Five ways Congress is helping innovators achieve the SDGs
Powerful committees in the U.S. House and Senate just passed spending bills to fund U.S. global development agencies next year. Here are five provisions you should know about.
Dear Unlock Aid community –
It’s going to take all hands on deck to achieve the Sustainable Development Goals (SDGs) by 2030. We need to rapidly shift resources, change the narrative about what’s possible, and build new tables rather than just create seats at old ones.
That starts with pushing for changes to the way the United States, as the world’s largest global development funder, develops and spends its annual foreign affairs budget.
Last week, the U.S. Senate Appropriations Committee passed its spending bill to fund U.S. foreign affairs agencies like USAID, the State Department, DFC, and MCC. Just one week prior, the U.S. House of Representatives Appropriations Committee passed its spending bill.
Most of the news coverage you will read about these two pieces of spending legislation will boil down to the numbers. The Senate bill includes nearly $10 billion more than the House version.
But as you know, Unlock Aid has always been more focused on how money goes out the door, to whom, and to what end. And on this front, we have some exciting updates.
Here are five of the most important provisions that you should know about:
Both bills direct USAID to develop a plan to scale proven solutions supported by the agency’s innovation units.
Philanthropy and impact investors have seeded thousands of the world’s most effective social enterprises. USAID’s early-stage innovation programs have also helped to incubate some of the world’s best solutions to achieve the SDGs.
Now it’s time to scale what works. Congress agrees.
Here’s what the Senate included in its bill:“Not later than 120 days after the date of enactment of the act, the USAID Administrator shall submit a report to the Committees on Appropriations…a plan to assess the percentage of projects supported by the Development Innovation Ventures program and other USAID incubators that prove capable of increasing the effectiveness of foreign assistance, whether such projects are subsequently brought to scale by USAID missions and bureaus, and how to increase such outcomes.”
This is what’s in the House version:
“Not later than 180 days after the date of enactment of this Act, the Administrator of USAID shall submit a report to the appropriate congressional committees…an assessment of how proven technologies and other innovations can be brought to greater scale.”
We need to scale programs beyond pilots to solve the “Missing Middle” funding gap to achieve the SDGs by 2030. This is big progress.
Both bills direct USAID to increase award transparency, including to stop practices like bid candy.
”Bid candy” refers to the practice of certain larger contractors and international NGOs highlighting the names of local organizations, social enterprises, and other more innovative players in their proposals in order to win large USAID grants and contracts…only to cut out those same groups from promised funding later on.
This practice breaks trust with local communities. It can destroy smaller organizations that budget for that revenue. And it reduces impact and sustainability.
To address this issue, the Senate bill directs USAID to develop:“enhanced performance metrics to measure contractor and subcontractor performance, including on direct delivery of aid and bid partner participation (emphasis added), and a projected implementation plan and timeline for improving associated award data transparency.”
The House bill also directs USAID to report to Congress:
“an analysis of the pervasiveness of sub-grantees or sub-contractors being highlighted within grant or contract proposals but not included or minimized during the period of the award.”
Earlier this year, we joined hundreds of other coalitions, organizations, and committed citizens to call on USAID to embrace transparency to stop subcontracting practices like bid candy once and for all.
While we wait, it’s great to see Congress showing the leadership that we need. Shifting resources is essential to achieving the SDGs by 2030.
The bills call for new aid delivery models in global health supply chains.
USAID is on the verge of awarding $17 billion for global health supply chains. This is USAID’s largest-ever set of awards and the agency’s best chance to walk the walk on promised reforms.
We’ve challenged USAID to use even 3-5% of this suite of contracts to show that new aid delivery models are possible, including to pay existing, in-country logistics and healthcare providers against the delivery of results.
The Senate bill requires USAID to report to Congress within 120 days:“the design and implementation timeline of an aid delivery pilot program in which payments are made directly to logistics, technology, and healthcare providers only after verification of successful delivery targets.”
The House version also includes this language:
”With regard to global health supply chain activities, in order to improve timely delivery, ensure available supply, and manage the risks associated with the worldwide delivery of sensitive global health commodities, the Committee directs the Administrator of USAID to set a target for further improvements in reducing the stockout rates of essential drugs and medical supplies at service delivery points. The Administrator shall consult with the Committees on Appropriations on the implementation of these measures and report on progress made towards this target.
This proposal describes what one market-shaping, pay-for-results model could look like, developed as part of the SDGs Moonshot Accelerator we co-hosted last August in Mexico City.
The Senate’s bill expands USAID’s ability to work with innovators.
Increasing the use of pay-for-performance awards is among the best ways that USAID can cut red tape, invite competition, and improve results.
The Senate’s bill expands USAID’s ability to provide pay-for-results spot payments to innovators by increasing the threshold on Innovation Incentive Awards (IIAs) from $100,000 to $500,000.
IIAs function like prizes. Organizations do not need to write complicated proposals to win funding; they need to only show the agency they delivered against a desired result. But historically, the low IIA funding threshold set by Congress has limited USAID’s ability to use this innovative contracting tool to its full potential. IIAs can become an engine for USAID to rapidly move funding to innovators on a pay-for-results basis. They can act as the backbone for building outcomes marketplaces, too. We’re excited to see this progress.
Both bills call on USAID to pay for results and more quickly shift resources to local organizations and non-traditional USAID partners.
In March, USAID took a major step forward when it published a spending strategy that promises to reshape how the agency spends more than $100+ billion over the next four years. As part of the strategy, USAID identified just four spending metrics it plans to prioritize: two on diversifying who the agency plans to work with, with a specific focus on new partners and local partners, and two on how USAID spends money, with a focus on increasing the use of pay-for-performance, milestone-based awards that are easier for non-traditional partners to apply for, manage, and deliver against.
Now Congress wants USAID to report progress against those goals.
The Senate version included this language:”Not later than 90 days after the date of enactment of the act, the USAID Administrator shall submit a report to the Committees on Appropriations describing how USAID is progressing toward stated locally-led development targets and plans to reach such targets in subsequent fiscal years. Such report shall include detail on funding implemented by local entities in fiscal years 2022 and 2023, which shall include development and humanitarian assistance programs.”
The House included this language:
Not later than 180 days after the date of enactment of this Act, the Administrator of USAID shall submit a report to the appropriate congressional committees on award performance and accountability in support of more effective, transformative, and efficient foreign assistance implementation…[including] the feasibility of building on innovation incentive awards and pay-for-performance awards in an effort to better achieve well-defined results through competitive means.”
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“The Committee directs the Administrator of USAID to submit a report to the appropriate congressional committees…details on funding implemented by local entities in fiscal years 2022 and 2023, which may not include international organizations or local representation of such organizations.”
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The Committee encourages USAID to use capable local entities, including local NGOs, to the maximum extent practicable in responding to humanitarian crises.
But that’s not all. Lawmakers also included provisions in their bills to direct USAID to increase its engagement with the private sector, increase investments for telehealth and funding for community health workers, standardize impact reporting in areas like nutrition and health, increase the agency’s use of ex-poste impact evaluations, and invest in innovation ecosystems in Africa, especially for vaccine development.
The Senate bill also increases funding for agency programs that have a good track record of working with social innovators and local organizations, including the Development Innovation Ventures (DIV) unit, Local Works, and the New Partnerships Initiative. Both the House and Senate versions also increase funding for the Development, Democracy, and Innovation (DDI) bureau, which is home to teams like DIV and the Exploratory Programs and Innovation Competitions unit.
So what happens next?
The powerful House and Senate appropriations committees have passed their respective spending bills. Now the full House and Senate need to vote. Lawmakers from both chambers will then need to meet to reconcile differences between the two versions. Throughout it all, we’ll push to keep the best parts of the House bill and the best of the Senate bill in the final product that Congress sends to President Biden.
Make no mistake about it: these are big wins for our community. Pending final passage, these reforms could take effect as early as this year and have big impacts as early as 2024 for organizations working on the front lines of solving the SDGs.
Now is the time to build on this momentum and step up the pressure.
We’ll be calling on you soon for help.
To Progress,
Unlock Aid
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