the most consequential of those initiatives is the Agency’s first-ever Acquisition and Assistance (A&A) Strategy, which guides the use of about 80% of USAID’s funding, roughly $17 billion annually.

Following its launch in 2019, the A&A Strategy has shown some promising results, but since procurement cycles are several years long, these reforms will need more time to take root. USAID leadership should give high priority to the continued implementation of the A&A Strategy at least until the end of Fiscal Year (FY) 2022, at which time progress should be formally evaluated. Doing so will respond effectively to four critical procurement weaknesses identified through the USAID’s A&A Listening Tour:

USAID’s awards are concentrated with a small and shrinking number of partners.

USAID found that in FY 2017, 60 percent of its funding obligations went to 25 partners, and more than 80 percent of its funding obligations went to just 75 partners. This concentration of awards may be robbing the U.S. taxpayer and target countries of ideas and innovations that a more diverse group of contractors and grantees would bring. Also, despite the increasing capability of government and civil society around the world, USAID’s cadre of implementing organizations has been consistently shrinking – from 761 new partners in 2011 to only 226 new partners in 2018. The A&A Strategy addressed this concern through the New Partnerships Initiative (NPI), which is on the right track and should continue. As of April 2020, 63 USAID Missions have developed NPI plans identifying new ways to work with local governments and civil society. These efforts merit the time to fully roll out.

 

USAID’s process for proposal design too often ignored local knowledge, local government priorities and the expertise of implementing partners. 

The A&A Strategy proposed much wider use of co-creation, which is an open dialogue between the USAID Mission and local sources of expertise, to better diagnose the most critical problems and the most effective ways to make progress. Co-creation now involves a more intense stage of collaboration with the presumed awardee, in order to safeguard intellectual property. The Strategy says, “USAID will increase our use of collaborative and co-creative approaches by 10 percentage points in terms of total dollars and awards in FY 2019. Building on past years of experimentation and innovation, we will challenge our design and procurement officers to engage a much wider range of practices that emphasize collaboration and co-creation.” It’s vital to maintain the Agency Priority Goal on Co-Creation and to push that goal higher by 10% per fiscal year through FY 2022. To advance co-creation, USAID should continue the broader use of more collaborative and flexible A&A mechanisms such as Statements of Objectives (SOO), Annual Program Statements (APS), Refine and Implement, Performance Work Statements (PWS) and Broad Agency Announcements (BAA), abandoning its over-reliance on Request for Proposals (RFP) and Request for Applications (RFA). USAID’s new internal guidance on co-creation is also laudable, as is the experience with virtual co-creation. Although spurred by the pandemic lockdowns, virtual co-creation has proven an effective approach for involving local partners by allowing more flexible timing and eliminating travel costs.

 

USAID wants to work more with local partners, but is all too often separated from their work and skills by the Prime.

USAID used to track and publicly list all the partner organizations involved in its programs. Today standard procedure is for USAID to interact only with and receive implementation progress reports from the Prime (Lead) Contractor or Grantee. The A&A Strategy proposes “The Agency will track sub-awards (team members) to develop a more holistic picture of its impact in strengthening local and locally-established development actors, and engaging new partners at all levels.” Not doing so displays a lack of transparency that undervalues the contributions and capabilities of the local organizations and locally-established partners in the Prime’s coalition. Too often, the Prime receives credit for the accomplishments of its team members, which is incompatible with USAID’s goal of empowering local actors for sustainable impact. When scoring proposals and making awards, USAID also overvalues organizational experience as a USAID partner. Through a vicious cycle, that focus on “past performance” has been a key contributor to the unhealthy narrowing of USAID’s partner base and fails to acknowledge that the ability to manage USAID funding is not central to an organization’s ability to make a sustainable development impact.

 

USAID wants its procurement (A&A) professionals to have more space to innovate.

USAID’s A&A Labs have already developed and tested many of the guiding principles featured in the A&A Strategy. By formalizing the functions of the A&A Labs, USAID can ensure that its procurement operations continue to evolve, support and test new innovations and approaches. Related to this, USAID needs support to recruit and hire a new generation of Contract and Agreement Officers who reflect the Agency’s new goals of co-creating proposals and awards, and adaptively managing programs on the ground. The A&A Labs have been innovating across several Administrations. They should be formalized, funded, encouraged and invited to present their innovations to the Front Office on a regular basis.

These four well-grounded procurement reforms represent a vital opportunity to improve USAID’s agility and effectiveness and deserve continued support from Agency leadership as they take root.