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US/AFGHANISTAN: Short-staffed USAID tries to keep pace

by Ken DilanianUSA Today
February 1st, 2009

During her Senate confirmation hearing a few weeks ago, Secretary of State Hillary Rodham Clinton offered a blunt assessment of the U.S. Agency for International Development, founded under President Kennedy to revamp foreign assistance.

"I think it's fair to say that USAID, our premier aid agency, has been decimated," she said. "It has half the staff it used to have. It's turned into more of a contracting agency than an operational agency with the ability to deliver."

Like other government functions, U.S. foreign aid and reconstruction largely has been privatized a process that began decades ago but accelerated under the George W. Bush administration. To a far greater extent than the State Department, with its much-publicized use of private security firms, USAID turns to contractors to fulfill its basic mission of fighting poverty and promoting democracy.

After decades of staff cuts, contract spending has outpaced the agency's ability to manage it, said Ronald Neumann, the head of the American Academy of Diplomacy, who served as ambassador to Afghanistan from July 2005 to April 2007.

An October report by the academy said USAID suffers "a drastic shortage of people with the technical capabilities" to oversee contractors. The agency employs just five engineers, the report said.

The consequences are on display in Afghanistan and Iraq, where government audits and independent reports have chronicled contractor failures.

Gradually downsized since '70s

During the Vietnam War, agency workers built roads and dug wells. These days, a far smaller staff mainly pounds keyboards and shuffles paper, said Carol Lancaster, a Georgetown University professor who was an agency administrator from 1993 to '96.

For much of its work, the agency hires large U.S. firms, many of them private, for-profit concerns whose executive ranks include former USAID employees. Those companies in turn hire subcontractors, which sometimes hire other firms. At the end of the chain are local workers at the site.

"USAID has left the retail game and become a wholesaler," Lancaster said. "In fact, it's become a wholesaler to wholesalers. It takes you far from what's happening on the ground."

The agency has lost half its permanent staff in a gradual downsizing since 1975 that accelerated after the Cold War. Then came a boost in spending for Iraq and Afghanistan. In 1990, USAID had nearly 3,500 people administering $5 billion a year in aid, according to the academy report. Now it has 2,200 people overseeing more than $8 billion annually.

Annual contract spending rose from $479 million in 2000 to about $2 billion a year now.

"Even when there are not headline-grabbing abuses," Clinton told senators, "there has been a steady transfer of authority and resources from government employees and a chain of accountability to contractors, and we have reaped the very difficult consequences of that."

Agency officers such as Francisco Zamora, public health expert and vice president of the foreign service union, say contractors provide flexibility.

Humanitarian workers point to Afghanistan as an example of systemic weaknesses. "Vast sums of aid are lost in corporate profits of contractors and sub-contractors," Matt Waldman, an Afghanistan-based analyst for Oxfam International, said in a study released last year.

In an interview from Kabul, Michael Yates, the top USAID official in Afghanistan, disputed that. He acknowledged that contractors in Afghanistan require security and overhead costs but said contractors "expand the pool of expertise available."

Private contractor under fire

A major contractor in Afghanistan is Chemonics International, a private Washington firm that has seen its USAID contracts grow from $6.7 million in 2000 to more than $250 million last year, according to government records. In an interview, Chemonics President Richard Dreiman called Waldman's analysis "exaggerated." He said Chemonics typically earns less than 3% net profit on its contracts.

In 2003, Chemonics won a $153 million contract to promote Afghan agricultural development. A July 2005 analysis by the Government Accountability Office, the investigative arm of Congress, concluded that the company built irrigation canals and vaccinated livestock as promised but "failed to address a key program objective": integrating its activities into a functioning agricultural market.

"I think they've identified a challenge that remains to be completed," Dreiman said, saying that the insurgency and corruption stood in the way.

A 2006 report by Corpwatch, a non-profit group that monitors government contracting, found that grain storage silos and greenhouses built under the Chemonics contract "had collapsed or disintegrated during their first Afghan winter."

A Chemonics spokeswoman, Lisa Gihring, said in an e-mail: "There was around a 98% success rate with these structures. Those that failed did so because not all laborers had the same skill levels for construction."

Despite those issues, USAID awarded Chemonics another agricultural contract, worth $102 million, in 2006. Last year, the agency's inspector general found that Chemonics could not show that it fulfilled any of the eight project goals, such as training farmers. The audit criticized "significant delays" in a commercial farming operation and "significant construction defects" in buildings.

Chemonics, Dreiman said, is correcting the problems and is "making a difference in Afghanistan."

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