[Senate Hearing 118-102]
[From the U.S. Government Publishing Office]


                                                    S. Hrg. 118-102

                 USAID LOCALIZATION: CHALLENGES, OPPORTUNI-
                  TIES, AND NEXT STEPS TO FURTHER DEVELOP-
                  MENT INITIATIVES ON THE LOCAL LEVEL

=======================================================================

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON STATE
                          DEPARTMENT AND USAID
                       MANAGEMENT, INTERNATIONAL
                       OPERATIONS, AND BILATERAL
                       INTERNATIONAL DEVELOPMENT

                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 9, 2023

                               __________



       Printed for the use of the Committee on Foreign Relations
       
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]       


                  Available via http://www.govinfo.gov

                              __________

                                
                    U.S. GOVERNMENT PUBLISHING OFFICE                    
53-433 PDF                 WASHINGTON : 2023                    
          
-----------------------------------------------------------------------------------

                 COMMITTEE ON FOREIGN RELATIONS        

             ROBERT MENENDEZ, New Jersey, Chairman        
BENJAMIN L. CARDIN, Maryland           JAMES E. RISCH, Idaho
JEANNE SHAHEEN, New Hampshire          MARCO RUBIO, Florida
CHRISTOPHER A. COONS, Delaware         MITT ROMNEY, Utah
CHRISTOPHER MURPHY, Connecticut        PETE RICKETTS, Nebraska
TIM KAINE, Virginia                    RAND PAUL, Kentucky
JEFF MERKLEY, Oregon                   TODD YOUNG, Indiana
CORY A. BOOKER, New Jersey             JOHN BARRASSO, Wyoming
BRIAN SCHATZ, Hawaii                   TED CRUZ, Texas
CHRIS VAN HOLLEN, Maryland             BILL HAGERTY, Tennessee
TAMMY DUCKWORTH, Illinois              TIM SCOTT, South Carolina
                Damian Murphy, Staff Director          
       Christopher M. Socha, Republican Staff Director          
                   John Dutton, Chief Clerk          


           SUBCOMMITTEE ON STATE DEPARTMENT AND USAID        
           MANAGEMENT, INTERNATIONAL OPERATIONS, AND        
              BILATERAL INTERNATIONAL DEVELOPMENT        

             BENJAMIN L. CARDIN, Maryland, Chairman        
TIM KAINE, Virginia                  BILL HAGERTY, Tennessee
CORY A. BOOKER, New Jersey           PETE RICKETTS, Nebraska
CHRISTOPHER A. COONS, Delaware       TED CRUZ, Texas
CHRISTOPHER MURPHY, Connecticut      RAND PAUL, Kentucky

                              (ii)        



                         C  O  N  T  E  N  T  S

                              ----------                              
                                                                   Page

Cardin, Hon. Benjamin L., U.S. Senator From Maryland.............     1

Hagerty, Hon. Bill, U.S. Senator From Tennessee..................     3

Sumilas, Michele, Assistant to the Administrator, Bureau for 
  Policy, 
  Planning, and Learning, U.S. Agency for International 
  Development, 
  Washington, DC.................................................     4
    Prepared Statement...........................................     7

Steiger, Dr. Bill, Global Health Consultant, George W. Bush 
  Institute, 
  Washington, DC.................................................    25
    Prepared Statement...........................................    27

Aquino, Elana, U.S. Executive Director, Peace Direct. Washington, 
  DC.............................................................    36
    Prepared Statement...........................................    38

O'Keefe, Bill, Executive Vice President for Mission, Mobilization 
  and 
  Advocacy, Catholic Relief Services, Baltimore, MD..............    44
    Prepared Statement...........................................    45

              Additional Material Submitted for the Record

Responses of Ms. Michele Sumilas to Questions Submitted by 
  Senator 
  Benjamin L. Cardin.............................................    56

Responses of Ms. Elana Aquino to Questions Submitted by Senator 
  Benjamin L. Cardin.............................................    59

Responses of Mr. Bill O'Keefe to Questions Submitted by Senator 
  Benjamin L. Cardin.............................................    62

Prepared Statement of Dr. Tessie San Martin, CEO FHI 360 and Co-
  Chair, Modernizing Foreign Assistance Network (MFAN)...........    62

Article Titled, ``Metrics Matter: How USAID Counts `Local' Will 
  Have a Big Impact on Funding for Local Partners,'' by Publish 
  What You Fund, Dated March 2023................................    65

Prepared Statement of David J. Berteau, President and CEO of the 
  Professional Services Council..................................    69

Prepared Statement of Allassane Drabo, Search for Common Ground..    70

                                 (iii)

  

 
   USAID LOCALIZATION: CHALLENGES, OPPORTUNITIES, AND NEXT STEPS TO 
           FURTHER DEVELOPMENT INITIATIVES ON THE LOCAL LEVEL

                              ----------                              


                        THURSDAY, MARCH 9, 2023

                               U.S. Senate,
        Subcommittee on State Department and USAID 
Management, International Operations, and Bilateral 
                         International Development,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:31 a.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Benjamin J. 
Cardin, presiding.
    Present: Senators Cardin [presiding], Coons, Booker, 
Hagerty, and Ricketts.

         OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, 
                   U.S. SENATOR FROM MARYLAND

    Senator Cardin. The subcommittee will come to order.
    This is the Subcommittee for State Department and USAID 
Management, International Operations, and Bilateral 
International Development. That is quite a title.
    Welcome to our first hearing of this Congress. The 
subcommittee's jurisdiction is broad and our principal 
responsibility is oversight, oversight of the State Department, 
the USAID, U.S. Agency for Global Media, the Peace Corps, the 
Millennium Challenge Corporation.
    We have a lot of work to do, and we intend to be very 
active during this Congress and I say ``we'' because Senator 
Hagerty and I are partners in this effort on oversight.
    We joined together in the last Congress and we concentrated 
more on the State Department, and I think we were able to get 
some significant progress made in the State Department on 
several areas including training and we intend to do the same 
type of work during this Congress together on the oversight of 
the agencies to make sure that Congress is a full partner and 
the agencies being able to carry out their mission and to make 
the types of recommendations we think that can be helpful in 
carrying out that responsibility.
    I am extremely fortunate to have Senator Hagerty as my 
partner. He understands the challenges through his experience 
as Ambassador to Japan.
    We have had a chance to talk about that on many occasions 
and it really is a pleasure to have him as my co-leader on this 
committee, and thank you very much for your help in that 
regard.
    Our first hearing will be on the USAID localization--
challenges, opportunities, the next step, and further 
development initiatives on the local level.
    This is a subject that does not get the type of attention 
that we think it needs to get because we know that locally-led 
development gives the ability of the local communities to 
become self-sufficient to sustain their operations.
    We know Administrator Power has made this a priority for 
USAID. There are major advantages to moving forward on local 
capacity and the challenge is that today's numbers are about 6 
percent of the resources are used in local development. 
Administrative Power indicates she wants that number to be 
increased to 25 percent over a 4-year period.
    That is an ambitious goal. The question is how do we get 
there and part of it is in the definition of what is local 
actors. The USAID's definition encompasses individuals, 
communities and networks, organizations, private entities, and 
governments set their own agendas, develop solutions that bring 
capacity, leadership, and resources to make those solutions a 
reality. That is a quote from the USAID.
    We are going to talk a little bit about that because we 
recognize that localization--in some cases there is a 
disagreement as to what is local. We will have a chance to talk 
a little bit more about that.
    Challenges in carrying out localization, first and 
foremost, is resources--do you have the capacity to be able to 
carry out your current mission and do a transition to more 
local efforts with the resources that are available.
    We will talk a little about workforce--do you have the 
personnel that can make that a reality. We will talk about 
financial risks that are involved and accountability, and the 
conflicts between local providers and their sights and 
ambitions and what the USAID goals are.
    These are all areas that we hope that we will have some 
conversation about during today's hearing.
    The United States needs a strong Agency for International 
Development to advance its interests in the 21st century. In 
order to do this effectively, we need strong local partners.
    Many of the most serious challenges the United States faces 
in 2023 and beyond require us to effectively leverage our 
development initiatives, and local actors play a critical role 
in this effort preventing the rise of authoritarianism, 
empowering businesses to build economic ties with our country, 
addressing climate change, strengthening democratic 
institutions, furthering peace building, and strengthening 
health systems overseas to respond to global health crisis.
    These are just a few of the development priorities in which 
local civil societies have the local context and experience 
required to help USAID achieve these goals. That is our 
objective.
    I must tell you we have a really distinguished two panels, 
first from the Administration and then from the private sector, 
and we welcome you here. You will get formal introductions in 
one moment.
    We welcome you to this discussion so that we can work 
together to improve the effectiveness of our international 
development efforts.
    With that, let me recognize Senator Hagerty.

                STATEMENT OF HON. BILL HAGERTY, 
                  U.S. SENATOR FROM TENNESSEE

    Senator Hagerty. Thank you, Chairman Cardin, and I, 
likewise, appreciate the opportunity to partner with you on 
this and looking forward to a productive Congress.
    I certainly feel honored to have been able to work with you 
in the last Congress to achieve the beginning that we have in 
the State Department and I applaud you for taking us in this 
direction with USAID.
    I would also just like to acknowledge that USAID does 
business in some very tough places and a lot of the, by 
definition, the developing nations where USAID does business 
often lack the infrastructure to have the accountability, the 
transparency, that we would like to see.
    I want to acknowledge that challenge up front and say that 
I know that it is difficult, as we move forward, but that is 
the challenge that we are embracing today to try to help make 
that better.
    The notion of localization is very appealing. It, 
certainly, from a person with a business background, smacks of 
greater efficiency, disintermediation of sort of brokers and 
people that go between, and it suggests to me in the long-term 
that we could certainly become a lot more efficient with the 
expenditure of our USAID dollars.
    I hope we have a chance to talk about some of the efforts 
toward localization that have taken place. I applaud Ambassador 
Power and her setting the goal of 25 percent localization over 
this Administration.
    I agree with the chairman that is a very aggressive goal. I 
would take us back to the Obama administration, and at that 
point the Obama administration put forward the USAID Forward 
program and at that point the administrator, Rajiv Shah, sought 
to localize 30 percent of mission funding and, obviously, that 
did not happen. I just want to acknowledge this has been tried 
and has not happened on a broad scale basis.
    I would like to draw our attention to an area that I think 
may be an example where this has worked, and as a business 
person we always try to find a case-in-point where we can 
observe best practices and see if we can standardize on those 
and that would be in the Trump administration, an effort called 
Journey to Self-Reliance--the Journey to Self-Reliance 
Initiative--and in particular I think that initiative probably 
saw greater results as countries got toward their goal of self-
reliance.
    There was a particular program there in PEPFAR where they 
made tremendous, tremendous progress and I hope we will have an 
opportunity to go there.
    With respect to Ambassador Power's goal of getting to 25 
percent, I just want to come back and, again, put a reality 
check. This is a report, and I will quote from it, the 
Congressional Research Service reported in January of this 
year--a very recent report--that--I will just use the exact 
words--that, ``USAID has faced challenges in operationalizing 
its localization work. These include potential increased 
financial risk when working with local partners when compared 
with U.S.-based entities, inconsistent definitions of local 
entities leading to confusion among stakeholders,'' just as 
Chairman Cardin said, ``and potential conflicts between 
localization objectives and USAID development goals.''
    I think that that is a clear-eyed acknowledgement of the 
challenge that we have to look at and, again, it takes me back 
from a business background.
    Let us take a look at what has worked, and Dr. Deborah Birx 
and Dr. Bill Steiger wrote a report that was published by the 
George W. Bush Institute just last month, and I am going to use 
a quote from that. ``Fewer than 15 percent of the prime 
recipients of PEPFAR funds managed by AID were local partners 
in 2016, but by 2021, USAID transitioned more than 63 percent 
of its worldwide PEPFAR awards to these local implementers and 
it is on track to hit 70 percent this year.''
    I think if we talk about what the next steps might be, let 
us take a hard look and understand what worked and what has not 
worked in the past and see if we can learn from that.
    In that spirit, I look forward to hearing from the 
witnesses today from both panels and I am certain that we will 
have a very productive conversation.
    Mr. Chairman, back to you.
    Senator Cardin. Thank you, Senator Hagerty.
    Senator Ricketts, I want to, first of all, welcome you to 
our subcommittee. We have already welcomed you to the full 
committee, but welcome to the subcommittee.
    Senator Coons, who chairs the relevant subcommittee in 
Foreign Ops, has a lot of demands. Thank you very much for 
being part of this subcommittee. I appreciate it very much.
    Our first witness is Michele Sumilas, who was the assistant 
to the administrator for the Bureau of Policy, Planning, and 
Learning and is USAID's lead on implementing the localization 
initiative. She served as executive director of Bread for the 
World, an anti-hunger Christian advocacy organization.
    She also brings to the table her government experience 
serving as USAID chief of staff and deputy chief of staff 
during the Obama administration and earlier service on the 
staff of the House Subcommittee on State and Foreign 
Operations.
    I learned this morning that she has roots in Baltimore. 
Welcome.

 STATEMENT OF MICHELE SUMILAS, ASSISTANT TO THE ADMINISTRATOR, 
  BUREAU FOR POLICY, PLANNING, AND LEARNING, U.S. AGENCY FOR 
           INTERNATIONAL DEVELOPMENT, WASHINGTON, DC

    Ms. Sumilas. Thank you, Chairman Cardin, Ranking Member 
Hagerty, distinguished members of the Subcommittee.
    USAID is grateful for the support of members of Congress on 
advancing a more localized approach to achieve sustainability 
and greater impact from our foreign assistance investments. I 
appreciate the opportunity to appear today to share our work.
    When she articulated her vision for USAID, Administrator 
Samantha Power said, ``Never before have our fates been so 
intertwined with those of people around the world. So, 
accordingly, it is imperative that we work hand-in-hand with 
local communities as we address both chronic and acute 
development and humanitarian challenges to achieve progress 
that outlives our investments.''
    This not only furthers our localization agenda, but it also 
strengthens the NGOs to be voices for democracy, anti-
corruption, and transparency in their own countries.
    For USAID, localization refers to the actions and reforms 
we take to put local actors at the center of our work. 
Localization is a whole-of-agency effort to understand local 
systems and our role within them, to address barriers to 
pursuing equitable locally-led development, to reevaluate our 
risk posture while continuing to safeguard taxpayer resources, 
to incentivize staff to work more closely with local partners, 
and to build greater support for localization among our key 
stakeholders, collaborators, and partners.
    We want to reiterate as well that we see a continued key 
role for our existing partners, including international NGOs, 
U.S. small businesses, contractors, multilateral institutions, 
and the private sector.
    Collectively, we are working to change the power dynamics 
between donor organizations and those with whom we work. We 
want to ensure a seat at the table for local actors, especially 
those representing women, girls, historically marginalized 
communities, and others.
    Localization is fundamentally about putting local context, 
aspirations, dynamics, organizations, and change agents at the 
center of our programming.
    It is about recognizing that development agencies such as 
USAID do not direct or drive change. Rather, we support and 
catalyze local change processes.
    To do this, we want to shift more leadership and ownership, 
decision making, evaluation, and implementation to local 
communities who possess the capability, connectedness, and 
credibility to propel change in their own communities. This is 
part of what Administrator Power calls our commitment to 
Progress Beyond Programs.
    To institutionalize this agenda, Administrator Power 
established two high-level targets. By 2025, a quarter of our 
funding will go directly to local actors, and by 2030 at least 
half of our programs will create space for local actors to 
exercise leadership over priorities, activity design, 
implementation, and defining and measuring results.
    Next month, we will release our first localization progress 
report that will include the 2022 data for direct local funding 
and it will also articulate the definition and methodology for 
the second target as well as for the first target.
    We see the two targets as complementary. Whom we partner 
with is a key measure of localization, but direct funding is 
only part of the story.
    More broadly, opportunities exist to advance local 
ownership across all types of relationships with local actors, 
whether they are direct recipients of funding, sub-partners on 
a USAID award, participants in a USAID program, or members of 
the communities where we work.
    We need to track how we work to create those decision-
making opportunities. This new target has been informed by 
consultations with USAID staff, partners, and local 
organizations themselves.
    On the issue of direct measurement, we acknowledge the 
complexities of defining a local entity and have been working 
with stakeholders to make this target as accurate as possible.
    Our goal was to come up with as good a proxy as possible 
while minimizing the reporting burden on staff and our local 
partners by maximizing our automated systems.
    Finally, as part of all these efforts on targets, missions 
and operating units will set direct funding targets for future 
years and we will share more about these targets soon.
    I also want to flag that our target of 25 percent of 
funding is a global target and so in some missions there will 
be--70 percent of funding will go to local organizations and in 
other missions, depending on where we are working, as you said, 
Senator Hagerty, we may have 2 or 3 percent going to local 
partners. It has to be based on the local context.
    While we measure our progress towards increasing locally-
led development, we will remain focused on impact.
    Increasing our impact through locally-led development is 
the ultimate reason we are committed to this. Engaging with 
local partners and communities will create deeper development 
outcomes, safeguard our investments, and advance the 
Sustainable Development Goals.
    While the measurement development process has been ongoing 
and has received lots of attention, we have also pressed 
forward with other reforms.
    We are pushing forward a whole-of-agency change management 
process including reforms to business practices built on 
lessons learned and ongoing engagement with current and 
prospective partners, and this is what is different about this 
effort from USAID Forward. We are looking at all of our systems 
and making changes.
    We have released a new updated Risk Appetite Statement and 
implementation plan. We have updated our Agency Learning Agenda 
to make sure we are assessing our progress and making changes 
along the way. We have established a Localization Playbook, 
which is an internal document for our staff, and, finally, we 
have a new Local Capacity Strengthening Policy.
    Last week, we released a new Acquisitions and Assistant 
Strategy. The Strategy has three core focus areas. The first 
focus is on our staff, the second commits to streamlining 
cumbersome acquisitions and assistance processes, and the third 
focuses on lowering barriers to engagement. We have been 
seeking input on all of this from everyone.
    Finally, I just want to flag that we are also reducing 
hurdles to accessing USAID information and in November.
    Senator Cardin. You can finish your comment.
    Ms. Sumilas. We launched the workwithusaid.org website, 
which provides additional information for local organizations, 
which has been used by over 200,000 new users. We also just 
added a sub opportunities portal to the website.
    I just want to flag, and I hope I will have a chance to 
talk about Centroamerica Local, our Africa Localization 
Initiative, and some of the work being done in our country 
missions.
    Finally, we look forward to working with you and I want to 
thank the Appropriations Subcommittee and all of Congress for 
the additional resources provided to hire new staff. Many of 
these staff will be making these changes that we are talking 
about, and I look forward to talking about specific legislative 
changes that we would seek in the new Congress.
    Thank you so much, and I look forward to answering 
questions.
    [The prepared statement of Ms. Sumilas follows:]

               Prepared Statement of Ms. Michele Sumilas

                              introduction
    Chairman Cardin, Ranking Member Hagerty, distinguished members of 
the Subcommittee, thank you for inviting me here today to testify about 
the United States Agency for International Development (USAID)'s 
efforts to promote locally led development. We are grateful for the 
support we have received from you and other Members of Congress on the 
need to advance a more localized approach to achieve sustainability of 
our investments and greater development impact.
    When she laid out her vision for our Agency, USAID Administrator 
Samantha Power said, ``never before have our fates been so intertwined 
with those of people around the world.'' Acknowledging this, it is 
imperative that we work hand in hand with local communities as we 
strive to address both chronic and acute development and humanitarian 
challenges and achieve progress that outlives and outlasts our 
investments in time-bound programs. The communities in which we work 
have unique priorities, knowledge, lived experiences, and aspirations. 
Through collaboration with USAID, this local expertise can shape the 
investments of foreign assistance and greatly increase its impact. 
Creating space for local actors to exercise leadership is a smarter, 
more efficient use of development and humanitarian resources. In the 
spirit of ``Progress Beyond Programs,'' working with and through local 
actors and leaders creates impacts and sustains progress long beyond 
the period of performance of a single award or program.
    As we take steps to realize this, we are urged along by a wide 
range of stakeholders. Members of Congress, our international and local 
implementing partners, and community-based organizations in the 
countries where we work have all expressed their support for enhancing 
locally led approaches and working with us to create a more inclusive 
vision of development and humanitarian assistance. We see a collective 
imperative to recognize and change power dynamics--to ensure that we 
utilize the expertise of local actors--including, notably, those who 
represent and have the confidence of historically marginalized 
communities and groups. Our work must continue to support these local 
changemakers to drive progress in their own communities.
    For USAID, localization refers to the actions and reforms we are 
taking to put local actors at the center of our work to advance locally 
led development and humanitarian relief. Localization is a whole-of-
Agency effort to understand local systems and our role within them; 
take specific actions to make USAID more accessible to local actors; 
address barriers to pursuing equitable locally led development; 
reevaluate our risk posture while continuing to safeguard U.S. taxpayer 
resources; provide incentives to staff to work more closely with local 
partners; and build greater support for localization among our key 
stakeholders, collaborators, and partners. We will also continue to 
work hand in hand with existing implementing partners, private sector 
actors, international NGOs, U.S. small businesses, multilateral 
institutions, and philanthropic foundations to complement, promote, and 
increase our locally led development efforts. We need to make sure we 
are building on the unique resources, skills, and networks of all 
actors in the development and humanitarian system, and do so in a way 
that supports and creates the conditions for local actors to lead their 
own progress.
    I'm honored to represent USAID today and share some of the progress 
that we've made toward more locally led development.
                        measurement and metrics
    Administrator Power has set out two high-level targets for our 
localization efforts. The first is that by FY 2025, a quarter of 
USAID's funding will go directly to local actors. The second, which is 
of equal importance--or maybe even higher importance--is that by 2030, 
at least half of our programs will create space for local actors to 
exercise leadership over priorities, activity design, implementation, 
and defining and measuring results. In the next month, we will release 
our first localization progress report that will also include our first 
year of data for direct local funding as well as the definition and 
methodology for a new metric for tracking local leadership. But today, 
I'd like to preview how these measures relate to each other and why, 
together, they are important for tracking our progress.
    We see these two targets as complementary. On one hand, who we 
partner with is a key measure of localization. And it is one USAID has 
used in the past. But direct funding is only part of the story. 
Channeling funding to local partners can be done in ways that create 
more or less space for local actors' agency and decision making. And, 
more broadly, there are opportunities to advance local ownership across 
all types of relationships with local actors--whether they are direct 
recipients of funding, sub-partners on a USAID award, participants in a 
USAID program, or members of a community affected by USAID programming. 
So, while control of resources is an important aspect of ownership, the 
power to meaningfully influence key decisions about how development 
happens for your own community is at the heart of locally led 
development. On the other hand, we need to track how we work to create 
those decision making opportunities. This new metric is informed by 
consultations with USAID staff, partners, and local organizations 
themselves.
    On the issue of direct measurement, USAID acknowledges the complex 
nature of measuring what is considered a `local' entity and has been 
working with stakeholders to make this metric as accurate as possible. 
We also recognize there are several ways to measure direct funding to 
local organizations. Our goal was to come up with as good a proxy as 
possible, while minimizing the reporting burden on staff and local 
partners by using automated systems to the maximum extent possible. At 
the time of the launch, USAID was able to ascertain that our direct 
local funding was 6 percent in FY 2021 (this has since been revised to 
7 percent) and we will be using this data as our baseline. This year, 
all USAID operating units were asked to review the 2022 data to ensure 
its accuracy, resulting in many changes following the initial data 
review.
    We are also asking all Missions and operating units to set targets 
and we will plan to share more about those in the coming months. We are 
initially focused on establishing targets for the direct local funding 
indicator, but we will also ask Missions and operating units to set 
targets for local leadership after we pilot the new measure this fiscal 
year.
    While we measure our progress towards increasing locally led 
development, we understand that we need to remain focused on impact. 
Increasing the impact of our investments through locally led 
development is the reason we are committed to this work. Taking the 
opportunity to engage with local partners, communities, and leadership 
will create deeper development outcomes and safeguard our investments.
    While the measurement process has been underway, we have not been 
waiting to move ahead on the goal of creating space for local 
leadership in our work. Here in Washington, we have been making 
fundamental changes to our business model and investing efforts across 
the Agency to ensure we reach our localization goals and 
institutionalize the business practices that facilitate successful 
investment in local organizations. Our missions are also moving 
forward. For example, USAID/Nepal has already committed to co-create 
100 percent of its programs with local actors, at every step of the 
way, from the concept stage to measuring and evaluating results. Early 
support from Congress has made this possible and we want to recognize 
and thank you for your partnership and assistance in support of this 
goal.
    Additionally, please note that our efforts to expand engagement 
with local partners will in no way jeopardize our strong commitment to 
close oversight and monitoring. We remain fully committed to 
safeguarding U.S. foreign assistance, promoting effectiveness, 
efficiency, and accountability, and preventing fraud, waste, and 
misconduct.
           internal reforms to support our localization goals
    Achieving our localization goals requires a whole-of-Agency change 
management process, including reforms to our business practices. These 
reforms are built on lessons learned from our previous efforts to 
expand engagement with local partners, as well as ongoing engagement 
with both current and prospective international and local partners to 
understand their needs and perspectives.
    A central strategy that is driving our reform process is our newly-
released Acquisition and Assistance Strategy, or ``A&A Strategy.'' The 
strategy's overarching goal is to ensure our A&A practices enable 
sustainable, inclusive, and locally led development, and it has three 
categories of commitments in pursuit of that goal.
    First, the strategy focuses on our staff. Through efforts to 
improve hiring, training, and retention, we will enable, equip, and 
empower USAID's A&A workforce to engage with local organizations who 
are unfamiliar with U.S. Government and USAID requirements and often 
need more accompaniment through the process. Special attention is given 
to hiring and retention approaches for foreign service national (FSN) 
A&A staff who, with their in-country connections, continuity at post, 
language capabilities, and professional skills, will be central to 
advancing localization.
    Second, recognizing that our award process can be cumbersome, the 
A&A strategy commits to streamline our A&A processes and automate 
repetitive tasks so USAID staff and partners can spend less time on 
paperwork and more time on developing partnerships and delivering 
development results.
    And third, the A&A Strategy focuses on lowering barriers to 
engagement with USAID for all partners, but with particular attention 
to local organizations. The strategy highlights efforts such as using 
more proactive communications to reach local partners; using more 
flexible, adaptable, and simple award mechanisms; expanding the use of 
less-than-full proposals up front and phased competitions; expanding 
opportunities for local partners to engage in A&A processes in 
languages other than English; making it easier for Missions to limit 
competition to local partners; and exploring more ways to help local 
partners recover their indirect costs.
    We are already making progress. For example, USAID missions in 
Northern Central America have ramped up their efforts to reach out to 
potential new local partners, including through targeted outreach in 
English, Spanish, and local Indigenous languages. And several Missions 
are supporting a pilot for ``last mile translation,'' wherein final 
applications are translated into English (a regulatory requirement) 
from local actors who operate primarily in languages other than 
English.
    We released the A&A Strategy earlier this week along with a draft 
implementation plan. We are seeking input from internal staff and all 
our partners to shape and inform our efforts. We hope to tap into local 
organizations' expertise on how to implement the objectives in the A&A 
Strategy, asking for their input to identify the barriers local 
organizations face in partnering with us, beyond those we are already 
addressing.
    One topic on which we anticipate significant input and discussion 
to find a solution is the requirement to obtain a unique entity 
identifier (UEI) and register in the System for Award Management (SAM), 
which is a U.S. Government-wide system designed for U.S. entities. 
USAID staff and local organizations consistently highlight challenges 
with the UEI/SAM process. For example, there is a requirement that 
documentation in the entity validation process be submitted in English; 
this is a huge barrier for many local entities whose operations--and 
documentation--are in other languages.
    In addition to reducing the procedural requirements to access USAID 
funding, we're also reducing the knowledge barriers that have 
historically impeded local organizations from working with USAID. In 
November 2021, we launched the WorkwithUSAID.org website to help 
development organizations expand their knowledge and networks. Since 
its launch, over 200,000 new users have visited the website and more 
than 3,700 entities from more than 90 partner countries have registered 
in the Partner Directory. Of these entities, more than 60 percent self-
identified as ``local.'' The platform also includes resources in nine 
different languages.
    The newest feature on the platform centers around a popular topic 
in the development community: sub partnership opportunities. A Sub-
Opportunities Portal has been added to the website, which shares 
opportunities being offered by USAID's prime implementing partners, who 
are seeking subcontractors or subawardees when they need specialized 
expertise or on-the-ground support. For current USAID prime partners, 
the new page will raise the visibility of their subaward and 
subcontract opportunities, allowing them to access a wider pool of 
qualified potential partners. And for these potential partners, the 
page will provide visibility into more ways to get involved.
    The team is working on additional enhancements to the website, 
including a funding opportunities feed that will pull all ``live'' 
USAID-specific opportunities from SAM.gov and Grants.gov into one 
place, making it easier for potential partners to locate solicitations. 
Finally, we are working to translate the entire platform into multiple 
languages, prioritizing Spanish, French, and Arabic.
                          regional initiatives
    While all USAID Missions are exploring opportunities for expanding 
their engagement with local partners and other local actors, regional 
localization initiatives offer targeted and expedited opportunities to 
expand engagement with local partners.
    Launched just over a year ago, Centroamerica Local is a 5-year, 
$300 million initiative to engage, strengthen, and support local 
organizations in El Salvador, Guatemala, and Honduras to lead programs 
to advance sustainable and equitable economic growth, improve 
governance, fight corruption, protect human rights, improve citizen 
security, and combat sexual and gender-based violence in line with the 
U.S. Strategy for Addressing the Root Causes of Irregular Migration in 
Central America. Under the program, USAID missions in the region are 
expanding outreach to local organizations, including indigenous and 
women-led organizations, using procurement flexibilities to make 
partnership opportunities more accessible to local organizations. We 
are now directly supporting more than 20 local partners in El Salvador, 
Guatemala, and Honduras.
    The Africa Localization Initiative is our second regional 
initiative and will build on the consistent investment that region has 
seen over the years, particularly in health and food security. The 
initiative will be a targeted effort in which USAID Missions identify 
opportunities and the support and flexibilities necessary to take 
advantage of those opportunities. We are focused on understanding what 
Missions need to expedite these efforts.
              global leadership in locally led development
    And finally, we recognize that USAID is a powerful player in 
development and humanitarian spheres. We want to use our voice, power 
of example, and partnerships to encourage others to also advance 
locally led development. We are seeing new momentum around reimagining 
the business of foreign assistance, and we want to help push that 
forward.
    To date, USAID is the only international development donor that has 
made clear, measurable commitments for how it will hold itself to 
account for making progress. But other countries are also invested in 
making their work more locally led.
    That is why USAID is working with other donors on shared 
commitments and approaches for increasing locally led development. In 
December, during the Global Partnership for Effective Development 
Cooperation Summit in Geneva, I announced that the USAID and 14 other 
bilateral donors agreed to a new joint statement on supporting locally 
led development.
    The joint statement outlines specific commitments on behalf of the 
joining donor institutions to: (1) shift and share power with local 
actors; (2) channel high quality funding as directly as possible to 
local actors; and (3) use our voices to advocate for locally led 
development.
    Building on previous international commitments, this statement 
provides a strong collective statement of donor commitments to 
localizing development, humanitarian, and peacebuilding cooperation, 
with a particularly important focus on power dynamics. Together, we 
will work toward actualizing these commitments, and will continue to 
advocate for other donors, philanthropies, and multilateral 
organizations to join us in these efforts.
                      congressional flexibilities
    We are grateful for the support and enthusiasm we've heard from our 
partners and advocates in Congress for advancing a more localized 
approach to development and humanitarian assistance.
    We look forward to working with this committee to advance reforms 
and tackle the constraints involved with scaling up localization, 
including those related to current statute or regulation. In 
particular, we are interested in pursuing changes to how U.S.-centric 
requirements, such as SAM registration and compliance with certain 
accounting and audit standards, are applied to partners overseas.
    I'd like to thank the committee for the increased funding for 270 
new direct hire staff and 33 Foreign Service National staff in the FY 
2022 and FY 2023 appropriation funds. Through our multi-year Global 
Development Partnership Initiative, we hope to continue to work with 
Congress to grow the permanent Foreign Service workforce to 2,500, the 
Civil Service workforce to 2,250, and hire 206 Operating Expenses-
funded Foreign Service Nationals.
    Flexibilities are central to advancing locally led development, and 
an example from a Local Works program in Burma illustrates why. In 
Burma's Kachin State, USAID/Burma had been working with international 
partners to address high HIV rates, which were driven, in part by a 
complex, heroin epidemic. The Mission's earmarked funds, however, did 
not allow for activities that addressed the complex socioeconomic 
factors underpinning the drug epidemic. The Mission was able to use 
Local Works' flexible funding to listen to local actors--including 
faith-based and youth organizations, women's groups, the private 
sector, and others--and then design programming with these 
organizations based on how they defined the challenge and their 
envisioned solutions--a strategic, sustainable approach to the complex 
nexus of the HIV and drug epidemics.
    We also hope that future legislation can support the New 
Partnerships Initiative (NPI), which helps improve the Agency's ability 
to partner with new, non-traditional, and local partners. To note one 
example of NPI's success, I'll highlight USAID/Nigeria which bought 
into multiple NPI mechanisms to channel hundreds of millions of dollars 
through awards to new and local partners. Despite a challenging 
security environment, the Mission currently has 16 awards to local 
partners with a value of $538 million.
    In addition, we hope that any new legislation will support our 
efforts to apply a localization lens to all of our work, whether that's 
by making USAID more accessible to local partners or by removing 
barriers to help USAID and our traditional implementing partners work 
in different ways with local organizations. USAID looks forward to 
continued dialogue on the specifics of these reforms in the coming 
months.
                               conclusion
    Thank you again for the opportunity to speak with you today. USAID 
hopes to continue collaborating closely with Congress to lift up a 
diverse chorus of voices within and outside of the Agency to create a 
more secure and prosperous world. I welcome your questions and comments 
on USAID's leadership in driving locally led development.

    Senator Cardin. Thank you very much for your testimony. 
Today is the day that the President will be submitting his 
budget, so it is appropriate, first, that we start on workforce 
issues.
    In the last Congress, as I mentioned earlier, Senator 
Hagerty and I made a priority of issues within the State 
Department.
    Part of that was training, that we felt that we needed to 
up our game on training. The challenge is that there were not 
enough personnel to substitute as Foreign Service officers did 
their training mission. It was a budgetary issue from the point 
of view of the number of personnel.
    USAID uses a lot of local contractors and grants and they 
are very valuable to you accomplishing your mission. We 
recognize that. I do not want to minimize any aspect of the 
tools that you have available.
    Do you have an adequate number of Foreign Service 
Officers--the FSOs--to be able to transition to more being done 
at the local level where you are going to need to deal with 
financial responsibility and accomplishing missions, et cetera?
    Do you have the personnel in order to implement a 
transition to 25 percent localized?
    Ms. Sumilas. Thank you so much for the question, and I will 
say that we do not have enough staff and we are working on 
increasing that. We thank the Committee and the Congress for 
the additional resources for additional staff in the 2022 and 
2023 bills, and you will see the 2024 budget request asks for 
further staff.
    Those staff will be focused primarily on contracts--
contracting officers in the field and we are working also to 
work much more closely with our Foreign Service National staff 
to provide opportunities for them to also serve as contracts 
officers.
    Currently, we have, I believe, somewhere around 20 or 30 
contracts officers who are Foreign Service Nationals and we are 
looking to significantly increase that number at the mission 
level.
    They have the context and the ability to ensure that we are 
working most carefully with local partners. We appreciate the 
support you are providing.
    This is an iterative process and we are being very careful 
about protecting taxpayer dollars, putting in place lots of 
checks and balances to make sure that resources are going to 
the right local partners in the right way with the right 
oversight.
    Senator Cardin. I want you to elaborate more on the 
protections to the taxpayers. As we do more and more 
localization, explain to me how you will be able to ensure that 
we have the appropriate mechanisms in place for the proper use 
of taxpayer dollars and that you have an accountability system 
that this is the most effective way for us to achieve our 
development goals.
    Ms. Sumilas. Thank you very much for the question. This is 
something that is very much on our minds.
    One, I just want to be clear that the requirements for 
local organizations will be no different from the requirements 
for large NGOs that are U.S.-based or international NGOs.
    Local partners will be required to meet our audit 
requirements. They will be required to have a monitoring and 
evaluation plan and we are setting up processes at the mission 
level to make sure that this will all be in place.
    We are also working on creating new support mechanisms both 
for USAID mission staff, as well as organizations in the field 
to help them build up their accounting systems, their HR 
systems, and their monitoring and evaluation processes.
    I think we would also flag that there is no evidence that 
local organizations are any more corrupt or use resources in a 
way that is not consistent with their award more than any other 
partner that we have.
    What is often the case is they do not have the same level 
of information that our international partners and our U.S.-
based organizations have. There are instances where they may 
take an action that seems like it is inconsistent with our 
auditing practices, but it is a knowledge issue. It is 
generally handled very carefully.
    The other thing we are putting into place is new award 
types. We are doing fixed amount awards, which are based on 
progress towards goals in the grant or contract.
    For example, if I am a small organization, I will have 
milestones that I need to reach before resources are released 
to me and I will have to provide receipts and accounting for 
all the resources that I am using.
    We are working very closely to put this all into place. I 
would also just flag the new Acquisitions and Assistance 
Strategy that was released this week.
    We have an implementation plan to go along with that and we 
are building systems in missions and in Washington to help 
support these local organizations to meet our requirements.
    Senator Cardin. I just want to underscore the point that 
Senator Hagerty made about PEPFAR.
    Many of us have been to countries that have been the 
recipients of PEPFAR dollars and we see the local capacity to 
deal with health challenges that was just not there before, 
COVID-19 being one, how PEPFAR countries were able to do a much 
more effective job because we built up the capacity through 
PEPFAR that they are handling health care issues and the 
sustainability.
    I would hope that you could get--and you do not necessarily 
have to answer at this moment, but if you could get back to our 
committee other areas where capacity building could give us the 
same type of results that we saw from PEPFAR, so we make the 
investments in building up local capacity where we think we 
will be able to see big dividends in the future with a country 
being able to handle their needs rather than needing 
international assistance. I think that would be very helpful to 
us.
    Ms. Sumilas. Thank you, Senator Cardin. We will get back to 
you with more details on that.
    One thing I would just flag. The reason PEPFAR was 
successful is they really took a systems-based and whole-of-
initiative approach to doing this. From the very beginning, 
working with local partners was a priority. That is why this 
initiative is really focused on our systems and the ways we 
work to make sure it can be successful.
    Senator Cardin. Thank you.
    Senator Hagerty.
    Senator Hagerty. Thank you, Chairman Cardin.
    I will come back to you, Assistant Sumilas. First, thank 
you for being here today.
    I would like to ask you a foundational question about 
localization, and Senator Cardin touched on this in his opening 
remarks, but it is how you define localization.
    In your prepared testimony--I am just going to cite it--you 
say localization is, ``the actions and reforms we are taking to 
put local actors at the center of our work to advance locally-
led development in humanitarian relief.''
    I think I understand that, but I want to contrast that with 
how the Chinese Communist Party handles their diplomacy, how 
the CCP handles their foreign assistance and their 
infrastructure development overseas, and in that regard, it is 
predatory. It is corrupt. They take advantage at every turn 
they possibly can. It is coercive. It is often very big and it 
is always marketed as ``made in China.''
    In some parts of the world I feel like the CCP is 
outcompeting us by the fact that they play by a different set 
of rules. When I served as ambassador to Japan, I had to think 
about all of our efforts through the lens of our strategic 
competition with Communist China every single day and it 
certainly shaped how I had our embassy work with JICO, which is 
the Japan International Cooperation Agency, the Japan Bank for 
International Cooperation--JBIC--which we worked with 
constantly, how we worked with them on foreign development and 
assistance projects in the Indo-Pacific region. I always had to 
put that lens on it, how we are competing with China.
    I would like to come back to you and ask you how USAID sees 
its localization efforts fitting into President Biden's overall 
National Security Strategy and, in particular, how localization 
is going to support our strategic interest as we work in the 
areas where you are deploying your resources.
    Ms. Sumilas. Thank you, Senator Hagerty, for that question, 
and I think we believe that the localization agenda fits very 
squarely within the efforts to counter, compete, and cooperate, 
if possible, with China.
    USAID is very much a part of this agenda. We are the ground 
game for the United States Government in terms of working with 
our partners in-country.
    We believe that working with local partners and really 
creating a new relationship with civil society, with 
governments, with the private sector, and other partners in the 
country will demonstrate that we support a transparent, a 
cooperative, and a collaborative way of doing assistance.
    We hold countries and ourselves accountable for results. We 
work closely and we listen to local voices. We lift those up 
and make sure they are part of the conversation.
    This is very much about working with our partners, 
listening to them, having them see that we listen to them, and 
that we are meeting their local needs and their aspirations.
    Senator Hagerty. One aspect of the localization concept 
that I think is inspiring in this regard is the fact that you 
are going to get closer to the people that you are serving and 
I would love to hear your thoughts on how you market the fact 
that it is the U.S. that is delivering these resources and that 
it is the U.S. that is partnered with this local organization.
    How does the public see that in the nation where you are 
actually working?
    Ms. Sumilas. Thank you so much for that question.
    USAID has over a 60-year history of working in countries, 
and as you probably have seen on your trips and you will see, 
going forward, we very much are committed to being clear with 
our partners that this is assistance coming from the American 
people.
    It is demonstrated very clearly on our logo with the hands 
that are clasped together, and we work within branding 
guidelines. Where it is safe, where it makes sense, all of our 
partners will be very clear that this is assistance coming from 
the American people.
    If we choose not to brand a project, it is for very 
specific safety purposes and there is a waiver required, but 
all assistance has that logo and an American bent to it.
    Senator Hagerty. You mentioned branding requirements. It 
sounds like you have guidelines put in place. Do you have any 
reports on the effectiveness of our branding or anything of 
that nature that would allow us to get a better sense for how 
effective the branding process is?
    Again, I am thinking about it contrasted to the way China 
does it. I would be very interested to see, and you may want to 
come back to me on that, but I would be very interested to 
understand that better.
    Ms. Sumilas. We will come back to you on that. We have very 
definite data and information on that.
    Senator Hagerty. Can I just get a little bit deeper into 
it--some examples of how you are going about the process here? 
One of the things that Administrator Power has said is that you 
need to reduce bureaucratic burdens as a key part of being able 
to localize with local partners.
    Could you share some examples of the reforms that USAID has 
enacted in terms of reducing bureaucratic burdens and those 
type of burdens that would enable more localization?
    Ms. Sumilas. Thank you for the question. This is very much 
a part of our work. We are very focused on reducing 
bureaucratic burdens, not just for local partners, but also for 
all of our partners.
    For example, we have made new requirements about how long 
the initial application for a proposal needs to be. It is now, 
I think, about a five-page document that local organizations 
need to present to us and then we will have follow-on 
conversations.
    We are also making our work more available to all of our 
local partners. Many of our requests for proposals are now 
translated into local languages so local indigenous communities 
and local partners can see them.
    They are in Spanish, they are in French, they are in 
Arabic, and we are doing that a lot as well on our new website, 
workwithusaid.org, so people can have access to that.
    In addition, we are doing new awards through co-creation. 
We are sitting down with partners and saying here are the goals 
that we want to reach in your country--maybe it is a health 
goal, maybe it is an economic growth goal--and then working 
with the local partners to say how would you do this; what 
would make the most sense.
    We are co-creating along the way and we are not asking 
organizations to do a ton of work on a project that maybe is 
not going to be appropriate to the context.
    The last thing I would point to is our Acquisitions and 
Assistance Strategy, which was just released this week. It has 
a full implementation plan, which has a slew of new burden 
reduction efforts in it, which we will be implementing over the 
next year.
    Senator Hagerty. We have exceeded the allocated time here, 
but if I could just leave one more point in the context of 
something you can get back to me with, and it may be part of 
this acquisition strategy that you have just outlined.
    If you could array where you see the low-hanging fruit in 
terms of the highest benefit and work down. I would love to see 
that chart and the impact that you think it would have.
    I would appreciate that very much. Thank you.
    Ms. Sumilas. We will definitely get back to you.
    Senator Cardin. That would be very helpful, I think, for 
our committee. Thank you.
    Senator Coons.
    Senator Coons. Thank you, Senator Cardin and Senator 
Hagerty, for engaging in this important conversation.
    As you well know in your former role of Bread for the 
World, your previous role as chief of staff to the 
administrator, and now your return role in Policy, Planning, 
and Learning, this is a long-standing conversation about the 
tension between using highly-skilled, broadly-experienced, but 
U.S.-headquartered NGOs that have the audit and accounting 
staff that understand the lingo and the process and the 
procurement versus having local NGO partners that then build 
the human resources, the administrative capacity, and are much 
more likely to be delivering culturally appropriate and 
effective solutions, particularly when the sorts of things we 
are talking about are public health, which is an intensely 
human personal engagement.
    It is one thing when you are building a highway or a 
stadium. It is another thing when you are encouraging people to 
get vaccinated or talking about maternal and child health.
    This is a discussion that has gone on over decades. As I 
think my colleagues recognized and as you referenced, USAID 
works in some very difficult places that are robustly corrupt, 
where existing national and local government institutions are 
uneven, where the human resources to effectively administer 
programs in a way that is transparent and meets our 
expectations in terms of the expenditure of public dollars is 
challenging.
    I am very encouraged by the progress you have made. I would 
be interested if you would talk to just a few questions.
    One is you mentioned in passing a new risk appetite 
statement and I would welcome--having not seen or reviewed that 
statement--I would welcome hearing what that new statement is, 
what the risk appetite profile you think is, and what role we 
in Congress play in sending signals because my concern--and I 
will just reference embassy construction and security.
    We had one tragic, terrible incident. There were more than 
a dozen hearings about it, about Benghazi in Libya, and in the 
years since I have seen us build fortresses remote from the 
centers of cities that are really focused not on diplomacy, 
development, and engagement, but on protection of Americans.
    I understand that choice, but it was, in my view, one 
incident and it has had significant consequences for how our 
development professionals engage in countries.
    Risk profiles are driven in no small part by what Congress 
says and does in a few instances. My hope is that you will 
accelerate your localization.
    I just came back from a bipartisan trip to Zambia, 
Botswana, South Africa, and, yes, the PEPFAR experience across 
those countries led to significant strengthening of the NGO and 
national health system capacity.
    Talk to us for a minute about the risk appetite statement. 
Tell me what, if any, additional legal authorities you think 
you need and what sorts of signals, whether spoken, stated in 
bipartisan letters, in resolutions or in legislation, would 
help you move towards appropriately investing more in the 
strengths and skills of the people who would ultimately 
administer a localized program.
    Ms. Sumilas. Thank you very much for the question and I 
appreciate you grabbing onto that one piece.
    The risk appetite statement is something that we actually 
looked at very early in the Administration and realizing that 
it had been built to really look at projects and programs of 
several hundred million dollars.
    We have updated our risk appetite statement and our staff 
would be happy to update you on this. We have been doing 
trainings with our staff around the world on this.
    We are asking people to kind of look at the relative size 
of a grant, look at the relative experience of the organization 
you are working with, look at putting in ways of working 
together where you really can watch the flow of resources so, 
as I mentioned, the milestones option. We are asking people not 
to put the same restrictions on grants and contracts of 
$100,000 or $500,000 that they would put on a contract or grant 
of $500 million, our risk appetite statement was written in 
such a way that both were getting the same types of scrutiny 
and oversight.
    Now just to be really clear, USAID is very focused on 
protecting taxpayer dollars. We do not intend to have this 
localization agenda lead to the misuse of resources and 
dollars. We are putting in place processes that will make that 
clear to our partners.
    In many cases, things that are seen potentially as 
corruption are often just an oversight, not understanding how 
to keep timesheets for staff for example.
    There are just different cultural differences. We are 
building systems and ways of supporting these organizations so 
that they do not get caught in those kinds of situations.
    In terms of legal authorities that we would ask that the 
committee consider, some of them are related to this and some 
of them are related to other things. For example, going back to 
the question around resources and staff, in the appropriations 
bill you have given us the authority to use up to 15 percent of 
our program resources--for administrative and operating 
expenses for Centroamerica Local.
    We would ask that you would consider doing that in other 
regions of the world because that will help us increase the 
number of staff more quickly, help us hire more Foreign Service 
National staff, which is a very big priority of the 
administrator, who really know the local context, local 
organizations, and can assess where the risk is.
    We would also ask that you consider additional 
flexibilities such as multiyear or no-year money. There is a 
lot of work that we do that is really very focused on getting 
money obligated and spent. We do want to spend our resources in 
a very constructive way, but that often leads us not to work 
with local partners who require more accompaniment as they 
understand how to work and follow our rules.
    In Centroamerica Local, you also have included legislative 
language where you give us some flexibility in how quickly 
those dollars need to be spent.
    We thank this committee and others for continued support 
for the New Partnerships Initiative and Local Works. These are 
very important mechanisms that we have and we are looking at 
lessons learned internally from those two specific initiatives 
and applying them to our new way of doing business.
    Finally, one additional thing that we are working on is 
infusing localization across all sectors of work. This is not 
just about doing localization on climate change or health or 
education. It is across all of our work.
    We want it to be the first way we work with partners in 
countries and so we need flexibility on sectoral earmarks. In 
some countries, in order to address their issues, countries 
need resources to work on education versus water and we are 
very restricted on this due to the sectoral earmarks.
    I will stop here because I think I am probably over time, 
but I do have an example--a country example--that might be 
helpful in that context.
    Senator Coons. Thank you, Michele. I would welcome hearing 
that from you.
    Mr. Chairman, I regret I have to go. You have some very 
talented people behind you who I just wanted to give my best 
regards to and I know you will get remarkable testimony from 
Bill O'Keefe, among others, and so I look forward to staff 
sharing the testimony that you will deliver today.
    Great to see you. Thank you very much.
    Senator Cardin. Senator Ricketts.
    Senator Ricketts. Thank you very much, Mr. Chairman.
    Ms. Sumilas, thank you very much for joining us here today. 
I have some experience--a little bit of experience with 
development in Nepal.
    There is a foundation there called the dZi Foundation that 
has been there a long time and they are, in my opinion, very 
successful because they work with local partners. They are not 
working with USAID.
    Their model is that they go to a village. They ask what the 
village wants, whether it is toilets, water, school, some--in 
one case it was a grocery store, and they partner with the 
village to ask them what they want and then require the village 
to put in 50 percent of the sweat--put in the sweat equity, 
essentially, to be able to build whatever they want and then 
they provide the materials to be able to get it done.
    In my opinion, it has been very successful. It is--one of 
the things that they, for example, were able to do in one small 
village that was about 5 days from the nearest road and about 2 
days from the nearest airstrip by walking because that was the 
only way to get there--there was not any roads or any other way 
to get there, at least at the time and this was in 2008--they 
were able to build a school for about $17,000.
    I came back a few years later and USAID had built a 
hospital there, my recollection--you got to take this with a 
grain of salt because this is what I was told at the time and I 
do not know how accurate it was, I never followed up with it, 
so just taking a ballpark--of, like, $250,000 or $500,000.
    To me, I was, like, how could you have possibly spent that 
much money. Granted, it was a hospital, not a school so it was 
a little different, but when we took the tour, it did not look 
that different, right. This is very rural Nepal. Very remote in 
Nepal. Hard to get to.
    I think that the opportunity to be able to be more 
effective and more efficient and use local partners is really a 
good idea.
    My question is more along the lines of, do you have a 
model, like, what the dZi Foundation does where you can--rather 
than parachute in and say, hey, I am going to give you blah, 
blah, blah--a hospital--do you work with the local places where 
you want to do development, ask them what they need, and then 
require them to put in some of the sweat equity to some of 
the--actually in some of the work so they have got a buy-in and 
ownership?
    I know one of the things the dZi Foundation did that was 
very successful is, like, for example, when they build a school 
they require the village to form a PTA to hold the teachers 
accountable because generally the teachers come from Katmandu 
and they were not keen on staying there.
    They really worked with the local community to make sure 
that the community could then run that operation afterwards and 
be successful.
    Can you just tell me a little bit about how you think about 
this localization effort from a tactical getting it done, 
working with the local community?
    Ms. Sumilas. Thank you so much for the example and I love 
that you actually have a country example because I think that 
is really what makes this all come alive.
    A couple of things I would say. One is that we do a lot of 
work with local communities and we are trying to get our staff 
to do more.
    One is we are doing a lot of co-creation. If we know that 
we are working on a water project in a particular part of a 
country, we will reach out to local communities. We will talk 
to local NGOs, local governments, the national government in 
many cases, and ask what way of doing this work would work the 
best.
    I will say and going back to the conversation I just had 
with Senator Coons, in some countries we are restricted on the 
types of programs we can do because of the limitations on the 
kind and flavor of money that we have. Be happy to speak to you 
about that.
    That does limit us. In some countries, we only have money 
to do certain sectoral projects and no other projects.
    Let me give you two examples, perhaps. In Kenya, we are 
working with county governments and developing MOUs with their 
25 counties--we currently have MOUs with 11 counties--to say 
what are your priorities as a local government and how can we 
help support that.
    That effort is run and overseen by our Foreign Service 
Nationals who are from those counties. In many cases, we are 
trying to then take the money that we have depending on the 
flavor of it and apply it most appropriately to those county 
priorities, working also with local civil society.
    We have a project in Honduras. It is called the Genesis 
Global Development Alliance, which was co-created and is being 
implemented by a local private sector foundation, very much 
probably like your dZi Foundation. It is called FUNADEH, and in 
that project we are working to increase opportunities for 
vulnerable populations including youth and returned migrants to 
provide economic growth opportunities, education, training, and 
capacity strengthening.
    Our support for that project has leveraged an additional 
$14 million that the private foundation was able to raise on a 
yearly basis, it will be reaching 75,000 children.
    As I said earlier, the administrator has a new vision for 
our work, Progress Beyond Programs, which is to say we have 
program resources, but how can we leverage those resources 
either from local foundations, local governments, other donors, 
other foundations here in the United States, to really amplify 
the impact that we can have. We are working very carefully to 
do that.
    Senator Ricketts. All right. Great.
    Well, I will note I am over time. I just wanted to add one 
little note as well. When the dZi Foundation, for example, was 
building the school, one of the things they did is they posted 
everything, getting back to your idea of transparency.
    They posted on a board so all the villagers could see it, 
how much sweat equity had been put in by whom in the village 
and then how much money had been allocated to the village and 
how it was being spent. It was not just given all the time--
given all at once, and the materials that were delivered and 
that sort of thing.
    Again, just I think there is maybe things to be learned 
from some of these small nonprofits that are doing development 
work in these countries because they have to be accountable for 
their dollars as well when they are getting it from private 
donors.
    Anyway, just food for thought. Thank you.
    Senator Cardin. Thank you, Senator. That was very helpful.
    Senator Booker.
    Senator Booker. Sir, were you going to pass me the power 
and let me preside while you go down the hallway to another 
meeting? I was hoping to have the power, sir.
    [Laughter.]
    Senator Booker. As a junior senator from New Jersey, I 
rarely get such moments.
    [Laughter.]
    Senator Cardin. You are going to have to wait a little 
longer, I am afraid.
    Senator Booker. Story of my life in the United States 
Senate. Wait.
    Let me just, first off, by saying what an extraordinary 
career you have had. You have dedicated your--you do things 
that would make most Americans truly proud, but most Americans 
have no idea the kind of impact you are making on the globe, 
and I know you have a team of those kind of folks.
    I just want to say--start off by saying how deeply grateful 
I am for the work you do for humanity and in the name of the 
United States. You make us a stronger nation.
    I still remember when General Mattis was here and said that 
famous quote, ``If you cut the State Department, I am going to 
need you to buy me more bullets,'' and when you are doing 
things in countries that stop the things that often cause 
political instability, people do not realize that the dollars 
we expend in the programs that you do, we get a big significant 
return for that as well. Thank you for just being that kind of 
patriot for our country.
    I loved your testimony. You had a whole section at the very 
end very gently trying to say to us where you need us to act. I 
want to end with that, if I can foreshadow sort of on your--
what you call it. I think that your section was called the 
congressional flexibilities. I want to end with that.
    I want to talk about--and I was so interested in hearing 
Senator Ricketts. I have a lot of my friends who do 
philanthropy on the subcontinent of Africa, on the--excuse me, 
on the sub-Saharan Africa and one of my friends who has led 
major corporations of names we know who is really now 
dedicating his life to that work is frustrated because he--they 
de-Americanized their organization to stop the sort of 
colonial, to really get local legitimacy.
    They only have one or two Americans now involved in this 
organization and he has frustrations that they have to go 
through a subsidiary that takes a pretty high vig, which he 
thinks is an obnoxious amount of money, just to get USAID 
grants, so even less of it is going to the folks.
    This idea of localization, I am just wondering in that 
context of how do we--again, he has done all the research. He 
has found some--an organization that gets the highest bang for 
his philanthropic buck, but he is wondering why American 
taxpayers are not able to get their money to get the highest 
bang. They get it reduced by this amount of folks.
    I am wondering what are the--what is the hope I could give 
someone like that who is just wondering why USAID is basically 
saying, we cannot give to you?
    Ms. Sumilas. Thank you, Senator Booker, for that and I will 
just say that Senator Cardin called out my Baltimore roots, but 
I have also spent every summer in South Jersey, so I have deep 
Jersey roots as well.
    [Laughter.]
    Senator Booker. You are reaching and I respect that.
    [Laughter.]
    Ms. Sumilas. I am just seeking a little grace here.
    I think this initiative is what you should share with your 
colleague. We are working to move significant amounts of money 
to local organizations.
    We are currently at about 6 or 7 percent. Later this month, 
we will release the report and we will have new numbers, but 
this is about finding the organizations like the one your 
friend has been working with and saying, how can we work with 
you better, what kinds of support can we give you on the back-
end in terms of accounting, auditing, human resources, etc., to 
make you eligible for the resources that we have.
    This effort is reaching as far as we can. As I said, the 
workwithusaid.org website is a very strong resource. Over 
200,000 new users have come on. Of those, many of them, I 
think, over 60 percent are local organizations and it will have 
lists of opportunities for people to apply for local grants. I 
just want encourage them.
    Also, we are working with our missions and our mission 
leadership to urge them to get out of the fortresses that 
Senator Coons was speaking about into local communities, 
working with local people, and hearing about effective local 
organizations.
    This is the hope and we hope that people will apply, will 
receive resources, and then this will be more sustainable 
development.
    Senator Booker. Great. One of my best friends of life is 
actually a very conservative individual, gives lots of 
contributions to my friends on the other side of the aisle, but 
his philanthropy and one of the reasons I love him is he was 
looking for the best ways to make a difference with his dollar 
and he finds it is local health systems in Africa.
    One of my heroes in America, a guy named Ron Finley, says 
in South Central we have drive-bys and drive-throughs, and the 
drive-throughs are killing more people than the drive-bys 
because the number-one killer of our own population in the 
United States are issues that deal with health.
    The USAID's localization efforts are really focused on 
strengthening health systems and helping the communities have 
the resources and the ability to continue their global health 
progress.
    In particular, what is being done to support and equip 
local health workers who are really the frontline of the 
defense not only in stopping death at rates that are often 
other issues, even wars, do not amount to, but also my concerns 
are global pandemics, are local issues here in America, as well 
as global issues that we see in developing countries?
    Ms. Sumilas. I am going to bet that my colleague, Bill 
Steiger, is going to give you lots of strong examples of how 
the Global Health Bureau and PEPFAR are working very closely 
with local partners.
    What I would say is the Global Health Bureau is very 
focused on local health workers. There will be an initiative, I 
believe, in the proposed budget coming out later today from the 
Administration that focuses on how can we strengthen local 
health workers, how can we make sure they are paid, they are 
resourced, they are trained to do what they have been asked to 
do.
    The Global Health Bureau has taken a specific interest in 
the localization initiative. They are holding conferences, 
trainings, discussions with their local partners and with their 
local staff and U.S. Foreign Service Officers to talk about how 
they can increase their percentages as PEPFAR has done. There 
are common denominators across all that work and we look 
forward to being part of that effort.
    Senator Booker. In my time, I am trying to be more like 
Senator Hagerty and less like Senator Coons--you guys can tell 
them I said that--in going over my time.
    At risk of now pushing the chairman, could you just end--if 
you had two big wishes as we are doing this, just for the 
record, just reemphasize maybe perhaps from your testimony, 
what would be the two big wishes you have from us as we look 
towards our legislative role?
    Ms. Sumilas. These are not approved by OMB, but I will put 
them out there----
    [Laughter.]
    Ms. Sumilas. --and you all can help me later.
    First, I would say we would ask for the ability to use up 
to 15 percent of program funds for administrative and operating 
expenses so that we can further support the localization 
effort. I think that is very, very important.
    Then I think the additional flexibility on multiyear 
funding so that we have additional time to work with local 
partners who need the accompaniment to be able to apply, to be 
able to implement, and to have the results that you all are 
looking for.
    Thank you for that opportunity.
    Senator Booker. Thank you very much to my favorite Jersey 
girl today.
    [Laughter.]
    Senator Cardin. You might want to consider spending a 
little more time in Tennessee just as----
    [Laughter.]
    Senator Booker. That is wise counsel.
    Senator Hagerty. One other thing I----
    Senator Cardin. Senator Hagerty.
    Senator Hagerty. Ambassador Power gave a speech at 
Georgetown talking about the burden on your contracting 
officers. In fact, she said that the average officer at USAID 
has a burden of the dollars--she compared the dollars managed 
by a contracting officer at USAID to a counterpart at DoD and 
said about 4 the number of dollars managed at USAID 
versus DoD, and I think she was using that as a way to 
underscore the fact that there is a real shortage and a hiring 
problem in terms of getting the competent people to do the 
contracting work.
    That is context. I am trying to get at something I have 
seen happen in the corporate world. If you take the value chain 
from the dollars that are being distributed from USAID and you 
use the grants under contract construct, that is, you get an 
American company as an intermediary, they do the work and then 
they hire or subcontract a local firm.
    If you think about the dollars flowing through there and 
the process that happens, let us focus on that American 
intermediary for a minute.
    Do you have a sense for how many USAID alumni are employed 
by these intermediary firms now?
    Ms. Sumilas. I do not have a sense of that. I know that 
there are alumni who work for many of those organizations, but 
I would not want to offer a percentage at this time.
    I would just say that this is an ecosystem of assistance. 
We require U.S.-based organizations to help us achieve some of 
our goals and other----
    Senator Hagerty. No. No. I get that.
    Here is what--here is my next question and you will 
understand where I am trying to get.
    Ms. Sumilas. Yes.
    Senator Hagerty. If we knew the extent, I would like to 
know it, but is there a big pay gap between what one can make 
as a contracting officer at USAID versus what they could make 
if they jumped over to the other side and became an 
intermediary?
    Ms. Sumilas. Again, I do not know the difference. I do not 
want to offer a pay gap number because I do not know what it 
is, to be honest with you.
    Senator Hagerty. I would be interested in following up on 
this at some other point, if you could think about it, but the 
question I have got is whether the intermediaries siphon your 
talent and make it almost impossible to ever fill the bucket, 
so to speak, because there is this constant pull of 
intermediaries who are extracting value in the chain and 
playing--basically playing a lot of the role that the 
contracting officer might otherwise play.
    You have got overburdened contracting officers on the one 
hand, this intermediary, and then you have got the localization 
goal that we are trying to accomplish.
    I am just trying to get at what that intermediary is doing 
and how it is impacting your ability to deliver.
    Ms. Sumilas. We would be happy to follow up with your staff 
on that and to provide additional information.
    Senator Hagerty. Okay. Thank you.
    Senator Cardin. Senator Hagerty, you are raising a very 
important point. I know that Senator Menendez, the chair of our 
committee, and Senator Risch, the ranking member, have been 
concerned about the relationship between DoD and State 
Department as it relates to the responsibility--this has been 
in foreign military arms sales.
    It is also beyond that, and the capacity within the State 
Department has been eroded. The capacity within DoD has been 
strengthened.
    It would be good, I think, for us to understand your 
capacity on contracting and also the relationship between what 
you are able to compensate versus the private sector. I think 
that would be important information for our committee. If you 
could get that to us, it would be helpful to us.
    Ms. Sumilas. Happy to do that and appreciate the question. 
Thank you.
    Senator Cardin. Senator Booker, anything further?
    Senator Booker. No, sir. For the respect of the time, I 
think we should let this extraordinary public servant retire 
from the hearing. Samantha will--Ambassador Power will kick my 
butt if I am telling people----
    [Laughter.]
    Senator Cardin. Thank you very much for your testimony and 
thank you very much for your service to our country. We 
appreciate it.
    Ms. Sumilas. Thank you.
    Senator Cardin. We will now turn to our second panel. Let 
me introduce them as they are coming forward.
    We, first, have Bill Steiger, who is currently a global 
health consultant at the George W. Bush Institute and recently 
he was chief of staff at the U.S. Agency for International 
Development--USAID.
    Previously he was managing director of Pink Ribbon Red 
Ribbon, a public-private partnership dedicated to the fight 
against cervical and breast cancer in the developing world.
    Dr. Steiger also served as director of the Office of Global 
Health Affairs at the U.S. Department of Health and Human 
Services and a special assistant for international affairs to 
the Secretary of HHS. Thank you very much for being here.
    Next, we have Elana Aquino, who is the U.S. executive 
director of Peace Direct. With over 15 years of experience in 
international development and peace building, she brings an on-
the-ground perspective of supporting locally-driven 
initiatives, in particular on women's empowerment.
    In Kenya, she served as head of the key coordination 
secretariat between the Government of Kenya and 17 
international development agencies. She is currently the chair 
of the board of Women of Color Advancing Peace, Security, and 
Conflict Transformation.
    Our concluding witness will be Bill O'Keefe from Catholic 
Relief Services, executive vice president for mission, 
mobilization, and advocacy.
    Mr. O'Keefe has also served as director of CRS' flagship 
program, Operation Rice Bowl, director of church outreach for 
CRS and director for government relations.
    We will start with Mr. Steiger.

STATEMENT OF DR. BILL STEIGER, GLOBAL HEALTH CONSULTANT, GEORGE 
               W. BUSH INSTITUTE, WASHINGTON, DC

    Dr. Steiger. Thank you, Mr. Chairman, Ranking Member 
Hagerty, members of the subcommittee. I am grateful for the 
invitation to discuss localization at the U.S. Agency for 
International Development (USAID).
    Diversification of USAID's partner base should be an urgent 
priority, given the continuing concentration of the agency's 
portfolio in a small number of hands, essentially, an oligopoly 
of large U.S.-based and United Nations implementers.
    When I started at USAID in 2017, just 25 implementers 
managed 60 percent of the agency's funding for acquisition and 
assistance and 75 organizations controlled 80 percent of 
funding across all of the agency's portfolios.
    Despite a series of policy changes and major pushes from 
both Administrators Mark Green and Samantha Power, these 
figures have continued to move in the wrong direction.
    Transforming this model into one that prioritizes 
relationships with entities based in the countries where USAID 
operates should be a bipartisan policy goal. This was a major 
focus of the Journey to Self-Reliance in the last 
Administration.
    On ethical, financial, foreign policy, development, and 
public diplomacy grounds, it is imperative for the United 
States to localize our foreign assistance.
    Robust civil society, private sector, and faith-based 
organizations do exist around the world today that are 
delivering services and capacity-building right now and they 
should be the agency's primary recipient of funds, going 
forward.
    Large U.S.-based partners will always have a place in 
USAID's work, but the current situation is unhealthy. I endorse 
and applaud Administrator Samantha Power's vision for 
localization.
    However, I believe the Administration should be even 
bolder, more ambitious, faster to act, and more directive and 
proscriptive, especially with USAID's overseas missions.
    Fulfilling the Administrator's vision will not be possible 
without continuing and expanding fundamental reforms to USAID's 
business practices, cultural norms, and distribution of human 
and financial resources, many of which began under 
Administrator Green.
    USAID already has the legal authorities and other tools 
necessary to pursue a comprehensive localization agenda and 
does not need congressional action with the possible exception 
of the authority to create a working capital fund for 
acquisition and assistance, which I am happy to discuss. Relief 
from appropriations directives is another matter I would also 
endorse.
    The agency has remarkable legal and regulatory flexibility 
to innovate in its procurement, but too often it chooses not 
to. USAID's own staff, especially in the field, want to pursue 
innovative approaches, but are often stymied by restrictions 
and inertia in Washington.
    The key to achieving localization is to unshackle the 
agency's contracting and agreement officers to allow them to 
innovate freely.
    The President's Emergency Plan for AIDS Relief, PEPFAR, as 
many of you have already mentioned, demonstrates that 
localization at scale is not only possible, but transformative.
    PEPFAR also shows us that getting locally-led development 
to take root requires unflinching leadership, culture change, 
clear measurement, and a willingness to take risks despite 
opposition from entrenched interests.
    My written testimony offers a number of specific 
recommendations for how to bring that spirit to USAID, 
recognizing that this process will not move at the same pace in 
every country.
    However, focusing on the Administrator's goal of putting 25 
percent of USAID's current portfolio in local hands must not 
detract from the pressing need for the agency to change its 
business model, practices, and culture regarding the other 75 
percent of its awards.
    Now is a perfect opportunity to instill a culture of 
greater programmatic risk-taking across the agency to attract 
new ideas, new partners, and pay for results, including through 
greater partnerships with the private sector.
    The agency must use procurement instruments across its 
entire portfolio that are flexible, nimble, and lessen the 
burdens for both its own staff and implementers. In particular, 
Category Management is squeezing out innovation at USAID right 
now.
    A radical approach to the transparency of procurement data 
is needed also to allow us to understand whether our tax 
dollars, localized or not, are having the impact we expect.
    The bottom line is that the localization of our foreign 
assistance benefits both the population USAID serves and the 
U.S. taxpayer. Local organizations are closer to the issues and 
understand local needs and priorities.
    They have earned legitimacy and trust in their communities. 
They build lasting capacity, self-reliance, and sustainability. 
In an era of great power competition, our assistance to local 
groups is more likely to be visible and known to beneficiaries 
and the public on the ground. Local organizations are cheaper.
    Finally, I should emphasize that increased staffing is only 
one--and not even the principal--barrier to success in 
localization.
    Just adding more Contracting and Agreement Officers at 
USAID without changing policy, risk tolerance, lines of 
authority, incentives, and senior personnel in key places will 
not lead to the desired outcomes.
    USAID must retain and make better use of the staff it 
already has and continue Administrator Green's efforts to make 
grant-making and contracting the responsibility of everyone at 
USAID.
    I believe the purpose of foreign assistance is to end its 
need to exist, as Administrator Green said. This goal is hard 
to achieve without localization.
    I thank you for the opportunity and welcome your questions.
    [The prepared statement of Dr. Steiger follows:]

                 Prepared Statement of Dr. Bill Steiger

        ``If they get you asking the wrong questions, they don't have 
        to worry about the answers.''--Thomas Pynchon, Gravity's 
        Rainbow

    Chairman Cardin, Ranking Member Hagerty, and Members of the 
Subcommittee, I am grateful for the invitation before you to discuss 
what is variously known as ``localization'' or ``locally led 
development'' at the U.S. Agency for International Development (USAID).
    USAID's current system of grantmaking and contracting has created 
an oligopoly of large, U.S.-based implementers that are expensive, 
inefficient, and largely unaccountable for their performance. 
Transforming that model into one that prioritizes relationships with 
entities that are based in the countries where USAID operates should be 
a bipartisan policy goal. Robust local civil-society, private-sector, 
and faith-based organizations exist around the world today that are 
delivering services and capacity-building right now--they should be the 
Agency's primary recipients of funds going forward. Large numbers of 
USAID's own staff, especially in the field, believe in localization and 
wish to pursue it through innovative approaches but are stymied by 
restrictions and inertia in Washington. The key to achieving 
localization is to unshackle the Agency's Contracting and Agreement 
Officers (COs/AOs) to allow them to innovate freely.
    In the service of making localization at USAID more effective and 
feasible, I offer five principal messages for you and your colleagues:

  1.  On ethical, financial, foreign-policy, development, and public-
        diplomacy grounds, it is imperative for the United States to 
        localize our foreign assistance.

  2.  I endorse and applaud Administrator Samantha Power's vision for 
        localization; however, the Biden administration should be 
        bolder, more ambitious, faster to act, and more directive and 
        prescriptive (especially with USAID's overseas Missions).

  3.  USAID already has the legal authorities and other tools necessary 
        to pursue a comprehensive localization agenda and does not need 
        Congressional action (with two possible exceptions, including 
        the authority to create a Working Capital Fund for Acquisition 
        and Assistance). The challenges the Agency faces in localizing 
        its portfolio of awards are self-imposed, as USAID often 
        chooses not to exercise the authorities it enjoys.

  4.  Focusing on the Administrator's goal of putting 25 percent of 
        USAID's current portfolio in local hands must not detract from 
        the urgent need for the Agency to change its business model, 
        practices, and culture regarding the other 75 percent of its 
        awards.

  5.  Increased staffing is only one, and not the principal, barrier to 
        success in localization; simply adding more Contracting and 
        Agreement Officers (COs/AOs) at USAID without changing the 
        Agency's policy (and the interpretation of policy), risk 
        tolerance, lines of authority, incentives, and senior personnel 
        in key places will not lead to the desired outcomes.
        what is ``localization'' or ``locally led development''?
    These two terms encompass a multi-administration effort to award 
more U.S. foreign aid to smaller, non-U.S. organizations and increase 
the involvement of affected and beneficiary communities in the programs 
funded by USAID and other elements of the U.S. Government. I appreciate 
that the current Administration's approach to locally led development, 
while clearly and appropriately focused on finding and funding more 
local organizations around the world, is not just about the money. I am 
heartened that public comments by USAID officials, including Assistant 
to the Administrator for Policy, Planning, and Learning Michele 
Sumilas, have given almost equal weight to the idea that USAID will be 
consulting more with beneficiaries and communities in the design and 
perhaps even procurement of its programs, recruiting them to 
participate in the ongoing evaluation of the Agency's awards, and 
inviting them to share in the accountability for them. Administrator 
Power and Ms. Sumilas both correctly have mentioned that localization 
depends on ``changing the culture'' at USAID. The Administrator's goal 
of having 50 percent of all USAID's programmatic work, at least half of 
every dollar the Agency spends, involve the input of local communities 
in the lead in designing, implementing, adapting, or evaluating these 
programs, might be far more important than the 25-percent goal.
    Bringing this vision to reality will not be easy, and will face 
stiff resistance both within USAID and among the development-industrial 
complex that receives the vast share of the Agency's funding today. 
Shifting the balance of power and resources away from U.S.-based 
organizations will be impossible without the continuation and expansion 
of fundamental reforms to USAID's business practices, cultural norms, 
and distribution of human and financial resources.
                        why pursue localization?
    What the Biden administration has proposed in its localization 
agenda is consistent with, and builds upon, similar efforts launched 
under the Obama and Trump administrations. Why have three successive 
administrations decided to pursue a strategy of attempting to provide 
more resources to local organizations and increase their involvement in 
USAID's decision-making, implementation, and monitoring? The answer 
covers several dimensions, from cost to legitimacy to sustainability:

   Local organizations are closer to the issues, understand 
        local needs and priorities, and can more efficiently and 
        effectively address barriers to access;

   Local institutions have the legitimacy to advocate for and 
        drive the policy, social, and cultural changes necessary to 
        address development challenges effectively;

   Local groups, especially civil-society and faith-based 
        organizations (FBOs), have access to, and have earned the trust 
        of, their communities;

   Local private-sector firms are drivers of economic growth 
        and employment in developing countries, and of two-way trade 
        with the United States; and

   Local partners, including governments, can ensure the 
        sustainability of interventions, particularly by eventually 
        assuming control of the financing of U.S.-funded programs.

    The bottom line is that localization of our foreign assistance 
benefits both the populations USAID serves and the U.S. taxpayer. 
Rigorous economic analysis confirms this thesis: A new study (https://
static1.squarespace.com/static/5b2110247c93271263b5073a/t/
6377d05b92d652286d6720e5/1668796508981/
Passing+the+Buck_Report.pdf) released in November 2022 by the Share 
Trust and the Warande Advisory Centre suggests that local implementers 
are 32 percent more cost-efficient than international ones, because 
awards to the former do not include what the authors call ``inflated 
international overhead and salary costs.'' In addition to hiring few 
foreigners on expatriate compensation packages, local organizations 
much more seldom receive large reimbursements from USAID for so-called 
``indirect costs.''
    Yet we do not have to rely on modeling to see the positive impact 
of localization on U.S. foreign assistance, because we what economists 
call a ``natural experiment'' in the form of the President's Emergency 
Plan for AIDS Relief (PEPFAR). A paper (https://www.bushcenter.org/
publications/pepfar-and-communities) I co-authored with former U.S. 
Global AIDS Coordinator Dr. Deborah Birx, published last month by the 
George W. Bush Presidential Center, traces the history of PEPFAR's 
remarkable record of prioritizing the funding of local organizations 
and the engagement of affected communities over the last 20 years. 
Local organizations, defined by a standard more precise than that used 
by USAID, now directly receive and manage almost 70 percent of PEPFAR's 
bilateral funding, and the program has seen no diminution in quality or 
coverage as a result. In fact, the cost-savings and programmatic 
efficiencies produced by localization are a main reason PEPFAR has been 
able to expand the numbers of people it supports on life-saving anti-
retroviral treatment and reaches with prevention interventions despite 
a flat budget (https://gwbushcenter.imgix.net/wp-content/uploads/
Pepfar-paper-3-2.pdf) over more than a decade. Furthermore, no U.S. 
foreign-assistance program better embodies Administrator Power's vision 
of involving the input of local communities in awards. Representatives 
from host governments and civil society participate in PEPFAR's annual 
planning meetings, and clients and other citizens perform the 
community-led monitoring that ensures the generous investment of U.S. 
taxpayers is reaching the people the program is supposed to serve and 
generating the expected quantifiable results.
    We all can agree that close oversight is paramount to maintaining 
the integrity of USAID's programs, no matter who implements them, and 
the Administration's push for ``localization'' cannot not bring with it 
a watering down of the Agency's standards for financial management and 
probity. But I reject the assertion, often whispered by large U.S.-
based implementers, that ``local'' means ``high-risk,'' and that more 
money to smaller foreign entities means more funds diverted. This claim 
is designed to intimidate, and to provide cover for current business 
models that diminish the role of local partners by limiting their role 
to overly restrictive sub-awards. There is a need for sub-awards to 
local partners from the traditional prime recipients of USAID's awards. 
But the proper role for such established U.S.-based grantees and 
contractors is to sub-award the majority of funding to equip local 
partners through technical oversight, compliance support-, and 
capacity-strengthening. In these arrangements, the local partner, even 
as a sub-awardee, should be leading in project implementation. 
Traditional prime partners mainly should be facilitators that enable 
maximum transparency to the public and USAID.
    To its credit, USAID's leadership has pushed back forcefully on the 
assumption that going local automatically brings higher risk. In a 
hearing before the House Subcommittee on International Development, 
International Organizations and Global Corporate Social Impact in March 
of 2022, Ms. Sumilas said, ``Our commitment to funding local 
organizations does not stand in conflict with our commitment to prevent 
waste, fraud, and abuse.'' I am encouraged to hear that all USAID's 
current requirements to vet partner for ties to terrorism will remain 
in place, that ``local organizations/entities'' all will have to pass a 
``responsibility determination assessment,'' and that the Agency will 
be quick to put in place additional ``special conditions'' in grants 
and cooperative agreements that might involve heightened risk. This is 
all great news for the taxpayer.
   how to drive localization at scale: seven sets of recommendations
    PEPFAR shows that localization at scale is not only possible but 
transformative. But PEPFAR also shows us that getting locally led 
development to take root and flourish in a large program requires 
unflinching leadership, culture change, clear measurement, and a 
willingness to take risks and follow data despite bureaucratic inertia 
and opposition from entrenched interests.
    Administrator Power's vision for localization and the steps she and 
her team have announced are necessary, but insufficient. I am gratified 
that USAID's Missions across the world are reaching out proactively to 
community leaders and beneficiaries to seek input at the early stages 
of designing programs and mapping the landscape of local organizations 
in their countries to identify those not currently funded by the Agency 
that could be good candidates for upcoming competitions. Yet the 
increased knowledge of this existing capacity is not yet translating 
into a large increase in awards to new and local partners. In the 
service of helping drive localization at USAID farther, faster, and 
with a greater chance of long-term success, I offer the following 
recommendations, including for how Congress can help:
Define ``Local'' More Precisely and Measure Localization More 
        Accurately
    So much of the success and credibility of localization rides on the 
definition of a ``local organization/local entity.'' This question is 
the single most important policy decision for the Biden administration 
as it continues to shape its localization initiative. A standard that 
is too vague invites U.S.-based and international groups and for-profit 
companies to ``game the system'' by claiming ``local'' status; a 
standard that is too strict can exclude the legitimate, helpful role 
that international partners can play in mentoring and preparing local 
organizations to manage Federal funds and implement USAID-financed 
projects successfully. USAID's current definition (https://
www.usaid.gov/sites/default/files/2023-01/303.pdf) of ``local 
organization/local entity'' is less precise than the one PEPFAR 
(https://gwbushcenter.imgix.net/wp-content/uploads/Pepfar-paper-5.pdf) 
uses, in particular because it has a lower threshold for beneficial 
ownership (``majority'' vs. 75 percent) and no criterion for percentage 
of staff who must be local citizens or lawful permanent residents. In 
addition, USAID's framework for measuring local funding only qualifies 
implementers as local based on the alignment of three criteria: 
registration in the U.S. Government's System for Award Management, 
declared location of an organization's headquarters, and location of 
implementation. This system can allow international groups to pose as 
``local'' and skew the measurement of progress in pursuing 
Administrator Power's target of channeling 25 percent of USAID's 
funding to local partners
    In a report (https://www.publishwhatyoufund.org/app/uploads/
dlm_uploads/2023/02/Metrics-Matter-Summary.pdf) published last week, 
Publish What You Fund concluded that, as a result of this expansive 
definition, USAID might be overstating its progress on localization by 
a significant margin. In research that looked at 10 countries, the 
analysis found that USAID actually channeled 5.7 percent of eligible 
funds directly to local and national actors from 2019-2021, while 
USAID's approach produced an estimate nearly double that number (11.1 
percent). That translates into a $732 million difference over 3 years 
for just this subset of countries.
    Finally, USAID has said it will produce its calculations of funding 
to local organizations by using data from the U.S. Government System 
for Award Management (SAM) and the Agency's Global Acquisition and 
Assistance System (GLAAS). While the public has access to some of these 
data, they cannot view the full set of information required to carry 
out this analysis. This limits the possibility of carrying out any 
independent replication of USAID's data and results.
    USAID also should disaggregate these data according to sector and 
geography, so the public can see not just progress against the macro-
level 25-percent figure but how the Agency is performing country by 
country and sector by sector. Otherwise, there is a real risk that the 
data from a few countries will tilt the scales and lessen the burden on 
other Missions that need to do more work to shift resources to local 
organizations.
    Perhaps more important than the 25-percent target is assuring 
USAID's progress against Administrator Power's 50-percent target for 
``local initiative'' and leadership in development assistance. The 
Agency's Policy on Promoting the Rights of Indigenous Peoples (https://
www.usaid.gov/sites/default/files/2022-05/USAID-IndigenousPeoples-
Policy-mar-2020.pdf) offers a good roadmap for how Missions could 
structure and manage consultations with many kinds of communities, as 
does the Country Operational Plan Guidance for PEPFAR. Any increase in 
site visits, focus groups, listening sessions, and community fora would 
be an improvement over the typical way USAID designs its programs.
    Therefore, USAID should:

    A.  Change Chapter 303.6 of the Agency's Automated Directives 
        System (ADS) to adopt PEPFAR's standards for beneficial 
        ownership and local staffing as part of the definition of 
        ``local organization/local entity.''

    B.  Maintain the current definition of ``Locally Established 
        Partner (LEPs) in ADS 303.6,'' but track funding to LEPs and 
        their sub-recipients separately from funding to ``local 
        organizations/local entities.''

    C.  Ensure that the tracking of local funding includes all 
        dimensions of USAID's definition of ``local organization/local 
        entity,'' and apply this definition strictly when determining 
        eligibility for funding opportunities restricted to new and 
        local partners.

    D.  Publish and track the achievement by each Mission of 
        standardized targets for ``local leadership'' in 50 percent of 
        programming by 2030 based on models such as PEPFAR 
        consultations and community-led monitoring, as well as the 
        Agency's own Policy on Promoting the Rights of Indigenous 
        Peoples.

    E.  Make public the metrics and data systems the Agency is using to 
        track progress on localization:

       a.  USAID should make all its award data public, including, but 
        not limited to, the data in the SAM and GLAAS systems the 
        Agency is using to track progress towards localization, to 
        enable the public to replicate the Agency's claims.

       b.  USAID should disaggregate these data by sector and 
        geography.
Increase and Assure Progress Against the Global Target for Funding to 
        Local Organizations/Entities by Assigning a Specific Share to 
        Each USAID Bureau and Mission, and Create Corresponding Funding 
        Opportunities for New and Local Partners Now and Every Year
    For USAID to achieve Administrator Power's target of having 25 
percent of award funding in the hands of local organizations by 2025, 
qualifying groups will have to start winning a lot more of the Agency's 
open competitions right away, and/or the Agency will have to start 
structuring many more competitions just for them. If USAID does not 
change the rules of the game now, local organizations will not be able 
to win awards at the Mission level at a high enough rate to come 
anywhere near the Administrator's goal. I am gratified that 
Administrator Power has continued the New Partnerships Initiative (NPI) 
begun by former Administrator Mark Green, including by requiring all 
USAID's Missions and Bureaus to produce NPI Action Plans. The time has 
come to convert the vision of these plans into concrete contracts, 
grants, and cooperative agreements in larger numbers. Because the 
interlocking jigsaw puzzle of geographic (country- and region-specific) 
and sectoral appropriations directives imposed by Congress make it 
extremely difficult for USAID to aggregate large central pots of money 
and eliminates unattributed funds at most Missions, the Agency should 
write these Notices of Funding Opportunities (NOFOs) in as broad a 
fashion as possible to cover every programmatic area and account. In 
this way, eligible local applicants in education, health, climate-
adaptation, economic growth, and other areas could all apply to the 
same open call for proposals, and Missions could combine resources 
under various directives and attributions to fund the resultant awards.
    Furthermore, PEPFAR demonstrates that USAID can and should be more 
ambitious in its vision for localization. In reality, Administrator 
Power's target of 25 percent is too low, especially in Asia, Latin 
America and Eastern Europe, where local private-sector and civil-
society organizations are well-positioned to take over the work of the 
U.S.-based for-profit contractors that dominate the Agency's portfolio 
in these regions today. I applaud the approach USAID has taken to shift 
more funding in Central America over the last 2 years, but the Agency 
can do more. Missions in countries such as Brazil, Peru, Colombia, the 
Eastern Caribbean, India, Indonesia, and the Balkans should be ready to 
move to close to 100 percent localization by the end of this decade.
    In addition, an aggregate target allows individual Missions to 
escape responsibility and accountability. USAID already has a very 
successful example of how to translate an Agency-wide goal into 
realistic, achievable yearly shares for Bureaus and Missions with with 
a progressive, multi-year time horizon to meet them--the Small Business 
Goals (https://www.usaid.gov/about-us/organization/office-small-and-
disadvantaged-business-utilization/small-business-program/small-
business-goals) managed by the Office of Small and Disadvantaged 
Business Utilization (OSDBU).
    I acknowledge that not every potential ``local organization/local 
entity'' is ready and able to handle Federal funding as a prime 
implementer today. We should agree that the compliance requirements 
that come with U.S. Government funds are heavy (I would argue too 
heavy), even for the most sophisticated organization. Signing central 
contracts for supporting ``local entities'' in their governance, 
management, and compliance is a strategic answer to this problem, 
because it offers an alternative business model for the U.S. for-
profits that inevitably will see their funding decrease as USAID 
transitions to making more awards to foreign groups. NPI ``mentoring 
awards'' that require recipients to subaward 50-75 percent of the Total 
Estimated Amount while focusing on technical, compliance, and capacity-
building assistance are another strategic answer. However, if the 
Agency does not write the awards correctly, with specific Key 
Performance Indicators and timelines for achieving sustainability, the 
arrangement could end up trapping local organizations in a dependent 
relationship with American companies.
    A crucial step in localization is funding partners that help local 
partners handle compliance. This will help nurture indigenous 
equivalents to (and eventual substitutes for) the large, U.S.-based, 
catch-all contractors. USAID should start this process immediately in 
Asia, Eastern Europe, and Latin America, where more than enough local 
competent, honest accounting, human-resources, and management-
consulting firms exist to perform this work. The system of ``Local Fund 
Agents'' the Global Fund to Fight AIDS, Tuberculosis, and Malaria has 
created to provide oversight to its grants around the world could serve 
as a model. After all, ``localization'' should mean that all aspects of 
both programmatic and administrative implementation are in the hands of 
local people, including accounting, human resources, monitoring, and 
reporting.
    Another answer is to create more awards that are pass-through 
arrangements in which U.S.-based and local implementers apply jointly 
for funding related to specific, time- or milestone-bound projects. The 
U.S. partner can keep a modest sum to mentor and provide oversight of 
the local partner, which receives the overwhelming majority of the 
funding. The best current example of this model at USAID is the 
American Schools and Hospitals Abroad Program (ASHA), which is a relic 
of the Marshall Plan and predates the Agency by almost 20 years. ASHA 
only receives an appropriation of $25 million per year, and the 
management of its APS and awards only requires a few full-time 
employees. One of ASHA's most important aspects is that the local 
partner is not treated as subordinate to the U.S. partner. This dynamic 
is critical to mitigate the risk that the U.S. organizations could use 
such an arrangement to drive up their margins in the name of ``building 
capacity,'' the hallmark of the worst awards in the current system.
    As a result, USAID should:

    A.  Raise the Administrator's localization target to 50 percent of 
        the Agency's portfolio of acquisition and assistance by 2030.

    B.  Using the Small Business Goals as a model, assign a specific 
        annual target for localization to each Bureau and Mission, 
        which, in the aggregate, add up to USAID's global goal:

       a.  Track and publish progress against the targets for each 
        Bureau and Mission as OSDBU does for the small-business 
        program.

    C.  Issue a renewable global umbrella Annual Program Statement 
        (APS) from Washington restricted to ``local organizations/
        entities,'' modeled on the original NPI APS:

       a.  Require every Mission to publish an Addendum to it each 
        year, translated into local language(s), that follows the 
        central rules and definitions.

       b.  Set minimum first-year and 5-year amounts that each Mission 
        would have to invest in its Addendum to the APS.

    D.  Require each Bureau and Mission to set up a multi-sectoral 
        pass-through partnership program, modeled on ASHA, to attract 
        new local partners that have established ties with U.S. peer 
        institutions.

    E.  Set in motion a process to move 90 percent of the funding 
        managed by USAID's bilateral and regional Missions in Asia, 
        Latin America, and Eastern Europe to local implementers by 
        2030.

    F.  Help more potential applicants among local entities prepare to 
        qualify for Federal funds through targeted technical assistance 
        and additional education, ideally delivered through a series of 
        quarterly ``how-to'' webinars and ``Industry Days'' in multiple 
        languages.

    G.  Pursue a comprehensive, region-by-region strategy to find and 
        fund local organizations that can provide services to their 
        peers in the areas of governance, administration, and 
        compliance.
Include Humanitarian Assistance in the Localization Strategy
    Since the International Disaster Assistance (IDA) and Food for 
Peace appropriations account for nearly 40 percent of the Agency's 
annual budget, USAID must not exclude them from the localization 
agenda. The Bureau for Humanitarian Assistance (BHA) has a long way to 
go to open its opaque funding processes and culture to qualified 
``local entities.'' I appreciate the incremental steps USAID has taken 
to increase BHA's capacity in response to inquiries from Senator Jodi 
Ernst (R-IA), but the Agency needs to do more to lessen the power of 
the oligopoly of United Nations (UN) entities and international non-
governmental groups that dominate HA now.
    As a result, the Agency should:

    A.  Allow BHA to use its existing authority to use even more IDA 
        funds to acquire additional capacity for tasks directly related 
        to procurement.

    B.  Mandate that BHA use these resources to perform more of its 
        specialized pre-award assessments (essentially a pre-
        qualification process) on local organizations, especially 
        faith-based charities, to make them eligible for HA funds.

    C.  Delegate to BHA the authority to hire its own Personal Services 
        Contractors.

    D.  Expand the use of Government-to-Government Agreements with 
        national agencies responsible for preparing and responding to 
        disasters.
Include Acquisition Fully in the Localization Strategy
    On paper, acquisition (contracts) is included in the 
Administrator's global target for localization. In practice, however, 
the Office of Acquisition and Assistance (OAA) in USAID's Bureau for 
Management (M) is leading a systematic campaign to increase the share 
of the Agency's portfolio managed by U.S.-based for-profit contractors, 
including by assertively pushing Missions and Bureaus to make awards 
from the pre-competed Federal Supply Schedule and Multiple Award 
Schedule managed by the General Services Administration (GSA). U.S. 
Government-wide targets set by the Office of Management and Budget 
(OMB) for ``Category-Management'' should not be an excuse for de facto 
exempting contracts from localization, as USAID's overseas business is 
fundamentally different from the activities of other Federal 
Departments that primarily purchase goods and services for their 
domestic use. Furthermore, USAID should not exclude its largest central 
contracts, such as the Next Generation (NextGen) Global Health Supply 
Chain Suite of Programs, from the localization agenda. Sixty years of 
USAID's investments in medical procurement, supply chains, and delivery 
in developing countries have failed to produce much sustainable local 
capacity on the ground. Logistics and healthcare are two of the most 
mature sectors in all of Africa, Asia, Eastern Europe, and Latin 
America--these sectors are the biggest low-hanging-fruit opportunities 
to begin to shift resources locally.
    As a consequence, USAID should:

    A.  Negotiate with OMB to exclude the Agency's portfolio of field-
        implementation contracts from the denominator used to calculate 
        USAID's progress against the Federal Category-Management goals.

    B.  Ensure the forthcoming Requests for Proposals under the NextGen 
        program are accessible to local applicants, including by 
        awarding points in the scoring process for local organizations 
        and restricting eligibility for the contract for last-mile 
        delivery to local entities.
Use the Principles of Localization to Take Aggressive Steps to 
        Diversify USAID's Entire Portfolio
    Diversification has to be an Agency-wide priority, given the 
continuing concentration of the Agency's portfolio in a small number of 
hands. When I started at USAID in 2017, just 25 implementers managed 60 
percent of the Agency's funding for acquisition and assistance, and 75 
organizations controlled 80 percent of funding across all the Agency's 
portfolios. The members of this cartel, including the so-called ``non-
profits,'' have become increasingly dependent upon Federal funds over 
the years, to such an extent that one can consider USAID awards to 
large U.S. organizations a form of corporate welfare. This dependency 
is partially the result of the Congressional decision in 1998 to repeal 
a 1984 amendment to the Foreign Assistance Act of 1961 (FAA) that 
established that a ``Private Voluntary Organization (PVO) is ineligible 
for U.S. foreign-assistance funding unless it could demonstrate that it 
obtained ``at least 20 percent of its total annual financial support 
for its international activities from sources other than the United 
States Government.'' For-profit contractors have never been subject to 
such a requirement.
    Despite a series of policy changes and major pushes from both 
Administrators Mark Green and Samantha Power to increase the number of 
new and local partners, these figures have continued to move in the 
wrong direction. USAID has remarkable legal and regulatory flexibility 
to innovate in its grant- and contract-making; too often, it chooses 
not to. The Biden administration's localization agenda offers a perfect 
opportunity to make sure a culture of greater programmatic risk-taking 
takes hold across the Agency. The risk of USAID's current approach is 
that the bureaucracy will wall it off and ignore it, as they did with 
Administrator Raj Shah's previous effort that had a similar global 
target.
    To avoid this fate, USAID needs to institute a generalized shift to 
attract new ideas, new partners, and pay for results, including through 
greater financial partnerships with the private sector. The Agency must 
use procurement instruments across its entire portfolio that are 
flexible, nimble, and lower the burden of compliance for both the 
Agency's staff and implementers. Large awards to U.S. organizations 
should have sunset provisions built in from the beginning, so that 
local organizations are ready and able to assume the role of prime 
recipient after 5 or more years. Making open calls (such as the APS, 
Broad Agency Announcements, and two-stage competitions for contracts) 
the default model for all NOFOs would lower the administrative barriers 
to applicants, which would make it far more likely that smaller and 
local organizations could win awards over time. I applaud Congress's 
recent decision to remove the cap on the number of Innovation Incentive 
Awards (such as Grand Challenges and prize competitions) that USAID may 
finance every year, which always bring in partners that have never 
received funding from the Agency before. These awards are underused, 
strictly pay-for-results mechanisms that cut red tape for both USAID 
and recipients. USAID's Bureaus and Missions need to seize this 
opportunity to make these kinds of competitions a standard practice in 
every sector and geography, which will allow the Agency to get more 
money out the door faster while also heightening accountability to the 
American taxpayer.
    In this regard, USAID should:

    A.  Make open calls for proposals and solicitations with 
        streamlined requirements that only ask for short Concept Notes 
        at the initial stage of application the default modality for 
        both acquisition and assistance across the Agency.

    B.  Structure every large assistance cooperative agreement to 
        include mandatory Transition Awards to local organizations/
        local entities for the vast majority of the substantive work by 
        the end of the period of performance.

    C.  Structure every large programmatic contract to require the 
        holder to devolve a greater share of the funding year over year 
        to local sub-recipients, with mandatory provisions for the 
        transition of the vast majority of the substantive work by the 
        end of the period of performance.

    D.  Structure many more awards as Fixed-Amount Awards (FAAs), 
        Fixed-Price Contracts, and other pay-for-results modalities.

    E.  Use reimbursable grants and the Agency's Other Transaction 
        Authority much more widely to conclude unconventional 
        investment arrangements and partnerships with private-sector 
        entities.

    F.  Allow the Agency's COs to exercise the authority they have 
        under the Federal Acquisition Regulations (FAR) and the and 
        Uniform Guidance for Federal Awards (2 CFR 200) to:

       a.  use two-step competitions that streamline and expedite 
        acquisition and assistance;

       b.  encourage oral presentations and other local-friendly 
        techniques in proposals for new awards; and

       c.  promote adaptive management by employing the Changes Clause 
        of the FAR to manage existing contracts.

    G.  Require that every umbrella contract to a U.S.-based 
        organization use Grants under Contract (GUCs) to increase the 
        small-scale, nimble grants to local organizations.

    H.  Require each Bureau and Mission to issue at least one NOFO for 
        Innovation Incentive Awards each year for each sector for which 
        it receives funding.

    I.  Ask Congress to Restore Sub-Section g of Section 2151u of the 
        FAA to re-establish eligibility criteria for Private Voluntary 
        Organizations and include a similar provision to cover for-
        profit contractors.
Adopt a Radical Approach to Transparency
    I appreciate that USAID has begun to take steps to make the Agency 
and its processes easier to understand for new and local partners, such 
as opening the website WorkwithUSAID.org and publishing more NOFOs in 
languages other than English. Yet USAID fails to report the very 
information that would promote accountability and transparency in the 
relationships between new, underutilized, and local partners and 
USAID's traditional primes. A stunning and intimidating asymmetry of 
information puts most prospective local implementers in a difficult 
position. A lack of basic data in the public domain on USAID's 
procurement also makes it difficult to track how implementers of any 
kind actually spend their funds, and to hold the Agency and its large, 
U.S. based implementer accountable for progress on localization. USAID 
is even allowing many of its largest U.S.-based prime implementers to 
skirt the few statutory requirements that do exist, which makes it 
impossible to replicate and independently verify their and the Agency's 
performance claims. As I noted above, I endorse Publish What You Fund's 
call for USAID to make publicly available all its award-related data in 
the SAMS and GLASS systems.
    As a result, USAID should:

    A.  Resume public reporting on the use of New and Underutilized 
        Partners (NUPs) by USAID, which the Agency tracked and reported 
        publicly through the Office of Management and Budget (OMB) from 
        2018 to 2021--including data at both the prime and sub-award 
        level.

    B.  Require both for-profit and non-profit organizations to 
        disclose publicly the percent of work they promise in their 
        responses to NOFOs to sub-award to smaller firms, including 
        local organizations, and the percent they actually deliver 
        through sub-awards quarterly.

    C.  Publish the NICRA rates USAID negotiates with all for-profit 
        and non-profit implementers.

    D.  Allow searchable public access to all contracts, grants, and 
        cooperative agreements stored in the Agency's Secure Image and 
        Storage Tracking System (ASIST) and accompanying performance 
        reports.

    E.  Enforce the existing legal requirements that all USAID's prime 
        implementers disclose their sub-recipients in the Federal 
        Funding Accountability and Transparency Act Sub-Award Reporting 
        System (FSRS) on a timely basis, and work with GSA to make 
        these data publicly available.

    F.  Hire more local organizations, such as universities, Supreme 
        Audit Institutions, and watchdog groups, to conduct the ongoing 
        monitoring and required, formal evaluations of the Agency's 
        awards in the field.
Harvest Human Resources for Procurement More Wisely
    USAID's traditional rationale for why it cannot pursue and sustain 
localization is that the Agency is short-staffed. There is no question 
that USAID lacks the number of warranted COs/AOs that would correspond 
to the size of its award portfolio. But blaming the Agency's failure to 
diversify its partner base on staffing shortages is the easy, and lazy, 
answer. Does USAID need more AOs and COs? Yes. But just adding more of 
them to the current system will not fix the excessive concentration of 
USAID's portfolio in the hands of UN agencies and large U.S.-based 
companies and organizations.
    The reality is more complicated, and just increasing staffing 
levels is not the answer. Under the current conditions and in the 
current culture, even doubling the number of COs/AOs in the Foreign 
Service and Civil Service will not solve a series of underlying 
structural and cultural problems. We tried this strategy in the Trump 
administration: Despite a hiring freeze (first U.S.-Government-wide, 
then continued by the U.S. Department of State), former Administrator 
Mark Green secured permission to hire enough COs/AOs to increase 
USAID's cade of procurement officials by 45 percent. Because of 
attrition driven by factors I will describe below, by the beginning of 
Calendar Year 2021 the numbers of COs/AOs on staff had returned to the 
level before the hiring surge.
    The main staffing challenge at USAID is that the Agency does not 
make optimum use of the personnel it has. USAID is an entity whose 
purpose and mission is grant- and contract-making. Nevertheless, the 
Agency likes to pretend that it is a think tank, or a non-governmental 
organization, or a charity, or an academic institution, instead of what 
it actually is--a procurement agency. Too much of the workforce is not 
engaged, and not incentivized to be engaged, in the Agency's core 
business. They are reluctant to participate in the less-than-glamorous 
aspects of that work: writing draft solicitations, sitting on the 
Technical Evaluation Committees (TECs) that review applications, 
checking monitoring and performance reports, acting as Contracting 
Officer's/Agreement Officer's Representatives (CORs/AORs) to help 
structure and oversee awards in progress, none of which requires a 
warrant.
    To be fair, this reluctance often arises because USAID has chosen 
to make all of these processes just as burdensome for its own staff as 
they are for applicants. NOFOs are unnecessarily long and complicated, 
TECs take too long and are woefully inefficient (often because NOFOs do 
not include clear scoring criteria and the panels insist on reviewing 
all applications, even ones that are not qualified), and the system of 
pre-award approval is duplicative and overly cumbersome. For example, 
instead of accepting as valid the due diligence of a local organization 
performed by another major public or private donor has recently (within 
3 years, say) that covers the same topics USAID does in its pre-award 
evaluations, the Agency insists on undertaking its own review. In 
addition, Agency staff understandably focus on their job descriptions 
and performance plans, which rarely include any expectations that they 
will participate in procurement or award-management.
    Administrator Green identified and found solutions to address these 
and other systemic problems. However, not all the solutions were fully 
implemented, and many have been quietly rolled back since the end of 
the Trump administration.
    Administrator Power needs to continue Administrator Green's efforts 
to make grant- and contract-making the responsibility of everyone at 
USAID and set clear metrics to hold staff accountable for spending 
their time on the Agency's most important job. In exchange, she should 
task M/OAA, the Office of the General Counsel, and the Bureau of 
Policy, Planning, and Learning to reinforce the streamlining of every 
step in USAID's Program Cycle, including procurement processes and 
eliminate other distractions and time-wasters that prevent people from 
believing they have the bandwidth to prioritize USAID's core work. The 
Agency needs to make the best use of the personnel it has, by 
empowering as many of them as possible to qualify for appropriate 
warrants, providing better training and career paths for AOs/COs and 
AORs/CORs, and empowering Foreign Service Nationals as much as possible 
to shoulder more responsibility. In addition, USAID should emulate the 
best practices of other Federal grant- and contract-making agencies, 
such as the National Institutes of Health within the U.S. Department of 
Health and Human Services, which supplement their workforces with 
outside reviewers and procurement specialists who can perform almost 
every step in acquisition and assistance processes short of signing an 
award. ADS Chapter 303 is very clear that staff from other Federal 
Agencies and Departments and ``[r]eviewers from outside the U.S. 
Government may serve on Selection Committees,'' as long as they are 
free from any conflict of interest, which the Chapter defines in 
detail, but USAID almost never chooses to use this provision to 
alleviate its workload. Finally, the Administrator must install leaders 
in M/OAA who will embrace, rather than resist, her agenda.
    Any new hiring for localization must be judicious and targeted 
exclusively to procurement and award-management. For example, a major 
bottleneck that needs immediate resolution is that the Office of the 
General Counsel (OGC) only has a handful of lawyers who work on grant- 
and contract-making full-time. I understand why Congress has been 
reluctant to increase the Agency's appropriation for Operating Expenses 
(OE, which I would argue is disproportionately small compared to its 
Program Budget). But there is a simple way for Congress to make more 
dollars available to USAID for hiring dedicated to grant- and contract-
making: Authorize a Working Capital Fund for Acquisition and 
Assistance. Such an authorization would allow USAID to convert a 
certain percentage of its Program funds to OE, but only for the purpose 
of hiring term-limited staff and paying for supplemental resources 
(such as contracts) to work exclusively on procurement.
    Therefore, USAID should:

    A.  Build metrics on participation in processes related to 
        acquisition and assistance into the performance plans of all 
        non-administrative staff from all hiring categories:

       a.  In particular, all such staff should serve on at least three 
        TECs per Calendar Year.

    B.  Create a better-defined career path for both COs/AOs in both 
        the Foreign Service and Civil Service, including through 
        specific training to prepare them to compete better for 
        positions as Office Directors, Deputy Mission Directors, 
        Mission Directors, and Deputy Assistant Administrators.

    C.  Free COs/AOs in the field to pursue innovative instruments in 
        both acquisition and assistance, and increase the ceilings on 
        their warrants.

    D.  Require that every TEC include reviewers from outside USAID who 
        can demonstrate they do not have a conflict of interest:

       a.  At the Mission level, this should include local citizens, 
        which could be a primary metric for measuring ``local input.''

    E.  Prioritize the hiring of additional attorneys in OGC dedicated 
        to acquisition and assistance:

       a.  The cadre should have a mix of Federal procurement and 
        private-sector transactional experience.

    F.  Make pre-award assessments faster and more efficient, including 
        by pursuing mutual recognition and pre-qualification 
        arrangements with other major donors.

    G.  Revitalize and expand plans established under Administrator 
        Green to create a dedicated institutional home, strengthened 
        accountability, training materials, library, and other 
        resources for CORs/AORs.

    H.  Undertake an exercise to reinforce Administrator Green's 
        reforms and streamline the steps in all procurement processes 
        even further.

    I.  Accelerate plans to grant as many appropriately tiered warrants 
        as possible to staff from all hiring categories, both in 
        Washington and at USAID's Missions.

    J.  Restore Foreign Service leadership to M/OAA.

       a.  Consider splitting the positions of Director of M/OAA and 
        Senior Procurement Executive and restore both of them as 
        billets in USAID's Senior Foreign Service on the next Major 
        Listing.

    K.  Replace the entire leadership of M/OAA, including the Agency's 
        Competition Advocate.

    L.  Ask Congress to authorize a Working Capital Fund, with specific 
        guardrails on its use.

    Senator Booker [presiding]. That is incredibly valuable 
testimony. You did not seem at all nervous sitting before me. 
It was Hammer time now, sir, and your poise was incredible.
    Ms. Aquino.

      STATEMENT OF ELANA AQUINO, U.S. EXECUTIVE DIRECTOR, 
                  PEACE DIRECT. WASHINGTON, DC

    Ms. Aquino. Thank you and good morning. Chairman Cardin, 
Ranking Member Hagerty----
    Senator Booker. Excuse me, it is Chairman.
    Ms. Aquino. Sorry. I am so sorry.
    [Laughter.]
    Senator Booker. Yes.
    Ms. Aquino. Chairman Booker.
    Senator Booker. Thank you very much.
    [Laughter.]
    Ms. Aquino. Ranking Member Hagerty and other distinguished 
members of the subcommittee, thank you for inviting me to speak 
with you today about USAID's commitment to localization.
    My name is Elana Aquino and I work with Peace Direct, an 
international peace building organization. At Peace Direct we 
take a different approach. We do not maintain country offices. 
Instead, we find and support courageous local people dedicated 
to stopping violent conflict and building lasting peace in 
their communities.
    We accompany, support, learn from, and partner with 
organizations across Africa, the Middle East, Asia, and South 
America. Our work to shift attitudes and practices among 
policymakers and donors has moved us beyond the field of peace 
building.
    We are keenly aware that the entire international 
development, humanitarian, and peace building system needs to 
reform if it is to deliver better outcomes for the poorest, 
most marginalized and conflict-affected communities worldwide. 
Local leadership is key.
    We welcome Administrator Power's commitment to respect the 
dignity of the individual and localize USAID's efforts 
globally. We also recognize this committee's important role in 
ensuring this shift is meaningfully implemented.
    Before discussing the challenges, opportunities, and next 
steps, it is important to be explicit about who should be 
considered local. Peace Direct disagrees with the definition 
put forth in the ADS 303 directive.
    In our view, this directive offers a loophole for 
international organizations to qualify as local when they in 
fact are not.
    Early last year we worked with other prominent INGOs to 
develop a set of definitions which differentiate international 
from local organizations. I have included this set of 
definitions in my written testimonial.
    By not addressing this, we risk skewing and distorting how 
USAID measures its success in this endeavor. Civil society 
organizations worldwide have high hopes that USAID will make 
good on its commitments. Those hopes will not be fulfilled if 
funding is channeled to INGO subsidiaries or country offices.
    According to a recent report by research organized by 
Publish What You Fund, only 5.7 percent of USAID funding goes 
directly to local organizations. This is woefully inadequate.
    Local civil society organizations are often the first 
responders to any situation and local community leaders are the 
ones who remain when international organizations inevitably 
move on.
    USAID colleagues in various country contexts have shared 
with me that they are proud of specific efforts that have been 
made--that they have been involved in to provide aid locally 
and directly to local actors, but they have also shared that 
these tend to be the exception rather than the rule.
    Though there are some challenges we must address, out of 
respect for time I am only going to highlight a couple. A more 
comprehensive list can be found in my written testimony.
    First, flexible funding. Here we mean the idea that funding 
for local actors be what we call local first funding--flexible, 
inclusive, respectful, trustable--sorry, sustainable and trust 
based.
    In fragile contexts, dynamics can change daily if not 
hourly. Adaptive funding models ensure local organizations 
remain nimble and have a sustained positive impact in the 
communities they are serving.
    Finally, racism. By this we mean the deliberate or 
unconscious exclusion from resources and opportunities due to 
race. Through many global consultations with local actors, we 
at Peace Direct believe that we must address systemic racism 
throughout international development, humanitarian, and peace 
building efforts.
    Racism creeps in in numerous ways big and small, for 
example, in the assumption that local civil society 
organizations do not have the capacity to develop responsive 
programs, therefore, justifying the reliance on international 
organizations with country offices.
    On opportunities, there are many opportunities to further 
locally-led development. Again, with respect to time, a more 
extensive list can be found in my written testimony.
    First and foremost, it is recognizing that it is possible. 
Peace Direct has employed a locally-led approach to peace 
building since its inception in 2002. Taking a locally-led 
approach demonstrates a profound commitment to the autonomy and 
dignity of ordinary people to be agents of their own destiny.
    Finally, there is significant momentum worldwide to 
transform the international development, humanitarian, and 
peace building system's efforts to be locally led. The United 
States has a unique opportunity to lead and shape the future of 
international development in ways that for the first time would 
answer the call of the world's marginalized communities. 
Nothing about us without us.
    Lastly, on next steps, we must work together to address the 
challenges outlined here and by others to ensure that we 
meaningfully employ a locally-led model. This requires having 
difficult conversations on dismantling systemic racism.
    It also requires willingness to take smart risk and it 
requires increased investment and budget for USAID to ensure 
the agency has the capacity it needs to meaningfully implement 
this model.
    I want to take the time to thank you, Chairman Booker, and 
Ranking Member Hagerty and the other distinguished members of 
the subcommittee for organizing this vital hearing.
    I look forward to responding to any questions you may have 
and I am also open to working with you in partnership to 
actualize and implement a locally-led model.
    [The prepared statement of Ms. Aquino follows:]

                 Prepared Statement of Ms. Elana Aquino

    Good morning, Chairman Cardin, Ranking Member Hagerty, and 
distinguished members of the Subcommittee. Thank you for inviting me to 
speak with you today about USAID's localization process. This is an 
issue that directly affects the work of my organization, our partners 
and local and community-based civil society globally.
    My name is Elana Aquino and I work with an international 
peacebuilding organization called Peace Direct. At Peace Direct, we 
take a different approach than most international nongovernmental 
organizations. We do not maintain country offices. Instead, we find and 
support courageous local people and organizations who are dedicating 
their lives to stopping violent conflict and building lasting peace in 
their communities. We partner with, accompany, support, and learn from 
partners across Africa, the Middle East, Asia, and South America. From 
Afghanistan to Sudan, Colombia to Syria, it is our experience that 
lasting development, peacebuilding and humanitarian support is more 
effective and sustainable when led by local civil society organizations 
embedded in the communities they serve.
    Amplifying the experiences and perspectives of local communities 
striving to overcome violence, we advocate within the United Nations, 
here in Washington, DC, with the European Union, and in London where we 
our sister organization is based, for policy change and improved 
foreign assistance to better support locally led peacebuilding. Our 
work to shift attitudes and practices among policymakers and donors in 
favor of locally led efforts has moved us well beyond the field of 
peacebuilding, as we are keenly aware that the entire international 
development, humanitarian and peacebuilding system needs reform, if it 
is to deliver better outcomes for the poorest, most marginalized and 
conflict affected communities worldwide. Local leadership is key.
                             defining local
    We welcome Administrator Power's commitment to respect the dignity 
of the individual and localize USAID's efforts globally. We also 
recognize this Committee's important role in ensuring this shift is 
meaningfully implemented.
    Before discussing the challenges, opportunities and the next steps 
we believe should be taken to further locally led development, I 
believe it is important to be explicit about who should be considered 
local.
    As it stands, USAID uses the criteria outlined in the ADS 303 
directive to define what constitutes a local organization. According to 
this directive, a local organization is:

   Legally organized under the country's laws;

   The country is its principal place of business or 
        operations;

   It is majority owned by individuals who are citizens or 
        lawful permanent residents of the country; and,

   It is managed by a governing body, the majority of whom are 
        citizens or lawful permanent residents of the country.

    ADS 303 directive also includes a separate definition for locally 
established partners (LEPs). If country offices of U.S.-based or other 
international organizations meet the following criteria, they can 
qualify as an LEP:

   Continuous operations in the country for at least 5 years;

   Local staff comprise at least 50 percent of office 
        personnel;

   A local office registered with the local authorities and 
        with a local bank account;

   A portfolio of locally implemented programs; and,

   Demonstrated links to the local community including a 
        majority of local citizens on any governing body or board and 
        evidence of local support or roots.

    Peace Direct disagrees with the definition put forth in the ADS 303 
directive. In our view, this directive offers a loophole for 
international organizations to qualify as `local' when they are in fact 
not. Early last year, we worked with other prominent INGOs, including 
Catholic Relief Services, who is also here today, as well as Mercy 
Corps, Care USA, Save the Children USA, and the Hunger Project, among a 
few others, to develop a set of definitions which distinguishes 
international and local organizations. I have included this set of 
definitions in my written testimonial in the appendix. According to 
this document, Locally Established Partners are not regarded as local 
entities, for the simple reason that they tend to be country offices or 
subsidiaries of INGOs who are accountable to an office outside of the 
country of operation.
    This is a critically important issue as the current inclusion of 
``Locally Established Partner'' in the ADS 303 directive risks skewing 
and distorting how USAID measures its success in delivering 25 percent 
of funding directly to local organizations and 50 percent of 
programming to be co-designed in partnership with local organizations. 
Civil society organizations worldwide have high hopes that USAID will 
make good on its commitments, as set out by Administrator Power. Those 
hopes will not be fulfilled if funding is channeled to INGO 
subsidiaries or country offices.
                               challenges
    According to a recent report by the research organization, Publish 
What You Fund, only 5.7 percent of USAID funding goes directly to local 
organizations. The current aid model is not equitable or sustainable, 
and there are questions as to whether it is effective. Local civil 
society organizations are often the first responders to any situation 
and, as COVID-19 and the U.S. withdrawal from Afghanistan have 
demonstrated, local community leaders are the ones who remain when 
international organizations inevitably move on.
    The current system does not meaningfully include the perspectives 
and expertise of local civil society organizations as its default way 
of working. In discussing this with USAID colleagues at country level 
in various contexts, many comment that they are proud of specific 
efforts they have been involved in to provide aid directly to local 
actors. But these tend to be the exceptions rather than the rule and 
that tendering, procurement, and implementation continue to remain 
elusive processes that exclude local leaders. This is due to the lack 
of directives and training to U.S. staff at the local level on how to 
truly deliver on locally led development, peacebuilding and 
humanitarian support in ways that are respectful and sustainable, along 
with a lack of wrap around services required to prepare local actors 
for receiving aid.
    While we welcome the commitments and sentiments made by 
Administrator Power, I want to raise some challenges that we must 
address to meaningfully implement locally led development initiatives.
    First, accessibility. By accessibility I mean more inclusive access 
for local organizations to engage with USAID. USAID has recently 
launched WorkWithUSAID to help local civil society organizations learn 
what the Agency does and how they can partner with the U.S. Government. 
However, local civil society organizations must still compete with 
international, U.S.-based organizations who have relationships with and 
expertise on how USAID operates and awards. A combination of 
simplifying proposal and reporting requirements along with providing 
wrap around services to support ease in uptake can make partnering with 
USAID more accessible for local organizations.
    Moreover, the responses to the calls for proposals circulated by 
USAID and the reporting requirements are often required to be submitted 
in English. This does not consider that for many local actors globally, 
English is not their first language, if they speak it at all. Allowing 
applications submitted in local languages, and even orally in some 
cases, acknowledges the difficulties local actors are already facing 
without seeking to add more. Shifting some of that burden to USAID to 
seek translation is a step towards true partnership and will create 
space for new entrants at the local level to participate.
    Second, equitable partnership. By this, I mean partnerships that 
are a relationship between individuals and organizations based on trust 
that takes actionable steps to support the needs, priorities, and 
agendas of all parties equally. In our experience working with local 
peacebuilders globally, many local actors have highlighted that current 
practice of partnerships are prescriptive in nature. Foreign actors 
come in with pre-defined solutions often without the consultation or 
buy-in of the local organizations or communities we are trying to 
support. This overlooks the active capacity, agency, expertise, and 
social, political, and cultural know-how local organizations bring to 
any context.
    Putting local civil society organizations in the driver's seat does 
not mean international organizations do not have an important role to 
play. International actors have many roles they can play. For example, 
as an interpreter an international organization can explain the complex 
jargon used by USAID, and I would encourage the committee to look at 
the recent paper produced by Peace Direct on the future role of INGOs 
as intermediaries.
    Third, power dynamics. By this I am primarily looking at the 
decision-making authority of the design of program work, resources and 
credibility. USAID's place as the world's largest donor for 
international development, humanitarian support and peacebuilding 
efforts comes with explicit and implicit power. When USAID makes an 
announcement to offer humanitarian support or invest in development and 
peacebuilding efforts, it comes with a global recognition that the 
United States is actively involved to address issues.
    To effectively and meaningfully implement a locally led approach, 
we must add the element of humility to recognize that we cannot know or 
understand the social, political and cultural variables at play as well 
as local organizations embedded in the community. And to acknowledge 
that, as much as we may want to help and have good intentions, aid 
delivered without community planning and inclusion can be patronizing 
and harmful. At Peace Direct, we do not consider ourselves to be the 
expert of any of the contexts our partners are working and living in. 
We look to them for insights and recommendations on what can be done 
and said, and we mobilize as best as we can to support them in their 
self-identified work.
    Meaningfully working with, not through, local organizations will 
open opportunities for genuine thought partnerships to be combined with 
the resources USAID brings to the table, allowing credibility to flow 
from the community.
    Fourth, flexible funding. The idea that funding for local actors 
should be flexible, inclusive, respectful, sustainable and trust based; 
what we call Local FIRST funding. As I mentioned earlier under the 
challenge of accessibility, the bureaucratic barriers that come with 
partnering with USAID often employ very rigid restricted funding. As 
many of us here know and recognize, in conflict zones and humanitarian 
crises, the dynamics change daily if not hourly. Funding models need to 
be adapted to allow local organizations to change programming and how 
humanitarian support is delivered to have a better chance of 
effectuating a positive impact in the community they are serving.
    We must improve USAID's granting mechanism to allow for flexible 
funding to be deployed globally. At Peace Direct, we do this through 
our Local Action Fund model, and we believe it is scalable.
    Finally, racism. By this, we are looking at the deliberate or 
unconscious exclusion from resources and opportunities due to race. 
Through many consultations with local actors globally, we at Peace 
Direct believe that we must address the explicit and structural acts of 
racism through international development, humanitarian and 
peacebuilding efforts. For example, we often wrongly assume local civil 
society organizations do not have the capacity or ability to implement 
programs therefore, we rely on international organizations with country 
offices to lead. Another example is the assumption that we cannot 
partner with local organizations due to rampant corruption and 
mismanagement of funds. Just as corruption does not see color, we 
cannot assume that every local actor is corrupt.
    Only by deconstructing and dismantling racist ideologies regarding 
the superiority of Western approaches and working toward a 
redistribution of power can we meaningfully implement locally led 
approaches.
                             opportunities
    There are many opportunities to further locally led initiatives. 
First and foremost, it is possible. Peace Direct has employed a locally 
led approach to peacebuilding since its inception in 2002. We are 
constantly learning and improving our model, and it has been proven to 
be successful. Taking a locally led approach across USAID will not only 
deliver better outcomes for communities worldwide; it also demonstrates 
a profound commitment to the agency and dignity of ordinary people to 
be agents of their own destiny. This is a sentiment that speaks to the 
very core of the American values of individual liberty and self-
determination. And it reminds us of Nobel Prizewinning Economist 
Amartya Sen's definition of development as ``the freedom to live the 
life that one has reason to value.''
    Second, improving USAID's funding model to be more flexible. 
Flexible funding for local actors is the key to unlocking creativity 
and adaptability for communities living in such volatile and 
unpredictable contexts. By providing greater flexibility in its 
funding, USAID will be able to contribute more effectively to the 
achievement of the Sustainable Development Goals by allowing 
communities to adapt their plans as the context changes. At Peace 
Direct, we have piloted such an approach for over 5 years now, and have 
proved that such flexible funding can be transformative for local 
actors. Our ``Local Action Fund'' (LAF) is an innovative and flexible 
grant making mechanism which supports and targets locally led 
initiatives operating at the grassroot or sub-regional level, i.e., 
below the field of vision of most international donors. Through such an 
approach, development or peacebuilding funding directly reaches those 
who most need it, and such an approach is scalable.
    Third, locally led approaches are cost-effective. Recent evidence 
by The Share Trust points to the fact that local organizations can 
deliver programming that is 32 percent more cost efficient than 
international intermediaries. A more cost-effective approach will help 
to eliminate the need to pick and choose what conflict or humanitarian 
crisis deserves more attention and resources. This can allow the U.S. 
dollar to stretch further and reach more people globally.
    Fourth, a locally led approach is more sustainable. Working with 
local organizations will generate read: credibility from the 
communities we are seeking to support. Community-owned programs and 
initiatives are more likely to be sustainable after international 
organizations and USAID decide to leave. Thus, preventing the feeling 
that there must be a continuous U.S. presence everywhere all of the 
time.
    Fifth, there are existing networks of local civil society 
organizations ready and willing to work with USAID. We at Peace Direct 
have mapped many across the world. There are other networks such as 
NEAR, CIVICUS, Movement for Community-led Development, and United 
Network of Young Peacebuilders, to name a few, who have an extensive 
network of local civil society organizations working on any number of 
development, peacebuilding and human rights initiatives. Consider this 
a joint endeavor and build links with those already committed to 
working in this way.
    Finally, there is significant momentum worldwide to transform the 
international development, humanitarian and peacebuilding system's 
efforts to be locally led. From the 2016 Grand Bargain Agreement at the 
World Humanitarian Summit to the OECD-DAC commitments and the Donor 
Principles on Locally Led Development co-led by USAID and Norway, the 
United States has a unique opportunity to lead and shape the future of 
international development in ways that--for the first time--would 
answer the call of the world's poor that ``nothing about us, without 
us.''
                               next steps
    We must move from commitment to action. Together, we can champion 
and support the efforts USAID is making internally and globally to 
ensure the shift to locally led is one that is comprehensive.
    We must work together to address the challenges outlined here and 
by others to ensure that we meaningfully employ a locally led model to 
development, humanitarian, and peacebuilding efforts. This involves 
having the difficult conversations of dismantling systemic racism to 
address biases and unequal power dynamics. It involves being smarter 
and risk-tolerant. It involves investing and increasing the budget for 
USAID to ensure that USAID has the capacity it needs to meaningfully 
implement this model.
    I want to again take the time to thank Chairman Cardin, Ranking 
Member Hagerty and the other distinguished members of this subcommittee 
for organizing this vital hearing. I look forward to responding to any 
questions you may have. I am also open to working with you all in 
meaningful partnership to actualize and implement a locally led model.
                                appendix





    Senator Booker. Thank you for that excellent testimony.
    Mr. O'Keefe.

    STATEMENT OF BILL O'KEEFE, EXECUTIVE VICE PRESIDENT FOR 
 MISSION, MOBILIZATION AND ADVOCACY, CATHOLIC RELIEF SERVICES, 
                         BALTIMORE, MD

    Mr. O'Keefe. Thank you so much, Chairman Booker, and 
Senator Cardin in absentia and Ranking Member Hagerty, members 
of the subcommittee.
    On behalf of Catholic Relief Services, the international 
relief and development agency of the Catholic community in the 
United States, I want to thank you for calling this hearing and 
for your leadership in addressing global poverty and injustice.
    Humanitarian and development assistance are at a 
crossroads. In one direction, we can continue to do what we 
have done for decades, underestimating and under-investing in 
local organizations in favor of international organizations, 
INGOs, and contractors. In the other direction, we can seize 
momentum and advance more locally development and humanitarian 
response.
    Rooted in our values, Catholic Relief Services encourages 
the U.S. Government and other bilateral and multilateral donors 
to take the second path, which we believe will vastly improve 
aid efficiency and effectiveness, lead to more sustainable 
programs, provide a foundation for more resilient systems, and 
weave a stronger web of civil society organizations providing 
services alongside governments, holding those same governments 
accountable and building stronger democracies.
    USAID has led efforts to promote localization, but has yet 
to make enough progress. Reports to Congress show that roughly 
1 percent of USAID's humanitarian assistance and 7 percent of 
all its assistance were obligated directly to local entities in 
fiscal year 2021.
    Shifting resources and power to local leaders requires 
political, economic, social, and cultural changes across the 
USAID system. We believe conditions are ripe for real change 
now, though.
    One, local actors are ready. Some argue that local 
organizations lack capacity. We firmly reject this assertion. 
While every country is different, every situation is different, 
responsible capable local organizations are ready to take on 
more leadership roles in many instances.
    INGOs are ready. Faith-based groups like CRS, secular NGOs, 
and coalitions like the Modernizing Foreign Assistance Network, 
of which we are a part, are ready to support a vision of a more 
locally-led future.
    Donors are ready. Over the last several administrations, 
and we have heard examples of this already on this panel, USAID 
has committed that working more equitably with and through 
local entities is the path forward to sustainable impact.
    Congressional support, though, is required to seize these 
opportunities and build momentum. We urge this subcommittee, 
working with appropriators, to take several actions.
    One, follow the money. When local actors access direct 
funding, they can invest in their own capacity, expand their 
programming, and enhance their influence with governments and 
donors.
    He who has the gold, rules. Congress should require the 
Administration to report on funding to local entities through 
the annual appropriations process as in the last 2 years.
    In addition, so local institutions can lead in new ways, 
Congress should ensure USAID invests in holistic capacity 
strengthening.
    Second, measure what matters. Creating a uniform and honest 
definition of local entity coupled with annual tracking of 
progress over time is critical.
    The aid transparency group Publish What You Fund recently 
released a report entitled ``Metrics Matter,'' showing that 
different definitions of local produce dramatically different 
calculations.
    What we measure and how we measure it will be critical in 
determining whether progress is real. Catholic Relief Services 
agrees with the definition that Ms. Aquino gave a few minutes 
ago and has worked with Peace Direct and other groups in 
similar efforts to clarify what we consider to be local.
    Congress must provide oversight and should also evaluate 
State Department funding of truly local entities as well.
    Breaking down silos--local partners often implement both 
humanitarian and development responses, but efforts to advance 
their leadership are siloed.
    Congress should encourage USAID to harmonize localization 
strategies within USAID and then with State and other donors 
and across contexts and types of assistance. Operational 
policies and practices must facilitate local participation.
    Finally, digging into the details. USAID has developed 
strong policies to advance locally-led development. Additional 
time, money, and human capital will be necessary to properly 
implement these policies and accurately report progress.
    Partner with USAID in a bipartisan way to remove barriers 
to entry for local groups such as unreasonable award sizes, 
unwieldy and inflexible procurement mechanisms, and excessive 
compliance requirements that large INGOs like CRS have spent 
decades building capacity to manage. Do not let this moment 
pass.
    I want to close with a quick story. In Nigeria, CRS led a 
USAID-funded $40 million project to improve services for 
orphans and vulnerable children. The project strengthened the 
capacity of 49 local partners from state government, local 
civil society organizations, and community-based groups 
improving their technical, administrative, and financial 
management skills.
    By projects end, 10 of those partners transitioned to prime 
recipient status for direct donor funding. This effort allowed 
hundreds of thousands of children in their communities to 
receive quality services provided effectively and sustainably 
via local institutions and local government. This is the second 
path.
    Thank you again for your time and I look forward to your 
questions.
    [The prepared statement of Mr. O'Keefe follows:]

                 Prepared Statement of Mr. Bill O'Keefe

    Chairman Cardin, Ranking Member Hagerty: On behalf of Catholic 
Relief Services (CRS), the international relief and development agency 
of the Catholic community in the United States, I want to thank you for 
calling this hearing to discuss locally led development and 
humanitarian response. The future of international assistance must 
include a shift to more direct funding of local entities and more 
genuine empowerment of local organizations to make decisions as they 
implement, evaluate, and own their development.
    Strong local organizations in the lead are key for the advancement 
of Integral Human Development--the idea, rooted in Catholic Social 
Teaching, that individuals and communities thrive best within healthy 
social, economic, political and environmental ecosystems. Local 
institutions and local leaders are critical for building, supporting, 
and sustaining such ecosystems. Local organizations that can provide 
critical social services to people outside of and in addition to those 
provided by the government services, and through collective 
representation, can help hold the public sector accountable to its 
citizens. A robust, resourced, and representative civil society also 
helps create more resilient systems and societies that can better 
withstand shocks. Finally, supporting local organizations can help 
advance the relations between the U.S. and other countries by expanding 
the ``whole of society'' web of relationships between countries.
    Over multiple Administrations, the U.S. Agency for International 
Development (USAID) has made efforts to varying degrees of success to 
strengthen local organization capacity and increase resource allocation 
to local entities. These efforts have gained momentum in recent years 
as the global humanitarian community signed on to the Grand Bargain, 
former USAID Administrator Mark Green launched the Journey to Self-
Reliance, former Global AIDS Coordinator Deborah Birx advanced 
localization within PEPFAR, and USAID Administrator Samantha Power 
announced goals to direct 25 percent of all funds to local entities 
within 5 years and to have local entities in the lead of 50 percent of 
all programming by the end of the decade. These objectives are 
significant and to reach them will require great change within USAID 
and the entire ecosystem delivering humanitarian and development 
assistance.
    CRS wholeheartedly supports the objectives of locally led 
development and humanitarian response. Locally led development and 
humanitarian response are central to our values, an essential element 
of our agency's vision, and will be critical to how we think about 
changing our own systems and structures in the coming years. CRS will 
seek to share capacity with local partners to receive and manage funds 
directly from donors, support local organizations to achieve their 
leadership ambitions and sustainability, and align our own operations 
with our local leadership commitments.
             principles to guide a more locally led system
    For 80 years, CRS has partnered with the U.S. Government and local 
entities around the world to assist populations in need. Grounded in 
Catholic Social Teaching, we are guided by the principles of 
solidarity, the idea of walking with and accompanying our neighbor, and 
subsidiarity, the belief that those who are closest to a problem are 
the best positioned to determine the right solution. Solidarity and 
subsidiarity are at the core of our support for locally led development 
and humanitarian response and help determine the following principles 
that guide our approach to advancing localization:
    Locally led development and humanitarian response requires local 
actors as implementers and leaders. Efforts to support local leadership 
must go beyond local program implementation to include ownership of all 
development processes. A focus on local leadership means ``shifting the 
power'' from the international to the local level in responding to 
development and humanitarian challenges. For transformation of the aid 
process, local organizations should also help lead the design of aid 
programming, as well as shape development strategies of governments and 
donors. Local actors should be part of donor processes like USAID's 
Country Development Strategy Process, and humanitarian mechanisms like 
Coordination Clusters.
    Effective partnerships underpin effective transition to local 
leadership. CRS' decades-long global experience has shown that 
meaningful partnership that is rooted in trust, respect, and mutuality 
provides the foundation for successful transition to locally led 
development and humanitarian response. Ensuring strong relationships 
with clear and negotiated roles and responsibilities, as well as clear 
means of accountability between international actors, governments, 
donors, and local institutions can help ensure sustainable locally 
owned initiatives and maximal impact. Partnership requires 
intentionality and sustained collaborative work to achieve successful 
transition to locally led and owned humanitarian and development 
efforts.
    Holistic, not transactional, capacity strengthening is critical for 
sustainable change. Too often donors, policy makers, and peer 
organizations define locally led development as merely the ability of 
local organizations to comply with donor regulations. However, 
meaningful, and sustainable local leadership goes beyond compliance 
capacity, and should instead include the resources, systems and 
structures, staff and leadership needed for effective, appropriate, and 
sustainable programming. Holistic capacity strengthening should respond 
to goals developed by local institutions in collaboration with their 
partners. Programs may address organizational weakness in finance, 
programming, or compliance, but may also help local institutions 
improve staff skills, organizational systems, structures, and 
governance to lead more effectively and sustainably. Efforts can also 
assist local institutions develop organizational resource mobilization 
capacity, resulting in greater growth and sustainability. Capacity 
strengthening should go beyond simply training to include investments 
in organizational systems and structures, continuous technical 
assistance, and constant coaching and accompaniment to ensure these 
efforts take hold.
    Funding mechanisms and conditions help determine localization 
success. There are many advantages to a humanitarian aid and 
development assistance system implemented primarily by local actors. 
However, as USAID's Bureau for Humanitarian Assistance (BHA) recognizes 
in its own Localization Strategy, structural and/or operational changes 
will be required for success. Important factors for successful local 
actor bidding and program design, implementation, and evaluation 
include appropriate award size, operation timelines, and procurement 
mechanisms, as well as adequate coverage of direct and indirect costs 
for project implementation and risk management considerations. Less 
directed, more flexible, and multi-year humanitarian funding; 
harmonized funding and reporting requirements; improved transparency 
and cost efficiency; and innovative tools and mechanisms such as pooled 
funds and fixed amount awards all encourage and support local 
institutions in taking more lead roles. All humanitarian and 
development stakeholders should develop joint strategies to manage and 
overcome compliance, due diligence obstacles, and move towards 
effective risk-management and sharing. This must include ensuring 
donors commit to covering local institutions' indirect costs.
    A broad and inclusive civil society, including faith-based 
organizations (FBOs), is important. Local leadership goes beyond 
institutions that are immediately capable of being donor compliant or 
``prime ready.'' There are many local actors that have important roles 
to play in meeting development goals but may not be ready or interested 
in serving as prime USG program implementers. In many places, non-prime 
ready, or not-yet-prime ready actors are also reaching the most 
vulnerable. These are important local leaders and institutions for 
reaching program targets, and they need capacity support. Faith-based 
organizations of this type can play a powerful role in reaching 
communities and effecting meaningful change. Moreover, strong 
associations of local organizations that influence and support a full 
range of local organizations of various sizes and capacities are also 
essential. A broad and inclusive civil society ensures that social 
services and advocacy needs are addressed across a wide range of 
sectors, geographic regions, and areas of economic and social needs. 
Local leadership thrives in a political environment that allows civil 
society engagement and that promotes effective civil society/local 
government collaboration. Too often, closing civic space threatens 
authentic and inclusive local leadership.
    Government matters. Aid to civil society should not replace an 
effective public social service sector. Strong partnerships with shared 
responsibilities between the government, local civil society, private 
sector, and others such as international non-governmental organizations 
(INGOs) can result in transformative change at scale. CRS works with 
local and national governments to strengthen their technical and 
organizational capacity to deliver services, as well as with civil 
society to help them fill gaps and ensure government is accountable to 
its citizens.
                 opportunities to advance locally led 
                 development and humanitarian response
    While locally led development and humanitarian response work has 
been ongoing for years, USAID and stakeholders have yet to fully 
realize their collective goals. Shifting resources and power to local 
leaders and their institutions requires political, economic, social, 
and cultural change at every level of the system. Nevertheless, change 
is possible if we can capitalize on momentum and seize the following 
opportunities:
    Local actors are ready. Opponents often argue that local 
organizations lack the capacity to lead or are too risky to engage. We 
disagree. Responsible, capable local organizations are ready to take on 
more leadership roles. The world has changed and developed 
significantly since the beginning of the modern aid system, and that 
system must now realize that in many countries and communities, there 
are local institutions led by capable, professional leaders--
experienced in their fields and endowed with their own expertise--ready 
to take on new and expanded development and humanitarian assistance 
roles. Many of these local organizations have not yet had the 
opportunity to lead or implement programming at scale but can with 
resources to strengthen their institutional systems and structures.
    INGOs are ready to help. More than any time in recent memory, INGOs 
like CRS and coalitions like the Modernizing Foreign Assistance Network 
are ready to advance a vision of a more locally led future. We are 
using our own private resources through projects like EMPOWER--
Empowering Partner Organizations Working on Emergency Responses--to 
show proof of concept. We are managing transition awards and continuing 
to accompany partners to ensure sustainability and demonstrate 
solidarity. We advocate in Washington, DC for a definition of `local 
entity' that truly reflects local organizations. We are pushing USAID 
and international donors to report publicly how they are progressing 
toward agreed goals.
    Donors are on board. Increasingly, donors understand that working 
more justly and equitably with and through local entities is the path 
forward to maximize funding and impact. Since Administrator Power's 
speech in late 2021, USAID has made significant efforts to reflect the 
importance of localization in its development and humanitarian agenda, 
including through the appointment of special advisors on localization, 
and the release of a range of documents and policies to articulate 
goals and paths forward. Whether through USAID's donor statement on 
locally led development, its Local Capacity Strengthening Policy, or 
more operational pieces like the Locally-led Development checklist and 
Centroamerica Local, locally led development is clearly of keen 
interest. With the Grand Bargain's renewal last year, government, NGO, 
and multilateral signatories agreed that more action is needed to 
actualize its vision of shifting the power towards greater local 
leadership, and more effective, accessible, quality funding for local 
actors. USAID's BHA reflects this prioritization in its own draft 
Localization of Humanitarian Assistance Policy.
    Evidence shows localization works. Donors have supported research 
into the effectiveness of local leadership. Resources like USAID's 
Journey to Self-Reliance Learning Agenda (https://2017-2020.usaid.gov/
selfreliance/self-reliance-learning-agenda), USAID's Stopping as 
Success (https://www.stoppingassuccess.org/resources/) platform and 
resource library, and their newly released Evidence Summary for Local 
Capacity Strengthening all demonstrate the effectiveness of 
localization efforts. In addition, PEPFAR has begun sharing data 
results from its recent shift to utilizing locally led primes that 
shows the effectiveness of this work. Academics and research 
institutions have also begun to contribute to this evidence base (e.g. 
recent journal articles like the International Journal of Disaster Risk 
Reduction's International humanitarian organizations' perspectives on 
localization efforts (https://reader.elsevier.com/reader/sd/pii/
S221242092200629X?token=146EF
98D858D90B2E55BFA262E3E8E047C856D8C84194A17824ED1049
99350DE8BE33618866873F64F49F1157DABB940&originRegion=us-east-
1&originCreation=20230120191042) or the Brookings Institution's recent 
Obstacles and recommendations for moving U.S. development policies onto 
a locally led path (https://www.brookings.edu/blog/future-development/
2022/05/09/obstacles-and-recommendations-for-moving-us-development-
policies-onto-a-locally-led-path/) ). More INGOs are active research 
partners, and are producing a wide range of gray literature, including 
extensive case studies, lessons learned, and briefs. There is also 
growing research on the efficiency of locally led approaches, e.g., 
Passing The Buck: The Economics Of Localizing International Assistance 
(https://thesharetrust.org/resources/2022/11/14/passing-the-buck-the-
economics-of-localizing-international-assistance), a recent study 
estimating that local intermediaries could deliver programming that is 
32 percent more cost efficient than international intermediaries.
            experience demonstrates that localization works
    CRS has learned that prioritizing investment in and advancement of 
locally led development and humanitarian programming is the best way to 
ensure our development and humanitarian interventions are effective, 
efficient, and most importantly, sustainable. CRS has extensive 
experience in supporting local actors, strengthening their capacity and 
increasing their leadership of development initiatives. For example, 
the CRS High-Performing Implementers (HPI) Initiative offers partner-
led, CRS-facilitated capacity building, focusing on leadership, 
procurement and supply chain management, financial management, and 
overall program quality to help place local public and non-profit 
institutions in the driver's seat of their own growth as sustainable 
principal recipients of donor funding. Supporting local actors in this 
way can advance the transition to a locally led future.
    CRS led the USAID-funded Sustainable Outcomes for Children and 
Youth (SOCY, 2015-2021) project in Uganda. This project was designed to 
improve the health, economic, educational, and psychosocial wellbeing 
of orphans and vulnerable children and their households, as well as 
reduce abuse, exploitation, and neglect among this population. Through 
a network of civil society organizations, social workers, and frontline 
para-social workers, SOCY provided services that reduced the risk of 
HIV and violence and linked individuals to much needed services. The 
$45.5 million budget investment funded local civil society capacity 
strengthening to meet the needs of children and families, and 13 local 
partner institutions. All partners demonstrated increased 
organizational performance, and one, the Transcultural Psychosocial 
Organization (TPO), has now transitioned to become a major prime 
recipient of U.S. Government funding. With TPO, CRS used additional 
funding and time to provide on-going technical assistance--beyond the 
life of the project--to help TPO successfully move into a program 
leadership role. This experience highlights the importance of strong, 
trust-based partnerships, as well as appropriate timelines and adequate 
investment in on-going capacity strengthening for effective local 
leadership.
    In The Gambia, CRS implemented an $11 million Global Fund malaria 
program as co-Principal Recipient with the Ministry of Health from 
2010-2018. CRS' strong partnership with national and local 
organizations eventually led to full transition of the Principal 
Recipient role to the National Malaria Program. During this period, 
malaria parasitic prevalence decreased from 4 percent in 2010 to 0.1 
percent in 2017 while malaria infections decreased by 50 percent across 
all regions of the country between 2011-2017. The project's 
interventions contributed to improved outcomes, including uptake of 
Intermittent preventive treatment by 82 percent of pregnant women 
(target was 85 percent), and reported bed net use by 94 percent of 
pregnant women, 95 percent of children under 5 (target was 85 percent), 
and 83 percent of other household residents (target was 60 percent). 
CRS continues to support The Gambia through accompaniment to improve 
monitoring and evaluation systems and modify approaches to move closer 
to disease elimination. The National Malaria Control Program and other 
government agencies are replicating CRS' approach to behavior change in 
other sectors, and many government and local NGOs have 
institutionalized the use of digital systems for data management and 
reporting as part of project implementation. Now in our Sub-Recipient 
role, CRS provides technical support on SMC data management and 
initiated a cross-border pilot project between Senegal and The Gambia.
    CRS has also seen it is possible to support local organizations to 
lead humanitarian action. In 2018, CRS launched the EMPOWER project to 
strengthen the humanitarian response capacity of local partners by 
providing accompaniment and support in diverse areas, including 
business development; program management; monitoring, evaluation, 
accountability, and learning; finance; supply chain management; and 
protection and safeguarding. CRS implements EMPOWER in Latin America 
and the Caribbean, Asia, and West and Central Africa with 79 local and 
national partners in 58 countries. Through the EMPOWER project, local 
organizations in Brazil, Colombia, and Peru have received direct 
funding from USAID's BHA and the Department of States' Bureau for 
Population, Refugees, and Migration to respond to humanitarian needs 
across the region. Due to the successful model in South America, CRS 
has partnered with BHA to support similar efforts in Central America 
and now also West Africa.
    These examples demonstrate the effectiveness of locally led 
development and humanitarian response. The core development and 
humanitarian goals remain the same--to save lives, reduce poverty, 
uphold dignity, and promote peace, but the roles in which we accomplish 
these goals are shifting. Locally led development and humanitarian 
response is not one size fits all. Context matters. Supporting a local 
entity to respond to the needs of orphans and vulnerable children in 
Uganda is quite different from accompanying a local entity in Brazil 
respond to a migration crisis. How we approach localization is 
dependent on many factors, but when solidarity and subsidiarity drive 
the vision, it is possible to advance our goals.
challenges to advance locally led development and humanitarian response
    To capitalize on the momentum and take advantage of the 
opportunities in front of us, we must not fall victim to the obstacles 
that have impeded progress in the past. This change will not be easy, 
as it requires expending political capital and the will to drive change 
in policy, processes, procedures, and practices. In our favor now, 
unlike in previous iterations, Congress, the Executive branch, 
implementors, and local groups are largely aligned in our collective 
goal. However, we also know that in previous efforts, when the enormity 
of the task became clear, staff and resources were not brought to bear 
to make the changes needed and inertia set in. This will take sustained 
energy and investment. In particular, we must address the following 
challenges:
    Tracking progress. Based on Administration reports to Congress we 
know that only .82 percent of humanitarian funds from the International 
Disaster Assistance account and 7.2 percent of all USAID funds were 
obligated directly to local entities in FY21. With these two figures as 
baselines, we have a long way to go to meet our goals. And while money 
isn't the only indicator of success, it is an important metric. 
Unfortunately, one singular definition of ``local entity'' does not 
exist across the U.S. Government or international organizations to 
measure progress toward results. USAID uses the definition of ``local 
entity'' found in ADS 303, which can include non-local entities. USAID 
will not track progress toward the 25 percent metric using the ADS 303 
definition, but instead on three indicators found in existing 
government tracking: project place of performance, organization 
headquarters, and organization registration. Without a unified 
definition and methodology to calculate target results, it will be more 
difficult to assess progress and understand the overall picture of 
funding realities on the ground. In a research paper released recently 
by Publish What You Fund (PWYF) titled `Metrics Matter (https://
www.publishwhatyoufund.org/projects/localization/),' PWYF demonstrated 
that different measurement approaches result in dramatically different 
numbers, impacting how we perceive progress.
    Taking good policies and putting them into action. As noted above, 
recent years have seen tremendous progress at the policy level in 
support of locally led development. From the Grand Bargain to the Local 
Capacity Strengthening Policy, to regional pilot initiatives, and the 
emerging BHA localization policy, we see the affirmation across USG 
that locally led development is important. Now is the time to move from 
policy to practice and from concept to reality. Donors, including 
USAID, must take on the hard work of change at the financial, 
operational, and cultural levels. They must break down the enduring 
silos between development and humanitarian assistance; examine and 
address the pain points and barriers embedded in the procurement 
process that hinder localization progress; and make real and tangible 
investments in the implementation of localization policies.
    To advance progress on localization, local capacity and procurement 
practices must be considered and addressed together. For many local 
institutions, the sole roles accessible to them have been as project 
sub-recipients, or task-specific sub-contractors. If they have primed 
awards, they have often been smaller and/or limited awards. As more 
donors look to increase funding to local institutions, the size of 
awards, the choice of instrument, and the timeline of the funding 
significantly affect their success. For example, in a given country a 
range of institutions may be able to take on a $1m multi-year 
assistance award. However, leading a $20m contract may be overwhelming. 
This difference is not a reflection of their inherent capacity, but 
rather the robustness of their current organizational systems that were 
developed to match currently available funding.
    Constraints in the larger aid ecosystem. While USAID is the leading 
humanitarian and development donor in the world and has led the 
conversation in the U.S. around locally led development and 
humanitarian assistance, broadening these efforts within the 
interagency and among multilateral donors will be a challenge. Changes 
will need to occur within other U.S. donor agencies such as the 
Department of State and multilateral actors that receive U.S. 
Government money such as the United Nations.
    Simultaneously, while USAID and others are advancing localization, 
civic space is under threat. We know from experience and from 
documentation such as Civicus' Annual Report on the State of Civil 
Society (https://www.civicus.org/index.php/media-center/reports-
publications/socs-reports) that in many places around the world, civic 
space is deteriorating. For local organizations to thrive, they need 
the space to do their work and engage with communities and government 
free of constraints. Ensuring that third sector institutions can 
operate safely and thrive is critical to the localization agenda.
                 recommendations to the u.s. government
    Grounded in our principles and based on our experience, CRS makes 
the following recommendations to the U.S. Government to help advance 
locally led development and humanitarian response:
    Money matters: keep momentum and ensure increased funding and 
increased opportunity for local leadership. The Administrator laid out 
an ambitious goal to increase direct USAID funding to local entities to 
25 percent by 2025. Though challenging, ensuring local actors have 
access to the resources necessary to lead and carry out their mission 
is critical. Donors, policymakers, and practitioners must double 
efforts to increase funding to local actors, while also supporting 
local institutional participation in all development and humanitarian 
decision-making processes, including the development of Country 
Development Strategies and humanitarian coordinating Clusters.
    Oversee progress toward results: ensure accurate data collection 
and transparency. Thanks to reports submitted to Congress required in 
Fiscal Year 2022 State, Foreign Operations, and Related Programs 
appropriations, we know very little funding is currently reaching local 
actors. Similar report language was included in the Fiscal Year 2023 
SFOPS appropriations report. We urge Congress and the Senate Foreign 
Relations Committee to continue to support the inclusion of 
appropriations language to require a report from USAID that assesses 
progress toward results and provides data on funding to local entities, 
disaggregated by country. As USAID grapples with burden busting and 
reporting accurate information, we urge Congress to work with the 
Administration to ensure in the future this data can be readily 
available on ForeignAssistance.gov to interested stakeholders.
    Ensure adequate investment in holistic, not transactional capacity 
strengthening. Good partnership and effective capacity strengthening is 
critical for any effort to support local leadership. Based on decades 
of experience, and in accord with USAID's 2022 Local Capacity 
Strengthening Policy, we insist that donor agencies fully fund 
comprehensive, holistic and participatory capacity strengthening 
approaches that ensure participatory, locally led capacity goal 
setting, and go well beyond simple transitional one-off activities. It 
is also important for USAID and other donors to plan, fund and give 
time in partnership activities, while also exploring new funding 
mechanisms to incentivize and support INGOs to play different roles in 
humanitarian response and development assistance programming.
    Focus on the details: improve acquisition and assistance mechanisms 
to open the door to local partners. Strengthening local capacity is 
important. However, equally important are the mechanisms that help or 
hinder access to critical development resources. To truly `shift the 
power' and increase opportunities for local leaders and their 
institutions, Congress must work to: ensure size of awards are 
reasonable for local actors to design, bid for, implement and evaluate; 
set timelines for design and implementation that reflect local 
capacity; align the choice of funding instrument with local actors' 
capacity to respond and comply, including using mechanisms that do not 
require significant upfront resources from bidding organizations; and 
embrace flexibility in funding and adaptive management approaches. 
Efforts must also be made to develop and fund strategies to manage risk 
and help local organizations manage the extensive security, fiduciary, 
legal and other risk and compliance measures, and to strive to 
harmonize minimum criteria among donors, share information on the 
criteria, and expand pooled fund coverage.
    Beyond USAID: urge other actors to advance localization. The United 
States has emerged as a clear leader in the movement for a more 
localized aid system, and recent efforts (such as the joint Donor 
Statement on Locally led Development (https://www.usaid.gov/
localization/donor-statement-on-supporting-locally-led-
development#::text=We%20will%20work%20to%20prioritize,and%20sustainable
%20approach%20to%20development) ) demonstrate U.S. influence on the 
wider circle of donors. Nevertheless, broad agreement across the U.S. 
interagency or within the United Nations will not foster lasting 
change. Congress must work with USAID to ensure their efforts are not 
in vain and apply pressure to multilateral donors such as the United 
Nations as well as other donors within the U.S. Government to ensure 
that all development and humanitarian assistance advances localization.
    Thank you, Chairman Cardin, Ranking Member Hagerty and the 
subcommittee for your leadership and dedication to supporting poor and 
vulnerable communities around the world. We look forward to working 
with you in the coming months and years to advance locally led 
development and humanitarian response.

    Senator Booker. Truly phenomenal testimony.
    In deference and respect to my friend and colleague, I want 
to offer you the opportunity to ask questions first, sir.
    Senator Hagerty. Thank you, Chair Booker. Appreciate that.
    I would like to start with you, Dr. Steiger, and given your 
time in government as chief of staff at USAID with the 
outstanding Administrator Mark Green, I would like to just get 
some foundational questions answered with you about development 
in localization, and I touched on this in my previous set of 
questions.
    From your perspective, how did the agency view its 
localization efforts under the Journey to Self-Reliance 
Initiative that I touched on before and how did you view those 
localization efforts fitting into the Administration's National 
Security Strategy?
    In particular, did you see development in localization as 
supporting our U.S. and allied strategic competition with 
Communist China? I would like to know what the lessons learned 
might be.
    Dr. Steiger. Absolutely. Thank you, Senator, for the 
question.
    The answer to your question is yes, simply. Localization 
was a key part of the Journey to Self-Reliance because it was 
obvious to us that building long-term sustainability, long-term 
self-reliance on the ground, means working with local 
organizations first and over the long term.
    It is hard to do that with intermediaries. There is a role 
to play for U.S.-based organizations to be umbrellas, to be 
mentors, to facilitate the kind of relationships that Bill 
talked about that CRS did in Nigeria.
    Over time and with specific metrics, those kinds of 
relationships have to move on to transition to full ownership 
and implementation by local organizations and one of the main 
reasons for that is visibility.
    As you know well, Communist China--the Chinese Communist 
Party and others of our adversaries are excellent at branding 
their assistance on the ground. Everyone knows what that flag 
means with the red stars on it.
    Even to take a more benign example, everyone knows what the 
rising sun of the Japanese flag means when they see it on a 
building, on a bridge, on a hospital.
    Our logos--even the great one that is ``From the American 
People''--are washed out in a sea of other logos and colors, 
mostly from our implementers. This is particularly true when we 
use United Nations organizations.
    It is hard for people to see and feel what we do when we 
use intermediaries. Local organizations are far more likely to 
give us credit, and they are far more likely to be involved in 
programs that show local people that what they are receiving is 
from the American people.
    We saw localization as an integral part of trying to 
counter our adversaries on the ground in this great power 
competition.
    Senator Hagerty. Can I stay on the lessons learned topic 
for a few more minutes with you? I am going to extract a quote 
from your testimony to put it into context.
    You stated that USAID already has the legal authorities and 
other tools necessary to pursue a comprehensive localization 
agenda and does not need congressional action with two possible 
exceptions including the authority to create a working capital 
fund for acquisition and assistance.
    The challenges the agency faces in localizing its portfolio 
of awards are self-imposed as USAID often chooses not to 
exercise the authorities it enjoys.
    If you could elaborate a bit on that. What authorities 
exist that are not being exercised and what can we learn from 
that?
    Dr. Steiger. Absolutely, and I will follow on many of the 
things that Michele Sumilas said.
    The agency, over time, has imposed upon itself a series of 
bureaucratic processes that make it very difficult for 
Contracting Officers, Agreement Officers, innovative staff in 
the field, to really use what is an extraordinary set of 
procurement authorities that USAID has as an agency.
    I would say that there is virtually no other entity in the 
Federal Government that does procurement at this scale that has 
the flexibility on paper that USAID does.
    One example is a marvelous, almost magical, authority 
called Other Transactional Authority, which is the ability for 
the agency to take almost any kind of money and create almost 
any kind of relationship it wants to within certain legal 
boundaries with, for example, private sector entities.
    USAID has a slew of innovative ways of doing awards with 
small and local organizations. Ms. Sumilas mentioned Fixed 
Amount Awards, but there are Fixed Price Contracts. There are 
other kinds of relationships with local entities that can be 
drawn up.
    For a variety of reasons, the agency's procurement 
infrastructure--the bureaucratic node of the Management 
Bureau's Office of Acquisition and Assistance--is extremely 
conservative in allowing people in the field to use those 
authorities to work directly with local organizations.
    Senator Hagerty. Are these limitations published 
guidelines? Are they rules that have been made or are these 
informal limitations?
    Dr. Steiger. This is part of the problem. We and this 
Administration have worked very hard to make the documents 
around these issues pretty clear, to the layperson anyway, that 
things are permissible.
    It is a cultural and, perhaps even philosophical problem 
that what holds people back in many cases is not the letter of 
the policy or the regulation, but someone's interpretation of 
that regulation, often shrouded in myth or in legend.
    You have people who will take the letter of a policy or the 
Federal Acquisition Regulation, go to Washington and say, ``We 
would like to do this,'' and they will be discouraged from 
doing so by people who are not really on board with the idea 
that the agency should be doing things in a new and innovative 
way.
    Senator Hagerty. Thank you for your testimony.
    Mr. Chairman, back to you.
    Senator Cardin [presiding]. Thank you.
    Let me first apologize. We have the safety issue in regards 
to the rail spill in the Environment and Public Works Committee 
today. Part of the watershed comes into Maryland, so it is an 
issue of public safety in our state. I apologize for leaving 
the committee and not hearing your testimony directly.
    Mr. O'Keefe, I am going to start with you because CRS is 
critically important to our development goals globally, but you 
are also important to my community. I thank you for what you 
do.
    I really want to understand from you. I look at CRS as 
having a similar mission that USAID has, that you are globally 
engaged for all the right reasons and your values are our 
values.
    As we move towards localization, which we all support, what 
are the risk factors that could affect your ability as an 
institution to provide the services that you are able to do 
today?
    Mr. O'Keefe. Thank you, Senator. That is a great question.
    I think we, in some ways, are blessed with having a network 
of partners and operate in a localized way in most countries 
already ourselves, and so as our partners have gotten stronger 
over the years, our role has constantly evolved and I think we 
are confident that as USAID has more direct relationships, as 
we help to strengthen capacity of more of our partners, we will 
be--play a critical role, but at a different level.
    For example, rather than focusing on particular health 
clinics, we will focus on improving the health system. In the 
Gambia, for example, we have a global fund project that for a 
number of years was working with the ministry of health--their 
office of malaria control--to build their capacity and under 
that project our--the malaria incidents dramatically dropped 
and, more importantly, in some ways, the ministry was able to 
take over running of that operation.
    Rather than us providing the direct malaria response, the 
government is now able to do so in a sustainable way and will 
be playing a role at that kind of higher level.
    We are not afraid of a new world where we have to adapt and 
compete at a higher level and I look forward to doing that and 
as part of the community in Maryland as well.
    Senator Cardin. That is helpful, and as--we really 
appreciate your input today, but we invite you for continuing 
input to our work as we try to get this right. We want to make 
sure that we do not compromise the current tools that we have, 
that we all are working on the same way.
    Ms. Aquino, I was interested in your testimony that you 
seem to be supporting the USAID administrator and that they 
need greater capacity in order to implement this. I was 
interested--the lack of capacity, but as they move forward, how 
does it affect your work?
    Ms. Aquino. Yes, thank you for that question, Senator. 
Thank you for that question, Mr. Chairman.
    The lack of capacity at USAID, I think, is pervasive in 
terms of being able to really implement this and what I would 
say--I am just back from Colombia where I had the privilege of 
meeting with our USAID staff there--and it is unclear--it seems 
to me that it is unclear for staff at the local level whether 
these directives should be implemented immediately, what is the 
timeline for implementing this, what are tools that they can 
have at the local level to understand deeper what is happening 
in communities.
    In general, I do not get a sense that there is a lack of 
willingness. I get a sense that there needs to be more training 
and more support.
    As Mr. Steiger mentioned, there are tools that are 
available, innovative tools that USAID does have. Do all our 
staff at--the USAID staff at the local level know of these 
tools and how to use them to support local communities?
    All of that working better would certainly help for this 
locally-led agenda to be delivered.
    Senator Cardin. Thank you.
    Mr. Steiger, you have seen this up close and personal. You 
have heard the testimony today. You hear the Administration 
wants to move to 25 percent localization. Tell us your greatest 
concerns and risks in the way these policies could be 
implemented.
    Dr. Steiger. Thank you, Senator.
    Mr. Chairman, the greatest risk is that the 25 percent 
target, which I support and I actually think should be higher, 
becomes an excuse for the agency and some of these larger 
partners to believe that business as usual can continue with 
the other 75 percent or the other 50 percent.
    These reforms, as Michele Sumilas alluded, have to cover 
the entire portfolio, whether awards with local partners or 
not. Otherwise, this initiative, as its predecessor in the 
Obama administration did, will end up getting pigeonholed and 
sidelined.
    Local Works did a lot of good things and USAID Forward did 
a lot of good things, but the agency was able to basically 
surround them. Its antibodies came out and surrounded these 
good initiatives and kept them as very small niche enterprises, 
at the end of the day. This Administration's push for 
localization cannot afford to fall into that trap.
    I think the more that the agency, from the top down, moving 
to the local level, can extend these reforms to the entire 
portfolio, including humanitarian assistance, by the way, not 
just development assistance, then they have a greater chance of 
surviving.
    Senator Cardin. I think that is a key point. We are talking 
about changing a delivery system and if it just is used as an 
addition and we do not really integrate it, it loses the reason 
why we are doing this.
    It becomes then a set aside or a dollar number rather than 
it becomes part of the ingrained way in which we are meeting 
our development goals. I think that is an extremely important 
point. Thank you.
    Senator Hagerty.
    Senator Hagerty. Thank you for holding the hearing today, 
Mr. Chairman. I have had the opportunity to question this group 
of witnesses.
    I would just say this. We obviously have a lot of work 
ahead of us in terms of helping modernize USAID's approach, 
too. I appreciate the approach that Ambassador Power is taking.
    The localization direction from a private sector 
perspective makes so much sense to me, and to the extent that 
we can learn lessons from the past and help the organization 
accept a new vision, I think we can achieve something great 
here.
    I look forward to working with you on this more.
    Senator Cardin. Thank you.
    I thought you started the hearing with mentioning PEPFAR 
and I know there are differences and you cannot use one 
example, and we made a huge additional investment when we did 
PEPFAR.
    The results speak for itself. The local capacity is there 
and it is making a huge difference. I think the last comment 
that was made about whether we can engrain that type of local 
responsibility and capacity into our foreign assistance--
development assistance programs--really is what localization is 
about. I think we all support it.
    It will be interesting to see whether they have the 
capacity and the--I guess, the sustainability to make this work 
throughout our development assistance goals and, as pointed 
out, in some areas it is just not possible. We recognize that. 
We have to be sensitive to the local communities.
    Senator Hagerty. As you very ably pointed out, building 
that capacity creates or yields dividends well beyond the 
initial purpose and I think we have seen that take place and 
very much appreciate that observation.
    I hope we have metrics that can capture that broader 
benefit as we think about the investments that we make here.
    Mr. Chairman, could I also just make a request to enter 
into the record two written statements that were voluntarily 
submitted by two individuals--David Berteau, president and CEO 
of Professional Services Council, and Allassane Drabo, West 
Africa regional director at Search for Common Ground? If I 
might enter these.
    Senator Cardin. Without objection, those two statements 
will be made a part of our record.

[Editor's note.--The information referred to above can be found 
in the ``Additional Material Submitted for the Record'' section 
at the end of this hearing.]

    Senator Hagerty. Thank you.
    Senator Cardin. The record will remain open for questions 
for the record until close of business tomorrow, Friday. I 
would ask our witnesses to please respond promptly to those 
questions that are submitted for the record.
    With that, I want to thank our three witnesses not just for 
your participation here, but for your commitment to global 
issues that are so important to our national interests.
    Thank you all. With that, the subcommittee hearing will 
stand adjourned.
    [Whereupon, at 12:00 p.m., the hearing was adjourned.]
                              ----------                              


              Additional Material Submitted for the Record


             Responses of Ms. Michele Sumilas to Questions 
                Submitted by Senator Benjamin L. Cardin

    Question. How have local partners been involved in co-development 
processes to ensure local context allows for and supports the aims of a 
program?

    Answer. USAID uses many forms of collaborative action in our 
missions to encourage and ensure local input and ownership of our 
programs. We use co-creation, co-design, and co-development at 
different periods of time and for different purposes.
    Co-creation is a design approach that brings people together to 
collectively produce a mutually valued outcome. It employs a 
participatory process that assumes shared power and decision making. In 
a co-creation, USAID convenes a group that may include Mission staff, 
partners, potential local implementers, local communities, and other 
stakeholders to address a specific problem. The participants agree upon 
shared goals and objectives, identify existing and new solutions 
aligned with local realities, build consensus around action, and refine 
plans to move forward with programs and projects. While USAID is the 
sponsor of this creative effort, it does not have to be directly 
involved. Indeed, the power of co-creation is its emphasis on those 
closest to the problem, the ability to enable local actors to bring 
their perspectives, experiences, capabilities, and ideas to the fore. 
In this way, an effective co-creation fosters local ownership and 
accountability and can generate results that are both effective and 
sustainable.
    Co-creation is not required and can occur during the award process 
(pre-award and post-award) or independent of an award. Often, co-
creation is a valuable implementation tool. It is important this 
approach is used with purpose and intent as appropriate.
    Co-design is a growing feature of USAID-implementing partner 
collaboration. Usually, it involves USAID and an apparently successful 
applicant or offeror working together to shape and finalize a program 
description or statement of work. Through collaborative brainstorming 
and problem solving, this process serves to produce fit-for-purpose 
solutions. Though the partner may not be finally selected, ownership 
over the planned work is heavily shared. Co-design processes may also 
occur in non-competitive settings to discuss the feasibility of 
specific ideas for future programming or as part of an existing funding 
mechanism.
    Co-development is a different, broader effort by USAID in a similar 
vein. It focuses on the ``how to'' of the work in progress and involves 
significant input from USAID. Co-development emphasizes the shared 
conversation of what to do next. Co-development can occur throughout 
implementation and at several levels, from the entirety of a program, 
to a workplan or specific interventions, or a discussion of the 
viability of new ideas. As such, co-development is usually an on-going 
approach unlike co-creation, which is usually time-limited; co-
development also always involves USAID staff.
    These collaborative approaches are among the core Agency practices 
promoted to ensure that local leadership is reflected in USAID 
programming. USAID can co-create strategic priorities, program designs, 
work planning, implementation, monitoring, evaluation, learning and 
closeout, using a variety of approaches and mechanisms.
    During strategy development, Missions may consult with local actors 
to identify challenges and opportunities through consultative 
workshops, advisory boards, and working sessions with government 
counterparts. Co-creative approaches are particularly valuable in 
complex settings where various stakeholders need to work together to 
identify solutions. For example, USAID/Myanmar used a non-competitive 
co-creation event to identify local solutions to the heroin epidemic in 
Kachin State. A local advisory committee convened more than 100 local 
stakeholders to participate in a ``Whole System in the Room'' workshop, 
where participants identified common priorities to address the epidemic 
and began forming a local network to implement solutions. The outcome 
of this co-creation then informed USAID/Myanmar's direct awards to 
local actors in Kachin to improve access to health and support 
services, and vocational training, and to promote healthy behaviors and 
raise awareness among non-drug users.
    There are numerous creative ways that USAID co-creates during the 
award process, including with a funding notice like an Annual Program 
Statement (APS), Global Development Alliance, or a Broad Agency 
Announcement (BAA), which puts forth a problem statement and challenge 
in search of a solution. These invite local actors to bring innovative, 
local ideas to inform the direction of existing or new programs.
    The Agency may use multi-step or phased requests for concepts 
followed by proposals or applications to iteratively co-create ideas 
and approaches. USAID/Malawi engaged in a local-only BAA and co-
creation process that brought together local actors ranging from 
private entities to academia, most of whom were new to working with 
USAID. This enhanced collaboration promoted the spirit of problem 
solving, and ultimately seven awards were made to new local partners.
    Missions are also using notices of funding opportunities that 
restrict eligibility to local applicants to co-design assistance awards 
to local and non-traditional partners for innovative, adaptive, and 
locally led development approaches. For example, through an addendum to 
the Agency's Local, Faith and Transformative Partnerships ``Locally Led 
Development APS,'' USAID/West Africa held a 3-day co-creation workshop 
with local private sector associations and support organizations. This 
entirely virtual workshop brought together participants from across the 
West Africa region, creating opportunities for collaboration and 
continued co-creation, co-development, and co-financing. Ultimately, 
this effort produced three awards to new and local partners across the 
region.
    Other ways USAID is being less prescriptive and opening the door to 
local actors to bring new ideas, resources, approaches, and 
partnerships to the Agency through co-creation include local advisory 
boards, such as the youth advisory boards established in Zimbabwe and 
Guinea, which were convened by the USAID Missions to advise on new 
Mission programming to support youth entrepreneurship.
    USAID also employs co-creation during implementation, monitoring, 
learning, and adaptation. For example, the USAID Cooperative 
Development program conducted a collaborative redesign process with 
implementing partners to pause and reflect, revisit assumptions, and 
incorporate early learning into the program plan around 12-18 months 
into activity implementation. This process was an ideal time to ensure 
program timelines and targets aligned with local realities and 
priorities and created an opportunity for USAID and international and 
local partners to work together to update their plans, indicators of 
success, and target goals to align with emergent priorities and 
learning from their first year of implementation.
    Overall, between FY 2018 and FY 2022, USAID increased our use of 
co-creation in the award process from 18 percent of new awards to 35 
percent of new awards (inclusive of all awards, not just those with 
local partners). And while co-creation is not required, nor relevant 
for all awards and agreements, we do recognize the importance of 
gathering input from those--usually local actors, organizations, or 
institutions--closest to the problem. To help encourage USAID staff to 
consider co-design and co-creation as part of the award and agreement 
development and implementation processes, we will begin to track these 
two practices as part of our new indicator to measure USAID's 
performance toward its target that, by 2030, half of our programs will 
enable local leadership over priority setting, activity design, 
implementation, and measuring results. More information about this 
indicator will be available in our FY22 Localization Progress Report, 
expected to be posted by mid-April.

    Question. Has USAID done an audit on how many local formal and 
informal groups it supports as sub-grantees of its programs? What were 
the findings?

    Answer. USAID has not conducted an audit on how many local entities 
it supports as subcontractors and subrecipients of its programs. Prime 
contractors and recipients are required to report subcontract and 
subaward data in the Federal Funding Accountability and Transparency 
Act (FFATA) Subaward Reporting System (FSRS). Reported information is 
made publicly available on USASpending.gov but is often incomplete. 
Recently, USAID issued a reminder to prime contractors and recipients 
of the importance of accurately reporting subcontracts and subawards in 
FSRS to promote transparency, accountability, and visibility of data 
regarding Agency-funded activities.

    Question. You mentioned a goal to empower more than the current 20-
30 FSNs authorized to contract to a more substantial number. What is 
the intended goal and by what timeframe do you intend to reach it? What 
is the distribution plan for these FSN positions--will there be 
authorized FSN positions at every post?

    Answer. As outlined in the Implementation Plan (https://
www.usaid.gov/sites/default/files/2023-03/AA-Strategy-Implementation-
Plan-3-2023-draft.pdf) for USAID's new Acquisition and Assistance 
Strategy (https://www.usaid.gov/policy/acquisition-and-assistance-
strategy), USAID's goal is to increase the number of Foreign Service 
Nationals/Cooperating Country Nationals (FSNs/CCNs) with administrative 
warrants from 19 in FY 2022 to 38 by the end of FY 2023. As of March 9, 
2023, USAID has 35 CCN Administrative Contracting/Agreement Officers 
(ACOs), though this number fluctuates constantly. Administrative 
warrants are issued at the request of Missions. The number of warranted 
FSN/CCN ACOs per Mission is subject to Mission needs for additional 
coverage, the number of qualified candidates, and the capacity for 
Mission COs to provide the required oversight.

    Question. Can you outline the rough estimates for increase in USAID 
FSOs that the 15 percent increase in OE funding would support?

    Answer. Through our Global Development Partnership Initiative 
(GDPI), we aim to grow the Agency's permanent direct hire workforce by 
28 percent by 2025. The GDPI would expand our cadre of Foreign Service 
(FS) employees to 2,500, our Civil Service employees to 2,250, and our 
Foreign Service Nationals (FSNs) by 206 positions to around 4,700. GDPI 
will allow the Agency to build a diverse workforce that represents 
America and is equipped to tackle unrelenting international challenges. 
The FY 2024 request includes an additional 105 Civil Service and 125 
Foreign Service, as a further step towards meeting these goals.
    Our reference to 15 percent was not for an increase in operating 
expenses (OE), but rather the flexibility to use up to 15 percent of 
appropriated program funds for operational and administrative costs 
associated with the project (as we currently do under the Local Works 
program and under the directive for locally led development in northern 
Central America). There are several benefits to having this flexibility 
when working with local partners. First, though local partners should 
be seen as equally capable compared to U.S. or other traditional 
partners, their relative inexperience working with USAID may require 
additional USAID staff time in order to guide them through the Agency's 
compliance and reporting processes, technical and operational standards 
for programming, among other support. Part of how the Agency provides 
that additional guidance is by providing local partners with capacity 
and compliance support in various forms, which requires additional 
(non-programmatic) resources.
    Local partners also tend to receive smaller awards than traditional 
partners, and issuing a greater number of awards to these local 
partners requires additional USAID staff support (compared to managing 
a single, larger award to a traditional partner). Having the 
flexibility to use program funds to cover these kinds of award 
management costs would better enable USAID to expand and diversify its 
local partnerships at or above the Administrator's targets.
    Thus, while this 15 percent flexibility would not necessarily be 
used directly for hiring additional staff, it would give our current 
staff the resources they need to better support more local partners.

    Question. Do you support increased language training for USAID FSOs 
as a mechanism to enable more USAID FSOs to interact directly with 
local NGOs?

    Answer. Direct engagement is crucial to the success of USAID's work 
because it fosters localization of USAID programs and provides FSOs 
with unfiltered information to better inform decisions for U.S. 
taxpayer money spending. Foreign Service Officers (FSOs) are already 
utilizing their language skills, in addition to the expertise of USAID 
Foreign Service Nationals (FSNs) and implementing partners, to engage 
with local NGOs, host government officials, and participants in USAID's 
programs. Increased language training for FSOs could augment current 
engagements with external stakeholders.
    The required languages for tenure and language-designated positions 
are captured in USAID ADS 438 maa (https://www.usaid.gov/sites/default/
files/2022-05/438maa.pdf). Language assessments are offered to 
potential new hires for USAID in tenure languages as part of the 
Foreign Service hiring assessment for extra points. Language training 
timelines can vary depending on the level of proficiency of the Foreign 
Service Officer (FSO). Depending on the language needs of individual 
employees, USAID can provide access to language training for FSOs at 
the Foreign Service Institute (FSI).
    In addition to the language training offered at FSI, USAID's Office 
of Human Capital and Talent Management (USAID/HCTM) offers USAID staff 
and their eligible family members (EFMs) access to free foreign 
language applications such as Mango Languages and Rosetta Stone to 
foster ongoing foreign language skills development. USAID/HCTM also 
funds the Mentored Foreign Language Course at the State Department's 
Foreign Service Institute (FSI) to empower EFMs to fill staffing gaps 
in critical Mission-level positions.
    FSOs can also receive one-on-one language training through a 
contracted vendor that has adopted FSI curriculum content, design and 
assessment procedures to ensure standardized learning methodologies 
that can result in a higher success ratio for meeting language 
proficiency. This one-on-one environment allows learners to absorb 
meaning intuitively, with a focus on developing speaking, reading, 
writing and listening skills. The total immersive environment enhances 
learner engagement. This instructional model provides real-life 
interactive scenarios to engage learners in conversation and build 
vocabulary and grammar skills.
                                 ______
                                 

              Responses of Ms. Elana Aquino to Questions 
                Submitted by Senator Benjamin L. Cardin

    Question. How do you think USAID could best approach its policies 
and structure to address the problem of institutional racism in 
development that you raised?

    Answer. Racism creeps in in numerous ways: big and small, conscious 
and unconscious. Some of the ways we can see the impact of racism 
creeping in, resulting in racist beliefs becoming standard and being 
perpetuated are through USAID's structures and procedures.\1\ For 
example, it's often wrongly assumed that local civil society 
organizations do not have the capacity or ability to implement 
programs, especially when based in non-Western contexts. Then, it is 
deemed necessary to rely on international organizations with country 
offices to lead, a majority of which are based in Global North 
countries, believing that they are the sole legitimate option. Another 
example is the assumption that we cannot partner with local 
organizations due to rampant corruption and mismanagement of funds. 
Just as corruption does not see color, we cannot assume that every 
local actor is corrupt.
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    \1\ https://www.peacedirect.org/us/publications/race-power-and-
peacebuilding/
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    Some of the ways that USAID could best approach its policies and 
structures to address the problem of institutional racism in 
development are, but not limited to: accessibility, equitable 
partnership, flexible funding, training and diversity in hiring at 
USAID and empowerment of Foreign Service Nationals to enact the locally 
led commitments.\2\
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    \2\ https://www.conducivespace.org/wp-content/uploads/2023/03/
Innovative-Practices.pdf
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    Local civil society organizations globally welcomed Administrator 
Power's commitments in November 2021 at Georgetown.\3\ Accessibility 
remains one of the biggest barriers to working with USAID. The 
processes, terminology and language used by USAID excludes most local 
organizations who could otherwise be interested and willing to work 
with USAID. Complex and internationally biased processes 
disproportionately skew the chances of winning an award or partnership 
in favor of U.S. organizations over local ones.
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    \3\ https://static1.squarespace.com/static/
5fc4fd249698b02c7f3acfe9/t/
61afeeb21e86814389672abe/1638919859912/
Public+Letter+to+USAID+Administrator+
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    Additionally, terms used by USAID often do not translate clearly to 
the local context. For example, a Peace Direct-led consultation with 
local civil society organizations working to prevent atrocities in 
eastern DRC found that ``terminology [like atrocity prevention] often 
fails to encompass the realities of complex violence and ongoing 
conflict dynamics and argued for more nuanced narratives.'' \4\
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    \4\ https://www.peaceinsight.org/en/resources/escaping-perpetual-
beginnings/?location=dr-congo&theme=atrocity-prevention
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    Moreover, the languages used must be diversified. USAID has taken 
steps to make several major languages available in their 
communications, but the Agency should go further to incorporate 
indigenous languages and languages of other marginalized populations. 
This must also expand to allow for grant proposals, reporting 
requirements, and other forms of engagement with local civil society to 
be received in the local language. In some instances, allowing for 
verbal proposals and reporting requirements is vital as literacy rates 
globally vary. The emphasis should be on whether local actors can carry 
out the necessary tasks and have the credibility within their 
communities to create a positive lasting impact, not whether they can 
eloquently do so in English or in written format.
    Simplifying and removing the barriers preventing local 
organizations from working with USAID is key to addressing some of the 
systemic processes that perpetuate racism. Also key is to speak 
directly with local civil society networks in local languages to 
understand how conflict, development concerns and humanitarian crises 
are being discussed by local actors to ensure terminology is not lost 
in translation.
    In their localization process, USAID seeks to diversify who the 
Agency partners with to deliver vital support globally. Working toward 
diversifying partnerships is a good step. We think this can and should 
be taken further. Equitable partnership, in our view, is the 
relationship between individuals and organizations based on trust that 
takes actionable steps to support the needs, priorities and agenda for 
all parties involved. Many local actors have highlighted that the 
current practice of partnership is prescriptive in nature and can 
contain hidden agendas. External actors parachute in with pre-defined 
solutions often without consultation or buy-in from local organizations 
or communities. This overlooks or assumes the absence of the active 
capacity, agency, expertise, and social, political, and cultural know-
how local actors bring to any context. We must add the element of 
humility to recognize that we cannot understand the social, political 
and cultural variables at play as well as local actors embedded in the 
community. And to acknowledge that, as much as we may want to help and 
have good intentions, aid delivered without community planning and 
inclusion can be patronizing and harmful.
    We believe partnerships should be trust-based, transparent, and 
equitable all while maintaining decision-making power to be with the 
local partner. USAID should develop active feedback loops, not only 
from implementer to USAID, but also from USAID to the partner. 
Withholding or not sharing information can create an environment of 
mistrust and perpetuate an imbalance of power.
    Flexible funding models employed by USAID should also be flexible, 
inclusive, respectful, sustainable and trust based. In conflict zones 
and humanitarian crises, the dynamics change daily if not hourly. 
Funding models need to be adapted to allow local organizations to 
change programming and how humanitarian support is delivered to have a 
better chance of effectuating a positive impact in the community they 
are serving. Funding needs to be deployed in a way that can reach local 
actors directly, not country offices of INGOs.
    International actors have many roles they can play, but creating 
and implementing programs should be led by the local organizations.\5\ 
By solely working through international organizations, the U.S. sends 
the message that local actors cannot be trusted, nor do we believe they 
have the capabilities to carry out development, humanitarian or 
peacebuilding efforts. When in reality, local civil society 
organizations are often the first responders to any situation. Flexible 
funding for local actors is the key to unlocking creativity and 
adaptability for communities living in such volatile and unpredictable 
contexts.
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    \5\ https://www.peacedirect.org/us/publications/nine-roles-for-
intermediaries/
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    Internally, USAID can benefit from hiring and promoting more 
Americans from diverse backgrounds into its workforce. Diversity does 
not stop at race, ethnic or religious background, but also includes 
those who come from families of or have directly experienced being a 
refugee or being displaced; hiring those who have lived experience or 
have worked in fragile or conflict contexts.
    The Council on Foreign Relations released a report in November 2020 
entitled Revitalizing the State Department and American Diplomacy. In 
this report, the authors suggest that if diversity and institutional 
barriers are not addressed within the Department of State then ``the 
challenges that DOS faces [to dismantle racism] risk causing 
irreparable damage to America's standing and influence in the world, 
ability to advance its interests overseas, and security and prosperity 
at home.'' \6\
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    \6\ https://www.cfr.org/report/revitalizing-state-department-and-
american-diplomacy
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    A similar assessment and approach is necessary for USAID to 
maintain its leadership globally as the largest development, 
humanitarian and peacebuilding donor. However, hiring and promoting 
more diverse Americans into the workforce will not alone address the 
problems of structural racism within international development. Some of 
the barriers are addressed above and more are explored in Peace 
Direct's report, Time to Decolonize Aid.\7\
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    \7\ https://www.peacedirect.org/us/publications/
timetodecoloniseaid/
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    Finally, the training of USAID staff to overcome conscious and 
unconscious biases and empowerment of Foreign Service Nationals hired 
by USAID is vital for addressing institutional racism. As locally hired 
staff, Foreign Service Nationals join USAID Missions with an existing 
network and understanding of the local dynamics. However, this 
expertise is not often utilized. Their exclusion from being fulling 
involved in USAID programs is rooted in the underlying perceptions that 
local people do not have the expertise, understanding or intelligence 
to carry out the work that is delegated to international organizations. 
Foreign Services Nationals are also subject to assumptions of 
corruption therefore there is an effort to make their involvement 
minimal. Some of this stems from conscious and unconscious bias of 
USAID staff and overcoming this through training and intentional hiring 
will be key.
    Foreign Services Nationals can play the role of the convener to 
bring together local civil society organizations for consultations or 
shared learning. They can also access certain parts of the country 
through their position as local community members. When funding models 
at USAID are reformed to fit one that is flexible and directly local, 
Foreign Service Nationals can also support USAID Missions and local 
organizations by tracking the implementation of programs and even play 
the role of interlocutor for open feedback loops between local 
organizations and USAID.
    The steps listed above are not exhaustive. Racism comes in all 
shapes and sizes, conscious and unconscious, and if not curtailed, it 
can continue to infiltrate institutional structures in ways that 
disempower and marginalize rather than embrace and promote American 
values.

    Question. What changes and reforms are needed from USAID, and what 
is needed from Congress to address this problem?

    Answer. For the above changes to take place, it will take a 
concerted and intentional effort by Congress and USAID. While Congress' 
mandate is far more expansive than international development and 
humanitarian support, USAID can bring in the technical expertise of how 
their systems can be reformed to fit one that is inclusive, trust-
based, accessible, locally-led and sustainable. Congress can then hold 
USAID accountable to these values and ensure that the meaningful 
reform, implementation and active practice of these values are 
enshrined in policy, replacing the antiquated and harmful policies that 
promote racism and division.
    The accountability measures from Congress to USAID can include 
mandates for USAID Missions to work with Foreign Service Nationals and 
other international organizations to host genuine consultation in 
country to garner insights on how USAID is improving its systems 
towards being locally-led while simultaneously addressing structural 
racism. The findings and assessments from these consultations should 
then be reported to Congress periodically. It is also important to flag 
that Congress should push USAID to adopt a narrower definition of local 
so that the metrics the Agency uses does not misrepresent the progress 
of its commitments to localize efforts. Early last year, Peace Direct 
worked with other prominent INGOs, notably Catholic Relief Services, 
Mercy Corps, CARE, Save the Children, and the Hunger Project, among 
others, to develop a set of definitions which distinguishes 
international and local organizations. We define local as organizations 
headquartered and operating in their own country.
    Congress can also work with USAID and non-government organizations 
to upgrade the current funding model employed by USAID. Upgrades should 
include, but are not limited to, making grant proposals and reporting 
requirements less burdensome for local organizations, allowing 
resources to be used with flexibility especially in terms of timelines 
and the planned work, and improving the funding system to allow for 
resources from USAID to reach local organizations directly without the 
need for international intermediaries.
    Finally, Congress should increase the budget USAID has to work with 
to ensure the Agency has the capacity it needs to shift from the 
current model to one that is locally-led responsibly and to ensure that 
this shift is sustainable. Lack of capacity is often wrongfully and 
solely associated with local organizations; however, USAID also needs 
to raise its own capacity to localize its work meaningfully.\8\
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    \8\ https://www.brookings.edu/blog/future-development/2022/12/01/
rethinking-the-constraints-to-localization-of-foreign-aid/
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                                 ______
                                 

              Responses of Mr. Bill O'Keefe to Questions 
                Submitted by Senator Benjamin L. Cardin

    Question. Organizations like CRS can play a critical role in 
helping to build the capacity of local civil society. What more do you 
think could be done to focus more USAID efforts to leverage 
organizations like CRS to further build the capacity of local NGOs?

    Answer. CRS has a long track record of partnering with a diverse 
set of local organizations, and works with approximately 1500 local 
partners every year. We also have deep experience and expertise in 
supporting partners to strengthen their capacity, not only to implement 
specific projects, but also to sustainably provide a range of services 
to vulnerable people and to hold their governments accountable. Our 
approach is to deliver this kind of holistic capacity strengthening 
that responds to partner needs and far exceeds setting them up as mini-
contractors.
    We fully support the principals that guide USAID's new Local 
Capacity Strengthening Policy, and think it has the potential to 
transform USAID's work in this area--aligning capacity strengthening 
with larger localization goals, and elevating models that are more 
participatory, partner-led, and holistic.
    The key now is for the vision to become reality and the policy to 
become practice. Congress should ensure that the USAID has the staff 
and resources to support INGOs like CRS to implement capacity 
strengthening programming that matches the intent of the policy. To 
scale the capacity strengthening needed to reach USAID's localization 
goals, USAID must increase opportunities for INGOs like CRS to play new 
roles--facilitating transitions to local leadership, providing 
significant technical assistance, accompanying and mentoring local 
partners as they take on greater leadership roles. Congress should 
ensure that USAID is adequately resourcing these efforts, and that they 
are accountable for progress in their implementation.
                                 ______
                                 

              Prepared Statement of Dr. Tessie San Martin

                        Tessie San Martin, Ph.D.
                              CEO, FHI 360
        Co-Chair, Modernizing Foreign Assistance Network (MFAN)

    USAID Administrator Samantha Power has outlined what I believe is a 
powerful vision to make foreign assistance more accessible, equitable, 
and responsive. Her vision includes the ambitious target that 25 
percent of USAID's funding will go to local partners by 2025, and that 
by the end of this decade, 50 percent of its programming will place 
local communities in the lead when setting program priorities, co-
designing, implementing or evaluating the impact of USAID-funded 
projects.
              sustainability, effectiveness, and evidence
    Based on my experience, I consider the best argument for 
localization and locally led development to be one of sustainability--
the activities our development assistance funds are more likely to 
continue after our assistance ends if they are locally led and 
implemented. There is evidence that supports the argument that locally 
led programming, aligned to local priorities, is more likely to be 
sustainable. And it makes sense. Local and national actors have more 
relevant expertise, and they have long-term commitment to the work in 
their communities. Building on this expertise and commitment is good 
development and responsible stewardship of taxpayers' money.
    There is also some evidence that integrating local knowledge in 
program design and funding programs that better match local priorities 
can make assistance more effective. But we need to invest more in 
evaluation and learning to ensure all programs (not just those led by 
local or national actors) are effective, efficient and sustainable. We 
need to develop a body of hard evidence, based on rigorous research and 
evaluation, about where, when and how localization is the more 
effective or efficient way to deliver foreign assistance. I will come 
back to this point later.
        local capacity strengthening beyond usaid implementation
    Localization is not new to U.S. foreign assistance. The most widely 
cited example is the President's Emergency Plan for AIDS Relief 
(PEPFAR), which has reached a level of 62 percent of funding to local 
organizations. While impressive, this example should not be the model 
for the future. PEPFAR's efforts, and its 70 percent target for 
localization, have focused almost exclusively on ensuring that the 
local entities are able to manage USAID- or U.S. Government-funded 
projects--in other words, to make them new or substitute implementers 
of USG-designed projects. This is not enough to ensure sustainability.
    We recognize now that effective localization, that is, localization 
most likely to lead to sustainable results, needs to be based on more 
than just channeling follow-on projects to local organizations. 
Reflecting this recognition, the new USAID Local Strengthening Policy 
(https://www.usaid.gov/policy/local-capacity-strengthening) makes clear 
the agency's commitment to move beyond just building local USAID 
implementers. This policy focuses on strengthening local organizations' 
capacities to realize their own priorities and work effectively within 
local ecosystems rather than just training them to comply with U.S. 
government requirements.
                      usaid capacity strengthening
    Delivering on this vision of localization--a vision for more 
sustainable results through U.S. foreign assistance--will require 
profound changes in how USAID does business. These changes will take 
time and effort.
    For example, while much of the conversation regarding localization 
focuses on the capacity of local partners (based on the assumption, not 
always well founded, that local partners lack the capacity to meet the 
administrative requirements mandated by USAID to secure U.S. taxpayer 
dollars), not much is said about the capacity USAID needs in order to 
channel more assistance to local partners. USAID's staffing shortages, 
especially of contracting officers, is a major impediment for the 
agency. These shortages not only hinder advances in localization and 
working with other new and unconventional partners, they also impede 
more robust efforts around monitoring, evaluation and learning (MEL). 
That is why Congress must provide much-needed increases in funding for 
the agency's Operating Expenses (OE) account. USAID capacity 
strengthening requires not just more staff to manage acquisition and 
assistance to local entities, likely manifested as smaller and more 
numerous projects, but also the capacity to simplify and minimize the 
burden of current reporting requirements. USAID is currently 
undertaking efforts to do just this--hiring more staff, launching the 
burden reduction program, and reviewing and re-launching its Assistance 
and Acquisition strategy. These efforts together amount to an ambitious 
effort to change how the agency does business and should be recognized 
and supported.
                             risk appetite
    Another profound and required change to how USAID does business is 
a change in risk appetite. USAID recently launched its new Risk 
Appetite Statement, acknowledging that redirecting foreign assistance 
can create new risks. Organizations like the one I head, FHI 360 
(https://www.fhi360.org/), have decades of experience working for the 
U.S. Government in general and USAID in particular. Our processes, 
procedures, manuals and staffing profiles are all optimized for 
partnering with USAID. Channeling more assistance to partners less 
familiar with USAID and U.S. government business processes and 
requirements will create new stresses on the agency and the 
implementing partner community. It will be important for USAID to 
carefully evaluate its experience with early efforts to work with local 
entities, such as the 5-year, $300 million Centroamerica Local 
initiative that partners with local entities in the Northern Triangle 
countries to address the root cause of irregular migration, and 
consider lessons learned as it scales up localization--particularly as 
the agency launches a similar initiative in Africa.
                                metrics
    I very much appreciate that Administrator Power is specific about 
metrics to measure progress on localization. Metrics focus the mind and 
create urgency and accountability. But good metrics require good 
definitions, and in this case, that means a good metric for 
localization requires a good definition of ``local.'' The aid 
effectiveness coalition I co-chair, the Modernizing Foreign Assistance 
Network (https://www.modernizeaid.net/), is concerned that the 
definition of local organization, and thus the measurement methodology 
for the localization metric announced by USAID, only considers place of 
incorporation, physical address, and place of contract activity. This 
methodology is practical because the data are readily available. But 
the choice casts too wide a net for what are truly local actors and 
motivates international companies--who are still eligible for up to 75 
percent of USAID funding--to set up ``locally established partners'' 
that can crowd out national actors. I will note that USAID's 
methodology benefits organizations like mine, but it is not aligned 
with the Administrator's vision for localization, and it could limit or 
delay localization's expected results around sustainability and 
effectiveness. Employing a sharper definition of `local' and using 
publicly available data to measure the baseline, and track the 
progress, for the 25 percent target is essential to hold USAID 
accountable for shifting significant funding to local entities, and 
thus to incentivize the necessary culture shift within the agency to 
advance these reforms. I draw your attention to recent research by 
Publish What You Fund (PWYF) (https://www.publishwhatyoufund.org/), 
which proposes an alternate, independently replicable methodology for 
measuring the local funding share that employs USAID's own public data. 
The baseline estimated using the PWYF methodology for the 10 countries 
studied are notably lower than USAID's methodology suggests. A 
measurement choice overstating the share of funding going to local 
partners severely weakens the impact of Administrator Power's pledge to 
commit 25 percent of USAID funding directly to local actors by 2025.
                         the bigger challenges
    The changes I've outlined are challenging but within the power of 
USAID. Other changes will be harder (and also take longer) to implement 
and are not fully in USAID's control. For example, the budget process--
including the role of directives and the negotiations for allocating 
appropriations by country and program--often results in delaying or 
obstructing U.S. assistance program responsiveness to country 
stakeholder priorities and impeding the ability to adjust to changing 
country and program circumstances. Addressing these issues is much more 
challenging.
    I want to make one final observation to highlight the challenges of 
localization. Localization is ultimately about enabling local voices 
and local knowledge to influence how development and humanitarian 
assistance is allocated. But all too often authoritarian governments 
silence the voices of the marginalized populations in the countries we 
assist. How our government in general and USAID in particular elevates 
local voices has implications far beyond influence on any one 
particular program and could exacerbate domestic tensions. This 
challenge is not a reason to resist localization, but rather a call to 
invest in learning so that we do it well.
                               conclusion
    Localization must be a priority if we value sustainability. It must 
be a priority if we want to be responsible stewards of U.S. taxpayers' 
money. We need to deeply understand the contexts within which 
localization will yield the desired results. I stress again the 
importance of sufficient investments in research and evaluation to 
learn where, when, and how localization practices and approaches can 
shape effective and sustainable outcomes.
                                 ______
                                 

Article Titled, ``Metrics Matter: How USAID Counts `Local' Will Have a 
 Big Impact on Funding for Local Partners,'' by Publish What You Fund, 
                            Dated March 2023














                                 ______
                                 

                Prepared Statement of David J. Berteau, 
         President and CEO of the Professional Services Council

    Chairman Cardin and Ranking Member Hagerty: The Professional 
Services Council (PSC) \1\ represents more than 440 U.S. Government 
contractors providing critical technology and professional services to 
every federal agency. PSC's Council of International Development 
Companies (CIDC) \2\ represents those PSC member companies that work 
with the U.S. Agency for International Development (USAID) and the U.S. 
Department of State to support effective U.S. foreign assistance 
programs around the world.
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    \1\ http://www.pscouncil.org/print_friendly/__p/ca/
Print_Friendly.aspx
    \2\ https://www.pscouncil.org/psc/Councils/c/__p/cc/
CID.aspx?hkey=b852cdab-b041-47ed-902d-52026e032e16
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    PSC commends the Senate Foreign Relations Committee (SFRC) for its 
continued support for and oversight of these programs, including the 
policies, processes, and resources required to provide timely, needed 
assistance that is aligned with U.S. national interests. This hearing 
provides an excellent opportunity for this committee to examine ways to 
help ensure that communities receiving assistance both want the aid and 
are able to implement development programs in a manner consistent with 
U.S. legislation and procurement regulations. I thank you for the 
opportunity to provide PSC's comments and suggestions in this regard.
    By way of background, our members listened with great interest to 
USAID Administrator Samantha Power's November 4, 2021, speech at 
Georgetown University, in which she stated:

        ``[I]n addition to a 25 percent target of our assistance going 
        to local partners, today I'm announcing that by the end of the 
        decade, 50 percent of our programming, at least half of every 
        dollar we spend, will need to place local communities in the 
        lead to either co-design a project, set priorities, drive 
        implementation, or evaluate the impact of our programs.'' \3\
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    \3\ https://www.usaid.gov/news-information/speeches/nov-4-2021-
administrator-samantha-power-new-vision-global-development

    As development professionals, some with more than four decades of 
experience working for USAID, CIDC members fully embrace this call for 
improved local engagement and participation. Their experience has 
taught them that without significant local partner engagement in 
project development and implementation, the achievement of long-term 
sustainable goals is virtually impossible. In recognition of this 
reality, almost all of USAID's solicitations have for years now 
required significant, explicit local engagement requirements and 
metrics.
    In support of these requirements, PSC shared with USAID officials 
two CIDC white papers \4\ with insights on USAID's locally-led 
development agenda and recommendations for ways in which the Agency can 
better track and report support for local stakeholders. The papers 
showcased how USAID implementing partners, including CIDC members, have 
accelerated the Agency's progress in support of locally-led development 
over recent decades. These implementing partners are already doing much 
to reach Administrator Power's stated goals.
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    \4\ https://www.pscouncil.org/a/Resources/2021/
Perspectives_On_Localization.aspx
https://www.pscouncil.org/a/Resources/2022/Grants_Under_Contract_Help_
Meet_USAID_s_Local_Spending_Goals.aspx
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    Since submitting these papers to the Agency, our members have had 
numerous conversations with officials regarding on-the-ground 
experiences, suggestions, and other feedback. PSC applauds the Agency 
for this outreach and engagement, and our members plan to continue 
sharing insights on localization issues with USAID officials.
    At the same time, we believe the Agency must examine closely those 
structures, procedures, and requirements that create significant 
dampening effects on potential new entrants into the international 
development ecosystem. These requirements erect barriers to entry that 
deter not only potential new local partners, but also American ones as 
well, particularly small businesses.
    Administrator Power has made ``Bureaucratic Burden Busting'' a key 
driver in her reform efforts. As she noted at the swearing in of a 
senior USAID official in October 2022:

        ``[T]hese major reform priorities depend upon our ability to 
        cut the time our staff spends filling out paperwork, increasing 
        the time they're able to spend in the field and with our 
        partner organizations. And so we will look to Clinton to help 
        spearhead our bureaucracy busting initiative, with the goal of 
        saving our Agency staff members millions of hours collectively. 
        Our Agency already tackles the world's toughest challenges. 
        Needless bureaucracy should not be one of them.'' \5\
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    \5\ https://www.usaid.gov/news-information/speeches/oct-04-2022-
administrator-power-at-the-swearing-in-ceremony-for-counselor-clinton-
white

    Her remarks highlight the fact that, given the complexities of the 
U.S. Government procurement process and rules, too often only those 
entities with significant, demonstrated and documented past performance 
implementing USAID programs--and with abundant legal, accounting, and 
other specialized back-office staff--are able to meet U.S. Government 
requirements and compete successfully in the current federal 
marketplace. Reporting requirements consume countless staff hours and 
company resources even as they enable American implementing partners to 
account for every penny in order to ensure Congress and the American 
people that their generosity is accounted for. For localization to 
realize increased success, USAID will need to determine on a country-
by-country, program-by-program basis whether local firms have the 
capacity to meet these requirements. We believe these determinations 
should be of particular interest to Congress.
    Administrator Power recognized this in her 2021 Georgetown address:

        ``[W]orking with local partners, it turns out, is more 
        difficult, time-consuming, and it's riskier. Local partners 
        often lack the internal accounting expertise our contracts 
        require, or they might lack the legal counsel needed to shape 
        their contracts, many of which can run hundreds of pages 
        long.'' \6\

    \6\ See footnote 2 above.

    PSC suggests that the Committee consider directing a Government 
Accountability Office study to explore the impact of these constraints 
on potential contracting partners--both American and local. Such an 
assessment could help enumerate and illustrate these barriers more 
clearly and set the stage for potential actions to reduce, as 
appropriate, overly burdensome and unnecessary requirements. Such 
actions could not only support localization efforts, they could lead to 
better outcomes as well.
    In addition, PSC believes a key impediment to the most efficient, 
effective implementation of USAID programs, including localization 
efforts, has historically been the absence of a sufficient number of 
trained, experienced contracting officers tasked with reviewing, 
evaluating, and awarding projects that are vital to delivering 
assistance. We call attention to Administrator Power's cogent 
expression of this point in 2021 congressional testimony, in which she 
highlighted the disparity in USAID and Department of Defense workload:

        ``Over the last two decades, the funding levels and complexity 
        of our programs has expanded at a rate that significantly 
        outpaces our staffing. For instance, each USAID contracting 
        officer . . . has managed over $65 million annually over the 
        past four years, more than four times the workload of their 
        colleagues at the Department of Defense who manage an average 
        of about $15 million. Moving forward, we are seeking not a 
        return to the previous status quo, but to work with members of 
        Congress to increase our number of direct hires, while 
        maintaining a strong focus on creating a more diverse, 
        equitable, and inclusive Agency. With your support, USAID will 
        move aggressively to tackle the world's toughest challenges in 
        order to build a more stable and prosperous future for us 
        all.'' \7\ (emphasis added)
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    \7\ https://www.usaid.gov/news-information/congressional-testimony/
jul-14-2021-administrator-samantha-power-fy2022-budget-sfrc

    PSC urges the Committee to continue to provide USAID with both the 
funding and the hiring flexibility to provide, as appropriate, a 
sufficient number of contracting officers needed to implement the 
required workload.
    In summary, success in localization hinges on local capability to 
comply with U.S. procurement regulations and the ability of USAID 
officials to obligate needed funding under contracts. Thank you for the 
opportunity to submit this written statement, and we at PSC welcome any 
further engagement and dialogue with the committee on these key issues.
                                 ______
                                 

                Prepared Statement of Allassane Drabo, 
                        Search for Common Ground

    Chairman Cardin, Ranking Member Hagerty, distinguished members of 
the Senate Foreign Relations Committee, thank you for convening this 
timely and important hearing to focus on the challenges, opportunities, 
and next steps to ensure that U.S. Foreign Assistance can best support 
localization. I commend the Administration and Congress for the 
commitment to expanding support to local capacity development and its 
partnerships with local institutions.
    My name is Allassane Drabo. I was born in Burkina Faso and have 
spent most of my life bringing people together, from all backgrounds 
and perspectives, to jointly address problems and find locally-led 
solutions to the development and political challenges facing our 
region. I am currently West Africa Regional Director for Search for 
Common Ground, where I lead a team of 250 West African peacebuilders 
across Burkina Faso, Mali, Niger, and Nigeria and support partnerships 
with dozens of civil society, media, government, faith, and academic 
partners. Search for Common Ground is the largest peacebuilding 
organization, running locally-led and internationally-networked 
programs. We work with USAID through grants, contracts and cooperative 
agreements, although the majority of our support comes from other 
governments, UN agencies and private donations. My testimony is 
informed by my experience at Search for Common Ground and other 
organizations in the development sector, as well as the experiences of 
my colleagues and partners in the region, but the views I express are 
my own.
    I am deeply appreciative of U.S. assistance to this region. Every 
day, I see the results of efforts that range from urgent responses that 
prevent atrocities and upholding human rights amidst the crisis in 
Niger, Mali and Burkina Faso, to the decades-long investment that 
USAID--and civil society groups like us--have made in supporting the 
Nigerian people and institutions as they have transitioned away from 
military rule to lay strong foundations for Africa's largest democracy.
    I know that external support is most effective when it is informed 
by lived experience, and solutions are more sustainable when they are 
crafted by those most affected by the problem. USAID's focus on 
localization creates an opportunity to radically reshape American 
assistance to be even more effective and sustainable, and I welcome the 
opportunity to share a few pieces of reflection and recommendations.
           putting people & power at the center of assistance
    There is no standard definition across government and philanthropic 
donors on what is meant by ``localization.'' Here at Search for Common 
Ground, we define localization as efforts where people affected by a 
problem have power over how (1) priorities are set; (2) programs are 
designed and run; (3) resources are allocated; and (4) success is 
defined and measured.
    Localization must result in more financial investment in 
individuals, organizations, and institutions from developing societies. 
It also requires better investment, by shifting the processes and 
culture of how donors work and relate to the individuals and societies 
that they are supporting.
    In many places, the development sector has developed complex 
international bureaucracies and systems of middlemen, often built 
around satisfying donor agencies' procedures and accountability 
structures. These are ineffective. Localization efforts that focus on 
moving money around--but not shifting accountability structures and 
power--risk to simply shift resources from American middlemen to 
Nigerian or Malian middlemen, rather than augmenting the power and 
agency of the people being served. We have an opportunity to build 
efficient and responsive accountability structures.
              opportunities to advance further this vision
    USAID leadership--both in Washington and in our region--has 
prioritized local partnership in improving inclusivity, equity, and 
locally-led development. Change requires a detailed and what Americans 
might call ``wonky'' approach to systems of strategic planning, 
procurement, and accountabilities outside of the funding cycle. 
Practical changes--supported by Congress--can further strengthen the 
commitment to shift power to local actors.
    Local ownership cannot only be top-down and should match more 
resources with easier management. There is a tendency in localization 
processes to give an overwhelming amount of conversation about who 
donors give money to--and this is very important--but must be 
accompanied by the structures and approaches that shift how that money 
is used and how to the people most affected by the problem are shaping 
the solution.
    Effective localization means meeting the institutions being 
supported ``where they are.'' That means loosening restrictions and red 
tape, ensuring adequate staffing for USAID missions, easing two-way 
communication, and choosing the right funding modality to fit the work 
being done. For different types of projects, in different regions, 
localization can look differently: in many places, direct funding for 
national civil society organizations is an effective way to invest. But 
in others, supporting smaller local organizations to meet rigid federal 
standards creates inefficiencies that are hard for the organization to 
sustain over time. Sometimes areas, funding an international management 
agent to manage passthrough grant funds for local groups is a solution; 
in others, supporting direct program implementation with community-
based organizations is more appropriate and effective.
    As the world is simultaneously local and global, we need a stronger 
definition of local. We know that issues affecting communities are no 
longer simply local, but spillover effects are regional and even 
global. As such, there is still a strong need for regional or cross-
national interventions at a systems level. There is a place for a 
variety of business approaches to support locally-led development.

   We suggest that local civil society needs to be recognized 
        in all of its complexities, including international civil 
        society--where it is locally embedded--with a focus on 
        equitable resourcing. A locally-established office of an 
        international organization comprising of 100 percent local 
        staff with local leadership demonstrates a long term commitment 
        that a 5-year pop-up project office--or one where leadership is 
        foreign and locals are ``support staff' does not.

   There is an opportunity to elevate regional or south-south 
        capacities, which is largely missing from the local capacity 
        building policy. For example, a well-resourced Nigerian civil 
        society organization building its capacity to work in the Sahel 
        is a strong example of local capacity development that embeds 
        decision making and leadership in the region.

    Consultations to inform design are important, and ongoing follow-up 
is critical. Capturing and integrating different perspectives means 
listening to and hearing a diversity of local voices. Receiving 
conflicting perspectives can be overwhelming and lead to the assumption 
that progress is impossible without agreement. But what I have found is 
that different perspectives help us to see the multiple sides of an 
issue and uncover diverse existing forces for change. Through the 
hundreds of programs I have worked on in my career, I see that the more 
people are involved in a design process, the richer the program.
    This also requires robust communication to the public, to non-
recipient organizations outside of the grant cycles. USAID missions as 
well as Congressional Delegations and other officials could adopt a 
culture of public communications about their priorities and plans. This 
should engage more public reporting and open dialogue, not only with 
grantee or partner organizations, but with the wider community of 
stakeholders.
    Measure for impact simply, consistently and comparably. In highly 
dynamic and fragile environments, we have begun to use the Peace Impact 
Framework, which contains just 1O simple indicators and is increasingly 
accepted by multiple donors, civil society groups and national 
government institutions to simplify reporting and measure collective 
impact. We have also started using much more locally-embedded models 
for measuring impact such as the Grounded Accountability Model, engages 
communities at the core of the problem and allows them to define 
everyday indicators of key concepts (such as peace, empowerment, 
justice) that guide the program, and our Embedded Observer Approach 
piloted this in South Sudan and eastern Democratic Republic of Congo, 
two locations that are volatile and hard to access. We identify and 
coach people within the communities to identify conflict issues, give 
them a smartphone, and we have a form for them to send information back 
to Search every week. This is data that we can use against our simple 
measurement structure.
    Procurement changes are vital. In procurement processes, USAID 
needs to undertake a procurement review and reform process to:

   Review the use of Cooperative Agreements vs. Grants among 
        assistance awards. While Cooperative Agreements are appropriate 
        to highly sensitive and coordinated projects, they place a 
        higher burden on both USAID and recipient staff and can exclude 
        some organizations.

   Reduce the administrative burden to local direct recipients 
        of USG funding and increase the number of direct local entities 
        and locally-established recipients rather than only 'passing 
        through' local funding through U.S. implementers. That should 
        include encouraging applications supporting non-American 
        grantees, sub-grantees to establish Negotiated Indirect Cost 
        Rate Agreements within their awards to adequately reflect 
        costs.

   Review and eliminate the ``Chief of Party'' and other key 
        personnel staffing model which largely exclude the opportunity 
        for representative local leadership. USAID should consider 
        eliminating proposal evaluation criteria that incentivize 
        highly-compensated non-local staff, and study how other donors 
        ensure competent local staffing without being overly 
        prescriptive.

   Recognize that about half of USAID funds go directly to the 
        multilateral system in assessed and voluntary contributions.\1\ 
        USAID has little control over the local granting schemes of the 
        various multilateral agencies, which groups are prioritized, 
        and whether the funds adhere to strong principles of equity and 
        diversity at the local level.
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    \1\ Congressional Research Service. (Jan 2023) United Nations 
Issue: U.S. Funding to the U.N. System.
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    Review how risk is assessed. USAID should ask applicants to declare 
their funding from outside federal sources in the proposal evaluation 
process. USG places a high value on those who are specialized in 
receiving USG funds and considers them low-risk entities. However, 
other donors take the exact opposite approach and perceive a reliance 
on their funds as a high-risk factor because it reduces the ability to 
sustain beyond the program cycle. An entity receiving funding from a 
local mayor's office or local foundation would likely be considered 
high-risk by USAID, but in reality, the non-USAID funds with local ties 
ensure sustainability after USAID programming concludes. USAID should 
weigh the diversity of an organization's funding sources as a positive 
proposal evaluation criteria. Partners with funding from a variety of 
donors should be seen as an asset as USAID seeks to develop diverse 
capacities and strengthen a diverse coalition of actors. USAID should 
incorporate a ``value for money'' methodology in the evaluation of cost 
proposals where financial proposals are evaluated based on efficiency, 
economy, efficacy and equity. Methods for approaching capacity building 
and the ways in which money moves are inevitably different and vary 
from sector to sector. It is appropriate for USAID to be differential 
in the evaluation of partners across industries and issue areas; 
however, USAID should review financial proposals and operational 
structures through a value for money lens that emphasizes equity.
    USAID has set forth that they envision ``expanding the share of its 
programs that are locally led, in which a diverse group of local actors 
define priorities, design projects, drive implementation, measure and 
evaluate results, and more fully own and sustain efforts to save lives, 
reduce poverty, strengthen democratic governance, reduce corruption, 
address climate change, work to prevent conflicts, respond to global 
pandemics, and emerge from humanitarian crises.'' \2\
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    \2\ USAID (Aug 2022). Localization at USAID: The Vision and 
Approach. https://www.usaid.gov/sites/default/files/2022-12/
USAIDs_Localization_Vision-508.pdf.
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                            recommendations
    We encourage the U.S. Congress to support USAID and monitor 
progress against the goal of greater local agency and good stewardship 
of U.S. taxpayer funds allocated to development programming through the 
following ways:

   Continue robust dialogue between Congress and USAID on 
        reforms to procurement and reporting, to reduce barriers to 
        local partnership. Congress can look for statistics on the 
        number of women, young people, and national staff in leadership 
        positions for USAID programs and how evaluation criteria for 
        awards prioritize diversity and locally-led development. 
        Congress can continue the dialogue that is beginning here 
        between implementers, USAID staff and Congressional experts to 
        sustain energy and focus on the myriad of specific policy 
        changes.

   Ensure that the definitions of ``local'' submitted by the 
        USAID Administrator in the Localization Report takes the full 
        civic architecture into account. This may include underutilized 
        partners, locally registered entities, as well as locally 
        established partners that are fully local and embedded branches 
        tied to regional and global structures. Congress reporting by 
        USAID of how many local entities they already directly and 
        indirectly support financially through their awards can take of 
        how many local entities are benefiting from USAID money through 
        current awards and understand the diversity of those entities.

   Provide resources towards development assistance that 
        fosters innovation. We know that change takes a generation. 
        Yet, within USAID's long-term commitments to developing 
        contexts, testing programming approaches and models is really 
        important, especially in fragile or fast moving contexts. We 
        need to understand what works, where, and why. We support long-
        term funding commitments that allow for innovation and testing 
        a wide range of approaches.

   Invest in research and development that improves USAID 
        support to local actors and affected communities. Allocate 
        funding towards improving the systems of research, learning, 
        and adaptation that best support locally-led development. 
        Invest in peacebuilding and development ``R&D'' and require an 
        Impact Framework to report on critical measures of success or 
        failure in terms of levels of violence, polarization, 
        institutional legitimacy, and human agency and which can be 
        shared with other donors, national institutions, and civic 
        groups to streamline reporting. Support initiatives to build 
        the evidence base, break down silos of information, and expand 
        learning and cross-fertilization.

   Ensure that commitment to localization is adequately 
        resourced and integrated into other USAID strategies submitted 
        for congressional review, such as Women, Peace, and Security 
        and Global Fragility Act country and regional plans. Ensure 
        that these plans mandate moments of meaningful reflection with 
        local actors and create incentives and safety for implementers 
        to share in a transparent manner lessons learned and best 
        practices.

                                     [all]