Exclusive: Up to 3,000 DC aid workers laid off by next week, CEO says

The CEO of one of the world’s leading development contractors told staff members Friday that he expects sector-wide job losses of between 2,000 and 3,000 development professionals in Washington, D.C., by next week, as the fallout from the U.S. foreign aid freeze continues. Speaking to Asia-Pacific staff on Friday, Torge Gerlach, CEO of DT Global, said: “Many of our competitors, most of our competitors — and I know this because I've met with their CEOs individually and collectively to share thoughts and approaches — are literally furloughing (leave without pay), or retrenching, 80%, 85% of their staff. We anticipate the impact in the Washington, D.C., area to be 2,000 to 3,000 development professionals … losing their jobs this weekend and next week. It is significant.” Gerlach said he and the CEOs of other development contractors may head to Capitol Hill as early as Friday, seeking meetings with members of the U.S. Congress and the State and Foreign Operations Appropriations subcommittee. “They don't understand the impact of what they just caused,” he told staff members, according to a record of the call, obtained by Devex. He referenced the fact that typically, it can take up to three months for USAID contractors to be paid for work already done, and it was not yet clear if and when that money would be received. “We're typically financing as much as two, if not three months of operations out of the working capital facilities and the financing facilities we have with our banks, on behalf of our clients,” he said. “That's how long it takes them, by the time we advance the money to the field, by the time we incur the expense, by the time we invoice that expense, by the time they pay us … it's about three months of operations we're financing, right? So they're not paying us? We run out of money.” In emailed comments sent after publication, Gerlach wrote: “While I am disappointed that details of an internal meeting have been provided to DevEx, I stand by my comments to our staff, which I believe, based on my personal assessment, accurately reflect the impact the current pause has on the implementing partner community in the Washington DC area.” DT Global works on hundreds of aid projects in more than 90 countries, providing technical assistance, project management, and advisory services on infrastructure, governance, private sector development, and more. DT was USAID’s 11th biggest contractor in 2023, according to a Devex analysis, winning contracts totaling $79.8 million — up from $39.1 million in 2022. On the staff call, Gerlach said around 20% of the firm’s total business is at risk following U.S. President Donald Trump’s move to freeze U.S. foreign assistance for 90 days. Gerlach was upbeat about the company’s chances of surviving the current crisis and even possibly picking up work from smaller firms that go under. However, he said there had been job losses at DT too, notably operational support staffers in the D.C. office, and he said “We’re going to be part-timing the majority of the workforce for the foreseeable future.” “Today we have taken measures in the U.S. business where we have terminated a certain percentage of our home office staff,” he said, adding that it was a “meaningful percentage” but that he couldn’t share exact numbers as the all-hands meeting was yet to take place in the United States. Gerlach said the company is asking the U.S. government for waivers based on stated exemptions such as humanitarian assistance, but said there was confusion about what that meant. “We're figuring out, what do they mean, ‘humanitarian assistance’?” he said. “Do we qualify or not? Nobody really wants to take a risk at the agency level because they will lose their jobs if they don't show loyalty to President Trump. Those are words being used here. Those are not my words.” “We are in an unknown right now,” Gerlach told the Asia-Pacific staff members. “This is extreme. We've never seen anything like this and it's well beyond our wildest expectations of what the worst case could have been coming out [of] the administration at this point.” The foreign aid freeze was announced in an executive order on Trump’s first day in office on Jan. 20 and was followed by a stop-work order from the U.S. State Department on Jan. 24. That has left the global development sector in turmoil with experts warning of devastating effects on everything from global health to preventing famine. Trump’s executive order states that some projects can resume in less than 90 days, provided they are found to be efficient and align with Trump’s “America First” foreign policy. “We anticipate based on the review criteria that the vast majority of our portfolio will be brought back online,” Gerlach told staff members. “So it's a three-month stress period. There will be a reduction in portfolio if there's some activities we have that do not fit those criteria I believe. But again, we will be back online.” Gerlach elaborated on the freeze in his emailed comments to Devex after publication. “Significant pressure facing our industry will be removed as soon as the disbursement freeze is lifted, and contractors are paid timely for outstanding invoices for work completed prior to the issuance of the Executive Order. The US Government’s Prompt Payment Act should be followed to the letter to pay for work carried out prior to January 24, so that contractors can in turn pay their staff, partners, and vendors, all of whom have supported the Government’s mission to date,” he wrote. He added: “I am confident that our industry is keen and ready to contribute to the portfolio review, as appropriate, to make sure that programs are aligned with the Trump Administration’s America First policy and foreign assistance priorities. Hopefully, additional waivers are forthcoming on a national security interest basis and that other programs are re-instated on a rolling basis as soon as possible, following the reviews to mitigate unintended consequences of this pause. Additionally, clear guidance from USAID is required for contractors regarding the terms and conditions of the stop work orders without further delay so as to avoid additional risk and uncertainty.” Update, Jan. 31, 2025: This article has been updated with additional comments from Torge Gerlach.