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Ep 32: USAID Market Chat with Christy & Chuck
00:30:39
Konektid Chief Operating Officer, Christy Hollywood, and CEO of Pope International and former Senior USAID staff member, Chuck Pope, discuss key trends in the USAID market and the impact of the upcoming election. The discussion included insight on...
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- [00:02]
A
Welcome to the Aid Market Podcast where foreign aid partners connect to learn about key funding trends and market insight. The podcast is co hosted by Aid Connect Data, the pipeline and market intel software for USAID Partnering and Connected International, the leading USAID partnering support consulting firm. Now, here's your host, Mike Shanley.
- [00:28]
B
Welcome to the Aid Market Podcast. Have a great show. Today. Our guests are Chuck Pope, a 15 year veteran of USAID and now the CEO of Pope International, and Christy Hollywood, who brings 20 years of experience in the market and is the connected Chief Operating Officer. She was also the former VP of Business Development at Cardinal. Christy and Chuck, I want to hear from both of you a lot of interesting topics today. So let's jump right into it. Chuck, if we could start with you. What's a key trend that you've been watching in the USAID market this year?
- [01:06]
C
Yeah, I don't think this is going to be a surprise, but everything this summer has been slow and delayed to the point that I had a VP of Business development contact me because she was going to have to go before her board and explain what was going on. And I assured her everything is delayed and slowed down. Except we're in an election year now. It seems everything is kind of speeding up to try to get as many things awarded as possible before we, you know, who, who knows what happens November. So, yeah, so we're all living the dream.
- [01:42]
D
Over.
- [01:44]
B
And what about on the, the CO side, Chuck? How, how are you seeing that play, play with this on the contracting officers and staffing? Is that one of the main internal factors contributing to that?
- [01:58]
C
Yeah, you know, our good friend Jamie Rogers, the head of OA who loves all of us and loves the ANA workforce, you know, he's really, he's really trying to, to move as quickly as possible. You know, the whole ANA acceleration, efforts to get more ANA staff. And I think that at some point he's going to be sending some things out. They're going to be doing a, they're going to be given an update on the strateg. But as I say, ad nauseam. Whenever we talk about issues at aid, we're usually talking about these are symptoms of the greater malaise of the lack of staffing. But Jamie is working on it and we all wish Jamie the best.
- [02:42]
D
Over.
- [02:43]
B
Absolutely. Christy, what have you been tracking in the market this year?
- [02:48]
D
Well, first I'm just going to amplify what Chuck said about the delays. I was talking to one of our clients recently and all of their strategic bids for the year came out in the same four week period after massive delays. So it is happening, it is real. One of the other trends I've been seeing is the continued evolution of M and E monitoring and evaluation. Really starting to get more teeth and more focus on the continual learning and adapting adaptive management. We're starting to see continuing to see more quality assurance surveillance plans and understanding those are about the adaptive management part. They're not tracking your outcomes and your indicators there. But what things would require a shift in your management strategy. Those types of things. Service level agreements is one thing that other parts of the government have used in the past that are kind of similar and kind of, if you think about it that way, it might help. I'm also really excited to see what I think is a deeper interpretation of USAID taking on those high level interagency private sector cross donor coordination through initiatives like the Global Infrastructure Partnership, which is huge and could be really impactful globally. And there's allusions to that in some of the new draft policies coming out around other topics as well. Great.
- [04:22]
B
Now what about on the partnering side? We'll start with the new and local partners. How have you seen and Christy, we'll stay with you on this one. On the localization side, how have you seen that play out and evolve over over the year?
- [04:38]
D
I think USAID is continuing to broaden their definition of what local inclusion looks like and what new partners look like. I think they're also starting to make sure that missions have access to ways to engage with local organizations more systematically. So all that work they've been doing is starting to show fruit. I know just in the last couple of months we've seen two different diversifying partnerships in WASH opportunities come out the dip. WASH opportunities come out. They're starting to translate materials, mostly the early stage stuff so that local partners can get more engaged as they're putting out draft solicitations, that sort of thing. We're looking at key personnel not being included as evaluation factors which allows more local people to actually participate depending who wins, rather than having to sign up for just one team. And I think we're seeing both USAID and implementing partners look at capacity strengthening beyond just compliance and proposals, which is a really nice change, especially as USAID continues to try to lower barriers to entry.
- [05:59]
B
Chuck, what are you seeing? And I'm also particularly interested in on the new partnerships initiatives. So maybe not just local partners, but new partners both from your experience at usaid. And then now after that, how have you seen that evolve and be interested to get your thoughts a little bit on what Was the original intention. How have you seen that playing out over the last few years and now two different, under two different administrations.
- [06:27]
C
Great question. And I know we're going to get to it, but this does relate to what we're going to talk about later elections. You know, I, before this I had a conversation with some of our DEVEX partners and one of the things I told them is localization is here to stay. You know, it was, it was that they were fond of localization the previous administration. So whatever happens, localization is here to stay. And I think that, I think that there was this tendency to maybe, maybe some of the detractors of localization maybe to want to wait it out and that again, you know, it's here to stay and you know, it just makes sense. And one of the things you have to keep in mind with localization, there are different parts of localization. I think a lot of people when they, when, when they're worried about localization, they're worried about that 25% of USAID's funding by 2025. And I will say repeatedly what I've said in the past that that is mathematically not going to happen. But the other elements of localization, you know, to have local voices in design, to be co creating with local partners, you know, Christy mentioned it to, to, you know, to not naming the key personnel in applications, proposals and valuation factors also kind of meant to sort of level that playing field to get more local leadership in the projects. As far as, you know, the whole notion of new partners. You know, again, I want to say that, I want to say this was attributed to either Mark Green or Bill Sir, I don't know, may even gone. Maybe it even went back to Raj Shaw. But somebody used the, the term that there, there's a nut. The AIDS tent is big enough to have new players. And so you know, again, my, one of, one of, one of the approaches that I was a proponent of when I was at the agency that I'm still a proponent of is using fixed amount awards. And, and last fall AID commissioned a white paper and it was done out of I believe PDT to again to sort of do some myth busting on, on, on fixed amount awards. And, and I hold that for first time local recipients a fixed amount award, you know, is perfect. So again, localization is here to stay. It makes sense. And you know, I think that people are, you know, are getting behind it and they're trying to find more ways to you know, to, to work with local partners, which is good for all.
- [09:07]
B
Of Us and how have you what about and what about on the new partnerships initiative? Where are you seeing it? New partners are it's easier for them to work with usaid is it more just there's a greater openness now to hearing a new idea rather than just putting the trusted partner or the name brand partner on your proposal. And then after this Christie, I'd love to hear your thoughts. And actually on the tactical side as we work at connected with so many new partners working with USAID both in Europe and around the world, what what what what you're seeing in terms of are they successful getting in and what you know, maybe what are some of those continued barriers to entering the market?
- [09:48]
C
I mentioned this earlier that you know that Jamie Rogers and I had traded some messages and I promised to do a few plugs for him and one.
- [09:55]
B
Of the things go for it. He's a friend of the show so please a friend of all you and Jamie were chatting about.
- [10:01]
C
So one of a few things he wanted to remind the audience about again the work with USAID portal which is, which is wonderful. But the other thing kind of specific to your question Mike is the AAPD on the two CFR changes. And so one of the, one of the major, there are many updates to 2 CFR but one of the major updates was raising de minimis from 10% to 15% that will be extremely helpful to local partners who generally do not have the resources to go through a full blown nicar process. So one of the things that, that, that Jamie commissioned was basically an early basically giving AOS the option to go ahead and adopt these changes. So administrator power Jamie aid they are serious about lowering the barriers to entry and also working with their own bureaucracy to educate them on hey, here are all the techniques you have to lower the barriers to entry. So USAID is serious about having new entrants and they are taking just the steps that I just mentioned. They are taking those steps over and.
- [11:24]
B
You'Ve seen that in both the previous so the Trump and the Biden admin under green and under power. Maybe some variance but definitely continued the core of what you said that vision. Let's make it easier for new partners and local partners to work with usaid. That's been consistent.
- [11:39]
C
Yeah. And and I do want to, I want do want to plug a few things and you know to sound like a broken record. I wish USAID would do more concept notes as the, the first step, a three to five page concept note. I mean they do it here and there but that was one of the hallmarks of the preview administration with Bill Steiger and Randy T. That we should be doing more calls for concept notes and then of course on the acquisition side, more phased acquisition because again, it makes it easier to participate. The other thing that I again, I try not to talk too much, but one of the things I would love AID to to do is, you know, one of my favorite sayings is let's not let the perfect be the enemy of the good enough. I would like to see more of the umbrella awards which were envisioned under the previous administration where an INGO or a large for profit implementing partner would get an award but they had to push 60%, 77, 80% down to the subs and then they would do the compliance and capacity building. I would like to see AID do more of that anyways. Sorry, sorry Christy. Sorry Mike, don't mean to take time, but I'll pause.
- [12:58]
B
Chuck, we didn't have on here to not talk, so we appreciate it. Christy, what are your thoughts?
- [13:03]
D
One on the umbrella model? I have put bugs in people's ears about that because that was the main way that DFAT in Australia does their work. And when you're shorthanded and you're trying to do lots of local sub grants, it's kind of the only way to go. So we'll see if that happens on new partners. Yes, they are definitely having discussions with USAID, being encouraged to apply. There are some specific mechanisms to get in, but there are still barriers. I think one of our clients put it well that it is the long game. It takes usually 12 to 18 months to get your first anything and usually that's going to be a sub award or maybe a really small purchase. Usaid, despite loving innovation, When I talk to people at lunch and have coffees, what I hear is innovation that's already had a proof of concept that's been done somewhere else that we can do in this new way. So I think sometimes there's a little lost in translation between the folks who are interested in working with USAID and USAID staff on that front. The risk tolerance, I mean, it's still most contracting officers are only doing a couple handfuls of major procurements over their career and you want to make sure that they're worried about risk if it goes wrong. And we've all seen implementing partners end up on the front page of the post for that old chestnut. And so not having USAID specific past performance is still a big barrier, which is one of the reasons why for many of our new partners that we're Working with getting them on the right teams so they can get some of that sub award performance is a critical step.
- [14:59]
B
Kristi, on the past. Oh, sorry. Oh no, go ahead on that patent past performance note, what have you seen about when it's un, Europe, UK past performance mother large multilaterals or bilaterals when there isn't that usaid or for some I think we've seen there's state departments say past performance and now looking to get into usaid.
- [15:21]
D
If the outcomes on those past projects directly align to the outcomes that USAID is looking for and you can talk about how the methodologies are adjacent to what USAID expects, then you're usually fine. But it's a little bit of a needle to thread and really working with folks to get into the how are they actually implementing their projects now? How does that align with norms for USAID and what can we position as innovation? New ways of doing business versus this is a scary, weird thing that doesn't really fit in the box. I think that's something our consultants are great at helping folks work through.
- [16:04]
B
Yeah. And I've always thought of innovation in terms of usaid really likes to scale up proven solutions that are innovative but might have, you know, gone through the pilot process. And I just had a call with someone a couple weeks ago, a venture backed firm. He's talking about how they're a great fit for USAID and they were a good fit for usa. He's like, we got enough Runway for four to six months. Can we close some deals in that time? And I was like, this isn't the market for you. Well, let's talk about, I said let's talk when you have 12 to 24 months to close this. This is not, let's throw a proposal out there. Maybe we win, maybe we don't. This is, we're entering a new market. Let's put, you know, some proper resources into it and make sure you have senior level buy in for the decision.
- [16:46]
D
And I think some of the other things that really surprise people are that de minimis. I'm like, we're finally catching up with where US philanthropy went what, five, 10 years ago to kind of have more of a sliding scale and actually cover normal overhead costs for the smaller organizations. And then as well thinking through capture, capture most other donors include that design phase in their bids. And so letting new partners know that if they're not already on the ground in the same context doing similar work, they're actually going to need to invest a lot upfront, even if it's A concept note, because most of the concept notes now require at least a summary budget, which means they have to actually do the full buildup on the back end.
- [17:36]
B
Chuck, any other thoughts on that? Otherwise, I want to give some thoughts on how the established partners are, are working and acting these days.
- [17:45]
C
I have nothing to add. Christie, let's. Wonderful job as usual.
- [17:50]
B
Let's get right into that. So the established partners, how do you see them operating? Where are they investing their resources? Focus on being more locally led. Internal process improvements, AI hiring, not hiring, Working more with consultants, working more internally, moving operations around. What are you seeing there, Chuck, in terms of the operations of the established partners?
- [18:19]
C
Almost every conversation that somebody wants to have with me has to do with bd. Everybody seems to be concerned with their piece of the pie. So of course, you know, local partners, they just want to get their foot in the door. The mid majors, you know, they want to move up. The larger implementing partners, you know, want to, you know, they're worried about. Everybody's worried, oh, localization is going to take our, whatever, our funding away. So everybody is obsessed with, with bd and then sort of, you know, along those lines, you know, I, I do see, I do see organizations and, and I said this earlier on the devex call, so it's great to have your passions. You should have your passions, but you also need to learn how to message things. And so I will tell you, and I, I, for reasons we can all appreciate, I, I shouldn't name them, but there were some organizations that moved quicker and better when it came to embracing localization. And then now there are organizations that are trying to catch up and is it too late or is it. But, but you know, most, most people are, have gotten that memo, you know that, you know that they do that they do need to change as far as, you know, again, consultants or not consultants or operations. I think that, I think that you can, you could lump, you could lump it under, you know, you could explain it however you wanted. Having your, having your office, operations closer to the projects as opposed to a large office on K Street makes sense programmatically and it also makes sense from a budget standpoint. You know, Mike, I don't believe that Connected has an office. Is that correct? You don't have an office. Right.
- [20:18]
B
Team works remotely. Yeah, yeah, we do have offices, but what. We work remotely, Chuck. Yeah.
- [20:23]
C
So Pope International has no intention to ever have its own, like, big office or something like that. So what's interesting about entering the space right now is, you know, some of these things that People felt like they had to do five years ago. We've moved past that. No, you know, in fact, I don't think that AID likes to see a nice, shiny big office, you know, in D.C. these days. So, you know, the other thing that I'm seeing a lot that I really didn't notice when I was an AOCO team, everybody's teaming up, everybody's got all these and I think that's great. You know, again, these, these relationships are great mergers. It seems like every, you know, every week somebody's getting gobbled up or regurgitating somebody, you know, so that's like another thing that I don't really recall the whole mergers. And then of course, you know, you, you, you touched on this, the venture capital that is entering this space and what that can mean for entities. So entities that used to be like, oh, we'll go after this, we'll win this. Well, you get a venture capitalist involved and guess what? So anyways, it's an interesting market, so I'll pause and, but, but yeah, we are living the dream over.
- [21:50]
B
Christy, what are your thoughts?
- [21:52]
D
Oh, I'm just laughing because I worked for a venture capital owned firm for a while, but I'm not going to talk about that. There's a lot of education both ways. So I think what I'm seeing from established partners, again, the process, streamlining, trying to figure out how they can kind of cut some costs out of the system. Lean Six Sigma appears more often than I used to see it really, seeing as Chuck was saying, putting folks closer to where the action is. So project management units, business development units, being regionally based, if not actually locally based, where they have a lot of projects and can continue to grow, that technical stuff. A lot of the hiring is being done locally now, not out of headquarters. And I think that kind of fits the vision that USAID has for the sector as we continue to grow. I think you also asked about AI, if you want me to talk about that.
- [22:52]
B
Yeah, yeah. And just operate internal investments. Yeah. So what are you seeing there?
- [22:58]
D
So there are a couple large implementing partners that we've heard have been building their own AI engines internally to do things like quicker, easier, more nuanced searching when they're doing recruiting for deeper dives into their past performance and outcomes. Those sorts of things are really useful and build on a lot of existing systems those large players already have. What we're not seeing as much of is kind of that mid size small organization building out their library around an AI system. Although there are things out there doing that, but we haven't seen that uptake in the USAID sector as much as I'm hearing is happening elsewhere in the federal sector. And I think that's because I used to say that working with USAID is like playing, playing jazz, whereas the regular federal government, it's more of a consistent playbook. You're doing the same thing over and over, whereas you're improvising a lot more on every single bid with usaid. So the writing is still mostly being done by subject matter experts and technical writers.
- [24:11]
B
And that's what we're seeing at AID Connect. We're rolling out a AI powered USAID market capture research solution. What we hear is there are plenty of things going out there for the federal market, but there's always a niche of, but it just doesn't work for usaid. And, and that's really been a fun thing this year to focus on designing something for the nuances of the USAID market. With that, let's move to elections. We were originally going to have this show, this podcast episode I think in July and then we decided to wait till after both conventions. I think we have a clearer picture. Who knows what will happen the next two months, but would love to maybe. Chuck, we'll start with you. Talk about first, what it might regardless of the elections, let's say we have an acting administrator for 6:12 months, which has happened in the past, what that might look like and then of course share your thoughts on what a Harris and or Trump, whether and, or what a Harris or Trump administrator, that would be a huge surprise. But a Harris or Trump administration, what that might mean for the USAID market.
- [25:21]
C
We are living in unprecedented times. I will start my comments along those lines. We were talking about this earlier and I said this at Devex earlier. One way or the other, there are going to be changes at AID in November. My hunch is even if the Democrats keep the White House, I think Samantha Power will be moving on. And one of the things that I, I said previously, having worked with political appointees on both sides of the aisle, these are extremely hard positions personally on people's families and stuff like that. So my gut is Samantha Power, no matter what happens, Samantha Power and a portion of those political appointees will move on. So that's scenario A. I, you know, again, of course, many of these initiatives that they've, they've been working on will continue. But the, the real, you know, the, the real potential fly in the soup is we are living in unprecedented times from a geopolitical standpoint. Does, does China try to retake Taiwan in 2026? I don't know. You know, what are the Iranians going to do? And so one of the things, it's kind of funny, Samantha Powers group had sort of what they wanted to do, but then, oh, by the way, Afghanistan, oh, by the way Ukraine. Oh, by the way, you know, Israel. So, and then of course, if the Republicans are, are take the White House, I think many of us have a good idea who would be back with that administration. And one of the things that I really love that Samantha Power did one of her first speeches, she gave kudos to Mark Green and his team because the group that will come back to aid under a Republic administration, guess what, they love localization. And the thing I feel good about that group because they, they care about development and, you know, they love development. Now, will there be changes? You know, yeah, one of the, one of the major changes that I think would happen generally Republic administrations do not like to implement through PIOs. And this is, you know, I think that many of you saw my post last week. The OIG issued a scathing Report against AID's management of PIO. So there, there will be some changes. But we say one way or the other, there are going to be changes in November. And I'll pause. I've taken too much time. But thank you. Because you bring me. Because you want to hear me talk.
- [28:01]
B
All right, exactly. Chuck. Christy, what, what are your thoughts?
- [28:06]
D
We love hearing you talk, Chuck. I think an acting administrator, they're prepping for that now. You can see that in the last couple of months, we've seen relative onslaught of new policy drafts coming out, whether it's, let's say, resilience, economic growth and trade policy. One came across my desk this morning on health. So they're, they're really trying to get those big blocks done. So an acting administrator would, would have time to do what they need to do and are empowered to do if the election. Well, regardless of where the election goes, Chuck, I agree with everything Chuck said. I would say one of the things that I anticipate if there were a Harris administration is because of her deep experience working with the Northern Triangle, maybe expanding those programs to other countries that as the immigration tide has shifted to other places of origin. So really kind of looking at that and maybe taking some of those lessons more broadly, if the Republicans win, then I think we're going to see some innovative funding mechanisms coming out, ways that new partners could more easily interact. It's going to take some creativity, but I know folks on that team have really been working on coming up with ways to do that that have already been proven, so that might be something to take a look at as well.
- [29:36]
B
Excellent. Well thank you both. Be sure to check out our past shows with Administrator Mark Green who is the lead administrator under the Trump administration, recently with Sarah Rose working on localization in the current Administrator Powers office and our episode with Jamie Rogers. Chuck also mentioned Randy Tiff. We have several episodes with him so be sure to check out all of those. Follow Christy Hollywood and chuck pope on LinkedIn as well as myself Mike Shanley and feel free to reach out with any way that we can support your work with usaid. So Christy and Chuck, thanks so much. Really enjoyed the conversation today.
- [30:18]
A
Thank you for tuning in to the Aid Market podcast. If you enjoyed today's show, be sure to subscribe wherever you get your podcasts and connect with Mike Shanley on LinkedIn to stay updated on the latest USAID funding trends.