Inside the USAID closeout mess

Toxic mistrust, impossible deadlines, unclear direction, and demoralization. That’s the vibe among the skeleton crew inside USAID’s so-called legacy unit, which is tasked with settling termination agreements between the defunct foreign assistance agency and its now-former NGO and contractor partners to whom it owes hundreds of millions of dollars. Multiple insiders, including four former USAID officials with direct knowledge of the situation, painted a similar picture of a closeout process that has gone from daunting to dysfunctional in the last six months. What was once a 10,000-person strong bilateral aid operation is now a few dozen beleaguered career officials working under the suspicious eye of political appointees from the White House Office of Management and Budget, or OMB, without any agreement over how they are supposed to shut down the agency without breaking the law, they told Devex. The OMB officials in charge of the process had insisted it would be done by March 7, 2026, at which point USAID’s remaining staff would be terminated. That timeline has slipped. Last week, they extended the contracts for remaining career staff to Sept. 30, according to a copy of one extension letter seen by Devex. USAID has also awarded a contract to an outside firm to hire additional “institutional support contractors” to assist with the closeout process. Neither USAID nor the State Department responded to multiple inquiries or a detailed list of questions from Devex. When the Trump administration moved to dismantle USAID last year, it terminated over 5,000 awards. A group of roughly a dozen U.S.-based contractors said they are collectively still owed $600 million for costs they incurred while shutting down their operations. The overall amount owed to the agency’s hundreds of former partners is much larger than that, one former official said. Three of the former officials told Devex they left the USAID legacy team after concluding that the Trump administration would never pay the agency’s former partners — though his appointees have not said this outright. “Their intention is not to pay,” said a former USAID official who was involved in the closeout process. “They're pushing back against everything, giving zero permission to anyone to do anything, and taking it all collectively, you just realize that it's ill-intentioned.” The former officials said that the situation deteriorated rapidly after Secretary of State Marco Rubio handed off responsibility of the USAID closeout process in August to OMB and its director Russell Vought, a fierce foreign aid critic described by Trump’s own chief of staff as a “right-wing absolute zealot.” Since then, leadership inside the USAID legacy structure has changed hands multiple times, and with each handoff, it has grown more antagonistic, the former officials said. Eric Ueland, a deputy director under Vought at OMB, is currently in charge at USAID. The former officials, who spoke anonymously because they feared professional retribution, agreed to stay on to help with the closeout process because they felt a responsibility to the agency’s former partners to ensure it was done responsibly, they told Devex. “I sincerely wanted to get the partners paid, particularly local partners,” said the same former official, adding that they believed Rubio would leave them alone to do that work. “Then Russ Vought came in, and the second he came in, I regretted staying, because everything flipped,” they said. “It just became torturous to work for them. It was like reliving February 2025 all over again.” ‘I sincerely wish I knew why they hated us so much’ The award termination settlement process is already complex and can take months, if not years, to complete. That was massively compounded by the unprecedented pace, scale, and disruption that characterized the Department of Government Efficiency’s approach to dismantling USAID. The agency’s remaining contracting officers are trying to sort through a world of expenses, and they have to do so without any assistance or input from the USAID country mission staff with knowledge of the projects, since they have all been terminated. “Every single thing has a story to it that will take your day,” a second former USAID official said. On top of that, the OMB officials in charge have added layers of approval requirements so that USAID contracting officers have to get multiple sign-offs before they can close out even relatively minor expenses, the first official said. They added that the USAID team has been given “a trickle of permissions” to close out some awards but not others, without any clear explanation for what was being prioritized. Despite the massive undertaking, Trump appointees from OMB insisted for months that the job should be finished by March 7, which they have pointed to as the date when USAID will be effectively shut down and its remaining employees terminated. The former officials I spoke to all said that date was never realistic, and the team in charge never settled on an operating plan to achieve it. When USAID staff tried to explain to those in charge why the closeout process would take longer, it fed the mistrust political appointees felt towards them, multiple former officials said. “They would want to hear what they wanted to hear,” said the second former official. Early this year, as it became more obvious that the process would drag on well past March 7, the officials in charge of the closeout adjusted their staffing plan. First, they put out a request for offers from contracting firms to supply the USAID legacy unit with additional institutional support contractors to assist with the closeout process. As Devex previously reported, this contract came with an unusual stipulation. None of the contractors hired through this mechanism would be permitted to have previous USAID experience. The reason for that restriction was spelled out in an internal memo Devex obtained, which said that it was to “maintain the perception of an independent and objective closeout process by those who are most sceptical of USAID staff.” “I sincerely wish I knew why they hated us so much,” the first former official said. A Virginia-based contracting firm called 2techjv LLC was awarded the institutional support contract last month. The second staffing adjustment was to extend the employment period of USAID career staff still serving at the agency. “As the mission of USAID closeout has continued to evolve, it has been determined that your role in effectively managing closure of the agency is instrumental to our success,” reads the extension letter obtained by Devex, which was sent by Ueland on Feb 24. “Therefore, this letter is to inform you that your separation from the Agency, based on the Agency’s reduction in force, will be on September 30, 2026,” it states. ‘Everybody's filing claims’ The former officials said that a career USAID official named Mike Capobianco is almost singlehandedly keeping the entire process afloat and preventing a mass exodus of remaining contracting officers. Known to his colleagues as “Capo,” he serves as the agency’s senior procurement executive and has been urging career officials to keep pushing forward with settlement packages for partners. “He is the key person in this entire operation,” said the first former official, predicting that if Capobianco were to leave, the remaining contracting officers would follow. “I don't know why he continues to do what he does, but he is honestly the last hope that the agency has,” they said. Capobianco could not be reached for comment. Despite the ongoing push by those on the inside to process payments, USAID’s U.S.-based implementing partners have not received any money in months, according to the CEO of a U.S.-based international development company. “Nobody's received any payments against their termination-related costs — either the invoices they submitted or the termination settlements themselves — since September,” they told Devex. “They think that we are part of this woke den of thieves who somehow have been getting fat on foreign assistance,” the CEO said. An unsigned memo sent by U.S. foreign aid contractors to members of the U.S. Congress — and shared with Devex — states that “hundreds of millions of dollars remain unpaid” to them. “This issue sets a terrible precedent for how the U.S. Government treats American companies providing services to it,” it reads. In the absence of any payments from the U.S. government, USAID’s former implementing partners are having to finance their operations with expensive loans. Some of them, the CEO said, are just trying to stay in business long enough to receive the termination settlements. The situation also looks destined to end up in court. “At some point, if none of us can get movement, everybody's filing claims as soon as we can,” the CEO said. Devex asked the first former official if there is a growing consensus internally about what an eventual resolution for the USAID closeout will look like. Their answer was simple: “No.” Update, March 4, 2026: This article was updated to reflect specifics on termination-related costs.