A North Carolina nonprofit awarded billions of tax dollars over the years by the U.S. Agency for International Development keeps a revolving door swinging for former government officials while spending heavily to lobby Congress to keep the federal money pouring into its corporate treasury.
RTI International’s development work has been criticized in a litany of inspector general reports over the past decade, but the Raleigh-based organization continues getting high-profile USAID contracts and hiring former top officials from USAID.
Nearly $208 million was awarded to RTI by USAID just in 2012, so it’s no surprise that federal funding has accounted for more than three quarters of the nonprofit’s revenue between 2009 and 2011, according to financial disclosure documents.
The nonprofit spent $377,825 on lobbying in 2012, according to its tax filings, relying heavily on Cornerstone Government Affairs for lobbying services in Washington. RTI paid Cornerstone $240,000 in 2012, putting the nonprofit among Fortune 500 firms that are also Cornerstone clients, including Microsoft, Boeing and GlaxoSmithKline.
The intimate relationship between RTI and USAID began in earnest in April 2003 when RTI was the sole bidder on a $168 million contract to promote democracy in Iraq, fresh from its liberation by the U.S. military from Saddam Hussein’s tyranny.
A September 2003 memorandum from the agency’s IG suggested the contract was merely intended “to justify spending the available funding of approximately $150 million within one year rather than being based on an assessment of actual or estimated needs.”
The memorandum said that sum may have been “in excess of need.”
Despite the nonprofit’s near-complete failure to comply with contract regulations requiring officials to turn over regular progress and expenditure reports, USAID handed RTI three consecutive contracts between 2003 and 2011, totaling more than $400 million dollars.
“There’s obviously a lack of oversight in administration of the funds USAID is awarding,” Scott Amey, general counsel of the nonpartisan Project on Government Oversight, told the Washington Examiner.
That may be a result of the fact that former USAID officials populate the ranks of RTI, with some running programs for the nonprofit that they oversaw at the agency. The issue raises questions about the agency’s impartiality when it comes to procurement.
For example, Aaron Williams, currently vice president of RTI’s International Development Group, spent more than 20 years with USAID before joining the firm. He became vice president of international business development for RTI in 2003.
Williams took a brief break from RTI when President Obama appointed him as head of the Peace Corps in 2009, after Williams had served on the Obama-Biden transition team. By 2012, however, he was back at RTI.
Philip Schwehm, vice president of governance and economic development, departed USAID for the nonprofit in 2004 after serving as the agency’s senior governance advisor in Indonesia, the same country where RTI landed a local governance development contract in 2010.
Barbara Kennedy spent more than two decades in USAID’s foreign service before RTI tapped her to perform “a market assessment of opportunities with USAID” as a consultant. The firm hired her in 2001 after she discovered RTI could have a “significant” partnership with the agency.
Kennedy is now one of the nonprofit’s most highly-compensated executives, netting six figures in bonuses on top of a more than $250,000 salary.
And the list of agency insiders among RTI’s staff goes on. Neil Gordon, a POGO investigator, said a “very free-swinging revolving door” allows contractors to snatch up agency officials.
“Personnel from [US]AID get jobs, very often with the companies that do business with them,” Gordon told the Examiner. “In Afghanistan specifically, they repeatedly have been found to lack oversight of contractors. In fact, recently they’re implementing a plan to put contractors in charge of overseeing contractors.”
When the nonprofit won its contract in Iraq, much of the small team initially in charge of project implementation had been plucked from USAID.
Williams had joined RTI the same year it won its largest-ever award. He was among the contingent of five RTI executives who arrived in Iraq in late 2003 to make way for the nonprofit’s efforts.
With Williams in Iraq that fall was Peter Benedict, a long-time USAID mission director, and Chuck Costello, who had logged more than 25 years at the agency. Benedict joined Williams in leaving USAID for RTI in 2003.
In a 2004 interview, Costello described the flow of agency money to his new employer’s efforts in Iraq.
“As you know, typically they give you a $100,000,000 task and they give you $7,000,000 to work with, but we had — I’m exaggerating a bit — virtually unlimited money the first year. … [F]unding was there, although it was dribbled out a bit too much at first on kind of a phony weekly performance basis. We had no resource constraint — I’ll put it that way — in year one to try to accomplish our program objectives,” Costello told the Institute of Peace.
