Releasing Glassdoor for Primes

Global development spending is highly consolidated. It's time to talk about subcontracting...

Dear Unlock Aid community,

Today, during an event hosted by Catalyst2030, we’re publishing our first-ever Glassdoor for Primes industry report. This report provides insights regarding many of the business practices of 26 of the largest organizations in global development and humanitarian response.

Here’s why a report like this is so important:

U.S. global development spending is highly consolidated

Every year, the United States spends approximately $60 billion for global development, humanitarian response, and other forms of foreign assistance. This is funding that U.S. taxpayers spend globally every year on issues that affect all of us, such as investing to boost global food security, to prevent the next pandemic, and to promote sustainable economic growth.

However, like at many other U.S. federal agencies that have become highly dependent on a small number of government contractors and consulting companies, most U.S. public funding for global development and humanitarian response flows through a relatively small number of organizations. For example, in a typical year, at the nation’s premier foreign aid agency USAID:

• More than 50 percent of contract dollars go to just 10 aid industry contractors, most of which are based in or around the Washington, D.C. area. 

• More than 60 percent of all USAID funding (inclusive of grants and contracts) can flow through just 25 organizations, including a mix of for-profit aid contractors, international non-governmental organizations (INGOs), and UN agencies. 

• Just 9.6% of USAID funding flows directly to local organizations that are based in the countries this funding is intended to support, according to the agency’s most recent “Localization Progress Report.” 

This has big implications for the quality, sustainability, and effectiveness of U.S. global development and humanitarian investments. 

Subcontracting is often the only way in the door for most local organizations and more innovative, non-traditional players

Since U.S. development agencies’ largest aid contractors tend to be headquartered in or near cities like Washington, D.C., New York City, or European capitals, these large organizations must often subcontract to local organizations and specialized firms to deliver vital services in Africa, Latin America, Asia, Central and Eastern Europe, and other geographies that U.S. foreign assistance supports. 

For example, after receiving a large $100M contract from USAID, a large “prime” contracting organization is likely to subcontract to dozens of local and community-based organizations, grassroots and civil society actors, social enterprises, or technology companies to deliver against the contract’s intended objectives. In this way, large development and humanitarian contractors often function as intermediaries, or project managers, to deliver against a sprawling set of objectives described by USAID or other government agencies.

Similarly, local communities, social enterprises, private sector groups, grassroots and civil society organizations, and other innovative players have solutions to the world’s hardest development and humanitarian challenges. However, often the only way for these and other innovative groups to receive support from USAID is as a subcontractor or sub-grantee to one of the agency’s biggest contracting partners. 

But subcontracting is too rarely a positive experience

In parallel to trying to bring down barriers to enable local actors, the private sector, and other non-traditional actors to work directly with USAID to deliver sustainable results, USAID and other funders need to give the issue of subcontracting more attention, too. After all, this still remains the primary way for more innovative and non-traditional organizations to work with USAID and U.S. government agencies, but it is too rarely a positive experience.

According to one Center for Global Development analysis, over a five-year period, USAID’s largest U.S.-based aid contractors distributed approximately just 14 percent of what they made those years to local, frontline organizations. In 2021, more than 73 percent of local organizations and smaller firms told us that big contractors “always” or “often” sub-awarded less money than they initially promised, often costing those smaller outfits significant sums in lost revenue and breaking trust with local communities.

That’s why we’re releasing Glassdoor for Primes

Today, to provide more specificity regarding the ways that subcontracting practices can be improved, we’re releasing Glassdoor for Primes. This is our first-ever industry report to give more visibility into the business practices of 26 of the world’s largest prime contracting organizations in global development and humanitarian response. Click here to read the report.

This summer, we sent a survey to hundreds of prospective respondents via a variety of global development and humanitarian response networks, including Catalyst2030, Afrilabs, Community Health Impact Coalition, Shabaka, Connective Impact, Million Lives Collective, and other local- and community-based coalitions, as well as our own network of 100+ affiliated social innovators. In total, 80 respondents participated who have experience working with the world’s largest prime contracting organizations in global development and humanitarian response. The feedback we received enabled us to develop insights about the sector at large.

Here are some of the report’s high-level findings:

• Business practices across large prime contracting organizations can vary significantly. One cannot generalize what it is like to work with all of the largest development and humanitarian organizations. For example, respondents said they were most likely to recommend working with Catholic Relief Services, Mercy Corps, and Save the Children, however respondents rated many other large prime contracting organizations more poorly.

• When respondents rated organizations favorably, they said those organizations tended to embrace the principles of transparency and open communication; fairness, genuine collaboration, and respect; and that they showed a commitment to trustworthiness and accountability.

• The decision to subcontract can be an expensive and time-consuming one. Respondents said it cost them, on average, $19,622 in both direct costs and staff costs just to prepare a proposal for a single prime contracting organization.

• However, being included on a prime contracting partner’s winning proposal was not a guarantee of funding, respondents said. Respondents reported that prime contracting organizations, on average, disbursed just 59 percent of what they promised, and sometimes significantly less.

  

• Nearly 80 percent of respondents said they experienced delays in receiving promised funding from prime contracting organizations, too, including delays that lasted more than one year, according to 13.4 percent of respondents.

  

• Many respondents also said they were concerned by how prime contracting organizations used the intellectual property they furnished to help win proposals. For example, one respondent told us, “Subs need to be careful about their scope not being "kept" by [the prime] upon award, and also ideas shared with them being co-opted by them.”

Click here to download the full report for more detailed insights, including analysis regarding 26 of the largest prime contracting organizations in global development and humanitarian response.

This report can spur change

Industry reports like this can have a powerful effect towards shaping a sector. Take the Pledge for Change initiative, for example. By pointing to specific areas where large INGOs can improve how they work with Global South partners, Pledge for Change has helped to change behavior at some of the largest organizations in global development and humanitarian response, especially to promote the principles of equitable partnerships and authentic storytelling.

Similarly, we’ve already had outreach from some of the largest INGOs included in this survey who first heard about this initiative when we announced it in April and wanted to know what they can do to improve the way they work with local, community-based, and other front line organizations.

No matter your role in the ecosystem, here are some things you can do to spur change:

• If you work at a large prime contracting organization, this report is full of recommendations on things your organization can do to improve how it works with subrecipients. Get in touch with us. We’re happy to consult with you on what you can do.

• If you work for an organization that is considering whether it wants to partner with one of the largest prime contracting organizations surveyed, significant and imbalanced power dynamics and financial considerations may discourage you from speaking up when challenges arise. However, we hope that you can use this report as a tool to advocate for yourself during negotiations and identify prospective prime contracting partners that may be a good fit for you. We also have recommendations on how to best protect your organization. You’re not alone. Get in touch if you want help.

• Finally, if you are a policymaker or a funder, we hope this report will encourage you to consider the ways that your organization’s policies may reinforce good prime contracting business practices or incentivize bad ones, such as doing more to increase contracting and subcontracting transparency. We’d love to speak with you about what changes your organization can make.

When we started Unlock Aid in late-2021, we identified four barriers that repeatedly kept social innovators and local organizations from working more closely with the world’s largest development agencies, such as USAID. Those barriers included procurement red tape; funding for pilots but not to scale up what proved effective; public tenders so large that only aid industry insiders could compete; and poor subcontracting practices, such as the ones described in this Glassdoor report.

In the years since, we’ve built a coalition and put forward solutions for each of these issues, changing rules and regulations on matters like procurement reform and securing hundreds of millions of dollars to scale up what works. Today, with this report, we begin to shift the narrative and spur behavior change at the development and humanitarian response actors on subcontracting, too.

We’d love to hear what you think. No matter your role in the ecosystem, you have a role to play. Please share this content online. Get in touch with us if you’d like to get involved. Here’s to a more transparent and equitable future for global development.

To progress,
Unlock Aid