On June 26, 2015, the United States Agency for International Development (“USAID”) published a final rule extending its pilot Partner Vetting System (“PVS”) program to assistance awards and cooperative agreements.  This final rule comes nearly two years after USAID issued a proposed rule applying PVS to USAID assistance and resembles USAID’s existing vetting program for its procurement contracts.  The final rule goes into effect on July 27, 2015.

PVS is intended to prevent USAID funds and resources from inadvertently benefitting terrorists and their supporters or affiliates.  In pursuit of that goal, applicants for USAID assistance subject to PVS must submit identifying information about their key individuals, which an independent vetting official then checks against government databases to determine potential affiliations with or links to terrorism.  Any applicant that does not pass the vetting process is deemed ineligible for award.

Scope of Vetting

Not all USAID assistance awards are subject to vetting.  Rather, USAID employs a risk-based assessment to determine whether national security interests warrant vetting for a particular award.  This risk-based assessment considers numerous factors, including the operating environment, nature of the program or activity, geographic location of the proposed program or activity, and monetary value of the award.  USAID’s determination regarding the appropriateness of vetting in a certain situation is not appealable.

The PVS pilot program is limited to 5 countries—Guatemala, Kenya, Lebanon, the Philippines, and Ukraine—although USAID has authority to conduct vetting outside the scope of the pilot program if its risk assessment indicates that vetting is an appropriate safeguard.  The final rule also clarifies that PVS requirements apply to non-federal entities, nonprofit organizations, for-profit entities, and foreign organizations.

Vetting Process

If an award is subject to vetting, the applicant must submit a USAID Partner Information Form, USAID Form 500-13, for all “key individuals,” regardless of whether they are employees of the applicant, subrecipient(s), or subcontractor(s).  Key individuals include:

• principal officer of the organization’s governing body (e.g., chairman, vice chairman, treasurer and secretary of the board of directors or board of trustees)

• principal officer and deputy principal officer of the organization (e.g., executive director, deputy director, resident, vice president)

• program manager or chief of party for the USAID-financed program

• any other person with significant responsibilities for administration of the USAID-financed activities or resources, such as key personnel identified in the solicitation or resulting cooperative agreement

An applicant found ineligible may request reconsideration of the decision within 7 days.

Although vetting initially occurs during the application phase, vetting obligations continue after award.  If an awardee experiences a change in key individuals, or in subrecipients or subcontractors for which vetting is required, it must submit an updated Partner Information Form to the designated vetting official within 15 days of the change.  Unlike the proposed rule, however, awardees are not required to resubmit the Partner Information Form annually.  Additionally, USAID may undertake additional vetting of key individuals, subrecipients, and subcontractors following award and throughout the course of the program, using information supplied on the existing Partner Information Form.

USAID Responses to Comments on the Proposed Rule

Although USAID made very few substantive changes compared to the proposed rule, the agency provided extensive feedback on the public comments submitted by 23 different organizations.  In particular, USAID stated:

• PVS is not intended to be invasive, but instead complements existing due diligence mechanisms.

• Contrary to concerns that vetting will cause nongovernmental organizations to be perceived as “intelligence arms” of the U.S. Government, the information obtained will be used solely for vetting and updating records; access to the data will be strictly controlled, and an independent vetting officer will conduct the vetting process separate from the application process.

• An applicant’s personal information will not be used to compile a “blacklist” of entities barred from seeking U.S. Government contracts and grants.

Although PVS seeks to be minimally burdensome, USAID partners remain concerned that increased vetting requirements will delay awards, and that false positives may derail assistance to deserving applicants.  The extension of the PVS pilot program to assistance awards, however, is similar to the vetting system that USAID already uses for its acquisition program.  USAID also already conducts vetting in Afghanistan and the West Bank/Gaza.

Greg Rustico is co author of this article.