Proposed Rule2022-12736
USAID Grant Regulations; Removing the Program Income Restriction on For-Profit Entities
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 17, 2022
Issuing agencies
Agency for International Development
Abstract
The U.S. Agency for International Development (USAID) proposes to amend the rules for administering Federal awards to remove a prohibition on for-profit entities from adding program income to a Federal award. This change allows any USAID assistance recipient-- whether nonprofit or for-profit--to use the "addition method" for managing program income under a Federal award. This will align USAID's approach to program income with other Federal agencies.
Full Text
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<title>Federal Register, Volume 87 Issue 117 (Friday, June 17, 2022)</title>
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[Federal Register Volume 87, Number 117 (Friday, June 17, 2022)]
[Proposed Rules]
[Pages 36411-36412]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-12736]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 87, No. 117 / Friday, June 17, 2022 /
Proposed Rules
[[Page 36411]]
AGENCY FOR INTERNATIONAL DEVELOPMENT
2 CFR Part 700
RIN 0412-AB01
USAID Grant Regulations; Removing the Program Income Restriction
on For-Profit Entities
AGENCY: U.S. Agency for International Development.
ACTION: Proposed rule.
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SUMMARY: The U.S. Agency for International Development (USAID) proposes
to amend the rules for administering Federal awards to remove a
prohibition on for-profit entities from adding program income to a
Federal award. This change allows any USAID assistance recipient--
whether nonprofit or for-profit--to use the ``addition method'' for
managing program income under a Federal award. This will align USAID's
approach to program income with other Federal agencies.
DATES: Comments must be received no later than August 16, 2022.
ADDRESSES: Submit comments, identified by the title of the action and
Regulatory Information Number (RIN) through the Federal eRulemaking
Portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a> by following the instructions for
submitting comments. Please include your name, company name (if any),
and ``0412-AB01'' on any attachments. If your comment cannot be
submitted using <a href="https://www.regulations.gov">https://www.regulations.gov</a>, please email the point of
contact in the FOR FURTHER INFORMATION CONTACT section of this document
for alternate instructions.
FOR FURTHER INFORMATION CONTACT: Lyudmila Bond, USAID/M/OAA/P, 202-916-
2622, <a href="/cdn-cgi/l/email-protection#2656494a4f455f4b474f4a44495e665355474f4208414950"><span class="__cf_email__" data-cfemail="50203f3c3933293d31393c323f281025233139347e373f26">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
A. Instructions
All comments must be in writing and submitted through the method
specified in the ADDRESSES section above. All submissions must include
the title of the action and RIN for this rulemaking. Please include
your name, title, organization, postal address, telephone number, and
email address in the text of the message.
All comments will be made available at <a href="http://www.regulations.gov">http://www.regulations.gov</a>
for public review without change, including any personal information
provided. We recommend that you do not submit information that you
consider Confidential Business Information (CBI) or any information
that is otherwise protected from disclosure by statute.
USAID will only address substantive comments on the rule. USAID may
not consider comments that are insubstantial or outside the scope of
the proposed rule.
B. Background
In 1995, USAID established its own program-specific assistance
regulation prohibiting the use of the ``addition method'' by any
recipient that is a for-profit entity. The interim final rule,
Administration of Assistance Awards to US Non-Governmental
Organizations, 60 FR 3744, January 19, 1995, was codified at 22 CFR
part 226. Prior to 2013, Government-wide guidance on assistance awards
was contained in several Office of Management and Budget (OMB)
circulars. Agencies promulgated their own assistance award guidance in
policy statements and regulations. In 2014, OMB consolidated and
updated its guidance in the interim final rule, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal
Awards (commonly referred to as the ``Uniform Guidance''), at 79 FR
75867, December 26, 2014, and codified at 2 CFR part 200. Program
income is defined in 2 CFR 200.1, with 2 CFR 200.307(e) describing the
three methods for recipients to account for program income under an
award: deduction, addition, and cost share/matching. In 2015, USAID
published its final rule at 80 FR 55721, October 19, 2015, adopting the
Uniform Guidance and re-codifying its own regulations in 2 CFR part
700. At that time, OMB's instructions were that a change to agency-
specific policy must be done separately from the adoption of 2 CFR part
200. Thus, the current USAID regulation, 2 CFR 700.13(a)(2) (Additional
Provisions for For-Profit Entities) extended the USAID-specific
restriction without any revisions.
C. Analysis
The purpose of USAID's action to delete the prohibition on for-
profit recipients adding earned program income to Federal awards is to
expand and extend the activities that USAID supports, when these
activities are implemented by a for-profit entity. When program income
is generated, the addition method means that recipients may add such
income back into the award to continue supporting the activity. Section
2 CFR 200.307(e)(2) requires that the added ``program income must be
used for the purposes and under the conditions of the Federal award.''
Thus, all recipients must comply with the terms of the award regardless
of its entity type.
The Federal agencies that have adopted OMB's Uniform Guidance have
not generally imposed a prohibition on the use of the addition method
by for-profit entities, and no Federal agency appears to have imposed a
complete prohibition on the addition method by for-profit entities. The
Department of State, under 2 CFR parts 600 through 699, adopts the
application of the Uniform Guidance to its assistance awards, including
to for-profit entities, but does not impose any additional program
income restrictions on them. As such, for-profit entities of assistance
awards from the Department of State may apply the addition method for
program income. Similarly, the Department of Energy, through its
supplemental regulations under 2 CFR parts 910 through 999, adopts the
application of the Uniform Guidance and expressly applies them to for-
profit entities, but it does not create any additional program income
regulations. Only one Federal agency is known to maintain a
restriction: the Department of Health and Human Services, under 45 CFR
75.216 through 75.218, does not allow for-profit entities to use the
addition method, except for grants for research in its Small Business
Innovation Research and Small Business Technology Transfer Research
programs.
Removing this restriction from 2 CFR 700.13 will support USAID's
Private Sector Engagement (PSE) policy by leveling the playing field
for all recipients. In short, the result of this
[[Page 36412]]
change would be that any USAID recipient--whether non-profit or for-
profit--would be able to use the addition method for program income,
subject to all the same regulations. Section 2 CFR 700.13 would
continue to state that for-profit entities cannot use the addition
method for using program income as profit.
USAID is seeking public comments on the proposed change to 2 CFR
700.13. This proposed change will allow program income earned by a for-
profit entity to be added to Federal awards as an option under 2 CFR
200.307(e), when such program income is used for the purposes and under
the conditions of the Federal award.
D. Regulatory Considerations
1. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct 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 is not a significant regulatory action and, therefore, was not
subject to review under section 6(b) of E.O. 12866, Regulatory Planning
and Review, dated September 30, 1993. This proposed rule is not a major
rule under 5 U.S.C. 804.
2. Regulatory Flexibility Act
The proposed rule will not have an 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.
3. Paperwork Reduction Act
The proposed rule does not establish a new collection of
information that requires the approval of the Office of Management and
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).
List of Subjects in 2 CFR Part 700
Grant programs, Grants administration.
For the reasons discussed in the preamble, USAID proposes to amend
2 CFR part 700 as set forth below:
PART 700--UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND
AUDIT REQUIREMENTS FOR FEDERAL AWARDS
0
1. The authority citation for 2 CFR part 700 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; 3 CFR
1979 Comp., p. 435.
Sec. 700.13 [Amended]
0
2. Amend Sec. 700.13 by removing and reserving paragraph (a)(2).
Mark Anthony Walther,
Chief Acquisition Officer.
[FR Doc. 2022-12736 Filed 6-16-22; 8:45 am]
BILLING CODE P
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