GovDiscovery AI Podcast with Mike Shanley – Ep. 36

Bill Steiger, former USAID Chief of Staff: Partnerships and Innovation at USAID

Date: October 22, 2024

Episode Overview

In this in-depth episode, host Mike Shanley speaks with Bill Steiger, former USAID Chief of Staff and experienced leader in global health and U.S. foreign assistance, currently Global Health Consultant at the George W. Bush Institute. The conversation delves into USAID’s strategic role in U.S. foreign policy, current and future reforms, the importance of localization, inter-agency partnerships (MCC, DFC, State Department), private sector engagement, and actionable advice for implementers and future administrations. Steiger provides a candid, practical view on how USAID and its partners can better fulfill their missions amid evolving global challenges and government mandates.

Key Discussion Points

1. USAID’s Role in US Foreign Policy ([02:05])

• Centrality in Foreign Policy:
  Steiger underscores USAID's function as “essential to American foreign policy," serving core national security objectives and supporting U.S. interests globally.

  • “Every administration learns pretty quickly that USAID is incredibly useful in the service of furthering our foreign policy goals and our national security objectives overseas.” – Steiger [02:19]

• Need for Architectural Rebalancing:
  The emergence of the U.S. International Development Finance Corporation (DFC) and growth of the Millennium Challenge Corporation (MCC) are reshaping interagency roles.

  • Steiger advocates for a new, unified U.S. foreign assistance investment strategy, hoping the next administration seizes the DFC reauthorization as an opportunity for better coordination.

2. Big Ideas for Foreign Assistance Reform ([04:01])

• A. Journey to Self-Reliance as Core Principle:
  Building local independence and dignity is fundamental.

  • “Preserving and advancing human dignity. The journey to self-reliance is the core of that.” – Steiger [04:29]
  • Goal: Transition recipients into partners and fellow donors.

• B. Compact-Based Aid and Strategic Alignment:

  • Steiger proposes that USAID should function more like MCC by establishing "compacts" (binding agreements with mutual milestones) with host governments.
  • USAID would focus on countries not yet eligible for MCC compacts, guiding them toward eligibility.

• C. Private Sector Engagement:

  • Emphasizes that empowering the private sector is key for sustainable development.
    • “The private sector is actually the generator of most growth…it's going to be actually giving people...the dignity that comes with work.” – Steiger [08:23]
  • Calls for more co-financing and co-design with DFC, flexible financial vehicles, and a culture shift inside USAID to support private sector partnership (e.g., creating a Foreign Service career pathway focused on private sector work).

3. USAID vs. State Department: The Ideal Relationship ([11:00])

• Collaboration, Not Control:

  • Field relationships between State and USAID are often stronger than in Washington.
  • Steiger criticizes the State Department’s Office of Foreign Assistance (“F”) for being more of an obstacle than a coordinating body and suggests it should be eliminated or restructured.

• Distinct Roles:

  • “State Department is where we get our foreign policy guidance...But then it needs to get out of the way and allow actual implementation to be done by the folks in the field who are more oriented and trained in development.” – Steiger [13:23]
  • Advocates for flexibility: as partners progress, traditional aid should phase out and evolve into new forms of cooperation.

4. Assessment of Current USAID Direction and Administration ([17:44])

• Localization:

  • Steiger supports the “localization” push but critiques the slow pace and scope of current reforms.
    • “I champion the same cause...which is the agency and all of us in foreign assistance need to move more directly, more aggressively into working with local implementers and engaging local communities.” – Steiger [17:52]
  • PEPFAR cited as proof localization can be accelerated, even in developing countries.

• Culture and Risk:

  • Praises current USAID leadership for embracing risk tolerance and learning from “successful failures.”
  • “The risk aversion in general of the institution is something that I think everyone...knows that they need to tackle.” [18:43]
    • Applauds the new risk appetite statement but calls for stronger, faster implementation.

5. Concrete Steps for USAID Reform ([23:05])

• Localization as Default:

  • Make local partnerships the standard, not the exception, especially in more developed regions.
  • Tighten the definition of “local” organization and broaden which funds count towards localization metrics.
    • “It should not be part of the portfolio. It really should be the portfolio.” – Steiger [23:24]

• Setting and Enforcing Goals:

  • Recommends assigning quotas for localization at the mission level, modeled after the Small Business Goaling Program.
  • Clarifies accountability by tying localization and innovation to staff evaluation and promotion.

• Procurement & Innovation [32:30]:

  • Push for open, low-barrier competitions; wider use of pay-for-performance contracts and innovation incentive prizes.
  • Streamline, simplify funding vehicles; recommends proliferation of flexible mechanisms like the New Partnerships Initiative (NPI) in every mission.

6. Practical Adjustments in Procurement ([39:46])

• Pay-for-Performance at Scale:

  • Believes large contracts can and should be structured as performance-based, regardless of value.
  • Advocates for transition pathways within contracts to elevate subs to primes, supporting localization.

• Workforce & Technology Solutions:

  • Radical suggestions include use of AI to automate tedious grant/procurement processes and external technical reviewers (as used by other federal agencies) to increase competition and lighten workloads.
  • “AI can help on every score...to return the officers at the agency back to higher-level, more meaningful work, the stuff that they signed up to do.” – Steiger [41:28]

• Operating Expenses & Working Capital ([48:40]):

  • Calls for a USAID working capital fund for Acquisition & Assistance to allow use of program funds for procurement staffing and tech improvements, because the operating expense budget isn’t keeping pace with the program budget.

7. USAID Budget, Flexibility, and Congressional Constraints ([51:04])

• Paradox of Funding:

  • USAID simultaneously has “too much program money and not enough operating money.”
  • Humanitarian funds are crowding out development resources; implementation and oversight can’t match appropriation growth.
  • Suggests moving responsibility for chronic humanitarian crises out of the traditional aid budget.
  • Sees the most limiting constraints in country-level earmarks rather than sectoral earmarks.

• Recommendations for Congress and Internal Agency Changes:

  • Seeks more flexibility from Congress on budget directives and less administrative burden.
  • Suggests USAID leadership use legal flexibilities they already have and increase transparency with Congress and partners.

8. Looking Ahead: Political and Policy Recommendations ([56:45])

• Bipartisan Consensus Points:
  • Anticipates consensus on innovation, better coordination among USAID/MCC/DFC, more compact-based aid, and a stronger push for sustainability and self-reliance.
  • Warns about the “moral hazard” of humanitarian assistance becoming counterproductive in some contexts.
    • “What people should take away is that there is a consensus that USAID is important...We can make some changes that will make all of that more impactful and more efficient.” – Steiger [58:45]

9. Actionable Advice for Implementers ([59:43])

• Hold Agency and Administration Accountable:
  • Focus on reducing procurement burden and increasing transparency.
  • Ensure localization, diversification, and innovation commitments are met by holding decision-makers to their promises.
    • “The burden that USAID imposes in every aspect of its procurement process is still too high. Hold everyone accountable for that reduction, that promised reduction in burden.” [59:52]
  • Engage in policy conversations and advocate for improvements regardless of administration.

Notable Quotes & Memorable Moments

• “USAID is essential to American foreign policy and forms the core of our network of agencies that provide foreign assistance...” – Bill Steiger [02:05]
• “Preserving and advancing human dignity. The journey to self-reliance is the core of that.” – Steiger [04:29]
• “The private sector is actually the generator of most growth… it's going to be actually giving people... the dignity that comes with work.” – Steiger [08:23]
• “Localization needs to be the default, not just a portion of the portfolio.” [23:24]
• “Ambiguity leads to inactivity, leads to paralysis... if no one is actually particularly responsible for implementation of any of these goals, then nothing happens because everyone is responsible.” [31:10]
• “AI can help on every score, on every one of those fronts to, as people say all the time, return the officers at the agency back to higher level, more meaningful work, the stuff that they signed up to do.” – Steiger [41:28]

Timestamps for Key Segments

• USAID’s Role in Foreign Policy: [02:05]
• Three Big Ideas for Reform: [04:01]
• Collaboration with Other Agencies: [11:00]
• State vs USAID Relationship: [11:16]
• Assessment of Current USAID Administration: [17:44]
• Deep Dive: Localization & Procurement Reform: [23:05]
• Pay-for-Performance & Contracting Reform: [39:46]
• Operating Expenses and Working Capital Fund: [48:40]
• USAID Budget Challenges & Congress: [51:04]
• Advice for Implementers: [59:43]

Conclusion & Takeaways

Bill Steiger offers a comprehensive, pragmatic vision for a reformed, modernized USAID that partners more actively with local organizations and the private sector, integrates innovation and risk-taking, and seeks genuine sustainability and dignity for aid recipients. He stresses clear accountability, practical reforms (both legislative and internal), and constructive partnership across agencies and with implementers. For future administration officials and implementing partners alike, his message is: be bold, be accountable, embrace innovation, and push for a truly transformational approach to U.S. foreign aid.

For more episodes and resources:

• govdiscoveryai.com
• konektid.com