A long-awaited final Partner Vetting System (PVS) final rule was issued by the U.S. Agency for International Development (USAID) June 26 (Partner Vetting in USAID Assistance, 80 Fed. Reg. 36693). The rule, which establishes a pilot project in five countries, requires many grant applicants to submit detailed personal information on key employees to USAID for comparison with intelligence databases. It is dismissive of concerns raised by nonprofit organizations (NGOs) and others in response to the proposed rule issued in 2013

The final rule implements a pilot PVS program for USAID assistance and acquisition awards in Kenya, Guatemala, Lebanon, Philippines and Ukraine. The PVS program applies to non-federal entities, nonprofit organizations, for-profit entities and foreign organizations that apply for USAID contracts, grants, cooperative agreements or other funding, and to those entities that apply for registrations with USAID as Private and Voluntary Organizations. The purpose of PVS, according to the rule, 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.”

Vetting Determination and Process

USAID will apply a risk-based assessment to determine if a particular award is subject to vetting. This will involve evaluating a variety of factors including the operating environment, nature of the program or activity, geographic locations of the proposed program or activity, and the amount of the award.

If vetting is required, key individuals or applicants, including key personnel, must submit the Partner Information Form (USAID Form 500-13). If a “match” is found between information provided by an applicant and information contained in non-public databases or other sources, USAID will determine whether the match is valid or is a false positive. If the match is found to be a link to terrorism, the applicant is ineligible.

If any key individual is found ineligible, the organization may submit a reconsideration request within 7 days to USAID. Organizations will be given a reason for denial of an award, with a reasonable amount of detail given the nature, source and sensitivity of the information, according to the final rule. Within 7 days of receiving a request for reconsideration, USAID will determine “whether the applicant’s additional information merits a revised decision,” the rule states.

Significant Comments, Dismissive Response

Comments to the proposed rule were extensive and identified numerous problems with USAID’s proposal. Several commenters noted, for example, that lower-tier partners and vendors may be unwilling or unable to provide their personal information and that the program will disproportionately affect smaller local organizations that cannot understand and comply with vetting requirements. Other commenters stated that there may be issues with storing, sharing and using personal data in terms of foreign privacy and data collection laws.

USAID’s response to these comments was largely dismissive. For example, in response to comments that there is no evidence that USAID funds are flowing to terrorist and that NGOs already conduct due diligence, the agency responded that vetting is a higher-level safeguard that USAID can conduct and its implementing partners cannot, because they do not have access to these non-public databases. While the Office of Foreign Assets Control (OFAC) list of Specially Designated Nationals (SDN) is publicly available, “it is not fully inclusive of terrorist information included” in federal databases, it said.

Intelligence Gathering and Aid Worker Safety

Perhaps the biggest concern of commenters was that NGOs will be perceived as intelligence arms of the U.S. government, increasing the security risk for partner employees. They added that PVS will discourage international and local partners from working with U.S. NGOs and will deter U.S. citizens and foreign nationals form working for U.S.-funded programs. In response, USAID simply stated that “PVS is not a U.S. intelligence collection program,” without addressing the perception. At the same time, however, in its response to comments, USAID also states that it must share information it collects with other security and intelligence branches of the U.S. government.

When asked how data on key individuals will be used and shared among different actors, and how long such information will be stored, USAID responded that an applicant’s information “will not be used to create a ‘blacklist’ of organizations and/or individuals who will be barred from seeking US government contracts and grants.” The agency added, “Findings based on vetting results do not preclude an organization’s eligibility to bid on subsequent solicitations.” This appears to contradict the statement that information will be shared with other government agencies, who will then use it to update their databases.

In response to comments that PVS will cause a delay in aid delivery, USAID agreed that the requirements of the new regulations “will affect the delivery of assistance.” It added that USAID is increasing its vetting staff to accomodate the additional workload imposed by the pilot program. It also explained that in crisis situations where humanitarian aid is urgently needed, “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.” In these cases, USAID may conduct post-award vetting.

USAID’s PVS took effect July 27, 2015. Read a summary of the rule.