Alert

USAID Grant Regulations Continue USAID’s Practice of Treating Foreign Organizations Differently Than U.S.-Based Grantees & Clarify Which Cost Principles Apply to For-Profit Grant Recipients

September 23, 2015

On September 17, 2015, the United States Agency for International Development (USAID) adopted, with amendments, the “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards,” issued by the Office of Management and Budget (OMB) and published in the Federal Register on December 26, 2013. USAID’s final rule, which becomes effective on October 19, 2015, is codified at 2 CFR part 700. Like many agencies, USAID has largely adopted the OMB “Super Circular” in full as its new grant regulations. The final rule includes two noteworthy revisions concerning the application of the Super Circular’s requirements to USAID grantees and subrecipients.

First, the Final Rule confirms concerns that USAID will apply the Uniform Guidance inconsistently to foreign organizations and U.S.-based entities. USAID stated that it will continue its “longstanding practice” of not applying the OMB’s Uniform Requirements to foreign organizations. Despite commenters’ protestations, USAID stated it would continue this practice because not doing so would, among other things, “result in an across-the-board increase of administrative burden on local organizations and would seriously undermine USAID’s development and sustainability goals that have been the subject of significant efforts to reduce such burdens and barriers to local organization partnerships with USAID.”

Consequently, commenters noted that U.S.-based grantees will continue to be subject to different standards when they receive awards from USAID as compare to their foreign counterparts. Commenters also complained that USAID’s continuation of its practice of treating foreign organizations differently than U.S.-based grantees will perpetuate a number of other issues. For example, U.S.-based grantees that make subawards to both domestic and foreign organizations will have to continue using different subaward agreements for different classes of subrecipients. Further, given that other agencies have chosen to apply parts of OMB’s Uniform Requirements to foreign organizations, USAID’s decision to continue its practice of not doing so will, as one commenter noted, result in “non-US based subrecipients who receive funds that originate from USAID and from other federal agencies [being] subject to policies that are not uniform.” Thus, while the continuation of this “longstanding practice” may help advance USAID’s mission, it also may very well detract from OMB’s efforts to increase efficiencies and uniformity in administration of grant monies.

Second, USAID confirmed that that Subpart E (Cost Principles) does not apply to for-profit entities. Instead, for-profit entities must follow Part 30 (Cost Accounting Standards) and Part 31 (Cost Principles) of the Federal Acquisition Regulation (FAR). This clarification eliminates any potential ambiguity over which cost principles apply to a for-profit entity receiving funds from USAID.

Read Time: 2 min

Practice Areas

Jump to top of page

Wiley Rein LLP Cookie Preference Center

Your Privacy

When you visit our website, we use cookies on your browser to collect information. The information collected might relate to you, your preferences, or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. For more information about how we use Cookies, please see our Privacy Policy.

Strictly Necessary Cookies

Always Active

Necessary cookies enable core functionality such as security, network management, and accessibility. These cookies may only be disabled by changing your browser settings, but this may affect how the website functions.

Functional Cookies

Always Active

Some functions of the site require remembering user choices, for example your cookie preference, or keyword search highlighting. These do not store any personal information.

Form Submissions

Always Active

When submitting your data, for example on a contact form or event registration, a cookie might be used to monitor the state of your submission across pages.

Performance Cookies

Performance cookies help us improve our website by collecting and reporting information on its usage. We access and process information from these cookies at an aggregate level.

Powered by Firmseek