USAID administrator discusses agency's plans to reduce spending, reform development practices

Jan 21 2011

USAID Administrator Rajiv Shah, "in a speech on Wednesday, outlined steps USAID is taking to improve its balance sheet, including moving costly senior jobs from places such as Paris and Tokyo, reducing its real estate portfolio and doing more work with in-house experts rather than expensive contractors," Reuters reports (Quinn, 1/19).

Shah "unveiled several new procurement reform initiatives - some of them effective immediately - that are meant to boost the monitoring and evaluation of field projects and more closely scrutinize especially the government's larger implementing partners," according to Devex. In his speech at the Center for Global Development, Shah said the planned changes are not intended to create "an updated version of a traditional aid agency." Instead, the goal is "to build something greater: a modern development enterprise," he said.  

"A new evaluation policy now requires a performance evaluation conducted by independent third parties, not by the implementing partners themselves, for every major USAID project. To better evaluate the impact of field projects, USAID plans to not just report results, but to collect baseline data and employ study designs that explain what would have happened without U.S. intervention. The agency plans to release all evaluations within three month of completion, and integrate some data into its new Foreign Assistance Dashboard," Devex writes.

"USAID is also continuing efforts to synchronize contracting and grant-making procedures. ... All grant and contract extensions in excess of $5 million that are being awarded without a competitive process will - starting this week - require personal approval by the USAID administrator," the news service reports. Shah also said USAID will no longer be content "with writing big checks to big contractors and calling it development."

"Partners need to achieve the outcomes they seek in the time they suggest. Otherwise, we will seek out those who can," he said (Rosenkranz, 1/20). A USAID press release notes the highlights from Shah's speech, "marking his first year as USAID Administrator" (1/19).

Also Wednesday, in an interview with Reuters, Shah discussed his plans to eliminate millions of dollars in costs from USAID's budget and called for lawmakers on Capitol Hill to allow the agency to continue with its expansion and restructuring effort. According to Shah, administrative and procurement changes, as well as contract management improvements could lead to hundreds of millions of dollars in savings.

"We're making those hard decisions and tough changes," Shah noted in the interview, "saying skeptics on Capitol Hill must be persuaded that overseas aid is an essential part of U.S. security strategy for coming decades," the news service writes. "We need our partners on the Hill in both parties to recognize that, done well, development saves lives and improves economic opportunities, and needs to be elevated and not cut," he said.

According to Shah, just implementing administrative changes could save about $65 million in operating expenses. He also noted the agency's plans to speed up the process for countries that will "graduate" from receiving U.S. aid. "The first of these, Montenegro, can expect to see U.S. development support end in 2012 and at least six others are also likely to see U.S. money dry up, he said," Reuters writes.

"We're actually embarking on perhaps the most aggressive operational reform of a major federal bureaucracy," Shah said. "If we get the support for it, we will save American taxpayers hundreds of millions of dollars over time."

Shah "said the basic message to Republicans, made recently both by Obama's Democratic appointees and key military leaders, was that overseas development aid makes America safer. 'Our military colleagues refer to us as ... high value partners,' Shah said. '(But) we as a country make a decision to dramatically underfund development time and again'" (Quinn, 1/19).

Conservative House Members Release Spending Reduction Plan That Includes USAID Cuts

The Republican Study Committee (RSC) has released a plan that proposes significantly reducing the U.S. foreign aid budget, in addition to other non-defense programs, in an effort to "cut 2011 fiscal spending back to 2008 levels," CQ Today reports.

The overall FY2011 cuts "would save $80 billion" and the plan would "push spending in fiscal 2012-2021 even lower, to fiscal 2006 levels, which would save $2.29 trillion, according to a summary," the news service writes. The plan proposes reducing USAID's budget by $1.39 billion a year (1/19). Over 10 years, the plan would save a total of $2.5 trillion after cuts, mostly to domestic programs, Reuters reports.

The RSC recommendations will be formally released on Thursday, according to Reuters. "The plan goes beyond the sharp cutbacks promised by Republican leaders before they won control of the House in November 2010, and it is unclear how far it will advance in the legislative process," Reuters reports. A House Appropriations Committee Republican staffer said the plan was too drastic to pass the House, according to the news service. 

"Appropriations Committee members are crafting a spending-cut plan of their own that could take effect as soon as March, when current funding levels expire. But they have so far declined to say which programs in particular could face the axe," the news service writes (Sullivan/Dixon, 1/19).