Scoop: USAID issues guidance on operating expenses exempt from freeze

Limited and vague guidance around how the Trump administration’s foreign aid freeze and stop-work order will play out has spurred widespread anxiety and confusion through the aid sector. The abrupt order to halt the agency’s expansive global programming network one week ago has left staffers and partner organizations uncertain about what sort of expenses are considered legitimate, and therefore exempt, from the freeze. U.S. Agency for International Development Acting Administrator Jason Gray told the agency’s staffers Thursday that the “Operating Expenses” and “Capital Investment Fund” accounts aren’t part of the aid freeze, according to an email obtained by Devex. He wrote the agency’s operating units are authorized to disburse these funds, as needed, “consistent with the applicable laws, funds availability, operational requirements, Executive Orders, and other Agency guidance.” He added that operating units may fund “on a temporary basis, salaries, benefits and related administrative expenses, including travel for U.S. direct hire employees (including Foreign Service Limited (FSLs), Crisis Operations Staff (COS), etc.), Personal Services Contractors (PSC), and locally-employed staff.” He further clarified that administrative expenses could include leases, residential and office maintenance, approved travel, utilities, internet, cell phones, vehicle maintenance, and what is known as “international cooperative administrative support services” for USAID staffers, among other expenses. However, he cautioned “prudence and fiscal responsibility” to ensure expenses included are “necessary for current operations.” One USAID staff member told Devex that this new guidance has now raised questions about whether these expenses are also included for the agency's partner organizations. “Every day there are just more questions than there are answers,” the staffer said. This guidance is the latest in a series of updates Gray has issued in the past week following a 90-day pause in disbursements of foreign aid that U.S. President Donald Trump issued on his first day in office on Jan. 20. This was followed by the U.S. State Department issuing the stop-work order on Jan. 24 for existing grants and contracts and an immediate pause on new foreign aid spending. Last year, USAID committed $30.3 billion globally. The State Department will develop review standards within 30 days to ensure foreign assistance is aligned with Trump’s “America First” foreign policy agenda. This will then lead to decisions on whether to continue, modify, or terminate USAID programs. Implementing partners globally have received orders to immediately “stop, cease, and/or suspend any work” performed under the USAID funding agreement. This includes, but is not limited to, “a contract, task order, grant, cooperative agreement, or other acquisition or assistance instrument.” They were told that “legitimate expenses” incurred before Jan. 24 under existing awards and those associated with stop-work orders, suspensions, and pauses could be waived. Implementing partners were also told that the director of foreign assistance at the State Department can approve other exceptions. Update, Jan. 31, 2025: This piece has been updated to reflect comments from a USAID staff member.