As the experienced CEO of a well-regarded engineering firm in Ukraine, Dan Aspleaf could expect to be extremely busy. After all, the Western world is preparing a Ukrainian reconstruction project that they say dwarfs even the post-WWII Marshall Plan.
Instead, Aspleaf's company finds itself suddenly short of work. And, even in an environment with a severe lack of qualified labor and an abundance of work that needs doing, he may be forced into downsizing.
"We're having a difficult time - there's a giant hole in my cash flow," said Aspleaf, an American who has served in Kyiv as director of CDM Engineering for 11 years, including the past three years of full-scale war. "The stoppage of USAID work took away half of our revenue."
The USAID work frozen last month included projects to upgrade border crossing posts, bolster the security of Ukraine's energy generation facilities and restore the nation's infrastructure. CDM, as one of the few firms in the country that can meet the exacting standards required, worked on all three.
"Worse yet, the way they've done it, is they put a freeze on back payments, so we haven't been paid for our work since last November," he told the Ukraine Rebuild Newswire in an interview. "Even the giant global firms would have trouble surviving three months of non-payment."
In most of the cases, CDM was a subcontractor – the first-level contractors are suffering too.
On the energy security contract, CDM was subcontracting for global engineering giant Tetra Tech, which last year won a five-year, $439 million, single-award contract through the USAID Securing Power, Advancing Resilience & Connectivity Activity to improve energy security and resilience in Ukraine. Tetra Tech has already furloughed dozens of people back in the US.
The border crossing post contract came through Bethesda Maryland-based DAI Global. The contractor administers a $115 million USAID program to improve Ukrainian border crossing to help exporters cope with the impeded access to Black Sea shipping and other traditional routes. DAI Global last week announced it was furloughing 400 workers in the US.
Aspleaf's third contract, meant to help restore the nation's infrastructure, came from USAID via Dallas-based AECOM, which has won multiple contracts for works in Ukraine, including for restoring the country's damaged hydropower infrastructure and helping supervise multiple other projects.
The damage from the freezing of the USAID contracts compounds the challenge of working in a country in the midst a full-scale war that has diverted much of the labor to the frontlines and wreaked havoc on the energy grid and infrastructure.
And the blows are concentrated on the highest-quality firms, the ones deemed most capable of carrying out massive nationwide projects.
The effect of the USAID stoppage also illustrates how dependent the reconstruction works still are on international finance institutions, foreign governments, and other international bodies, particularly as the Ukrainian government devotes as much of its own resources as it can to the war effort.
Since the full-scale invasion of February 2022, USAID has given Ukraine $2.6 billion in humanitarian aid, $5 billion in development aid, and facilitated $30 billion in direct support for the budget.
One of Aspleaf's two remaining contracts - on works to help municipalities weather the energy crisis sparked by Russian attacks on Ukraine's grid - is paid for by the Swiss Agency for Development and Cooperation, run by the Swiss government, which has earmarked CHF1.5 billion ($1.65 billion) for Ukraine aid over the next three years.
The funds for the other contract, which involves verifying the technical capabilities of small and medium businesses applying for low-cost loans, is paid for by the European Bank for Reconstruction and Development, which deployed a total of €2.4 billion in Ukraine last year.
He doesn't anticipate a rush of incoming work from private sector investors until the shooting stops in Ukraine, but Aspleaf said he's "cautiously optimistic" that USAID will resume the contracts and his firm will survive the crunch.
"The problem is, when you're owed money and you don't know when you're going to get it, you effectively have to assume, from a planning perspective, that you're not going to get it," he said.
And in the worst-case scenario?
"I like to think that my firm is pretty successful here in Ukraine, but there's no firm on earth that plans for the current non-payment policy from government contracts."
