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Home Publications Blogs Haiti: Relief and Reconstruction Watch Leaked Contract Reveals Inadequate Oversight of Beltway Contractors; Haitian Firms Remain Sidelined

Leaked Contract Reveals Inadequate Oversight of Beltway Contractors; Haitian Firms Remain Sidelined

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Monday, 28 November 2011 15:31

This is the second part of a series of posts analyzing USAID's increasing reliance on contractors and how this has affected efforts to provide greater oversight, implement procurement reform and improve the efficacy of U.S. aid. Part one is available here.

Procurement Reform – Moving Forward?

One primary aspect of USAID Forward is procurement reform. The goal is to “Increase use of reliable partner country systems and institutions”, strengthen local capacity by allocating more grants to local NGOs and increase the “percentage of total dollars through direct contracts with local private businesses.” The program also aims to “[d]ecrease both the number and/or dollar value of large indefinite quantity contracts” which have been labeled as “high risk”.

These reforms deserve to be supported, and there is some evidence that efforts are being made to implement them. The GAO report (discussed in the part one), for instance, acknowledges that procurement documents indicated, “whether those activities will be targeted at local firms or organizations or use traditional partners.”

Nevertheless, in Haiti, only .02 percent of contracts from USAID have gone directly to Haitian companies, while the largest contracts have gone to for-profit development contractors in the form of “high-risk” indefinite quantity contracts. The overwhelming majority of contracts have gone to companies in the Washington DC area (Beltway), as can be seen in Table I. The percentage that has gone to local firms in Haiti is even lower than USAID’s worldwide average, which over the past three years has been 0.63 percent. Through USAID Forward, the agency aims to reach 2 percent by fiscal year 2013.

Table I.

Contractor Location

Amount Received

Percent of Total

Beltway

 $ 242,204,401

82.96

Haiti

 $           48,641

0.02

All Other

 $   49,691,198

17.02

Total

 $ 291,944,240

100

Source: FPDS, author’s calculations.

While USAID’s “implementing partners” are supposedly encouraged to increase their use of local subcontractors, USAID lacks the capability to actually track these metrics. On the USAID Forward website it states:

Unfortunately, the Agency does not have the systems in place to track sub-grants and sub-contracts so it is not possible to state precisely the number of partners or the percentage of USAID funds that flow to local nonprofit organizations (or, for that matter, to local private businesses) through these indirect arrangements.

Although the Agency admits to not having systems in place, the absence of this data is especially troublesome given that the contract with the largest benefactor of USAID funds, Chemonics, specifically requires information regarding subcontractors as well as weekly, monthly and annual expenditure reports. Chemonics has received an astonishing $167 million from USAID since the earthquake, over 60 percent of all USAID contracts awarded. A copy of a contract with Chemonics from January 2010, obtained by Relief and Reconstruction Watch, reveals that Chemonics is required to “track and report on the overall monthly commitments and disbursements for all activities and non-activity expenditures.” Further, the contract states that Chemonics “is required to provide a detailed budget and vouchers for all subcontractors.” There is even an activity database, which is a “means of supporting activity development, documentation, reports, financial tracking, and real-time monitoring and evaluation to inform ongoing programmatic decisions and management.”

One clear problem with these requirements is that Chemonics itself is largely responsible for providing oversight of their work. Regarding the activity database, Chemonics is responsible “for ensuring that the database contains accurate, complete, and up-to-date information.” Not only is the contractor solely responsible for providing accurate data, but they are also intimately involved in the overall evaluation process. The contract states that USAID and Chemonics “are expected to jointly develop a system of processes and tools for the monitoring and evaluation of the country program.”

Through USAID’s own admission, they lack the resources and capabilities to provide adequate oversight and accountability of their largest contractors. With little input from, or involvement with, Haitian entities, these contractors are accountable neither to their funders nor their intended beneficiaries.  Although the Forward initiative is a step in the right direction, until USAID can provide basic oversight of their contractors, there is little reason to believe the ambitious reform initiative will reap quick rewards.  

Next: Chemonic's Track Record and the Development Indsutrial Complex.

Update 12/01:
For more information on indefinite quantity contracts and how they function, see this analysis from the Haiti Justice Alliance.

 

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