What to expect from USAID’s new A&A strategy

The U.S. Agency for International Development’s acquisition and assistance, or A&A, strategy has come to guide how the organization provides almost 80% of its funding. The strategy will help determine how USAID delivers its vision of a more locally driven agenda, and whether the agency can expand the pool of organizations that receive foreign aid funding. Some development experts Devex spoke to expressed concerns regarding the strategy’s delay. There was also criticism that there was not enough public consultation during its development. As the agency gets ready to launch the new strategy early this year, a lot is at stake. “If we can get this right, this would increase the incentives for other U.S. partners, especially in the G-7, to rethink how they do their own foreign aid programming.” --— Walter Kerr, executive director, Unlock Aid “The agency moves tens of billions of dollars every year. So this is one of the most important strategies for USAID to publish,” said Walter Kerr, executive director of advocacy group Unlock Aid. USAID did not immediately respond to Devex’s request for comment. We will update the story with the agency’s reaction when it arrives. The localization agenda USAID Administrator Samantha Power has made having local partners be the ones that lead development a key tenet of her agenda. The agency has promised that by 2025, at least 25% of funds will go to locally led organizations. Tessie San Martin, CEO of FHI 360, a top recipient of USAID funding, told Devex that a strong A&A strategy was critical to realizing that ambition. “I don't think the administrator’s vision for locally led development, for localization, gets executed without really addressing the acquisition and assistance strategy,” she said. The launch of an A&A strategy in 2019 kick-started important shifts in the way that USAID operated, San Martin said. There was more co-creation happening now, for example, and less of a top-down approach to project design. She said she wanted to see the strategy explain how USAID would strengthen local capacity, and use more of local implementers’ expertise for service design, delivery, and evaluation. “If you're not placing value on the expertise and the new perspectives that are possible to bring in with a new strategy, then all you want is the same flavor of implementing partners that are going to do what you want them to do,” said San Martin, who is also co-chair of the Modernizing Foreign Assistance Network, or MFAN, a coalition of global development experts. Some observers point out that despite commitments to fund local organizations directly, USAID was not designed at the moment to meet these aspirations. “The hope is that the revised A&A strategy will recognize that USAID's attitude to risk and partnership needs to change if it wants to deliver on its commitment to localization,” said Gunjan Veda, a director at The Movement for Community-led Development. Red tape and complexity Kerr lamented a lack of public consultation in the development of the strategy and said early drafts he had seen lacked clear targets for USAID to change its approach. “If you don't set targets, you're just asking for a doubling down of the status quo,” he said. “The status quo is using procurement vehicles that are excessively complicated that only a handful of organizations and companies in the world can apply for and manage because they've built their businesses around winning foreign aid contracts.” Justin Fugle, head of U.S. government policy at Plan International and MFAN’s working group co-chair, said he hoped the strategy — initially scheduled to be released last summer — had been strengthened during the delay. Fugle wondered why USAID seemed to have more burdensome regulations than other U.S. foreign aid agencies, such as the Inter-American Foundation and the U.S. African Development Foundation. “They have been giving grants to local organizations for decades. They don't have all kinds of audit problems. They don't have all kinds of corruption problems,” Fugle said. “This is the same U.S. government money, the same taxpayer dollars, and they flow much more freely and easily to the local organizations. And they've been doing it for decades. So why is USAID so much more difficult to work with?” All these agencies have to adhere to government regulations but USAID adds additional strictures that make it extra challenging for local organizations, he said. “You need to take that down … so local organizations can do their work, to move their countries forward, rather than being so focused on this fear of not being able to comply with some obscure regulation,” Fugle said. Kerr placed the blame of the cumbersome regulations on the U.S. Congress. “Congress puts on USAID very restrictive directives that makes it difficult to move money fluidly in a way that other agencies are less encumbered,” he said. Risk aversion One positive so far, said Fugle, was that USAID has said it is willing to take more risks with the organizations it will extend funds to. But San Martin was skeptical about a new risk appetite at USAID. She said the agency had suggested it was willing to take risks on programming, but less so when it comes to funding. “You can’t take program risk and think it's not going to affect what you're doing with the money. So, I am a little skeptical that they've taken a more aggressive risk posture,” she said. San Martin said the development sector as a whole has a problem talking about risk and failure. “The fact of the matter is, we need to be willing to take more risks if we want to do business differently,” she said. “And we've said that we want to do business differently.” Staffing levels Fugle said USAID needed to show in the strategy how it would operationalize the goal of 25% local funding. “Is there a clear path to show how they're going to get more contracting officers, how they're going to reduce burdens, and how they're going to diversify their partners, including a lot more local partners?” he said. He focused on workforce changes. “There are not enough contracting officers in USAID,” he said. “When you are overworked, as the contracting officers at USAID are, it's much harder for you to innovate.” He said pressured officers tend to go back to what’s familiar and fund known players in development. Fugle suggested adding local staff to the roster of procurement officials, building on previous pilots. He said local staff knew their environment well and had shown they could run USAID’s operations during the COVID-19 pandemic, when American staffers were evacuated. “They ran the missions for a year, 18 months, things seem to work just fine,” he said. “There's this big gap in the number of contracting officers and you have these folks already there who know USAID so well; what is stopping USAID from expanding those pilots more rapidly?” Veda said that USAID needs to improve on access by tailoring its policies to local languages, and simplify its financial and compliance systems to allow for smaller, local organizations to come into USAID’s fold of implementers. A definition of local USAID has for a while been wrestling with what constitutes a local organization. San Martin said she hoped the agency would be clear about their definition by the time the strategy gets released. “This is not an opportunity for global north INGOs to establish local branches and then be seen as part of that definition,” she said. “I do not think that's in the spirit of what the administrator has been talking about.” Veda suggested that the agency needs to rethink the way it deals with local partners. “If USAID is serious about its localization agenda, it needs to stop viewing organizations as contractors whose services are purchased by USAID and view them as equal partners who bring in an invaluable resource — local knowledge and implementation capacity,” she said. Will the strategy deliver? Fugle said time was running out for USAID to deliver on its 25% local funding pledge, and it was imperative that the new A&A strategy clearly lay out a path to realize that promise. This will need practical things to be done to ensure more local partners are brought into the USAID funding fold, such as translating contracting documents into local languages, scaling up co-creation of projects, and having less burdensome processes. Kerr said that if USAID is able to institute true reforms, that could have a reverberating effect for the entire aid industry. “If we can get this right, this would increase the incentives for other U.S. partners, especially in the G-7, to rethink how they do their own foreign aid programming,” he said. Kerr was concerned that without a mindset change at the agency, the current approach of doing business could continue despite a new strategy. “If we actually want to move to a world that is free from foreign aid, we need to get more of this money to organizations that have sustainable business models that are embedded within and accountable to the communities they serve,” he said. “This acquisition and assistance strategy is the opportunity to do that.” Update, Jan. 30, 2023: This story has been updated to say that Ms. San Martin and Mr. Fugle are part of the Modernizing Foreign Assistance Network.