Does IRD have a case against USAID?

By Molly Anders 19 June 2015

International Relief and Development fights back against USAID's suspension. Photo by: FadderUri / CC BY-NC-ND

International Relief and Development, the suspended nonprofit and formerly the U.S. Agency for International Development’s largest contractor operating in Iraq and Afghanistan, is awaiting response from the agency to a lawsuit filed to contest IRD’s suspension.

The organization claims USAID suspended IRD’s operations unlawfully, and that the agency did not consider financial evidence and reforms offered by the nonprofit months before the suspension was announced in February. The court filing submitted by IRD alleges that USAID is “making an example” of IRD in order to appease U.S. lawmakers who want more aid oversight.

Allegations of financial misconduct have hounded IRD, formerly run by founder Arthur Keys Jr., for months. The nonprofit’s leaders allegedly handed out extravagant gifts, bonuses and vacations to executives and issued confidentiality agreements that appeared to prevent former staff from speaking out.

Now IRD is taking aim at USAID’s conduct of the suspensions and debarment process, a process with which USAID has less experience than many other agencies.

“[The trend toward] improving and making the suspension and debarment process more accountable hasn’t yet reached USAID,” David Robbins, government contracts department chair at the law firm Shulman Rogers, told Devex.

The process — from investigation to debarment — needs to improve, Robbins said, and this case, even if IRD loses, could be a catalyst for exposing many of USAID’s operational shortcomings.

The debarment process, Robbins said, “operates at agencies that use it correctly as a way of mitigating risk and fixing things, not as a penalty.”

“I’m unwilling to accept a contractor’s or an agency’s statement of facts as gospel, and If you come from the premise that the truth is somewhere in the middle, even then, there are some process concerns and potential deficiencies that need to be fixed.”

Some speculate the damage for IRD has already been done, regardless of whether the organization has a case to make against its former client.

“I can’t believe IRD is still open, frankly,” Neil Gaught, a consultant who specializes in brand management for both global public and private sector organizations, told Devex. “I can’t imagine USAID ever backing them again. The risks are so high.”

“I think it has two choices, it either sells, or it changes its name and reinvents itself,” Gaught said.

IRD’s case brings to mind the last high-profile USAID suspension, that of the Academy for Educational Development, which was suspended in 2011 for “corporate misconduct” and “lack of internal financial controls.” That organization dissolved, while its assets were incorporporated into the development firm FHI360.

George Ingram, senior fellow at Brookings Institution and former interim president and CEO at AED, told Devex that IRD makes a pretty strong case. But a strong case, he said, doesn’t mean they’ll see a lift of the suspension.

“They’re asking the court to intervene ... on an issue of judgment rather than fact, and the courts don’t like to second guess the government on issues of judgment,” Ingram told Devex. “I can readily believe that there’s a credible legal case for IRD, but I also think it would be difficult for them to win it.”

Chief Judge Royce C. Lamberth will likely preside over the trial, which will take place within the District Court System in Washington, D.C, according to Robbins.

USAID officials did not respond to requests for comment.

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About the author

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Molly Andersmollyanders_dev

Molly is a global development reporter for Devex. Based in London, she covers U.K. foreign aid and trends in international development. She draws on her experience covering aid legislation and the USAID implementer community in Washington, D.C., as well as her time as a Fulbright Fellow and development practitioner in the Middle East to develop stories with insider analysis.


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