[Federal Register Volume 84, Number 147 (Wednesday, July 31, 2019)]
[Rules and Regulations]
[Pages 37079-37081]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15685]


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AGENCY FOR INTERNATIONAL DEVELOPMENT

22 CFR Part 203

RIN 0412-AA91


Streamlining the Registration Process for Private Voluntary 
Organizations

AGENCY: U.S. Agency for International Development (USAID).

ACTION: Final rule.

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SUMMARY: USAID is issuing a final rule to rescind the Agency's rules to 
streamline the registration process for Private Voluntary Organizations 
(PVOs). Foreign assistance has evolved since the establishment of the 
requirement that PVOs register with USAID, and a careful review of the 
Agency's business practices has concluded that there is no longer a 
need for the current, time-consuming and costly Agency-wide process. 
The remaining USAID programs required by statute to register PVOs as a 
condition of eligibility have incorporated a simplified registration 
process into each of their applications for funding. USAID published 
the proposed rule and has determined to adopt a final rule to support 
streamlining the PVO registration process.

DATES: This rule is effective August 30, 2019.

FOR FURTHER INFORMATION CONTACT: Daniel Grant, Telephone: (202) 712-
0497 or email: [email protected]

SUPPLEMENTARY INFORMATION: On February 12, 2019 (84 FR 3351), USAID 
issued a proposed rule to rescind part 203 of title 22 of the Code of 
Federal Regulations (CFR) (22 CFR part 203) to streamline the 
registration process for PVOs. Effective upon the publication of this 
final rule, PVOs would no longer be required to register with USAID to 
compete for funding, with the exception of organizations that apply for 
the Limited Excess-Property Program (LEPP), the Ocean-Freight 
Reimbursement Program (OFR), or to other Federal Departments and 
Agencies under Section 607(a) of the Foreign Assistance Act (FAA). 
Applicants to the LEPP, the OFR, and for assistance under Section 
607(a) of the FAA must complete and submit to USAID a self-
certification form to indicate they qualify as a PVO. The self-
certification form, which an authorized representative of the applicant 
organization must sign, requires that a PVO confirm whether it is 
registered as a U.S.-based organization or an international PVO. 
Rescission of 22 CFR part 203 is expected to reduce the burden on the 
public significantly; produce a total estimated annual cost savings of 
$779,406 to USAID; and offer significant savings for the PVO community, 
projected to range from approximately $2 million to $11 million per 
year.

A. Discussion of Comments

    USAID received one set of comments from an individual in response 
to the proposed rule. A discussion of these comments follows:
    The commenter sought clarification on the rule and the rulemaking 
process, in addition to the laws associated with the registration of 
PVOs. The three USAID programs that require registration because of 
statute are the LEPP, the OFR, and applications to other U.S. 
Government Departments and Agencies that seek to provide foreign 
assistance in accordance with Section 607(a) of the FAA. The statute is 
silent on the methodology for registration. While 22 CFR part 203 
details a specific process, USAID has determined it is duplicative of 
pre-award assessments and due-diligence requirements the Agency already 
undertakes with all prospective awardees. Maintaining both sets of 
requirements imposes a significant cost burden on PVOs (and PVOs only) 
to obtain and maintain registration, a process largely duplicated if a 
PVO is considered for an award. Replacing 22 CFR part 203 with a 
legally compliant, simplified self-certification would streamline the 
process significantly. USAID is updating

[[Page 37080]]

this process not because of changes in law or new legal requirements, 
but to reduce costs and eliminate unnecessary regulation. Only PVOs 
participating in the three specific programs mentioned above would have 
to self-certify, and the Bureaus and Independent Offices within USAID 
that manage these programs would provide guidance as necessary as part 
of implementing them. Maintenance of a PVO registry is not necessary to 
implement these programs. In addition, no law requires maintaining a 
database of PVOs, which is duplicative of the role private rating 
organizations now play. While different from the focus of the PVO-
registration program, initially established to help achieve USAID's 
international-development mission, private rating organizations offer 
the transparency on service organizations that the PVO-registration 
process had also provided, although that was not the purpose of USAID's 
PVO-registration program.
    USAID published the proposed rule on February 12, 2019, and 
issuance of this final rule serves as USAID's notification to, and 
request for, input from the public on the streamlined registration 
process for PVOs.

B. Background

    USAID is issuing this final rule to rescind 22 CFR part 203, which 
codified the rules for PVO registration with USAID and provided the 
registration process for PVOs, including the conditions for 
registration and documentation required to be submitted to USAID to 
complete a registration, as well as detailing the annual renewals and 
termination processes.
    USAID has rescinded 22 CFR part 203 because the process to register 
PVOs is no longer needed for the majority of programs open to PVOs 
across the Agency. Therefore, the Agency has streamlined it to apply 
only to programs that require registration by statute (LEPP, OFR, and 
applications to other U.S. Government Departments and Agencies that 
seek to provide foreign assistance in accordance with Section 607(a) of 
the FAA). Combined, these programs serve fewer than 50 organizations.
    USAID initially established its process to register PVOs to ensure 
an organization met the definition of a PVO and specific organizational 
standards. Today, USAID examines all potential partner organizations, 
PVOs or otherwise, via a pre-award assessment managed by warranted 
USAID Agreement/Contract Officers in accordance with Agency policy 
(Automated Directives System [ADS] Chapter 303: Grants and Cooperative 
Agreements to Non-Governmental Organizations; and ADS Chapter 302: 
USAID Direct Contracting), and as required by relevant regulations 
(i.e., 2 CFR 200.205 for assistance, and 48 CFR part 9 for contracts). 
The due-diligence process for registering PVOs under 22 CFR part 203 is 
duplicative of these pre-award assessments, and organizations spend a 
substantial amount of time and money to obtain and maintain 
registration. Finally, USAID's PVO registration has historically played 
the role that private rating organizations now play--publishing data on 
PVOs and other types of non-governmental organizations. The extensive 
information publicly available through other providers has eliminated 
the Agency's need to produce information on the sector through the 
maintenance and publication of a registry.

C. Impact Assessment

(1) Executive Orders (E.O.) 12866 and 13563--Regulatory Planning and 
Review

    Under E.O. 12866, USAID must determine whether a regulatory action 
is ``significant'' and therefore subject to the requirements of the 
E.O. and subject to review by the Office of Management and Budget 
(OMB). USAID has determined that 22 CFR part 203 is not an 
``economically significant regulatory action'' under Section 3(f)(1) of 
E.O. 12866. This final rule is not a major rule under Section 804 of 
Title 5 of the United States Code (U.S.C.).
    E.O.s 12866 and 13563 direct Federal Departments and Agencies to 
assess all the costs and benefits of available regulatory alternatives, 
and, if regulation is necessary, to select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety effects, distributive impacts, and equity). 
E.O. 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
Streamlining the duplicative Agency-wide registration program would 
eliminate thousands of labor hours and save hundreds of thousands of 
dollars for USAID and the estimated 550 PVOs currently registered with 
the Agency.
    USAID uses a contractor to manage the PVO-registration process, 
which costs the Agency approximately $700,000 per year. In addition, 
internal USAID annual labor costs related to the registration process 
amount to $79,406 in burdened salary and benefit expenses (50 percent 
of a General Schedule [GS]-13 Full-Time Equivalent [FTE]). With this 
deregulation, USAID anticipates saving $779,406 in Federal Government 
costs per year.
    Moreover, USAID estimates that the deregulation would generate 
significant cost-savings for affected PVOs. USAID recently surveyed all 
550 PVO registrants to quantify the burden associated with the 
registration process. Within the past ten years, the number of PVOs 
registered with USAID on an annual basis has been consistent, ranging 
from 550 to 553 PVOs per year. Based on the results of the survey, 
USAID estimates that all 550 PVO registrants spent a total of 4,378 
hours per year to prepare and file the registration forms.
    Using market research, USAID estimates that the burdened labor cost 
for PVO staff to conduct tasks related to registration ranges from $40 
to $80 per hour.\1\ Applying those rates to the total 4,378 personnel 
hours yields an estimated cost that ranges from $175,120 to $350,240 
for PVO staff to register.
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    \1\ Calculated based on nationwide data on nonprofit program 
manager salaries (https://www.glassdoor.com/Salaries/nonprofit-program-manager-salary-SRCH_KO0,25.htm), with employee benefit costs 
added into the hourly rates (https://www.bls.gov/news.release/ecec.nr0.htm).
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    In addition, with rescission of the rule, USAID concludes that PVOs 
would achieve significant further cost-savings, because a component of 
the registration process is the requirement to conduct an external 
financial audit. USAID estimated the total number of external audits 
conducted only for the purposes of registering as a PVO, but not used 
because the organization did not receive an award from USAID, range 
from 183 to 367. Based on market research,\2\ past experience, and 
consultations with registered PVOs, the average cost of an independent 
audit ranges from $10,000 to $30,000. USAID then calculated a low 
estimate and high estimate of cost-savings. For the high estimate, 
USAID applied the rate of $30,000 to 367 registrants (two-thirds of the 
550 total registrants) that do not receive an award. This yields an 
annual total of $11,010,000 in ``unfruitful'' expenses avoided. For the 
low estimate, we applied the $10,000 rate as the audit cost, and added 
the assumption that half of registrants without awards would have 
procured financial audits even in the absence of the rule. Multiplying 
$10,000 by 183 (one-third of the 550 total registrants) yields a total 
of $1,830,000 for our low-cost estimate of

[[Page 37081]]

cost-savings associated with avoided audit expenses. When estimates for 
PVO staff time and financial audits are combined, the cost savings for 
affected PVOs ranges from $2,005,120 to $11,360,240. When added to the 
expected costs internal to USAID of $779,406, the annual total of 
incremental cost savings as a result of the rescission ranges from 
$2,784,526 to $12,139,646. Therefore, the rescission of our PVO-
registration rule would benefits USAID and our PVOs by streamlining 
processes and achieving significant cost-savings.
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    \2\ https://www.councilofnonprofits.org/nonprofit-audit-guide/what-is-independent-audit, http://www.financialexecutives.org/ferf/download/2015%20Final/2015-018.pdf
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2. Executive Order (E.O.) 13771

    This rule is considered an E.O. 13771 deregulatory action. Details 
on the estimated cost-savings of this rule appear in the rule's 
economic analysis.

3. Regulatory Flexibility Act

    Because the rescission of this regulation removes, rather than 
imposes, the collection of information, USAID certifies that the 
rescission would not have a significant economic impact on a 
substantial number of small entities.

4. Paperwork Reduction Act (PRA)

    The Paperwork Reduction Act (44 U.S.C. 3507) applies to this rule, 
because it removes information-collection requirements formerly 
approved by OMB. Rescission of this rule would reduce paperwork 
significantly and eliminate information-collection requirements on the 
550 PVOs that currently register with the Agency. USAID collects 
information from all registered PVOs as part of the registration 
requirement, such as financial data and a costly external financial 
audit, to determine whether the PVO meets the conditions of 
registration. Under the revised approach, only organizations that apply 
for the Agency's LEPP or OFR, or to other U.S. Government Departments 
and Agencies that seek to provide foreign assistance (about 50 
organizations in total) would have to certify they meet USAID's PVO 
requirements through the new, streamlined certification process 
described earlier. USAID would not collect any other data or demand 
extra financial audits from these organizations.
    USAID previously collected information for to register PVOs under 
the OMB-approved AID Form 1550-2 (OMB Approval Number 0412-0035), but 
inadvertently operated in non-compliance with the PRA when OMB approval 
of this form expired, and USAID did not seek extension of the OMB 
approval when the Agency moved to an on-line system for PVO 
registration. USAID's online PVO-registration system required that PVOs 
provide the same information requested on AID Form 1550-2, including 
financial data. As such, the public-reporting burden for collection of 
information remained the same under the on-line system.

5. Administrative Procedures Act

    USAID is issuing this deregulatory action to remove an unneeded 
hurdle to doing business with the Agency that imposes unnecessary and 
excessive costs on the private sector with no value to the Government. 
The rescinded rule originally called for the collection of information, 
such as a company's make-up of volunteers--since obviated once 
statutory changes removed the volunteer requirement. Apart from that 
requirement, statutory references to the registration of PVOs (such as 
those in Sections 123 or 607 of the FAA) provide no further guidance or 
requirements to the Agency on what such registration should entail. By 
rescinding this rule, the Agency would be free to simplify and 
streamline registration to remove barriers that impose expenses on 
smaller organizations that wish to compete for USAID funds.
    USAID also conducted surveys of the primary stakeholders to the 
registration process--that of Agency's internal stakeholders and the 
PVO community. Surveys of registered PVOs in 2012 and 2017 showed that 
the PVO community did not see significant value in the registration 
program delineated by 22 CFR part 203, and internal stakeholders for 
the Agency determined that the information collected in accordance with 
22 CFR 203 served no purpose for the Agency. These findings contributed 
to the decision to remove both the registration program and the rule 
that required such a rigorous registration process. Additionally, USAID 
does not plan to replace the current rule with any other.
    For the LEPP, the OFR, and PVOs that apply to other U.S. Government 
Departments and Agencies that are seeking to provide foreign assistance 
under Section 607(a) of the FAA, all of which still require 
registration because of legislative requirements, as provided above, 
the Agency has developed a simplified registration process as part of 
the application process.

List of Subjects for 22 CFR Part 203

    Foreign aid, Nonprofit organizations, Reporting and recordkeeping 
requirements.

PART 203--[REMOVED]

0
For the reasons discussed in the preamble, and under the authority of 
Sec. 621, Public Law 87-195, 75 Stat. 445, (22 U.S.C. 2381), as 
amended; E.O. 12163, Sept. 29, 1979, 44 FR 56673, 3 CFR, 1979 Comp., p. 
435, USAID removes 22 CFR part 203.

Carrie Thompson,
Acting Assistant Administrator, Bureau for Economic Growth, Education, 
and the Environment.
[FR Doc. 2019-15685 Filed 7-30-19; 8:45 am]
 BILLING CODE 6116-01-P