[Federal Register Volume 88, Number 115 (Thursday, June 15, 2023)]
[Rules and Regulations]
[Pages 39189-39193]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-12569]


=======================================================================
-----------------------------------------------------------------------

AGENCY FOR INTERNATIONAL DEVELOPMENT

48 CFR Parts 726, 729, 731, and 752

RIN 0412-AB04


Acquisition Regulation: Foreign Tax Reporting, Conference 
Planning, and Trade and Investment Activities

AGENCY: U.S. Agency for International Development.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The United States Agency for International Development (USAID) 
is amending its Acquisition Regulation (AIDAR) regarding contractor 
requirements on foreign tax reporting, conference planning, and trade 
and investment activities. These revisions are intended to bring the 
AIDAR into compliance with revised Agency policies and procedures and 
statutory requirements.

DATES: Effective July 17, 2023.

FOR FURTHER INFORMATION CONTACT: Kelly Miskowski, USAID M/OAA/P, at 
202-916-2752 or [email protected] for clarification of content or 
information pertaining to status or publication schedules. All 
inquiries regarding this rule must cite RIN No. 0412-AB04.

SUPPLEMENTARY INFORMATION:

[[Page 39190]]

A. Background

    USAID published a proposed rule in the Federal Register at 87 FR 
22843 on April 18, 2022, to amend the AIDAR regarding contractor 
requirements on foreign tax reporting, conference planning, and trade 
and investment activities as outlined in 48 CFR parts 726, 729, 731, 
and 752.

B. Discussion and Analysis

    Two respondents submitted public comments in response to the 
proposed rule. A discussion of the comments is provided as follows:

1. Summary of Changes

    USAID reviewed the public comments in the development of the final 
rule; however, no changes were made as a result of the public comments 
received. Some administrative changes were made to revise the title of 
subpart 726.71 and to correct the title of Sec.  752.226-70 to read: 
Trade and Investment Activities and the ``Impact on U.S. Jobs'' and 
``Workers' Rights'' and to revise capitalization throughout.

2. Analysis of Public Comments

    Below are the Agency's responses to comments on the proposed rule.
(i) Foreign Tax Reporting
    A. Comment: One commenter (#1) indicated that some countries 
require that contractors withhold income tax from vendors in a manner 
similar to employee income tax withholding. They requested that USAID 
confirm that this type of withholding is exempt from the foreign tax 
reporting requirements in section 752.229-71.
    Response: USAID cannot confirm on a blanket basis whether the 
vendor taxes described would be exempt as this is a fact-specific 
inquiry. The determination needs to be made at the country level by the 
Department of State based on the specific tax code. We recommend 
reaching out to your Contracting Officer for country-specific guidance.
    B. Comment: Commenter #1 also expressed a concern that there is 
confusion as to when the cost of VAT or customs taxes may be allowable. 
They requested that the regulation be revised to be more similar to 
USAID's Mandatory Standard Provision for Federal assistance awards to 
include language that indicates that host government taxes (such as 
VAT) are not allowable where the Contracting Officer provides the 
necessary means to the contractor to obtain an exemption or refund of 
the taxes, and the contractor fails to take reasonable steps to obtain 
this exemption.
    Response: The issue of foreign tax allowability is outside the 
scope of this rule. This rulemaking pertains to foreign tax reporting. 
Some foreign tax payments may need to be reported, even if allowable. 
Questions about allowability should be coordinated with your relevant 
Contracting Officer as this is a fact-specific inquiry and depends on 
the country of taxation. For further information, please see USAID's 
Procurement Executive Bulletin (PEB) 2017-02, ``Exemptions and 
Allowability of Host Government Taxes''.
    C. Comment: A commenter (#2) requested information on how USAID/
Washington will communicate to Mission Directors to renegotiate and 
revise procedures for exemption of reimbursement of taxes.
    Response: Internal agency communications are outside of the scope 
of this rulemaking. However, USAID will communicate the contents of 
this rule through existing communications channels with missions.
    D. Comment: Commenter #2 also recommended revised language in 
752.229-71 to indicate ``the mission controller'' rather than ``point 
of contact at the Embassy, Mission . . .'' to identify where the report 
must be submitted.
    Response: USAID appreciates the recommendation but does not believe 
a change is necessary. The specifics on where the reporting must be 
submitted will be included in each solicitation and resulting award.
(ii) Conference Planning and Approvals
    A. Comment: Commenter #2 requested that the text specify that USAID 
is required to report to Congress on conferences as a main reason for 
the requirement.
    Response: USAID appreciates the recommendation but does not believe 
a change is necessary.
    B. Comment: Commenter #2 also requested clarity on what costs are 
associated with ``costs to ensure the safety of attending government 
officials.''
    Response: These terms and definitions come directly from OMB Memo 
M-12-12 (``Promoting Efficient Spending to Support Agency 
Operations''), as amended by OMB Memo M-17-08. OMB notes that 
``Conference expenses include any associated authorized travel and per 
diem expenses, hire of rooms for official business, audiovisual use, 
light refreshments, registration fees, ground transportation, and other 
expenses as defined by the FTR. . .The FTR provides some examples of 
direct and indirect conference costs included within conference 
expenses. See 41 CFR 301-74.2. Conference expenses should be net of any 
fees or revenue received by the Agency through the conference and 
should not include costs to ensure the safety of attending governmental 
officials.'' (See OMB Memo M-17-08, footnote 2) USAID, in implementing 
these OMB memos, adopts these terms as defined in the OMB memos and 
Federal Travel Regulations and considers a wide array of scenarios for 
``costs to ensure the safety of attending government officials''. 
Although not exhaustive, illustrative examples include: the additional 
costs related to selecting a safe location with historically low crime 
rates and a venue offering protective services such as security guards 
and restrictive access technology.
    C. Comment: Commenter #2 requested amending the definition of USAID 
employee to include ``Foreign Service Limited''.
    Response: USAID believes that the definition as drafted is 
inclusive of all USAID employees for purposes of conference planning 
policy--including staff hired under the Foreign Service Limited 
appointments.
    D. Comment: Commenter #2 also indicated that the exceptions should 
be reviewed for compliance with any reporting under relevant 
appropriations.
    Response: USAID acknowledges the comment and confirms that this 
clause has been reviewed internally to comply with relevant 
appropriations requirements.
    E. Comment: Commenter #2 suggested deletion of paragraph (c)(4) of 
the clause 752.231-72 as these conferences are not funded by USAID.
    Response: USAID appreciates the recommendation but does not believe 
a change is necessary. This section outlines a circumstance when USAID 
funding is not being used for the venue but is being used for costs 
associated with USAID employees and/or Personal Services Contractors 
attending or light refreshments. Although USAID is partially funding 
costs associated with the conference, prior approval is not required in 
this very specific situation to reduce burden on contractors.
    F. Comment: Commenter #2 also requested clarity on whether the 
information outlined in (f)(1)-(6) is needed to request approval of a 
conference.
    Response: The information required to request prior approval of a 
conference is outlined in section 752.231-72(f)(1) through (7). These 
items must be submitted.

[[Page 39191]]

(iii) Trade and Investment Activities
    A. Comment: Commenter #2 requested definitions for the terms ``gray 
area'', ``prohibited activity'', and ``activity'' generally.
    Response: The Agency makes a determination whether the clause 
applies or not during the planning phase, in accordance with Agency 
policy outlined in Automated Directives System (ADS) Chapter 225 (used 
as a reference here). The term ``gray area'' is not included in the 
contract clause 752.226-70 and does not need to be defined. For 
informational purposes, contractors may review definitions and guidance 
of these terms as outlined in ADS 225. USAID is not establishing any 
new definition of ``activity.'' Rather, ``activity'' has the same 
meaning as used throughout the AIDAR. More specifically, an activity 
relates to any effort performed by the contractor within the scope of 
work.
    B. Comment: Commenter #2 requested more clarity on the phrase 
``authorized by USAID'' to ask who would be responsible for 
authorization. They referred specifically to AIDAR 752.226-70(a) which 
indicates that ``no funds . . . may be used'' unless ``specifically set 
forth in this contract or otherwise authorized by USAID in writing''.
    Response: Contractors should communicate with their Contracting 
Officer who will issue an approval in accordance with Agency guidance.

C. Regulatory Considerations and Determinations

Executive Orders 12866, 13563, and 14094

    Executive Order (E.O.) 12866, Regulatory Planning and Review, as 
amended and reaffirmed by E.O. 13563, ``Improving Regulation and 
Regulatory Review,'' and E.O. 14094, ``Modernizing Regulatory Review,'' 
directs agencies to assess all 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, of reducing costs, of harmonizing 
rules, and of promoting flexibility. This rule has been determined 
``nonsignificant'' under E.O. 12866. This rule is not a major rule 
under 5 U.S.C. 804.

D. Regulatory Flexibility Act

    USAID does not expect this proposed rule to have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
Therefore, an Initial Regulatory Flexibility Analysis has not been 
performed.

E. Paperwork Reduction Act

    This rule contains information collection requirements that have 
been approved by the Office of Management and Budget under the 
Paperwork Reduction Act (44 U.S.C. chapter 35). This information 
collection requirement has been assigned OMB Control Number 0412-0619, 
entitled ``AIDAR: Foreign Tax Reporting, Conference Planning, and Trade 
and Investment Activities''.

List of Subjects in 48 CFR Chapter 7 Parts 726, 729, 731, and 752

    Government procurement.

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

0
1. The authority citation for 48 CFR part 726 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 726--OTHER SOCIOECONOMIC PROGRAMS

Subpart 726.71--Trade and Investment Activities and the ``Impact on 
U.S. Jobs'' and ``Workers' Rights''

0
2. Revise the heading for subpart 726.71 to read as set forth above.

0
3. Revise section 726.7101 to read as follows:


726.7101  Trade and Investment Activities and the ``Impact on U.S. 
Jobs'' and ``Workers' Rights.''

    (a) Policy. USAID policy and required procedures in ADS Chapter 225 
(Program Principles for Trade and Investment Activities and the 
``Impact on U.S. Jobs'' and ``Workers' Rights'') implement statutory 
prohibitions on obligation and expenditure of appropriated funds. ADS 
Chapter 225 requires Agency operating units to analyze a project or 
activity to ensure compliance with U.S. foreign policy objectives as 
stated in Section 601 of the Foreign Assistance Act (FAA) of 1961, as 
amended; the U.S. Government's trade and development objectives set 
forth in trade legislation; and related policy documents. If the 
analysis concludes that the project or activity meets the criteria for 
what the ADS chapter describes as ``gray-area activities'' or if the 
contract statement of work has the potential to evolve into what the 
chapter defines as a prohibited activity, then the planner must include 
in the procurement request language appropriately tailored to the 
specific circumstances for the contract statement of work.
    (b) Special contract requirement. The contracting officer must 
insert in Section H of the uniform contract format a clause 
substantially the same as the clause in 752.226-70 when informed by the 
requesting operating unit that the statement of work or statement of 
objectives includes gray-area activities or investment-related 
activities where specific activities are not identified at the time of 
obligation but could be for investment-related activities, as described 
in ADS Chapter 225.


Sec.  726.7102  [Removed]

0
4. Remove Sec.  726.7102.

PART 729--TAXES

0
5. The authority citation for 48 CFR part 729 is revised 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.

Subpart 729.4--Contract Clauses

0
6. Revise Sec.  729.402-70 to read as follows:


729.402-70  Foreign contracts.

    (a) The annual Department of State, Foreign Operations, and Related 
Programs Appropriations Act (SFOAA) requires USAID to take certain 
steps to prevent countries from imposing taxes, including value added 
tax (VAT) and customs duties, on U.S. foreign assistance, or if 
imposed, requires the countries to reimburse the assessed taxes or 
duties. The SFOAA also requires certain reporting to Congress on host 
country taxation. Because countries imposing such taxes assess them 
directly on contractors, USAID requires contractors to report annually 
on whether taxes have been imposed and, if so, whether the foreign 
government reimbursed the taxes.
    (b) The contracting officer must insert the clause at Sec.  
752.229-71, Reporting of Foreign Taxes, in solicitations and resulting 
contracts when:
    (1) A contract is fully or partially funded with funds appropriated 
under titles III through VI of an SFOAA making appropriations for the 
Department of State, foreign operations, and related programs, and
    (2) The contract is to be performed wholly or partly in a foreign 
country.

[[Page 39192]]

PART 731--CONTRACT COST PRINCIPLES AND PROCEDURES

0
7. The authority citation for 48 CFR parts 731 and 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.

Subpart 731.2--Contracts With Commercial Organizations

0
8. Revise Sec.  731.205-43 to read as follows:


731.205-43  Trade, business, technical and professional activity 
costs--USAID conference approval requirements.

    (a) Definitions. As used in this section--
    Conference means a seminar, meeting, retreat, symposium, workshop, 
training activity or other such event that is funded in whole or in 
part by USAID.
    Net conference expense means the total conference expenses 
excluding: any fees or revenue received by the Agency through the 
conference, costs to ensure the safety of attending governmental 
officials, and salary of USAID employees and USAID personal services 
contractors.
    Personal Services Contractor (PSC) means any individual who is 
awarded a personal services contract in accordance with AIDAR appendix 
D or J of this chapter.
    Temporary duty (TDY) travel means official travel at least fifty 
(50) miles from both the traveler's home and duty station for a period 
exceeding twelve (12) hours.
    USAID employee means a USAID direct-hire employee or a direct-hire 
Federal employee from another U.S. government agency detailed to USAID.
    (b) Prior approval. USAID policy requires contractors to obtain 
contracting officer approval of the following, unless an exception in 
paragraph (c) of the clause at 752.231-72 applies:
    (1) A conference funded in whole, or in part, by USAID when ten 
(10) or more USAID employees or personal services contractors are 
required to travel on temporary duty status to attend the conference; 
or
    (2) A conference funded in whole, or in part, by USAID when the net 
conference expense funded by USAID is expected to exceed $100,000, 
regardless of the number of USAID employees or USAID personal services 
contractors who will participate in the conference.
    (c) Allowability of cost. Costs associated with a conference that 
meets the criteria above, incurred without USAID prior written 
approval, are unallowable.
    (d) Solicitation provision and contract clause. Contracting 
officers must insert the clause at 752.231-72 in all USAID-funded 
solicitations and contracts anticipated to include a requirement for a 
USAID-funded conference.

Subpart 731.3--Contracts With Educational Institutions

0
9. Add Sec.  731.374 to read as follows:


731.374  Conference approval requirements.

    USAID's policies regarding conference approval requirements are set 
forth in (48 CFR) AIDAR 731.205-43. These policies are also applicable 
to contracts with educational institutions.

Subpart 731.7--Contracts With Nonprofit Organizations

0
10. Add Sec.  731.775 to read as follows:


731.775  Conference approval requirements.

    USAID's policies regarding conference approval requirements are set 
forth in (48 CFR) AIDAR 731.205-43. These policies are also applicable 
to contracts with nonprofit organizations.

PART 752--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

Subpart 752.2--Text of Provisions and Clauses

0
11. Add 752.226-70 to read as follows:


752.226-70  Trade and Investment Activities and the ``Impact on U.S. 
Jobs'' and ``Workers' Rights.''

    As prescribed in 48 CFR 726.7101(b), insert a clause substantially 
as follows:

Trade and Investment Activities and the ``Impact on U.S. Jobs'' and 
``Workers' Rights'' (Jul 2023)

    (a) Except as specifically set forth in this contract or 
otherwise authorized by USAID in writing, no funds or other support 
provided under this contract may be used for any activity that: 
provides financial incentives and other assistance for U.S. 
companies to relocate operations abroad if it is likely to result in 
the loss of U.S. jobs; contributes to violations of internationally 
recognized workers' rights defined in 19 U.S.C. 2467(4); or provides 
financial incentives for entities located outside the United States 
to relocate or transfer jobs from the United States to other 
countries or provide financial incentives that would adversely 
affect the labor force in the United States.
    (b) In the event the Contractor is requested to provide services 
in any of the above areas or requires clarification from USAID as to 
whether an activity would be consistent with the limitation set 
forth above, the Contractor must notify the Contracting Officer and 
provide a detailed description of the expected impact of the 
proposed activity. The Contractor must not proceed with the activity 
until advised by USAID in writing that it may do so.
    (c) The Contractor must ensure that its employees and 
subcontractors providing trade and investment support services are 
made aware of the restrictions set forth in this clause and must 
include this clause in all subcontracts.

(End of clause)

0
12. Revise 752.229-71 to read as follows:


752.229-71  Reporting of Foreign Taxes

    As prescribed in (48 CFR) AIDAR 729.402-70(b), insert the following 
clause in applicable solicitations and resulting contracts. The 
contracting officer must insert the address and point of contact at the 
Embassy, Mission, or M/CFO/CMP as appropriate under paragraph (d) of 
this clause.

Reporting of Foreign Taxes (Jul 2023)

    (a) Definitions. As used in this clause--
    Foreign government includes any foreign governmental entity.
    Foreign taxes include value-added taxes and customs duties but 
not individual income taxes assessed to local staff.
    Local staff means Cooperating Country National employees.
    (b) Annual report. (1) The Contractor must submit a report 
detailing foreign taxes assessed under this contract during the 
prior U.S. government fiscal year. The report must be submitted 
annually by April 16.
    (2) A report is required even if the Contractor did not pay any 
foreign taxes during the reporting period. A cumulative report may 
be provided if the Contractor is performing more than one award in 
the foreign country.
    (c) Contents of report. The report must contain:
    (1) Contractor name.
    (2) Contact name with phone number and email address.
    (3) Contract number(s).
    (4) Amount of foreign taxes assessed by each foreign government 
(listed separately) under this contract during the prior U.S. 
Government fiscal year.
    (i) Taxes assessed on any individual transaction of less than 
$500 should not be reported.
    (ii) The Contractor must report only foreign taxes assessed by a 
foreign government receiving U.S. assistance under this contract. 
The Contractor must not report on foreign taxes assessed by a third-
party foreign government.
    (5) Any reimbursements of foreign taxes received by the 
Contractor on the taxes reported in paragraph (c)(4) of this clause 
received through the date of the report.
    (d) Submission of report. The Contractor must submit the report 
to: [Contracting Officer must insert address and point of

[[Page 39193]]

contact at the Embassy or Mission in the country in which the 
contract will be performed, or CFO/CMP for USAID/W-issued contracts, 
as appropriate], with a copy to the Contracting Officer's 
Representative.
    (e) Subcontracts. The Contractor must include this reporting 
requirement in all subcontracts issued under this contract. The 
Contractor shall collect and incorporate into the Contractor's 
report all information received from subcontractors pursuant to this 
clause.


(End of clause)

0
13. Revise 752.231-72 to read as follows:


752.231-72  Conference planning and required approval

    As prescribed in (48 CFR) AIDAR 731.205-43(d), insert the following 
clause in section H of all USAID-funded solicitations and contracts 
anticipated to include a requirement for a USAID-funded conference.

Conference Planning and Required Approval (Jul 2023)

    (a) Definitions. As used in this clause--
    Conference means a seminar, meeting, retreat, symposium, 
workshop, training activity or other such event that is funded in 
whole or in part by USAID.
    Net conference expense means the total conference expenses 
excluding: any fees or revenue received by the Agency through the 
conference, costs to ensure the safety of attending governmental 
officials, and salary of USAID employees and USAID personal services 
contractors.
    Personal Services Contractor (PSC) means any individual who is 
awarded a personal services contract in accordance with AIDAR 
appendix D or J of this chapter.
    Temporary duty (TDY) travel means official travel at least fifty 
(50) miles from both the traveler's home and duty station for a 
period exceeding twelve (12) hours.
    USAID employee means a USAID direct-hire employee or a direct-
hire Federal employee from another U.S. government agency detailed 
to USAID.
    (b) Prior approval. Unless an exception in paragraph (c) 
applies, the Contractor must obtain prior written approval from the 
Contracting Officer at least 30 days prior to committing costs, for 
the following:
    (1) A conference funded in whole or in part by USAID when ten 
(10) or more USAID employees or Personal Services Contractors are 
required to travel on temporary duty status to attend the 
conference; or
    (2) A conference funded in whole or in part by USAID and 
attended by USAID employees or USAID Personal Services Contractors, 
when the net conference expense funded by USAID is expected to 
exceed $100,000, regardless of the number of USAID participants.
    (c) Exceptions. Prior USAID approval is not required for the 
following:
    (1) Co-creation conferences to facilitate the design of programs 
or procurements.
    (2) Events funded and scheduled by the Center for Professional 
Development within the USAID Office of Human Capital and Talent 
Management.
    (3) A single course presented by an instructor conducted at a 
U.S. Government training facility (including the Washington Learning 
Center or other USAID training facilities), a commercial training 
facility, or other venue if a U.S. Government training facility is 
not available.
    (4) Conferences conducted at a U.S. Government facility or other 
venue not paid directly or indirectly by USAID, when travel of USAID 
employees or USAID Personal Services Contractors, light refreshments 
and, if applicable, costs associated with participation of the 
Contractor's staff are the only direct costs associated with the 
event.
    (d) Allowability of cost. Costs associated with a conference 
that meet the criteria above, incurred without USAID prior written 
approval, are unallowable.
    (e) Post-award. Conferences approved at the time of award will 
be incorporated into the contract. The Contractor must submit 
subsequent requests for approval of conferences on a case-by-case 
basis, or requests for multiple conferences may be submitted at one 
time.
    (f) Documentation. Requests for approval of a conference that 
meets the criteria in paragraphs (b) of this clause must include:
    (1) A brief summary of the proposed event;
    (2) A justification for the conference and alternatives 
considered, e.g., teleconferencing and video-conferencing;
    (3) The estimated budget by line item (e.g., travel and per 
diem, venue, facilitators, meals, equipment, printing, access fees, 
ground transportation);
    (4) A list of USAID employees or PSCs attending and a 
justification for each, and the number of other USAID-funded 
participants (e.g., Contractor personnel);
    (5) A cost comparison for at least three potential venues 
(including a U.S. Government owned or leased facility) and a 
justification if the lowest cost facility is not selected;
    (6) If meals will be provided to local USAID employees or PSCs 
(a local employee would not be in travel status), a statement on 
whether the meals are a necessary expense to support the conference 
objectives; and
    (7) A statement signed by an employee of the Contractor with 
authority to bind the Contractor, confirming that strict fiscal 
responsibility has been exercised in making decisions regarding 
conference expenditures, the proposed costs are comprehensive and 
represent the greatest cost advantage to the U.S. Government, and 
that the proposed conference representation has been limited to the 
minimum number necessary to support the conference objectives.


(End of clause)

Mark Walther,
Chief Acquisition Officer.
[FR Doc. 2023-12569 Filed 6-14-23; 8:45 am]
BILLING CODE 6116-01-P