Kelsey O’Brien (email@example.com) is a J.D. candidate at The George Washington University Law School and the Editor-in-Chief of the Public Contract Law Journal. She wishes to thank Judge Jeri Somers, Bryan Byrd, Professor Christopher Yukins, Scott Sheffler, and Brittany Finder for their support and guidance during the Note-writing process.
Following a tense and tumultuous thirteen-year war in Afghanistan, the United States Agency for International Development (USAID or Agency) stepped up to provide foreign aid and reconstruction assistance to the wartorn nation. To carry out this public purpose, USAID entered into cooperative agreements with established implementing partners. Despite limited progress, the Afghanistan reconstruction effort largely resulted in allegations of waste, fraud, and abuse. Responding to allegations in the media and demands for accountability, USAID took action — suspending two of its largest and well-established implementing partners — without much explanation.
This Note explores the problems USAID experienced using cooperative agreements to implement foreign assistance programs in Afghanistan.1 Part II discusses different federal funding agreements, what it means for an agency to be “substantially involved” in implementing cooperative agreements, nonprocurement debarment and suspension, and USAID’s current contracting regime. Part III looks specifically at USAID’s use of cooperative agreements in the Afghanistan reconstruction projects from 2001 to 2013, the Agency’s major implementing partners, and how “substantially involved” USAID was in the projects. Next, Part IV discusses two specific Afghanistan aid programs, what went wrong, and the results. Finally, Part V suggests amending the U.S. Code of Federal Regulations (CFR) to include descriptive guidance and requirements on an agency’s “substantial involvement.”
A. Procurement Contracts, Grants, and Cooperative Agreements
The federal government uses procurement contracts, grants, and cooperative agreements to reflect a legal relationship between an executive agency and a federal funding recipient.2 Congress enacted the Federal Grant and Cooperative Agreement Act (FGCAA) in 1977 to guide federal agencies in selecting the appropriate legal instrument when obligating federal funds.3 Specifically, Congress sought to “promote a better understanding of United States Government expenditures and help eliminate unnecessary administrative requirements on recipients of Government awards.”4 To achieve this goal, the FGCAA attempted to prescribe criteria for federal agencies to use when deciding to utilize a procurement contract, a grant, or a cooperative agreement.5
A federal agency’s choice between a procurement contract and a grant or a cooperative agreement depends on the principal purpose of the instrument. A federal agency is required to use a procurement contract when the principal purpose of the instrument is to acquire property or services for the direct benefit or use of the U.S. government.6 If, however, the principal purpose of the instrument is to transfer a thing of value to the beneficiary or partner to assist in carrying out a public purpose, a federal agency is required to use a grant or cooperative agreement.7 Thus, with grants and cooperative agreements, the federal agency is not the direct beneficiary of the relationship.
A federal agency’s choice between a grant and a cooperative agreement depends on the agency’s anticipated involvement in the project. If “substantial involvement” between the federal agency and the intended beneficiary is not expected for successful project completion, the federal agency must use a grant.8 If, on the other hand, successful project completion depends on a federal agency’s “substantial involvement,” the agency must use a cooperative agreement.9 Despite this statutory distinction, there is little guidance for agencies on what it means to be “substantially involved.”10
B. “Substantial Involvement” in Cooperative Agreements
The FGCAA does not to define “substantial involvement,” and there is little guidance elsewhere.11 In enacting the FGCAA, Congress decided to leave executive agencies with flexibility in developing guidelines on what establishes substantial involvement, explaining “the intent is to require executive agencies to make conscious decisions on the choice of instruments and the basic relationships they reflect. In anticipation of governmentwide guidelines, all that is required is that the agency be able to reasonably justify its choices.”12
The Senate report on the FGCAA provides examples of relationships where an executive agency may be “substantially involved” with a recipient:
(1) Federal “project management” or Federal program or administrative assistance would be helpful due to the novelty or complexity involved (for example, in some construction, information systems development, and demonstration projects);
(2) Federal/ recipient collaboration in performing the work is desirable (for example, in collaborative research, planning or problem solving);
(3) Federal monitoring is desirable to permit specified kinds of direction or redirection of the work because of interrelationships among projects in areas such as applied research; and
(4) Federal involvement is desirable in early stages of ongoing programs, such as Health, Education, and Welfare (HEW) welfare activities or Law Enforcement Assistance Administration programs, where standards are being developed or the application of standards requires a period of adjustment until recipient capability has been built.13
These examples illustrate situations when an executive agency may be “substantially involved” with a beneficiary for the purposes of selecting a cooperative agreement as the governing legal instrument, but there is little substantive guidance or requirements on what an agency actually must do to be “substantially involved” with a beneficiary during project performance.14
The FGCAA directed the Director of OMB to issue supplementary interpretative guidelines to support consistent use of procurement contracts, grant agreements, and cooperative agreements.15 The OMB published guidance in 1978 (1978 Guidance).16 In the OMB’s view, “substantial involvement” in the FGCAA refers to agency participation or operational involvement in carrying out the project.17 The 1978 Guidance distinguishes agency participation and agency oversight in terms of “substantial involvement.”18 The OMB declared “substantial involvement” is a “relative” concept, and it is the OMB’s policy that agencies should “limit Federal involvement in assisted activities to the minimum consistent with program requirements.”19
Subsequent legislation,20 executive guidance,21 and individual agency policies and procedures based on the 1978 Guidance22 have further developed the federal grant and cooperative agreement regime.23 To consolidate the numerous federal grant and cooperative agreement laws, the OMB published Final Guidance on Uniform Administrative Requirements Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) in 2013.24 The Uniform Guidance supersedes earlier OMB circulars25 and aims to remove conflicting guidance and establish standard language.26 The OMB claimed implementation of the guidance will “ease administrative burden and . . . strengthen oversight over Federal funds to reduce risks of waste, fraud, and abuse.”27
Absent from the Uniform Guidance is any direction or definitive requirements for any agency on its “substantial involvement” in the performance of a cooperative agreement. This leaves individual federal agencies with wide discretion for determining whether a project requires “substantial involvement” and what exactly that involvement will be.28 The agency-wide OMB guidance and individual agency regulations for cooperative agreements are codified in title 2, subtitles A and B, of the C.F.R.29 Most agency regulations simply codify the OMB guidance30 and use internal policy guidelines to govern cooperative agreement administration.31
When an agency anticipates that it will participate substantially in assisting a federal funding recipient in a project to carry out a public purpose, a cooperative agreement is the proper legal instrument to reflect the relationship. However, no matter what legal instrument is used, federal funding recipients must abide by the requirements of the agreement and the law or face the possibility of suspension or debarment.
C. Nonprocurement Debarment and Suspension
If a federal funding recipient (person or entity, hereinafter entity) violates the requirements of an agreement — whether a procurement contract, a grant, or a cooperative agreement — the recipient runs the risk of suspension or debarment.32 For procurement contracts, the Federal Acquisition Regulation regulates agency suspension and debarment actions.33 With regard to non- procurement agreements, such as grants and cooperative agreements, most federal agencies have adopted the common rule developed by the OMB.34
Suspension and debarment are sanctions imposed by agency suspension and debarment officials (SDOs), which exclude an entity from doing business with the federal government.35 These exclusionary measures, when rationally and logically supported, protect the public interest by ensuring the federal government conducts business only with responsible entities.36 A suspension immediately excludes an entity from participating in federally funded activities for a temporary period of time, pending an investigation.37
A debarment is an exclusion for a specific period of time.38 Suspension and debarment are serious matters that can have devastating ramifications for federal funding recipients.39 Used properly, these sanctions can be powerful tools for agencies, such as USAID, to combat waste, fraud, abuse, and poor performance.
D. United States Agency for International Development
In 1961, President John F. Kennedy signed the Foreign Assistance Act40 into law and created the USAID by executive order.41 With its creation, USAID became the central agency charged with carrying out U.S. foreign assistance, aid, and economic development programs.42 The Agency began with a “ ‘basic human needs’ approach” to international aid, which focused on developing human resources, dispensing food and nutrition, and providing health and education services to foreign nations.43 In the 1980s, the Agency committed to expanding economic growth in developing countries and focused on revitalizing agriculture and expanding domestic markets.44 During this time, aid shifted from Agency-implemented projects to private voluntary organizations implementing large Agency programs.45 Throughout the 1990s, USAID’s priority became sustainable development and improving the quality of life for individuals in developing countries.46
In the 2000s, the wars in Afghanistan and Iraq brought change and evolution to the Agency’s approach to international aid.47 For the first time, USAID issued a joint strategic plan with the U.S. Department of State, which “intensifie[d] U.S. attention on failing states” and focused on advancing U.S. national security strategy.48 The plan tasked USAID with helping Afghanistan and Iraq rebuild government, infrastructure, and civil society.49 As the Agency’s mission catapulted into rebuilding these war zones, USAID began an aggressive campaign to find new organizations to partner with and looked to the private sector for support.50 USAID shifted from primarily implementing its own projects to managing implementation instruments, such as procurement contracts, grants, and cooperative agreements, in order to extend the reach of the Agency’s foreign assistance.
2. USAID Implementation Instruments and Administration
USAID implementation instruments (procurement contracts, grants, and cooperative agreements) create binding relationships with outside parties to carry out various federally funded projects and programs.51 Federal law, OMB regulations, the FAR, and the USAID Acquisition Regulation52 provide the regulatory and statutory framework for how the Agency manages public funds.53 USAID’s Automated Directives System (ADS) provides guidance to USAID staff for all contracting activities, including implementing cooperative agreements.54 The ADS prescribes the Agency’s policy directives and are not codified in the Agency’s regulations.
Consistent with the FGCAA, a USAID Agreement Officer (AO)55 is required to use a cooperative agreement when the project’s intent is to transfer a thing of value to carry out a public purpose and the AO anticipates there will be substantial involvement between the Agency and the beneficiary.56 While USAID always must have some involvement in administering cooperative agreements — for example, through monitoring project performance, reviewing reports, and providing approvals — instances of USAID’s substantial involvement include the AO’s active approval of the beneficiary’s implementation plans and specified key personnel; Agency collaboration with the beneficiary, including reviewing and approving monitoring and evaluation plans; and the Agency’s reservation of the authority to “immediately halt a construction activity if identified specifications are not met.”57
Substantial involvement does not amount to control over the beneficiary’s program management, and the specific level of involvement varies among projects — from reviewing reports and performing site visits to specific elements of substantial involvement as articulated in the cooperative agreement.58 The AO and the Agreement Officer’s Representative (AOR) are required to maintain contact with the beneficiary and carry out the specific substantial involvement elements articulated in the cooperative agreement.59 The AO’s and the AOR’s roles are critical to all USAID cooperative agreements, but they are especially critical in foreign assistance projects. For USAID foreign assistance projects, the AOR is the central coordinator be- tween the beneficiary and the host country government — project leaders and managers are considered official U.S. government representatives, charged with opening lines of communication with host country governments.60 Guided by the operational policy of the ADS, the AO and the AOR administer USAID’s foreign assistance cooperative agreements.
III. USAID’s Use of Coopertative Agreements for Afghanistan Assistance
A. Afghanistan Assistance
At the end of a thirteen-year war in Afghanistan, the United States shifted its focus to providing foreign aid and reconstruction assistance to the war-torn nation. At the broadest level, the main purpose of the reconstruction aid was to “stabilize and strengthen the Afghan economic, social, political, and security environment so as to blunt popular support for extremist forces in the region.”61 President George W. Bush focused on counterterrorism as a justification for reconstruction aid.62 The President’s rationale was that nation-rebuilding projects would help eliminate terror networks in Afghanistan and create an ally in the global war on terror through building a free society.63 To help accomplish this goal, the Bush administration utilized USAID extensively,64 aligning the Agency’s objectives more closely with the objectives of the military.65 To advance these political objectives, Congress obligated $96.57 billion between 2002 and 2013 for Afghanistan aid.66 The appropriations principally went to the U.S. Department of Defense (DoD), Department of State (State), and USAID.67 Across the board, these agencies relied extensively on contractors and implementing partners to carry out the projects.68
B. Major USAID Implementing Partners
Of the total $96.57 billion obligated for Afghanistan aid, USAID awarded $13.3 billion in procurement contracts, grants, cooperative agreements, and other awards.69 Recipients used the aid funds to “build or rebuild the physical infrastructure of Afghanistan, establish training or technical assistance programs for the Afghan government, deliver relief assistance to the people of Afghanistan, and provide security or other support functions to facilitate reconstruction efforts.”70 The Agency engaged a variety of implementing partners, such as nongovernmental organizations (NGOs), for-profit corporations, multilateral organizations, and Afghan and U.S. governmental entities.71
Cooperative agreements accounted for twenty-four percent of USAID’s total obligated Afghanistan reconstruction aid.72 Over seventy percent of that funding went to only ten recipients.73 International Relief and Development (IRD), a nonprofit NGO, received the largest amount of USAID cooperative agreement funding.74 From October 2001 through June 2013, IRD received five USAID cooperative agreements worth $895 million for Afghanistan aid projects.75 These projects included work on the Strategic Provincial Road – Southern and Eastern Afghanistan Project (SPR-SEA) and the Southern Regional Agricultural Development Program (S-RAD), among others.76 The Academy for Educational Development (AED), another nonprofit NGO, was also a key implementing partner for USAID, receiving $146 million in cooperative agreement funding.77 The Afghanistan Higher Education Program (HEP) was one of AED’s major projects with USAID.78
The Agency and the NGOs faced several problems in implementing these cooperative agreements, some of which were completely out of either parties’ control. Other problems, however, were completely within the Agency’s control.
IV. Problems with USAID’s Cooperative Agreements for Afghanistan Assistance
A. The Programs
1. AED’s Afghanistan Higher Education Program
In January 2006, USAID and the Afghanistan government awarded AED a $38 million cooperative agreement to assist in implementing the HEP.79 USAID and the Afghanistan government sought to improve the quality of education by improving the quality of teacher education at higher education institutions through the project with AED.80 To allow the Afghan communities to experience consistent, high quality instruction, the mission focused on creating a sustainable education structure.81 This was to be accomplished by transforming the instruction of teaching at higher education institutions and institutionalizing these structures.82 While the program progressed,83 significant problems with program implementation threatened the success and sustainability of the project.
Meeting the program’s objective84 of achieving a sustainable educational structure required coordination between the Afghanistan Ministry of Education (MOE) and the Afghan Ministry of Higher Education (MOHE).85 The two ministries are interdependent in the development of quality higher education.86 The MOE is responsible for preparing students to attend higher education institutions, and the MOHE is responsible for managing higher education institutions (pedagogical institutions, universities, etc.).87 Because of this interdependency, the cooperative agreement made collaboration be- tween the two ministries a critical objective — the collaboration was essential for sustainable results.88 Two years into project implementation, no progress was made in meeting this critical objective.89 “[P]olitical tensions between the ministries made cooperation . . . slow and difficult.”90 Eventually, AED ceased pursuit of this objective and assumed that USAID would work to coordinate collaboration between the ministries.91 At this point, two years into the five-year project, USAID had obligated $23 million of the $38 million award.92 The Agency later suspended the project.93 The HEP was only one of many problematic USAID assistance agreements; the Agency also experienced problems in implementing the S-RAD Program.
2. IRD’s South Regional Agricultural Development Program
In August 2011, USAID entered into a nearly $70 million cooperative agreement with IRD to provide farm equipment (e.g., tractors, threshers, solar panels); agricultural supplies (e.g., seed fertilizer, saplings); and agricultural training to farmers and cooperatives94 in the south region of Afghanistan under the S-RAD Program.95 The program was intended to reduce instability in the region and increase agricultural employment opportunities in particular communities.96 The distribution of supplies and equipment was designed to follow the “beneficiary selection and distribution process.”97 Under the process, USAID was supposed to select and approve the districts for the program; IRD, along with the Afghan Directorate of Agriculture, Irrigation, and Livestock (DAIL), would then select the recipient of the respective equipment and supplies within the approved district.98
The program did not go according to plan and reports of waste, fraud, and mismanagement were directed to the Office of the Special Inspector General for Afghanistan Reconstruction (SIGAR).99 SIGAR’s audit of the program found IRD purchased supplies and farm equipment that significantly deviated from the work plan.100 For example, IRD’s work plan detailed the purchase of two-wheeled tractors costing $4,600 each, but the NGO instead purchased ninety-five four-wheel tractors costing $17,600 each — for a total cost of
$1.67 million, without prior approval of USAID.101 However, without any supporting documentation, the AO retroactively approved IRD’s decision to purchase the more expensive tractors.102
Farmers and cooperatives also received supplies from IRD that were entirely useless — such as solar panels for districts that did not have the proper electricity to power them.103 Other large purchases could not be located at all, including at least one-third of the ninety-five tractors, worth more than $650,000, that IRD purchased.104
Possibly the most egregious problem with the S-RAD Program was IRD’s expenditure of over $23 million to purchase and distribute 16,000 irrigation pumps.105 Neither the Agency nor the NGO could articulate why 16,000 pumps were necessary,106 and the governor of one of the Afghan districts expressed concerns with the distribution of the irrigation pumps to the districts IRD selected.107 The governor wrote to IRD explaining that the districts selected to receive the irrigation pumps already had “sufficient water resources” and the distribution of the irrigation pumps to these districts could “result in water theft from existing canals.”108 In response to the governor’s concerns, IRD stored, disassembled, and diverted pumps to different districts — costing the program an additional $6 million.109
The HEP and the S-RAD Program resulted in failure of USAID and the NGOs to meet critical program objects and the mismanagement of millions of dollars. What caused these large, important, foreign aid programs to fail?
B. The Problem: USAID Was Not “Substantially Involved” in the Programs
The HEP and S-RAD Program were not the only problematic Afghanistan reconstruction missions. Numerous other projects by the DoD, State Department, and USAID also failed to meet objectives and wasted taxpayer dollars. In response, Congress created the Commission on Wartime Contracting in Iraq and Afghanistan (CWC) to assess the reconstruction programs; examine the extent of waste, fraud, and abuse; and provide recommendations to Congress.110 Additionally, the U.S. Government Accountability Office, the Office of Inspector General (OIG), and SIGAR investigated the same issues — conducting audits and producing reports. In the CWC’s final executive summary, the commission reported the U.S. government spent an estimated $206 billion on projects in Iraq and Afghanistan, with tens of billions of dollars lost to waste and fraud.111
Problems with the Afghanistan reconstruction projects quickly became a target for the media. Specifically with regard to USAID, the media highlighted the project delays, the heightened tensions between U.S. civilian and military officials in Afghanistan, and overall project mismanagement.112 Military officials increasingly were convinced USAID personnel and implementers were incapable of doing their jobs and complained that the failed initiatives left the troops on the ground vulnerable due to the lack of stabilization the projects were supposed to achieve.113
Several factors challenged the implementation of USAID’s cooperative agreements, such as the “high-threat” environment in Afghanistan;114 however, the primary issues revolved around the absence of USAID’s “substantial involvement.” Specifically, USAID consistently failed to follow the ADS for approving plans, collecting performance information, and having U.S. government representatives on the ground.
1. Approval of Plans and Collection of Reports
Despite the ADS including approval of implementation plans, monitoring plans, and evaluation plans as “instances of substantial involvement,”115 USAID failed to approve plans and collect information useful to managing the performance of both AED and IRD. AED provided USAID with a monitoring plan at the beginning of the program, which contained performance indicators.116 USAID failed to approve this plan, despite USAID policy, and thus, made repeated ad hoc requests of AED for program performance information — diverting AED from programmatic issues.117
Similarly, under the S-RAD Program, USAID failed to approve IRD’s work plan until four months into the one-year project — after “$44 million of the nearly $70 million budgeted initially for the program  had already been obligated and project activities were well underway.”118 USAID later waived requirements in the cooperative agreement, including IRD’s submission of various plans and reports.119 Although USAID policies state the mission should collect and report only on the information most directly useful for performance management,120 SIGAR found the Agency severely limited its access to information it could have used to monitor IRD’s implementation of the program effectively “and mitigate waste and mismanagement.”121
2. Continuity in Staffing
To the extent Agency officials’ presence and participation was required or necessary to meet project objectives, USAID experienced frequent staff turnover in both the HEP and S-RAD Program, to AED and IRD’s detriment. For example, within only two years the HEP had experienced five different cognizant technical officers to administer the project since the award date.122 These officials, considered U.S. government representatives,123 were charged with the technical and administrative oversight of the project124 and were sup- posed to coordinate and facilitate communication between AED and the MOE and MOHE.125 Due to the frequent turnover in staff officials, this co- ordination and facilitation did not happen. Because USAID did not participate in this aspect, the OIG concluded that AED “managed and implemented the activities as it deemed necessary” — which may or may not have aligned with USAID’s intended objectives.126
The S-RAD Program experienced a similar lack of continuity in staffing. Project officials were rotating in and out of Afghanistan so frequently that they often were “misinformed about individual projects” or lacked the historical context to aid in any substantive decision-making.127 This required IRD to make programmatic decisions without guidance from a USAID official,128 allowing the NGO to substitute its policy preferences in place of U.S. official policy.129 When some of these programmatic decisions deviated from the work plan, USAID officials approved IRD’s decisions, sometimes retroactively and without documentation as to why any deviation was permissible.130 Because of USAID’s repeated staff changes throughout the HEP and S-RAD Program, it was not “substantially involved” in implementation — crippling both AED and IRD.
Where the decision to use a cooperative agreement turns on an agency’s anticipation that the project or program will require its substantial involvement in administration for successful completion, it follows that an agency should substantially participate in administration if the project is to be a success. Here, USAID’s failure to adhere to its own policy guidance on what it means to be “substantially involved” proved disastrous — not only for the Afghanistan aid programs, but ultimately for AED and IRD as well.
C. The Results
As mentioned, reports of the troublesome Afghanistan reconstruction projects were prevalent in the media.131 Taxpayers and Congress demanded accountability132 and questioned the lack of suspension and debarment action against federal funding recipients.133 In October 2009, the OIG reported that USAID did not issue enough suspensions and debarments to adequately protect the public interest.134 The report highlighted the Agency’s failure to take suspension or debarment actions — even after contractors settled allegations of fraud with the Agency.135 Of USAID’s awarded $20 billion from 2003 to 2007, the Agency took only eight documented suspension or debarment actions — worth about $378.5 million.136 With USAID awarding $4 billion annually in procurement contracts, grants, and cooperative agreements, the OIG estimated $280 million could be lost every year to fraud.137 In response to the audit and growing demands for accountability, within two years USAID “more than doubled the number of companies and nonprofit groups it ha[d] suspended or debarred.”138
1. Suspension of AED
In December 2010, USAID suspended AED, its tenth largest implementing partner, based on “initial findings” by the OIG.139 While the investigation was ongoing, the OIG reported evidence of “serious corporate misconduct, mismanagement, and a lack of internal controls, [raising] serious concerns of corporate integrity.”140 The suspension barred AED from receiving new federal funds.141 The government alleged AED “failed to ensure that its actions under two cooperative agreements with USAID complied with applicable regulations”142 without any more explanation.143 One of the cooperative agreements at issue was the HEP.144 After years of implementing numerous USAID development projects worldwide, AED sold its assets and dissolved — less than three months after the suspension.145
The sudden suspension and subsequent dissolution of AED made waves in the development community, partly because of its size and history with USAID.146 While USAID lauded the suspension action as “evidence of the government’s careful stewardship of taxpayer dollars,” others in the development community saw it as “the result of a recent crackdown on government contractors at a time when ‘accountability’” took center stage with regard to Afghanistan reconstruction.147 Some applauded the effort, even calling the suspension USAID’s greatest “success story.”148 Others were concerned about the lack of transparency in USAID’s investigation and handling of the suspension.149
2. Suspension of IRD
Following AED’s suspension, USAID suspended its largest implementing partner in January 2015.150 In its suspension notice, USAID cited “adequate evidence” (without more) that IRD lacked sufficient financial controls and “mischarged USAID over a period of at least four years,” despite the fact that IRD recently hired a new president.151 In April 2015, USAID informed IRD it would not lift the suspension, leaving IRD ineligible to compete for government-funded projects.152 Two months later, IRD filed a complaint against USAID in the U.S. District Court for the District of Columbia, alleging the Agency had “established and maintained a suspension and debarment process that results in an inherent conflict of interest in [USAID’s] decision-making process that reinforced the challenges the SDO faced to render an independent suspension decision in [the] matter.”153 At the time, USAID’s SDO was both “responsible for supervising the Agency’s overall awarding of [procurement] contracts, grants, and assistance agreements, including those to IRD,” as USAID’s Office of Acquisition and Assistance Director, and responsible for making the Agency’s suspension and debarment decisions against those very same contractors, as the SDO.154 In August 2015, a judge lifted the suspension and declared the suspension void ab initio.155
The failed HEP and S-RAD Program had devastating consequences abroad and led to the suspension of two of USAID’s largest implementing partners on the home front. The suspensions rendered the NGOs ineligible to receive new government work, depleting revenues and forcing layoffs. As a result, AED dissolved and IRD was forced to litigation. Using cooperative agreements for foreign aid to further U.S. policy is a practice that likely will continue. The question then becomes: what can be done to ensure an agency substantially participates in implementation to avoid these problems in the future?
V. Proposed Solution: Amend Title 2 of the U.S. Code of Federal Regulations
The OMB should amend title 2 of the CFR to include guidance for federal agencies on what it means to be “substantially involved” and create binding legal requirements on agencies to remain involved during performance. For instance, the examples of relationships where an agency may be “substantially involved” contained in the Senate report on the FGCAA156 may be included in 2 C.F.R. § 200.201. Further, the OMB should consider including a section in Subpart D, Post Federal Award Requirements, detailing certain minimum requirements for “substantial involvement” that all federal agencies must abide by during cooperative agreement performance. While federal agencies such as USAID often prescribe polices on substantial involvement, these policies are not legally binding.157 Amending the C.F.R. to provide guidance on what it means to be “substantially involved” and to create binding legal requirements on agency involvement may help ensure proper use and administration of cooperative agreements by all federal agencies in the future.
While the main purpose of the Afghanistan reconstruction aid was to stabilize the war-torn nation, the Bush administration also sought to utilize USAID to advance U.S. security and political objectives. This presented significant challenges for the Agency, forcing USAID to look to NGOs, such as AED and IRD, to implement major programs by awarding cooperative agreements. However, after awarding these cooperative agreements, USAID failed to participate substantially in the programs. USAID’s consistent disregard for its “operational policy,” which is contained in the ADS, contributed to the projects’ failure to meet critical objectives and the mis- management of millions of dollars. In response to growing pressure from the OIG, SIGAR, Congress, and the media calling for “accountability,” USAID improperly suspended two of its largest implementing partners. To prevent these problems in the future, agencies need to be held to government-wide regulations with the force and effect of law.
- There is a growing discussion over the legal standards governing federal agencies’ choice of instrument decisions—i.e., the use of cooperative agreements to implement programs as opposed to procurement contracts. See, e.g., Robert Nichols, Legal Standards Governing Agency “Choice of Instrument” Determinations in the “Third Party Situation” (Oct. 22, 2016) (unpublished white paper), http://go.pardot.com/l/97032/2016-10-22/5jz22f/; Parker Lewton, Note, From the Mouth of a Shark: Refugee Resettlement and the Need for Procurement Contracts, 46 PUB. CONT. L.J. 189 (2016). While a valid inquiry, whether the United States Agency for International Development (USAID) should have used procurement contracts instead of cooperative agreements to implement foreign assistance programs in Afghanistan is beyond the scope of this Note. This Note is limited to examining the legal requirements of cooperative agreements and the issues USAID experienced as a result of using this instrument.
- See generally Federal Grant and Cooperative Agreement Act of 1977, 31 U.S.C. §§ 6301–6308 (2012).
- See Federal Grant and Cooperative Agreement Act of 1977, Pub. L. No. 95-224, 92 Stat. 3 (1978) (codified as amended at 31 U.S.C. §§ 6301–6308 (2012)).
- Id. § 2(b), 92 Stat. at 3; see S. REP. NO. 95-449, at 9 (1977) (describing the intent of the Federal Grant and Cooperative Agreement Act (FGCAA) as “requir[ing] executive agencies to make conscious decisions on the choice of instruments and the basic relationships they reflect”).
- 31 U.S.C. § 6301(2)(C) (prescribing criteria for agencies to use in selecting appropriate legal instruments to achieve “a better understanding of the legal responsibilities to the parties to them”).
- Id. § 6303.
- Id. §§ 6304–6305.
- Id. § 6304.
- Id. § 6305.
- KENNETH J. ALLEN, FEDERAL GRANT PRACTICE § 15:5 (2016).
- S. REP. NO. 95-449, at 9 (1977).
- Id. at 9–10. The Department of Health, Education, and Welfare was renamed the Department of Health and Human Services in 1979.
- See, e.g., ALLEN, supra note 10 (commenting there is “[s]parse [s]tatutory [g]uidance on ‘[s]ubstantial [i]nvolvement’ ”); Ralph C. Nash & John Cibinic, Postscript: Cooperative Agreements, 9 NASH & CIBINIC REP. ¶ 53 (Oct. 1995) (noting “there is little substantive coverage of award and administration issues” in the regulatory structure applying to cooperative agreements).
- Federal Grant and Cooperative Agreement Act of 1977, Pub. L. No. 95-224, § 9, 92 Stat. 3, 6 (codified as amended at 31 U.S.C. § 6307 (2012)).
- See Implementation of Federal Grant and Cooperative Agreement Act of 1977, 43 Fed. Reg. 36,860 (Aug. 18, 1978).
- Id. at 36,863.
- Id.; see also 2 U.S. Gov’t Accountability Off., GAO-06-382SP, Principles of Federal Appropriations Law 10-16 (3d ed. 2006).
- See Implementation of Federal Grant and Cooperative Agreement Act of 1977, 43 Fed. Reg. at 36,863.
- See, e.g., Lobbying Disclosure Act of 1995, Pub. L. No. 104-65, 109 Stat. 691 (1995) (codified at 2 U.S.C. §§ 1601–1614 (2012)) (mandating federal funding recipients to finance any lobbying efforts with non-federal funds); Single Audit Amendments of 1996, 31 U.S.C. §§ 7501–7507 (2012) (updating audit requirements for federal funding recipients); Federal Financial Assistance Management Improvement Act of 1999, Pub. L. No. 106-107, 113 Stat. 1486, 1488 (1999) (seeking to facilitate coordination among grant-making agencies). The Federal Financial Assistance Management Improvement Act of 1999 led to the creation of the Grant Policy Committee; although the Act has expired, some of its initiatives are still in place.
- Exec. Order No. 13,576, 76 Fed. Reg. 35,297, 35,298 (June 13, 2011) (creating the Government Accountability and Transparency Board in 2011, which works to provide “strategic direction for enhancing the transparency of Federal spending”).
- See generally Federal Agency Regulations for Grants and Agreements, 2 C.F.R. subtit. B.
- See also A Short History of Federal Grant Policy, GRANTS.GOV, http://www.grants.gov/web/grants/learn-grants/grant-policies.html [https://perma.cc/FUN2-ZDS7] (last visited Jan. 8, 2017).
- See Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 78 Fed. Reg. 78,590 (Dec. 26, 2013) (amending and replacing subparts of 2 C.F.R. pts. 200, 215, 220, 225, and 230); see also ALLEN, supra note 10, § 17.13.
- The Uniform Guidance supersedes OMB Circular A-102, “Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments,” and OMB Circular A-110, “Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations.” However, the Uniform Guidance draws from these circulars, among others. See Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 78 Fed. Reg. at 78,590, 78,620.
- Id. at 78,591.
- Id. at 78,590. Commentators have expressed skepticism on how the guidance will accomplish both goals of increasing accountability and efficiency. See Steven L. Schooner & David J. Berteau, Emerging Policy and Practice Issues, in WEST GOVERNMENT CONTRACTS YEAR IN REVIEW CONFERENCE COVERING 2013 CONFERENCE BRIEFS 9-4 (2014).
- While the OMB 1978 final guidance on the implementation of the FGCAA listed examples of when anticipated agency involvement could be “substantial,” these examples were for choosing between a grant and a cooperative agreement as the appropriate legal instrument. See supra note 14 and accompanying text.
- See Office of Management and Budget Guidance, 2 C.F.R. subtit. A; Federal Agency Regulations for Grants and Agreements, 2 C.F.R. subtit. B.
- See Federal Agency Regulations for Grants and Agreements, 2 C.F.R. subtit. B.
- See, e.g., U.S. Dep’t of Hous. & Urban Dev., Discretionary Grant and Cooperative Agreement Policies and Procedures, Handbook 2210.17 (1992).
- See 2 C.F.R. pt. 180; FAR 9.4. For a detailed explanation of suspension and debarment, see Steven D. Gordon, Suspension and Debarment from Federal Programs, 23 PUB. CONT. L.J. 573 (1994).
- See FAR 9.401.
- 53 Fed. Reg. 19,161 (May 26, 1988); Gordon, supra note 32, at 576. OMB revised its governmentwide guidance for nonprocurement suspensions and debarments in 2006. See Guidance for Government-wide Debarment and Suspension (Nonprocurement), 71 Fed. Reg. 66,431, 66,431 (2006). The guidance is published in 2 C.F.R. pt. 180. Most federal agencies have adopted the OMB guidance, found in scattered sections of the U.S. Code of Federal Regulations (CFR), as final rules. See, e.g., 2 C.F.R. pt. 1326 (U.S. Department of Commerce); 2 C.F.R. pt. 1125 (U.S. Department of Defense). For a consolidated list of federal agency codification of the nonprocurement common rule, see OFFICE OF MANAGEMENT & BUDGET, EXECUTIVE OFFICE OF THE PRESIDENT, OMB CIRCULAR A-133 COMPLIANCE SUPPLEMENT (2015) (Appendix II). The nonprocurement common rule is similar to FAR 9.4. Compare 2 C.F.R. pt. 180 with FAR 9.4.
- See 2 C.F.R. § 180.130; FAR 9.405.
- See 2 C.F.R. § 180.125; FAR 9.402.
- See 2 C.F.R. § 180.1015; FAR 9.407-4. For assistance agreements:
[T]he suspending official may impose suspension only when that official determines that—2 C.F.R. § 180.700.
(a) There exists an indictment for, or other adequate evidence to suspect, an offense listed under § 180.800(a), or
(b) There exists adequate evidence to suspect any other cause for debarment listed under § 180.800(b) through (d); and
(c) Immediate action is necessary to protect the public interest.
- See 2 C.F.R. § 180.925; FAR 9.406-4. For assistance agreements, the causes of debarment can be found in 2 C.F.R. § 180.800.
- See, e.g., Todd J. Canni, Shoot First, Ask Questions Later: An Examination and Critique of Suspension and Debarment Practice Under the FAR, Including a Discussion of the Mandatory Disclosure Rule, the IBM Suspension, and Other Noteworthy Developments, 38 PUB. CONT. L.J. 547, 586 & n.256 (2009) (“Exclusion from federal contracting, alone, is sufficiently devastating and may, by itself, put the contractor out of business.”) (citing Christopher R. Yukins, Suspension and Debarment: Re-Examining the Process, 13 PUB. PROCUREMENT L. REV. 255, 256 (2004) (“[A]s a practical matter the shock and infamy of suspension or debarment can quickly drive government contractors (especially small contractors) out of business.”); Ralph C. Nash & John Cibinic, Suspension of Contractors: The Nuclear Sanction, 3NASH&CIBINIC REP. ¶ 24 (May 1989) (noting “suspension is equivalent to the death penalty” to entities whose primary client is the federal government).
- Foreign Assistance Act of 1961, Pub. L. No. 87-195, 75 Stat. 424 (codified as amended at U.S.C. § 2151 et seq. (2012)).
- Exec. Order No. 10,973, 26 Fed. Reg. 10,467, 10,469 (Nov. 7, 1961).
- Id. § 304, 26 Fed. Reg. at 10,469.
- U.S. AGENCY FOR INT’L DEV., USAID PRIMER: WHAT WE DO AND HOW WE DO IT 6 (2006) [hereinafter USAID PRIMER].
- Id. at 7.
- USAID History, U.S. AGENCY INT’L DEV. (Nov. 7, 2016), https://www.usaid.gov/who-we-are/usaid-history [https://perma.cc/D8DN-YQSM].
- See generally U.S. AGENCY FOR INT’L DEV., AUTOMATED DIRECTIVES SYSTEM (ADS) CHAPTER 304: SELECTING BETWEEN ACQUISITION AND ASSISTANCE (A&A) IMPLEMENTING INSTRUMENTS (2012) [hereinafter ADS 304].
- FAR pts. 701–753.
- USAID PRIMER, supra note 43, at 22.
- Id.; see generally Operational Policy (ADS), U.S. AGENCY INT’L DEV. ( Jan. 2, 2014), https://www.usaid.gov/who-we-are/agency-policy [https://perma.cc/T3N4-2RK6].
- Similar to a Contracting Officer’s role in procurement contracts, an Agreement Officer (AO) is the individual in charge of administering assistance agreements. ADS 304, supra note 51, at 11. AOs have “the authority to enter into, administer, terminate and close out assistance agreements” and are confined to act within the scope of their warrant. Id.
- Id. at 7.
- U.S. AGENCY FOR INT’L DEV., ADS CHAPTER 303: GRANTS AND COOPERATIVE AGREEMENTS TO NON-GOVERNMENTAL ORGANIZATIONS 53–54 (2016) [hereinafter ADS 303] (discussing ADS 303.3.11, which includes Agency approval of plans, as “instances of substantial involvement”).
- Id. at 63–64.
- U.S. AGENCY FOR INT’L DEV., ADS CHAPTER 202: ACHIEVING 24 (2008) (“USAID plays a critical coordination role with respect to its partners and host country governments.”). USAID utilized ADS Chapter 202 for the relevant time period of this Note (2001 through 2013). Notably, USAID no longer uses ADS Chapter 202.
- CURT TARNOFF, CONG. RESEARCH SERV., R40699, AFGHANISTAN: U.S. FOREIGN ASSISTANCE 2 (2010).
- See President George W. Bush, Speech to the Reserve Officers Association of the United States: Afghanistan, Pakistan, and the Global War on Terror, in THE OFFICER, Nov. 2006, at 45–52; see also Michele M. Murray, A Special Day, THE OFFICER, Nov. 2006, at 27.
- See Bush, supra note 62, at 49; see also Murray, supra note 62.
- While the largest portion of U.S. assistance to Afghanistan included security-related activities provided by the U.S. Department of Defense (DoD), the second largest portion of assistance included economic, social, and political development efforts provided by the United States Agency for International Development (USAID or Agency). TARNOFF, supra note 61, at 2.
- A former USAID official described this use of the Agency as “hijacking.” Dion Nissenbaum, Roads to Nowhere: Program to Win Over Afghans Fails, WALL ST. J. (Feb. 10, 2012), http://www.wsj.com/articles/SB10001424052970203554104576655280219991322 [https://perma.cc/7YCY-VU6M] (“Aid as a weapons system has never been tested—and [the government is] putting it into the field with no evidence that it works.”).
- Congress obligated the funding through the Economic Support Fund (ESF). SPECIAL INSPECTOR GEN. FOR AFGHANISTAN RECONSTRUCTION, SIGAR-14-27-SP, USAID ASSISTANCE TO AFGHANISTAN RECONSTRUCTION: $13.3 BILLION OBLIGATED BETWEEN 2002 AND 2013 2 (2014) [hereinafter SIGAR REPORT ON AFGHANISTAN RECONSTRUCTION]. The ESF is apportioned “to advance U.S. interests by helping countries meet short- and long-term political, economic, and security needs.” Id. For a critique on this use of foreign aid, see NATHANIEL MYERS, CARNEGIE ENDOWMENT FOR INT’L PEACE, HARD AID: FOREIGN AID IN THE PURSUIT OF SHORT-TERM SECURITY AND POLITICAL GOALS (2015). For a more scathing critique, see DOUGLAS A. WISSING, FUNDING THE ENEMY: HOW U.S. TAXPAYERS BANKROLL THE TALIBAN (2012) (criticizing the U.S. government for mismanaging DoD, State, and USAID projects in Afghanistan resulting in billions of wasted aid dollars, among other problems).
- SIGAR REPORT ON AFGHANISTAN RECONSTRUCTION, supra note 66, at 1.
- Id. at 2.
- Id. at 3, 7. The funds were obligated to sixty-two implementing partners through ninety-nine awards during the reporting period. Id.
- Id. at 7.
- The awards to International Relief and Development (IRD) accounted for nearly thirty percent of USAID’s total cooperative agreement obligations. Id. at 8.
- Id. at 7.
- The Academy for Educational Development (AED) was among the top ten recipients of USAID cooperative agreement obligations, receiving nearly five percent. Id. at 8.
- See generally U.S. Agency for Int’l Dev., Office of Inspector Gen., Audit Report No. 5-306-09-002-P, AUDIT OF USAID/AFGHANISTAN’S HIGHER EDUCATION PROJECT 1 (2008) [hereinafter AUDIT OF USAID/AFGHANISTAN’S HEP].
- Id. at 3.
- The program progressed in two areas: First, AED provided training in teaching methods, information technology, and graduate-level education courses, and second, AED provided workshops and seminars on institutional leadership development. Id. at 1. Another success was the initiation of a master’s degree program as well as the training of several master’s degree candidates in the United States. Id.
- See infra discussion Part IV.B.
- Id. at 8.
- Id. at 8–9.
- Id. at 9.
- Id. at 3–4.
- See SPECIAL INSPECTOR GEN. FOR AFGHANISTAN RECONSTRUCTION, SIGAR 14-73-SP, INQUIRY LETTER: CANCELED USAID CONTRACTS 32 (2014) [hereinafter CANCELED USAID CONTRACTS].
- See SPECIAL INSPECTOR GEN. FOR AFGHANISTAN RECONSTRUCTION, SIGAR ALERT 13-2 SRAD 1 n.2 (2013) [hereinafter SIGAR ALERT 13-2 S-RAD] (“An agricultural cooperative consists of a group of farmers affiliating for the purpose of sharing high-value machinery—such as farm tractors—to increase agricultural production with a relatively small number of grants distributed under the program.”).
- The Southern Regional Agricultural Development Program (S-RAD) was a bridge program between of the Afghanistan Vouchers for Increased Production in Agriculture Plus (AVIPA-Plus) program and the Regional Agricultural Development Program South. Id. at 1 n.1. Four months prior to the award of the S-RAD cooperative agreement, a Washington Post article discussed USAID’s consideration whether to extend the project or not because many of the Agency’s senior leaders deemed the project “ineffective and wasteful.” Rajiv Chandrasekaran, U.S. Military Dismayed by Delays in 3 Key Development Projects in Afghanistan, WASH. POST (Apr. 28, 3011), https://www.washingtonpost.com/world/us-military-dismayed-by-delays-in-3-key-development-projects-in-afghanistan/2011/04/22/AFD6jq8E_story.html [https://perma.cc/FUX3-BXR7].
- SIGAR ALERT 13-2 S-RAD, supra note 94, at 1.
- Id. at 2.
- Congress created the Office of the Special Inspector General for Afghanistan Reconstruction (SIGAR) to “provide for the independent and objective . . . audits and investigations relating to the programs and operations funded . . . for the reconstruction of Afghanistan” and to “promote economy, efficiency, and effectiveness in the administration of the programs . . . and prevent and detect waste, fraud, and abuse in such programs.” National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181, § 1229(a), 122 Stat. 3, 378 (2008).
- SIGAR ALERT 13-2 S-RAD, supra note 94, at 2.
- The total cost of these tractors was three times more expensive than what the work plan called for. Id.
- Id. at 3.
- In addition to their uselessness, IRD purchased an excessive amount above and beyond what was stated in the work plan: three hundred solar panels costing $2,300 each for five additional districts. Id. Further, there was concern over the purchases of the solar panels for certain districts in the first place because there was high “potential for theft, resale, or use of the equipment other than for business purposes.” Id.
- Tractors similarly went missing under S-RAD’s predecessor program, AVIPA-Plus. Id. at 2. IRD was the implementing partner for the AVIPA-Plus program as well. Id.
- Id. at 4.
- USAID and IRD failed to conduct a capability needs assessment and/or an environmental assessment during the project’s planning phase. Id. The failure to conduct an environmental assessment is inconsistent with 22 C.F.R. part 216 (directing agencies to conduct a “detailed study of the reasonably foreseeable environmental impacts” of a proposed action on a foreign country”) and ADS Chapter 303 (directing the USAID activity manager to comply with 22 C.F.R. part 216 requirements during the design process). See ADS 303, supra note 57, at 7.
- SIGAR ALERT 13-2 S-RAD, supra note 94, at 4–5.
- Id. at 5.
- National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181, § 841, 122 Stat. 3, 230–34 (2008).
- COMM’N ON WARTIME CONTRACTING IN IRAQ & AFGHANISTAN, TRANSFORMING WARTIME CONTRACTING: CONTROLLING COSTS, REDUCING RISKS 90 (2011) [hereinafter CWC REPORT]. See also WISSING, supra note 66, for a critique.
- See generally, e.g., Chandrasekaran, supra note 95; Nissenbaum, supra note 65; Josh Hicks, USAID Spent $47 Million in Afghanistan Without Meeting Key Objectives, WASH. POST (July 29, 2013), https://www.washingtonpost.com/news/federal-eye/wp/2013/07/29/usaid-spent-47-million-in-afghanistan-without-meeting-key-objectives-report-says/ [https://perma.cc/8GT9-TRMT].
- See Chandrasekaran, supra note 95. A senior official stated “[t]he civilians had promised they would do certain things, and we expected them to follow through . . . [n]ow we’ve realized that we can’t depend on them, so we have to do it on our own.” Id.
- See, e.g., U.S. GOV’T ACCOUNTABILITY OFF., GAO 10-178R, AFGHANISTAN’S SECURITY ENVIRONMENT 2 (2009) (noting “Afghanistan’s security situation ha[d] deteriorated significantly since 2005, affecting all aspects of U.S. and allied reconstruction operations”); U.S. GOV’T ACCOUNTABILITY OFF., GAO 10-932T, AFGHANISTAN DEVELOPMENT: USAID CONTINUES TO FACE CHALLENGES IN MANAGING AND OVERSEEING U.S. DEVELOPMENT ASSISTANCE PROGRAMS 3 (2010) [hereinafter GAO 10-932T] (noting Afghanistan was experiencing an annual increase in attacks, further challenging USAID’s ability to implement assistance programs).
- See supra note 57 and accompanying text.
- AUDIT OF USAID/AFGHANISTAN’S HEP, supra note 78, at 7.
- While it is USAID policy to collect and report only on information directly useful to performance management, U.S. AGENCY FOR INT’L DEV., ADS CHAPTER 203: ASSESSING AND LEARNING 21 (2012) [hereinafter ADS 203], USAID’s failure to approve AED’s monitoring plan meant its performance indicators were not necessarily aligned with the Agency’s indicators (i.e., “information that is most directly useful for performance management”). Id.; see also AUDIT OF USAID/AFGHANISTAN’S HEP, supra note 78, at 7 (discussing ADS 184.108.40.206).
- SIGAR ALERT 13-2 S-RAD, supra note 94, at 5.
- Id. at 6. This implicated the Agreement Officer’s Representative’s (AOR) role per ADS 303.2. See generally discussion supra Part II.C.2; ADS 303, supra note 57, at 7–8 (requiring the AOR to monitor reporting requirements and review and analyze reports).
- ADS 203, supra note 117, at 20–22 (discussing ADS 220.127.116.11).
- SIGAR ALERT 13-2 S-RAD, supra note 94, at 6.
- AUDIT OF USAID/AFGHANISTAN’S HEP, supra note 78, at 9.
- ADS 203, supra note 117, at 23–25 (discussing ADS 18.104.22.168); see also AUDIT USAID/AFGHANISTAN’S HEP, supra note 78, at 9.
- See ADS 303, supra note 57, at 5–9 (discussing ADS 303.2).
- See discussion supra Part IV.A.
- AUDIT OF USAID/AFGHANISTAN’S HEP, supra note 78, at 13.
- SIGAR ALERT 13-2 S-RAD, supra note 94, at 5 (internal quotation marks omitted).
- See ADS 303, supra note 57, at 5–9 (discussing ADS 303.2).
- See SIGAR ALERT 13-2 S-RAD, supra note 94, at 5.
- See discussion supra Part IV.A.2.
- See supra note 112 and accompanying text.
- See, e.g., Comprehensive Contingency Contracting Reform Act of 2012, S.2139, 112th Cong. (2012) (introduced in the Senate “to enhance security, increase accountability, and improve the contracting of the Federal Government for overseas contingency operations”); Afghanistan Suspension and Debarment Reform Act, H.R. 2912, 113th Cong. (2013) (introduced in the House “to provide authority for the [SIGAR] to suspend and debar contractors under certain circumstances”).
- See, e.g., Letter from Senator Bob Corker, Chairman, U.S. Senate Committee on Foreign Relations, to Dr. Rajiv Shah, Adm’r, U.S. Agency for Int’l Dev. ( Jan. 16, 2015), reprinted in Press Release, U.S. Senate Comm. on Foreign Relations, Corker Seeks Review of USAID Contracting Practices After Prominent Firms Implicated in Major Fraud and Corruption Charges (Jan. 16, 2015), http://www.foreign.senate.gov/press/chair/release/corker-seeks-review-of-usaid-contracting-practices-after-prominent-firms-implicated-in-major-fraud-and-corruptioncharges [https://perma.cc/8SY2-8PVY] (questioning why USAID had not taken suspension or debarment activity against two partners despite developing criminal investigations).
- U.S. Agency for Int’l Dev., Office of Inspector Gen., Audit Report No. 9-000-10-001-P, Audit of USAID’s Process for Suspension and Debarment 1 (2009).
- Specifically, GA Paper International and Ramtech Overseas, Inc. paid to settle allegations that they “knowingly submitted more than 100 false and inflated claims for reimbursement.” Id. at 8. Another contractor settled a claim for overcharging USAID for services rendered on three contracts. Id. USAID did not take any suspension or debarment action. Id.
- Id. at 16 (only 1.9% of USAID award funding from 2003 to 2007). The audit also identified a conflict of interest with the Director of the Office of Acquisition and Assistance also serving as USAID’s suspension and debarment official. Id. at 12. The audit highlighted that this individual’s involvement as the senior procurement executive and chief acquisition officer presented issues about performing his suspension and debarment duties assigned by the ADS. Id. Assigning all these duties to one individual made it difficult for the Agency to effectively utilize the suspension and debarment system; all but one of USAID’s eight suspensions during the four-year period analyzed relied on a federal indictment or conviction. Id. at 13.
- Id. at 16.
- Michelle Jamrisko, The Number of Contractors Barred by USAID Has More Than Doubled This Year, WASH. POST ( July 3, 2011), https://www.washingtonpost.com/business/economy/the-number-of-contractors-barred-by-usaid-has-more-than-doubled-this-year/2011/06/30/AGHUPuwH_story.html [https://perma.cc/ZAN7-ERFJ].
- See Press Release, U.S. Agency for Int’l Dev., USAID Suspends Academy for Educational Development from Receiving New U.S. Government Awards (May 17, 2012), https://www.usaid.gov/news-information/press-releases/usaid-suspends-academy-educational-development-receiving-new-us [https://perma.cc/6CTN-EUXY]; CANCELED USAID CONTRACTS, supra note 93, at 32.
- USAID Press Release, supra note 139.
- See generally discussion supra Part II.B.
- Press Release, U.S. Dep’t of Justice, Washington, D.C.-based Academy for Educational Development Pays More Than $5 Million to Settle False Claims Act Allegations (June 30, 2011), http://www.justice.gov/opa/pr/washington-dc-based-academy-educational-development-pays-more-5-million-settle-false-claims [https://perma.cc/8KDM-MSLZ].
- See Christopher Beam, Contract Killer: Why Did USAID Suspend One of Its Biggest Contractors Without Any Explanation?, SLATE (Mar. 31, 2011, 3:27 PM), http://www.slate.com/articles/news_and_politics/politics/2011/03/contract_killer.html [https://perma.cc/EUZ6-957F].
- The other was the Federally Administered Tribal Area Livelihood Development Program (FATA-LDP) in Pakistan. DoJ Press Release, supra note 142.
- At the time, the Office of the Inspector General had still not released its final report. Beam, supra note 143 (noting “[t]he suspension effectively dried up AED’s revenues”).
- Id.; see also Testimony of Michael G. Carroll, Deputy Inspector Gen., U.S. Agency for Int’l Dev., Before the Commission on Wartime Contracting (Feb. 28, 2011), at 6.
- Beam, supra note 143 (noting “[t]he main complaint has been that USAID suspended AED without sufficient explanation”).
- Notice of Suspension from Aman S. Djahanbani, Suspending & Debarring Official/Director of Office of Acquisition & Assistance, U.S. Agency for Int’l Dev., to Roger Ervin, President/CEO, Int’l Relief & Dev. ( Jan. 26, 2015).
- See Press Release, Int’l Relief & Dev., IRD Statement on Continuance of USAID Suspension (Apr. 14, 2015).
- Complaint at 36, Int’l Relief & Dev. v. U.S. Agency for Int’l Dev., Civil No. 15-854 (RCL) (D.D.C. June 9, 2015).
- See Order Granting Plaintiff ’s Motion for a Preliminary Injunction and Declaring Suspension Void Ab Initio, Int’l Relief & Dev. v. U.S. Agency for Int’l Dev., Civil No. 15-854 (RCL) (D.D.C. Aug. 3, 2015) (noting IRD had shown a likelihood that the suspension decision was “contrary to law” in violation of the National Defense Authorization Act of 2013 and the Administrative Procedure Act).
- S. REP. NO. 95-449, at 9–10 (1977); see discussion supra Part II.B.
- See generally discussion supra Part II.D.2 (noting USAID’s ADS merely prescribe the Agency’s policy directives and are not codified in the Agency’s regulations).