Viewpoint: The Illusion of Control in Foreign Aid

Thursday, February 19, 2015

Maybe Jesse Helms was right. I never thought I’d hear myself utter those words, but after witnessing the fracas around the U.S. Agency for International Development’s “Local Solutions” policy, I’m coming around to his way of thinking.

Back in 2001, Helms proposed replacing USAID with an International Development Foundation, providing all foreign assistance as grants to nongovernmental organizations. Coming on the heels of his (largely successful) effort to merge USAID, the Arms Control and Disarmament Agency and the U.S. Information Agency into the State Department, his agenda was justifiably perceived as an attempt to end foreign aid entirely. And given that his earlier effort would have put the State Department in charge of all foreign aid, the idea of removing development assistance from the foreign policy umbrella was a remarkable volte-face.

Motives notwithstanding, what Helms got right was the philosophy of being less prescriptive about how aid is implemented. We should be supporting change, not driving it. Finding people with good ideas and facilitating their work makes a lot more sense than trying to come up with all the ideas ourselves and finding someone else to carry them out. And if we want to make economic growth inclusive and self-sustaining, then we should make a special effort to find those ideas in developing countries themselves.

The problem is, our well-intentioned campaign to make foreign assistance more efficient and more effective has made this kind of cooperation more difficult. In an environment where multiple oversight bodies — regular and special inspectors general, the Government Accountability Office, congressional committees and independent evaluators — conduct audits and investigations, where every error or inefficiency is trumpeted on the front pages of newspapers as an example of waste, fraud and abuse and where there is increasing pressure to show quick and tangible results, USAID has understandably responded by exerting ever-greater control over how programs are carried out.

Instead of allowing good ideas to bubble up from the bottom and helping them to flourish, USAID — under real or perceived pressure from Congress — designs the projects and requires its partners to obtain pre-approval for every detail of each work plan, local hire, wage rate, plane ticket and equipment purchase. (Oliver Wyman’s Award Cost Efficiency Study, commissioned by USAID and its Advisory Committee on Voluntary Foreign Aid, lists many of the harrowing details.) Making matters worse, large projects that were previously under the control of mission directors in the field must now be authorized by senior management in Washington (a change that USAID claims was made in response to the Oliver Wyman study), and NGOs complain that “cooperative agreements,” which are technically grants and should provide a certain degree of autonomy and flexibility for partners, are being managed as if they were contracts, with USAID dictating all the details.

This heavy-handedness may seem surprising given USAID’s highly publicized and controversial efforts to move away from “acquisitions” (as the agency refers to contracts) and toward “awards” (grants and cooperative agreements). The agency has particularly sought to reduce megacontracts of the catch-all variety, known as indefinite quantity contracts and indefinite delivery, indefinite quantity contracts. Indeed, from 2007 to 2011, the total value (ceiling) of all USAID’s IQCs fell from $79 billion to $68 billion, whereas awards skyrocketed from $20 billion to $61 billion. However, these numbers are deceptive when one considers the vanishing distinction between contracts and cooperative agreements.

Source: Devex (link opens in a new window)

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aid agencies