[Federal Register Volume 84, Number 220 (Thursday, November 14, 2019)]
[Rules and Regulations]
[Pages 61832-61835]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20501]


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AGENCY FOR INTERNATIONAL DEVELOPMENT

48 CFR Chapter 7

RIN 0412-AA93


Agency for International Development Acquisition Regulation 
(AIDAR): Revisions to the Incentive Awards Program for Personal 
Services Contractors (PSCs)

AGENCY: U.S. Agency for International Development.

ACTION: Final rule.

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SUMMARY: The rule amends the AIDAR's provisions that pertain to 
incentive awards for personal services contracts with individuals.

DATES: Effective Date: December 16, 2019.

FOR FURTHER INFORMATION CONTACT: Richard E. Spencer, Procurement 
Analyst, Telephone: (202) 567-4781 or email: [email protected] for 
clarification of content or information pertaining to status or 
publication schedules. All communications regarding this rule must cite 
AIDAR RIN No. 0412-AA93.

SUPPLEMENTARY INFORMATION:

A. Proposed Rule and Requests for Comment

    USAID published a proposed rule in the Federal Register at 84 FR 
9739 on March 18, 2019. The public comment period ended May 17, 2019, 
and the Agency received no comments on the proposed rule. Therefore, 
USAID is publishing this final rule without change.

B. Background

    Over the last 27 years, USAID has awarded personal services 
contracts to individuals as necessary for the Agency to carry out its 
mission in the United States and overseas. USAID awards PSCs with 
individuals based on multiple authorities: (1) Section 636(a)(3) of the 
Foreign Assistance Act of 1961, as amended (FAA, Section 2396 of Title 
22 of the United States Code [U.S.C.]), for personal services abroad; 
(2) annual appropriations for Foreign Operations for a maximum number 
of PSCs in the United States (e.g., Section 7057(g) of Division K of 
Pub. L. 114-113 for Fiscal Year 2016); or (3) program-specific 
provisions of the FAA, the Food for Peace Act, or an appropriations act 
that authorizes the use of a broad range of implementation authorities 
toward those programmatic purposes ``notwithstanding any other 
provision of law'' (e.g., FAA Section 491, Section 2292 of Title 22 of 
the U.S.C., which authorizes international assistance ``to alleviate 
human suffering caused by natural and manmade disasters . . .'').
    As of September 2015, approximately eight (8) percent of USAID's 
total workforce were U.S. PSCs, and 47 percent were cooperating-country 
or third-country national (CCN or TCN) PSCs. The Agency's overseas 
local staff are CCNPSCs, with the exception of a very few remaining 
Foreign Service National (FSN) direct-hire employees.
    Since the Agency depends on PSCs as part of its workforce for its 
operations, USAID seeks to recognize and motivate excellence in the 
performance of their contracts. Because PSCs are not authorized to 
participate in programs administered by the Office of Personnel 
Management (OPM), in May 2004, then-Administrator Andrew Natsios used 
the Agency's discretionary authority to establish a separate incentive-
awards program for PSCs, distinct from the Agency's incentive awards 
program authorized by OPM for the Agency's U.S. Direct-Hire (USDH) 
employees (see 5 U.S.C. 4501 et seq. regarding incentive-awards 
programs for ``superior accomplishment'' by employees within the 
definitions of 5 U.S.C. 2105 and 5 CFR part 451). The Administrator 
approved a deviation from Appendix D of the AIDAR to expand the non-
monetary incentive-awards program for PSCs to include limited monetary 
awards such as ``On The Spot'' or Special Act cash and Time-Off awards. 
The Agency implemented the revised monetary incentive-awards program 
for PSCs under USAID Acquisition and Assistance Policy Directive (AAPD 
04-15) issued on October 15, 2004, which authorized USPSCs, and certain 
TCNPSCs on an exceptional basis, to be eligible for these three types 
of monetary incentive awards under programs managed by USAID's 
Missions, Bureaus, or Independent Offices (M/B/IOs).
    In March 2015, USAID's Special Awards Committee (SAC) conducted a 
review of the Agency's awards program for its USDH employees. Following 
that review, on December 22, 2015, then-Acting Administrator Alfonso 
Lenhardt approved a deviation to further expand the Agency's PSC 
Incentive Awards program to include additional types of monetary and 
non-monetary awards similar to those provided to USAID's USDH 
employees.
    To implement the incentive-awards programs for PSCs as approved by 
the Agency in 2004 and 2015, this final rule revises Appendices D and J 
of the AIDAR to replace the deviations approved in 2004 and 2015 and 
make them permanent.

C. Discussion

    This final rule amends the AIDAR to establish a separate monetary 
and non-monetary incentive-awards program to recognize and reward 
individual PSCs for their contributions to the accomplishment of 
USAID's mission, goals, and objectives.
    Based on Statute--Section 636(a)(3) of the FAA, as amended; and by 
regulation--Appendices D and J of the AIDAR, PSCs are not allowed to 
participate in any program administered by OPM. Recognition of 
individual accomplishments by PSCs has been limited to non-monetary 
incentive awards and certificates of appreciation. However, based on 
deviations and policy directives signed by the Administrator and Acting 
Administrator in 2004 and 2015, respectively, USAID established an 
interim, separate incentive-awards program to make PSCs eligible to 
receive incentive awards similar to those available under the Agency's 
incentive-awards program for USDH employees.
    USAID implements its incentive-awards program for USDH employees 
under parameters set in Chapter 491 of the Agency's Automated 
Directives System (ADS). The Agency will incorporate the new PSC 
incentive-awards program authorized by this final rule into Appendices 
D and J of the AIDAR and implement it as described in USAID's PSC 
policy in ADS Chapter 309. Where appropriate, this incentive-awards 
program will closely parallel the program for USDH employees. The 
Agency will make any incentive award payments from the same source of 
funding used for each individual PSC's contract, and in all cases 
separately from the pool of funds maintained for incentive awards for 
USAID USDH employees. Recognizing that PSCs receive an annual pay-
comparability adjustment similar to what U.S. Direct-Hires receive, as 
well as an annual within-grade salary increase for work evaluated at 
the ``satisfactory performance'' level, Agency policy requires that 
these incentive awards be for performance or a special act that goes 
above and beyond the minimum satisfactory performance required under a 
contract. USAID will recognize and encourage exceptional performance by

[[Page 61833]]

PSCs when they perform special acts or create innovations that 
contribute to efficiency, economy, or other improvements in U.S. 
Government operations, in the same way USAID recognizes superior 
performance by its USDH employees. The proportion of PSCs who receive 
cash awards at a M/B/IO or at the Agency level, and the total amount of 
the incentive awards, will be consistent with, and will not exceed, the 
Agency's existing policy for incentive awards to USDH employees, as set 
by USAID's Senior Management.
    The Agency's internal policies in ADS Chapter 309 describe the 
criteria for each incentive award, any cash or other limitations 
associated with each incentive award, how a PSC's supervisor(s) or 
others may nominate individuals, and how such nominations are reviewed 
and recommended for approval. Nominations for the annual Agency-level 
incentive awards generally follow the same procedures, and use the same 
documentation, as currently required for USAID's USDH employees.

Regulatory Basis

    Since the Agency depends on PSCs and their contributions, and as 
the statute, Section 636(a)(3) of the FAA of 1961, as amended, and the 
regulation, Appendix D of the AIDAR, do not permit PSCs to participate 
in OPM-administered programs, the Administrator has decided to use the 
Agency's discretionary authority to establish a separate monetary 
incentive-awards program for its PSCs. This incentive-awards program is 
distinct and separate from the Agency's incentive-awards program for 
USDH employees described in ADS Chapter 491. Additionally, this final 
AIDAR rule establishes an incentive-awards program that is different 
from FAR Subpart 16.4 (Incentive Contracts), as the Agency's PSC 
contracts are with individuals, and these contracts do not provide 
profit or fees. The details of this incentive award program are 
available in a Mandatory Reference to ADS Chapter 309, 309mab--
``Incentive Awards Program for Personal Services Contracts with 
Individuals,'' accessible on the Agency website.

D. Impact Assessment

    (1) Regulatory Planning and Review. Under Executive Order (E.O.) 
12866, the Office of Information and Regulatory Affairs (OIRA) has 
designated the final rule ``not significant,'' and therefore it is not 
subject to review by the Office of Management and Budget (OMB). OMB/
OIRA has determined that this Rule 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 U.S.C.
    This rule codifies the Agency's deviations to date from the current 
rule in the Code of Federal Regulations (CFR). The costs calculated in 
this section are based on upper-end estimates to illustrate the 
potential impact of this final rule from the baseline costs of the 
current rule. Under this final rule, incentive awards paid to USPSCs at 
the level of USAID's Missions, Bureaus, and Independent Offices (M/B/
IO), and TCNPSCs with exceptions to be paid on the General Schedule 
(GS) scale (i.e., ``excepted TCNPSCs'') for FY 2014-2015 averaged 
$86,158 per year based on historical data provided by the Office of the 
Chief Financial Officer (M/CFO) in the Bureau for Management. The 
administrative and processing costs for these awards averaged $47,865. 
Therefore, the total estimated cost for M/B/IO awards is estimated at 
$134,023 per Fiscal Year.
    For ``Agency-level'' incentive awards issued from USAID 
headquarters, the total estimated amount that could be paid to all 
selected PSCs (U.S., TCN, and CCN) is $160,000 per Fiscal Year, 
assuming nominations are approved for every incentive award. This 
figure is based on an estimated payout for all of 31 possible cash-
award amounts listed in ADS 309mab.
    As the Agency-level headquarters incentive awards program is new, 
and there are no historical data for such incentive awards paid to 
PSCs, USAID used historical data for incentive awards to U.S. Direct-
Hires, as provided by USAID's Office of Human Capital and Talent-
Management (HCTM) for estimating the administrative and processing 
costs. On that basis, administrative and processing costs are estimated 
at $118,525 per Fiscal Year labor for nominations, selection panels, 
and the processing of incentive awards, plus the costs of ceremony 
events for a volume of PSC incentive awards equivalent to those given 
to USDH employees. Also, as PSCs are eligible for fewer categories of 
Agency-level incentive awards than are USDH staff, the Agency pro-rated 
the costs accordingly. Therefore, the total estimated cost for Agency-
level incentive awards from headquarters is $278,525 per Fiscal Year.
    Based on the above, the M/B/IO awards and Agency-level incentive 
award issues at headquarters are estimated together estimated to cost 
$412,547 per Fiscal Year.
    Note that for incentive awards at the Mission level for CCN and TCN 
PSCs, AIDAR Appendix J authorizes such awards in accordance with the 
local compensation plan at each USAID Mission overseas through the 
``Joint Special Embassy'' awards program. While this final rule revises 
the title of the Mission incentive-awards program by using current 
terminology, this rule does not otherwise affect the authority for this 
long-established incentive awards program for CCN and TCN PSCs. 
Therefore, there are no increased cost implications for such incentive 
awards under this rule, as it only updates the title of the program 
under AIDAR Appendix J.
    Overall, USAID's awards program affects approximately 5,200 
individual PSCs based on USAID's staffing numbers for FY2015 (i.e., 775 
PSCs and more than 4,470 CCNand TCN PSCs). The costs to implement this 
rule are justified, as the Agency depends on PSCs as large part of its 
workforce. Given that USAID PSCs are an important and flexible 
supplement for the Agency's dynamic operations, this rule provides the 
Agency the ability to recognize and motivate excellence in the 
performance of its contractors. Additionally, because these incentives 
were previously approved at the highest levels of Agency management, 
USAID deemed the costs to implement this rule as a necessary business 
decision to promote excellent performance by PSCs.
    As a regulatory matter, the cost of the rule-making process to 
incorporate this final rule into the regulation is also justified. The 
AIDAR appendices include all the compensation and benefits available 
under personal services contracts. Therefore, the Agency needs this 
rule to keep the regulation consistent, complete, and transparent to 
industry, other U.S. Government Departments and Agencies, and the 
general public.
    (2) Regulatory Flexibility Act. This final rule will not have an 
impact on a substantial number of small entities within the meaning of 
the Regulatory Flexibility Act, Section 601 of Title 5 of the U.S.C., 
et seq. Therefore, USAID has not performed an Initial Regulatory 
Flexibility Analysis.
    (3) Paperwork Reduction Act. This final rule does not establish a 
new collection of information that requires the approval of OMB under 
the Paperwork Reduction Act (Chapter 35 of Title 44 of the U.S.C.).

List of Subjects in Appendices D and J of Chapter 7 of Title 48 of 
the CFR

    Government procurement.

    For the reasons discussed in the preamble, USAID amends Chapter 7 
of Title 48 of the CFR under the authority of Section 621 of Public Law 
87-195, 75

[[Page 61834]]

Stat. 445, (Section 2381 of Title 22 of the U.S.C.), as amended; E.O. 
12163, Sept. 29, 1979, 44 Federal Register 56673; and Title 3 of the 
CFR, 1979 Comp., p. 435, as follows:

CHAPTER 7--AGENCY FOR INTERNATIONAL DEVELOPMENT

0
1. Appendix D is amended as follows:
0
a. In Section 4, by revising paragraph (f);
0
b. In Section 10 entitled, ``Form USAID 1420-36, ``Cover Page'' and 
``Schedule'', in the Table of Contents under the heading General 
Provisions, reserve numbers 27 and 28, and add 29 to the list of 
provisions;
0
c. In Section 11 entitled, ``Optional Schedule With a U.S. Citizen or 
U.S. Resident Alien'', in the Table of Contents, under the heading 
General Provisions, reserve numbers 27 and 28, and add 29 to the list 
of provisions;
0
d. In Section 12:
0
i. Revise the heading, ``General Provisions'';
0
ii. Remove the heading, ``Contract with a U.S. Citizen or a U.S. 
Resident Alien for Personal Services Abroad'';
0
iii. Amend the Index of Clauses by reserving clause numbers 27 and 28, 
and add clause 29, ``Incentive Awards''; and
0
e. By adding a parenthetical authority citation at the end of the 
appendix.
    The revision and addition read as follows:

Appendix D to Chapter 7--Direct USAID Contracts With a U.S. Citizen or 
a U.S. Resident Alien for Personal Services Abroad

* * * * *

4. Policy

* * * * *
    (f) Incentive awards. U.S. personal services contractors are not 
eligible to participate in, or be funded under, the incentive-awards 
program administered by the Office of Personnel Management (OPM) for 
USAID U.S. direct-hire employees in accordance with section 636(a) 
of the Foreign Assistance Act of 1961, as amended. U.S. personal 
services contractors are eligible to receive certain monetary and 
non-monetary incentive awards as authorized under this section. All 
nominations for incentive awards must be approved by a U.S. direct-
hire employee, who is either the contractor's supervisor or is at 
the next higher level within the Mission/Bureau/Independent Office 
(M/B/IO). The list of incentive awards and detailed eligibility, 
nomination, and approval processes are specified in internal Agency 
policies in Chapter 309 of Automated Directive System (ADS), 
available on the USAID website. These awards will be funded from the 
authorizations used to fund the specific contract.
* * * * *

10. Form USAID 1420-36, ``Cover Page'' and ``Schedule''.

* * * * *
    27. [Reserved]
    28. [Reserved]
    29. Incentive Awards
* * * * *

11. Optional Schedule With a U.S. Citizen or U.S. Resident Alien

* * * * *
    27. [Reserved]
    28. [Reserved]
    29. Incentive Awards
* * * * *

12. General Provisions for a Contract With a U.S. Citizen or a U.S. 
Resident Alien for Personal Services Abroad

* * * * *

Index of Clauses

* * * * *
    27. [Reserved]
    28. [Reserved]
    29. Incentive Awards
* * * * *

29. Incentive Awards

    [Insert the following clause in all USPSC contracts.]

Incentive Awards (Date)

    The contractor is eligible to receive certain monetary and non-
monetary USAID incentive awards in accordance with the AIDAR and 
USAID internal policy.
* * * * *
(Authority: Section 621 of Public Law. 87-195, 75 Stat. 445, 
(Section 2381 of Title 22 of the U.S.C.), as amended; E.O. 12163, 
Sept. 29, 1979, 44 Federal Register 56673; and Title 3 of the CFR, 
1979 Comp., p. 435)

0
2. Appendix J is amended as follows:
0
a. In section 4:
0
i. By revising paragraph (c)(1);
0
ii. In paragraph (c)(2)(i), by removing ``TCN or CCN'' and adding in 
its place ``CCN or TCN'' and removing the reference ``4c(2)(ii)'' and 
adding in its place the reference ``4(c)(2)(ii)'';
0
iii. In paragraph (c)(2)(ii) introductory text, by removing the words 
``FSNs which includes CCNs and TCNs,'' adding in their place ``CCNs and 
TCNs,'' and revising the second sentence.
0
iv. In paragraph (c)(2)(ii)(A), by removing the words ``foreign 
national employee'' and adding in its place the words ``CCN or TCN 
personal services contractor'';
0
v. In paragraph (c)(2)(ii)(B), by revising the first sentence;
0
vi. In paragraph (c)(2)(iii), by removing the words ``compensation plan 
for each'' and adding in its place the words ``local compensation plan 
for each Mission'';
0
vii. By revising paragraphs (c)(2)(v) and (vii) and (c)(3); and
0
viii. In Paragraph (c)(4), by removing ``CCN and TCN PSCs'' and adding 
in its place ``CCN and TCN personal services contractors,'' removing 
the words ``Contracting Officer,'' and adding in their place the words 
``contracting officer.''
0
b. In section 12, General Provisions for a Contract with a Cooperating 
Country National or with a Third-Country National for Personal 
Services, revise item 19.
0
c. By adding a parenthetical authority citation at the end of the 
appendix.
    The revisions and addition read as follows:

Appendix J--Direct USAID Contracts With a Cooperating Country National 
and With a Third-Country National for Personal Services Abroad

* * * * *

4. Policy

* * * * *
    (c) * * *
    (1) General. For the purpose of any law administered by the U.S. 
Office of Personnel Management (OPM), USAID personal services 
contractors are not to be regarded as employees of the U.S. 
Government, are not included under any retirement or pension program 
of the U.S. Government, and are not eligible for the Incentive-
Awards Program covered by Uniform Department of State/USAID 
regulations. Each USAID Mission is expected to participate in an 
interagency Mission incentive awards program. Additionally, CCN and 
TCN personal services contractors are eligible to receive certain 
USAID monetary and non-monetary incentive awards as authorized under 
this section. See paragraph (3) of this section for incentive 
awards.
    (2) * * *
    (ii) * * * The plan is each post's official system of position 
classification and pay, which consists of the local salary schedule 
including salary rates, statements that authorize fringe benefit 
payments, and other pertinent facets of compensation for CCNs and 
TCNs. * * *
* * * * *
    (B) Section 4 of Appendix D of this chapter, entitled, 
``Policy,'' sections (c) ``Withholdings and Fringe Benefits,'' (d) 
``Resident Hire U.S. Personal Services Contractors,'' (e) 
``Determining Salary for Personal Services Contractors,'' (f) 
``Incentive Awards,'' (g) ``Annual Salary Increase,'' (h) ``Pay 
Comparability Adjustment,'' and (i) ``Subcontracting.'' * * *
* * * * *
    (v) CCN and TCN personal services contractors are eligible for 
allowances and differentials as provided under the post's local 
compensation plan.
* * * * *
    (vii) CCNs and TCNs retired from the U.S. Government may be 
awarded personal services contracts without any reduction in, or 
offset against, their U.S. Government annuity.
    (3) Incentive Awards. (i) All CCN and TCN personal services 
contractors of the Foreign

[[Page 61835]]

Affairs Community are eligible for an interagency Mission incentive 
awards program. The Joint Country Awards Committee administers each 
post's (Embassy) awards program, including the establishment of 
procedures for submission, review, and approval of proposed awards.
    (ii) CCN and TCN personal services contractors are also eligible 
to receive certain monetary and non-monetary USAID incentive awards. 
The list of incentive awards, eligibility, nomination, and approval 
processes are specified in internal Agency policies in ADS Chapter 
309, available on the USAID website. These awards will be funded 
from the authorizations used to fund the PSC contract, and not from 
funds allocated for the OPM-administered awards program for USAID 
U.S. direct-hire employees.
    (iii) Meritorious step increases for USAID CCN and TCN personal 
services contractors may be authorized provided the granting of such 
increases is the general practice locally.
* * * * *

12. General Provisions for a Contract With a Cooperating Country 
National or With a Third Country National for Personal Services

* * * * *

19. Incentive Awards

    [Insert the following clause in all CCN and TCN contracts paid 
under the local compensation plan.]

Incentive Awards (Date)

    (a) CCN and TCN personal services contractors of the Foreign 
Affairs Community are eligible for an interagency Mission incentive 
awards program. The program is administered by each post's (Embassy) 
Joint Country Awards Committee.
    (b) CCN and TCN personal services contractors are also eligible 
to receive certain monetary and non-monetary USAID incentive awards 
in accordance with the AIDAR and USAID internal policy.
    (c) Meritorious Step Increases.
    CCNs and TCN personal services contractors paid under the local 
compensation plan are eligible to receive meritorious step increases 
provided the granting of such increases is the general practice 
locally.
* * * * *
(Authority: Section 621 of, Public Law. 87-195, 75 Stat. 445, 
(Section 2381 of Title 22 of the U.S.C. 2381), as amended; E.O. 
12163, Sept. 29, 1979, 44 Federal Register 56673; and Title 3 of the 
CFR, 1979 Comp., p. 435)

Mark A. Walther,
Acting Chief Acquisition Officer.
[FR Doc. 2019-20501 Filed 11-13-19; 8:45 am]
BILLING CODE 6116-01-P