USAID's Disclosure of Local Partner Info Raises Troubling Questions
Written by CEPR
Following a request from HRRW, USAID yesterday released information on the amount of relief and reconstruction funds that have gone to local partners in Haiti. The info, available here, is a positive step towards transparency and provides the only official information on the level of local contracting by USAID in Haiti. As can be seen in figure 1, about $9.5 million has gone to local organizations and firms since the earthquake. An additional $18.3 million has been awarded to Haitian-American firms, according to USAID data.
St. Damien Hospital
Hopital Adventiste d'Haiti
La Fondation Héritage pour Haïti (Transparency International)
Inter-American Institute for Cooperation on Agriculture
The American Chamber of Commerce in Haiti
PAGS Cabinet d'Experts-Comptables
National Transport Service (Natrans)
Although ascertaining the total spending by USAID in Haiti since the earthquake is not an easy feat, the $9.5 million that has gone to local firms represents a small fraction of total spending by USAID. In fiscal years 2010 and 2011, USAID reported spending over $700 million on humanitarian programs (not counting funding through USAID/OTI, which is included in Figure II). Additionally, the most recent data compiled by HRRW reveals nearly $400 million in contracts that have been awarded since the earthquake. As can be seen in figure II, only 0.02 percent of these contracts have gone directly to local firms, while over 75 percent have gone to firms located in the Beltway (DC, Maryland, Virginia). The largest of these beltway contractors is Chemonics International, which has received $173.7 million from USAID since the earthquake. The company came under criticism in recent weeks regarding the temporary parliament building that was constructed under a Chemonics contract. Haitian lawmakers told GlobalPost that the building was nothing more than a “shell”, and that it would cost the government as much to finish it as USAID had spent on building it. The building remains vacant four months after it was inaugurated by USAID and Haitian officials.
Percent of Overall
Source: Federal Procurement Data System, Author’s Calculations
It is likely that Figure II doesn’t capture the entirety of local procurement as no data is available on the level of local sub-contracting. On the USAID Forward website, the organization admits they lack the ability to systematically track the level of local subcontracting and grant making:
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.
As HRRW has previously reported, this is especially problematic because a leaked contract between USAID and Chemonics contains very detailed reporting requirements. 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.” A USAID Inspector General report from 2010 found that while other branches of USAID had conducted financial reviews of their partners, USAID/OTI had not:
Although DAI and Chemonics were also expending millions of dollars rapidly on CFW [Cash-for-Work] programs in a high-risk environment, USAID/OTI had not yet performed these internal control reviews.
USAID Procurement Reform
Procurement reform is a main plank of the USAID Forward program, which aims to strengthen local capacity by allocating more grants to local NGOs and increase the “percentage of total dollars through direct contracts with local private businesses.” USAID has consistently touted their efforts in this regard, with USAID administrator Rajiv Shah telling NPR on the two-year anniversary of the earthquake that “USAID is working with 500 Haitian organizations after a real intensive effort to go out there and meet these groups and make sure we work directly with them.” While increasing local procurement and local capacity building appears to have the support from USAID leadership, there is scant evidence in the data compiled by HRRW and released by USAID to support the rhetoric. If USAID does indeed work with 500 local organizations, they haven’t publically released any data to support that and the information released yesterday would seem to directly contradict it.
The release of information is a welcome step for transparency on the part of USAID. However, until greater controls are implemented with regard to prime contractors and USAID can accurately track the amount of sub-grants and contracts going to local organizations; it will remain nearly impossible to determine if USAID actions truly match their lofty rhetoric.