Testimony submitted by
David J. Berteau, President and CEO of the Professional Services Council
to the Senate Foreign Relations Committee Subcommittee
on State Department and USAID Management,
International Operations, and Bilateral International Development
Hearing on USAID Localization: Challenges, Opportunities, and Next Steps to Further
Development Initiatives at the Local Level

March 9, 2023

Chairman Cardin and Ranking Member Hagerty:

The Professional Services Council (PSC)[1] represents more than 440 U.S. government contractors providing critical technology and professional services to every federal agency.  PSC’s Council of International Development Companies (CIDC)[2] represents those PSC member companies that work with the U.S. Agency for International Development (USAID) and the U.S. Department of State to support effective U.S. foreign assistance programs around the world. 

PSC commends the Senate Foreign Relations Committee (SFRC) for its continued support for and oversight of these programs, including the policies, processes, and resources required to provide timely, needed assistance that is aligned with U.S. national interests.  This hearing provides an excellent opportunity for this committee to examine ways to help ensure that communities receiving assistance both want the aid and are able to implement development programs in a manner consistent with U.S. legislation and procurement regulations. I thank you for the opportunity to provide PSC’s comments and suggestions in this regard.

By way of background, our members listened with great interest to USAID Administrator Samantha Power’s November 4, 2021, speech at Georgetown University, in which she stated:

[I]n addition to a 25 percent target of our assistance going to local partners, today I’m announcing that by the end of the decade, 50 percent of our programming, at least half of every dollar we spend, will need to place local communities in the lead to either co-design a project, set priorities, drive implementation, or evaluate the impact of our programs.[3]

As development professionals, some with more than four decades of experience working for USAID, CIDC members fully embrace this call for improved local engagement and participation.  Their experience has taught them that without significant local partner engagement in project development and implementation, the achievement of long-term sustainable goals is virtually impossible.  In recognition of this reality, almost all of USAID’s solicitations have for years now required significant, explicit local engagement requirements and metrics.   

In support of these requirements, PSC shared with USAID officials two CIDC white papers[4] with insights on USAID’s locally-led development agenda and recommendations for ways in which the Agency can better track and report support for local stakeholders.  The papers showcased how USAID implementing partners, including CIDC members, have accelerated the Agency’s progress in support of locally-led development over recent decades.  These implementing partners are already doing much to reach Administrator Power’s stated goals. 

Since submitting these papers to the Agency, our members have had numerous conversations with officials regarding on-the-ground experiences, suggestions, and other feedback.  PSC applauds the Agency for this outreach and engagement, and our members plan to continue sharing insights on localization issues with USAID officials.

At the same time, we believe the Agency must examine closely those structures, procedures, and requirements that create significant dampening effects on potential new entrants into the international development ecosystem.  These requirements erect barriers to entry that deter not only potential new local partners, but also American ones as well, particularly small businesses.

Administrator Power has made “Bureaucratic Burden Busting” a key driver in her reform efforts. As she noted at the swearing in of a senior USAID official in October 2022:

[T]hese major reform priorities depend upon our ability to cut the time our staff spends filling out paperwork, increasing the time they’re able to spend in the field and with our partner organizations.  And so we will look to Clinton to help spearhead our bureaucracy busting initiative, with the goal of saving our Agency staff members millions of hours collectively.  Our Agency already tackles the world’s toughest challenges. Needless bureaucracy should not be one of them.[5]

Her remarks highlight the fact that, given the complexities of the U.S. Government procurement process and rules, too often only those entities with significant, demonstrated and documented past performance implementing USAID programs—and with abundant legal, accounting, and other specialized back-office staff—are able to meet U.S. Government requirements and compete successfully in the current federal marketplace.  Reporting requirements consume countless staff hours and company resources even as they enable American implementing partners to account for every penny in order to ensure Congress and the American people that their generosity is accounted for.  For localization to realize increased success, USAID will need to determine on a country-by-country, program-by-program basis whether local firms have the capacity to meet these requirements.  We believe these determinations should be of particular interest to Congress.

Administrator Power recognized this in her 2021 Georgetown address:

[W]orking with local partners, it turns out, is more difficult, time-consuming, and it’s riskier.  Local partners often lack the internal accounting expertise our contracts require, or they might lack the legal counsel needed to shape their contracts, many of which can run hundreds of pages long.[6]

PSC suggests that the Committee consider directing a Government Accountability Office study to explore the impact of these constraints on potential contracting partners—both American and local.  Such an assessment could help enumerate and illustrate these barriers more clearly and set the stage for potential actions to reduce, as appropriate, overly burdensome and unnecessary requirements Such actions could not only support localization efforts, they could lead to better outcomes as well.

In addition, PSC believes a key impediment to the most efficient, effective implementation of USAID programs, including localization efforts, has historically been the absence of a sufficient number of trained, experienced contracting officers tasked with reviewing, evaluating, and awarding projects that are vital to delivering assistance.  We call attention to Administrator Power’s cogent expression of this point in 2021 congressional testimony, in which she highlighted the disparity in USAID and Department of Defense workload:

Over the last two decades, the funding levels and complexity of our programs has expanded at a rate that significantly outpaces our staffing.  For instance, each USAID contracting officer…has managed over $65 million annually over the past four years, more than four times the workload of their colleagues at the Department of Defense who manage an average of about $15 million.  Moving forward, we are seeking not a return to the previous status quo, but to work with members of Congress to increase our number of direct hires, while maintaining a strong focus on creating a more diverse, equitable, and inclusive Agency.  With your support, USAID will move aggressively to tackle the world’s toughest challenges in order to build a more stable and prosperous future for us all.[7] (emphasis added)

PSC urges the Committee to continue to provide USAID with both the funding and the hiring flexibility to provide, as appropriate, a sufficient number of contracting officers needed to implement the required workload.

In summary, success in localization hinges on local capability to comply with U.S. procurement regulations and the ability of USAID officials to obligate needed funding under contracts.  Thank you for the opportunity to submit this written statement, and we at PSC welcome any further engagement and dialogue with the committee on these key issues.