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As expected, USAID issued an update to ADS 303 (Grants and Cooperative Agreements to Non-Governmental Organizations) that ties it closer to 2 CFR 200, the Uniform Guidance. The October 1, 2024, update expands on certain policies, but there are no real surprises if you’ve been following the revisions to 2 CFR 200. Here are a few highlights:

  • Notice of Funding Opportunity (NOFO) Format 3.5.3 – Provides a reminder that AOs should not permit programmatic progress reports more frequently than quarterly. (This reminder would also extend to subawards and grants under contracts.)
  • Merit Review Criteria 3.6.2 – Includes a policy that prior approval for change of subrecipient should only be required if the subrecipient was a determining factor in the merit review or eligibility process. (In other words, there should not be a blanket requirement to obtain AO approval to change all subrecipients.)
  • Pre-Award Risk Assessment 3.9 – The pre-award risk assessment can use information in the non-public segment of SAM for awards above the Simplified Acquisition Threshold. Reviewers are also encouraged to review USAID’s Risk Appetite Statement (RAS) and USAID’s 7-Step Risk Management Process in ADS 596.3.2.D. (USAID is encouraging a more nuanced approach to assessing risk and possible mitigation measures.)
  • Pre-Award Survey 3.9.1
    • This entry was expanded, adding context and guidance to permit the AO to guide a pre-award survey that is more realistic to the circumstances and useful to the award decision.
    • The revision provides context by articulating the purpose of the pre-award survey:
      • Determine whether the organization has sufficient financial and managerial capacity capability capacity to manage USAID funds, under U.S. government and USAID requirements, to achieve the intended objectives of the activity,
      • Assess the organization’s internal control systems and identify areas that may require strengthening and improvement to effectively implement activities, and
      • Determine the degree of support and oversight necessary to ensure proper accountability of funds provided to the organization.
    • AOs also decide on the use of NUPAS (Non-US Organization Pre-Award Survey) or the use of locally established or award-specific criteria.
    • For simplified grants, the revision encouraged a limited area of review to determine if the applicant can adhere to the Mandatory Standard provisions in the grant.
  • Cost Sharing and Program Income 3.10.1
    • Reinforces that cost share must be verifiable from the recipient’s records – and can be audited.
    • Asserts that Fixed Amount Awards should not be used in programs that require cost share.
    • Expands on the three approaches to program income (deduction, addition, and cost share) by providing examples.
    • Reinforces that non-profit entities cannot earn or keep profit from program income after the award term. Further, the use of program income by a for-profit entity after the award term is determined by agreement during the close-out process.
  • Cooperative Agreements and Substantial Involvement3.11 – USAID often seeks approval of key personnel and their replacement. The new language cautions that USAID’s involvement in the selection of key personnel should avoid the appearance of or actual conflict of interest and should not appear to circumvent the recruitment or hiring process. (By now, this should be broadly understood. Implementers should be firm in protecting their hiring/recruitment process from USAID involvement.)
  • Negotiation of the Award 3.12 – Incorporates the 15% de minimis rate. That’s 15% of Modified Total Direct Costs for applicants without a NICRA.
  • Award Administration 3.18 – Establishes the due date for final reports to 120 days after the period of performance, per 2 CFR 200.329 (c )
    • Once the final report is received, the AOR can conduct a timely review of the recipient’s performance.
    • Adds the requirement that the AO report in SAM using CPARS if USAID does not make an award to an applicant because it did not meet the minimum qualification standards.
  • Subawards 3.21 – Moved to the top of the entry the clear statement that Source and Nationality Rules in 2 CFR 228 do not apply to subawards. (Putting this language at the top will make it easier to answer this perennial question.)
  • Fixed Amount Awards to NGOs 3.25 – Requires recipients to certify that the project was completed as agreed to in the award or identify activities that were not completed. The certification should also include a statement that all expenditures were incurred under 2 CFR 403. If not complete, the amount of the award will be reduced by the amount that reflects the activities not completed. When all activities are completed under the terms and conditions of the FAA, the recipient is entitled to any unexpended funds and this is not to be considered profit. (The treatment of unexpended funds and incomplete activities should also apply to prime contractors and recipients administering FAAs.)
  • Trafficking in Persons (TIP)3.32 – Clarifies that the applicant/recipient certification that it has implemented a compliance plan to prevent trafficking must be done before award and annually during performance.
  • Electronic Communication 3.35.3 – A clear statement that USAID accepts electronic signatures in various formats.

Read the highlighted changes and other changes here.