FROM USAID
February 18, 2026
Dear USAID Contractor/Recipient,
The Agency’s Chief Acquisition Officer (CAO) has approved a class deviation to the Federal Acquisition Regulation (FAR), revising the audit threshold applicable to termination settlement proposals (TSPs) for certain contracts terminated in response to Executive Order 14169, Reevaluating and Realigning United States Foreign Aid or Executive Order 14151, Ending Radical and Wasteful Government DEI Programs and Preferencing. The CAO also issued a new Agency assistance policy, establishing audit requirements for final award payment proposals under assistance awards terminated in response to the referenced Executive Orders. For the purposes of this communication, TSPs and final award payment proposals are referred to collectively as “settlement proposals.”
Moving forward, the mandatory audit threshold for all settlement proposals is $50 million subject to the conditions below, including potential audits for settlement proposals below $50 million. This threshold consists of all incurred costs pre-termination and all termination-related expenses incurred on and after the effective termination date. All contracts, subcontracts, and assistance awards with settlement proposals that meet or exceed this threshold will be subject to an external audit prior to the finalization of a settlement. However, USAID may elect to require an audit of any settlement proposal below this threshold in cases where contractor/recipient-, award-, or proposal-specific issues or risks are identified. This does not apply to public international organization grants or government-to-government agreements.
Given the Agency’s current circumstances, this revised approach to settlement proposal audits will facilitate efficient finalization of settlements that fall below the threshold while ensuring independent oversight of more complex settlements above the threshold.
The cognizant Termination Contracting Officer (TCO)/Termination Agreement Officer (TAO) for your award(s) will communicate with you directly should these changes impact ongoing settlement proposal processes. You may reach out to your TCO/TAO with any questions related to this notice.
Thank you for your cooperation as we continue the mission of closing USAID.
USAID Industry Liaison