[Federal Register Volume 81, Number 206 (Tuesday, October 25, 2016)]
[Rules and Regulations]
[Pages 73352-73354]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25881]


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AGENCY FOR INTERNATIONAL DEVELOPMENT

48 CFR Part 752

RIN 0412-AA81


Requirement for Nondiscrimination Against End-Users of Supplies 
or Services (``Beneficiaries'') Under USAID-Funded Contracts

AGENCY: U.S. Agency for International Development.

ACTION: Final rule.

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SUMMARY: The Foreign Assistance Act of 1961, as amended (FAA), 
authorizes the U.S. Agency for International Development (USAID) to 
provide foreign assistance in the form of development and humanitarian 
assistance that reflect American ideals. To help emphasize USAID's 
intent and expectation of non-discrimination of beneficiaries in USAID-
funded activities, USAID is issuing a final rule to amend its Agency 
for International Development Acquisition Regulation (AIDAR) to include 
a new clause entitled ``Nondiscrimination against End-Users of Supplies 
or Services.'' This clause expressly states that USAID-funded 
contractors must not discriminate among end-users of supplies or 
services (referred to in this rule as beneficiaries and potential 
beneficiaries) in any way that is contrary to the scope of the activity 
as defined in the statements of work (SOWs).

DATES: Effective: October 25, 2016.

FOR FURTHER INFORMATION CONTACT: Todd Larson Telephone: 202-712-4969 or 
Email: [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    USAID published a proposed rule in the Federal Register at 81 FR 
56572 on August 22, 2016 to amend its Agency for International 
Development Acquisition Regulation (AIDAR) to include a new clause 
entitled ``Nondiscrimination against End-Users of Supplies or 
Services.''
    USAID seeks to improve the lives of people around the world by 
being inclusive in its development and humanitarian assistance efforts. 
In so doing, USAID recognizes that every person is instrumental in the 
transformation of their own societies, with the end result that each 
and every person is recognized and equally valued without regard to 
artificial and discriminatory distinctions. The inclusion, protection, 
and empowerment of all persons is critical because drawing on the full 
contributions of the entire population leads to more effective, 
comprehensive, and sustainable development results.
    Nondiscrimination is the basic foundation of USAID's inclusive 
development approach; as such, all USAID programs seek to ensure access 
for all potential beneficiaries within the scope of the contract 
without discrimination. Contractors must adhere to this by implementing 
the activities as outlined in the contract SOWs. Nondiscrimination is a 
critical foundation for protecting and promoting the human rights of 
all persons. In addition, nondiscrimination ensures equitable access to 
USAID programs. Effective nondiscrimination practices support USAID's 
principles of inclusion and equal access and help to ensure that USAID 
programs empower and effectively reach women and girls; marginalized 
ethnic and religious populations; indigenous peoples; internally 
displaced persons; persons with disabilities; youth and the elderly; 
lesbian, gay, bisexual, transgender, and intersex individuals; and 
other socially marginalized individuals and peoples unique to the 
country or regional context.
    In recent years, the Government has made multiple pronouncements of 
policy in many areas reflecting its emphasis on equity, fairness, and 
human dignity--effective nondiscrimination is a means toward achieving 
all of these. For example, in 2011, the White House issued E.O. 13563, 
``Improving Regulation and Regulatory Review,'' to update all agencies 
on factors to consider when issuing rules; in addition to quantitative 
factors, it advised that the qualitative values of equity, fairness, 
and human dignity are important considerations. Additionally, a 2011 
Presidential Memorandum, ``International Initiatives to Advance the 
Human Rights of Lesbian, Gay, Bisexual, and Transgender Persons,'' 
directs all agencies engaged abroad to advance nondiscrimination. This 
rule addressing discrimination in the provision of supplies or services 
is consistent with the values that animate the above.

II. Discussion

    This rulemaking revises (48 CFR) AIDAR to add a new clause at 
752.7038 entitled ``Nondiscrimination against End-Users of Supplies or 
Services.'' The clause, applicable to all solicitations, contracts, and 
subcontracts at any tier, prohibits contractors and subcontractors from 
discriminating against beneficiaries or potential beneficiaries (i.e., 
those individuals intended to

[[Page 73353]]

receive the benefits of the award, whether goods or services) on the 
basis of any characteristics not expressly stated in the award.
    The purpose of this rulemaking is to ensure adherence to the intent 
and authorities in the FAA, and other statutes related to humanitarian 
assistance and international development. The intent of the FAA is to 
help people, without regard to irrelevant and discriminatory 
distinctions among them. This intent is reflected in many places in the 
statute. The first words of the Act set out that it seeks to promote 
United States interests ``by assisting peoples of the world.'' Congress 
explained its intent thusly in FAA section 101: ``[T]he Congress 
reaffirms the traditional humanitarian ideals of the American people 
and renews its commitment to assist people in developing countries to 
eliminate hunger, poverty, illness, and ignorance.''
    A survey of FAA provisions relevant to USAID awards reflects that 
they focus on development and humanitarian assistance needs and 
effectiveness toward meeting them. For example, FAA section 103, on 
agriculture, rural development, and nutrition, suggests assistance 
should focus on alleviating poverty. FAA section 104, on health-related 
assistance, suggests limited targeting of activities to the specialized 
health needs of children, infants, and mothers. FAA section 491, on 
international disaster assistance, contemplates ``prompt United States 
assistance to alleviate human suffering'' and emphasizes that the 
implementing agency ``shall insure that the assistance provided by the 
United States shall, to the greatest extent possible, reach those most 
in need of relief and rehabilitation as a result of natural and manmade 
disaster.''
    In some contexts, such as assistance for child survival, the 
foreign assistance authorities contemplate a focus on women and 
children, but that is a matter of programmatic need and effectiveness. 
USAID has identified no context where excluding individuals from 
assistance based on any of the types of discrimination proscribed by 
this clause, outside the scope of the award, would have a positive 
effect on implementing USAID's foreign assistance authorities.
    The main effect of this clause is to ensure that USAID's policy and 
practice of non-discrimination in planning projects and activities is 
followed through to completion by the contractors that implement them. 
Its impact on contractors and offerors is to remind them to follow the 
terms and conditions of the contract, including the implementation of 
the SOW as designed, and to refrain from the types of discrimination 
described in the clause. In itself, the clause serves as a reminder to 
contractors and offerors of USAID's long-standing, pre-existing 
expectations based on USAID's programmatic and planning priorities and 
authorities.

III. Summary of Comments and Explanation of Revisions

    The proposed rule was published for public comment pursuant to the 
Office of Federal Procurement Policy Act (41 U.S.C. 1707). In total, 
six public comments were received. All six comments were supportive in 
nature.
    Five commenters recommended minor edits to the second sentence of 
subsection (a) of the rule to clarify that all of the listed categories 
are included among the factors, which if not expressly stated in the 
award, are precluded from being used as a basis for discrimination by 
the contractor. The second sentence of this final rule has accordingly 
been clarified in response to these comments to eliminate any potential 
ambiguity.
    Four commenters suggested that the rule be modified to apply to 
USAID grantees and be included in USAID grant and cooperative agreement 
awards. One commenter also urged that the rule be clarified to apply to 
subcontracts and subgrants. These comments did not warrant any changes 
to the final rule. The AIDAR only applies to contracts. USAID will 
address assistance awards (i.e., grants and cooperative agreements) and 
subawards separately from this rulemaking. Additionally, the new clause 
already specifies in subsection (b) that it must be inserted in all 
subcontracts at any tier.
    One commenter recommended the inclusion of language in the third 
sentence of the new clause to specify that targeted activities by the 
contractor toward the assistance needs of certain populations specified 
in the contract must serve a ``legitimate programmatic purpose.'' This 
change was not included in the final rule, as the programmatic purpose 
of USAID contracts is already considered as part of the contract SOWs. 
On its own initiative, USAID made a minor editorial revision to better 
clarify the regulation, replacing the article ``a'' with ``the'' in the 
third sentence of the clause to clearly refer to the contractor 
receiving a USAID funded contract.
    Finally, USAID also received a comment outside the scope of this 
rule from one commenter urging the Agency to examine its reporting and 
verification procedures to ensure compliance with the rule, and urging 
the government-wide harmonization of nondiscrimination policies for 
beneficiaries of foreign assistance.

IV. Executive Orders 12866 (Regulatory Planning and Review) and 13563 
(Improving Regulation and Regulatory Review)

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
the costs and benefits of the intended regulation. E.O. 13563 allows 
that in making this assessment, an agency ``may consider (and discuss 
qualitatively) values that are difficult or impossible to quantify, 
including equity, human dignity, fairness, and distributive impacts.'' 
The estimated costs of this rulemaking do not exceed the threshold of 
economic significance (i.e., an annual effect on the economy of $100 
million or more). However, the rule has been designated a ``significant 
regulatory action'' under section 3(f) of Executive Order 12866 and 
therefore it has been reviewed by the Office of Management and Budget.
    This rule provides a benefit by promoting non-discrimination, which 
itself promotes programmatic efficiency, with very little additional 
administrative burden for the affected entities, USAID contractors. It 
does not ask them to carry out activities beyond those in their 
contract SOWs and terms and conditions; it does not ask them to alter 
the manner in which they conduct the work as set out in their 
contracts. In fact, it reminds them to stay within those instructions. 
The only potential cost the Agency could identify for contractors and 
subcontractors is for minimal training, to the extent that contractors 
do not already proscribe discrimination as part of the normal conduct 
of their business.
    USAID awards approximately 1,300 contracts/task orders annually. As 
a practical matter for these current contracts, even absent this 
clause, if for example a contract specified the provision of food 
parcels in a certain community, the contractor could not, on its own, 
decide that only certain members of that community should receive the 
food parcels or that certain members should be excluded.
    Including this clause in all new contracts and subcontracts going 
forward provides an explicit reminder of USAID's expectation that its 
contractors not discriminate against any protected group or individual, 
and is particularly important in countries where stigma and 
discrimination toward certain groups is tolerated or officially 
endorsed by the government. The benefits of the rule would be to

[[Page 73354]]

expressly reinforce notions of equity, fairness, and human dignity 
under Federal Government contracts.
    Contractors responding to a solicitation (e.g. request for 
proposals (RFP) or invitation for bid (IFB)) would further be on notice 
not to include any discriminatory criteria in their response to a 
solicitation, absent specific programmatic justification in the SOW to 
do so.

V. Regulatory Flexibility Act

    Congress enacted the Regulatory Flexibility Act of 1980, as 
amended, 5 U.S.C. 601-612, to ensure that Government regulations do not 
unnecessarily or disproportionately burden small entities. It requires 
a regulatory flexibility analysis if a rule would have a significant 
economic impact, either detrimental or beneficial, on a substantial 
number of small entities.
    In fiscal year 2015, 330 small businesses received USAID funds. In 
fiscal years 2011, 2012, 2013, and 2014 the 391, 384, 349, and 363 
small businesses received USAID funds, respectively. The requirement 
this rule would impose on small businesses is no different than the 
requirement for other entities: Contracts or subcontracts awarded to 
them will include a provision reminding them not to discriminate. 
Beyond adding a brief reminder or discussion of this now explicit 
requirement to existing trainings on business ethics and conduct they 
provide to their staff, as already required by FAR 3.10, we do not 
estimate that this will impose a significant additional cost. As with 
all contractors, the employees of small businesses will be expected to 
be mindful of the principles of equity, fairness, and human dignity 
when performing the work under their contracts; as they have always 
been. The additional effort by small businesses (a matter of a few 
minutes of discussion) is so de minimis that we do not estimate that 
this will impose more than a negligible cost.
    There are no reporting or recordkeeping requirements associated 
with this rule. The rule does not duplicate, overlap, or conflict with 
any other Federal rules. There is currently no other Federal rule 
addressing discrimination of recipients of supplies or services 
pursuant to a Federal Government contract. There were no significant 
alternatives identified that would meet the objective of the rule.
    In light of the above analysis, the USAID Chief Acquisition Officer 
certifies that this rule would not have a significant economic impact 
on a substantial number of small entities.

VI. Paperwork Reduction Act

    This rule does not include a reporting or information collection 
requirement. Therefore, USAID has determined that this rule does not 
impose any new or revised reporting or disclosure requirements that 
would be considered collections of information requiring Office of 
Management and Budget approval under the Paperwork Reduction Act, 44 
U.S.C. 3501 et seq.

List of Subjects in 48 CFR Part 752

    Government procurement.

    For the reasons discussed in the preamble, USAID amends 48 CFR 
Chapter 7 as set forth below:

PART 752--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
1. The authority citation for part 752 continues to read as follows:

    Authority:  Sec. 621, Pub. L. 87-195, 75 Stat. 445 (22 U.S.C. 
2381), as amended; E.O. 12163, Sept. 29, 1979, 44 FR 56673; and 3 
CFR 1979 Comp., p. 435.

PART 752--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
2. Add section 752.7038 to read as follows:


Sec.  [thinsp]752.7038  Nondiscrimination against End-Users of Supplies 
or Services.

    The following clause must be inserted in section I of all 
solicitations and resulting contracts.

Nondiscrimination Against End-Users of Supplies or Services (OCT 2016)

    (a) USAID policy requires that the contractor not discriminate 
against any end-user of the contract supplies or services (i.e., the 
beneficiaries of the supplies or services) in implementation of this 
award, such as, but not limited to, by withholding, adversely 
impacting, or denying equitable access to the supplies or services 
(benefits) provided through this contract on the basis of any factor 
not expressly stated in the award. This includes, for example, race, 
color, religion, sex (including gender identity, sexual orientation, 
and pregnancy), national origin, disability, age, genetic 
information, marital status, parental status, political affiliation, 
or veteran's status. Nothing in this clause is intended to limit the 
ability of the contractor to target activities toward the assistance 
needs of certain populations as defined in the contract.
    (b) The Contractor must insert this clause, including this 
paragraph, in all subcontracts under this contract.

    (End of clause)

    Dated: October 18, 2016.
Roy Plucknett,
Chief Acquisition Officer.
[FR Doc. 2016-25881 Filed 10-24-16; 8:45 am]
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