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Public Contract Law Journal

Public Contract Law Journal Vol. 49, No. 3

Bringing the Spirit of "Konbit" to Disaster Relief: Reforming USAID Procurement to Promote Partnership Between Donors & the Local Community in Haiti

Erica Bilkis


  • Describess Haiti's history and poor development trajectory in the face of political instability and natural disasters.
  • Argues that USAID funding in support of rebuilding Haiti could have been improved had USAID worked in partnership and directly with the public and private sectors of the Haitian community.
  • Discusses two essentially elements of community-based development: (i) a focus on institutional building; and (ii) the inclusion of local input and use of local sourcing to extent possible.
Bringing the Spirit of "Konbit" to Disaster Relief: Reforming USAID Procurement to Promote Partnership Between Donors & the Local Community in Haiti
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In 2010, a 7.0 magnitude earthquake rocked the small island nation of Haiti and caused about $7.8 billion in damages. As an already low-income, less-developed country, this earthquake absolutely devastated Haiti. It exacerbated the issues surrounding development that the country had been dealing with for decades. In the aftermath of that earthquake, the country received over $9 billion in aid; yet it is still one of the least developed countries in the world. This Note suggests that one of the main donors, the United States Agency for International Development (“USAID”), did not use the most effective procurement practices when it came to disbursing the millions in contracts toward Haiti’s disaster relief and reconstruction projects. Part of the reason was that the Haitian community was sidelined from the rebuilding of their county. As a result, there was a disconnect between what the money was spent on and what the Haitian people wanted and needed. In addition, excluding them weakened their own capacity and ability to help break the country out of its cycle of dependency on foreign aid. As a solution, after the immediate crisis of a disaster is stabilized, foreign donors should actively work to include the local community in the disaster relief and reconstruction. There should be a focus on capacity-and institution-building projects as well as a more inclusive procurement policy when it comes to providing foreign aid.

I. Introduction

In 2010, a 7.0 magnitude earthquake rocked Haiti, killing about 200,000 people, rendering several million people homeless, and causing $7.8 billion in damages. As an already low-income, less-developed country, this earthquake absolutely devastated Haiti and exacerbated the issues surrounding development that Haiti had been dealing with for decades. This earthquake thrust Haiti into the world spotlight and foreign countries, organizations, and individuals all wanted to help. While the world had good intentions, the aid given was, at times, actively unhelpful and wasteful. Because the donor community did not connect and partner with the Haitian community, there was a disconnect between what the Haitian people needed and what the world provided. For example, before the earthquake, most of the country got their water “from wells, bottled and bagged water, and cisterns filled by trucks.” After the earthquake, the Haitian people still had access to this water supply but needed tools to purify the water. “Yet the aid effort offered no image more iconic than its human chains passing along boxes of bottled water, plastic shrink-wrap gleaming in the sun….” Had the donor community worked with and listened to the local community, it would have enhanced the benefits of the foreign aid and reduced the waste.

After the earthquake, Haiti received billions of dollars in foreign aid.However, about ten years later, Haiti is still considered one of the poorest and least developed countries in the Western Hemisphere and the world. In evaluating the way aid was and continues to be distributed after the 2010 earthquake, a main issue that impedes successful development emerges. Those spearheading the reconstruction process sidelined the Haitian people.In the beginning, the donor community did not consider Haitians as partners in the rebuilding, and this attitude did not dissipate.Rather, the international community took the “we’ll do it ourselves” approach, and, if they did work with national actors, they waited until the implementation stage to do so. This approach is problematic as it does not create the stable and lasting partners needed for long-term development. Partnership is so essential in bringing efficiency and sustainability in development that the signatories of the Grand Bargain, an agreement between more than thirty of the biggest donors and aid providers, highlight partnership as an “essential principle in humanitarian assistance.” By not connecting and working with the Haitian people, the development community overlooked an important and valuable resource that promotes successful projects and development.

Most of U.S. assistance to Haiti goes through the United States Agency for International Development (“USAID”). USAID disburses the money by contracting with public and private partners and providing grants for reconstruction and development projects. As of January 2018, USAID had disbursed over $2 billion in contracts toward Haiti’s development. However, this Note suggests that USAID funding could have been improved had it worked directly with the Haitian community, both in the public and private sector, in the relief efforts. The lack of community-driven development and the failure to implement a partnership between the foreign donors and local community hindered Haiti’s development. First, there was a disconnect between what the money was spent on and what the Haitian people actually needed to rebuild successfully. Second, by excluding the Haitian community from the rebuilding process, the foreign aid did not strengthen their capacity or create a more self-reliant community, but instead reinforced Haiti’s dependency on foreign aid. Third, the Haitian people, government, and NGOs received very little of the billions of dollars that was spent on foreign aid. Including the Haitian community in the funding, however, would have spurred economic growth, promoted self-reliance and self-sufficiency, and helped break the country out of its cycle of dependency on foreign aid.

While Haiti’s current economic and political state may hinder or prevent organizations from working directly with the Haitian community, there are ways in which governments and organizations, particularly USAID, can provide foreign aid after a disaster that is more inclusive and based on community partnership. Once the immediate crisis is stabilized, foreign aid and disaster response should focus on institution and capacity building. Having capable institutions in place will ensure maintenance of the reconstruction programs and promote continued development, even when the foreign aid decreases. Furthermore, disaster response should include the local community and its businesses by promoting a procurement policy that favors working with the local community for the procurement of goods and services. Investing in the private sector will lead to economic growth, job creation, stability, and opportunity for the country to grow successfully. Foreign donors and actors should look to the Haitian community for input and work with them as partners in leading the reconstruction effort to ensure the services that they are providing meet the needs of the Haitian people.

Section II of this paper will provide an overview of Haiti’s history and theories of why the country has not had a successful development trajectory. Part of the reason is its national government, which may be seen as weak and ineffective due to years of unstable governance and dictatorships. Haiti’s location in the Caribbean Sea exposes the island to extreme weather and disasters, which have also exacerbated its development issues. Section III discusses how the relief efforts failed to include the Haitian community and the negative effect that such disconnect had on its development and rebuilding after the earthquake. And, finally, Section IV illustrates how USAID can improve its procurement practices by promoting cooperation with both the public and private sector.

II. Haiti's History & Its Poor Development Trajectory

Haiti is ranked towards the very bottom on the World Bank’s Human Development Index, 169 out of 189 countries. It is one of the poorest countries in the world, with almost sixty percent of the population living under the national poverty line, and more than twenty-four percent living under the extreme poverty line. Before the 2010 earthquake, the United Nations designated Haiti as “one of the [fifty] least developed countries in the world, facing higher risk than other countries of failing to come out of poverty.” Furthermore, as of 2013, while the country had a work force of 4.2 million people, there were only about 200,000 people who had formal jobs.

Part of the reason for Haiti’s poor development is its history of political chaos and instability. Although the country has made progress since the fall of the twenty-nine year Duvalier dictatorship in 1986, the country still struggles with its weak democratic institutions. The country did not even have an elected president from February 2016 until February 2017, when Haiti inaugurated Jovenel Moïse.

While the 2010 earthquake may have brought Haiti into the spotlight as an underdeveloped country, the severity of that natural disaster is not an isolated incident. As a small island state in the Caribbean, Haiti is exposed to all kinds of natural disasters, which over the years have contributed to its slow-moving development trajectory. In the last fifteen years, there have been numerous serious natural disasters. In May 2004, there was extensive flooding after two weeks of heavy rain. In parts of the country, up to five feet of rain fell over the span of thirty-six hours, and tens of thousands of people in southeast Haiti were displaced. Four months later, another major hurricane hit the country, killing 3,000 people and leveling the city of Gonaïves in the northwest. In 2008, four storms within three weeks hit the island resulting in the deaths of 800 people, $8 billion in damages, and “render[ing] entire cities uninhabitable.”

Then the earthquake hit in 2010, the biggest to hit Haiti since the eighteenth century. The first shock hit about fifteen miles from the capital, Port-au-Prince. Multiple aftershocks followed, causing extensive damage throughout the country. Essential services and vital infrastructure — including the Presidential Palace and several government buildings — were destroyed along with many government records. The city was still recovering from the 2008 hurricane season and thus lacked the ability and equipment to deal with such a disaster, as did many other affected areas. In October 2010, a terrible cholera epidemic hit Haiti, exacerbating the crisis from the earthquake.

A few years later, in October 2016, Hurricane Matthew, characterized by the World Bank as “the most devastating disaster since the earthquake,” further damaged Haiti’s infrastructure and agricultural industry. It caused damage equal to about thirty-two percent of Haiti’s gross domestic product, while causing the agricultural, livestock, and fishing sectors to lose about $600 million. Then, a two-year drought, exacerbated by the hurricane, destroyed much of Haiti’s food supply, creating a humanitarian disaster.

Because natural disasters hit Haiti so frequently and so intensely, it is even more essential that, when a disaster hits, the disaster response effectively contributes to long-term development. The relief effort must help to build up Haiti’s institutions so that it can withstand, survive, and manage a disaster when the next one hits. Yet, the combination of political chaos, widespread corruption, instability, and the frequency of such serious natural disasters have posed major obstacles to Haiti’s attempt to climb the development ladder. As a result, Haiti is heavily dependent on foreign aid. In particular, the procurement of goods and services from other countries after a disaster is a lifeline to the Haitian people and government.

After the 2010 earthquake, foreign governments, non-governmental organizations (“NGOs”), and private citizens sent $9 billion to Haiti, including $3 billion from the United States. Under the Supplemental Appropriations Act of 2010, USAID received $651 million for bilateral reconstruction activities. In total, this was more than triple the average annual amount the U.S. Government pledged to Haiti between 2006 and 2009. After Hurricane Matthew in 2016, foreign governments and NGOs again sent millions to fund reconstruction efforts. Yet in 2017, 2.5 million Haitians still needed humanitarian aid, and 55,000 people continued to live in camps and makeshift camps. While today foreign aid comprises more than twenty percent of Haiti’s annual budget and its borrowing has reached $2.6 billion since the 2010 earthquake, Haiti continues to struggle to develop and improve its poor economy, and it is still one of the poorest countries in the world. Almost a decade after the earthquake, the United Nations Office for the Coordination of Humanitarian Affairs (“OCHA”) reported that “1.9 million Haitians are still in need of aid and that continued investment in preparedness and disaster risk reduction is required.” This is because the billions of dollars of aid that Haiti received following the natural disasters have not been used effectively to promote stability and long-term development. An essential part of the problem is that the Haitian people, its government, and the local community and businesses were not treated as partners with the relief and reconstruction efforts.

III. The Haitian People Were Not Treated as Partners When It Came to Foreign Aid After the Earthquake

After the earthquake, the foreign aid groups and private contractors working in Haiti generally sidelined and excluded the Haitian government and people from the disaster response and reconstruction work. For example, most of the planning in the days after the earthquake took place at the United Nations headquarters, the Logistical Base (“Log Base”). Aid organizations used this area to meet and coordinate reconstruction efforts, with up to seventy meetings a week among the agencies and other parties. Few Haitians were part of this reconstruction effort. To cross into the compound, an individual needed both an identification card and an invitation from the inside. Even if a Haitian citizen had both of those, most of the meetings were held in English, not Creole or French, thereby further excluding those Haitian citizens who did not speak English. Furthermore, in July 2010, sixty international organizations voted on the steering committee for NGO coordination. No local Haitian NGOs were present. Thus, no Haitians were given a voice to determine who would lead the rebuilding of their country and how it would proceed.

While there was an attempt to encourage collaboration between donors and the Haitian government through the Interim Haiti Recovery Commission (“IHRC”), the commission was largely unsuccessful. Its responsibilities included planning, coordinating, and overseeing the reconstruction projects funded by bilateral and multilateral donors, NGOs, and some private-sector projects for eighteen months. After the eighteen months, it would transfer control over these projects to the Haitian government. Donors and government representatives composed the board of the IHRC and were to coordinate and plan projects by approving individual humanitarian project proposals.

Even though the commission included a number of Haitian members, those Haitians on the commission still felt excluded. In December 2010, the twelve Haitian members submitted a letter to the IHRC expressing feelings of “[complete disconnect] from the activities of the IHRC”:

In general, contact is only established one day before the board meetings. Board members have time neither to read, nor analyze, nor understand – and much less to respond intelligently – to projects submitted at the last minute, despite all the complaints expressed and promises made on this subject. . . . In reality, [Haitian] members of the board have one role: to endorse the decisions made by the Director and Executive Committee.

A group of Haitian civil society organizations also expressed discontent with the IHRC, particularly the “lack of progress and marginalization of grassroots groups and the Haitian state.” Thus, even when Haitian civil society was supposed to be included, the international community still failed to view them as partners.

Two issues arise when the international community marginalizes the local community from the relief effort. First, the international community overlooks an important resource by not consulting with the Haitian community. Local actors bring to the table a “cultural awareness — a specific understanding of the local socio-political context — as well as a long-term perspective on the issues they face.” Second, the marginalization erodes the local capacity of the Haitian people because the Haitian people were or are unable to help with the relief efforts; however, by not giving them the chance, this becomes a “self-fulfilling prophecy.” The initial marginalization thus leads to the “further deterioration of Haitian capabilities and [fuels] the brain drain phenomenon.”

A. There Was a Disconnect Between What the Money Was Spent on and What the Haitian People Wanted.

As a consequence of the NGOs and foreign actors excluding the Haitian government and community from the development efforts, disconnect arose between what the money was spent on and what the Haitian peopled wanted and needed. A spokesman for a large UN organization offered a “stunningly blunt portrait of this dynamic”:

[When asked] whether the government of Haiti has ever told him what to spend donor money on, the spokesman . . . said: “Never. They are not in the position, because they are financially dependent. Recently, there was a government press conference. There was nothing ‘government’ about it; we organized it and told them what to say.”

A 2011 Government Accountability Office (“GAO”) Audit of the IHRC confirmed this marginalization, finding that “the IHRC failed to direct funding to projects prioritized by Haitians.” The Haitian government, for example, requested almost equal funding for agricultural projects and rubble removal, but “the IHRC approved seven times more funding for agriculture projects.” Haiti’s Action Plan (“Action Plan”) stated the country wanted more than $800 million for improving and rebuilding its government institutions, but the IHRC only approved $113 million. In another instance, the Haitian Action Plan requested only about $180 million for road construction, yet the IHRC approved $680 million for these projects.Because of the IHRC’s unwillingness to work with and listen to the Haitian community, the audit found that the “current projects may not be providing the assistance that is most urgently needed.”

Another example shows the stark disconnect between what the Haitian people wanted in terms of reconstruction and what projects the international community decided to work on. Fifteen miles west of the capital, Port-au-Prince, the “NGO Republic” took over the city of Léogâne. Because Léogâne is situated at the junction of three rivers, it needed a sustainable drainage system, and the river bank needed to be shored up to prevent flooding; however, only one group worked on reinforcing the river bank, while others claimed this was not part of their plan nor was it what they were fundraising for. The technical coordinator of the Municipal Civil Protection Committee of Léogâne summarized this problem correctly: “The irony . . . is that all the projects that the NGOs did put money into will get washed away in the floods that will come. The NGOs will continue to finance projects in underdeveloped countries in an underdeveloped way.” Had they spoken to the community and understood the land, maybe the groups would have realized that this project was worth funding.

B. Excluding the Local Community Reinforced Haiti’s Dependence on Foreign Aid.

Excluding the local community continues to reinforce the country’s reliance on foreign aid as it erodes the capacity of local actors.The health industry in Haiti is a prime example of this issue. Prior to the earthquake, the lack of access to health care was considered “the forgotten emergency.” While a system provides exemptions for the poor when it comes to health services, many cannot access healthcare because of the system’s poor regulation.Many of the structures are also short on medicine and need to purchase them from the private sector, which further reduces the poor’s access to healthcare.

At the same time, the organizations that provide free healthcare became an essential part of the relief process. After the earthquake, Chatuley Hospital, run by Médecins Sans Frontières (“MSF”) became the most important healthcare provider in the area of Léogâne.MSF was providing essential services that were previously unavailable to many Haitians; however, this has proven fatal to the fragile Haitian healthcare system in that local businesses that would normally provide healthcare cannot compete with the international groups that provide free healthcare. Many “Haitian private companies and individuals who traditionally provide[d] [healthcare] . . . have already gone bankrupt.”In addition, the influx of foreign doctors, particularly the volunteer doctors, displaced the local medical community and their private clinics because they had to compete for patients in a medical marketplace where volunteer doctors dominated. Because these foreign actors did not create partnerships with the local community, the Haitian private sector could not grow and work with the NGOs, which ensured that NGOs and foreign actors dominated the health industry and reinforced the country’s dependency on foreign aid.

C. The Haitian Government, Local Businesses, and NGOs Received Very Little Funding.

In addition to sidelining the Haitian community from directing how reconstruction would proceed, the international community gave very little funding directly to the Haitian government, local businesses, or local NGOs.The Haitian government received less than one percent of $2.29 billion disbursed by donors in 2010 and 2011. Haitian NGOs received just 0.4 percent of the international aid. In addition, Haiti received none of the $1.28 billion in humanitarian funding from the United States.The government did receive marginally more funding for long-term development, about fifteen to twenty-one percent of the total recovery funding, but the United States only disbursed about one percent of it to the Haitian government. When it came to procuring goods and services for the reconstruction process, Haitian companies received only $1.33 of every $100 spent by the U.S. government in Haiti.Rather, non-Haitian NGOs and private contractors were the primary recipients of the reconstruction assistance funds.As of April 2012, USAID had awarded few contracts to Haitian companies, even though they had spent over $1 billion in funding.More than seventy-five percent of USAID contracts went to “Beltway Contractors.”

In the immediate aftermath of the earthquake, it was unlikely that many local businesses had the capability to contract and provide the services needed. However, as time went on after the earthquake, the number of contracts with local firms actually decreased. For example, in the first six months after the earthquake, a large number of contracts were actually signed with Haitian firms; however, in the next year the direct contracts with Haitian companies actually decreased by “four-and-a-half times.” As time passed, months went by in which no Haitian firm received any contracts for reconstruction work. According to the Federal Procurement Data System, “As of April 14, 2011, 1490 contracts had been awarded . . . for a total of $194,458,912. Of those 1490 contracts, only [twenty-three] have gone to Haitian companies, totaling just $4,841,426, or roughly 2.5 percent of the total.”A proposed explanation for the lack of contracts going to Haitian firms early on was because many of these firms used no-bid contracts.However, the number of no-bid contracts actually increased, from about fifteen percent of all contracts in January 2010 to about forty-two percent between December and April 2011. If these no-bid contracts were used mainly because of urgency, the number would be expected to decrease as time went on, not almost triple in proportion.

The development community missed the opportunity to “spend the development dollar twice” by not contracting with the local companies.Investing in local businesses would grow the local private sector, which leads to an increase in long-term income and job growth.It would also help local entrepreneurs and firms build their businesses to compete with outsiders.Investing in the private sector would strengthen the Haitian economy, build local capacity, and strengthen the local government, which all would contribute to a more self-sufficient state that is not as reliant on foreign aid.

IV. Disaster Response Should Be A Partnership Between Donors & the Local Community

The development community missed an opportunity to spur long-term development by largely excluding the Haitian community and government from the reconstruction process.The Haitian community had no say in how their country would be rebuilt and who would lead the effort. Even the IHRC, the commission composed of both Haitian and international members, marginalized its Haitian members.Furthermore, very little funding actually went to the Haitian government, the local businesses, or Haitian NGOs.While the first goal in the aftermath of a disaster, especially one as devastating as the earthquake was to Haiti, is to stabilize the crisis, at some point, a shift must take place where the local community becomes an active participant in the rebuilding of its country.

The purpose of any foreign assistance program “should be ending its need to exist.”A program can achieve this purpose by prioritizing inclusive development, “strengthen[ing] in-country capacity, and mobiliz[ing] domestic resources” through partnering with the local community. Many organizations instead limit their partnerships to the implementation phase of a program, rather than collaborating with the local community from the project’s onset. Bringing in local actors at the implementation stage may be too late. It is important to build the partnership in the beginning to provide a strong foundation for lasting collaboration between the organizations and the community. While international agreements and USAID do support this approach in theory, their commitments must be translated into action.

After analyzing USAID’s shortcomings regarding an inclusive development policy in Haiti, this Note proposes two ways to promote a more collaborative disaster response and see sustainable and long-term development in Haiti. By targeting both the public and private sector in Haiti for reform and reconstruction projects, the hope is that Haiti’s economy, government, and citizens will grow and ultimately not rely so heavily on foreign aid. First, foreign aid should focus on institutional and capacity building and specifically reduce the use of results-based aid contracts for these kinds of projects. Second, the United States should adopt an inclusive procurement policy that favors working with local businesses when possible in responding to a disaster. This would require USAID to include local input and local sourcing of goods whenever possible. Ultimately, this will ensure that the aid community works with the Haitians as partners in the rebuilding and development of the country rather than silencing them. Working with the local community and including them in both the planning and implementation stage will lead to more successful and sustainable long-term development.

A. There Must Be a Focus on Institutional Building.

The immediate goal following a disaster is to stabilize the situation (i.e., pro- vide food, water, shelter, and conduct search and rescue missions).But, once the immediate crisis is stable, foreign aid must transition to promote long-term, broad-based institution building. In a country as fragile as Haiti, this means promoting the stability and independence of its government’s institutions and its capacity to respond to such disasters. If reconstruction does not focus on capacity building, “then Haiti will simply revert to its failed state status and whatever is reconstructed will begin to crumble over time without institutions to ensure maintenance.”

In the aftermath of the 2010 earthquake, the Haitian government was ineffective and lacked “skilled, trained, and properly organized government personnel and . . . management systems within ministries and other government[s].”As a result, foreign donors resisted giving money to the Haitian government.Providing the unstable and ineffective Haitian government directly with the billions of dollars in foreign aid would create the “perfect storm” for corruption and misuse of funds. However, this cannot stand as a singular justification to completely avoid working with the government. Successful foreign aid must go beyond just “bricks and mortar alone” and must strengthen the country’s institutions.

The success of a state and developing an effective government cannot be separated from having an effective public procurement system because economic growth and effective investment cannot happen without it. In the alternative, poor administration of a country’s public procurement system may result in investments becoming liabilities, the hindering of development goals, and lead to wasted funds and additional costs.Because government institutions and procurement systems are so intertwined, USAID cannot underestimate the importance of funding capacity-building projects.

There are unique challenges when funding institutional and capacity- building projects. In particular, the nature of funding many foreign aid contracts and grants is not necessarily conducive to programs focused on long-term development.Donors want to hold their implementing partners account- able and see tangible results.In doing so, many donors rely on results-based aid funding mechanisms. Results-based aid or cash-on-delivery funding mechanisms allow funders to defer payments until the implementing partner achieves certain results or reaches a particular indicator of progress. If and only if the partner reaches this goal, will the implementing partner receive additional funding. This type of funding mechanism is attractive to donors because it can provide more accountability, an essential aspect to any successful project.

However, heightened accountability has unintended consequences for long- term development projects. Long-term development goals, such as holding a successful election or increasing access to education, do not produce the same kind of tangible results as constructing a road. Therefore, when donors and partners are faced with a results-based funding mechanism and increased pressure to produce results quickly, capacity-building projects may be neglected. An overall decline in innovative transformational projects may take place because it is more difficult to quantify how to meet these types of goals. Furthermore, these projects take years, if not decades, to produce outcomes. By contrast, most USAID projects after the 2010 earthquake had a time frame of only one year. These institution-building projects cannot provide the types of results or prove they are successful or sustainable until after the aid has ended. Additionally, when conflicts and adverse political events occurred in Haiti, donors limited funding channeled through the Haitian state, finding it “counterproductive to strengthen state institutions when the state was acting in nondemocratic and repressive ways.” Reducing the funding, however, just makes the state that much less capable and further limits its growth and development. Due to Haiti’s history of political ineffectiveness and lack of state capacity, it is essential that funding continues to go to institution building and supporting its civil society. If not, Haiti will have a much harder time developing and rebuilding successfully.

B. Disaster Response Must Include Local Input and Local Sourcing When Possible.

While many Haitian companies after the 2010 earthquake were likely incapable of providing goods and services to contribute to the reconstruction effort, USAID contracts with Haitian firms actually decreased as time went on.However, had USAID contracted with the local businesses, it would have injected money into the economy, spurred job-creation, helped local entrepreneurs, and promoted self-sufficiency, rather than continued reliance on outside companies. Effective disaster response and recovery must include local input and local sourcing of materials when possible. Procurement is a valuable tool, capable of promoting and stimulating development through investment in the local markets. The United States should incorporate a local procurement preference when it comes to providing foreign aid and disaster relief. It must take two steps to increase local procurement: (1) it should codify local preferences for foreign aid via statute; and (2) it should provide assistance to local businesses to develop their companies and meet USAID standards.

1. Congress Should Create a Local Preferences Provision for Foreign Aid.

Currently, the United States has a provision in the Robert T. Stafford Disaster Relief and Emergency Assistance Act (“Stafford Act”) that gives preference to the provision of federal funds to “those organizations, firms, and individuals residing or doing business primarily in the area affected by such major disaster or emergency.” After Hurricane Katrina hit in 2005, President George W. Bush signed into law the Post-Katrina Emergency Management Reform Act (“Post-Katrina Reform Act”), which amended the local contractor preference “by requiring that expenditures of federal funds for emergency assistance activities to companies that are not local be justified in writing.” It further required that after a declaration of an emergency or natural disaster, “agencies performing response, relief, and reconstruction activities to transition that work to organizations, firms, and individuals residing or doing business primarily in the affected area.” This statute, however, only applies to domestic disaster relief and assistance.

There is no analogous statute when it comes to international assistance in the aftermath of a disaster. While Congress passed the Assessing Progress in Haiti Act of 2014 (“APHA”), which recognized the significance that comes from working with local businesses, this was done years following the earthquake and after the initial disaster reconstruction had finished. While the APHA may be a step in the right direction toward future cooperation with the local Haitian community, there is still no expressed preference for local businesses and organizations when it comes to foreign aid. The United States should pass a law similar to the Stafford Act and the Post-Katrina Reform Act that is applicable to foreign assistance. This way, it will no longer be possible for the U.S. Government to bypass local businesses and proceed with foreign contractors on the assumption that the local community is unable to work. Instead, the preference for working with local businesses and a requirement to justify the decision not to would be codified.

2. USAID Should Provide Assistance to Local Businesses to Develop Their Companies.

There is a catch-22 when it comes to working with Haitian local organizations. Many of them do not meet USAID’s eligibility criteria to receive funding. But these businesses cannot afford to improve their organizations up to USAID standards without such funding. Therefore, USAID must provide assistance to local businesses to develop their organizations and to ensure that they can meet these standards.

One area on which USAID should focus is training and capacity building for these organizations. For example, USAID and Haiti signed a $32 million contract with RTI International to develop the Local Enterprise and Value Chain-Enhancement (“LEVE”) Project. Its goal was to support micro-, small-, and medium-size enterprises (“MSMEs”) and to “create jobs by making the value chains more productive and inclusive,” with the goal to “create[] 6,000 full-time-equivalent jobs, . . . increase the investments of 155 businesses, increase the sales of 300 businesses, and provide 800 microenterprises (businesses operating on a very small scale), with U.S. Government assistance.” Yet at the time the audit was conducted in 2018, the project had created only 628 new jobs by mainly large businesses, not MSMEs. Furthermore, it increased investments only for six businesses, increased sales for twenty-three businesses, and helped only 223 microenterprises. Not only did the project not meet its goals, the Office of the Inspector General for USAID acknowledged that many of these businesses needed more training and capacity building if they were to succeed. USAID should focus on training and teaching businesses how to operate effectively so that if and when a disaster does strike, a capable group of businesses will already be on the ground in Haiti.

In addition, programs are already in place in Haiti that make it easier for international organizations, like USAID, to find Haitian organizations to do business with. In 2009, Building Markets (formerly Peace Dividend Trust) launched its Peace Dividend Marketplace-Haiti (PDM-H) project to encourage international organizations to adopt a Haiti First policy. An integral part of the project was creating a Tender Distribution Service, which collects and disseminates tenders and other business opportunities to local registered businesses. It includes an online supplier directory to increase buyers’ access to information about the local market. To ensure the businesses’ reliability, each business must go through an in-person interview with a verification officer and then is reverified every six months. It then allows buyers to research the local market and provides a matchmaking report “containing detailed information about suppliers that can meet [their] requirements.” Since its inception, it has now been transferred under the control of the Ministry of Commerce and Industry (MCI). This service makes it easy and feasible for international organizations to connect and work with local Haitian businesses, that are looking to grow, particularly if the work is to be done in Haiti.

Another way to increase Haitian participation requires posting procurement notices in French or Creole rather than in English. The APHA does address this issue by including a requirement that descriptions for communicating the progress of recovery and development efforts and procurement information be in Haitian Creole. Posting procurement notices in Haitian Creole will also open up the market for Haitian businesses.

V. Conclusion

While foreign aid provided much-needed help and support to Haiti in the immediate aftermath of the 2010 earthquake, it did not effectively focus and promote long-term development. The development community should have focused on working with the Haitian people as partners. Empowering the local community when providing aid and relief can lead to sustainable and lasting change and reform. A focus on institution and capacity building can help develop the state’s ability to maintain the development projects implemented and contribute to continued stability and growth. Giving the local community a voice in how the development progresses can ensure that the projects are actually necessary. Furthermore, buying locally when possible will provide a much-needed boost to the economy to support long-term economic growth. While these reforms will take time, they may help to get Haiti off the list of least-developed countries and contribute to lasting and successful development.