Where we stand at the end of the year
At the start of 2023 we made some predictions about how the year would unfold. Let’s see what happened.
Dear Unlock Aid community,
At the start of the year, we opined that 2023 would be critical for re-architecting our public institutions and reforming the U.S. approach to global development. Why?
Because if the start of this Administration, in 2021, was about setting a vision, and 2022 was about getting organized, then 2023 needed to be the year that we saw meaningful policy changes that reflected those new priorities. 2024 must be the year these changes manifest themselves in the real 3D world.
To hold ourselves accountable, we’re taking a look back at the predictions we made compared to where we stand today.
Prediction: The public will increasingly understand how the issues they care about are intimately connected to how the United States funds foreign assistance – and they’ll clamor for reform.
The role of U.S. foreign assistance has been on the front pages of nearly every newspaper for the better part of this year, especially so in recent months. Increasingly, the American public is coming to understand what so many around the world already know: U.S. foreign aid, as it is set up today, is not responsive to the needs and aspirations of communities around the world, and can often undermine faith and confidence in the United States as a reliable global partner. The approach is paternalistic and ill-aligned with the model of 21st-century partnership that we need to build to address the challenges of an interconnected world.
Earlier this year, we went on a listening tour to speak with communities around the world about the kinds of changes we need to restructure the U.S. approach to global development. We also spoke to diverse groups in states like Florida, North Carolina, New York, California, and Washington to build a new domestic political coalition to support long overdue, sweeping reforms. We’ll be sharing more early in the new year about what we heard – along with our recommendations regarding what a new U.S. global development approach can look like.
But here’s what we know for sure: we urgently need a different approach. And a new, next-generation coalition made up of diaspora communities, socially-responsible business leaders, faith groups, investors, philanthropists, activists, and social innovators are ready to band together to rally for one.
Prediction: USAID will pause its planned $17 billion worth of anti-competitive global health supply chain contracts.
This hasn’t happened. USAID delayed issuing these contracts, but it hasn’t given any indication yet that it plans to change business as usual.
In 2021, the Biden-Harris Administration promised to break its dependence on fly-in, fly-out foreign aid contractors in favor of working directly with local actors and the private sector. Since health care and logistics are two of the most mature sectors that USAID funds, we’ve challenged the Administration to use even just 3-5% of its largest-ever foreign aid project, a $17 billion project for global health supply chains, to show that it is ready to match rhetoric with action.
This is a flashpoint for the Administration to either keep or break its promises. So far, USAID hasn’t given us much hope. The Agency awarded the first of nine planned contracts to Deloitte to build a supply chain control tower software application for a staggering $105.9 million. USAID even restricted who could submit a proposal to just a shortlist of pre-approved, legacy contractors rather than opening competition to actual software and technology companies. USAID has delayed awarding the other supply chain contracts until 2024.
However, we’re cautiously optimistic that USAID may ultimately do the right thing next year. Congress wrote into spending legislation that it expects USAID to pilot new models in global health supply chains in 2024. USAID’s proposed supply chain contracts have also come under scrutiny during Congressional hearings. In November, Devex and The Bureau of Investigative Journalism published a scathing investigation into USAID’s management of its current global health supply chain project – an exposé that illustrated just just how expensive, unsustainable, and untenable the current model is.
If this kind of pressure doesn’t force USAID to change course, we’re worried nothing will.
Prediction: Congress will pass landmark legislation to make transparency, results, and innovation synonymous with the U.S. approach to global development.
Congress didn’t pass landmark legislation this year, but it did plant the seeds for major action in 2024. First, in April, Representatives Joaquin Castro (D-TX) and Young Kim (R-CA) introduced the Fostering Innovation in Global Development Act, or FIGDA. A growing, bipartisan list of Members of Congress have since cosponsored this bill.
FIGDA would begin to solve the “Missing Middle,” or the entrepreneurial “Valley of Death,” for global development innovators by creating an end-to-end funding pipeline for USAID to scale the most cost-effective, replicable solutions in global development. It would also make it easier for social enterprises and other innovators to work directly with USAID. We expect the House Foreign Affairs Committee to vote on this legislation in early 2024, and then for both chambers of Congress to pass it into law before the end of next year.
But that’s not all. Proposed spending bills in the House and Senate are also full of reforms advocated for by the Unlock Aid community, including requirements for USAID to scale funding for innovation and evidence-based solutions; increase transparency and accountability for predatory subcontracting practices; ramp up the use of pay-for-results contracting to increase accountability and shift resources to local players; pilot new ways of doing business in global health supply chains; and increase funding for highly effective offices like USAID’s Development Innovation Ventures (DIV) unit.
We expect both the House and Senate to come to a final agreement on a spending package in the first quarter of 2024. Some of these changes would take immediate effect, and others within just a few months thereafter.
Prediction: Pressure will increase dramatically on USAID to deliver on Administrator Power’s localization pledge.
We predicted a growing chorus of increasingly diverse actors, including a bipartisan group of lawmakers, would begin calling on USAID to show faster progress to hit the Agency’s target of 25 percent of funding to local groups, a commitment USAID made along with other funders as a signatory to the Grand Bargain. Pressure has increased.
During Congressional hearings, Republicans and Democrats increasingly called on USAID to show faster progress towards meeting its 25 percent goal. Members of Congress from both parties pointed out during budget hearings that shifting funding to local organizations would be at least 32% more cost effective than working with traditional contractors and international nonprofits.
In the media, publications including Devex, Vox, The Economist, and prominent columnists like Matthew Ygelisas of the Slow Boring newsletter, also wrote about why USAID needs to break its dependence on inefficient and expensive consultants in favor of working directly with organizations on the front lines.
Many coalitions stepped up their advocacy on this issue. So did philanthropy.
2024 will be the year for the rubber to hit the road on the Agency’s promises to shift funding.
Prediction: USAID will crack down on exploitative subcontracting practices.
This hasn’t happened yet and it is very disappointing because USAID has the ability to implement this policy change today, yet has resisted calls to do so.
Approximately 90 percent of USAID funding flows through US-based contractors and international nonprofits, most of which are located in the Washington, DC area. Despite Agency efforts to diversify its partner base, contracting consolidation means the only way for most organizations to work with USAID is still as a subcontractor.
But as we’ve explained, too often, big contractors and international nonprofits entice smaller organizations and especially local groups to join their proposals to help them win large grants and contracts, only for those same big groups to cut smaller ones out of promised work once USAID makes a funding decision. “Bid candy,” as it’s referred to by industry insiders, cripples smaller organizations and breaks trust in the very communities that USAID funding is designed to support. Last year, big contractors kept more than 82 cents of every contract dollar they made, according to Devex, leaving just a fraction of the overall award totals to be divided up among the thousands of actual frontline organizations doing the work. It’s why one group out of the University of Washington calls U.S. foreign aid “phantom aid.”
In March, we joined more than 100 organizations and coalitions calling on USAID for greater transparency, including to follow the money and force big USAID partners to keep their promises to devolve funding to frontline and community-level organizations. Congress joined us in making this call, too.
While USAID sent a notice the following month to its biggest partners reminding them of their subcontracting responsibilities, and it also set up a hotline for subrecipients to report wrongdoing, this pales in comparison to the actual accountability and full transparency we need.
Absent more transparency from USAID and leadership from the Agency on this matter, we expect the same bad status quo behavior to continue into 2024.
Prediction: We will be reminded that, to get things done well, the government must take on in-the-weeds issues like procurement reform.
We said the Biden-Harris Administration would champion what are often described as “boring,” “in-the-weeds” issues like procurement reform that usually don’t get a lot of attention from Executive Branch leadership. But it is these small issues that quickly add up and amount to the difference between whether the U.S. government can realize its big goals and work with a next-generation of organizations and frontline communities, or not.
We’ve got a long way to go. However, the Administration did take some big first steps forward on these issues. For example, in October, the White House proposed revamping the U.S. government’s overly-complex procurement system. Read here to see what we told the White House it should do.
Taking on issues like procurement reform is critical to democratizing access to more than $2 trillion the federal government spends every year for issues like climate change, pandemic preparedness, and food insecurity. This affects more than just agencies like USAID, too. Virtually every U.S. federal agency struggles with these issues. Read here about climate groups that have struggled to access federal funding created as a result of the landmark climate legislation passed last year, for example.
Excessive complexity favors the powerful and the few who know the insider game of government contracting – and it locks out organizations that are on the front lines, both here in the United States and around the world. Taking on these in-the-weeds issues are essential to inspiring a new generation of Americans and people around the world that the United States can be a reliable partner for solving the planet’s hardest problems.
These changes can’t come soon enough.
Our overall reflection is that 2023 was a very “middle” year. We don’t know yet how this story will end, but a guiding principle of our work has always been that change often happens slowly, and then all at once. We believe that the ripple effect of our collective efforts from 2023 will have an impact beyond what may presently seem imaginable. We would love to hear your thoughts on anything we missed in this recap.
Expect more calls in 2024 from a fast-growing, diverse coalition for big shifts in the ways our public institutions operate.
Thank you for being on the journey with us.
To Progress,
Unlock Aid