USAID reviews for-profits’ role in foreign assistance grants

The U.S. Agency for International Development is reviewing its long-standing practice of allowing nonprofit assistance grant recipients to subcontract with for-profit companies, in a move industry representatives say would starve projects of needed expertise.

USAID is re-examining 22 CFR 226.81, the rules governing the administration of assistance awards to nongovernmental organizations, an agency spokeswoman confirmed. The rules state that, under assistance grants, "no funds shall be paid as profit to any recipient that is a commercial organization." This traditionally has been interpreted to cover only the direct award recipient, but the agency is considering expanding it to sub-recipients.

The agency is "conducting this review to ensure our practices for managing USAID grants and cooperative agreements are clear, consistent with applicable law and policy, and support USAID's foreign assistance objectives," spokeswoman Tara Rigler said.

Because the potential changes relate to the interpretation of the rules, rather than the rules themselves, they would not need to go through the formal regulatory review and comment period.

USAID awards about $4 billion annually in federal contracts and grants. The agency uses contracts primarily for technical assistance and logistics such as equipment and transportation. According to industry sources, nonprofits often turn to for-profit companies when they lack the in-house capability to manage elements of massive humanitarian projects.

An industry source who spoke on the condition of anonymity said nonprofits are as concerned as contractors about any potential policy change because they view it as a threat to their ability to get the support necessary to provide foreign assistance. The former USAID employee said the nonprofit community is "wonderfully capable" in handling large assistance projects but sometimes needs help in administering complex economic development activities.

A change in policy or interpretation "will sideline an enormous pool of development expertise that USAID has purposefully developed and cultivated to make up for the reduction of direct-hire staff from roughly 16,000 employees when I joined USAID to the current 1,000 today," he said. "When these grantees perceive the need to enter into subcontracts with the for-profit community to better achieve their grant purposes, it is flat wrong for USAID to block this."

USAID officials announced the potential change on April 23 in Washington during a meeting between nonprofit and industry groups and USAID's office of acquisition and assistance, said several sources in attendance. They said representatives of contractors and nongovernmental organizations expressed concern about any policy modification made without input from the private sector.

Rigler noted there has not been any change yet.

On April 30, Jean Horton, ombudsman for USAID's office of acquisition and assistance, sent a letter to stakeholders announcing agency plans to hold a follow-up meeting to "continue the discussion and allow a greater amount of time to hear partner concerns." The meeting will take place between May 16 and June 16.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

    Download
  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

    Download
  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

    Download
  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

    Download
  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

    Download
  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

    Download
  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.

    Download

When you download a report, your information may be shared with the underwriters of that document.