Yesterday, USAID published its 1st Quarter Business Forecast. It covered many procurement themes for the world’s largest bilateral donor organization. Today, we are going to focus on one of the most important themes in 2025 and for the next four years (at least) – local led development.
Why a Locally Led Development Focus in 2025?
USAID released its policy on locally led humanitarian assistance recently, with a vision that places local communities at the center of humanitarian work and supports a humanitarian system that operates on the basis of local decisions and priorities, reflecting the needs and preferences of affected groups.
In addition, we recently heard from Dr. Bill Steiger, former Chief of Staff at USAID under Trump 1.0, that we should expect to see more direct funding to community-based groups and local partners in the future. He believes USAID will move from large, traditional RFPs to more nimble, performance-based awards that will require new strategies and skill sets.
He sees this shift offering opportunities for multiple entities seeking USAID funding.
- For Local Organizations: This changing landscape is good news, with lower barriers to entry, including: new partner entry points, simplified concept notes, multilingual submissions, and smaller, performance-based awards. Local actors well be able to compete more effectively and access funding that once seemed out of reach.
- For Established Implementers: Adaptation is key. International prime contractors will need to become mentors for smaller, local partners, and offer value-added services like shared administrative resources, compliance support, and capacity-building trainings.
These views reinforce our previous explorations of Trump 2.0’s impact on the USAID Business Forecast.
8 Key Locally Led Development Updates
It was clear in the June and December 2024 Business Forecasts that USAID’s commitment to localization has become a defining feature of its procurement strategy, with significant strides made in making funding and partnership opportunities accessible to local organizations.
In FY 2024, USAID onboarded 240 new partners, marking a 20% increase from the previous year. Looking at both of these Forecasts, its clear that USAID is serious about exceeding these numbers in FY2025 through locally led development procurement opportunities. Here are 8 reasons why:
1. Localization Metrics and Indicators:
What gets counted, gets changed, and USAID piloted the “Locally Led Programs Indicator,” which uses 14 good practices across four categories—direct partnerships, equitable collaborations, capacity strengthening, and community consultations—to measure local leadership in programming. During the pilot phase, approximately 50% of activities met the criteria for locally led programming, with a higher success rate observed in mission-managed projects compared to Washington-based initiatives.
2. SAM Registration Exemptions:
USAID’s updated guidelines say that foreign entities no longer need full SAM registration for awards under $500,000 that are performed outside the United States. Instead, these organizations only need a Unique Entity Identifier. This change addresses a long-standing barrier to entry for local organizations, particularly in low-resource environments, allowing them to engage with USAID more easily.
3. De Minimis Indirect Cost Rate Increase:
USAID was able to update 2 CFR 200 and increase the De Minimis rate from 10% to 15% and allows organizations without a Negotiated Indirect Cost Rate Agreement (NICRA) to better recover operational costs. This change particularly benefits smaller or newer organizations that lack the resources to undergo formal rate negotiations.
4. Fixed Amount Award Ceiling Increase:
Another change to 2 CFR 200 is a ceiling increase for fixed-amount awards that was raised from $250,000 to $500,000, effectively doubling the scope of these awards. This change facilitates greater engagement with smaller local organizations, which often rely on simplified funding mechanisms to operate efficiently in dynamic environments.
5. First and Last Mile Translation Program:
USAID is translating complex policy and procedural documents into Amharic, Arabic, Chichewa, French, Hausa,, Portuguese, Somali, Spanish, and Swahili. This is a pivotal accessibility improvement for non-English-speaking partners. It served 20 USAID missions across Africa, Latin America, and the Middle East, as well as six Washington-based operating units so far in its first year alone. USAID estimates that this translation saves each individual
implementing partner over $40,000 and up to 120 days of work.
6. Translation Flexibility for Applications:
Previously, the US Government required that all final applications for federal funding be submitted in English – even submissions from international organizations. USAID can now allow final applications, reporting, and other award-related documentation to be submitted in languages other than English. This flexibility is particularly impactful in regions like Latin America and Africa, where many local organizations operate in non-English languages.
7. Uniform Templates and Pre-Obligation Checklists:
USAID has introduced standardized templates and pre-obligation checklists, which improve the consistency and quality of award documentation. These tools speed up internal workflows, reducing the time required to process awards while maintaining compliance with federal regulations.
8. Enhanced Digital Tools:
WorkwithUSAID.org now offers streamlined access to resources, live funding feeds from Grants.gov and SAM.gov, and tools like the Unsolicited Portal for emergency applications. The Partner Directory on the site has grown to include over 6,700 organizations from 163 countries, making it easier for implementing partners to network and identify collaboration opportunities.
Locally Led Development Challenge: Staffing
I commend USAID for moving towards locally led development, however, there is a staffing challenge we need to overcome.
As explained in the Business Forecast, a USAID Contracting Officer or Agreement Officer on average obligated $106.2 million in FY2023, while a CO at the Department of Defense (DOD) on average obligated just $16.9 million. This means some USAID CO/AOs obligated more than six times the amount of their DOD counterparts – a gap that has increased over the years.
Moving to more contracts with more non-traditional partners will only increase the workload of USAID Acquisition and Awards staff, unless there is a concerted effort to increase staff and find procurement efficiencies. The A&A Strategy and Implementation Plan is a great start.
