Central America project shows challenges for USAID’s localization push

In August, Alberto Velazquez, the executive director at Communities of Faith Organizing for Action was approached by for-profit contractor Creative Associates International to subcontract on a U.S. Agency for International Development project in Santa Ana, El Salvador.

Velazquez said Creative asked his organization — a coalition of local churches that is known by the abbreviation COFOA — to carry out a community listening exercise to determine why people in El Salvador’s second-largest city were migrating. The process would involve one-on-one interviews with community leaders, group dialogues to identify participants for a “community committee for preventing migration,” and meetings with committee members to develop future activities to stem migration — all over a period of six weeks.

But to Velazquez, the project’s aims didn’t make sense. COFOA was being asked to address the structural issues prompting migration on an impossible timeline, using solutions the group didn’t believe would work.

“The only way to stop immigration is to avoid corruption, avoid violence, and give good jobs to the people and better salaries,” Velazquez said. Part of the reason he declined to participate, he added, was that Creative would not compensate his team at the desired rate for the work. “It’s really interesting how they try to use the NGOs here developing a program, a project that doesn’t go anywhere.”

The activity was part of a contract — worth up to $135 million — awarded to Creative in May by USAID for its Central America Regional Initiative to “increase community resilience in the face of significant poverty, violence, poor governance, corruption, and climate change, all of which contribute to irregular migration” from countries in the so-called Northern Triangle. According to USAID, CARI “supports local partners in El Salvador, Guatemala, and Honduras to increase community resilience.”

The CARI contract, which was quite large for the region, was given to Washington, D.C. area-based Creative under the Support Which Implements Fast Transition 5 — or SWIFT 5 — which is a mechanism of USAID’s Office of Transition Initiatives that is valued at up to $2.5 billion and allows companies to compete in advance for contracts.

They can apply to be part of a preselected pool of nine contractors — which includes Chemonics and DAI — that USAID has determined have the capacity to carry out types of OTI contracts that are designed to quickly distribute many small grants to local organizations. This can accelerate implementation in sensitive contexts because much of the lengthy and onerous contracting process has already been completed. But local organizations argue it is failing to give them a say in project design.

The usage of a SWIFT contract to deter migration from Central America left local organizations like COFOA puzzled. Several of which told Devex that they see a disconnect between USAID’s renewed localization push and its use of a contract for Central America that is too large for any local organization to manage.

To them, awarding a contract aimed at deterring migration to a for-profit company such as Creative and instructing it to move quickly suggests that the project was never intended to put local organizations in the driver’s seat to identify and treat root causes of migration. Many subcontracted projects last for less than six months.

“I told them [Creative] I was not interested” in working on CARI, Velazquez said.

The situation demonstrates the challenges posed by USAID’s efforts to increase localization in a region as complex as Central America, where the agency seeks to provide humanitarian and development assistance that will bring about the political goal of reducing migration — which has a diversity of underlying causes.

Local organizations say they are best placed to design and implement programs that meet the specific needs of their communities. But they often do not have the resources, capacity, or English-language ability to manage large contracts with the burden of reporting requirements mandated by USAID and designed to secure U.S. taxpayer dollars.

USAID Administrator Samantha Power has said she wants to change that dynamic. Last month, she announced that the agency intends to provide 25% of its funds to local organizations within the next four years — not the first time that USAID said it would aggressively seek to localize its work.

In the same speech, Power also revealed that USAID was launching the new “Centroamérica Local initiative,” which would funnel $300 million directly to local organizations in El Salvador, Guatemala, and Honduras “to create locally driven, sustainable progress over the next five years.”

Local organizations told Devex that they believe Power’s commitment is genuine, saying they have already sensed a sea change among USAID staffers around increasing the number of local partners. But many barriers remain to ensuring that Power’s words are matched by USAID’s actions.

When political expediency is at odds with localization

COFOA is a member of Faith in Action International, a coalition of faith-based groups that advocates for locally led solutions to development challenges. The coalition was reportedly frustrated when it learned about the CARI contract.

“If you’re serious about having impact in Central America and you believe that that comes through real partnerships with local organizations, following their lead, engaging them in design, [and] working through those organizations, then that needs to be the commitment of USAID, and this seems to contradict it,” said Gordon Whitman, a senior adviser at Faith in Action.

“It definitely doesn’t build trust and confidence that USAID is going to operate differently in the region when local organizations start hearing that they’re needed to help with deliverables for a for-profit company to meet its contract with USAID,” Whitman said.

Faith in Action’s Root Causes Initiative sent Power a letter in October outlining its concerns about CARI.

“The lack of transparency about the initiative and contract, bypassing existing civil society efforts in the design of the project, treating local organizations as vendors rather than partners, and early reports about how the project is being implemented risk undermining the credibility of the Administration’s Root Causes Strategy among the partners most necessary to its success,” the letter said, referring to a White House plan to reduce Central American migration.

Whitman said Faith in Action also spoke with OTI to voice its concerns about why such a development contract was awarded using the SWIFT mechanism, which requires in-country deployment within 72 hours of an award.

“OTI heard us out and essentially said: ‘We did this because we felt an urgency to take action in Central America. There’s a strong U.S. national interest,’” he said, alluding to the political pressure that President Joe Biden’s administration is under to address the arrival of migrants and refugees to the southern U.S. border. “The pressure to deliver results — it just runs up against the commitment to work with local organizations.”

Urgency was also OTI’s reason for using the SWIFT contracting process’s “Justification for an Exception to Fair Opportunity,” which allowed USAID to issue a no-bid contract and bypass the usual three-month timeline.

The justification document, seen by Devex, said USAID determined Creative was present in the three countries, had “qualified personnel with the technical expertise and regional experience which will facilitate quick start-up and credibility to the program, access to equipment and supplies, and networks with local counterparts that are essential for a SWIFT program to begin immediate implementation.”

Creative is one of two organizations among the pool of SWIFT 5 contractors to have a presence in all three Northern Triangle countries, allowing it to begin activities right away, according to the justification.

Creative referred detailed contracting questions to USAID. In a statement to Devex, a USAID spokesperson said exceptions to fair opportunity procedures are “very rare under the SWIFT contracts and are used only on occasions when there is an enormous foreign policy imperative to respond immediately.” The last time an exception was used for a SWIFT contract was in 2010 after a magnitude 7 earthquake in Haiti, USAID said.

Nick Marinacci, a director of political transitions at Creative, said his organization responded to a request for information from USAID about the project and then learned it had received the sole source contract.

“One of the advantages we had in the case of CARI is that we have strong and abiding presence, continuous presence, in those three countries, so we’re already legally registered with the host governments and the tax authorities,” Marinacci said. “We had that advantage. It was actually a pretty good startup from an operational perspective. And programmatically, it would have been impossible and certainly not optimal had we just parachuted in.”

Building local capacity to work with USAID

Participants across the development spectrum, from small and medium-sized local NGOs to large contractors to USAID itself, acknowledge how difficult it is for the agency to meaningfully shift to localization.

Working with a smaller number of contractors that can manage large sums of money while adhering to strict rules may seem like the easier choice. Many local organizations have no existing relationship with USAID and are unaware of how to even begin competing for grants. And those that have some kind of relationship with the agency can still find themselves stymied by the plethora of administrative hoops they must jump through.

“One of the hardest things is [knowing whether you’re eligible]. Once you work directly with USAID, then you know how to do it,” said Celina de Sola, president at Glasswing International, an NGO that began in El Salvador. “I’ve seen them do it with other organizations … Your counterpart [at USAID] will work with the organization to really build your capabilities. I know they did it with us. When we got our first grant, they helped us put in place all the processes and procedures.”

Glasswing now operates across the Northern Triangle and has the organizational infrastructure in place to compete regularly for USAID contracts.

A USAID spokesperson told Devex that the agency sees the SWIFT mechanism as a way to work with local organizations because, in the case of CARI, the contract awardee Creative will subcontract with them.

“This approach expands the pool of local organizations able to benefit from U.S. government funding. These programs typically involve hundreds of small grants to local organizations,” the spokesperson said. “The SWIFT programming model provides a platform for the design and implementation of small grants with local partners, which shape the overall direction and impact of the program. This programming is based on community needs and solutions, as identified and realized through the small grants implementation model.”

But that process isn’t always seamless.

Salvadoran Association for Rural Health, an NGO that goes by the abbreviation ASAPROSAR for its name in Spanish, was founded in 1986 and has deep ties in many communities working on a variety of projects. Executive Director Lucy Luna said that over the past five years, ASAPROSAR has worked as a subcontractor for organizations based in the U.S., but has never tried to compete for a contract on its own.

To learn more about the process, Luna said she attended recent meetings with USAID that aimed to bring in more local organizations as partners.

“They’re asking for organizations that have the capacity to administrate $25 million. They’re looking for the organizations that have the structure that allow them to administrate that quantity of money,” she said. “All those things for local organizations — [but] we’re 93 people and we are one of the biggest local organizations that work in the communities.”

Although Luna speaks fluent English, organizations in Central America face a language barrier to engaging with USAID because of the technical nature of contracts. Just 10% of her staffers speak English.

The USAID mission in San Salvador held virtual meetings last week in both English and Spanish, aiming to provide smaller organizations such as COFOA and ASAPROSAR with the tools to be able to work with the agency. Luna and Velazquez both attended.

Velazquez said participants were told they could not ask any questions or make comments during the meeting, and he came away feeling the grant awarding process had not changed significantly. COFOA plans to request another meeting with USAID next year, he said.

Creative has also approached ASAPROSAR about the CARI project, Luna said, and wants to visit its programs. She said she is eager to find ways to increase engagement with USAID contracts, but is also wary due to past experiences.

Previously, ASAPROSAR worked with Creative for a short time on a violence prevention project. But Luna said she was frustrated by the structure of the collaboration, and her organization ultimately determined it could not carry out the partnership.

“We wanted to participate in the creation of the proposal, but there was no space at all. Everything is packed, there is no time for feedback, there is no time for changing what is already written,” she said. According to Luna, the project involved community interviews that asked participants whether they had gang connections, even though discussing affiliation openly can put people at risk.

“When we saw those questions, we said we cannot have any kind of relationship with them in the community because that is putting the young people in danger,” she said. “We were saying, ‘We will not participate in this because we think this is wrong.’ … But they already [committed to achieving] the goal.”

Marinacci said OTI contracts give organizations like Creative more flexibility to adapt a program’s approach based on contemporaneous analysis of what is and isn’t working. But he acknowledged the frustration that local organizations may feel about their role as subcontractors on projects in their communities that they don’t help design.

“That’s a risk for our industry, for development assistance. But I think it’s one that’s well known and can often be mitigated … by casting a wide net and having a very participatory process with potential local partners,” Marinacci said, adding that he believed local organizations would have the ability to influence CARI’s agenda.

De Sola said that as Glasswing has grown to a size allowing it to work with USAID regularly, she feels an obligation to guide other local organizations down that path.

“For years as a local organization, we’ve been talking about this. I do feel that shift now more than ever. Now it’s just: How do we, the local organizations that have been able to work with USAID … help get other NGOs exposed to USAID?” de Sola said.

“Those of us who do have access to grants and have done this need to help the broader community of practice learn to access different kinds of funding,” she continued. “Not just USAID, but in general. That’s just part of building civil society.”

Devex, with support from our partner GHR Foundation, is exploring the intersection between faith and development. Visit the Focus on: Faith and Development page for more. Disclaimer: The views in this article do not necessarily represent the views of GHR Foundation.