The overhaul of U.S. foreign assistance has led to a severe financial crunch for USAID contractors, grantees and recipients. Facing millions of dollars in unpaid invoices, many contractors have had no choice but to lay off staff. The Stop-Work Orders, Suspensions, and now indications of 800 awards being terminated, are causing widespread panic in the development and humanitarian relief sectors. Typically these firms and organizations front the costs and then bill the U.S. government, but the sudden halt in payments has left them in a difficult position.
The ripple effects have been substantial. USAID civil service and foreign service employees are on administrative leave. Personal Services Contractors, which make up the bulk of USAID staff, have had their contracts stopped or terminated. Institutional Support Contractors have also been given Stop Work Orders resulting in mass lay-offs of their professional and administrative support staff. These abrupt layoffs have left these people without salaries, benefits or health insurance, leaving them with little hope and much uncertainty.
For many development and humanitarian entities, the situation has become an existential threat. Reports of 70-90% of workforces are being furloughed or terminated, leaving a trail of uncertainty and frustration. The impact on the millions of beneficiaries around the world is immeasurable.
Secretary Rubio has approved waivers of the freeze for emergency life-saving aid, but implementers are uncertain what activities meet this standard. In a recent press conference with Costa Rican President Rodrigo Chaves, Rubio stated,
“I issued a blanket waiver that said if this is lifesaving programs, okay – if it’s providing food or medicine or anything that is saving lives and is immediate and urgent, you’re not included in the freeze. I don’t know how much more clear we can be than that.
And I would say if some organization is receiving funds from the United States and does not know how to apply a waiver, then I have real questions about the competence of that organization, or I wonder whether they’re deliberately sabotaging it for purposes of making a political point.”
A disconnect is evident between Rubio’s statements and their implementation. Contracting Officers and Agreement Officers issued the Stop Work Orders and Suspensions based on his original directive, and they have not rescinded or revised them, presumably pending more specific authorizations for each award. Meanwhile, the funding freeze and associated layoffs pose a risk of long-lasting damage to U.S. engagement around the world. As the largest provider of humanitarian assistance globally, the U.S. halt in funding has left many organizations struggling to continue their operations.
As stated last week in a separate Pub K Development notice, USAID purportedly will not be making any payments to contractors and NGOs. If true, this appears to violate existing contracts, grants, and cooperative agreements—as well as various laws, regulations, court orders, and the Full Faith and Credit clause of the Constitution. Nichols Liu remains on standby to help implementing partners seek to enforce payment rights.
Read more details on the impact of the freeze in this CNN article linked here.
