U.S. Foreign Aid Undergoes Major Review: Immediate Funding Suspensions Announced

The United States Agency for International Development (USAID) has announced a significant policy shift with an immediate halt on all new funding obligations and sub-obligations under Development Objective Agreements (DOAGs), as mandated by a recent Executive Order aimed at reevaluating and realigning U.S. foreign aid. This pause, effective from January 24, 2025, influences numerous foreign assistance programs administered by USAID.

Established on November 3, 1961, under the Foreign Assistance Act, USAID has been pivotal in addressing global development and humanitarian issues. The agency’s mission has evolved through decades, primarily focusing on economic growth, poverty reduction, and improving global health. The current policy directive, however, marks a crucial reassessment to ensure that foreign aid aligns with the U.S. foreign policy objectives under the administration’s strategy.

According to Jami J. Rodgers, USAID Senior Procurement Executive, the suspension includes all program accounts categorized under “Title III” but notably excludes Operating Expenses and the Capital Investment Fund Account. During this suspension, Contracting and Agreement Officers are restricted from modifying, extending, or renewing existing awards unless explicitly authorized.

Immediate actions required by the order include issuing stop-work orders and amending or suspending current awards according to the terms of the relevant agreements. Furthermore, no new awards or solicitations for funding, including RFPs, RFAs, and NOFOs, will proceed until each activity undergoes a stringent review to ensure consistency with the President’s foreign policy agenda.

Exceptions to this directive encompass emergency food assistance and necessary administrative expenses, salaries for personal services contractors on a temporary basis, and legitimate expenses incurred prior to the effective date of the executive order. These exceptions, however, are subject to further review and approval by the Secretary of State and the Director of Foreign Assistance.

A significant part of this new directive includes the development of review standards by the Department of State’s Policy Planning Staff within 30 days, with a comprehensive review of all foreign assistance activities to be completed within eighty-five days from January 24, 2025. This process aims to scrutinize the alignment of U.S. foreign aid with the broader foreign policy objectives, potentially leading to a reshaping of how the U.S. engages with and supports international development projects.

This pause and subsequent review raise concerns among USAID contractors and recipients regarding the immediate and long-term impacts on global development projects, especially those heavily reliant on U.S. funding. The administration’s decision underscores a strategic pivot to realign foreign aid expenditures and enhance the effectiveness of U.S. foreign policy engagement globally.