The Foreign Assistance Contracting Cliff

There remains a lot of uncertainty regarding the status (and legality) of USAID award and staff terminations to date, and even more around the administration’s reorganization plans. But assume things work out as the administration hopes: USAID staff are all fired and the agency is shut down by the end of August, while the State Department takes over USAID functions on July 1^st. What has to happen in the meantime to retain some sort of continuity in the activities the administration wants to maintain? One thing is a lot of new contracting.

According to the data recently sent to Congress, $282 million of the awards retained by the administration had an end date of February 28^th or before. By March 31^st, awards worth $1.6 billion had already reached their end date. By September 29^th, awards worth $6.8 billion will reach their end date, and the next day, the last day of the fiscal year, the cumulative total obligations under preserved contracts that have reached their contract end date will climb to $36.1 billion—nearly half of the total obligated value of retained awards.

Figure. USAID award end dates by total obligated value

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Some of these awards will be for projects or tasks that are already completed, even though the official end date is later. For the rest, there are options to ensure continuity of provision: costed extensions, follow-on awards, or new award processes. But that takes design and review capacity alongside contracting staff. And for the next few months, the decimated and demoralized capacity that remains will be going through the considerably complex process of closing out 5,341 precipitously terminated awards, all while also trying to shut down USAID and create the institutions and logistics and then staff up in the Department of State to manage tens of billions of dollars’ worth of contracts.

Many firms and nonprofits running awards on preserved list and/or supposedly waivered activities still haven’t been paid for activities since the start of the funding pause. Meanwhile, the gap between obligations and appropriations is yawning large enough to force a fight over impoundment. Add the chaos of the proposed reorganization and dealing with terminations, and it seems optimistic that the administration can resurrect stable provision even for activities it views as making America safer, stronger and more prosperous. The (utterly avoidable) costs will include more dead children.