May 7, 2012

Contractors Lobbying To Keep Needlessly Taking Millions Of Dollars Of Development Aid

Contractors Lobbying To Keep Needlessly Taking Millions Of Dollars Of Development Aid
It remains to be seen whether lobbyists will win the battle to make USAID needlessly spend money on American contractors.

The words “foreign aid” conjure up images of American tax dollars being sent overseas to populations far away from our shores. Critics of foreign aid see this as a transfer of taxpayer money to non-Americans. Supporters see it as a way for America to support struggling people in developing nations, promote our values, and protect U.S. interests.

But often, foreign aid is neither of these things. For years, big American corporations have won control of foreign aid contracts so that they handle the delivery and implementation of development programs. This way, they take in hundreds of millions of dollars, sometimes becoming a burdensome and expensive middle man between the U.S. government and the foreign populations that overseas aid is supposed to comfort.

Earlier this year, the U.S. Agency for International Development (USAID) had a procurement policy change. The agency  established new rules that “will allow [it] to purchase most goods and services from developing countries, with notable exceptions including US-funded food aid, motor vehicles and US-patented pharmaceuticals.” It plans to spends up to 30 percent of its funds through local firms rather than U.S.-based corporations, which would both save American taxpayers money and boost the foreign local economies that USAID is designed to improve.

New York University’s Development Research Institute (DRI) blog notes that American contractors are not taking this news well. The Professional Services Council and the Coalition of International Development Companies, both representing contractors, have hired the powerful Podesta Group to represent them in Washington to fight USAID’s reforms.

The DRI bloggers note that House Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) has already told USAID he will seek to block their new procurement rules.

“This agency is no longer satisfied with writing big checks to big contractors and calling it development,” said USAID head Raj Shah last year. But if the contractors and their lobbyists have their way, Americans may continue to pay inflated price tags for sometimes subpar development work.