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5 USAID "Compliance" Practices Debunked!

Below are my Top 5 USAID “Compliance” Practices that I routinely see arise under USAID contracts and subcontracts alike. I’d (naively) love to see these practices come to an end in 2020. They represent “the way things have always been done”, yet are actually routine misapplications of the regs, requirements or best practices by USAID and prime contractors alike.

1. Application of AIDMax, LCPMax, and unburdened CDRs to independent consultants. These maximums are defined as salary maximums (AIDMax is established using a Salary Maximum, LCPs are established for employment purposes, and CDRs are defined as "unburdened" rates). Consultants do not bill a salary, are not employed, and bill burdened rates to account for having to cover the costs of fringe benefits and OH out-of-pocket. So how does a consultant rate reasonably fit into any of these maximums?

2. Belief that contractors are *required* to provide personnel allowances. This is not a requirement, but a permission, as granted under AIDAR 752.7028 Differential and Allowances.

3. Requiring subs to complete Section K in RFPs. Many of these reps and certs are not flow-downs, yet USAID (and some primes) routinely requests that any proposed subs also fill these out. As an example of where this practice can cause issues: Subs are not required to register in SAM (see FAR 52.204-7, which has no flow-down language) yet, when a sub is requested to fill out 52.204-8 in Section K, USAID/their prime is forcing their hand to register.

4. Prime contractors and subs requesting salary approval for their headquarters-based staff who bill periodically to a project. Typical salary approvals require approval for “starting” salaries. Not only is a HQ-based staff member’s salary not a “starting” salary (it would have been negotiated prior to their billing time to a contract), but it would have been established in accordance with the company’s personnel policies. Should a CO not “approve” a HQ staff salary (as long as it isn’t in excess of AIDMax), they would effectively be requiring the contractor to violate AIDAR 752.7007(a). This also applies to HQ staff salary increases. A CO has no authority over these increases (again, these are established per a company's policies), so contractors should be reminded that any restrictions on or approvals for annual salary increases only applies to their LTTA who are fully billable to a contract.

5. USAID holding contractors to line items under a cost-reimbursable (i.e. CPFF, CPAF, etc.) contract. Cost reimbursable mechanisms are issued when it is not possible for an offeror to accurately estimate costs. As such, holding them to an estimate of line items that is not accurate defeats the purpose of this contract type and only increases administrative burden and implementation bottlenecks for both parties.

And a BONUS! Primes attaching their entire contract as an annex to their subcontractor agreements. Do I really need to explain why this is a bad idea (and a lazy one, at that) for everyone involved??



Hussein Kamau
Hussein Kamau
May 11, 2023

Great insight. Seem like we all rush to implement what we haven't read deeply!


Jose Valdez
Jose Valdez
Sep 21, 2021

Great tips...wish companies project managers and USAID's CORs read more of this

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