US/AFGHANISTAN: Short-staffed USAID tries to keep pace

During her Senate confirmation hearing a few
weeks ago, Secretary of State Hillary Rodham Clinton offered a blunt
assessment of the U.S. Agency for International Development, founded
under President Kennedy to revamp foreign assistance.

"I
think it's fair to say that USAID, our premier aid agency, has been
decimated," she said. "It has half the staff it used to have. It's
turned into more of a contracting agency than an operational agency
with the ability to deliver."

Like other
government functions, U.S. foreign aid and reconstruction largely has
been privatized - a process that began decades ago but accelerated
under the George W. Bush administration. To a far greater extent than
the State Department, with its much-publicized use of private security
firms, USAID turns to contractors to fulfill its basic mission of
fighting poverty and promoting democracy.

After
decades of staff cuts, contract spending has outpaced the agency's
ability to manage it, said Ronald Neumann, the head of the American
Academy of Diplomacy, who served as ambassador to Afghanistan from July
2005 to April 2007.

An October report by the
academy said USAID suffers "a drastic shortage of people with the
technical capabilities" to oversee contractors. The agency employs just
five engineers, the report said.

The
consequences are on display in Afghanistan and Iraq, where government
audits and independent reports have chronicled contractor failures.

Gradually downsized since '70s

During
the Vietnam War, agency workers built roads and dug wells. These days,
a far smaller staff mainly pounds keyboards and shuffles paper, said
Carol Lancaster, a Georgetown University professor who was an agency
administrator from 1993 to '96.

For much of
its work, the agency hires large U.S. firms, many of them private,
for-profit concerns whose executive ranks include former USAID
employees. Those companies in turn hire subcontractors, which sometimes
hire other firms. At the end of the chain are local workers at the site.

"USAID
has left the retail game and become a wholesaler," Lancaster said. "In
fact, it's become a wholesaler to wholesalers. It takes you far from
what's happening on the ground."

The agency
has lost half its permanent staff in a gradual downsizing since 1975
that accelerated after the Cold War. Then came a boost in spending for
Iraq and Afghanistan. In 1990, USAID had nearly 3,500 people
administering $5 billion a year in aid, according to the academy
report. Now it has 2,200 people overseeing more than $8 billion
annually.

Annual contract spending rose from $479 million in 2000 to about $2 billion a year now.

"Even
when there are not headline-grabbing abuses," Clinton told senators,
"there has been a steady transfer of authority and resources from
government employees and a chain of accountability to contractors, and
we have reaped the very difficult consequences of that."

Agency
officers such as Francisco Zamora, public health expert and vice
president of the foreign service union, say contractors provide
flexibility.

Humanitarian workers point to
Afghanistan as an example of systemic weaknesses. "Vast sums of aid are
lost in corporate profits of contractors and sub-contractors," Matt
Waldman, an Afghanistan-based analyst for Oxfam International, said in
a study released last year.

In an interview
from Kabul, Michael Yates, the top USAID official in Afghanistan,
disputed that. He acknowledged that contractors in Afghanistan require
security and overhead costs but said contractors "expand the pool of
expertise available."

Private contractor under fire

A
major contractor in Afghanistan is Chemonics International, a private
Washington firm that has seen its USAID contracts grow from $6.7
million in 2000 to more than $250 million last year, according to
government records. In an interview, Chemonics President Richard
Dreiman called Waldman's analysis "exaggerated." He said Chemonics
typically earns less than 3% net profit on its contracts.

In
2003, Chemonics won a $153 million contract to promote Afghan
agricultural development. A July 2005 analysis by the Government
Accountability Office, the investigative arm of Congress, concluded
that the company built irrigation canals and vaccinated livestock as
promised but "failed to ... address a key program objective": integrating
its activities into a functioning agricultural market.

"I
think they've identified a challenge that remains to be completed,"
Dreiman said, saying that the insurgency and corruption stood in the
way.

A 2006 report by Corpwatch, a non-profit
group that monitors government contracting, found that grain storage
silos and greenhouses built under the Chemonics contract "had collapsed
or disintegrated during their first Afghan winter."

A
Chemonics spokeswoman, Lisa Gihring, said in an e-mail: "There was
around a 98% success rate with these structures. Those that failed did
so because not all laborers had the same skill levels for construction."

Despite
those issues, USAID awarded Chemonics another agricultural contract,
worth $102 million, in 2006. Last year, the agency's inspector general
found that Chemonics could not show that it fulfilled any of the eight
project goals, such as training farmers. The audit criticized
"significant delays" in a commercial farming operation and "significant
construction defects" in buildings.

Chemonics, Dreiman said, is correcting the problems and is "making a difference in Afghanistan."

• 21 Reconstruction
• 187 Privatization