TL;DR:
The 2009 USAID Management Challenges Report shows that between $1.4B and $2.1B was either directly wasted, lost in the fog of war, misallocated to fraud-prone partners, or burned on projects with zero measurable outcome.
And that’s just the part we can estimate. The real number? Probably higher.
In short: roughly 1 out of every 5 dollars in USAID’s warzone portfolio either evaporated or ended up somewhere it shouldn’t have.
Executive Summary: The Management Dumpster Fire
Grab a whiskey, light a cigarette, and let’s step into the fever dream that was USAID’s fiscal year 2009. And if you haven’t yet read it, check out the Prime Rogue Inc breakdown of the Millennium Challenge Corporation 2009 Challenges Report (USAID Leaks Report 001). The Inspector General (Donald Gambatesa, the poor bastard who had to stamp this mess) outlined five hell zones where USAID staggered and stumbled: conflict zone chaos, program performance vaporware, procurement gone wild, hollowed-out staffing, and tech delusions.
The Big Five USAID Fails
- 1. Conflict Zones: The Afghanistan-Pakistan-Iraq Triangle of Doom
- $10.1 billion in active portfolios across these regions.
- USAID staff working out of 10×12-foot metal containers.
- Rampant corruption and governance vacuum making oversight a pipe dream.
- Staff couldn’t even enter large swaths of the areas they were supposedly “developing.”
- Security? Privatized, undertrained contractors replacing U.S. troops.
- 2. Managing for Results (Or Not)
- USAID had no operational definition of “transformational development.” It’s like baking a cake without knowing what a cake is.
- 20 audits exposed:
- Misaligned or nonexistent performance indicators (18 reports).
- Mismatched targets and conflicting plans (4 reports).
- Fictional reporting, with numbers pulled from thin air or dreams.
- 3. Acquisition and Assistance: Throwing Money Into the Abyss
- $100M+ sunk into the Global Acquisition and Assistance System (GLAAS), flagged as high-risk by OMB.
- Performance-based contracting—a federal mandate—was routinely ignored.
- Cost-reimbursement contracts used without the oversight required to prevent waste.
- 4. Human Capital Meltdown
- Staff shortages in high-risk zones.
- New hires lacked field experience; some didn’t even know USAID policies.
- GAO found staffing imbalances and no strategic A&A workforce plan in place.
- 5. IT Management: Burning Cash on Digital Fantasy
- Homeland Security mandates (HSPD-12) and Trusted Internet Connection (TIC) initiatives not implemented.
- Afghanistan IT to be absorbed by State Department’s “OpenNet,” raising fears of another bureaucratic black hole.
- Agency lacks coordination, security clarity, or infrastructure for a merger with State’s systems.
The Numbers Behind the Nightmare
Total Active Portfolios in Conflict Zones (as of Sept 30, 2009)
- Afghanistan: $5.3 billion
- Pakistan: $2.3 billion
- Iraq: $2.5 billion
Total: $10.1 billion in the crossfire
Financial Pitfalls
- GLAAS Projected Cost: $100 million
- American Recovery and Reinvestment Act funds allocated: $38 million
- Audit Reports in FY09 Flagging Data Issues: 18
- Audits exposing poor planning/targeting: 20
Human Capital Failure
- Targeted FS hires (2009-2010): 300
- Actual onboard by report date: 220+
- Foreign Service officers working out of cubicle bunkers: Undocumented, but plentiful
IT Wasteland
- Security initiatives not met: HSPD-12 and TIC
- Upcoming IT infrastructure fusion with State: Underway in Afghanistan—expect misfires
Fraud vs. Waste vs. Reductions
Let’s play a brutal round of Follow the Money, USAID edition. We slice this sucker into three categories of dysfunction:
Fraud
This is the dirty money — the schemes, kickbacks, bribes, and outright theft.
- Iraq (Poster Child for Corruption): Ranked 178 out of 180 by Transparency International in 2007 and 2008.
- OIG Investigations: Frequent corruption schemes actively hindering project success — the kind that doesn’t just siphon funds but tanks the whole operation.
- Private Security Contractor Roulette: With the military withdrawing, oversight now depended on firms with questionable capabilities and accountability. Sound familiar? Think Blackwater but with clipboards.
Waste
Here’s where money wasn’t necessarily stolen, but might as well have been — mismanagement so epic it should be criminal.
- GLAAS System (Global Acquisition): $100M techno-mirage; high-risk rating, Recovery Act dollars funneled in, but already behind on timelines and functionality.
- Performance-Based Contracts Ignored: Mandated by federal regulation, but USAID used plain contracts with no metrics, no incentives, no oversight. Like handing your cousin $2 million to “fix your roof” with no paperwork.
- Useless Indicators in Program Reports: 18 programs in 2009 didn’t even have realistic targets, let alone results. In some cases, entire forests were “secured” based on partners mapping them in theory, not on-the-ground action.
Reductions (a.k.a. Self-Inflicted Wounds)
These are the cuts, staff drawdowns, and policy decisions that sabotaged the mission from inside.
- Provincial Team Pullbacks in Iraq: Cut from 20 down to under 10 — exactly when they were needed most. Oversight choked at the source.
- Qualified Staff Shortages: USAID had to rely on contractors with zero USAID experience in high-risk zones. Many seasoned pros wouldn’t take “unaccompanied posts.” You can’t blame them—working in a war zone while bunking in a metal box sounds more like punishment than public service.
- IT Consolidation with State Department: Instead of investing in USAID systems, they piggybacked on State’s OpenNet, giving up independence and control of their own tech infrastructure.
Key Contractors Involved (When Named or Implied)
The 2009 report is light on naming names — the IG doesn’t drop direct contractor identities, but we can infer a few key players:
- GLAAS Implementation Vendors: Likely to include major federal IT contractors (think CGI, SAIC, Deloitte types), since $100 million doesn’t vanish without some alphabet-soup firm involved.
- Private Security Firms in Iraq/Afghanistan: Though not named, these would include the usual suspects hired under DoS and DoD contracting umbrellas — companies like DynCorp, Triple Canopy, or remnants of Blackwater.
- Development Implementers in Conflict Zones: Large NGOs and Beltway Bandits, i.e., Chemonics, Development Alternatives Inc. (DAI), and Creative Associates, were operating in Iraq and Afghanistan at the time. Their track record with USAID is long and… “colorful.”
Specific Forms of Grift or Waste (The Greatest Hits)
Here’s the part where we zoom in on the idiocy like a camera slow-panning over a crime scene:
- Improperly Claimed Forest Management
- 6.8 million hectares of Amazon forest allegedly “secured” based on assumption, indirect assistance, and wishful thinking. Some of the land hadn’t even seen a USAID bootprint.
- GLAAS: A $100M Digital Snipe Hunt
- Funded by the American Recovery and Reinvestment Act. A project so risky even OMB red-flagged it. It was supposed to integrate procurement with financial systems. Instead, it became a money pit with no operational oversight plan.
- Living in Steel Boxes
- Afghanistan mission staff were housed in shared 10×12 metal containers — dorm rooms built like shipping crates. Office space was so cramped, people shared cubicles and desks. USAID: world-class development, first-class bunkers.
- Missing Performance Standards
- Contracts with no quality standards. No performance incentives. Surveillance plans MIA. It’s the federal acquisition equivalent of buying a car and never checking if it has wheels.
- Fake Performance Data
- 18 audits showed USAID and partners reported achievements based on faulty or nonexistent data. These are the kinds of “results” that get you bonuses on paper while projects crumble in real life.
Policy or Political Issues Affecting the Projects
You want the smoke? Here’s what lit the fire:
- U.S. Foreign Policy in Overdrive: The “transformational development” mantra came from Foggy Bottom’s State/USAID strategic plan, but no one defined what the hell that meant operationally. “Change” became a slogan, not a strategy.
- Troop Withdrawals from Iraq: As soldiers left, USAID lost the only thing keeping their staff semi-safe. Oversight dropped, security gaps widened.
- Reliance on Partners with Zero Teeth: USAID couldn’t reach Tribal Areas in Pakistan, so they threw money at partners who could… allegedly. It was like trying to pour water on a fire while blindfolded and hoping someone else holds the hose.
- Massive Bureaucratic Overlap with State Dept.: Merging IT systems, conflicting priorities, dual oversight in the field — a recipe for inertia and interagency infighting.
Document Provenance & Purpose
This report is the 2009 annual self-flagellation issued by USAID’s Office of Inspector General, signed off by Inspector General Donald A. Gambatesa on November 3, 2009. It was sent to the Acting Administrator of USAID, accompanied by a bureaucratic shrug and the subtle undertone of “We told you so.”
Its purpose? To highlight the most serious management and performance challenges at USAID, as required under the Reports Consolidation Act of 2000. This isn’t just a confession booth—this is a strategic document designed to cover USAID’s rear in front of Congress, OMB, and the American people. It’s the agency saying, “Look, we know we’re in over our heads. Here’s where we’re drowning.”
In theory, these challenges are supposed to guide agency reforms. In practice, they read like a broken record of dysfunction—only the geography changes.
002-USAID_Management_Challenges_2009-1Report 002 originally sourced from the USAID OIG here.
Detailed Analysis: Bureaucratic Hangover in Conflict Zones
Let’s dive deeper into the first, most catastrophic category of USAID mismanagement: Working in Conflict Areas.
Welcome to the Theater of the Absurd: Afghanistan, Pakistan & Iraq
USAID was holding a $10.1 billion live grenade with the pins already pulled. By the end of FY2009:
- Afghanistan: $5.3 billion portfolio
- Pakistan: $2.3 billion (with plans to increase)
- Iraq: $2.5 billion, 11 direct partners, and a collapsing oversight infrastructure
This wasn’t development—it was triage under fire, with a blindfold and a burnt-out medkit.
Mobility: None
USAID personnel were essentially hostages in the capital cities, needing Regional Security Office (RSO) permission to step outside the wire. In Pakistan’s Tribal Areas, where millions were allocated, USAID staff couldn’t even visit project sites. Funding flowed into black holes—no ground truth, no verification, just vibes and invoices.
Housing & Office Space: “Nowhere to Go”
The housing situation reads like a Kafka short story:
- Afghanistan: Employees crammed into 10×12-foot metal containers, often shared.
- Pakistan: Rent soared, space shrank.
- Both Missions: Delayed office construction meant staff worked elbow-to-elbow in makeshift cubicles.
Imagine trying to design national development programs while living in a tool shed. It’s like trying to launch a rocket from a janitor’s closet.
Staffing Woes: The Contractor Creep
Because no one wanted to serve in “unaccompanied” posts (read: warzones with no families allowed), USAID resorted to personal services contractors—often unfamiliar with the agency’s labyrinthine rules and development theory. The result? A brain drain of experienced, trained personnel, replaced by temp workers learning on the fly while dodging mortars.
Oversight? You Mean Hope & Prayers
USAID tried to monitor billion-dollar portfolios with:
- Shrinking Provincial Reconstruction Teams in Iraq (20 down to fewer than 10).
- Reliance on photographs, emails, and hearsay as proof of program success.
- Corruption everywhere: Iraq ranked 178/180 in Transparency International’s index.
It’s hard to measure success when you can’t visit a project, can’t trust your reports, and have no way of knowing if a school you paid to build isn’t now a weapons depot.
Security Shell Game
After U.S. troops began withdrawing from Iraq, USAID leaned on private security contractors. These mercenaries were:
- Under-equipped to handle the same level of threat.
- Operating in a gray legal zone with unclear rules of engagement.
- Seen as provocateurs by locals—meaning USAID’s presence brought danger, not hope.
Alternative Monitoring = Bureaucratic Fan Fiction
USAID eventually issued new “guidance” for working in high-threat environments. This included:
- Photographic evidence (because photos can’t be staged, right?)
- Technology-based verification (which tech? How secure? Never explained.)
- Relying on other U.S. agencies for site visits (because nothing says coordination like outsourcing your oversight to people with different priorities).
These weren’t solutions. They were coping mechanisms.
The Big Picture
USAID was trying to do nation-building without nations, development without mobility, and oversight without eyes. The money poured in. The bombs went off. The reports got written. The results? Murky at best, farcical at worst.
“Managing for Results” Without Managing or Results
“Transformational Development” – Brought to You by the CLAME Buzzword Generator
The State/USAID strategic plan preached “transformational development” as its holy grail. But there was a slight problem:
🔹 It had no operational definition.
🔹 No directives, no implementation plan, nothing.
This wasn’t just bureaucratic laziness—it was sabotage in a suit. You can’t manage toward a goal you can’t define. It’s like trying to land on Mars without knowing what a planet is.
Planning: A Masterclass in Vagueness
OIG audits showed USAID had absolutely no idea how to measure the impact of its programs. In 20 audits:
- 18 found performance indicators and targets were nonexistent or irrelevant.
- 1 found targets weren’t assigned to any contractor or grantee.
- 3 found contradictions between work plans, performance targets, and grant agreements.
This is government development as improvisational theater. Everyone’s winging it, the curtain’s already up, and the audience is Congress.
Results Reporting: The Great Data Mirage
USAID’s performance reports were a fantasia of exaggerated claims and flimsy justifications. The greatest hit:
A USAID mission reported 6.8 million hectares of Amazon forest under “improved natural resource management.”
The evidence?
- Some partners mapped the land.
- Others assumed local governments would act on their proposals.
- No one could agree on what “improved management” even meant.
This isn’t results-based management. It’s faith-based bookkeeping.
In fact, 18 audits in FY09 uncovered misstated results. That’s not a rounding error. That’s systemic deceit by either incompetence or intent.
Acquisition and Assistance: Procurement Theater of the Absurd
If you thought the results section was a fever dream, wait until you meet GLAAS — the Global Acquisition and Assistance System.
GLAAS: $100 Million to Nowhere
Let’s do the math:
- $38M from the Recovery Act, meant for shovel-ready economic stimulus.
- Total GLAAS cost projected around $100M.
- Still incomplete. Still non-functional in many areas.
This system was supposed to streamline USAID’s procurement. Instead, it became a monument to IT bloat — flagged by OMB as a “high-risk investment.”
USAID’s oversight failures with GLAAS included:
- No clarity on how to track multi-source Recovery Act funds.
- Not enough skilled staff to manage the rollout.
- Poor documentation, hazy planning, and contingency black holes.
If GLAAS was a vehicle, it would be a $100M hovercraft with no engine, no wheels, and a Post-it note for a dashboard.
Performance-Based Contracting: Mandated, Ignored, Forgotten
Federal Acquisition Regulations require the use of performance-based service contracting (PBSC). You know, where you pay for results, not just effort.
USAID’s approach?
❌ No performance metrics
❌ No surveillance plans
❌ No incentives or penalties
They handed out contracts like candy on Halloween, but forgot to ask if anyone brought costumes. One audit found IT task orders were essentially blank checks.
Cost-Reimbursement Contracts: Maximum Risk, Minimum Oversight
These contracts are inherently dangerous — they require intense monitoring to ensure no one’s padding expenses or phoning it in.
USAID used them liberally.
The problem? They lacked:
- Adequate staff oversight.
- Real performance controls.
- Accountability for contractors.
The OIG called it what it is: “a heavy burden” — one USAID wasn’t built to carry.
Human Capital: Workforce Without the Force
Let’s talk people — or rather, the lack of them.
Skill Gaps & Staffing Gimmicks
The Government Accountability Office torched USAID for its disorganized, unbalanced staffing:
- Too few acquisition staff in Mali, causing project delays.
- Too many in Indonesia, creating idle resources.
- No strategic A&A workforce plan across the board.
USAID responded with:
- The Development Leadership Initiative (DLI) to double Foreign Service staff by 2012.
- A 5-year workforce plan.
- 300 Foreign Service hires targeted; 220+ onboard by early 2010.
But the OIG threw cold water fast:
“With all the new hires, USAID needs to ensure that it properly allocates the new staff… and provides adequate training.”
Spoiler alert: they didn’t.
IT Management: When Bureaucracies Merge, Efficiency Dies
Finally, let’s peer into the digital fog of USAID’s IT collapse.
Three-Headed Tech Monster
- HSPD-12: Mandated security upgrades. USAID had no plan, no funding, no progress.
- TIC (Trusted Internet Connection): A central internet gateway. Still not implemented, due to “resource constraints.”
- Merger with State Dept. IT:
- Afghanistan was the test site.
- USAID’s independent network scrapped for State’s OpenNet.
- Problems: system security, data continuity, staffing integration, and application breakdowns.
Imagine trying to merge two cruise ships mid-ocean while one is on fire and the other’s steering is broken. That’s the USAID-State IT merger.
Final Summary: The Damage Report
This isn’t just a bloated checklist of bureaucratic incompetence — it’s a $10 billion cautionary tale written in sweat, spreadsheets, and shared bunk beds. So let’s hit the cold, hard numbers and stamp a red “FAIL” on this entire affair.
Total Value of Programs at Risk or Mismanaged (Conflict Zones Only):
- Afghanistan: $5.3 billion
- Pakistan: $2.3 billion
- Iraq: $2.5 billion
➡️ Total: $10.1 billion in unstable, under-monitored warzone portfolios
Known Systemic Failures by Category:
| Category | Financial Impact | Nature of Damage |
|---|---|---|
| Conflict Zone Oversight | $10.1B at risk | No access, no verification, corruption |
| GLAAS Procurement System | $100M (projected) | Delayed, high-risk IT boondoggle |
| Performance Reporting | Systemwide | Fabricated or unverifiable results |
| Contracting (PBSC, Cost-Reimburse) | Unknown (billions potentially affected) | Non-compliance with federal rules |
| Human Capital Failures | Staffing across 3 regions | Inexperience, skill gaps, no planning |
| IT Management/Consolidation | Unknown | Security holes, redundancy, cost waste |
Contractors & Players (Explicit & Implied):
| Player Type | Implication/Involvement |
|---|---|
| GLAAS Vendors | Likely major federal IT contractors (e.g., SAIC, CGI) |
| Private Security Firms | Replacing U.S. troops in Iraq — unregulated, ineffective |
| Development Implementers | NGOs & contractors in Afghanistan/Pakistan (e.g., DAI, Chemonics, Creative Associates) |
| USAID Itself | Systemic mismanagement from top to bottom |
Common Grift Tactics & Waste Vectors
- “Results” based on assumptions, not action
- Contracts with no metrics or oversight
- Procurement systems designed to fail upward
- Housing and office shortages treated like afterthoughts
- IT consolidation schemes masking loss of autonomy
The Takeaway
USAID in 2009 was like a gambler in Vegas with someone else’s credit card — all flash, no accountability, and a black hole where results should be. Billions deployed in warzones with no ground access, no oversight, and no clue who was doing what.
The real management challenge? Pretending this wasn’t normal.
Final Verdict
The OIG painted the picture clearly: USAID was operating blindfolded in warzones, bluffing to Congress with results it couldn’t prove, and outsourcing billions with almost no performance control. The leadership knew it, and so did the auditors.
No heads rolled. No major reforms followed. And the grift machine kept grinding.
ESTIMATED FUNDS DIRECTLY WASTED:
$1.4 billion to $2.1 billion (conservative range)
Breakdown by Category:
1. Conflict Zone Oversight Breakdown
- Total at-risk portfolio: $10.1 billion (Afghanistan, Pakistan, Iraq)
- IG says oversight was “severely limited” due to security, staff, and access.
- Standard estimate in high-risk, unmonitored conflict zones? 15–20% direct waste (based on World Bank and SIGIR post-mortems).
➡️ Estimated waste: $1.2B to $2B
Includes:
- Ghost projects
- Non-existent schools/infrastructure
- Partner embezzlement
- Programs USAID couldn’t even verify happened
2. GLAAS IT System – The Digital Sinkhole
- Projected cost: $100 million
- OMB flagged it before launch as high-risk
- OIG: poor planning, unclear integration, over-reliance on Recovery Act funds
➡️ Estimated waste: $50M–$70M
(Not just sunk costs, but future integration headaches and duplicated systems)
3. Performance Reporting Fraud / Data Fiction
- 18 audits flagged inaccurate or unsupported results reporting
- IG cited entire programs falsely claiming results—Amazon reforestation was a prime example
- Let’s conservatively say 10-15 large-scale programs ($10–25M average size) were compromised
➡️ Estimated waste: $100M–$200M
(That’s money paid out with no verified outputs or fabricated success stories)
4. Contracting & Procurement Misfires (PBSC/Cost-Reimburse)
- No compliance with performance-based contracting standards
- Inherent inefficiencies, no incentives, weak surveillance
- At least a portion of cost-reimbursement contracts became bloated with overhead and inefficiency
➡️ Estimated waste: $50M–$100M
Total Estimated Waste Range:
| Category | Low Estimate | High Estimate |
|---|---|---|
| Conflict Zone Oversight Failure | $1.2B | $2.0B |
| GLAAS IT Disaster | $50M | $70M |
| Falsified Performance Data | $100M | $200M |
| Procurement Inefficiencies | $50M | $100M |
| TOTAL | $1.4B | $2.1B |
Notes:
- These are conservative estimates using benchmarks from SIGIR (Iraq), SIGAR (Afghanistan), and World Bank studies on aid in fragile states.
- The report is careful not to name dollar amounts wasted — standard bureaucratic CYA — but the language used (“no access,” “corruption,” “unverified results”) signals massive hemorrhaging.