Partner Vetting in USAID Assistance, 36693-36707 [2015-15017]

Agencies

• Agency for International Development

[Federal Register Volume 80, Number 123 (Friday, June 26, 2015)]
[Rules and Regulations]
[Pages 36693-36707]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-15017]



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Federal Register / Vol. 80, No. 123 / Friday, June 26, 2015 / Rules 
and Regulations

[[Page 36693]]



AGENCY FOR INTERNATIONAL DEVELOPMENT

2 CFR Part 701

RIN 0412-AA71


Partner Vetting in USAID Assistance

AGENCY: United States Agency for International Development.

ACTION: Final rule.

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SUMMARY: The U.S. Agency for International Development (USAID) is 
implementing a pilot for a Partner Vetting System (PVS) for USAID 
assistance and acquisition awards. The purpose of the Partner Vetting 
System is to help mitigate the risk that USAID funds and other 
resources could inadvertently benefit individuals or entities that are 
terrorists, supporters of terrorists or affiliated with terrorists, 
while also minimizing the impact on USAID programs and its implementing 
partners. This final rule sets out the requirements for the vetting of 
Federal awards, requirements including award terms for PVS, and applies 
PVS to a pilot program and any subsequent implementation of PVS that is 
determined appropriate. It follows publication of a proposed rule and 
takes into consideration the public comments received.

DATES: This final rule is effective July 27, 2015.

FOR FURTHER INFORMATION CONTACT: Michael Gushue, Telephone: 202-567-
4678, Email: mgushue@usaid.gov.

SUPPLEMENTARY INFORMATION: 

A. Background

    In accordance with the Privacy Act of 1974, 5 U.S.C. 552a, USAID 
established a new system of records (see 72 FR 39042), entitled the 
``Partner Vetting System'' (PVS) to support the vetting of key 
individuals of non-governmental organizations (NGOs) who apply for 
USAID contracts, grants, cooperative agreements, or other funding and 
of NGOs who apply for registrations with USAID as Private and Voluntary 
Organizations. In January 2009, USAID published a final rule (74 FR 9) 
to add PVS to its Privacy Act regulation, 22 CFR 215, and to exempt 
portions of this system of records from any part of 5 U.S.C. 552a, 
Records maintained on individuals, except subsections (b), (c)(1) and 
(2), (e)(4)(A) through (F), (e)(6), (7), (9), (10), and (11) if the 
records in the system are subject to the exemption found in 5 U.S.C. 
552a(j). To the extent applicable, records in this system may be exempt 
from subsections (c)(3), (d), (e)(1), (e)(4)(G), (H), (I), and (f) of 5 
U.S.C. 552a if the records in the system are subject to the exemption 
found in 5 U.S.C. 552a(k). Any other exempt records from other systems 
of records that are recompiled into this system are also considered 
exempt to the extent they are claimed as such in the original systems. 
USAID's final rule exempting portions of the Partner Vetting System 
(PVS) from provisions regarding the accounting of certain disclosures 
(5 U.S.C. 552a(c)(3) and (4)); access to records (5 U.S.C. 552a(d)); 
agency requirements (2 U.S.C. 552a(e)(1), (2), and (3), (e)(4)(G), (H), 
and (I), (e)(5) and (8)); agency rules(f), civil remedies(g), and 
rights of guardians(h) of the Privacy Act of 1974 went into effect on 
August 4, 2009. Subsequently, USAID published a proposed rule (74 FR 
30494) to amend 48 CFR Chapter 7, which is USAID's procurement 
regulation, in order to apply PVS to USAID acquisitions. The final rule 
implementing PVS for USAID acquisitions was published on February 14, 
2012 with an effective date of March 15, 2012. In order to apply PVS to 
USAID assistance, USAID published a Notice of Proposed Rulemaking 
(NPRM) in the Federal Register on August 29, 2013 (78 FR 168) with a 
public comment period of 99 days, closing on December 6, 2013. During 
the 99-day comment period, USAID received comments from 23 separate 
respondents. Those comments and our responses are discussed below.

B. Legal Basis for Partner Vetting

    The Foreign Assistance Act of 1961, as amended (the ``FAA''), 
provides the President with broad discretion to set terms and 
conditions in the area of foreign assistance. Specifically, numerous 
sections of the FAA authorize the President to furnish foreign 
assistance ``on such terms and conditions as he may determine''. See, 
e.g., section 122 of the FAA, which provides that, ``[i]n order to 
carry out the purposes of this chapter [i.e., development assistance], 
the President is authorized to furnish assistance, on such terms and 
conditions as he may determine, to countries and areas through programs 
of grant and loan assistance, bilaterally or through regional, 
multilateral, or private entities.'' Similarly, sections 103 through 
106 of the FAA authorize the President to furnish assistance, on such 
terms and conditions as he may determine, for agriculture, rural 
development and nutrition; for population and health (including 
assistance to combat HIV/AIDS); for education and human resources 
development; and for energy, private voluntary organizations, and 
selected development activities, respectively. The FAA also authorizes 
the President to ``make loans, advances, and grants to, make and 
perform agreements and contracts with, any individual, corporation, or 
other body of persons, friendly government or government agency, 
whether within or without the United States and international 
organizations in furtherance of the purposes and within the limitations 
of this Act.''
    These authorities have been delegated from the President to the 
Secretary of State and, pursuant to State Department Delegation of 
Authority 293, from the Secretary of State to the Administrator of 
USAID. Agency delegations of authority, in turn, delegate these 
authorities from the Administrator to Assistant Administrators, office 
directors, Mission Directors, and other Agency officials.
    In providing foreign assistance, the Administrator must take into 
account relevant legal restrictions. For example, the FAA requires that 
all reasonable steps be taken to ensure that assistance is not provided 
to or through individuals who have been or are illicit narcotics 
traffickers. Pursuant to annual foreign operations appropriations acts, 
assistance to foreign security forces requires vetting to ensure that 
assistance is not provided to units where there is credible information 
that the unit has

[[Page 36694]]

committed gross violations of human rights. Restrictions in the FAA 
against supporting terrorism (Pub. L. 87-195, Sec 571-574) or providing 
assistance to terrorist states (Pub. L. 87-195, Sec 620A, Sec 620G, and 
Sec 620H) as well as restrictions in Title 18 of the United States Code 
on the provision of support or resources to terrorists (18 U.S.C. 113B) 
similarly support a decision by the Administrator of USAID to authorize 
terrorist screening procedures.
    In addition, the broad authority of the FAA permits the 
Administrator of USAID to consider a range of foreign policy and 
national security interests in determining how to provide foreign 
assistance. The United States has a strong foreign policy and national 
security interest in ensuring that U.S. assistance is not provided to 
or through individuals or entities that are terrorists, supporters of 
terrorists, or affiliated with terrorists. This interest arises both 
because of our concern about the potential diversion of U.S. assistance 
to other uses and also our interest in ensuring that these individuals 
or entities do not garner the benefit of being the distributor of U.S. 
assistance to needy recipients in foreign countries. The United States 
is an advocate of strong anti-terrorism provisions and has urged other 
nations to control the flow of funds and support to terrorists. There 
could be significant negative foreign policy repercussions if it were 
determined that the United States was funding individuals and entities 
that are terrorists, supporters of terrorists, or affiliated with 
terrorists.
    Further, Homeland Security Presidential Directive/HSPD-6 states 
that to protect against terrorism it is the policy of the United States 
to (1) develop, integrate, and maintain thorough, accurate, and current 
information about individuals known or appropriately suspected to be or 
have been engaged in conduct constituting, in preparation for, in aid 
of, or related to terrorism, and (2) use that information as 
appropriate and to the full extent permitted by law to support Federal 
screening processes. HSPD-6 also requires the heads of executive 
departments and agencies to conduct screening using Terrorist 
Information (as defined therein) at all appropriate opportunities. In 
accordance with HSPD-11, USAID has identified NGO applications for 
USAID funds as one of the opportunities for which screening could be 
conducted. Accordingly, use by USAID of information contained in U.S. 
Government databases, i.e., vetting, is entirely consistent with HSPD-
6.
    Finally, legislative and Executive Order prohibitions against 
furnishing financial or other support to terrorists or for terrorist 
related purposes, or against engaging in transactions with individuals 
or entities that engage in terrorist acts, provide justification not to 
award assistance if USAID already has access to information showing 
that the applicant for assistance has such connections to terrorism. 
Some of these prohibitions can be found in Sections 2339A and 2339B of 
Title 18 of the United States Code, Executive Order 12947, as amended 
by Executive Order 13099, Executive Order 13224, and Title VIII of the 
USA Patriot Act. Accordingly, USAID's authority to conduct vetting is 
implied from these authorities.
    Based upon all of the above, USAID has concluded that it has the 
legal authority to implement the PVS.

C. Summary of the Final Rule

    USAID is issuing a final rule to add 2 CFR part 701, with an 
associated application provision and award term. The application 
provision, Partner Vetting Pre-Award Requirements, defines the vetting 
process and the applicant's responsibilities for submitting information 
on individuals who will be vetted, prior to award. The award term, 
Partner Vetting, sets forth the recipient's responsibilities for 
vetting during the award period, and the partner vetting process that 
takes place after award.

D. Discussion of Comments

    USAID received comments and suggestions from 23 organizations on 
its proposed rule, which would enable USAID to apply the Partner 
Vetting System to USAID assistance.
    The following responses address comments that were specific to the 
proposed rule for Partner vetting in USAID Assistance:

Demonstrated Need for PVS and Adequacy of Procedures

    Comment: There is no evidence that USAID funds are flowing to 
terrorist organizations through USAID-funded programs. Moreover, 
partners have already implemented due diligence procedures, and there 
is no plausible evidence that current practices are inadequate. As an 
alternative to PVS, USAID should consider creating a system for U.S. 
organizations to obtain an exemption from PVS based on these 
organizations demonstrating to USAID that their own due diligence 
processes are sufficient to address potential diversion of aid.
    Response: Some organizations submitted comments that USAID does not 
need to implement a partner vetting system since there is no evidence 
that (1) USAID funds are flowing to terrorist organizations through 
USAID-funded programs; or that (2) due diligence procedures implemented 
by USAID or its partners are inadequate to address the potential 
diversion of aid.
    USAID addressed similar comments in publishing its final rule 
exempting portions of its system of records (Partner Vetting System, or 
PVS) from one or more provisions of the Privacy Act. See 74 FR 9 
(January 2, 2009). Consistent with Executive Order 13224, terrorist 
sanctions regulations administered by the Office of Foreign Assets 
Control (OFAC) within the U.S. Department of Treasury, the material 
support criminal statutes found at 18 U.S.C. 2339A, 2339B, and 2339C, 
as well as other related Executive Orders, statutes and Executive 
Branch policy directives, USAID has over the years taken a number of 
steps, when implementing the U.S. foreign assistance program, to 
minimize the risk that agency funds and other resources might 
inadvertently benefit individuals or entities that are terrorists, 
supporters of terrorists, or affiliated with terrorists. Specifically, 
USAID requires inclusion of clauses in its solicitations, contracts, 
grants, cooperative agreements and other comparable documents that 
remind our contractor and grantee partners of U.S. Executive Orders and 
U.S. law prohibiting transactions with, and the provision of support 
and resources to, individuals or entities that are terrorists, 
supporters of terrorists, or affiliated with terrorists. USAID also 
requires anti- or counter-terrorist financing certifications from all 
U.S. and non-U.S. non-governmental organizations seeking funding from 
USAID under grants and cooperative agreements. USAID contracting and 
agreement officers, prior to making awards of agency funds, check the 
master list of specially designated nationals and blocked persons 
maintained by OFAC. Implementing partners, as part of their due 
diligence, can check these public lists. However, given the range of 
activities carried out by USAID and the range of circumstances under 
which they are implemented, additional procedures may be warranted to 
ensure appropriate due diligence. In such instances, checking the names 
and other personal identifying information of key individuals of 
contractors and grantees, and sub-recipients, against information 
contained in U.S. Government databases, i.e., vetting, is an 
appropriate higher level safeguard that USAID can conduct and its 
implementing partners cannot. In certain high risk countries,

[[Page 36695]]

such as Afghanistan, USAID has determined that vetting is warranted to 
protect U.S. taxpayer dollars. In conducting due diligence, USAID's 
implementing partners do not have access to these non-public databases 
and therefore cannot avail themselves of the same universe of 
information as USAID does in conducting vetting in Afghanistan, West 
Bank/Gaza and elsewhere. In protecting U.S. taxpayer resources from 
diversion, the importance in accessing information from non-public 
databases for the purposes of vetting has been clearly demonstrated. 
For instance, in Afghanistan, we have prevented approximately $100 
million from being awarded to entities that did not meet USAID's 
vetting requirements. As a result of USAID's vetting programs, 1.5-2.5 
percent of potential awardees were deemed ineligible. While this 
percentage may seem insignificant, USAID believes that such vetting 
results have prevented the diversion of Agency funds from their 
intended development purpose. USAID is implementing the PVS pilot 
program in an effort to evaluate vetting in countries selected to 
represent a range of terrorist threat risks, geographic diversity, and 
locations where both Agencies have comparable programs. The PVS pilot 
program is mandated by section 7034(i) of the Department of State, 
Foreign Operations, and Related Programs Appropriations Act, 2012 
(Division I, Pub. L. 112-74) and related acts.
    Vetting seeks to close the gap between publicly available 
information and information that can only be obtained from U.S. 
Government databases. The Office of Foreign Assets Control (OFAC) list 
of Specially Designated Nationals (SDN) is publicly available and 
includes both individuals and companies owned or controlled by, or 
acting for or on behalf of, targeted countries and individuals, groups, 
and entities, such as terrorists and narcotics traffickers designated 
under programs that are not country-specific. The collective list 
promotes OFAC's enforcement efforts, and as a result, SDN assets are 
blocked, and U.S. persons are generally prohibited from dealing with 
them. While the SDN list serves as a useful resource, it is not fully 
inclusive of terrorist information included in U.S. Government 
databases. Through access to U.S. Government databases, USAID's vetting 
team can view and analyze terrorist information that is not publicly 
available for national security reasons but is accessible to USAID in 
accordance with HSPD-6 and HSPD-11. To date, all ineligible 
determinations from USAID's vetting process have been derived from 
information obtained from U.S. Government databases and not from OFAC's 
SDN list. Accordingly, USAID supports continued use of such databases 
to mitigate the risk of U.S. taxpayer funds flowing to individuals or 
entities that are terrorists, supporters of terrorists, or affiliated 
with terrorists.
    As an additional safeguard against the potential diversion of aid, 
the vetting conducted under PVS complements the stringent due diligence 
procedures undertaken by USAID and its implementing partners. Beyond 
examining business sources, U.S. government records, and other publicly 
available information to ensure proper use of appropriated funds in the 
contracting and grant making process, USAID requires supplemental 
information from organizations applying for these awards. While our 
implementing partners are required to be diligent in their efforts to 
screen their employees and employees of their subrecipients, they do 
not have access to all information relevant to U.S. national security 
interests. Rather than duplicating current due diligence efforts, PVS 
complements these efforts, providing another method to help ensure that 
USAID funds and other resources do not inadvertently benefit 
individuals or entities that are terrorists, supporters of terrorists 
or affiliated with terrorists, while also minimizing the impact on 
USAID programs and its implementing partners.

Risk to Partners

    Comment: NGOs will be perceived as intelligence arms of the U.S. 
government, versus independent and neutral actors, increasing the 
security risk for implementing partner employees and local partners. 
Moreover, PVS will discourage international and local partners from 
working with U.S. NGOs and will deter U.S. citizens and foreign 
nationals from working for U.S.-funded programs. As evidenced under 
existing vetting programs, lower-tier partners and vendors may be 
unwilling or unable to provide their personal information . . . 
artificially limiting the pool of eligible partners and vendors. In 
addition, the burden will disproportionately affect smaller, nascent 
local organizations that lack the capacity to understand and comply 
with vetting requirements (contrary to USAID Forward).
    Response: Organizations commented on the potential security risk to 
implementing partners and local partners that will be required to 
collect and submit personally identifiable information (PII) to USAID, 
since they might be perceived to be agents for U.S. law enforcement or 
intelligence. Moreover, commenters suggested that PVS could 
artificially limit the pool of eligible partners and contractors since 
they may opt not to be included in an application for an award in which 
the submission of PII is required for vetting purposes.
    USAID understands the concern expressed by organizations that 
collecting PII suggests a linkage with U.S. intelligence gathering. The 
concern has been raised before, including in connection with USAID's 
vetting program in West Bank/Gaza. PVS is not a U.S. intelligence 
collection program. Moreover, USAID is not a Title 50 Agency and is not 
authorized by law to collect intelligence information. USAID complies 
with all laws and regulations regarding information collection 
(including Paperwork Reduction Act, OMB/OIRA approved collection, which 
was authorized following a comment and response period), usage, and 
storage. Consistent with guidance from our General Counsel, we have 
established procedures for the use of PII for vetting purposes under 
the PVS pilot program. The primary intent of the program is to 
safeguard U.S. taxpayer funds. USAID collects the least amount of 
information possible, while remaining cognizant of the need to 
eliminate false positives. There is no other way that USAID can perform 
this screening unless this information is collected. PII on key 
individuals of organizations applying for USAID funds, either as a 
prime awardee or as a sub-awardee, is entered into a secure USAID 
database that is housed within USAID servers. Access to this data is 
strictly controlled and provided only to authorized U.S. Government 
staff with vetting responsibilities. Authorized U.S. Government 
personnel who have been assigned roles in the vetting process are 
provided role-specific training to ensure that they are knowledgeable 
in how to protect personally identifiable information. Access to this 
data is further restricted through role-based limitations.
    Using data provided by the applicant, USAID analysts search for any 
possible matches between the applicant organization or key individuals 
associated with that organization and one or more names contained in 
U.S. Government databases. Where a possible match is found, USAID staff 
will thoroughly analyze all available and relevant data to determine 
the likelihood of the match and make a recommendation regarding the 
eligibility of the organization to receive USAID funding. In those 
instances

[[Page 36696]]

where there is a positive match, USAID will update the existing public 
or non-public database records for those organizations or individuals 
with any pertinent data provided by the organization or individual. 
USAID only updates the record once we have determined a match and there 
is more accurate information on the individual that was voluntarily 
provided on the Partner Information Form. Failure to provide these 
updates would be counterproductive to the U.S. Government's 
comprehensive counterterrorism efforts and inconsistent with a whole of 
government approach.
    Given the standard assumption that an exchange of personal 
information is required as a part of government employment and 
government funding opportunities, the provision of personally 
identifying information for that purpose is not extraordinary, and its 
collection does not imply an improper use. USAID has a responsibility 
to take necessary actions to effectively safeguard U.S. taxpayer funds 
from misuse, as well as to deprive terrorist organizations and their 
supporters of money that might be diverted to fund their operations. 
USAID's experience has been that organizations advancing humanitarian 
and foreign assistance operations adapt to such requirements. Due 
diligence to prevent diversion to those with terrorism connections has 
increased substantially in the wake of the terrorist attacks of 
September 11, 2001, without jeopardizing the effectiveness of foreign 
assistance objectives, and we believe that the requirements of PVS will 
not preclude our implementing partners' ability to find subcontractors 
and/or employees abroad. USAID's experience with vetting in 
Afghanistan, West Bank/Gaza and elsewhere demonstrates that assistance 
programs can operate effectively while implementing vetting programs.
    USAID will continue to consider these issues when evaluating the 
effectiveness of the PVS pilot program.

Program Execution Delays

    Comment: The time associated with processing and clearing vetting 
applications will result in significant delays in program execution. In 
addition, because it is difficult to know who all contractors for a 
project will be during the application stage, large amounts of post-
award vetting would need to be conducted, causing significant 
implementation delays.
    Response: Commenters expressed concern regarding delays in program 
execution attributable to the vetting process. USAID recognizes that 
any additional requirement--whether related to PVS or otherwise--will 
affect the delivery of assistance. USAID's goal is to achieve the 
purpose behind any new requirement in the most efficient manner that 
will minimize any potential negative impact on implementation of 
activities.
    Based on USAID's experience with vetting in West Bank/Gaza and 
Afghanistan, the additional time needed for PVS will vary depending on 
the individual circumstances of each award. It should be noted that 
USAID is increasing its vetting staff to accommodate the additional 
vetting required by the pilot program. Additional time, if any, may be 
required to verify proper completion of the forms by implementing 
partners. Should an adverse finding occur, the award decision will be 
paused while officials consider the nature of the findings and other 
relevant factors. USAID designed the PVS application and process to 
allow for the flexibility to balance the need to make a timely award 
with the need to respond appropriately to adverse findings.

Transparency

    Comment: USAID should provide applicants with a clear explanation 
about the purpose of PVS. Regulations should state that USAID will 
provide a clear explanation in writing to applicants in the local 
languages of the pilot countries about (1) the purpose of PVS; (2) the 
type of information that will be collected from key individuals in the 
PIF; (3) how data on key individuals will be used and shared among 
different actors in the USG; and (4) how long such information will be 
stored. USAID should provide notice of clear restrictions on the use 
and sharing of personal data. Several organizations note language in 
Senate Report 113-81 that is incorporated by reference in the Joint 
Explanatory Statement of the Conference accompanying P.L. 113-76, the 
Department of State, Foreign Operations, and Related Programs 
Appropriations Act for FY 2014:

    ``All individuals and organizations being vetted should be 
provided with full disclosure of how information will be stored and 
used by the U.S. Government, including how information regarding a 
`positive match' will be handled and how to appeal such a match.''

    Response: Some organizations noted that USAID should include an 
explanation about the purpose of PVS in writing to organizations 
applying for awards, as well as the type of information collected and 
how that information would be used and stored. As noted in the summary 
to the proposed rule, the purpose of PVS is to help ensure that USAID 
funds and other resources do not inadvertently benefit individuals or 
entities that are terrorists, supporters of terrorists, or affiliated 
with terrorists, while also minimizing the impact on USAID programs and 
its implementing partners.
    Prior Federal Register notices regarding USAID's PVS and the 
proposed rule detail the type of information that will be collected in 
the Partner Information Form and the use of such information. Our 
response to a previous question details how the PII that is collected 
is used in the vetting process. An applicant's PII will not be used to 
create a ``blacklist'' of organizations and/or individuals who will be 
barred from seeking U.S. government contracts and grants. Using the 
information for that purpose would constitute a de facto suspension or 
debarment, which is contrary to law. Organizations and key individuals 
are vetted based on a specific contract or grant to be considered for 
an award. Findings based on vetting results do not preclude an 
organization's eligibility to bid on subsequent solicitations.

Agency Authority To Approve Individual Subawards

    Comment: We recommend that USAID remove proposed changes in 
226.92(g) as 226.25(c)(8) does not give USAID authority to approve 
individual subawards. [226.92(g) reads as follows: ``When the prime 
recipient is subject to vetting, vetting may be required for key 
individuals of subawards under the prime award when prior approval in 
accordance with 22 CFR 226.25(c)(8) for the subaward, transfer or 
contracting out of any work.'']
    Comment: USAID should ensure vetting requirements are not tied to 
administrative approval requirements. The clause at 226.92(g) is 
incomplete and links the need for vetting to an administrative approval 
requirement, 226.25(c)(8), * * * which relates not only to subawarding 
but also to the transfer or contracting out of work. We recommend 
striking the references to 226.25(c)(8) as follows: ``When the prime 
recipient is subject to vetting, vetting may be required for key 
individuals of subawards under the prime award. Alternate I. When 
subrecipients will be subject to vetting, add the following paragraphs 
to the basic award term: (h) When subawards are subject to vetting, the 
prospective subrecipient must submit a USAID PIF . . .''
    Response: Several organizations recommended that USAID remove

[[Page 36697]]

references to prior approval required by 2 CFR 200.308(c)(6) and 
previously found at 22 CFR part 226.25(c)(8). 2 CFR 200.308(c)(6) 
states that ``For non-construction Federal awards, recipients must 
request prior approvals from Federal awarding agencies for one or more 
of the following program or budget-related reasons . . . Unless 
described in the application and funded in the approved Federal awards, 
the subawarding, transferring or contracting out of any work under a 
Federal award.'' The purpose of the requirement is to ensure that, when 
vetting is required, subrecipients proposed by the recipient after 
award are properly vetted. Although the need for vetting is triggered 
by the introduction of a new subrecipient to the award, administrative 
approval requirements are separate from the vetting process. However, 
as stated in the rule, when the vetting of subawards is required, the 
agreement officer must not approve the subaward, transfer, or 
contracting out of any work until vetting is complete and the 
subrecipient has been determined eligible. When vetting of contractors 
is required, the recipient may not procure the identified services 
until vetting is complete and the contractor has been determined to be 
eligible. In cases where the recipient is procuring services, 
contractors of those services are subject to vetting when specified in 
the award. There is, however, no administrative approval process for 
recipient procurements.
    It was also noted that the clause at 2 CFR 701.2(g) is incomplete. 
USAID has revised the clause to state that USAID may vet subrecipients 
when the prime is vetted and the prime requests approval of a new 
subaward.

Delegation of Authority to Agreement Officers

    Comment: Can delegation of the authority entrusted to AOs under 
this rule be made to AORs?
    Response: An organization inquired as to whether delegation of the 
authority entrusted to Agreement Officers under this rule would also be 
made to Agreement Officers' Representatives. Please note that the pre-
award vetting process itself proceeds separately from the selection 
process for award to a successful applicant. For vetting requirements 
prior to an award, the Agreement Officer's duties and responsibilities 
cannot be delegated to an Agreement Officer's Representative or Award 
Manager. As the USAID official responsible for all aspects of the 
recipient selection process, only the Agreement Officer can perform the 
tasks that assist the vetting process. These include determining the 
appropriate stage of the award cycle to require applicants to submit 
the completed USAID Partner Information Form (PIF), USAID Form 500-13, 
to the vetting official identified in the assistance solicitation; 
specifying in the assistance solicitation the stage at which the 
applicants will be required to submit the USAID PIF; identifying the 
services in the assistance solicitation and any resulting award where 
the contractor will be subject to vetting; and making the award to an 
applicant that vetting has determined eligible. As such, all vetting 
procedures are the responsibility of the vetting official and are not 
delegable as part of the Agreement Officer's authority.
    For post-award vetting requirements, the vetting official is the 
USAID employee designated to receive and communicate vetting 
information from the recipient, subrecipients, and contractors subject 
to vetting. The Agreement Officer cannot delegate these 
responsibilities as they are not part of the Agreement Officer's 
authority.

Application of Rule to Non-U.S. Organizations

    Comment: The new rules apply to U.S. organizations and their 
subrecipients but not to non-U.S. organizations as implementers of 
prime awards. USAID should clarify whether the contents of the proposed 
rule will apply equally to non-U.S. organizations as they do to U.S. 
organizations. If the rule applies to non-U.S. organizations, how will 
requirements be documented for non-U.S. recipients?
    Response: USAID received a comment from an organization seeking 
clarification as to whether the contents of this rule will apply 
equally to non-U.S. organizations and U.S. organizations. Requirements 
related to PVS rulemaking will apply to non-U.S. organizations just as 
they apply to U.S. organizations. The rule has been revised to include 
non-U.S. organizations.

Statutory Parameters of Pilot

    Comment: Please confirm that the pilot will be limited to the five 
countries listed. If so, please remove reference to ``other vetting 
programs'' in the proposed rule. USAID should revise the proposed rule 
by specifically articulating the geographic and time limitations of the 
pilot program to comport with the relevant statutory requirements. [It 
should also be noted that vetting activities not part of the pilot] 
were not preceded by any formal rulemaking process allowing for public 
comment.
    Response: USAID was asked to confirm that the pilot will be limited 
to five countries (Guatemala, Kenya, Lebanon, Philippines, and Ukraine) 
and to articulate the geographic and time limitations of the pilot. 
While the FY 2012 Appropriations Act mandates a PVS pilot program and a 
report to Congress on the pilot program, it provides USAID and the 
Department of State with flexibility to design the policies and 
procedures for the pilot program, to select particular countries for 
the pilot program, and to implement administrative rulemaking to govern 
the vetting of acquisitions and assistance. The Department of State and 
USAID agreed on five countries for the pilot program because they 
represent a range of risks and are located where both agencies have 
comparable programs. As explained in a previous response, USAID has the 
legal authority to conduct vetting outside of the PVS pilot program 
where a risk assessment indicates that vetting is an appropriate higher 
level safeguard that is needed to protect U.S. taxpayer resources in 
high-risk environments like Afghanistan.

Use of Existing Data Collection Tools

    Comment: USAID should incorporate any vetting-related eligibility 
constraints into existing public tools such as the U.S. System for 
Award Management rather than creating a separate onerous process.
    Response: It was suggested that USAID incorporate any vetting-
related eligibility constraints into existing tools such as the U.S. 
System for Award Management (SAM). The Agency recognizes that partner 
vetting places additional requirements on its partners. However, 
incorporating vetting into SAM is not feasible. The partner vetting 
process established in this rule applies only to USAID. SAM is the U.S. 
Government-wide successor to the Central Contractor Registration (CCR) 
and combines users' records from the CCR and eight separate Web sites 
and databases that aided in the management of Federal procurement. 
USAID cannot alter SAM and cannot impose vetting processes onto other 
agencies. SAM collects data from suppliers, validates and stores this 
data, and disseminates it to various government agencies. The purpose 
of partner vetting for assistance is fundamentally different from and 
incompatible with the purpose and function of SAM.

Partner Information Form (PIF)

    Comment: One of the greatest burdens for applicants is the 
mandatory requirement that applicants collect a Government-issued photo 
ID number for

[[Page 36698]]

each vetted individual. The provision of a Government ID number should 
not be mandatory.
    Comment: Concern was expressed about the open-ended nature of 
(d)(1)(iii) in Appendix B: ``Must provide additional information, and 
resubmit the PIF with the additional information within the number of 
days the VO specifies.'' The organization requested specific parameters 
for the sort of information a VO can request and when that request can 
be made.
    Comment: There is no mention that data can be submitted via a 
secure portal.
    Comment: To reduce costs and burden for NGOs, USAID and DOS should 
standardize data collection mechanisms and vetting procedures.
    Comment: There is an inconsistency in the Federal Register 
regarding the retention of PIF data. The announcement states that 
information will be collected annually if the grant is a multi-year 
award. However, it also states that USAID may vet key individuals using 
information already submitted on the PIF.
    Response: Organizations provided various recommendations to reduce 
the burden for applicants to comply with requirements related to the 
submission of data on the Partner Information Form (PIF).
    One organization recommended that USAID not make it a mandatory 
requirement that applicants collect a government-issued photo ID number 
for each individual. In many cultures in locations where USAID provides 
development assistance, the provision of name and date of birth 
information only is insufficient for purposes of PVS. Some cultures 
identify individuals using one-part names, descriptive names, or 
titles. Additionally, the same individuals may have no recorded date of 
birth. Consequently, USAID requires a certified form of identification. 
Providing such unique identifiers better enables USAID to conduct the 
vetting process efficiently and effectively. Generally, applicants may 
be asked to provide telephone numbers or family information, or to 
clarify personally identifiable information that may have been provided 
erroneously. By requesting additional information, USAID aims to reduce 
the number of false positives.
    Another organization requested confirmation that data can be 
submitted via the secure portal. Organizations applying for assistance 
awards in countries covered under the PVS pilot may either submit data 
via the Agency's PIF or the secure portal.
    One general comment on the proposed rule was that USAID and the 
Department of State should standardize data collection mechanisms and 
vetting procedures. USAID and the Department of State are distinct 
agencies with differing programs and operational models. USAID and the 
Department of State have closely coordinated efforts on PVS and 
conformed approaches as much as possible. For example, the Agencies use 
similar information technology systems (PVS and RAM) to complete the 
vetting process. However, USAID and State apply different vetting 
procedures since USAID procurements are often executed at its overseas 
missions, while State's procurement function is centralized in 
Washington, DC As a result, in the PVS pilot program, USAID staff at 
the pilot Missions coordinate with USAID staff in Washington, DC on the 
vetting process, whereas State conducts vetting in Washington, DC. We 
believe the added burden of using different partner information forms 
represents a modest increase in burden on complying organizations and 
is important to allow the pilot to achieve the same purpose for two 
agencies with different procurement processes. We can also consider the 
issue of different identification forms as part of our assessment of 
the pilot should unanticipated challenges or burdens arise due to the 
existence of separate forms.
    Lastly, it was noted that there was conflicting information in the 
rule regarding the retention of PIF data. When PIFs are received 
containing personally identifiable information for a key individual 
assigned to a pending award, the relevant data are added to the PVS 
application. Applicants are vetted at that time using the information 
provided. When awards are reviewed for successive year options, 
partners are required to update information, and that information must 
be vetted by USAID prior to the option year. The vetting official will 
contact the awardee to confirm that the key individual information has 
not changed. If there have been no changes to key individuals or their 
identifiers, information for those initially vetted is available in PVS 
and may be used for re-vetting.

The Risk-Based Approach

    Comment: Who performs the risk-based assessment, and what would the 
criteria be to vet? How will the data from each pilot country be 
compared? Can USAID provide the full internal process on how an RBA 
determination will be made, including who is involved and what recourse 
mechanisms there are to the nature of the program, the type of entity 
implementing the activity, the geographic location of the activity, the 
safeguards available, and how easily funds could be diverted or 
misused. Other considerations may include the urgency of the activity 
and the foreign policy importance of the activity.
    Response: Rather than introduce a monetary threshold, whereby prime 
organizations and their partners applying for an award at or above the 
threshold are subject to vetting regardless of the nature of the award, 
operating environment, or program or activity to be implemented, as 
suggested by some organizations, the PVS pilot program uses a risk-
based assessment.
    Regarding the commenter inquiring about recourse mechanisms, an 
applicant may only request reconsideration of an ineligibility 
determination. The risk-based assessment does not focus on or capture 
data on implementing partners or subprime organizations. Rather, the 
assessment takes a holistic approach by evaluating a myriad of factors 
contributing to the overall level of risk of a new program or activity, 
including, but not limited to, the operating environment, nature of the 
program or activity, geographic locations of the proposed program or 
activity, and the amount of the award. Moreover, the risk-based 
assessment is designed to be conducted during the pre-solicitation 
phase, after the Statement of Work has been finalized, by USAID 
personnel who are most familiar with the proposed award and program or 
activity to be implemented. Given the nature and timing of the 
assessment as it relates to the procurement process, providing a 
recourse mechanism would not be appropriate.
    Another concern raised in comments received was that the nature of 
the RBA process, which is conducted by AORs, would lead to significant 
pilot inconsistencies. While the AOR will primarily be designated to 
conduct the RBA, USAID's Office of Security, Bureau for Management, and 
other Agency stakeholders are responsible for ensuring that the data be 
as accurate and complete as possible. Analysis of data collected from 
each RBA will help USAID determine whether there is a correlation and 
the nature of the correlation between vetting results and the level of 
risk established in the RBA. Solicitations for assistance awards under 
which vetting may occur will include language indicating that potential 
applicants may be vetted (pending the outcome of the RBA). An important 
aspect of the PVS pilot is testing the RBA model.

[[Page 36699]]

    One organization inquired as to who would be responsible for 
conducting the RBA when the grants program is managed by a contractor 
and not directly by USAID. Grants programs managed by contractors are 
properly part of vetting under acquisition rather than assistance. RBAs 
that USAID conducts for a particular planned acquisition will include 
consideration of Grants Under Contracts when these are part of the 
planned activities.
    Lastly, an organization requested that USAID specify the full range 
of assistance agreements to be covered by the RBA. The applicable range 
of federal assistance instruments is identified in the definition of 
Federal award found at 22 Part 200.38.

Direct Vetting Approach

    Comment: We recommend adopting a direct vetting approach, whereby 
subrecipients and vendors would be required to interact directly and 
solely with USAID for vetting purposes. The rule should make it more 
explicit that (1) no organization will be required to gather or verify 
information from a different organization or its key individuals; (2) 
organizations must submit their information directly to the VO; and (3) 
VO determinations must be communicated directly to the organization. 
The role of prime grantees should be limited to notifying local 
partners that they would need to submit their own information to the 
USAID vetting official, and directing them to the appropriate portal or 
Web site for information on such vetting. We urge USAID to state 
explicitly that PVS will not require prime recipients to verify 
information on the subrecipients or vendors, to convey vetting 
determinations to subrecipients or vendors, or to act as an 
intermediary in any way with respect to such vetting processes. The 
rule should specify that subrecipients submitting their vetting data 
directly to USAID have the responsibility to monitor and submit updated 
PIF or vetting data to USAID.
    Response: Some organizations requested that USAID adopt what is 
termed a ``direct vetting approach,'' in which subprime organizations 
would interact directly with USAID for vetting purposes. USAID will 
offer a type of direct vetting approach as an option to implementing 
partners for a select group of awards under the pilot program. Under 
the direct vetting approach, a prime organization applying for an award 
to be implemented in a pilot country would request potential sub-prime 
awardees to submit information required for vetting to USAID directly 
instead of sending such information to USAID via the prime. In this 
approach, USAID would communicate directly with the potential sub-prime 
awardee solely for the purposes of vetting, including the transmittal 
of eligibility and ineligibility notices. However, the prime would 
remain responsible for ensuring that the information provided by its 
sub-prime organizations to USAID for the purposes of vetting is 
accurate and complete to the best of its knowledge.
    In evaluating the direct vetting approach, USAID will consider the 
extent to which the approach was utilized and analyze its impact on 
USAID and partner organizations.

Privacy/Data Protection Laws

    Comment: Consistent with applicable privacy and data protections 
laws of countries where NGOs, their subrecipients, or vendors operate, 
USAID should provide significantly greater clarity on how the vetting 
processes will allow NGOs and their subrecipients or vendors to comply 
with those laws while implementing PVS. It is important to specify in 
detail who will have access to the data and the extent to which the 
data will be shared, how long the data will remain in any vetting 
database or otherwise be kept by USAID or other agencies, whether any 
individual could seek to have personal data removed from any vetting or 
other intelligence database, and the safeguards around the storing, 
sharing and use of such personal data. [CRS requested that the rule be 
modified to include an exemption to its application when it can be 
demonstrated that implementation will force an NGO to violate 
applicable local law.]
    Response: Commenters requested information regarding the storing, 
sharing, and use of personal data and cited concerns about potential 
conflict with applicable foreign privacy and data protection laws.
    Prior Federal Register notices regarding USAID's PVS detail how 
data is stored, shared, and used under PVS. See 72 FR 39042 (July 17, 
2007) and 74 FR 9 (January 2, 2009). USAID will review data retention 
policies as part of the PVS pilot.
    Throughout the design process of PVS, USAID has been committed to 
protecting national security while complying with all administrative 
requirements, and protecting privacy and other rights of its partners 
and their employees. USAID places a high priority on data protection 
and has a strong information security program. USAID is required to 
report annually on Federal Information Security Management Act 
compliance. Additionally, USAID's information security program is 
audited by the USAID Office of the Inspector General. USAID will 
continue to evaluate issues relating to privacy and data protection 
during implementation of the pilot and consider accommodations as 
necessary.

The Vetting Process

    Comment: Please confirm that only new awards (not existing awards) 
will be vetted under the pilot. Under what circumstances does USAID 
contemplate post-award vetting?
    Comment: We request that you provide a specific timeframe in which 
vetting officials have to make a vetting determination.
    Comment: The flow-down applicability for vetting is unclear, 
including for lower-tier awards. How far does vetting flow down? Which 
types of subrecipients and vendors have to be vetted? What triggers 
vetting of subrecipients and vendors? What about in-kind procurements 
conducted by contractors for grants-under-contract?
    Comment: The determination as to who should be vetted is highly 
subjective and variable. The subjectivity of the determination that a 
given award or environment requires vetting means that universal 
guidance on preparing and implementing USAID-funded programs cannot be 
developed.
    Comment: There is no guidance in the regulation instructing AOs on 
how to determine which parties should be vetted in any particular 
circumstance or when to exempt activities and individuals from the 
vetting process.
    Comment: Nowhere in this proposed rule * * * does USAID explain the 
relationship between key individuals and the organization and whether 
the failure of any individual to pass the vetting process also acts as 
a disqualification of the entire organization and its applications for 
assistance.
    Comment: There is significant concern about the accuracy of the TSC 
lists (referenced DoJ's OIG audit documenting higher error rate and 
dysfunction of central terrorist watchlist). How will USAID ensure that 
an applicant does not fail vetting due to a false positive?
    Response: USAID received a variety of comments related to the pilot 
vetting process. One organization requested confirmation that only new 
awards will be vetted under the pilot and sought further details on 
circumstances that could lead to post-award vetting. Under the PVS 
pilot, it is anticipated that vetting will be implemented for 
assistance awards made after the effective date of this rule. In most

[[Page 36700]]

instances, we anticipate that post-award vetting may be required 
whenever RBA parameters or a change in key individuals indicate that 
vetting is necessary.
    Comment: Another organization requested that vetting officials 
provide a vetting determination within a specific timeframe.
    Response: The vetting procedures utilized by USAID are in 
accordance with HSPD-11. Analysts assess the credibility of information 
obtained from U.S. government databases. USAID processes vetting 
requests as quickly as possible and has taken steps to increase USAID 
staff to expedite the processing of vetting requests. A hard and fast 
deadline for processing vetting requests and making a final decision on 
vetting requests cannot be provided due to the nature of the vetting 
process. The vetting process includes analysis of information by USAID 
analysts who make recommendations, and evaluation of those 
recommendations by USAID mission staff, with the possibility that 
USAID/Washington staff may be called upon to evaluate recommendations 
from analysts and mission staff. That said, USAID is mindful of the 
importance of timely processing and vetting decisions to the effective 
implementation of foreign assistance and is working on a regular basis 
to improve the vetting process by including efforts to make the process 
as expeditious as possible without undercutting efforts to safeguard 
U.S. taxpayer resources from diversion from their development purpose.
    Regarding the impact of the vetting process on providing urgently 
needed humanitarian assistance, under the PVS Pilot Program, USAID has 
the authority not to require pre-award vetting, and does not intend to 
require pre-award vetting, where vetting would hinder the delivery of 
urgently needed humanitarian assistance. USAID reserves the right to 
conduct post-award vetting in such situations. Factors such as the 
number of key individuals, the accuracy and completeness of the 
personally identifiable information provided, and the country or region 
in which programs will be implemented may impact the amount of time it 
will take from submission of the requisite information to the final 
vetting determination. It is in the interest of both USAID and its 
partners that the vetting process be conducted and the vetting 
determination made as effectively and expeditiously as possible.
    Organizations also commented that the rule is unclear about the 
level and type of organizations subject to vetting. In general, vetting 
will take place at the first and second tiers. However, certain 
circumstances may dictate less vetting or more vetting. This policy 
applies to subrecipients who benefit from U.S. dollars funding an award 
without limits. A subrecipient must notify the primary award recipient 
(Prime) when another award is to be made for any portion of the 
government award. The Prime will then notify the USAID Agreement 
Officer and arrange for the additional vetting.
    Organizations also suggested that the Agency's determination as to 
who should be vetted is subjective and variable. As referenced in a 
previous response to public comment, USAID's decision on whether or not 
to vet is based on objective criteria documented in the Risk-Based 
Assessment, such as the amount of an award, location and nature of the 
program or activity being implemented, and the national origin or 
association of the organization. In addition, USAID's Office of 
Security maintains and utilizes standard operating procedures when 
vetting applicants for those Missions and Bureaus implementing PVS.
    It was suggested during the comment period that USAID clarify in 
the rule the relationship between an organization and its key 
individuals as far as the vetting process is concerned. For example, 
when a key individual is found ineligible through the vetting process, 
is the organization applying for the award (the applicant) no longer 
eligible for that award or future awards? The organization applying for 
an award subject to vetting is responsible for selecting key 
individuals and verifying that the Partner Information Form for each 
key individual is accurate and completed before it is submitted to 
USAID for vetting. As the responsible agent for its key individuals, 
the organization is found ineligible if any key individual is found 
ineligible. If USAID determines that the applicant is ineligible for 
the award based on the ineligibility of one or more of its key 
individuals, USAID notifies the applicant that it is ineligible for 
that particular award but has the opportunity to submit a 
reconsideration request to USAID. The applying organization may opt to 
remove and/or replace a key individual and reapply for an award. In 
this case, the applicant would be re-vetted based on the key 
individuals identified in the renewed application. Regardless of the 
outcome on this particular solicitation, the organization may continue 
to apply for other USAID awards since each final vetting determination 
decision is specific to a particular solicitation under PVS and does 
not in and of itself constitute a basis for evaluating an application 
for a different award.
    Another organization inquired as to how the Agency will ensure that 
an applicant will not fail vetting due to a false positive. As stated 
in the Agency's publication of its final rule exempting portions of its 
system of records (Partner Vetting System, or PVS) from one or more 
provisions of the Privacy Act, decisions by USAID under PVS as to 
whether or not to award funds to applicants will not be based on the 
mere fact that there is a ``match'' between information provided by an 
applicant and information contained in non-public databases and other 
sources. See 74 FR 9 (January 2, 2009). Rather, in a timely manner, 
USAID will determine whether any such match is valid or is a false 
positive. The detailed identifying information required of applicants 
under the PVS in and of itself significantly reduces the risk of 
individuals being misidentified. Additionally, USAID's vetting team 
will review and analyze the matching information to further minimize 
false positives.

Perceived Vague or Broad Vetting Criteria

    Comment: The vetting criteria are vague and overly broad, extending 
to those ``affiliated'' with or with ``linkages'' to terrorists. These 
terms are not defined and could be interpreted so broadly that a person 
could fail vetting on the basis of activities they do not support or 
control.
    Commenters expressed some concern that vetting criteria were vague 
or overly broad, particularly as they may be applied to those 
``affiliated'' with or having ``linkages'' to terrorists.
    Response: It is a top priority for USAID to mitigate the risk that 
its funds and other resources could inadvertently benefit individuals 
or entities that are terrorists, supporters of terrorists, or 
affiliated with terrorists, while also minimizing the impact on USAID 
programs and its implementing partners. USAID responded to similar 
comments regarding potentially vague criteria when USAID published in 
the Federal Register its Privacy Act final rule for PVS. See 74 FR 9 
(January 2, 2009).
    USAID conducts vetting in accordance with HSPD-6 and HSPD-11, 
focusing on ``individuals known or appropriately suspected to be or 
have been engaged in conduct constituting, in preparation for, in aid 
of, or related to terrorism.'' Consequently, USAID defines individuals 
or entities with ``affiliations'' or ``linkages'' to terrorism

[[Page 36701]]

as ``individuals known or appropriately suspected to be or have been 
engaged in conduct constituting, in preparation for, in aid of, or 
related to terrorism.''
    USAID appreciates the concerns of its partners and, in order to 
help address potential concerns regarding the application of vetting 
criteria, is incorporating an administrative appeal process during 
which applicants can request that the Agency reconsider an 
ineligibility determination and submit any relevant documentation.

Timing of Vetting

    Comment: USAID should require PIFs from only ``apparently 
successful'' applicants [as opposed to awardees], similar to the 
requirements for providing a Branding and Marking Plan as outlined in 
22 CFR 226.91 (much more efficient and less burdensome). Requiring 
vetting at the applicant stage vastly increases the administrative 
burden on NGOs and the invasion of privacy of key individuals in the 
applicant organizations.
    Response: USAID appreciates the concern expressed in comments about 
the most appropriate time in the award cycle to require submission of 
the PIF. As stated in the NPRM, ``When USAID determines an award to be 
subject to vetting, the agreement officer determines the appropriate 
stage of the award cycle to require applicants to submit the completed 
USAID Partner Information Form, USAID Form 500-13, to the vetting 
official identified in the assistance solicitation. The agreement 
officer must specify in the assistance solicitation the stage at which 
the applicants will be required to submit the USAID Partner Information 
Form, USAID Form 500-13.'' We have carefully weighed the need to allow 
as much time as possible for vetting against the burden on applicants 
and USAID staff. The rule provides that as a general matter those 
applicants who will be vetted typically will be the applicants that 
have been determined to be apparently successful. We envision that, to 
the extent practicable, the selection and award process will occur 
concurrently with vetting. That said, the Rule provides Agreement 
Officers with discretion to require applicants to submit the Partner 
Information Form at a different stage of the award cycle.
    This pilot will implement PVS in five countries with varying levels 
of risk. The pilot will help the Agency determine resource 
requirements, as well as test the RBA, and other aspects of the PVS 
vetting process such as the point in time in the award cycle in which 
vetting takes place.

Exemptions to Vetting Requirements

    Comment: PVS should include a formal system for exempting vetting 
for special circumstances. [We recommend] a formal waiver system that 
provides express guidance on the circumstances that warrant special 
review and clear deadlines for both NGOs to request a review and USAID 
to provide a response. Waiving vetting on an ad hoc basis would result 
in inconsistencies and delays in program implementation. Clear language 
on the circumstances or types of programs exempted is critical.
    Recommendations include clarifying in the rule that the following 
are exempt from vetting (1) humanitarian emergencies; (2) democracy and 
governance programs; (3) in cases where compliance with vetting would 
conflict with a nation's privacy and data protection laws; (4) grants-
under-contract; (5) subrecipients and vendors of commercial items; (6) 
beneficiaries, U.S. citizens, and permanent legal residents.] 
Regulatory precedence for exemption includes 2 CFR 700.16 (Branding and 
Marking) and 2 CFR 25.110 (Reporting under Federal Funding and 
Accountability Act). USAID should ensure that the term ``key 
individual'' does not include beneficiaries of the programs or 
activities funded under the award. The SACFO FY2014 report notes that 
``there should also be a provision for waiving the vetting requirements 
to prevent delaying responding to humanitarian crises.''
    Response: Commenters recommended including a number of specific 
exemptions from vetting requirements and requested greater clarity 
regarding accommodations that might be made to standardize vetting 
procedures in special circumstances. USAID appreciates the concerns of 
its partners regarding consistency and expediency in program 
implementation and has taken partner concerns into account during the 
Agency's guidance and protocol development process. USAID retains the 
discretion to address emergency or unique situations on a case-by-case 
basis when a vetting requirement would impede USAID's ability to 
respond to an emergency situation. For example, it is USAID's intention 
that vetting will not prevent the immediate delivery of goods and 
services in a humanitarian crisis. Following stabilization, vetting may 
occur on a case-by-case basis. Further adjustments to policies and 
procedures are possible during implementation of the PVS pilot as 
appropriate.

Vendor Contracts/Services and Procurements

    Comment: What types of vendor contracts or services would be 
subject to vetting?
    Vendors and procurements do not fall under the definition of key 
individuals and should be removed from vetting. Inclusion of vendors in 
the vetting process would be unwieldy and in contradiction to 22 CFR 
226.43.
    Response: Organizations sought further clarification on the types 
of contracts or services that would be subject to vetting. One 
recommended that contracts below the simplified threshold of $150,000 
and beneficiaries be exempt from vetting. In general, most suppliers 
(e.g., commercial suppliers or contractors) will not be subject to 
vetting. However, in certain circumstances, USAID may determine that 
key individuals of a contractor are subject to vetting. This is 
consistent with the requirements of the subpart ``Procurement 
Standards'' of 2 CFR 200 where USAID has determined that contracts for 
services are subject to vetting since in those cases vetting will be a 
requirement that the bidder or offeror must fulfill to be eligible for 
an award. Beneficiaries will generally not be vetted unless they are 
receiving scholarships, training, cash, or in-kind assistance.

Determination of Successful and Unsuccessful Applicants

    Comment: The rule should stipulate that an AO should not be able to 
pass on making an award to a candidate until confirmation is received 
from the vetting official that the candidate has passed vetting. One 
organization recommended that the rule specify that no applicants be 
excluded from an award until after vetting has been completed.
    Response: USAID agrees with this comment and has amended the final 
rule accordingly.
    Although the selection process for award proceeds separately from 
the vetting process, USAID agrees that excluding an applicant from 
consideration for award prior to a vetting determination would not be 
appropriate. When an applicant is subject to vetting, the Agreement 
Officer will be directed not to make a determination regarding the 
inclusion or exclusion of the applicant from award until after the 
vetting process is complete.

Ineligible Determinations

    Comment: Please clarify the repercussions of failing the vetting

[[Page 36702]]

process. What actions, apart from denying the award, would USAID take? 
Would these actions involve other federal agencies, and if so, which 
ones? How would the applicant organization and the specific individual 
be notified of any actions? Would these actions result in an 
investigation by another federal agency?
    Response: USAID was asked to clarify the repercussions of failing 
the vetting process, including actions that USAID would take, potential 
actions taken by other federal agencies, and details on how the 
applying organization and the key individual(s) would be notified of 
the ineligible determination.
    Under the PVS pilot, the vetting official will notify applicants 
who are determined to be ineligible for award based on vetting. It is 
the responsibility of the AO to notify applicants of the award 
decision. Only applicants who are deemed ineligible as a result of the 
vetting process may receive an award. In the event that an ineligible 
determination has been made, USAID may consult with other U.S. 
government agencies and share terrorism information per Executive Order 
13388. Information shared will be used to update existing records in 
order to protect U.S. citizens and U.S. national security interests.

Re-Vetting

    Comment: We are concerned that U.S.-based international 
organizations that receive multiple awards in a year will be vetted for 
each award as well as annually (if multi-year awards) for each award. 
Internal processes would also have to be established to collect, 
compile, and safeguard PII for submission. The requirement that PIFs be 
collected annually was struck from the final PVS acquisitions rule, and 
it should be removed from the assistance rule as well.
    Comment: We recommend removing the requirement for annual re-
vetting or re-vetting upon change of key individuals. Perhaps allow the 
AO the ability to request re-vetting on a case-by-case basis without 
making it an automatic requirement for all implementing partners.
    Comment: The frequency of re-vetting is unclear. The proposed rule 
makes no mention of duration or validity of a vetting approval, 
including when a cleared grantee must be re-vetted (assuming there are 
no changes to key individuals).
    Response: Some organizations expressed concern that if they receive 
multiple awards that each of those awards would be subject to vetting. 
Additionally, they noted that USAID's requirement for annual re-vetting 
or re-vetting upon change of key individuals would be burdensome. 
Another organization requested more clarity on when re-vetting would 
occur. USAID has amended the rule to remove annual submittal of the PIF 
as a requirement. Recipients will still be required to submit the PIF 
any time key individuals change and before issuance of covered 
subawards, but will not be required to resubmit the form annually if no 
information has changed or expired. Instead, USAID will conduct post-
award vetting based on the latest available submittal.

Reconsideration Process

    Comment: The process for appealing a positive match should be 
strengthened and clarified. The [reconsideration] period is too short 
for the reasonable preparation of a written determination. [A couple of 
organizations recommended specific timeframes for applicants to provide 
supplementary information to appeal the positive match, ranging from 14 
to 21 days.] Moreover, USAID is not required to disclose the reason for 
the denial, and there is no requirement that the party evaluating the 
redetermination request be different from the party making the initial 
determination. Reconsideration procedures should be more open and 
accountable, and USAID should include a complete and meaningful 
description of the vetting failure to allow an applicant to adequately 
rebut any allegations.
    Response: Commenters requested that USAID make certain changes to 
the reconsideration process in the event of a determination of 
ineligibility due to vetting concerns. Specifically, commenters asked 
that USAID provide more detail when denying an award due to vetting 
concerns, extend the seven-day period provided for appeal, and require 
that the Agency official evaluating an appeal be different from the 
Agency official that made an initial determination of ineligibility.
    Organizations will be given a reason for denial of an award due to 
vetting, with a reasonable amount of detail given the nature and source 
of the information that led to the decision, and they will be allowed 
to challenge the decision as provided in the proposed rule. The amount 
of information provided to a denied applicant will depend on the 
sensitivity of the information, including whether the information is 
classified and whether its release would compromise investigative or 
operational interests. USAID cannot disclose classified material or 
compromise national security. Upon receipt of a request for 
reconsideration, the Agency will also consider any additional 
information provided by the applicant.
    USAID has determined that a seven-day reconsideration period is 
appropriate given the need to ensure that USAID funds and other 
resources do not inadvertently benefit individuals or entities that are 
terrorists, supporters of terrorists, or affiliated with terrorists, 
while also minimizing the impact on USAID programs and its implementing 
partners. The seven-day reconsideration period is consistent with the 
reconsideration period provided for in the PVS pilot program for USAID 
acquisition awards. See 77 FR 8166 (February 14, 2012).
    During the PVS pilot, USAID currently plans to elevate 
reconsideration of any eligibility determinations to senior policy 
makers within the Agency.
    USAID recognizes the value of meaningful reconsideration procedures 
and is in the process of further defining internal policies regarding 
such procedures. Because the pilot is intended to help further refine 
and adjust PVS, USAID will continue to evaluate the efficacy of its 
reconsideration procedures as part of its assessment of the PVS pilot 
program.

Definition of Key Individual

    Comment: The definition of ``key individual'' is too vague/very 
broad and the decision as to who should be vetted is left up to the AO. 
Does the definition of key individuals include both U.S. and non-U.S. 
citizens? The definition should be limited, and there should be a cap 
on the number of key individuals to be vetted. One commenter 
recommended that vetting be limited to key personnel as identified by 
the applicant in its proposal, in accordance with the definition 
typically used by USG agencies.
    Response: Several organizations commented that the definition of 
key individual is too vague. The rule provides that, for purposes of 
partner vetting, ``key individual'' means the principal officer of the 
organization's governing body (for example, chairman, vice chairman, 
treasurer, or secretary of the board of directors or board of 
trustees); the principal officer and deputy principal officer of the 
organization (for example, executive director, deputy director, 
president, or vice president); the program manager or chief of party 
for the U.S. Government-financed program; and any other person with 
significant responsibilities for administration of the U.S. Government-
financed activities or resources, such as key personnel as identified 
in the

[[Page 36703]]

solicitation or resulting cooperative agreement. The definition applies 
to both U.S. citizens and non-U.S. citizens. Key personnel, whether or 
not they are employees of the prime recipient, must be vetted.
    Limiting vetting to key personnel would be inadequate for vetting 
purposes. The rule uses the term ``key individual'' to describe those 
individuals with an ability or potential ability to divert funds. The 
term ``key personnel'' designates only those individuals that are 
essential to the successful implementation of the program under the 
award and does not necessarily include all individuals with an ability 
or potential ability to divert funds. The use of the term ``key 
individual'' as defined above serves a different purpose than ``key 
personnel'' and is essential for USAID to address the potential 
diversion of funds under PVS.
    Comment: The AIDAR does not separately define ``key personnel'' but 
subsumes that term under the term ``key individual.'' In addition, the 
AIDAR requires the automatic vetting of all subcontractors for which 
consent is required under FAR 52.255-2 while the assistance rule grants 
the AO wide discretion in applying vetting procedures to subrecipients 
or others.
    Response: USAID received a comment that the AIDAR does not define 
the term ``key personnel'' and that the AIDAR requires vetting of 
subcontractors for which consent is required under FAR 52.255-2, versus 
the PVS Assistance Rule, which gives the AO wide discretion in applying 
vetting procedures to subrecipients and other entities.
    The rules for vetting under assistance and vetting under 
acquisition are not and cannot be identical because of the fundamental 
difference between acquisition and assistance and the differing rules 
and requirements that result from this. Neither the AIDAR nor the 
Federal Acquisition Regulation is applicable to Federal assistance.
    The term ``key personnel'' is defined for assistance in USAID's 
Automated Directive System. The term ``key individual'' is defined in 
this rule, since it is applicable to partner vetting. The terms ``key 
individual'' and ``key personnel'' are not synonymous. However, all key 
personnel are considered key individuals for the purpose of vetting.
    Similarly, subawards and the approval of subawards under assistance 
differ fundamentally from subcontracts and subcontract consent under 
acquisition. Because of these differences, the decision to vet 
subawards or not is based on the results of the RBA, which will assess 
whether the vetting of a subaward under a particular program is 
merited.
    When USAID determines that the results of the RBA merit vetting 
subrecipients, USAID will require vetting at the time of the initial 
award and when the recipient makes new subawards during the grant 
period.

Definition of Subaward

    Comment: The definition of ``subaward'' needs clarification, 
particularly on how it differs from vendors.
    Response: Organizations requested that USAID clarify the definition 
of ``subaward.'' Subaward is defined at 2 CFR part 200.92 as ``an award 
provided by a pass-through entity to a subrecipient for the 
subrecipient to carry out part of a Federal award received by the pass-
through entity. It does not include payments to a contractor or 
payments to an individual that is a beneficiary of a Federal program. A 
subaward may be provided through any form of legal agreement, including 
an agreement that the pass-through entity considers a contract.'' The 
term ``vendor'' is replaced by the term ``Contractor'' in 2 CFR 200. 
``Contract'' is defined at 2 CFR 200.22, and ``Contractor'' is 
identified at 2 CFR 200.23.

Burden on Applicants

    Comment: The administrative burden estimates are too low (e.g., 
significant additional operational burdens for contractors implementing 
grants-under-contracts, replacement of key individuals, completion of 
the form, and staffing and recordkeeping costs). The paperwork burden 
and cost estimates should be recalculated based on more accurate 
assumptions to better reflect the true incremental cost of vetting.
    Comment: The paperwork burden and cost estimates are based on 
estimated pilot costs, but the proposed amendments to 22 CFR 226 do not 
limit the application of the new rules to the pilot only, so the 
estimates should reflect the comparable cost of implementing PVS 
worldwide.
    Response: Commenters expressed concern that USAID's burden estimate 
of the proposed collection of information for PVS was inaccurate and 
did not reflect the actual administrative and operational burdens that 
would be imposed on organizations applying for awards.
    USAID addressed similar comments in publishing its final rule 
exempting portions of its system of records (Partner Vetting System, or 
PVS) from one or more provisions of the Privacy Act. See 74 FR 9 
(January 2, 2009). USAID's cost estimates are based in part on the 
Agency's existing vetting programs and are meant to serve as a baseline 
for the upcoming pilot program. Accordingly, our cost estimate 
references costs anticipated to be incurred during the pilot.
    In addition to having established a secure portal to streamline the 
vetting process and reduce the burden on implementing partners and 
Agency personnel, USAID will continue to review policies and procedures 
to determine how to further mitigate the operational and administrative 
costs for the pilot while achieving its objectives. Furthermore, the 
pilot will allow the Agency to get a better sense of the burden on our 
implementing partners and to determine what PVS will cost USAID in 
terms of dollars and personnel hours. As part of the pilot, USAID will 
monitor the impact of PVS on our implementing partners. USAID also 
intends to request input from implementing partners on costs incurred 
during the pilot so that these costs may be considered in our 
evaluation of the pilot.

Comments on the Pilot Evaluation

    Comment: USAID should put forth specific evaluation criteria for 
the pilot [before the program begins]. How would USAID measure the 
burden on recipients and ascertain any negative impacts on program 
implementation and/or achievement of foreign assistance objectives? 
Will the evaluation consider factors like (1) the number of NGOs that 
refuse to apply for or to accept USAID funding due to vetting 
requirements, or the number and quality of bids for direct assistance 
awards and subcontracts in pilot countries; (2) number of NGOs that 
alter program implementation due to the pilot; (3) impact on the safety 
and effectiveness of NGOs and their local and national partners (bad 
press coverage, threats to staff, effect on local and national NGO 
staff retention rates, etc.); (4) number of individuals and NGOs 
erroneously identified as being involved in terrorism; and (5) summary 
of any legal risks NGOs faced due to compliance with the pilot program. 
We request that the evaluation process include substantive engagement 
with NGOs to help assess the value and success of the pilot and that 
the evaluation be made publicly available.
    Response: Some organizations sought further information on 
evaluation criteria for the PVS pilot program and requested that USAID 
engage with them to help assess the pilot.

[[Page 36704]]

    Consistent with our ongoing consultations with implementing 
partners, USAID will continue outreach with our partners to assess the 
impact of the pilot program. During pilot implementation, we will 
solicit feedback from partners participating in the pilot on the extent 
to which the pilot has impacted their ability (and that of their local 
and national partner organizations) to achieve U.S. foreign assistance 
objectives and to implement USAID-funded programs and activities 
efficiently and effectively.
    As part of our pilot evaluation, we will assess partner feedback 
along with data collected from the Agency's Office of Security and 
pilot Missions to increase our understanding of the resource 
implications and costs related to the pilot in order to inform the 
Agency's way forward on partner vetting. USAID intends to include 
feedback from our implementing partners in the Agency's final 
evaluation report.

Post-Pilot

    Comment: Implementation of the pilot should not be codified into 
CFR 226 until after the evaluation has been completed with 
implementation details modified in line with evaluation results. USAID 
should delay further rulemaking on PVS until the pilot program is 
completed.
    Response: One organization recommended that the rule not be 
codified until evaluation of the pilot has been completed so that the 
rule can be modified according to the results of the pilot evaluation. 
USAID initiated informal rulemaking prior to implementation of the 
pilot program to give interested parties the opportunity to comment and 
provide feedback on the rule, since the pilot will impact our foreign 
assistance programs and activities and the organizations selected to 
implement them. USAID determined that rulemaking was the best approach 
to ensure that the widest range of views was considered in the design, 
implementation, and evaluation of the PVS pilot program.

E. Impact Assessment

Regulatory Planning and Review

    Under E.O. 12866, USAID must determine whether a regulatory action 
is ``significant'' and therefore subject to the requirements of the 
E.O. and subject to review by the Office of Management and Budget 
(OMB).
    USAID has determined that this Rule is not an ``economically 
significant regulatory action'' under Section 3(f)(1) of E.O. 12866. 
The application of the Partner Vetting System to USAID assistance will 
not have an economic impact of $100 million or more. The regulation 
will not adversely affect the economy or any sector thereof, 
productivity, competition, jobs, the environment, nor public health or 
safety in a material way. However, as this rule is a ``significant 
regulatory action'' under Section 3(f)(4) of the E.O., USAID submitted 
it to OMB for review. We have also reviewed these regulations pursuant 
to Executive Order 13563, which supplements and explicitly reaffirms 
the principles, structures, and definitions governing regulatory review 
established in Executive Order 12866.
    This regulatory action is needed for USAID to meet its fiduciary 
responsibilities by helping to ensure that agency funds and other 
resources do not inadvertently benefit individuals or entities that are 
terrorists, supporters of terrorists or affiliated with terrorists. 
NGOs will provide information on key individuals when applying for 
USAID grants or cooperative agreements. This information will be used 
to screen potential recipients and key individuals. The screening will 
help ensure that funds are not diverted to individuals or entities that 
are terrorists, supporters of terrorists or affiliated with terrorists. 
The final benefit to the public will be the increased assurance that 
Federal funds will not inadvertently provide support to entities or 
individuals associated with terrorism.
    Although the primary benefit of vetting will be to prevent the 
diversion of USAID funds, implementing partners will benefit when their 
subrecipients have also been vetted and the prime recipient is working 
with legitimate organizations. In addition, as the vetting program 
becomes better known in the community, it will deter organizations 
associated with terrorism from applying for assistance funds.
    Based on the average number of applications for USAID's assistance 
awards in 2009, 2010, and 2011, USAID estimates that 10,120 applicants 
prepare assistance award applications in a given year. Based on 
feedback from our implementing partners and on our experience 
implementing vetting programs to date, we estimate that the additional 
requirements for Partner Vetting will add 75 minutes to each 
application. We calculated this burden estimate under the assumptions 
that the average form submitted will include information on three key 
individuals and that it would take approximately 75 minutes to gather 
the necessary information, complete the form, submit the form to USAID, 
and respond to requests by USAID for additional information, if 
necessary. In the event that the applicant elects direct vetting, this 
burden estimate includes the amount of time for applicants to inform 
proposed sub-grantees of their responsibility to complete and submit 
the form and for those proposed sub-grantees to complete and submit the 
form to USAID. The burden estimate also includes the time required for 
an applicant or proposed sub-grantee to provide additional vetting 
information on new key individuals or new sub-grantees. We recognize 
that this burden estimate may overestimate the amount of time required 
to comply with vetting requirements. As USAID continues to implement 
its vetting programs and obtains more data from those participating in 
the vetting process, we may adjust the burden estimate accordingly.
    USAID estimates the cost of partner vetting per submission to be 
$40.93. This amount is based on the mean hourly wage of an 
administrative support employee, as calculated by the U.S. Department 
of Labor, Bureau of Labor Statistics, multiplied by the time required 
for the administrative support employee to collect the information, 
complete the form, submit the form to USAID, and follow up with USAID 
on information related to the form (hourly wage rate of $32.74, 
multiplied by 75 minutes per form, divided by 60 minutes). USAID 
estimates the impact of partner vetting on implementing partners from 
completing additional paperwork to be $414,212 annually ($40.93 per 
application * 10,120 submissions). USAID would like to emphasize, 
however, that this estimate was calculated under the assumption that 
all applicants applying for USAID assistance awards are vetted, whereas 
only a portion of the Agency's awards are impacted by partner vetting. 
No start-up, capital, operation, maintenance, or recordkeeping costs to 
applicants are anticipated as a result of this collection.
    We estimate USAID's direct labor cost to process assistance 
applications for the partner vetting pilot program to be $391,810 
annually. This estimate is based on labor costs for four GS-13 
positions ($147,680 annually for each position) in the Office of 
Security (SEC), five GS-13 vetting officials ($147,680 annually for 
each position), and five foreign service nationals ($74,880 annually 
for each position). USAID estimates that these positions will expend 
approximately 23 percent of their total annual hours on the assistance 
portion of the partner vetting pilot program. One of the goals of the 
partner vetting pilot program is to

[[Page 36705]]

further understand the actual costs of implementing partner vetting in 
various environments. While the figures above reflect USAID's best 
estimates of government costs to implement the pilot program for 
assistance, the actual figures may be different. The pilot program will 
be used to inform our estimates of the costs of partner vetting in 
various environments.
    USAID has not quantified other costs associated with this rule, 
such as indirect costs to organizations participating in our vetting 
programs. We have invited implementing partners on an ongoing basis to 
provide feedback on issues related to partner vetting, and their 
perspectives will be included in our evaluation of the pilot program.

Regulatory Flexibility Act

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601 et seq.), USAID has considered the economic 
impact of the rule on applicants and certifies that its provisions will 
not have a significant economic impact on a substantial number of small 
entities.
    The proposed regulations would add the requirement for partner 
vetting of key individuals for applicants of USAID-funded assistance 
awards into the existing partner vetting system. USAID estimates that 
completing an assistance application in response to a Request For 
Application takes 200 hours. USAID considers the additional 75 minute 
burden on applicants as de minimis and that this does not significantly 
increase the burden on grant applicants.

Paperwork Reduction Act

    2 CFR 701 uses information collected via USAID Partner Information 
Form, USAID Form 500-13, which was approved in accordance with 44 
U.S.C. 3501 by the Office of Management and Budget on July 25, 2012 
(OMB Control Number 0412-0577).

List of Subjects in 22 CFR 701

    Foreign aid, Federal assistance, Non-federal entity, Foreign 
organization, Subrecipient, Contractor.

Regulatory Text

    For the reasons stated in the preamble, part 701 of title 2, 
chapter VII of the Code of Federal Regulations is added to read as 
follows:

PART 701--PARTNER VETTING IN USAID ASSISTANCE

Sec.
701.1 Definitions.
701.2 Applicability.
701.3 Partner vetting.
Appendix B to Part 701--Partner Vetting Pre-Award Requirements and 
Award Term.

    Authority:  22 U.S.C. 2251 et seq.; 22 U.S.C. 2151t, 22 U.S.C. 
2151a, 2151b, 2151c, and 2151d; 22 U.S.C. 2395(b).


Sec.  701.1  Definitions.

    This section contains the definitions for terms used in this part. 
Other terms used in the part are defined at 2 CFR part 200. Different 
definitions may be found in Federal statutes or regulations that apply 
more specifically to particular programs or activities.
    Key individual means the principal officer of the organization's 
governing body (for example, chairman, vice chairman, treasurer and 
secretary of the board of directors or board of trustees); the 
principal officer and deputy principal officer of the organization (for 
example, executive director, deputy director, president, vice 
president); the program manager or chief of party for the USG-financed 
program; and any other person with significant responsibilities for 
administration of the USG-financed activities or resources, such as key 
personnel as identified in the solicitation or resulting cooperative 
agreement. Key personnel, whether or not they are employees of the 
prime recipient, must be vetted.
    Key personnel means those individuals identified for approval as 
part of substantial involvement in a cooperative agreement whose 
positions are essential to the successful implementation of an award. 
Vetting official means the USAID employee identified in the application 
or award as having responsibility for receiving vetting information, 
responding to questions about information to be included on the Partner 
Information Form, coordinating with the USAID Office of Security (SEC), 
and conveying the vetting determination to each applicant, potential 
subrecipients and contractors subject to vetting, and the agreement 
officer. The vetting official is not part of the office making the 
award selection and has no involvement in the selection process.


Sec.  701.2   Applicability.

    The requirements established in this part apply to non-Federal 
entities, non-profit organizations, for-profit entities, and foreign 
organizations.


Sec.  701.3   Partner vetting.

    (a) It is USAID policy that USAID may determine that a particular 
award is subject to vetting in the interest of national security. In 
that case, USAID may require vetting of the key individuals of 
applicants, including key personnel, whether or not they are employees 
of the applicant, first tier subrecipients, contractors, and any other 
class of subawards and procurements as identified in the assistance 
solicitation and resulting award. When USAID conducts partner vetting, 
it will not award to any applicant who determined ineligible by the 
vetting process.
    (b) When USAID determines an award to be subject to vetting, the 
agreement officer determines the appropriate stage of the award cycle 
to require applicants to submit the completed USAID Partner Information 
Form, USAID Form 500-13, to the vetting official identified in the 
assistance solicitation. The agreement officer must specify in the 
assistance solicitation the stage at which the applicants will be 
required to submit the USAID Partner Information Form, USAID Form 500-
13. As a general matter those applicants who will be vetted will be 
typically the applicants that have been determined to be apparently 
successful.
    (c) Selection of the successful applicant proceeds separately from 
vetting. The agreement officer makes the selection determination 
separately from the vetting process and without knowledge of vetting-
related information other than that, based on the vetting results, the 
apparently successful applicant is eligible or ineligible for an award. 
However, no applicants will be excluded from an award until after 
vetting has been completed.
    (d) For those awards the agency has determined are subject to 
vetting, the agreement officer may only award to an applicant that has 
been determined to be eligible after completion of the vetting process.
    (e)(1) For those awards the agency has determined are subject to 
vetting, the recipient must submit the completed USAID Partner 
Information Form any time it changes:
    (i) Key individuals; or
    (ii) Subrecipients and contractors for which vetting is required.
    (2) The recipient must submit the completed Partner Information 
Form within 15 days of the change in either paragraph (e)(1)(i) or (ii) 
of this section.
    (f) USAID may vet key individuals of the recipient, subrecipients 
and contractors periodically during program implementation using 
information already submitted on the Form.
    (g) When the prime recipient is subject to vetting, vetting may be 
required for key individuals of subawards when the prime recipient 
requests prior approval in accordance with 2 CFR 200.308(c)(6) for the

[[Page 36706]]

subaward, transfer, or contracting out of any work.
    (h) When the prime recipient is subject to vetting, vetting may be 
required for key individuals of contractors of certain services. The 
agreement officer must identify these services in the assistance 
solicitation and any resulting award.
    (i) When vetting of subawards is required, the agreement officer 
must not approve the subaward, transfer, or contracting out, or the 
procurement of certain classes of items until the organization subject 
to vetting has been determined eligible. When vetting of contractors is 
required, the recipient may not procure the identified services until 
the contractor has been determined to be eligible.
    (j) The recipient may instruct prospective subrecipients or, when 
applicable contractors who are subject to vetting to submit the USAID 
Partner Information Form to the vetting official as soon as the 
recipient submits the USAID Partner Information Form for its key 
individuals.
    (k) Pre-award provision and award term.
    (1) The agreement officer must insert the pre-award provision 
Partner Vetting Pre-Award Requirements in Appendix B of this part in 
all assistance solicitations USAID identifies as subject to vetting.
    (2) The agreement officer must insert the award term Partner 
Vetting in Appendix B in all assistance solicitations and awards USAID 
identifies as subject to vetting.

Appendix B to Part 701--Partner Vetting Pre-Award Requirements and 
Award Term

Partner Vetting Pre-Award Requirements

    (a) USAID has determined that any award resulting from this 
assistance solicitation is subject to vetting. An applicant that has 
not passed vetting is ineligible for award.
    (b) The following are the vetting procedures for this 
solicitation:
    (1) Prospective applicants review the attached USAID Partner 
Information Form, USAID Form 500-13, and submit any questions about 
the USAID Partner Information Form or these procedures to the 
agreement officer by the deadline in the solicitation.
    (2) The agreement officer notifies the applicant when to submit 
the USAID Partner Information Form. For this solicitation, USAID 
will vet [insert in the provision the applicable stage of the 
selection process at which the Agreement Officer will notify the 
applicant(s) who must be vetted]. Within the timeframe set by the 
agreement officer in the notification, the applicant must complete 
and submit the USAID Partner Information Form to the vetting 
official. The designated vetting official is:

Vetting official:------------------------------------------------------

Address:---------------------------------------------------------------

Email:-----------------------------------------------------------------
(for inquiries only).

    (3) The applicants must notify proposed subrecipients and 
contractors of this requirement when the subrecipients or 
contractors are subject to vetting.

    Note:  Applicants who submit using non-secure methods of 
transmission do so at their own risk.

    (c) Selection proceeds separately from vetting. Vetting is 
conducted independently from any discussions the agreement officer 
may have with an applicant. The applicant and any proposed 
subrecipient or contractor subject to vetting must not provide 
vetting information to anyone other than the vetting official. The 
applicant and any proposed subrecipient or contractor subject to 
vetting will communicate only with the vetting official regarding 
their vetting submission(s) and not with any other USAID or USG 
personnel, including the agreement officer or the agreement 
officer's representatives. The agreement officer designates the 
vetting official as the only individual authorized to clarify the 
applicant's and proposed subrecipient's and contractor's vetting 
information.
    (d)(1) The vetting official notifies the applicant that it: (i) 
Is eligible based on the vetting results, (ii) is ineligible based 
on the vetting results, or (iii) must provide additional 
information, and resubmit the USAID Partner Information Form with 
the additional information within the number of days the vetting 
official specified in the notification.
    (2) The vetting official will coordinate with the agency that 
provided the data being used for vetting prior to notifying the 
applicant or releasing any information. In any determination for 
release of information, the classification and sensitivity of the 
information, the need to protect sources and methods, and the status 
of ongoing law enforcement and intelligence community investigations 
or operations will be taken into consideration.
    (e) Reconsideration: (1) Within 7 calendar days after the date 
of the vetting official's notification, an applicant that vetting 
has determined to be ineligible may request in writing to the 
vetting official that the Agency reconsider the vetting 
determination. The request should include any written explanation, 
legal documentation and any other relevant written material for 
reconsideration.
    (2) Within 7 calendar days after the vetting official receives 
the request for reconsideration, the Agency will determine whether 
the applicant's additional information merits a revised decision.
    (3) The Agency's determination of whether reconsideration is 
warranted is final.
    (f) Revisions to vetting information: (1) Applicants who change 
key individuals, whether the applicant has previously been 
determined eligible or not, must submit a revised USAID Partner 
Information Form to the vetting official. This includes changes to 
key personnel resulting from revisions to the technical portion of 
the application.
    (2) The vetting official will follow the vetting process of this 
provision for any revision of the applicant's Form.
    (g) Award. At the time of award, the agreement officer will 
confirm with the vetting official that the apparently successful 
applicant is eligible after vetting. The agreement officer may award 
only to an apparently successful applicant that is eligible after 
vetting.

Partner Vetting

    (a) The recipient must comply with the vetting requirements for 
key individuals under this award.
    (b) Definitions: As used in this provision, ``key individual,'' 
``key personnel,'' and ``vetting official'' have the meaning 
contained in 22 CFR 701.1.
    (c) The Recipient must submit within 15 days a USAID Partner 
Information Form, USAID Form 500-13, to the vetting official 
identified below when the Recipient replaces key individuals with 
individuals who have not been previously vetted for this award. 
Note: USAID will not approve any key personnel who are not eligible 
for approval after vetting. The designated vetting official is:

Vetting official:------------------------------------------------------

Address:---------------------------------------------------------------

Email:-----------------------------------------------------------------
(for inquiries only).

    (d)(1) The vetting official will notify the Recipient that it--
    (i) Is eligible based on the vetting results,
    (ii) Is ineligible based on the vetting results, or
    (iii) Must provide additional information, and resubmit the 
USAID Partner Information Form with the additional information 
within the number of days the vetting official specifies.
    (2) The vetting official will include information that USAID 
determines releasable. USAID will determine what information may be 
released consistent with applicable law and Executive Orders, and 
with the concurrence of relevant agencies.
    (e) The inability to be deemed eligible as described in this 
award term may be determined to be a material failure to comply with 
the terms and conditions of the award and may subject the recipient 
to suspension or termination as specified in the subpart ``Remedies 
for Noncompliance'' at 2 CFR part 200.
    (f) Reconsideration: (1) Within 7 calendar days after the date 
of the vetting official's notification, the recipient or prospective 
subrecipient or contractor that has not passed vetting may request 
in writing to the vetting official that the Agency reconsider the 
vetting determination. The request should include any written 
explanation, legal documentation and any other relevant written 
material for reconsideration.
    (2) Within 7 calendar days after the vetting official receives 
the request for reconsideration, the Agency will determine whether 
the recipient's additional information merits a revised decision.
    (3) The Agency's determination of whether reconsideration is 
warranted is final.

[[Page 36707]]

    (g) A notification that the Recipient has passed vetting does 
not constitute any other approval under this award.
    Alternate I. When subrecipients will be subject to vetting, add 
the following paragraphs to the basic award term:
    (h) When the prime recipient anticipates that it will require 
prior approval for a subaward in accordance with 2 CFR 200.308(c)(6) 
the subaward is subject to vetting. The prospective subrecipient 
must submit a USAID Partner Information Form, USAID Form 500-13, to 
the vetting official identified in paragraph (c) of this provision. 
The agreement officer must not approve a subaward to any 
organization that has not passed vetting when required.
    (i) The recipient agrees to incorporate the substance of 
paragraphs (a) through (i) of this award term in all first tier 
subawards under this award.
    Alternate II. When specific classes of services are subject to 
vetting, add the following paragraph:
    (j) Prospective contractors at any tier providing the following 
classes of services
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
must pass vetting. Recipients must not procure these services until 
they receive confirmation from the vetting official that the 
prospective contractor has passed vetting. (End of award term)

Angelique M. Crumbly,
Assistant Administrator, Bureau for Management.
[FR Doc. 2015-15017 Filed 6-25-15; 8:45 am]
BILLING CODE 6116-02-P