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A recent Bloomberg Law post made the case that the federal procurement system can play a crucial role in supporting national defense, fostering technological innovation, and driving economic growth. Similarly, USAID’s acquisition and assistance system positions the agency to mobilize recipients and contractors to respond in some of the most challenges corners of the world to urgent needs. Yet existing federal and USAID specific procurement policies and processes have been criticized for being outdated, overly complex, and ill-suited to economic and operational needs.

While the Bloomberg article focuses on the defense industry, the analysis and recommendations can extend to development and humanitarian relief as well.

  • Reinvest in the industrial base. The concentration of USAID awards in the top 5 for-profit and non-profit entities continues to grow. The number of small businesses competing for development work is shrinking. Medium-size development and humanitarian organizations are struggling. Local organizations are critical component of USAID’s implementing community, but still have limited capacity. DoD recognizes the importance of a healthy defense sector to national security. USAID needs to understand how its business practices lead to concentration of the industry into a few firms and organizations and its implications for innovation, responsiveness and the development/humanitarian workforce.
  • Expand Non-Traditional Procurement Methods. USAID was one of the pioneers of Other Transaction Awards (OTAs) but there is little evidence of it nowadays. DoD has used OTAs to expedite engagement with commercial entities that offer critical technologies. Commercial Solutions Opening (CSO) is the use of BAA-type collaborations processes to acquire innovative (new) commercial services or technologies to meet a program requirement. Greater use of Performance Work Statements solicitations may also lower the threshold for non-traditional organizations to purse development contracts.
  • Reform small business contracting. The article recommends allowing “small businesses that exceed their size standard to retain eligibility for set-aside contracts for a period of time or to transition smoothly into larger contract pools. This would encourage small businesses to scale, driving innovation and competition.”
  • Reduce compliance burden. This is already part of USAID’s acquisition and assistance strategic plan. Multiple layers of compliance requirements and associated risk management make working with the U.S. government a costly endeavor.

Like most organizations, USAID is subject to the Parento principle in which 80% of its effort is spent on 20% of the value. In other words, USAID staff spend a great deal of time and effort on the pr-award and selection process and only 20% to assure the delivery of value through a COR/AOR’s performance monitoring. Selecting from among a few, highly competitive proposals or applications should not be expensive or time-consuming and it does not guarantee successful performance. Reform efforts may benefit from taking a step back and asking how efficiently an idea can move to implementation and results.

Read the Bloomberg Law post here: Federal Procurement Needs More Updates, Fewer Compliance Hurdles