IRD's return from the brink

The nonprofit International Relief and Development is hiring staff and preparing to resume projects after a seven-month ordeal in which it was investigated, suspended, nearly debarred, then unsuspended by the U.S. Agency for International Development when a district judge ruled that the suspension was illegal. One of the projects is a USAID-funded $9 million anti-opium project that will help Afghan farmers replace poppy production with commodity crops. On returning to normal operations, IRD President and CEO Roger Ervin told Devex, “We are very excited about the path forward. Our enhanced program delivery platform fully integrates technology and will set new standards for transparency and impact.” After months of covering the debacle, we take a look back at the nonprofit’s troubled recent history and the evolution from the government’s once-largest nonprofit contractor in Iraq and Afghanistan to one of the agency’s best-known pariahs, and the legal battle and reforms that IRD hopes will bring the organization back from the brink. May 2014 — IRD in the spotlight In early May 2014, The Washington Post took aim at two controversial IRD programs in Afghanistan. What caught the eye of the development community, though, was the Post’s coverage of IRD staff bonuses compared with other nonprofits working in conflict zones, as well as its confidentiality agreements. The context of these revelations is key; the U.S. was in the midst of a troop drawdown in Afghanistan and a barrage of media scrutiny over its reconstruction spending. At the time, IRD had received more than $2.4 billion in awards since 2007, more than any nonprofit since the USAID’s involvement in Iraq and Afghanistan reconstruction. An anonymous U.S. government source informed Devex that the Office of the Inspector General had been investigating IRD “for months,” pulling audits of the organization’s projects as far back as 2009. Media reports revealed that, according to USAID auditors, one IRD program in Iraq was “highly vulnerable to fraud and exploitation” and said the nonprofit organization neglected to provide sufficient oversight in war zones and inflated the impact of its programs. At that time, USAID was already questioning the relationship, but even then, IRD claimed the agency was “flat out wrong” in its suspicions. December 2014 — New president and CEO takes over IRD Formerly secretary at the Wisconsin Department of Revenue, Ervin took over IRD in the wake of founder and CEO Arthur Keys Jr’s retirement. More reports of financial misconduct at IRD emerged. January 2015 — IRD barred from receiving new contracts Still under fire from media coverage of IRD’s alleged extravagant use of taxpayer resources, USAID announced in mid-January that it would suspend IRD. Adding to simultaneous investigations by the Federal Bureau of Investigation, the Office of the Inspector General and the Special Inspector General for Afghanistan Reconstruction, the agency said in a statement that its investigation and suspension of IRD “demonstrates USAID's continued commitment to accountability.” At the time, IRD’s new chief Ervin told Devex that reforms across the organization were “already in progress.” February 2015 — Collateral damage IRD staff felt the blow of USAID’s suspension in February when IRD’s new management laid off 21 employees from its Arlington headquarters, only days and weeks after the nonprofit dismissed its entire board of directors and several top executives resigned. IRD’s president and CEO told Devex the measures would contribute to “a more efficient and high-impact model.” About 300 IRD staffers in total would lose their jobs as a result of the suspension, and Ervin would later tell Devex that staff were among the “most affected” by USAID’s “sloppy and misdirected” suspension process. March 2015 — Making plans Only weeks after staff cuts, IRD outlined its plan for addressing USAID’s concerns, including an independent financial audit and voluntary disclosure of financial records. One IRD representative expressed concerns about the timeliness of USAID’s suspension and debarment process, saying, “This is not something that can remain unresolved for any period of time without having a significant impact well beyond IRD headquarters or inside the beltway,” referring to the nonprofit’s beneficiaries, many of whom were located in or near conflict zones. June 2015 — IRD sues USAID, suspension lifted In May, IRD’s president and CEO informed Devex that the nonprofit’s legal team was suing the U.S. government for violating the Administrative Procedure Act under what it viewed as “arbitrary, capricious abuse of discretion.” Ervin told Devex USAID couldn’t sufficiently prove IRD’s alleged financial mismanagement. A legal briefing filed by the nonprofit also claimed the suspension was “politically motivated,” citing USAID’s attempt to appease Congress’ calls for increased oversight by making an example of IRD. Only a few days before USAID and IRD representatives were due to appear in court, the U.S. aid agency told Devex it would lift the suspension of the nonprofit. A USAID spokesman said agency officials took the position that while the suspension was not in violation of the National Defense Authorization Act, the management structure in place at the time had not been ideal, and therefore USAID would fix the issue “to enhance” the office and reconduct the investigation. The decision was unprecedented, legal experts told Devex, and despite USAID’s insistence, these same experts expressed doubt that the agency would reopen the investigation. Legal commentators pointed out USAID’s lack of experience in debarment and suspension, compared with other U.S. agencies, like the Department of Defense. August 2015 — Vindicated? Even with the suspension lifted, IRD’s legal proceedings against USAID continued. In early August, the judge ruled overwhelmingly in IRD’s favor. Marking another first in USAID’s history, according to legal experts following the proceedings, the judge declared IRD’s suspension “void ab initio” (from its commencement), and ordered the agency to reinstate the nonprofit, erase all mention of the suspension from the record and issue corrections of any correspondence relating to the suspension. USAID has not yet indicated whether it will move forward with a reinvestigation of IRD, and did not respond to requests for comment in time for publication. What has the global development community learned from IRD’s near-demise? Let us know by leaving a comment below. Stay tuned to Devex for more news and analysis of U.S. aid, and subscribe to The Development Newswire to receive the latest from the world’s leading donors and decision-makers — emailed to you FREE every business day.