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tracting authority or to an area contracting officer).

(1) Documentation and control. (a) All correspondence to and from the cognizant RIG shall specify the contract number, contractor's name, audit report number, and recommendation number, plus the amount of the questioned costs allowed or sustained as disallowed by the contracting officer.

(b) All incoming audits containing recommendations for action by SER/OP are to be immediately submitted to OP/PS/SUP. OP/PS/SUP will log in the audit report, recording the recommendation numbers and established due dates for all recommendations assigned to SER/OP. OP/PS/SUP will then transmit the audit, through the cognizant division chief, to the contracting officer with action responsibility.

(c) OP/PS/SUP will establish a tickler file of recommendations assigned to SER/OP, and will provide internal reminders and follow-ups.

(d) The contracting officer will keep OP/ PS/SUP advised on the current status of open recommendations by providing OP/ PS/SUP with a copy of official audit-related correspondance between the contracting officer and the RIG. Any necessary follow up by OP/PS/SUP to update data for preparation of reports shall be made through the cognizant division chief.

(2) Notification, negotiation, and settlement. (a) Within two weeks after receipt of the audit report, the contracting officer shall formally notify the contractor by letter of the costs questioned. This notification shall require the contractor to respond to the contracting officer within 30 calendar days of receiving the letter. If warranted in the circumstances, invite the contractor to participate in negotiations to arrive at a mutually acceptable resolution of such costs. If no response has been received within 30 calendar days following the initial notification to the contractor of the questioned costs, issue a follow-up letter to the contractor requesting a response within 20 calendar days. In this follow-up the contractor should be advised that failure to respond within the specified period will result in the issuance of & final decision, pursuant to the disputes clause of the contract. If no response is received 20 calendar days after the follow-up letter, the contracting officer makes a final decision in accordance with FAR 33.011 regarding the questioned costs and issues, in writing, the appropriate contracting officer's decision as authorized in the Disputes clause of the contract. A copy of each letter, and any decision, shall be sent to the cognizant RIG (and, when the audit recommendation is assigned to SER/OP, to OP/PS/ SUP).

(b) If the contractor responds to the contracting officer's letter identifying questioned costs, but an acceptable settlement is

not achieved with a reasonable period of time (normally, 3 months from the date of initial notification), the contracting officer shall consider negotiations to have reached an impasse. The contracting officer shall then issue the appropriate decision as authorized in the disputes clause of the contract. A copy of this decision must be sent to the cognizant RIG (and, when the audit recommendation is assigned to SER/OP, to OP/PS/SUP). See also paragraph 5b(4) of this Appendix regarding notification of the Controller

(c) Normally, the contractor will respond to notification of questioned costs, and a mutually acceptable settlement can be negotiated. Such negotiated settlements must be documented for the contract file by the contracting officer. The written record must include:

(i) The initial audit findings, in detail, including all questioned costs, item by item.

(ii) The contracting officer's position, as reflected in the notification to the contractor, on each of the audit findings, and questioned costs. If there are any differences between the contracting officer's position and that of the audit, these must be explained, showing exactly what the differences are, why, and how they were arrived at (including discussions, comments, and advise or clearances by other offices).

(iii) A final summary analysis showing the audit finding; the contracting officer's initial position; the contractor's response; subsequent positions of both parties, and final resolution. This must be in sufficient detail to permit any reasonable person to understand what the issues were, how much was involved, what items were adjusted (plus how much and why), what the final resolution was, and why.

A copy of this written record, clearly marked to indicate the audit report and recommendation number(s) must be sent to the cognizant RIG (and, when the audit recommendation is assigned to SER/OP, to OP/PS/SUP). See also paragraph 56(4) of this Appendix, regarding notification of the Controller.

(3) Collection. The preferred method of collection is through the issuance of a Bill for Collection, in accordance with Agency policy on cash management. Use of any other collection method must be coordinated in advance with FM/PAFD. Bills for Col. lection are issued by the Controller in accordance with the procedures set forth in paragraph 5b(4) of this Appendix.

(4) Notification of the controller. (a) When a settlement has been negotiated, or a final decision has been issued pursuant to the disputes clause, it remains to collect the amount determined due to AID (substained disallowances). The contracting officer is responsible for notifying the Controller to

7. Clearances (a) General. All proposed post-award audit responses, whether to internal audits prepared by the IG, or to GAO audits, prepared by SER/OP are to be cleared in accordance with M/AAA/SER requirements in effect at the time the response is prepared. Responses prepared by Mission or Area contracting officers will be cleared in accordance with applicable Mission and Bureau procedures.

(b) Final decisions pursuant to the disputes clause. If settlement of an audit requires a final decision by the contracting officer in accordance with FAR 33.011, pursuant to the disputes clause, such decisions must be cleared by GC or the cognizant Mission or Regional Legal Advisor. (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) [49 FR 13302, Apr. 3, 1984, as amended at 50 FR 50303, Dec. 10, 1985; 51 FR 20652, June 6, 1986)

APPENDIX I-AID'S ACADEMIC

PUBLICATION POLICY

issue a Bill for Collection. A copy of this notification rnust be sent to the cognizant RIG, and to IG/PPP (and to OP/PS/SUP, for audits assigned to SER/OP).

(b) The notification to the Controller must contain the following information:

(i) Identification of the contract/task order/work order, providing the contract number, and the contractor's name and address;

(ii) The most recent accounting and appropriation data (PIO/T number and allotment number, etc.);

(iii) The amount due to AID;

(iv) The applicable audit and recommendation number(s): and

(v) A copy of the contracting officer's negotiated settlement or final decision pursuant to the disputes clause (see paragraph 5b(2) of this Appendix).

(c) The notification must request that a copy of the Bill for Collection be sent to the cognizant RIG, IG/PPP, and the contracting officer. The contracting officer is responsible for following up to insure that the Bill for Collection has been issued, and that a copy is in fact provided to the cognizant RIG and to IG/PPP, and is placed in the contract file.

(d) If the Contractor appeals the final decision pursuant to the disputes clause, the contracting officer must promptly notify the Controller to suspend collection pending resolution of the appeal. Suspension action by the Controller shall be taken in consultation with the Office of the General Counsel, pursuant to Delegation of Authority No. 80. The contracting officer is responsible for notifying the Controller regarding resolution of any appeal.

6. Closing Audit Recommendations When the contracting officer has completed all action required by an audit recommendation in accordance with the procedures established in this appendix, he/she shall request that the recommendation be considered officially closed. The memorandum to the cognizant RIG shall specifically identify the audit report and recommendation number(s), summarize the actions taken, and explain why the recommendation(s) should be considered closed, providing sufficient evidence to permit the cognizant RIG to make a reasonable decision. For audit recommendations involving questioned costs which result in sustained disallowances, RIG and IG/PPP will accept a copy of the issued Bill for Collection as evidence to close a recommendation. A copy of the request to close a recommendation shall be sent to IG/PPP (and, for audits assigned to SER/OP, to OP/PS/ SUP).

1. Statement of Policy This is a statement of AID policy on publication, or release to parties other than those specifically authorized, of unclassified materials gathered or developed under contracts with academic institutions.

2. Underlying Principles AID favors and encourages the publication of scholarly research as well as the maximum availability, distribution, and use of knowledge developed in its program.

This policy statement does not deal with material that is classified for security reasons. It does deal with considerations of national interest, not of sufficient gravity to warrant security classification, but serious enough to affect adversely the conduct of U.S. assistance programs. Consequently, in addition to the requirements of courtesy, propriety, and confidence which normally guide scholars in their work, there should also be consideration of the potential repercussions of publication on the successful execution of development and other cooperative programs in which the United States and foreign countries are involved.

3. Operational Definitions The Agency draws a distinction between two kinds of manuscripts which a scholar may wish to publish:

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(a) A report which is prepared and delivered to the Agency under the terms of the contract (a “contract manuscript"); and

(b) An article or book based upon experience and information gained under an AID contract but not prepared or delivered under the contract (a "non-contract manuscript").

There are two kinds of actions, to be specified in the contract, which the Agency can take upon notification of a contractor's desire to publish:

(a) Comment only, under which AID and the foreign government involved may review the manuscript, and have their comments considered seriously by the contractor prior to publication; and

(b) Authorization for release, which AID may withhold if reconciliation between the national interest and the author's interest is impossible.

4. Policy Statements (a) AID, as a general rule, will not require an academic institution to obtain permission to publish the written work produced under a contract. It will ask for the opportunity to review the manuscript for comment only, prior to publication.

In the case of a contract manuscript, AID reserves the right to disclaim endorsement of the opinions expressed; if it is a noncontract manuscript, AID reserves the right to disassociate itself from sponsorship or publication.

(b) On the other hand, AID may reserve the right of authorization for release in those exceptional cases where conditions exist making it reasonably foreseeable, in light of the contract's scope of work and the manner and place of performance, that the written work to be prepared and delivered under the contract may have adverse repercussions on the relations and programs of the United States. Where this right is reserved, it must be so specified in the contract. In determining where to reserve such right, AID will consider all relevant factors, including:

(1) The extent to which prompt and full performance of the contract will require access, facilitated by reason of the contract, to information not generally available to scholars;

(2) The extent to which the work involves matters of political concern to foreign countries, particularly where any substantial part of the work is to be performed therein;

(3) The extent to which, by reason of AID's close involvement and cooperation in the performance of the contract, the work product may be so identified with AID itself as to prevent effective disclaimer of AID endorsement thereof:

(4) The extent to which the objective of the contract is to provide advice to AID or to a foreign government of immediate oper

ational significance in the conduct of the AID program or the implementation of governmental programs in the host country; (5) The desires of the host country.

5. Implementation The successful implementation of this policy on publication rests on a thorough understanding and acceptance of these principles by AID and the prospective contractor. The actual publications provision for a particular contract, then, would be SO worded as to reflect the agreement reached in the contract negotations.

AID's concern with noncontract manuscripts is related to the identification of a manuscript with the U.S. Government. This concern will be modified by the passage of time following termination of the contract.

In the normal case of prepublication review for AID comment, the institution will submit a copy of the manuscript not later than the date of submission to the publisher. This gives the Agency time to comment if it is deemed appropriate. However, in the case of review for authorization, timely notification of AID's response will be given, consistent with the size of the manuscript and the number and location of the parties involved.

The Agency will make every effort to expedite this review procedure in accordan with the underlying principle described at the beginning of this policy statement. (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) (49 FR 13304, Apr. 3, 1984) .

APPENDIX J-DIRECT AID CONTRACTS

WITH COOPERATING COUNTRY NA-
TIONALS AND WITH THIRD COUNTRY
NATIONALS FOR PERSONAL SERVICES
ABROAD

1. Generai (a) Purpose. This appendix sets forth the authority, policy, and procedures under which AID contracts with cooperating country nationals and third country nationals for personal services abroad.

(b) Definitions. For the purpose of this appendix:

(1) "Personal services contract (PSC)” means a contract which establishes an employer-employee relationship for the performance of services personally by the contractor. The services may include general continuing services as well as specifically identifiable tasks.

(2) "Employer-employee relationship" means an employment relationship in which

the purpose of any law administered by the Civil Service Commission.” 1

3. Applicability (a) This appendix applies only to personal services contracts with CCNs or TCNs to provide assistance abroad under section 636(a)(3) of the FAA.

(b) This appendix does not apply to:

(1) Contracts for non-personal services with TCNs or CCNs; such contracts are covered by the basic text of the FAR and the AIDAR.

(2) Personal services contracts with U.S. citizens or U.S. resident aliens for personal services abroad; such contracts are covered by Appendix D of this Chapter.

(3) Appointments of experts and consultants as AID direct-hire employees, covered by AID Handbook 25, Employment and Promotion.

the employer supervises, or has the power to supervise, the performance of the work including, for example, the manner in which the work is to be performed, the days of the week and hours of the day in which it is to be performed, and where the work is to be performed. Another indication of this relationship is the provision by the employer of workspace and basic tools and materials for use in accomplishing the work.

(3) "Non-personal services contract" means a contract which directly engages the time and effort of a contractor whose primary purpose is to perform an identifiable task and which establishes an independent contractor relationship between the contractor and the activity contracting for the services.

(4) "Independent contractor relationship" means a contract relationship in which the contractor is not subject to the supervision and control prevailing in relationships between the Government and its employees. Under these relationships, the Government does not normally supervise the performance of the work, the manner in which it is to be performed, the days of the week or hours of the day in which it is to be performed, or the location of performance.

(5) "Contractor" means a cooperating country national or third country national who has entered into a contract pursuant to this Appendix.

(6) "Cooperating country” means the country in which the employing AID mission is located.

(7) "Cooperating country national (CCN)” means an individual who is a cooperating country citizen or a non-cooperating country citizen lawfully admitted for permanent residence in the cooperating country.

(8) “Third Country National (TCN)" means an individual (a) who is neither a citizen nor a permanent legal resident alien of the United States nor of the country to which assigned for duty, and (b) who is eligible for return to his/her home country or country of recruitment at U.S. Government expense (see Section 13, General Provision 11 paragraph (b)(1)].

(9) “Resident Alien" means a non-U.S. cit. izen lawfully admitted for permanent residence in the United States.

2. Legal Basis (a) Section 635(b) of the Foreign Assistance Act of 1961, as amended, hereinafter referred to as the "FAA", provides the Agency's contracting authority for nonpersonal services.

(b) Section 636(a)(3) of the FAA authorizes the Agency to enter into personal services contracts with individuals for personal services abroad and provides further that such individuals “... shall not be regarded as employees of the U.S. Government for

4. Policy (a) General. AID may finance, with either program or operating expense funds, the cost of personal services as part of the Agency's program of foreign assistance by entering into a direct contract with a CCN or a TCN for personal services abroad.

(1) Program Funds. Program funds may be obligated for periods up to five years where necessary and appropriate to the accomplishment of the tasks involved.

(2) Operating Expense Funds. Operating funds may be obligated for periods not to exceed twenty-four months where necessary and appropriate to the accomplishment of the tasks involved.

(b) Limitations on personal services contracts.

(1) Personal services contracts may only be used when adequate supervision is available.

(2) Personal services contracts may be used for commercial activities. Commercial activities provide a product or service which could be obtained from a commercial source. See Attachment A of OMB Circular A-76 for a representative list of such activities.

(3) Personal services contracts may be used for Governmental functions (defined by OMB Circular A-76 as functions so intimately related to the public interest as to mandate performance by Government employees) except:

(i) Negotiating on behalf of the United States with foreign governments and public international organizations.

NOTE: Negotiating on behalf of the United States with private individuals and entities is permitted.

The Civil Service Commission is now the Federal Office of Personnel Management.

(if) Entering into any agreement (e.g., with the local plan would be inappropriate loan, grant, contract) on behalf of the in a particular instance, then compensation United States.

will be set in accordance with (in order of (iii) Making decisions involving govern preference): mental functions such as planning, budget, (A) Any other Mission policies on foreign programming and personnel selection. Sery- national employee compensation; or ices will be limited to making recommenda (B) Paragraph 4 (c), (d), (e), and (f) of tions with final decision-making authority AIDAR Appendix D. reserved for authorized AID direct-hire em (iii) The earning of leave (annual and ployees.

sick), allowances and differential (if applica(iv) Supervision of AID direct-hire U.S. ble), salaries and all other related benefits citizen employees.

can not be enumerated in this Appendix as (v) Services which involve security classi they vary from Mission to Mission and are fied material.

based upon the compensation plan for each. (c) Conditions of Employment.

(iv) Unless otherwise authorized, the cur(1) General.

rency in which compensation is paid to conAID PSC contractors are not to be regard

tractors shall be in accordance with the preed as employees of the U.S. Government forvailing local compensation practice of the the purpose of any law administered by the

post. U.S. Office of Personnel Management, are

(v) CCN and TCN contractors are eligible not included under any retirement or pen

for allowances and differentials on the same sion program of the U.S. Government, and

basis as direct-hire FSN employees, under are not eligible for the Incentive Awards

the post compensation plan. Program covered by Uniform State/AID/

(vi) An AID PSC who is a spouse of a curUSIA regulations. (A USAID may institute

rent or retired U.S. Civil Service, U.S. Forits own incentive awards program for PSCs,

eign Service, or U.S. military service although such a program may not authorize

member, and who is covered by their meritorious step increases in salary.) Other than these exceptions, CCNs and TCNs who

spouse's government health or life insurare hired for work in a cooperating country

ance policy, is ineligible for a contribution under PSCs generally will be extended the

toward the costs of annual health or life in

surance. same benefits and be subject to the same restrictions as Foreign Service Nationals

(vii) Retired CCNs or TCNs may be award(FSNs) employed as direct hires by the AID

ed personal services contracts without any Mission.

reduction in or offset against their Govern(2) Compensation.

ment Annuity. (i) It is AID's general policy (see AIDAR

5. Soliciting for Personal Services Contracts 722.170) that PSC compensation may not, without the approval of the Mission Direc (a) Project Officer's responsibilities. The tor or Assistant Administrator, exceed the Project Officer (or the responsible requiring prevailing compensation paid to personnel office), will prepare a written detailed state. performing comparable work in the cooper ment of duties and a statement of minimum ating country. Compensation for TCN or qualifications to cover the position being reCCN personal service contractors set in ac cruited for. The statement shall be included cordance with the provisions in 4(c)(2)(ii) in the procurement request; the procurebelow satisfies this requirement.

ment request shall also include the follow(ii) In accordance with section 408(a)(1) of ing additional information as a minimum: the Foreign Service Act of 1980, a local com (1) The specific foreign location(s) where pensation plan forms the basis for all com- the work is to be performed, including any pensation payments to FSNs which includes travel requirements (with an estimate of CCNs and TCNs. The plan is each post's of frequency); ficial system of position classification and (2) The length of the contract, with beginpay, consisting of (a) the local salary sched ning and ending dates, plus any options for ule which includes salary rates, statements renewal or extension; authorizing fringe benefit payments, and (3) The basic education, training, experiother pertinent facets of compensation for ence, and skills required for the position; TCNs and CCNs; and (b) the local position (4) A certification from the officer in the classification system as reflected in the Mission responsible for the LEPCH or Local Employee Position Classification equivalent that the position has been reHandbook (LEPCH) or equivalent in effect viewed and is properly classified as to a title, at the Mission. Compensation for PSCs will series and grade in accordance with the be in accordance with the local compensa LEPCH. If the position does not fall within tion plan, to the extent that it covers em the LEPCH or equivalent system, an estiployees of the type or category being em mate of compensation based on subparaployed, unless the Mission Director deter graph 4(c)(2)(ii) (A) or (B) of Appendix D mines otherwise. If the Mission Director de- after consultations or in coordination with termines that compensation in accordance the contract officer or executive officer.

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