Local men work at a road construction project funded by the U.S. Agency for International Development in Farah Provice, Afghanistan. Photo by: Massoud Hossaini / USAID

Shocked. That sums up the development community’s reaction after the U.S. Agency for International Development announced late last year that it had temporarily suspended AED from winning new government business.

That decision followed an audit indicating misconduct in the company’s USAID-funded operations in Afghanistan and Pakistan.

“We will hold all our implementing partners to strict account, regardless of their size. For USAID, too big to fail does not exist,” USAID Administrator Rajiv Shah said during a hearing of the Commission on Wartime Contracting in Iraq and Afghanistan on April 1. He wasn’t joking.

AEDranked No. 10 among USAID’s top implementing partners in fiscal 2010. Today, AED exists no more following its acquisition by FHI, which has since rebranded itself as FHI 360.

The action against AED capped more than a year of reform in USAID debarment and suspension practices. In an October 2009 review of the process, the agency’s inspector general noted that USAID made “too few” actions – seven debarment and two suspension decisions – during fiscal 2003-’07, and “several of them were poorly executed.” Since then, USAID has barred 57 individuals and firms from doing business with the bilateral donor, as per the federal government’s Excluded Parties List Systems.

The data somewhat mirror the reality of U.S. aid activities. Of the 57 excluded individuals and firms, 26 are based in Afghanistan. USAID programs in that Asian country have become a favorite subject of audits, which in general paint a bleak picture on oversight and spending of American taxpayers’ money.

The roster includes debarred or suspended companies and individuals from the United States (20), the Philippines (6), Australia, (1), Canada (1), Israel (1) and Liberia (1). There is one individual whose origin is “unknown.”

Sanctions against debarred USAID implementing partners may be temporary – lasting for at least a year or up to three years – or indefinite. AED’s suspension was supposed to end Dec. 8. Meanwhile, a company in the Philippines and 10 individuals from the United States and overseas were slapped with indefinite debarments.

Getting debarred by USAID, of course, means bad news for any contractor. It not only denotes ineligibility to compete for USAID funding opportunities, but also prohibition to bid for procurements financed by other U.S. agencies such as the Millennium Challenge Corp.

MCC also blocks participation of contractors blacklisted by the World Bank. And it is not far-fetched to imagine the World Bank (and other multilaterals) blocking debarred USAID contractors from seeking bank-funded opportunities, especially since it has been intensifying its anti-corruption drive.

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About the author

  • Eliza Villarino

    Eliza Villarino currently manages one of today’s leading publications on humanitarian aid, global health and international development, the weekly GDB. At Devex, she has helped grow a global newsroom, with talented journalists from major development hubs such as Washington, D.C, London and Brussels. She regularly writes about innovations in global development.