A Virginia contractor that profited immensely on sprawling development projects across the world is now under investigation by the agency that bankrolled much of the work and the independent government watchdog with jurisdiction over the non-profit firm’s activities in Afghanistan.
The U.S Agency for International Development suspended International Relief and Development from eligibility for any government contracts Monday after uncovering significant problems with the way IRD handles taxpayer dollars and implements its projects. The company has received more than $1 billion in contracts for work in Afghanistan and $85 million for work in Iraq, as well as an unknown total for projects in other countries.
A spokesman for the Special Inspector General for Afghanistan Reconstruction confirmed that SIGAR is also investigating the Virginia-based nonprofit for alleged wrongdoing while executing the contracts in Afghanistan.
“The agency’s review revealed serious misconduct in IRD’s performance, management, internal controls and present responsibility,” USAID said Wednesday. Agency officials vowed to “take every measure at our disposal to recover these funds.”
IRD President Roger Ervin said the nonprofit has already taken steps to correct problems with “leadership, compliance and internal controls.”
“Nonetheless, it is clear from the suspension notice that USAID has determined that much more remains to be done in certain areas,” Ervin, who has only served as the nonprofit’s president since December 2014, said Monday. “We are working on a response to USAID that will directly address the agency’s concerns, and re-establish confidence that federal taxpayer funds are being prudently managed by IRD.”
In a memo to IRD staff Tuesday obtained by the Washington Examiner, Ervin said the nonprofit’s employees are “our most valuable asset” and assured them “we are doing everything we can to ensure they can continue” their work despite the suspension.
Ervin said in the memo, which outlined talking points about the suspension, that IRD’s ultimate goal was to secure an “administrative agreement with USAID” in order to allow it to pursue additional contracts with the federal government. Its existing projects will continue uninterrupted while the dual investigations continue.
IRD has a history of problems completing USAID-backed projects, according to a series of reports from the agency’s inspector general. Common problems included falling behind schedule, reporting unreliable project data and running over its budget.
A March 2014 inspector general audit found the nonprofit had spent far more than it had been budgeted in a nearly $62 million contract to help strengthen West African communities against terrorists. It went 442 percent over-budget on travel, transportation and per diem costs.
IRD was supposed to work with local partners in target countries to strengthen community governments and improve conditions for youth in an effort to combat the factors that typically allow insurgents to gain ground. But two of the three local partners quit the project less than two years through the five-year contract.
One claimed “they felt IRD used them to win the award.” The Niger-based group said it only learned that it was to be partnered with IRD through the local newspaper. The other said IRD’s performance “did not meet [its] expectations.”
The third local partner, which worked out of Burkina Faso, maintained its ties to IRD but told the inspector general that it was “frustrated” with IRD, claiming the nonprofit withheld a promised start-up payment of $50,000. The delayed payment forced the local partner into debt because it could only receive money after submitting invoices for incurred costs.
In another project, IRD was one of three contractors who reported helping 33.7 million Iraqis in their efforts to assist internally displaced people — even though the entire population of Iraq was only 30.4 million at the time, a March 2010 inspector general report found.
IRD ranked among USAID’s top contractors in 2012, the most recent year for which USAID data is available, by winning $181 million in contracts. USAID was responsible for nearly half of IRD’s earnings that year, tax documents show.
USAID has awarded the nonprofit more than $2.4 billion of the $3.5 billion IRD claims to have raised since 1998, according to USASpending.gov.
Media reports have questioned the nonprofit’s tendency to lavish its executives with generous salaries and bonuses in the past, most notably in a Washington Post article that appeared in May 2014.
John Sopko, head of SIGAR, demanded from IRD and USAID Director Rajiv Shah answers to allegations made in the Post story. Among the allegations was that IRD had forced departing employees to sign confidentiality agreements, preventing them from speaking critically about the nonprofit to outsiders.
“The threat of retaliation for reporting problems to oversight agencies is all too real,” Sopko wrote in a letter to then-president Arthur Keys. “I am simply not willing to tolerate an attempt to institutionalize employee intimidation. Therefore, I am initiating an inquiry into these allegations.”
Weeks later, Sopko fired off another letter expressing his frustration with IRD’s inadequate response to the first one.
“SIGAR has not agreed to any ‘understanding’ with IRD,” Sopko wrote. “To the contrary, we are actively seeking information concerning IRD’s compliance with whistleblower protection laws and regulations.”
The reply that had troubled Sopko was written by IRD General Counsel Jason Matechak, who had told the watchdog he’d resolved the issue by simply emailing 49 former employees to tell them that their confidentiality agreements were not meant to “run afoul of the False Claims Act.”
Matechak is a seven-year veteran of USAID, according to the Center for Responsive Politics. Tax forms show he earned $420,000 in salary and bonuses in 2012.
Matechak is just one of several top IRD officials who came to the nonprofit through a revolving door with the government and began collecting a hefty paycheck.
Ervin served as director of the State Department’s Africa bureau and served as a senior policy advisor in both the House and the Senate, among other top government posts, before he took over as president and CEO of IRD.
The problems that riddle IRD’s contracts echo those found in projects run by RTI International, another top USAID nonprofit that has a history of wasting taxpayer funds as reported by the Examiner in November 2014.
Like RTI, IRD played a major role in rebuilding Iraq and has taken on health initiatives in Africa.
