President and CEO

Samuel A. Worthington October 21, 2008

Chair
Charles MacCormack,
Save the Children
Mr. James R. Kunder
Acting Deputy Administrator
Vice Chair
Ritu Sharma Fox, United States Agency for International Development
Women Thrive Worldwide Ronald Reagan Building
Washington, D.C. 20523-1000
Treasurer
Amy Coen,
Population Action International
Dear Jim:
Board of Directors
Nancy A. Aossey, I appreciate your letter of September 29th concerning the Partner Vetting
International Medical Corps
Kenneth Bacon, Refugees International
System (PVS). The members of InterAction and others in the NGO community
David Beckmann, Bread for the World are grateful for your willingness to work with us in trying to ensure that U.S.
Carol Bellamy, World Learning
Sekyu Chang,
funds are not diverted to prohibited persons or organizations. I personally want
Korean American Sharing Movement to recognize the extra effort you and other USAID staff have made in listening
Julius Coles, Africare
Helene D. Gayle, CARE USA to our community and in coming up with these revised guidelines. We firmly
Anne Lynam Goddard, believe that significant consultation with the NGOs on the front lines of the
Christian Children’s Fund
Lee H. Hamilton, development mission is required before a new screening system can be imposed
Woodrow Wilson International Center for Scholars
Neal Keny-Guyer, Mercy Corps
from Washington. Unfortunately, based on your recent letter, that consultation
Elizabeth Lathem, US Committee for UNDP must continue, as serious privacy, operational, and legal concerns remain within
Lelei Lelaulu, Counterpart International
Jo Luck, Heifer International the U.S. international non-profit community over this agency action.
John McCullough, Church World Service
Stephen F. Moseley,
Academy for Educational Development As we have stated repeatedly, our members strongly support the thorough
Daniel E. Pellegrom, Pathfinder International
Linda Pfeiffer, INMED
vetting of grantees to ensure U.S. tax dollars and security interests are
Robert Radtke, protected (as is currently required under U.S. law). Our members are already
Episcopal Relief and Development
Yolonda C. Richardson,
engaged in due diligence and assessment practices to ensure compliance with
Centre for Development and Population Activities Federal tax laws and regulations that prohibit tax-exempt organizations from
George Rupp,
International Rescue Committee disbursing funds for non-exempt purposes. We do not believe that additional
Zainab Salbi, vetting is necessary or appropriate. Moreover, even if additional vetting were to
Women for Women International
Ron Sconyers, Physicians for Peace be implemented, USAID’s PVS action, in its current form, and even after the
Kathy Spahn, Helen Keller International
Richard Stearns, World Vision
revisions contained in your explanatory letter of September 29th, (i) does not
Tsehaye Teferra, effectively ensure USAID funds are protected from wrongful use; (ii) is unduly
Ethiopian Community Development Council
Sam Worthington (Ex-Officio)
burdensome on a select group of USAID partners; (iii) will have a negative
impact on the delivery of vital U.S. foreign assistance programs; and (iv) does
not provide binding assurances of its limited application. In support of these
1400 16th St., NW assertions, we highlight the following:
Suite 210
Washington, DC 20036
PHONE: (202) 667-8227 1) Limiting the number of people within an organization to be vetted.
FAX: (202) 667-8236 Unfortunately, we do not believe there has been a great deal of flexibility by
E-MAIL: ia@interaction.org
http://www.interaction.org USAID on this issue. There remains too much ambiguity as to the number of
people that should be vetted. Leaving the decision to the applicant, subject to
later ad hoc review, remains an arbitrary and capricious approach to
 implementing a system. There is no acknowledgment of the burden on organizations due to the
overly broad definition of eligibility. Using an average-sized InterAction member as an example,
the fewest number of people to be vetted would be close to 10-12 people, not five, as USAID
estimates. Further, there would be significant duplication of efforts as each program funded in
an identified country will be a different “transaction” and vetting of the same individuals would be
repeated several times. The costs in time (which are not likely to be covered as an allowable
grant expense) and the paperwork will be burdensome, particularly for larger organizations with
international boards and staff.

2) Limiting number of sub-grantees to be vetted. The concerns of the NGO community

remain unheeded. Establishing trust, particularly as U.S. entities, with local implementing
partners is a challenge in many parts of the world. Adding the implicit message “we don’t trust
you” is a detriment to forming the meaningful partnerships with local entities that are required to
do effective humanitarian and development work. There have been a substantial number of
articles in the mainstream press, and testimonial from our members have indicated, that the
information in the National Targeting Center database (and other databases that are used for
such purposes) is not accurate. This means that staff, board members, and the staff/boards of
partners may inadvertently be identified as problematic, thereby excluding legitimate partners
from successful participation in USAID funding.

3) Grants versus contracts. The PVS applies only to grants, and not contracts. This inequity
in coverage creates a serious gap in screening and an undue burden on grantees. We suspect it
will likely drive many organizations out of the grant business and into contract work. While we
appreciate USAID’s stated intention to make the PVS applicable to contractors, this is unlikely to
occur in the near future. In fact, because USAID did not commence the rule-making process for
contractors at the same time it proposed the rule for recipients of grant/cooperative agreements,
it may be foreclosed from doing so for an unidentified period of time given the November
elections. On May 9, 2008, White House Chief of Staff Joshua B. Bolten issued a memorandum
directing executive departments and agencies to finalize regulations before November 1, 2008,
“[e]xcept in extraordinary circumstances, regulations to be finalized in this Administration should
be proposed no later than June 1, 2008 and final regulations should be issued no later than
November 1, 2008[.]” The September 29th statement that USAID will “immediately start a
process to enable them to implement the PVS for both contracts and grants” is doubtful. This
means, once again, that a disproportionate burden of compliance (which is in all likelihood
redundant) is placed on non-profits and not equally applicable to for-profits. This disproportionate
burden is especially arbitrary and capricious given that non-profit organizations implement a very
small segment of the U.S. foreign assistance budget relative to for-profit companies.

4) Limiting PVS to a small number of countries. We appreciate USAID’s effort to identify a

limited number of countries for initial implementation. However, there is nothing in the
September 29th letter that suggests USAID agrees not to expand the PVS until there is a showing
that the vetting system will achieve its stated purpose. As shared with USAID at the April 11,

InterAction is a membership association of US private voluntary organizations engaged in international humanitarian efforts including
relief, development, refugee assistance, environment, population, public policy, and global education.
 2008 open meeting, the NGOs working under the West Bank/Gaza vetting system remain subject
to significant delays indicating that not all of the kinks of the PVS have been fully addressed.

5) Limiting other routine uses of information obtained under PVS. We acknowledge the
limitation of the number of “routine uses” which USAID is now claiming. Yet, it is disturbing that
the private information collected will still be shared with other Federal agencies. This belies
earlier assurances from USAID that “information will not be shared.” It is unclear how the routine
uses that USAID still claims are relevant and necessary to support the stated goal of ensuring its
funds do not support entities or individuals associated with terrorism. Beyond sharing
information about individuals with the Department of Justice, FBI or other U.S. law enforcement
agency in those instances that USAID confirms a “match” with listed individuals, there is no
support for additional “routine uses” by USAID. If the PVS is truly intended for limited list
checking for USAID to assure itself of appropriate use of its funds, making the information subject
to any other use (routine or otherwise) is unnecessary. Again, given the publicly acknowledged
inaccuracies of the government databases, sharing personal information regarding confirmed
matches with U.S. law enforcement remains problematic; however, it is beyond problematic to
share personal information for non-law enforcement “routine” uses and feeding potentially
inaccurate information into other agencies’ databases.

6) Formal exceptions for humanitarian emergencies or low-dollar grants. When

responding to humanitarian emergencies, development organizations need to move swiftly in
delivering aid to the people who need it most. Collecting personal privacy information and
vetting it through intelligence databases in Washington would not be possible or prudent in such
cases. While your letter acknowledges that, “Disaster relief and other kinds of emergency
projects may operate under dire circumstances and time constraints which would justify post-
obligation vetting” (emphasis added), you have not formalized a process by which emergencies
will be identified and implementing partners will be notified that the PVS has been suspended.
Nor is it clear which “emergency” funds (OFDA, etc.) will be exempt from the vetting system, or
exempt from pre-award vetting at a minimum, in emergencies. Life-saving humanitarian
programs are too important to rely on assurances that the vetting may occur post-award during
emergencies. Our community needs to be certain that vetting will occur post-award under those
circumstances.

Additionally, we were surprised that USAID intends the PVS to apply regardless of the dollar
amount of the grant or expenditure. This requirement seems completely unworkable in practice.
We understand there have been significant problems in West Bank/Gaza because even basic
service providers (e.g., health, technical etc.) in the region had to be vetted under the PVS when
even one U.S. dollar was involved.

7) Privacy. As the Agency is aware, there are significant protections afforded U.S. persons
under the Privacy Act. Exemptions from the Act are not to be easily obtained. It was our
understanding that USAID’s application to exempt the PVS from the Privacy Act is subject to
Executive Order 12866 and Congressional review. EO 12866 and congressional review processes

InterAction is a membership association of US private voluntary organizations engaged in international humanitarian efforts including
relief, development, refugee assistance, environment, population, public policy, and global education.
 are in place to ensure the integrity and legitimacy of U.S. agency rule-making and to assure that
rule-making with significant impact on a particular segment of the public is an open and
accessible process and that the end result does not place an unwarranted burden on the
impacted community. We would appreciate a better understanding of why USAID chose not
comply with the processes required under law.

8) Personnel Safety and Data Security Concerns. Implementation of the PVS will
undoubtedly create the perception that NGOs are operating as an extension of U.S. law
enforcement and intelligence agencies, which will undoubtedly increase the risk of violence
against staff of those organizations. Putting our members’ employees in this position is totally
inconsistent with USAID’s current efforts to help its implementing partners improve the security of
staff members working in hazardous places.

Furthermore, the July 17th, 2007 Federal Register Notice announcing the PVS states, “paper
records are to be maintained by the USAID regional offices where the information cannot be
collected electronically.” InterAction members have serious concerns about whether sensitive
employee data supplied in paper form can be adequately safeguarded in the USAID regional
offices. Such offices typically have varying degrees of secure record keeping practices. For
example, even the GAO audit report on West Bank/Gaza noted weaknesses in security controls
because vetting data was stored in unlocked filing cabinets where foreign national staff and
others at the USAID Mission had unrestricted access (see GAO-06-1062R USAID West Bank and
Gaza Antiterrorism Procedures, page 17). These concerns are highlighted by the fact that
identity theft and data security issues are rampant in many countries where NGOs operate.

Jim, let me restate that preventing the purposeful or inadvertent support of those engaged in or
associated with terrorism is an obligation that the NGO community takes seriously and shares
with USAID. We have worked hard at meeting this obligation, and at complying with the existing
body of law (IRS rules, EO 13224, the Patriot Act, etc.) that requires grant-makers to exercise
oversight and control over the use of funds and to conduct pre-award assessments to ensure
there is no transaction with terrorists or facilitation of terrorist activities. Again, we want to work
with you to strengthen the recipient community’s screening systems and controls, but the PVS in
its current form still does not achieve those objectives.

We would ask that you take the above comments into consideration, and that we meet once
again, as soon as possible, with the appropriate House and Senate staff, to resolve the following
open issues arising from this agency action:

1. Seeking greater clarification on the number of people in each organization to be

vetted;
2. Limiting the number of sub-grantees to be vetted;
3. Ensuring that PVS does not take effect until it simultaneously applies to contracts;
4. Obtaining some specific assurances that PVS will only be rolled out to perhaps one
additional country in order to obtain additional data on how the program is working;

InterAction is a membership association of US private voluntary organizations engaged in international humanitarian efforts including
relief, development, refugee assistance, environment, population, public policy, and global education.
 5. Restricting the routine uses under which information obtained in PVS could be used;
6. Creating a formal carve-out for humanitarian emergencies and low-dollar grants;
7. Understanding USAID’s rationale for avoiding compliance with the legal processes
under the Privacy Act;
8. Addressing the increased security risk that the PVS presents, and assuring that data
supplied to USAID by implementing organizations are kept confidential.

Again, we are very grateful for your willingness to work with us. As you know, USAID and the
NGO community have a long and successful record in working together to resolve difficult issues
such as this one. I look forward to hearing from you so that we may plan accordingly for our
next meeting.

Sincerely,

Samuel A. Worthington
President & CEO
InterAction

InterAction is a membership association of US private voluntary organizations engaged in international humanitarian efforts including
relief, development, refugee assistance, environment, population, public policy, and global education.