In this article, Alex Tilley analyses the transparency of private aid contractors. These organisations handle billions of dollars of aid money, yet the largest players are almost completely un-transparent. This limits both accountability and the scope for analysis of international aid flows. Alex takes a deep dive into the transparency of two of these companies, Chemonics and Adam Smith International, and provides clear policy recommendations to help improve the visibility of the aid that flows through them.

We are publishing this piece ahead of the academic workshop “New tools for aid accountability: tackling the ‘black box’ of private sector contracts and innovative development finance” to be held later this month. The workshop is organised by researchers based across Cambridge, Nottingham, Queen Mary, Sussex and St Andrew’s universities.

Why do we need to know more about the aid going to private contractors?

At Publish What You Fund, we have been spending time recently looking into localisation of aid spending. With current transparency data, we were able to gauge how much of the US Agency for International Development’s (USAID’s) spending is channelled directly to “local” organisations and companies. Similarly, through the Aid Transparency Index we have been looking at how aid data can be used to trace aid flows and network data through and across delivery chains. Both of these strands of work have raised questions about the transparency of aid implementers. Transparency of actors down the delivery chain is required to build a complete picture of the network of aid delivery. This can then help us to see where funds are disbursed and spent, and ultimately quantify how much aid money reaches the countries and communities it is purported to benefit.

Private contractors are a very significant group in the first tier of “prime” recipients of aid, often channelling hundreds of millions, or billions of dollars of aid money. While consultants and consultancies have been a perennial feature of development aid, their use to manage and deliver aid has grown significantly over the past decade and a half. This includes large, multi-sector professional services firms such as Deloitte and PricewaterhouseCoopers (PwC), as well as specialized aid consultancies. In spite of the large volumes of public money they handle, transparency is lacking.

There is a broad consensus on standards for aid transparency among the world’s major aid donors and multilateral organisations, as a cornerstone of good democratic governance. Transparency allows citizens in both aid recipient and aid donor countries to hold these organisations to account. It also facilitates research and analysis of aid delivery that can help improve effectiveness, value for money, coordination among aid organisations and responsiveness to needs. However, compliance of major private sector implementers with aid transparency standards is patchy, with many publishing almost no data about their activities and finances. Others are publishing aid data, but for an incomplete sub-set of their activities. None of the top USAID or FCDO implementers I refer to in this article publish basic information such as reports and accounts on their own websites and I needed to look at official company registry filings to find these. Complex company structures including multiple holding companies, and branches registered in other home and host countries, further obscure the operational and financial picture. The large professional services firms do publish reports and accounts for their entire businesses but with no specific data about international aid spending.

How much aid do private implementers channel?

I analysed official development statistics from the US and UK to get top-line figures for the amounts of aid they deliver through private contractors. I then tried to get totals for the amounts of aid two individual contractors channel. I was not able to get comprehensive figures for either of the firms I looked at.

Total US aid spent through the private sector

Members of the OECD Development Assistance Committee (DAC) of major bilateral donors, including the US and UK, report comprehensive annual statistics about their aid and development spend. These statistics are published through the OECD Creditor Reporting System (CRS) with an 18-month to two-year time lag. Using the US’s reported data I was able to get some insights into the amounts they are spending through the private sector.

USAID recorded a total of US$25.3bn of commitments in 2021. Of this, US$5bn was channelled through US private sector implementers and US$1.3bn was spent through the private sector in recipient countries. Many of the largest contractors in recipient countries are local branches of international brands such as Deloitte, PwC and Cardno Limited. Taking these two totals together, 25% of USAID’s spending was contracted through the private sector. Some 340 individual companies are listed as USAID implementers.

Looking at other US departments and agencies spending ODA, the State Department recorded commitments of US$8.2bn in 2021 with US$860m spent through the US private sector and $625m through non-US companies. This adds up to 18% of State’s total aid spend going through the private sector.

For others disbursing ODA it is less clear, however. The Department of Defense recorded aid commitments of US$3.2bn but has no breakdown of the amount that went to private contractors. The Millennium Challenge Corporation had commitments of US$1.1bn in 2021, all of which was recorded as going to “public corporations”. Recipient governments set up Millennium Challenge Accounts (MCAs) that directly receive the funds for spending on infrastructure, agriculture, education and other development projects. It is not clear, however, how much of the MCA funds are spent on private consultants.

Total UK aid spent through the private sector

I also reviewed the UK’s international development statistics to establish how much UK aid is channelled through private contractors. In 2021 the UK reported a total of £11.4bn of ODA. Of this £467m was channelled through “non-financial corporations” (4% of the total spend). The vast majority (£465m) of these were UK-based with just £2m channelled through recipient country non-financial companies.

The proportions are much higher when looking just at country-specific aid, however. This sub-set of UK aid excludes international programmes and non-country specific spending such as core contributions to multilaterals. For country-specific aid, the proportion spent through the private sector has remained consistent at 12-14%, as UK bilateral aid has declined over the past five years.

UK country-specific aid, private sector delivery

Unlike the US, the UK does not identify specific implementer names in its development statistics, (except where these have their own unique channel codes). Including implementer names in development statistics would mean we could identify which organisations are receiving the largest amounts of UK aid.

Total aid managed by individual companies

According to data compiled by Devex from USAspending.gov, the largest USAID contractor in financial year 2021/22 was Chemonics (US$1.5bn), followed by DAI Global (US$421m) and Abt Associates (US$199m). The highest paid Foreign, Commonwealth and Development Office (FCDO) consultancy in UK financial year 2022/23 was Adam Smith International, with contracts worth a total of £198m.

Analysing consultancies on a country-by-country basis does not always provide a complete picture, however, since many provide services for multiple governments and for multiple ministries and agencies within countries. The three largest US consultancies are all suppliers for UK Aid, and Adam Smith International does business with USAID and DFAT in Australia as well as the FCDO. They are also subject to mergers and acquisitions that can expand reach to other donor countries. For example, one of the largest Australian aid and development consultancies – Coffey International – was recently acquired by the publicly listed US engineering and consulting firm, Tetra Tech.

So, while we can get some idea of the amounts of aid that specific donors channel through consultancy companies, it is more difficult to get a full picture of these companies’ operations. Since they mostly do not publish detailed reports and accounts for all of their operations it is often not possible to find out how much aid money they actually receive, or how and where they spend that money.

To get an idea of what we can currently find out based on data that is publicly available I had a closer look at the top recipients of USAID and UK FCDO aid money. While obviously not fully representative, this does provide a good indication of current levels of transparency of private contractors.

Case studies

USAID and Chemonics – fractured data and unhelpful redactions

USAID publishes some information about its funding channelled through Chemonics. Some of this information is, however, inconsistent or incomplete. In its 2021 reporting to the OECD, USAID records a total of US$569m in commitments to Chemonics. However, US$2.03bn of USAID commitments to the US private sector have the implementer name redacted. Given that other sources indicate much higher total funding to Chemonics, it is likely that a large amount of the redacted funding is in fact channelled through Chemonics.

By cross referencing data from various sources it is possible to start piecing together a picture of Chemonics’ US funded activities. It is presently very difficult, however, to trace funds down the delivery chain or to build up a picture of how funds are spent by Chemonics.

The USAspending.gov website has a search function that generates profiles of receiver organisations. Searching for Chemonics gives top-line information about their funding from the US government. Total spending through Chemonics in 2021 was US$1.66bn, all from USAID (this was down from an all-time high of US$2.25bn in 2020). By far the highest proportion of spend with Chemonics is on “Administrative Management and General Management Consulting Services”, which makes up US$1.36bn (82%) of the total. The top three primary places of performance are listed as United States (Washington DC) US$1.3bn (78%) followed by the Congo (Kinshasa) US$48.5m (2.91%) and Sudan at US$32.5m (1.95%).

Through USAspending.gov it is also possible to view information about individual contracts. The two largest Chemonics programmes are a contract running from 2015 to 2024 worth up to US$5.8bn and a contract running from 2015 to 2023 for up to US$2.6bn. These are both part of a global health supply chain programme focused on HIV/AIDS and malaria. More detailed information about incoming and outgoing transactions, budgets, and descriptive data such as objectives, activity descriptions, results and any project reports or evaluations are not available through USAspending.gov.

There is a dedicated website for USAID’s global health supply chain programme that contains more detail about the programme activities. However, I found no mention of Chemonics as the principal supplier of the project on the website.

Next, I reviewed USAID’s International Aid Transparency Initiative (IATI) data. Searching for “Global Health Supply Chain” in USAID’s data came up with 17 active projects. Among these were a project with total commitments of US$5.5bn and a malaria procurement and supply management project with US$2.1bn of commitments, which look like they correspond to the projects we identified in the USAspending.gov data. These contain some more detailed financial transaction data and some results and outputs documents (quarterly reports). However, it was not possible to confirm that these projects are delivered by Chemonics since the implementing organisation is redacted in both cases and there are no transaction receiver organisations listed. The title of the US$5.5bn project is also redacted and the description is for a project to strengthen democratic governance and sustainable economic growth in Ukraine – this looks like a mistake in USAID’s data.

Chemonics’ own website includes project pages for 215 projects with dates ranging from 2000 to 2028. It is not possible to know whether this includes the entirety of Chemonics’ project portfolio – USASpending records 324 “new awards” from 2008-2023, however, some of these could be extensions of existing projects. The project pages include some basic information: titles, descriptions, some objectives and results, and some impact stories. Here is the project page for the global health supply chain projects I identified above, for example. For projects that have ended, final narrative reports are sometimes published. I could not find any independent evaluations of any of the projects. Nor could I find any financial information. There are no total funding envelopes for projects, no budgets or records of transactions. And I could not find information about downstream spending through other project partners or contractors. No annual company reports and accounts are published on the website either.

In conclusion – by cross referencing data from various sources (USASpending.gov, USAID’s OECD and IATI data and Chemonics’ own website) it is possible to start piecing together a picture of Chemonics’ US funded activities. It is presently very difficult, however, to trace funds down the delivery chain or to build up a picture of how funds are spent by Chemonics. While some performance data can be found, carrying out independent research to compare performance with other projects or to gauge value for money is not possible under the current regime.

A much more straightforward and clearer approach to transparency would be for Chemonics to start publishing comprehensive and complete IATI data about its activities. Chemonics International Inc. is an IATI publisher. However, it currently only publishes data for its UK funded activities – 10 projects worth a total of US$83m – a tiny fraction of its global footprint.

FCDO and Adam Smith International – a more cohesive picture but is the data complete?

For UK contractors the situation is somewhat different. The Department for International Development (DFID) required its implementers to publish IATI data, an approach that continues under the FCDO. This can be seen in the case of Adam Smith International (ASI), which does publish detailed IATI data for some of its UK funded projects.

ASI’s IATI publication includes detailed transaction data (budgets, incoming transactions, commitments, disbursements and expenditure), participating organisation information, some objectives, and some documents such as annual reports and results frameworks, although these are mostly out of date.

ASI adds links to its data that connect its projects with the corresponding FCDO funding programme. This makes it possible to build up a detailed picture of the programmes that ASI is participating in and map how these fit together with other components of FCDO programmes. Furthermore, FCDO publishes more comprehensive documentation including business cases, up-to-date results frameworks and annual reviews and evaluations of the programmes that ASI is helping to deliver.

The detailed transaction data published by ASI means a picture can be built up of where flows are spent – what proportion of the funds are spent by ASI and what type of organisations receive funds downstream. I put this Sankey diagram together using ASI’s IATI data. The colour coding of the different flows illustrates what is disbursed to local organisations (yellow), what goes to national governments or international organisations (green) and how much is spent by ASI themselves on things like salaries, consultant fees and other costs (pink).

Adam Smith International financial flows taken from IATI publication, amounts in US$.

This exercise could be replicated on a country-by-country or project-by-project basis by disaggregating ASI’s IATI data. And, if other implementers were to publish equally detailed IATI data we would be able to aggregate this and produce similar country, regional or global breakdowns to provide more comprehensive analysis of how aid flows through these entities.

Getting an overall picture of ASI’s finances is more difficult, however. The data published to IATI is only for UK funded activities and there is no data about ASI’s contracts with other governments – this USAID funded activity in the DRC, for example – or any of its contracts with the Australian government. The data published for UK activities also appears to be incomplete. I downloaded the data from the UK government’s contracts finder website and found 58 contracts with Adam Smith International since 2010, worth £764m in total. In 2016 alone the total awarded amount was £265m. The vast majority of these contracts are with DFID or FCDO.

ASI’s IATI data is for 18 total projects, the earliest starting in 2014, and total spending of US$187m. Using the current USD/GBP exchange rate, this represents just 19% of the total funding awarded from the UK government contracts found in contracts finder. Looking just at funding awarded from 2014 onwards makes almost no difference to these totals either – in that case, the IATI data covers 20% of the total awarded.

Adam Smith International does file reports and accounts with the UK company register, Companies House. These financial statements include total turnover and profit figures. It is not clear, however, if this is only for business done with the UK government, or if it includes contracts from other jurisdictions. Furthermore, ASI is owned by a holding company – the Amphion Group, which itself is owned by Aquileia Limited (formerly known as the Adam Smith Advisory Group), making it less clear how much the firm profits or loses annually and how and to whom profits are paid.

Conclusion

Given the volumes of public money that private contractors handle they should be publicly accountable for how they manage and spend these funds. Large implementers should meet international standards for aid transparency since they are channelling taxpayer funds with a mandate to benefit citizens in low-income countries and improve the lives of poor and vulnerable people. Greater transparency of these organisations will also help complete the picture of international aid delivery and facilitate a more responsive, organised and efficient aid system. To achieve these aims we recommend the following:

• All major aid donors should require their larger implementers to publish good quality aid data in the IATI Standard. While some already do require this of their partners (the UK, Netherlands, Belgium and Denmark, for example) some major donors with very large implementing partners do not (USAID).
• Contractors should publish IATI data for all of their aid and development projects, including those financed by different donors around the world in order to provide a full picture of implementation of international aid.
• Aid contractors should publish detailed reports and accounts on their own websites to provide full details of how much public money they receive and spend.
• USAID should review its approach to redacting sensitive information and not redact whole global programmes when a small portion of the funds are going to high-risk areas. A better approach would be to carry out targeted redactions of the sensitive information only.
• The UK should identify individual implementer names in its development statistics.