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limitations on compensation for USAID local subcontractors

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Please see AIDAR722.170, copied below for convenience. Here is the question: Is a USAID contractor limited in what it can pay subcontractors, hired abroad, by sections (a) and ( B) of AIDAR722.170, or do those sections only apply to the USAID contractor's employees A Some argue sections (a) and ( B ) apply to any person "hired abroad for work in a cooperating country &c" and therefore apply to subcontractors' employees. Note that sections (d ) and (e) refer to "employees" and sections (a) and ( B ) do not.

B Some argue the clause only applies to contractor's employees. because 1 there is no explicit requirement to flow the clause down and 2 "USAID-direct contracts" in clause (a) refers to the prime USAID contract and thus excludes subcontracts under USAID contracts. Some say, however, that "USAID-direct contracts" in this context, means USAID direct contracts as opposed to host country contracts, see ADS 301.3.1.1 copied below for convenience.

301.3.1.1 Distinction Between USAID-Direct Contracts and Host Country Contracts Effective Date: 08/18/1997 Mission Directors and staff must bear clearly in mind the distinction between USAID-direct and host country contracts. USAID-direct contracts follow the Federal Acquisition Regulation (and AID Acquisition Regulation) and maximize USAID control over the activity in question. When USAID decides to use host country contracting procedures, on the other hand, it acts as a financier and not a contracting party, reserving certain rights of approval and activity monitoring.

[b 722.170 Employment of third country

nationals (TCN’s) and cooperating

country nationals (CCN’s).

(a) General. It is USAID policy that

cooperating country nationals (CCN’s)

and third country nationals (TCN’s),

who are hired abroad for work in a cooperating

country under USAID-direct

contracts, generally be extended the

same benefits, and be subject to the

same restrictions as TCN’s and CCN’s

employed as direct hires by the USAID

Mission. Exceptions to this policy may

be granted either by the Mission Director

or the Assistant Administrator

having program responsibility for the

project. (TCN’s and CCN’s who are

hired to work in the United States

shall be extended benefits and subject

to restrictions on the same basis as

U.S. citizens who work in the United

States.)

( B) Compensation. Compensation, including

merit or promotion increases

paid to TCN’s and CCN’s may not,

without the approval of the Mission Director

or the Assistant Administrator

having program responsibility for the

project, exceed the prevailing compensation

paid to personnel performing

comparable work in the cooperating

country as determined by the USAID

Mission. Unless otherwise authorized

by the Mission Director or the Assistant

Administrator having program responsibility

for the project, the compensation

of such TCN and CCN employees

shall be paid in the currency of

the cooperating country.

© Allowances and differentials. TCN’s

and CCN’s, hired abroad for work in a

cooperating country, are not eligible

for allowances or differentials under

USAID-direct contracts, unless authorized

by the Mission Director or the Assistant

Administrator having program

responsibility for the project.

(d) Country and security clearances.

The contractor shall insure that the

necessary clearances, including security

clearances, if required, have been

obtained for TCN and CCN employees

in accordance with any such requirements

set forth in the contract or required

by the USAID Mission, prior to

the TCN or CCN starting work under

the contract.

(e) Physical fitness. Contractors are

required to insure that prospective

TCN and CCN employees are examined

prior to employment to determine

whether the prospective employee

meets the minimum physical requirements

of the position and is free from

any contagious disease.

(f) Workweek, holidays, and leave. The

workweek, holidays, and leave for TCN

and CCN employees shall be the same

as for all other employees of the contractor,

under the terms of the contract;

however, TCN and CCN employees

are not eligible for home leave or

military leave unless authorized by the

Mission Director or the Assistant Administrator

having program responsibility

for the project.

(g) Travel and transportation for TCN’s

and CCN’s. Travel and transportation

shall be provided TCN and CCN employees

on the same basis as for all

other employees of the contractor,

under the terms of the contract.

(h) Household effects and motor vehicles.

USAID will not provide household

effects to TCN and CCN employees;

such employees may ship their household

effects and motor vehicles to their

place of employment on the same basis

as for all other employees of the contractor,

under the terms of the contract

unless they are residents of the

cooperating country.

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I believe the intent is to limit the cost of labor and avoid contract hires making more than TCN's and CCNs working in the USAID offices. They probably meant it to cover sub-contractors too but you should contact the USAID office that publishes the AIDAR and have them clarify the meaning of the clause. Point out that they seem to have forgot to require a flow down clause.

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