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Some Trump administration officials have crafted a proposal to restructure the U.S. international aid and development architecture, making it leaner, more focused, and better positioned to take on China. The plan sets forth “3 pillars” designed to streamline and align international assistance with national security and strategic priorities.
Here’s some key takeaways:
- The proposed plan appears to be designed to operate within existing legal frameworks, engaging with Congress and OMB to establish these pillars and align funding, policies, and regulations.
- The full-cost recovery model, central to USAID’s partnerships through cost reimbursement grants/COAGs and cost-plus-fixed-fee contracts, may be replaced with “performance-based procurements,” linking payments to outcomes and results. Mention was made to “reduced indirect cost rates.” This shift could lead to extended cash outlays and delays due to the verification processes required before payments are made.
- The performance-based payment model and potentially capped indirect cost rates shift risks to implementers.
- There is an anticipated replacement of the partner base, moving away from “beltway bandits” and UN agencies to new and local firms and organizations with proven track records outside of government contracting. The combination of performance-based awards and limited experience may result in steep and expensive learning curves for these new entities.
- The plan aims to foster innovation through the increased use of Other Transaction Authority (OTAs), BAAs, and APS, with blockchain technology to secure transactions.
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