On August 29, 2013, the U.S. Agency for International Development (USAID) issued a Notice of Proposed Rulemaking (Notice) that could lead in the near future to implemention of a Partner Vetting System (PVS) for certain USAID-funded assistance awards.1 USAID’s Notice reflects renewed efforts to implement a system of vetting certain organizations (including subrecipients and vendors) that receive USAID funding, in an effort to safeguard against the diversion of USAID awards by organizations and individuals associated with terrorism. If implemented, the vetting system would require organizations seeking USAID funding for certain awards to submit substantial amounts of personal information about their key personnel, as well as the key personnel of subrecipients and vendors, including full names, addresses, nationalities, occupations, nationalities, and passport information.

Comments by the public, including by possible applicants for USAID awards, may be made until September 30, 2013.  USAID has not provided an anticipated effective date for implementing the new vetting system.  An effective date would be provided when USAID reviews public comments and issues final rules.

Prior Efforts and Comments

USAID first began working on a possible PVS in 2007, but has delayed implementation as it has continued to consider how best to implement a new system.  USAID received numerous comments when it initially proposed a PVS.  The nonprofit community, including organizations that work in international development, has been especially vocal about raising concerns about USAID’s proposal during previous public consultations on a possible PVS system.  In this respect, the PVS would represent a significant change from the current anti-terrorism screening used by USAID that requires organizations that receive USAID funding to certify that they have checked their personnel and partners against government terrorist lists and found no relevant connections.2

One of the key concerns previously raised about PVS relates to the privacy and security of individuals who must be vetted by USAID. Concerns have been expressed about persons

flagged by USAID as associated with terrorism as a result of a “false positive” that can arise on U.S. government terrorism lists.  This issue can arise, for example, through common names or mistakes on Treasury Department’s list of Specially Designated Nationals.  Concerns have also been expressed that local country privacy laws may protect local nationals working for applicants for USAID funding from having their personal information passed to U.S. government officials.

Prior comments to USAID on PVS programs have noted that award recipients already undertake due diligence efforts to ensure that U.S. government funds are not diverted inadvertently to support terrorism, including checking organizations and individuals against the Treasury Department’s SDN list and comparable sanctions lists maintained by the European Union and other governments.3

Finally, previous comments to USAID have expressed concern that an organization’s employees working overseas will face increased safety risks if, as a result of vetting, they are viewed as agents of the U.S. government who are gathering information about foreign nationals for U.S. intelligence purposes. For example, nonprofit organizations operating in hazardous parts of the world already must overcome significant safety challenges for their overseas employees and have argued that the new USAID vetting system makes this job even more difficult.

Summary of Proposed Vetting System

As explained in the August 29 Notice, the following are key aspects of the proposed PVS program:

  • „ Overview of the Program. The PVS process involves the collection of information from individuals, officers, employees, or other officials of organizations that seek to receive USAID funding. The information will be used to conduct national security screening of such individuals and organizations to ensure that USAID funds do not inadvertently benefit individuals or entities associated with terrorism.
  • „ Information Required on Key Individuals. For USAID programs that are subject to the PVS process, USAID will require applicants to provide information on “key individuals”—the principal officers and other key employees and personnel of USAID contractors and recipients.4 The applicant will need to provide information on USAID Partner Information Form, USAID Form 500-13, which identifies the information required for the key individuals of the applicant and any subrecipients or vendors who are subject to vetting, including their full names, addresses, nationalities, occupations, nationalities, and passport information.
  • „ Risk Based Analysis to Identify Awards Subject to PVS. Not all USAID awards will be subject to the PVS program. USAID will vet a particular planned award and will perform a risk based assessment (RBA) to determine whether PVS is appropriate. In performing the RBA, USAID will determine the likelihood that the funds, goods, services, or other benefits to be provided could inadvertently benefit individuals or entities that are terrorists, supporters of terrorists or affiliated with terrorists, including people or organizations who are not specifically designated by the U.S. government but who may nevertheless be linked to terrorist activities.
  • „ Key Factors in Risk Based Analysis. Key factors that USAID will consider in determining whether to subject an applicant to the PVS program will include, but are not limited to:
    • the nature of the program, the type of entity that will be implementing the activity (for example, U.S. non-governmental organization (NGO), U.S. forprofit organization, foreign NGO, foreign for-profit organization, international organization);
    • the geographic location of the activity, the safeguards available; and
    • how easily funds could be diverted or misused.

USAID will also consider the urgency of the activity and the foreign policy importance of the activity. USAID may identify through the RBA process that only certain services the recipient procures from vendors are subject to vetting.

  • „ Process Issues During the Vetting. USAID states in the Notice that it intends to apply PVS in a manner that protects the integrity of the selection process and also ensures that USAID’s Office of Security (SEC) is able to obtain information necessary to vet key individuals and protect sensitive information from disclosure. The Notice proposed that these issues will be addressed in the following ways:
    • Individuals involved in the selection process, including the agreement officer (AO),5 will not have access to the information applicants submit for vetting, other than to confirm the key individuals the applicants have submitted.
    • When vetting is required, a provision in the relevant solicitation will notify applicants of the vetting requirements and procedures. The AO will instruct applicants when to submit the completed USAID Form 500-13 to the vetting official identified in the solicitation. In all cases, the vetting official will be a U.S. citizen employee of USAID who is not involved in the selection process.
    • In addition to receiving the completed Forms, the vetting official will be responsible for responding to questions from applicants about information to be included on the Form, coordinating with USAID’s Office of Security, and conveying the vetting determination to each vetted applicant and the AO.
  • Process Issues After the Vetting. After a vetting determination has been made, the vetting official notifies the applicant or applicants that they either have passed or have not passed vetting. The vetting official also notifies the AO that all vetting determinations have been provided to the applicants. The vetting official indicates to the AO whether or not all applicants have passed vetting but will not provide the AO with specific vetting information.
    • For applicants who have not passed, the vetting official will notify the applicant(s) of the vetting determination.  Applicants who have not passed vetting may request reconsideration of the vetting determination within seven days of receiving notification that they have not passed vetting.  USAID’s determination of whether reconsideration is warranted is final. USAID will determine what information may be released to the organization vetted consistent with applicable law and Executive Orders, and with the concurrence of relevant agencies.
    • The AO makes the award decision independently from the vetting process.  The AO then confirms with the vetting official that the apparently successful applicant has passed vetting and proceeds with the award.  Only applicants who have passed the vetting process are eligible for an award.  If the AO is ready to make an award but the vetting official is unable to confirm that the apparently successful applicant has passed vetting, the AO will wait as long as is practicable for the vetting official’s confirmation.
    • Applicants are required to keep the AO up to date on any changes in key personnel. Applicants who change any key individuals for any reason, including but not limited to failure to pass vetting or for reasons related to their applications, must submit a revised Form to the vetting official as soon as possible to allow for vetting of individuals not previously vetted.

Conclusion

USAID has confirmed its intention to implement an antiterrorism vetting system that attempts to balance its efforts to prevent the diversion of USAID awards for the benefit of individuals or entities associated with terrorism with the costs that such a program will have on USAID programs and its implementing partners. Based on previous comments USAID received regarding its proposed partner vetting system, especially from the nonprofit sector, USAID clearly faces great challenges in achieving its objectives. Those who work with USAID should review the proposed regulations carefully and consider submitting comments.6