USAID contractors fire staff, face cash crunch as Trump causes chaos in aid world

WASHINGTON: President Donald Trump’s overhaul of US foreign assistance has led to chaos in the aid and development field, leaving hundreds of contractors in a severe financial crunch with some already having to lay off staff and others facing millions of dollars in unpaid invoices.

Hours after coming into office on Jan 20, Trump ordered a sweeping review of almost all US foreign aid and tasked billionaire Elon Musk, who has falsely accused USAID of being a “criminal” organisation, with scaling down the agency.

Since then, dozens of USAID staff has been put on leave, hundreds of internal contractors have been laid off, while Musk’s so-called Department of Government Efficiency employees have gutted the agency that is Washington’s primary humanitarian arm, providing billions of dollars worth of aid worldwide.

Blanket stop-work orders that were issued by the State Department have thrown the aid industry into panic, both at home and abroad as the contractors usually front the costs and then bill the US government.

For Steve Schmida, co-founder of Vermont-based Resonance, a USAID contractor for many years working in areas such as innovation, fisheries conservation and trade and investment, the issue has become an “existential one” after the stop-work orders.

“We had millions of dollars in invoices due to be paid that had been approved by our clients in the US government...We quickly understood that this was a serious threat to our business,” Schmida said.

He began laying off and furloughing dozens of his staff as he calculated that about 90 percent of his revenue was about to disappear. Once he is done, all but about a dozen of his nearly 100 US-based employees will have been impacted, he said.

“The last 10 days have been the worst 10 days of my professional life,” said Schmida. The funding for some of his projects were granted during the first Trump administration.