What's the right way to procure democracy?

A man places his vote into a ballot box. Expressions of a preference for grants over contracts in funding democracy programs in a Senate appropriations bill drew opposition from government contractors. Photo by: Ben Edwards / USAID

Language inserted in a Senate appropriations bill has set the stage for a heightened debate about how the U.S. government should fund its democracy and governance programs overseas.

The Senate appropriations bill for State and Foreign Operations directs the Obama administration to use grants and cooperative agreements, instead of contracts, as the “primary delivery mechanism” for democracy programs. While this debate is not new, the Senate’s entry into the conversation has riled some government contractors, and one lobbying group has voiced its “strong opposition” to the language in a letter to the subcommittee’s leadership.

Stan Soloway, president and CEO of the Professional Services Council, which advocates on behalf of government contractors, wrote in a letter to Sen. Lindsey Graham and Sen. Patrick Leahy: “This section would make grants and cooperative agreements virtually the sole funding mechanisms for foreign assistance programs in the democracy assistance sector, and thus eliminate a significant portion of [the U.S. Agency for International Development’s] partner community that has been implementing such programs through contracts for decades.”

Kevin Bishop, Graham’s communications director, described the impetus for including the language in an email to Devex.

“The Subcommittee is seeking to strengthen democracy programs in FY 16, as the Administration has not made such programs a priority,” Bishop wrote. “There are numerous proposals to accomplish this in section 7032, from specific funding levels for each region to the use of grants and cooperative agreements as primary delivery systems.”

The Senate’s 2015 appropriations bill did not include such a provision; however, last year’s bill does contain specific directions for how democracy programs should be funded in certain countries. Others have expressed a preference for grants over contracts in funding democracy programs in the past. A 2007 paper by USAID’s Advisory Council on Voluntary Foreign Assistance argued for similar prioritization of funding mechanisms.

In that report the preference for grants over contracts in democracy building comes down to an assessment of the appropriate relationship between states and nonstate actors. It makes more sense, according to ACVFA’s report, for civil society organizations to be supported by, not run by, the U.S. government.

Many U.S. democracy programs operate in places where the state has control over many aspects of society. Funding CSOs through contracts risks replacing one form of state control with another, the argument goes.

“The use of assistance mechanisms allows experienced, independent [nongovernmental organizations] to provide assistance to local organizations, such as civic groups and parent-teacher associations, without direct association with the U.S. government, thereby strengthening the fundamental idea that government should not control all aspects of society,” the ACFVA paper reads.

PSC’s objection has less to do with philosophical debates about the relationship between state and nonstate actors, and more to do with the stipulations of procurement law. Many services the U.S. government seeks to purchase from implementing partners to carry out its democracy programs, the group argued in its letter, fit the description of what is required by law to be procured through contracts.

Soloway pointed to an April 2015 supreme court ruling against the U.S. Department for Housing and Urban Development, which reinforced that “an executive agency shall use a procurement contract as the legal instrument … when … the principal purpose of the instrument is to acquire (by purchase, lease, or barter) property or services for the direct benefit or use of the United States government.”

Soloway argued that many of the services USAID procures through democracy programs fit that description. And since, according to the court’s ruling, the choice of instrument must follow from the type of service being procured, the Senate’s stipulation of a preference for one type of procurement vehicle over another might not actually be legal, according to a USAID official who spoke to Devex on the condition of anonymity.

In light of the recent choice of instrument ruling against HUD, the official said, USAID is currently reviewing its policy for choosing between grants and contracts. The official emphasized that USAID’s interest is in equipping field staff with the full array of funding mechanisms to make the best choice, according to the problem they are trying to solve, instead of centrally dictating those decisions. While in many cases, the U.S. government might want to maintain some distance from aid recipients by funding them with grants, in other cases — police training in Afghanistan, for example — it remains vital to get exactly what you are paying for.

For their part, some NGO representatives remain open to a middle ground where grants and contracts coexist in democracy and governance funding plans. An NGO representative, who wished to remain anonymous to speak about sensitive funding issues, reiterated that the language doesn’t prohibit democracy assistance going through contractors and that not even the NGO community would argue that it should.

The tension between these options and preferences begs another question: What does it mean for a procurement vehicle to be “primary?” USAID already channels more of its funding through grants than through contracts, including in the agency’s democracy and governance programs. Does that mean the agency is already meeting the Senate subcommittee’s standard? USAID is starting to engage with the language and its authors, the official said, to understand exactly what its implications would be.

The subcommittee’s bill was approved by the appropriations committee in July and now awaits consideration by the full Senate chamber. The 2016 fiscal year begins Oct. 1, 2015.

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About the author

  • Michael Igoe

    Michael Igoe is a Senior Reporter with Devex, based in Washington, D.C. He covers U.S. foreign aid, global health, climate change, and development finance. Prior to joining Devex, Michael researched water management and climate change adaptation in post-Soviet Central Asia, where he also wrote for EurasiaNet. Michael earned his bachelor's degree from Bowdoin College, where he majored in Russian, and his master’s degree from the University of Montana, where he studied international conservation and development.