Biden Administration Stonewalls Probe Into Hundreds of Millions in Potentially Wasted Foreign Aid

USAID may use taxpayer dollars to cover an 'awardee’s rent in Geneva or Rome or Paris,' lawmakers say

USAID chief Samantha Power / Getty Images
April 25, 2023

The Biden administration is stonewalling a congressional probe into whether the U.S. Agency for International Development wasted hundreds of millions of taxpayer dollars on hotels, lobbying services, and luxury airfare.

USAID refuses to tell Congress how much of the $15 billion it doled out to foreign entities in 2022 was ultimately spent on items unrelated to humanitarian projects. The agency’s opacity could mask the fact that USAID grant recipients are wasting taxpayer dollars on frivolous expenses, a pair of lawmakers claim in an oversight letter obtained by the Washington Free Beacon.

"Indirect costs, which can include rent for a partner’s corporate headquarters, lobbying costs, and other miscellaneous expenses can easily exceed 25% of an organization’s total award," Sen. Joni Ernst (R., Iowa) and Rep. Michael McCaul (R., Texas) wrote to USAID last week in a letter ordering the agency to stop obstructing congressional efforts to investigate this spending.

There is no way to know exactly how much USAID has wasted on these expenditures because the agency has been blocking a congressional investigation for more than a year, according to the lawmakers. Ernst and McCaul described the agency’s behavior as "troubling" and said the House Foreign Affairs Committee intends to discover if taxpayer funds are being "wasted on paying for awardee’s rent in Geneva or Rome or Paris."

The foreign aid agency has a history of misallocating funds. An inspector general determined in 2019 that just 43 percent of the agency’s awards "achieved, on average, just half of their intended results." USAID, whose budget President Joe Biden increased by 10 percent after taking office, also has a history of supporting organizations that work alongside terror groups and maintaining links to militant organizations like Hamas. The agency’s spotty oversight record has long been a source of concern on Capitol Hill, and with Republicans now in control of the House, Congressional investigators are ramping up efforts to hold USAID accountable.

Ernst and McCaul’s investigation hinges on Negotiated Indirect Cost Rate Agreements (NICRA), a little-known contract carveout that permits U.S. government grantees to spend a substantial portion of taxpayer dollars on things like lobbyists, hotel stays, and even first-class airfare.

In theory, NICRAs restrict how much money federal grantees spend on extraneous items, but these costs "have ballooned due to a lack of stewardship and care" under the Biden administration, the lawmakers say.

USAID is supposed to renegotiate these NICRA rates every year to ensure taxpayer funds are not being wasted on frivolous projects. But the agency has let oversight fall to the wayside, as it failed to hire more officials to keep up with ballooning expenditures. Just 7 federal employees are responsible for reviewing nearly 6,000 transactions to more than 300 organizations.

Ernst and McCaul, who chairs the House Foreign Affairs Committee, are particularly interested in USAID’s lies to Congress about the NICRA database it maintains.

Ernst first inquired about the payments in November 2022 but did not hear from USAID until February 2023, when the agency claimed it "does not have a system to track or report on this data." Later that month, Ernst discovered a public NICRA database and presented the information to USAID, which subsequently confirmed the database does exist.

The agency then claimed it was "legally restricted from sharing an implementing partner’s proprietary information, including its NICRA" and threatened the senator with "civil and criminal penalties" if she pursues an investigation.

Ernst again called the agency’s bluff mid-February, saying that "congressional oversight on federal agencies spending and contracting negotiations most certainly does not violate federal law, including the acts listed in your response."

After that exchange, USAID provided a third explanation for its refusal to cooperate with Congress, saying it "protects the confidential business information of its implementing partners, including NICRAs," and would not disclose this information.

The pair now have plans to grill USAID administrator Samantha Power over the issue, according to congressional sources who said the Republican-controlled House committee is poised for a fight with the agency.