Tempest in a teapot? USAID's new contracting scandal

Donald Steinberg, deputy administrator at the U.S. Agency for International Development. Photo by: Friends of Europe / CC BY

Two years after allegations of mismanaged funds brought down one of the largest U.S. aid contractors, Washington is again engulfed in a procurement scandal  and this time, it’s personal.

“The Justice Department is conducting an investigation into possible contract rigging by the general counsel at the government agency that distributes foreign aid,” the Associated Press wrote on Thursday, Jan. 24.

The investigation initially focused on whether Lisa Gomer, general counsel of the U.S. Agency for International Development, “wired” a contract in May so the winner would be David Ostermeyer, who retired as the agency’s chief financial officer on Jan. 3. The contract award was eventually canceled, Don Steinberg was quoted as saying in an inspector general document from June, AP reports.

Steinberg is under scrutiny himself now for allegedly interfering with the auditors’ investigation  an allegation that a USAID spokesperson denies. According to documents seen by the AP, the USAID deputy administrator told inspector general staff that “they had no right to make a criminal referral to the Justice Department without going first to top USAID officials. The IG’s office told Steinberg that the office was independent and did not need such approval.”

Gomer’s case caught the eye of a pair of House Republicans last year who wrote in a November letter to USAID Administrator Rajiv Shah that if the allegations were true, the general counsel would have violated several federal laws and government ethics policies. In a Jan. 24 statement, Gomer’s lawyer denied his client violated “any law” and that the “Justice Department decided not to initiate a criminal investigation.”

Gomer was reassigned to a new post on Aug. 20 and resigned earlier this month, effective Feb. 9, a USAID spokesperson told the Washington Post. She assumed the post of general counsel in March 2010 and in that role, was at the center of perhaps the most hotly debated USAID procurement scandal in years, which involved one of the agency’s leading contractors at the time, AED. In late 2010, USAID temporarily froze new contracts to AED alleging the mismanagement of funds in Afghanistan and Pakistan. After several months, AED decided to fold  it sold its assets and transferred its programs to FHI, the global health group, which has since rebranded as FHI 360.

The new allegations  whether justified or not will almost certainly lead to more scrutiny of USAID procurement, especially from the Republican-controlled House of Representatives, as well as calls for more transparency.

Read more on U.S. aid reform online, and subscribe to The Development Newswire to receive top international development headlines from the world’s leading donors, news sources and opinion leaders — emailed to you FREE every business day.

About the author

  • Rolf rosenkranz 400x400

    Rolf Rosenkranz

    Rolf Rosenkranz oversees a talented team of in-house journalists, correspondents and guest contributors located around the globe. Since joining Devex in early 2008, Rolf has been instrumental in growing its fledgling news operation into the leading online source for global development news and analysis. Previously, Rolf was managing editor at Inside Health Policy, a subscription-based news service in Washington. He has reported from Africa for the Johannesburg-based Star and its publisher, Independent News & Media, as well as the Westdeutsche Allgemeine Zeitung, a German daily.