International Development Companies: Tackling the World’s Challenges
Key Issues for the New Administration
June 2021
PSC
The purpose of this document is to provide an overview of the role that PSC member companies play in the implementation of U.S. foreign assistance. It discusses some of the key attributes U.S. foreign assistance consulting firms bring in providing technical support to our stakeholders for resilient, sustainable, country-led growth.
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CIDC 2021 Compendium
Content Introduction – PSC and the Role of Contractors – David J. Berteau, President and CEO, Professional Services Council......................4 Welcome – The CIDC Role in International Development – Paul Foldi, Vice President, International Development Affairs, PSC......................5 Foreign Assistance By the Numbers – Three Key Charts......................6 Key Issues for the New Administration Pivoting During A Global Pandemic: The Impact of COVID in the Development Workplace – CIDC Chair - Leland Kruvant, President and CEO, Creative Associates......................8 Reinvigorating Development as a National Security instrument; Reintegrating USAID into the core “Three Ds” – CIDC Vice Chair - Susan Chodakewitz, President and CEO, Nathan Associates......................10 The Importance of Oversight in Ensuring Effective Foreign Policy Implementation – Anna Slother, EVP, Chemonics International......................12 . hat makes Private Sector/For-Profit Implementers the Right Choice W for Certain Development Projects – Jay Gutzwiller, Vice President – Global Region, DAI......................14 What role does Equality, Diversity, and Inclusion play in development – Torge Gerlach, CEO, DT Global......................16 Reinforcing the Mission Driven nature of CIDC work – Don Ellison, SVP, ICF......................18 Foreign Assistance as A Hand Up – Not a Hand-Out – David Snelbecker, CEO, International Development Group......................20 Preserving Meaningful Changes from the Past Administration – Thomas England, President and CEO, ME&A......................22 Creating Economically Sound Models/How for-profit development companies can unlock additional capital – Maria Martinkov, Managing Partner, Palladium......................24 Role of CIDC members Institutional Capacity Building – Larry Cooley, President Emeritus, MSI, A Tetra Tech Company......................26
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Introduction Our mission remains the same today as when PSC began - bringing government officials together with our members to discuss potential, proposed, and current legislation, regulations, and programs that have implications for both federal policy and cost-effective execution of that policy.
The Professional Services Council (PSC) first formed in 1972 to give a voice to the handful of companies then engaged with the federal government in the often-overlooked “services” segment of the U.S. economy. These 35 industry leaders recognized the emergence and growing vitality of the professional services sector within the U.S. Government marketplace and established PSC to support policies that promote programmatic resilience, sustainability, and innovation through a fair and competitive process. In the last five decades, PSC’s membership has grown to more than 400 U.S. companies, which provide critical support to every federal agency and department in the United States and around the globe. Our members understand that competitive contracts ensure maximum transparency and account for every U.S. taxpayer dollar spent. As federal budgets ebb and flow, U.S. government contractors are asked to provide an increasing range of services-based expertise to address government requirements. Whether supporting discrete, near-term projects or longer-term demands, whether the work is for NASA, the IRS, DHS, HHS, or the Departments of State and Defense, American contractors have stepped in wherever and whenever Washington officials determined there was a need. The fact of the matter is the federal government could not function without the hundreds of thousands of
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contractors who provide a vast array of professional services from facilities maintenance to satellite design. These contractors work in all 50 states, all U.S. territories, and around the globe, providing exceptional services to the U.S. government and taxpayer. Thanks to our close cooperation with congressional leaders, committee chairs and ranking members, and individual members -- as well as with their staffs--PSC also advocates effectively with the legislative branch of government on contracting issues of greatest import to our member companies. At hearings and briefings and through written communications, PSC provides much-valued insights into the causes, effects and – sometimes – unintended consequences of regulations and legislation that impact the contracting community. Throughout the last 49 years, PSC has served to advocate, educate, and create public-private dialogues on behalf of American contractors and their U.S. Government customers. What follows is a terrific example of how PSC is able to leverage the knowledge of our members to address key issues impacting both the federal marketplace and the policies and programs designed to improve lives around the world. David Berteau, President & CEO, Professional Services Council
CIDC 2021 Compendium
Welcome
CIDC’s Role in International Development
In 2011, the 50 PSC member companies whose work centered on foreign assistance, in all its many forms, came together to form our Council of International Development Companies (CIDC). In the last ten years, the CIDC has grown to 75 members firms which work primarily with the Department of State, the U.S. Agency for International Development (USAID), the Millennium Challenge Corporation (MCC), the President’s Emergency Plan for AIDS Relief (PEPFAR), and the new US Development Finance Corporation (DFC), but also with the Department of Defense, Centers for Disease Control, Department of Homeland Security and others.
competitively-awarded, results-oriented contracts. In awarding contracts, competition lowers costs, assures greater responsiveness, and offers better value to the US Government and the American taxpayer though rigorous oversight and accountability.
US Government foreign assistance programs have been at work for decades, and these efforts have helped spur real improvements across the globe: lifting millions out of poverty and helping nations achieve lasting gains through sustained, longterm efforts that help create stable corners of the world that turn into key U.S. economic and security partners. CIDC members are proud of their role in helping to achieve tangible progress such as helping cut infant mortality rates in half since 1990, dramatically reducing extreme poverty through viable economic programs, and raising 33 countries from low to middle income status. Recently they were involved in economic development programs designed to curb migration, medical infrastructure programs that helped prevent Ebola from spreading and laid the foundation for local healthcare systems currently combatting COVID. And these gains have been accomplished on far less than 1% of the federal budget.
What follows next is a compendium of certain, key development policy issues impacting the Biden Administration, presented by a representative from each of the ten companies on the EAB. As with PSC, these companies range from small businesses to large companies, yet each is passionate about their work improving lives around the world and ensuring programs are delivered as effectively and efficiently as possible. I hope you enjoy reading and learning from their experiences and expertise.
International development companies are indispensable partners in delivering accountable and transparent development projects through
Here at PSC, guided by CIDC’s ten-member Executive Advisory Board (EAB), we hold monthly meetings with key stakeholders in the executive and legislative branches. These events ensure that both sides of the implementation equation understand fully the needs and expectations of the other and serve as exceptional opportunities for policy and programmatic discussions.
Paul Foldi, Vice President - International Development Affairs, PSC Close Engagement with Locals CIDC member companies bring private sector solutions to complex problems in fields ranging from health, governance, economic growth, education, infrastructure, and security. Some CIDC members are decades old with thousands of employees, and some are newly formed Women/Veteran Owned Small Businesses. Regardless of their size, they all engage closely with local partners to effect changes that promote the environment, sustainable agriculture, women’s education and economic empowerment, minority rights, intellectual property standards, land reclamation and titling.
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Foreign Assistance by the Numbers Department of State Function 150 Budget History FY11-FY21 (in Billion)
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CIDC 2021 Compendium
Foreign Assitance
Federal Budget
Other Function 150 Activities $32
FY21 Federal Budget Authority (In $Billions)
FY21 Foreign Assitance Funding Function 150 (In $Billions)
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Pivoting During A Global Pandemic: The Impact of COVID in the Development Workplace CIDC members by their very nature are skilled at adapting to the ever-changing nature of overseas development requirements. As such, they were well-positioned with the right technologies and policies already in place to cope with the demands the current pandemic produced. Similarly, as this crisis begins to abate, they are already prepared with needed adaptations to the new post-COVID world. The far-reaching effects of COVID-19 on developing countries are immeasurable. We may never truly know the full effect that this pandemic has had on many parts of the world. At its peak, it is estimated that 1.5 billion students were out of school due to the pandemic – and, regrettably, some 11 million girls may never return to their classrooms when the global crisis ends. More than 70 countries postponed their elections. The impact of this pandemic has been magnified by the challenges of natural disasters, regional conflicts, and the effects of climate change. And the pandemic continues to take its toll. India had nearly 19 million cases and more than 200,000 deaths, Mexico has suffered with 3.1 million cases and nearly 220,000 deaths.
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CIDC 2021 Compendium
These catastrophic results challenged donors and development implementers to discover new, innovative, and effective ways to immediately respond to this unprecedented global pandemic to save lives. USAID development implementers were able to respond rapidly through their onthe-ground programming, utilizing in-country staff, local partnerships and ingenuity. Creative Associates International, pivoted in ways it had never thought to do before. In Morocco, the USAID Reading for Success – National Program for Reading focused on in-school early grade education. When schools closed, it did not want learning to stop. It quickly curated a collection of 100 colorful, age-appropriate, and interactive stories. Reading for Success program forged a partnership between the Moroccan Ministry of Education and the Dubai-based Assafeer Digital Library to develop the country’s first digital reading platform dedicated exclusively to elementary school learners. The pandemic is also causing tremendous economic havoc around the world – with small and medium enterprises in developing countries feeling the effects most directly. Global Mamas, a Ghana-based fair-trade enterprise that works with women across Ghana to create and sell handcrafted products, suffered a 90 percent loss in domestic retail sales and a 40 percent loss in global sales because of the pandemic. Fortunately, it was one of the first recipients of a COVID-19 rapid response grant from the USAID West Africa Trade and Investment Hub. Global Mamas applied for and received a $497,000 grant, which leveraged $2 million of private funding that stabilized the business and staving off layoffs and economic hardship. Within a few weeks of the pandemic hitting Africa, the USAID/OTI Nigeria Lake Chad Basin program mobilized resources to boost household income, raise awareness of the disease and reduce tensions. For example, the program previously trained war widows and victims of Boko Haram in Northeastern Nigeria the basics of sewing and selling their work to provide a more reliable
sources of household income. When COVID-19 struck, the OTI program engaged some 40 women to pool their tailoring skills to produce high-quality face masks – which were in short supply in the region. With support and funding by the OTI program, more than 51,000 non-medical cloth masks had been delivered and distributed by state officials to high-risk residents, including people with disabilities, transit workers and market vendors. The pandemic did not just create new issues; it exacerbated old ones. Pre-existing situations did not just pause. Indeed, at-risk populations became more vulnerable. Addressing these concerns became a priority for many funders and program implementers. Guatemala saw a rise in domestic violence, especially in its rural communities, as curfews and other measures kept people at home. The USAID Peacebuilding Project – which focuses on social conflict dynamics as they pertain to gender, youth and families, governance, land and natural resources – picked up on this dangerous spike. The program, known as Proyecto Tejiendo Paz, quickly stepped in with a multifaceted approach. One component it leveraged was an activity called “comprehensive conversations,” which are live events that use trusted leaders to guide discussions to address domestic and gender-based abuse. It was so-well received, the Guatemalan government picked it up for use nationally.
Conclusion
The pandemic reminds development professionals that there is no “normal” in our line of work. Even without a pandemic, to appropriately support communities and advance donors’ goals, flexibility and ingenuity are required. Throughout this pandemic, USAID implementing companies have demonstrated those and many other skills to save lives. Leland Kruvant, President & CEO, Creative Associates International CIDC Chair
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Reinvigorating Development as a National Security Instrument Integrating development into national security policy and decision making represents a critical and – to date – underutilized instrument. For numerous reasons, there is a unique opportunity to chart a new course and leverage this essential tool for a multiplicity of reasons and benefits. The current administration is charting a new course in foreign policy and national security, revitalizing American engagement and international cooperation. One aspect of this new approach that clearly stands out is the refresh of international development as an arm of US foreign policy and its systematic integration into national security decision-making and policy. In the post-COVID world and in light of the twin crises of health and economics, the US has a unique opportunity to reshape its influence, improve its PR, and make sustainable and inclusive improvements to health and economic growth around the world. A coherent and fully integrated policy will prioritize new resources for diplomacy and development as the most effective and efficient option for national security and will also yield the most powerful results, thereby having a multifaceted impact in terms of assisting people around the world while also 10
enhancing our visibility and elevating our seemingly increased presence and activism. This approach will pack a dual punch as foreign assistance and foreign policy maximize the impact of each dollar and contribute to national security in very concrete ways. This will be facilitated by a growing number of developmentrelated agencies, such as the Developmental Finance Corporation (DFC), in addition to USAID and the Millennium Challenge Corporation (MCC) as well as the US Trade and Development Agency (USTDA.) This additional muscle enables more projects with greater participation by the local population than ever before. Particularly beneficial is a renewed commitment by the Biden administration for private sector partnership in development investment is the opportunity to showcase the US private sector and the unique way it can promote sustainable development in fragile regions.
CIDC 2021 Compendium
Equally important is that fact that demand exists. There is a desire for US engagement around the world. In Southeast Asia, our economic and security partners look for ways to offset the loss of Trans-Pacific Partnership (TPP). Similarly, Africa needs assistance that US diplomacy, international development and private sector partnership can bring to address the outcomes of port governance, economic distress, health, and food insecurity. US international development assistance can offer an alternative to predatory development models. In Myanmar in the aftermath of the coup, US diplomacy and international development can assist that country to move towards enduring democratic values. In Central and Latin America, US engagement, leveraging private sector expertise and capabilities offers the potential to address the root causes of human insecurity, including
poverty, criminal violence, and corruption, which drives irregular migration, NGOs and community stakeholders want to see the US reemerge in concrete ways that make a difference for the people and provide some alternative to increasingly assertive China and destabilizing Russia.
look forward to doing their part by working in partnership with the administration to produce demonstrable and quantifiable results in achieving the international development goals of the United States.
A unique opportunity exists to advance core development goals and principles as well as leverage them to protect the security of the American people. The Administration notes that world economic security is national security. The Administration’s emphasis on multilateralism reflects this idea, as does recognizing climate change as a national security issue. These ideas are not new, but their prominent and reinforced articulation in the new security strategy is both important and necessary. CIDC members are well positioned to support these issues. CIDC members
The time is now to chart a systematic, integrated approach to harnessing the power offered to the US national security policymaking apparatus by development activities, investment, and policy. The potential synergies are both short and longer term and potentially require a fraction of the resources other defense, military, and homeland security initiatives do. PSC and CIDC members stand ready to support this initiative.
Conclusion
Susan Chodakewitz, President & CEO, Nathan Associates CIDC Vice Chair
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Oversight in Ensuring Effective Foreign Policy Implementation CIDC members embrace robust oversight of US foreign policy implementation, both to achieve results and to provide sound and transparent stewardship of U.S. taxpayer funds. Oversight promotes results and accountability with the public and private sector across all development objectives and can be broadly categorized into three main “buckets”: (1) measuring for results (2) compliance (3) financial performance. American international development contractors have long appreciated the linkage between oversight and both Congressional and public support for foreign assistance. As a result, we have the systems and processes to excel in Streamlined Procedures for Small Grants to Promote COVID Impact USAID for-profit implementers have successfully used streamlined grant procedures to quickly award hundreds of small grants to businesses negatively impacted by COVID-19 to promote economic recovery or help struggling health systems to respond to the crisis. We have used similar streamlining mechanisms in emergency situations without sacrificing compliance or results.
these areas and the experience and know-how to achieve U.S. foreign assistance goals in the most complicated and risky operating environments – in both the physical and fiscal sense. Contractors implement projects in more than 120 countries, with nearly 39 percent of funds programmed in sub-Saharan Africa. For USAID alone, contracts accounted for 29 percent of total dollars obligated in FY 2020.
Rule of Law Assistance In 2020, GAO completed several studies of the Department of State and USAID rule of law programs that accounted for more than $2.7 billion from fiscal years 2014 through 2018. During this period, USAID conducted 861 performance evaluations for its foreign assistance programs and projects. Of these, 53 (about 6 percent) were for global rule of law-related projects, often carried out by for-profit implementers. GAO concluded that USAID programs followed key practices for monitoring assistance in almost all cases.
Measuring Results For-profit implementers are held legally accountable for achieving tangible, quantifiable technical indicators – a key distinction for contracts. The Theory of Change model requires that each contract uniquely describe how and why the process of change is expected to take place and how we will work directly and or indirectly to influence the desired change and achieve the stated project purpose. To support the theory of change, all aid contracts include a Monitoring and Evaluation (MEL) plan. This MEL plan includes the project’s monitoring approach and performance indicators of activity outputs and outcomes, including a consistent process for data validation 12
by multiple parties. Progress against indicators in the MEL plan are reported by contractors on a regular basis enabling the US government to track project performance, take early corrective action when necessary, and ensure that projects achieve their intended results. Results of performance evaluations performed by third parties are disseminated to public via Development Experience Clearinghouse. The theory of change model and managing by results allows for contractors to promote collaboration, learning, and adapting to changing conditions on the ground to maximize results.
CIDC 2021 Compendium
SIGAR’s overview of USAID’s implementation of its recommendations (2014-2019) In Afghanistan, SIGAR conducted 17 performance audits, 8 inspections and 59 financial audits of USAID’s contracts over the past five years. In his quarterly report to Congress, the head of SIGAR, John Sopko, reported that of its 201 recommendations, 167 (an impressive 83 percent) were implemented within the statutorily required one year period, 22 remained open, and only 12 were not implemented and closed. About 80 percent of the recommendations aimed at enhancing contract oversight and nine percent intended to improve program effectiveness. Contrast that with the Department of Defense’s performance during the same period during which the Department “implemented less than 40 percent of SIGAR’s audit and inspections recommendations” according to SIGAR’s April 2020 Report.
Compliance Contractors work collaboratively with the US government to promote a culture of compliance to prevent fraud, waste, and abuse. There is a perception that compliance hinders innovation, however we maintain that the polarity between compliance and innovation doesn’t always exist. With a thorough understanding of the rules, regulations, and policies by both the contractor and the government, we can promote creativity and innovation while remaining compliant (see text box above about rapid grants). There are hundreds of laws originating from the Foreign Assistance Act that govern the work of contractors, and compliance is both time consuming and expensive. But we see it as central to our ability to promote accountability. And many laws are in place to promote U.S. businesses and protect the most vulnerable populations. For example, Buy America, Fly America, and the Bumpers Amendment promote the use of American businesses and goods, and terrorist financing and anti-trafficking laws are critical to have in place as a safety and oversight function.
Financial Performance U.S. foreign assistance has financial principles and standards based on Federal laws and regulations. CIDC contractors assume the risks of managing resources effectively, including an auditable trail of accounting systems, procurement systems, etc. This includes e-payments to third parties which allow traceability of funding. And contractors are increasingly working in highly complex and volatile environments that in some cases necessitate working
remotely. Contractors have embraced the challenge and responsibility to have robust systems in place so that we can effectively operate in all environments without sacrificing results. According to the Office of Inspector General semiannual reports to Congress, out of 120 audits of US based contractors conducted between October 1, 2019 through September 30, 2020 covering nearly $10 billion in programs, only 0.51% of expenses were questioned. Unlike with grants, contractors have to provide invoices and billing details how they spend federal funds increasing transparency over how Federal acquisition funds are spent. Contractors also devote tremendous effort to increasing the operational and technical capacity of local organizations we work with to promote sustainability and new development partners overseas.
Conclusion CIDC members recognize the realities inherent in providing contract services to the federal government as they work to achieve US foreign policy goals around the world in often challenging and dangerous environments. Providing a high degree of transparent accountability ensures effective program implementation and maintains the necessary and appropriate oversight on these activities – ensuring American taxpayers and their Congressional representatives can have confidence that their money is being appropriately spent and bringing the best outcomes to the largest number of beneficiaries. Anna Slother, EVP, Chemonics International
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Why Contracts are an Integral Part of the International Development Ecosystem The debate over who—nonprofits or contractors—should implement more of our foreign assistance programs is the wrong argument; the more useful question is what type of implementation instrument is most effective for a given program. International development companies proudly identify as mission-driven firms. We provide specialized technical expertise and high-quality project management services to USAID and other U.S. government clients working to improve the lives of people and communities around the world. As businesses, we invest in the talent and capabilities crucial to the work of development, allowing us more effectively to support America’s development objectives. USAID has three main instruments at its disposal to fund foreign aid programs: grants, cooperative agreements, and contracts. Grants and cooperative agreements (known as “assistance” instruments) facilitate the transfer of money, property, or services to a recipient in order to achieve a public purpose or benefit; the main difference between these two assistance instruments is that a cooperative agreement provides for substantial involvement by USAID. A contract, on the other hand, is a mutually binding legal instrument for acquiring goods or services for the direct benefit or use of the U.S. Government. Contracts are traditional procurement (or “acquisition”) instruments subject to the Federal Acquisition Regulation (FAR). In 2019 and 2020, two thirds of all USAID funding obligations went to assistance awards, with the remaining third going to acquisition awards. Each instrument is associated with different levels of government control over how taxpayer funds are used. 14
CIDC 2021 Compendium Process and Benefits With contracts, USAID designs the scope of work, approves key personnel and salaries of project staff, and has the means to cancel the award for convenience or non-performance. While both assistance and acquisition instruments have important roles to play, contracts are often the most suitable instrument in challenging overseas environments where accountability, political sensitivity, and results are paramount.
Key attributes of contracts include the following: Competition Most contracts are competed openly, and the competition for projects is intense. We welcome competition—from all types of development organizations—because competition yields lower costs, best value, superior technical innovation, and more diverse technical choices. International development companies, accordingly, are by nature cost-conscious, innovative, and entrepreneurial. Our standing—and thus our ability to win new awards—is based on the performance and results of our projects.
Cost-effectiveness If contractors are not cost-competitive, the market will quickly let us know. With respect to the cost to the U.S. Government, there is little difference between nonprofit and private sector development firms, and no evidence that nonprofits enjoy any cost advantage over for-profit firms.
Alignment with U.S. foreign policy Development contractors carry out their work on behalf of and under the supervision of the American government. Quite literally, we deliver interventions and results in the name of USAID, the Millennium Challenge Corporation, PEPFAR and, most importantly, “from the American people.”
Accountability U.S. Government contracting is a tightly regulated and highly scrutinized industry. Contracts provide the greatest level of ethical and performance accountability because they are rigorously controlled and routinely audited for waste, fraud, and abuse. By law, contractors are subject to annual independent and government audits, as well as to potential review by the Inspector General.
Conclusion
CIDC member firms believe that U.S. Government interests are best served by nurturing the highest possible level of competition and innovation among a large, diverse ecosystem of service providers. There is a role for both assistance and acquisition awards in that ecosystem, and room for all types of international development organizations, from contractors, NGOs, and charitable organizations to think tanks, academic institutions, and development-focused enterprises. The American government and its citizens benefit when its overseas Missions have maximum flexibility to utilize the mechanism best suited to their distinct objectives, and the freedom to select from the widest possible array of providers, based on their ability to deliver superior results in an accountable, cost-effective way. Jay Gutzwiller, Vice President – Global Region, DAI 15
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Building Impact Through Diversity, Equity, and Inclusion Diversity, Equity, and Inclusion must be an integral part of how international development implementing partners do business, from leadership and home office policy to how we collaborate and communicate with our partners in country.
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CIDC 2021 Compendium Across the international development space, we are wrestling with issues surrounding Diversity, Equity and Inclusion (DEI)—from how our hiring practices should promote staff diversity to how we can ensure that our programs are implemented in a way that affects change amongst the most vulnerable and marginalized populations. But this is more than a conversation about what is morally and ethically right; this is a question of how DEI practices can make international development organizations and our partners in the US government more effective, sustainable, and impactful. Companies that are guided by the interrelated principles of equity (that all persons are treated fairly and justly) and equality (that all persons are considered equal, with the same opportunities, rights, and responsibilities) and consistently apply this lens are more likely to achieve better development outcomes. These policies—when clearly communicated, consistently tracked, and used to adapt programs accordingly—can encourage different viewpoints that can be authentically incorporated into programming at all levels, from the home office to the field. If we don’t confront, improve, and systematize how we integrate DEI into international development, we’ll all perform at a suboptimal level. Simply put, more diverse organizations perform better. As contractors working in countries and cultures around the globe, CIDC members are better positioned than most to appreciate and embrace the diversity of the populations with and for whom we work on behalf of the American government and taxpayers. Without a diversity of people and viewpoints— bolstered by policies and cultures that allow for all staff to feel comfortable bringing their talents to bear—development organizations will be less effective and impactful. A DEI lens ensures that all ethnic groups are present and active in peace talks in conflict zones, and that we sub-contract work to indigenous-owned businesses whenever possible. Impact stories need to be told from the local perspective, and it is imperative that we consistently partner with and listen to the communities with whom we work. By valuing the perspective of our local staff, our programs will be more effective, have stronger roots in the community, and be more sustainable in the long term. While the USG and other donors are increasingly tracking impact numbers and setting targets to
engage with the most marginalized populations, we can and should be doing more. Change starts when leadership emphasizes the critical nature of integrating DEI into all aspects of our work—from hiring, to inclusive office culture, to diversity of partners in the field. With DEI prioritized and driven by leadership in the home office and the field, we can effectively tailor our programs in a way that addresses the systemic challenges and integrates marginalized populations that most need the extra support. CIDC member projects tell the story of this commitment to diversity and inclusion. For example, building on feedback from women impact investors and business owners in the Middle East and Asia, USAID has established a network of female entrepreneurs in Egypt to ensure they have better access to start up funds and mentoring through its USAID Strengthening Entrepreneurship and Enterprise Development project, and built a network of women-owned businesses and female entrepreneurs in Fiji through the government of New Zealand’s Business Link Pacific. USAID has engaged women in the energy sector through USAID’s Kosovo Energy Security of Supply project, created jobs for youth with disabilities through USAID’s Toward Enduring Peace in Sudan project, and adopted our REFLECT Reconciliation Action Plan to move forward in stronger collaboration with the Aboriginal and Torres Strait Islander peoples in Australia.
Conclusion
Now more than ever, when so many of these issues are exacerbated by the isolation and impact of COVID-19, international development programs are only as strong as our commitment to listening to, engaging with, and co-owning projects with the local communities and marginalized, diverse populations that they are intended to serve. Real solutions begin at home, in each of our offices, and in partnership with our clients and funders. It takes more than policy within an organization to be the change we want to see. It takes the courage to call out behavior and action that does not align with the culture we seek to create. It takes prioritizing and amplifying voices and people in the communities where our programs are implemented. It takes time, and the time is now. Torge Gerlach, Chief Executive Officer, DT Global
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Reinforcing the Mission Driven nature of CIDC work: Climate Resilience – Accelerating Solutions Through Knowledge Transfer
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CIDC 2021 Compendium
Whether decades old or newly formed, CIDC member companies bring years of experience with them based on their passion for development work. This knowledgebase ranges widely: from sector-specific expertise to broader program management and U.S. contracting experience.
Because many CIDC companies also respond to needs here in America for federal, state and counties, they can apply those lessons learned in their work overseas. This transfer of knowledge and practices not only ensures more comprehensive responses to proposals – thus speeding up the contractor selection process – it also produces results that address what otherwise would likely have been unforeseen complications – thereby reducing implementation times and reducing costs. For some sectors knowledge transfer from one to the other can accelerate programmatic responses. One area where this is quite fruitful is climate resilience. In the United States over the last 30 years, many CIDC companies have provided climate resilient infrastructure, policies, and programs to local governments - especially in jurisdictions vulnerable to flooding. As a result, these county and municipal governments integrate climate resilience into all aspects of planning. This occurs with activities such as infrastructure development, emergency planning, and land-use policy. By anticipating and mitigating changing climate impacts over the next several decades, thousands of lives and billions of dollars in recovery costs can be saved. The benefit of this work means that knowledge and practices implemented domestically in the US can be easily adapted into USAID projects. One example is a USAID funded project in Mozambique – Coastal City Adaptation Project.
Home to 60 percent of the country’s population, Mozambique’s coastal cities drive national economic development. But because of their locations, they are also some of the most vulnerable cities in Africa: they are exposed to rises in sea level, cyclones, erosion, tropical storms, and other effects of climate change. The USAID Coastal City Adaptation Project (CCAP) worked with five cities — Pemba, Quelimane, Nacala, Mocimboa da Praia, and Ilha de Moçambique — to protect livelihoods from the effects of climate change and improve residents’ lives. There are many other examples of knowledge transfer of climate and environmentally related knowledge and practices into USAID projects by firms that first worked in developed countries. This approach is critical in accelerating adoption of lifesaving approaches, especially as climate related events increase and expose populations to severe risks.
Conclusion As climate change progresses and USAID seeks programming that supports more resilient outcomes, climate resilience sits at the top of that list. Firms and organizations with decades long experience with these issues in the US and Europe, already adapt solutions for different conditions in their countries. Adaptation of climate resilience into the great variety of lowand middle-income countries, is but one more problem they are eager to solve. Don Ellison, SVP, ICF
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U.S. Foreign Assistance: A Hand Up Rather Than a Handout In measuring success of foreign assistance projects, we need to look at the development results achieved—the sustainable capacity built—given dollars spent, rather than focusing on whether foreign assistance dollars went to international or local organizations or staff.
A key aspect of most U.S. foreign assistance is: A Hand Up Rather Than a Handout. That is, rather than simply give cash or goods directly to beneficiaries, most American foreign assistance programs aim to transfer skills, knowledge, best practices, capabilities, or institutional capacity to beneficiaries so that they can better meet their development challenges in a sustainable and ongoing way. With the important exceptions of disaster response and humanitarian relief, most assistance programs aim to improve how health systems provide medical care, to strengthen how schools provide early grade education to children, to reduce corruption in how governments manage expenditures and procurements, to increase private-sector generation of jobs and livelihoods, to overcome barriers to international trade, among countless other activities. The intended outcome
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of most development programs is to improve how local systems function, and, in essence, to work ourselves out of a job. If one accepts this principle that the most effective, long-term foreign assistance is A Hand Up Rather Than a Handout, what matters most is how well any aid implementing partner—whether local or international—succeeds in transferring capability to the ultimate beneficiaries, i.e., where is the greatest bang for the buck? Sometimes local implementing partners may be able to successfully transfer knowledge to beneficiaries at a best-value cost, and sometimes international implementing partners such as those represented in the CIDC will be most adept at doing so, along with ensuring the required regulatory compliance and sound financial management.
CIDC 2021 Compendium
When considering which development partner, local or international, is providing the most direct benefit to a recipient community, it is important to remember that projects implemented by American contractors will largely be staffed by local technical and operations experts, with international experts only participating in a few specialized roles where a country lacks sufficiently qualified local experts, such as in specific technical areas or in the minutia of U.S. foreign assistance regulatory oversight. Conversely, local implementing partners might staff their projects with a mix of local and some international experts. As an example: a project for USAID in Bangladesh is helping the country to increase international trade and improve the business enabling environment so that it creates more jobs. Of the 25 project employees, 21 are Bangladeshi citizens, one is an American, and three are third-country nationals. Similarly, Bangladeshi experts as used as shortterm consultants whenever individuals with the right skillsets are found, and only internationals when the right skill mix can’t be found in country. This project is working to streamline procedures to reduce trade costs at customs points, increase the
use of Authorized Operators to transport goods across borders, build capacity for post-clearance audits, improve public education for small and medium traders, improve e-auction software used by customs, provide training to customs officials on the Harmonized System classification and on customs valuation, improve food safety protections while making regulations less onerous, streamline the company registration process and trade licensing, and support other business enabling environment reforms.
Conclusion Ultimately, the appropriate way to judge the success of capacity building is not to look at what country the implementing partner is registered in, or the nationalities of the employees, but rather, to look at the development results achieved for the partner country relative to the dollars spent on the project. David Snelbecker, CEO, International Development Group LLC
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Preserving Meaningful Changes from the Past Administration Certain initiatives developed by the previous administration under the leadership of former USAID Administrator Mark Green are worthy of consideration and continuance. A whole industry of books and articles has evolved around leadership: how to define it, how it relates to politics and how it impacts governance. Wise leadership recognizes that not everything that preceded it was bad. Certainly, any new team wants to put its mark on an agency, introducing new priorities, themes, and modus operandi—testing its own ideas and advancing its priorities. And certainly, the Biden administration and the new USAID Administrator Samantha Power plan to do so and should, taking over from a White House that expressed little support for foreign aid. Recognizing and prioritizing the critical needs of other nations to
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acquire vaccines against the COVID virus in the short term and helping them to develop policies to fight climate change in the long term are just two obvious examples that the Biden Administration has already begun to implement. However, certain initiatives under the leadership of former USAID Administrator Mark Green are worthy of consideration and continuance. The first initiative was set forth in the USAID Policy Framework: Ending the Need for Foreign Assistance and became known as the Journey to Self-Reliance. It emphasized the creation of a long-term goal for USAID, building
towards a time when foreign aid to developing nations would no longer be necessary. To accomplish this, USAID moved to place a premium on localization— taking steps to extend USAID programming to strengthen local institutions’ own capability to provide the services and programming that the United States and other donors currently provide. Although this has long been an objective of USAID programming, “Localization” seeks new and creative ways to strengthen these local institutions—the for-profit private sector, NGOs, and government—to reach self-sufficiency and function effectively together.
CIDC 2021 Compendium
The second initiative was to incorporate the private sector into the development assistance formula as outlined in the USAID Private-Sector Engagement Policy. This was based on the notion that, if properly leveraged, the more abundant resources of the private sector could be mobilized to accelerate development at a much faster pace. To this end, USAID instituted a program of private sector engagement and experimented with different methodologies to mobilize these resources. Though still a work in process, this initiative deserves serious consideration by USAID’s new leadership. During the prior administration, USAID also produced several additional policies and
strategies including the USAID Policy on Countering Trafficking in Persons; the USAID Digital Strategy; USAID’s Protection from Sexual Exploitation and Abuse Policy; the USAID Education Policy; the 2020 Gender Equality and Women’s Empowerment Policy; the Policy on Promoting the Rights of Indigenous Peoples; and the Acquisition and Assistance Strategy, to mention a few. While it would be unrealistic to acknowledge the tensions that often accompany a transfer of power from one party to another in the executive branch, each of these policies contains many serious and well-researched conclusions and practices that deserve serious consideration by the new leadership.
Conclusion In addition to its policy considerations, the former leadership of USAID took a serious look at reforming the Agency’s organizational structures - attempting to make them more efficient and effective. While most of these changes received the necessary support of Congress, some of these institutional initiatives are still ongoing. Before any new attempts are made at the reorganization of USAID, assessing the efficacy, or inefficiencies, of the most recent round of bureaucratic realignment within the Agency would be the prudent choice. Thomas C. England, President and CEO, ME&A, Inc.
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PSC
Creating Economically Sound Models:
How International Development Companies Help Unlock Additional Capital Multiple US presidential administrations have instituted development policy and programming that increasingly reflect the belief that the commercial incentives of private enterprise can dramatically help drive development outcomes. Private capital is in fact necessary to fill the gap between capital necessary and capital available to achieve development objectives. The U.S. government initially used USAID Development Credit Authority as a credit guarantee mechanism to help raise capital. Its success now forms an integral part of the newly legislated U.S. International Development Finance Corporation.
Innovative Solutions International Development Companies have pioneered ground-breaking market-driven solutions, being at the forefront of private capital mobilization and investment for USAID, other donor, government, and private sector organizations for decades. Over these years, international development companies mobilized billions in investment to advance development objectives all over the world and continue to implement innovative USAID-funded projects such as CATALYZE. Just under this one contract design blended finance solutions and other mechanisms will be applied to mobilize $2B in private capital.
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From the 1980s through the mid to late 1990s, investments in microfinance and agricultural market systems had major roles in USG approaches to development. This accelerated with the fall of the Berlin Wall and disintegration of the Soviet Union and the concomitant decline of the intellectual and political influence of belief in state-centered and run economies and ushered in a long and expanding USG-led era of private, financial, and capital market development. As noted in an earlier piece, international development companies, such as those comprising the membership of CIDC, best steward and emulate the philosophy of foreign assistance as a hand up, not a handout.
CIDC 2021 Compendium CIDC members have played leading and prominent roles in the expansion of the role and objective of private sector development in foreign assistance. CIDC members have also played and continue to play leading roles in building new institutions and building the capacity of institutions that constitute the pillars of market economies, including, but not limited to, banks and other financial institutions, financial and capital market regulators, micro, small and medium sized enterprises across a vast diversity of industries and sectors, expanding numbers of local professional service providers who provide the support to and connectivity among commercial networks and supply and value chains. CIDC members continue to refine, adapt, and apply market systems development approaches to bolster the capacity and functioning of individual institutions. The massive role of CIDC members in the post-Iraq and Afghanistan war scenarios has diminished, yet that work helped to establish a legacy for the importance of Development in the ‘3 Ds’, now manifest in the USAID Bureau for Development, Democracy, and Innovation (DDI). CIDC members not only complement and supplement humanitarian efforts in conflict and post-conflict zones, with private sector actors playing key roles in the delivery of short to medium term assistance, but also lead in the long-term work of building resilience to man-made and natural shocks. Fundamentally, this entails interventions such as installing and expanding digital networks (e.g., mobile phones and digital payment infrastructure for cash transfers), expansion and diversification of transportation options, diversification of supply chains to incorporate multiple micro, small, and medium enterprises, and deepening of financial and capital markets to provide insurance, emergency financial assistance, and other financial mechanisms that allow households, communities and countries to smooth the effects of shocks. CIDC members lead innovation and expansion of the use of blended finance to help meet an expanding array of development objectives in commercially oriented sectors such as agriculture and energy, and ever more in social sectors, such as health and education. Blended finance – i.e., the leveraging of private capital, using donor funds – has become a tool for building market development and resilience, applying approaches that focus on enabling a key component of commercial ecosystems, namely, transaction advisory and business development advisors. Our approach generates blended finance transactions, by using donor grants to fund pay for results incentives for the advisors to “close deals” between financial institutions and designated
demand-side clients (e.g., agro-processors, educational institutions, health services providers, women-owned enterprises, and so on). Meanwhile we also provide training, mentorship, technical assistance, and other forms of capacity building support to those advisors. We also look to embed long-term market viability and capacity support by connecting advisors to local and regional training and other institutions, facilitating connections among advisors and other key market actors. Mobilizing the trillions of dollars required to meet the Sustainable Development Goals—and innovating systemic changes in business models to create lasting change—requires coordinated USG action. The COVID-19 crisis has shed glaring light on the insufficiency of ecosystems of key actors and enabling policies, structures, and capabilities, which mutes blended finance potential. Lack of local capital market integration, poor capacity of intermediaries to connect enterprises with emergency sources of funding, and an absence of blended finance vehicles that work in the aggregate (e.g., standby facilities that would trigger guaranteed government bond issues in a crisis) comprise only a few of the shortcomings in current markets. Concurrently, COVID-19 does offer an opportunity for us to broaden the frame to look at blended finance through a risk/resilience lens. For blended finance to have sustained relevance, especially in the most fragile states, it must be able to respond in a systemic way to systemic crises. Blended finance must yield scope and scale that go beyond individual actors, and over periods of time that extend well beyond “normal” transactional timeframes, not just in response to COVID-19, but also climate change, recurring natural disasters, and persistent threats of man-made unrest.
Conclusion CIDC members lead this next exciting phase of unlocking more private capital to meet a diversifying and deepening well of development and emergencyresponse needs. Financial capital fuels the economic models and systems required to propel development and reduce the risks and impacts of shocks and disasters. CIDC members have the proven profiles, networks, and capacities to partner with other private sector and international development actors, enjoining them to scale beyond the transactional to the systemic. Maria Martinkov, Managing Partner, Palladium
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PSC
Institutional Capacity Building
U.S. development firms play an important support role to USAID and other USG agencies helping partner countries build the institutional capacity essential for fostering resilient and sustainable country-led growth.
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CIDC 2021 Compendium
Support for strengthening host country and regional governmental agencies, non-profit organizations, universities, think tanks, and businesses has been a central feature of USAID programming since the late 1960s. The rationale for this support includes both the central roles played by these organizations in achieving national goals, and the opportunities to deploy a major U.S. asset in support of those national aspirations in priority counties. The list of institutions that have benefitted from these investments is long -- ministries of Health, Agriculture, Education, Water, and Environment; prominent national teaching and research institutions; local and regional government agencies; regulatory and anti-corruption commissions; cooperatives and small businesses; courts and legislatures; advocacy and service delivery institutions; and more. The U.S. commitment to support and strengthen these local institutions has been bipartisan and stands in stark contrast to some traditional forms of charity and foreign aid from countries such as China that prioritize loans and cash transfers or, at the other extreme, bypass established local organizations. By contrast, U.S. assistance has prioritized building the capacity of local institutions and supporting specific institutions to enhance their self-reliance, performance, responsiveness, and accountability. Private U.S. consulting firms have played an essential and unique role in this effort since the outset drawing on the capabilities of a robust U.S. consulting sector, serving as a flexible and on-call source of expertise and a gateway to U.S. innovation, and providing a force magnifier for USAID’s direct hire workforce. Today, more than 300 U.S. companies, working at the behest and under contract to USAID, the State Department, and other USG agencies, support these efforts and contribute to the scale, sustainability, and impact of development solutions. More than half of these firms are small businesses, and the owners of these businesses represent a diverse cross-section of America.
The world has changed dramatically since U.S.sponsored institutional development efforts began five decades ago. Today, it is possible to complement, and often to substitute for, U.S. technical assistance with a wide array of host country and third county expertise. There are also a range of capable host country public and private institutions that serve as benchmarks for worldclass performance. But the need for deliberate efforts to strengthen the capacity, transparency, and responsiveness of local institutions remains significant. Today’s institutions are called upon to solve a new and complex array of challenges, many of them with transnational implications. These institutional challenges are particularly pronounced in fragile states. Post-conflict work on state capacity and reconciliation, responses to the second and third round effects of the pandemic, managing the impacts of internal displacement and forced migration, and climate change mitigation are but a few of the problems facing over-burdened and under-resourced institutions in these nations which also face more familiar challenges in meeting the education, health, food, justice, and livelihood needs of their people.
Conclusion No other country has developed an array of service providers comparable to the development consulting industry in the United States, and none has a comparable track record in providing technical support for the array of host country and regional institutions that are so essential to resilient, sustainable, country-led growth. This capability and track record, and this commitment to strengthening host country institutions, are significant differentiators for U.S. development assistance and serve as a strong example of public-private partnership in the service of national objectives both here at home and in the countries we serve. Larry Cooley, President Emeritus, MSI, A Tetra Tech Company
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Contact Info Paul Foldi, VP, International Development Affairs Foldi@pscouncil.org (703) 875-8397 www.pscouncil.org 4401 Wilson Boulevard, Suite 1110 Arlington, VA 22203
