USAID watchdog highlights local procurement pitfalls

WASHINGTON — As U.S. Agency for International Development Administrator Mark Green moves forward with his “journeys to self-reliance” agenda, he can draw on lessons from one of his predecessor’s attempts to achieve similar goals.

Last month, USAID’s Office of the Inspector General released an audit report that highlights some of the successes and pitfalls of the previous administration’s attempt to shift the agency’s resources from large international organizations to local governments and implementing partners.

The report found that while many of USAID’s operating unit staff felt the local solutions push would move the agency in a good direction, they lacked a system for measuring that progress and fell short on managing the risks posed by the policy shift.

In 2010, with Rajiv Shah at the helm, USAID launched a high-profile reform plan called “USAID Forward,” and in 2013 — under the banner of “local solutions” — set a target of directing 30 percent of the agency’s money to local organizations. These included universities, government, civil society, and private sector organizations in the countries where USAID operates. One year later, the agency’s leaders had already backed away from the hard 30 percent target, describing it as “aspirational.”

USAID never came up with a good substitute for the 30 percent target, OIG pointed out in its report. Even when field staff collected additional information to paint a more holistic picture of the agency’s progress in building local capacity, “the other indicators used by field operating units and the reported success stories were not aggregated to present an overall picture of local solutions progress Agency-wide,” the OIG report noted.

As the agency sought to shift more of its money from international NGOs and contractors to local organizations and government bodies, many of which were less accustomed to USAID’s heavy reporting and management requirements, it also put in place new risk management policies. These were designed to evaluate potential partners’ capacity to absorb and manage USAID funding.

In some cases, USAID’s policies for mitigating the risks of waste, fraud, and abuse conflicted with other U.S. government priorities and bilateral relationships.

In Pakistan, for example, the USAID mission received a waiver exempting them from the requirement to complete a series of assessments of the government’s capacity to manage direct government assistance. The U.S. Department of State had already issued a directive that up to 50 percent of USAID’s assistance money for Pakistan should flow through the Pakistani government or local organizations, and this arrangement was prioritized over USAID’s risk management policies, according to the inspector general.

In some cases where USAID identified potential risks from channeling money through local implementers, the agency fell short on monitoring those risks to make sure their local partner was attempting to manage them, according to the watchdog.

This disconnect between identifying risks and managing them was a “major shortcoming” at USAID, according to an official involved in the local solutions effort and interviewed during the audit.

The agency emphasized risk assessment and compliance, instead of a risk management approach that ensured activities would achieve their intended results, the official told OIG.

USAID’s current leadership has voiced a similar commitment to broadening the agency’s partner base and building local capacity — while shying away so far from a hard funding target.