USAID_Construction_Policy.docx

USAID Construction Policy

USAID is funding construction projects in all regions across all foreign assistance objectives. USAID infrastructure investments range from small-scale projects such as community water tanks to large power plants and water treatment facilities. USAID also makes direct infrastructure investments in schools, hospitals, health clinics, and other public buildings, as well as rural farm to market roads, trunk roads, and bridges. The Agency’s infrastructure projects are a critical component of our development programs in post-conflict and post-disaster countries but are not limited to those situations.

The use of contracts and task orders to manage both the design and construction of infrastructure projects allows the Agency to specify that engineering requirements including design, tendering, and construction oversight activities, as well as safety or other operational construction standards/specifications are met. In contrast, the lesser degree of control that the Agency can legally assert over grantees under assistance awards minimizes the Agency’s ability to ensure that the design and construction activities are carried out properly. The Administrator has approved the policy stated below; the first step in a larger effort to address these and other construction-related concerns.

I. Type of Instrument for Construction Activities

a. USAID must use a direct contract (including a task order) when:

i. The award is solely for construction, or

ii. The award includes construction activities as some portion of all award activities and

1. The estimated cost of construction activities at a single project site is $500,000 or more, or

2. The total aggregate estimated cost of construction activities under the award is $10,000,000 or more.

b. USAID may use an assistance award to finance construction activities only when all of the following conditions apply:

i. The award is a cooperative agreement (CA), since greater oversight is possible through substantial involvement by USAID (see ADS 303.3.11). Where construction activities are financed under contracts, operating units are encouraged to use fixed price contracts to the greatest degree possible.

Construction must not be financed under a grant;

ii. The CA complies with the requirements of ADS 221 USAID’s Procedures for Implementing International Agreements for Tied and Untied Aid;

iii. The CA must expressly state that no construction activities other than those explicitly approved under the agreement may be performed as part of the cooperative agreement;

iv. Construction activities must be explicit in the budget;

v. A term of substantial involvement must be the right of the Agreement Officer’s Representative (AOR) to halt construction; and

vi. The construction activities are only a portion of all award activities and

1. The estimated cost of construction activities at a single project site is less than $500,000 and

2. The total aggregate estimated cost of construction activities under the award is less than $10,000,000.

Agreement Officers must not approve any amendments or modifications to the cooperative agreement or subawards or procurements by recipients for construction activities that increase the value of construction activities above the limits established in the above policy without approval from the Procurement Executive, in consultation with the Director, EGAT/I&E, on a case-by-case basis.

c. Exempt from the above policy are funds provided through:

i. A government-to-government agreement (e.g., a Fixed Amount Reimbursement Agreement);

ii. A Development Credit Authority instrument under ADS 249; and

iii. Grants under ADS 308 to Public International Organizations or grants to other bilateral donors.

d. For any assistance awards under which construction activities are not permitted by the above policy, the following requirements apply:

i. The award must expressly state that construction is not part of the “financial assistance” contemplated (i.e. it is not a core part of the award), and

ii. Agreement Officers must not approve any subawards or procurements by recipients for construction activities.

II. Exceptions and Waivers

a. Any additional exceptions or waivers from this policy must be reviewed and approved by the Procurement Executive in consultation with the Director, EGAT/I&E, on a case-by-case basis, based on the following factors:

i. What construction activities will take place, broken down by type, site and cost; and

ii. The impact to USAID’s programmatic and foreign assistance objectives compliance with the policy will otherwise cause.

b. Waivers are currently granted for the offices and activities listed below.

i. Both the Type of Instrument Policy and the Construction Oversight Requirements Policy do not apply to:

1. Construction activities carried out under Food for Peace for disaster relief (including that using program income and monetized proceeds);

2. Construction activities carried out by DCHA/OTI through Grants Under Contracts (e.g., SWIFT) to the extent current practice is maintained; and

3. Construction activities conducted by DCHA/OFDA.

4. Construction activities carried out by the West Bank/Gaza Mission and

5. Construction activities conducted by DCHA/ASHA.

DEFINITIONS:

“Construction” for purposes of this policy means: construction, alteration, or repair (including dredging and excavation) of buildings, structures, or other real property and includes, without limitation, improvements, renovation, alteration and refurbishment. The term includes, without limitation, roads, power plants, buildings, bridges, water treatment facilities, and vertical structures.

“Single project site” for purposes of this policy means a single undertaking of construction within a contiguous geographic location, including but not limited to, a road, a building, a wastewater treatment facility, a power plant, a school, a clinic, etc., but also includes contiguous multiples of the same.

“Improvements, renovation, alteration and refurbishment” for purposes of this policy includes any betterment or change to an existing property to allow its continued or more efficient use within its designed purpose (renovation), or for the use of a different purpose or function (alteration). Improvements also include improvements to or upgrading of primary mechanical, electrical, or other building systems. “Improvements, renovation, alteration and refurbishment” does NOT include non-structural, cosmetic work, including painting, floor covering, wall coverings, window replacement that does not include changing the size of the window opening, replacement of plumbing or conduits that does not affect structural elements, and non-load bearing walls or fixtures (e.g., shelves, signs, lighting, etc.).

“Direct USAID contract awards” for purposes of this policy means a contract awarded pursuant to the FAR, AIDAR, and ADS 302 and does not include grants, cooperative agreements, or other transactions, including without limitation, a grant/cooperative agreement awarded pursuant to ADS 303, a grant under a contract, a procurement contract under a grant/cooperative agreement, a Global Development Alliance, etc.

“Modifications or amendments” as used in this policy refer to changes in scope or refinements of work plans that include activities not previously carried out by an assistance recipient.

Effective dates of implementation of the policy. The policy becomes effective upon publication of this Notice. It applies to all assistance solicitation issues after the effective date of this Notice and the resulting awards, and to modification or amendments to existing awards that authorize new activities not already authorized under such awards.

Conforming amendments to the ADS and other guidance will be issued to implement the above policy.