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This bill directs the U.S. Agency for International Development (USAID) to shift toward working more directly with local organizations in developing countries rather than relying primarily on large international contractors. The legislation requires USAID to simplify funding processes, accept applications in local languages, streamline reporting requirements, and increase direct funding to local partners in development and humanitarian aid. It gives USAID flexibility to modify hiring practices, reduce bureaucratic barriers, and allow local organizations to use their own accounting standards instead of U.S. standards. The bill also authorizes USAID to increase indirect cost rates for small local entities and limits competition on certain contracts to local organizations when it saves money or builds local capacity, capping such contracts at $25 million each and 10 percent of annual appropriations. Within 180 days of passage, USAID must update its internal policies to institutionalize these changes, and the agency must submit annual progress reports to Congress detailing funding amounts, local leadership involvement, and implementation success.

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