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1. Basic Rules
Rules apply to:
USAID awards ONLY (not PRM or USDA) Direct costs only (not indirect costs) US NGOs and non-US NGOs Flows down to Subawards
The USAID Source, Origin and Nationality rules are contained in:
USAID Standard Provisions, USAID Eligibility Rules for Goods and Services http://www.usaid.gov/policy/ads/300/303maa.pdf
The rules define the eligible source and origin of goods and services and the nationality of suppliers for procurement transactions under USAID grants and cooperative agreements (including OFDA, Food for Peace, Child Survival, mission funds, etc.). Important Definitions
Note: Rules do not apply to match/cost-share or items purchased from program income
Source:
Origin:
Nationality:
Country where the supplier of the good or service is from (for an individual) or where the supplier of the good or service is organized or incorporated (for a company or non-profit)
Cooperating Country:
Note: No goods, services or suppliers may be from one of the FPRC. Any component from a FPRC contained in the item makes the item in eligible.
Geographic Code:
Code contained in each USAID agreement which defines the country or region from which goods and services can be purchased under that agreement. Full list of codes available in USAIDs ADS (Automated Directives System). http://www.usaid.gov/policy/ads/200/260mab.xls
When no geographic code is listed in the schedule of the agreement, see USAID Standard Provision, USAID Eligibility Rules for Goods and Services. 1. For agreements with a total procurement element >$250,000, the default geographic code is 000. 2. For agreements with a total procurement element <$250,000 or when funded under DFA (Development Funds for Africa), the default geographic code is 935.
This guide is intended as a summary only. The full regulations should be consulted for the exact language when necessary. Questions? Contact asparks@mercycorps.org Page 1 of 6 Version: 7/06
2. Procurement Rules
Goods
1.
Services
All services purchased with USAID funds must be purchased in (SOURCE) the geographic code listed in the agreement. The Supplier (vendor) of any services purchased with USAID funds must be a citizen of or a company organized under the laws of a country authorized in the geographic code listed in the agreement (NATIONALITY). Eligibility rules for suppliers apply to contractors or subcontractors at any tier. Rules also apply to consultants. Exceptions for services available from local vendors (suppliers located in the country in which the agreement is being implemented) are outlined in Local Procurement rules (See Section 3 of this guide).
1.
All goods purchased with USAID funds must be purchased in (SOURCE) and produced in (ORIGIN) the geographic code listed in the agreement. 2.
2.
The Supplier (vendor) of any goods purchased with USAID funds must be a citizen of or a company organized under the laws of a country authorized in the geographic code listed in the agreement (NATIONALITY).
3. 3.
Exceptions for goods available from local vendors (suppliers located in the country in which the agreement is being implemented) are outlined in Local Procurement rules (See Section 3 of this guide).
Supplier Eligibility Individual: Must be a citizen of and have a principal place of business in a country or area included in the geographic code listed in the agreement. Corporation: Must be organized under the laws of and have its principal place of business in a country or area included in the geographic code. Ownership must be greater than 50% by individuals who are citizens of a country or area included in the geographic code. (Certification can be by an authorized officer of the company.) Non-Profit Organization: Must be organized under the laws of and have its principal place of business in a country or area included in the geographic code. Management must be greater than 50% by individuals who are citizens of a country or area included in the geographic code. (Certification can be by an authorized officer of the NGO.) Foreign Government Owned Organizations or Companies: Not eligible as suppliers under USAID funding (does not include ministries). See 22 CFR 228, Subpart D for rules on less common suppliers (joint ventures, etc.)
Component Goods When the items purchased are in a kit, the entire kit is considered one item. For spare parts, each separate shipment is considered one item, rather than each individual spare part. When a system consisting of more than item is procured together as a single, separately priced item, the entire system is considered one item.
Long-Term Leases Any goods obtained under a long-term lease must also meet source and origin requirements. A long-term lease is defined as a lease of 180 days or more in a 12 month period (either consecutive or intermittent).
Note: This Quick Reference Guide does not summarize the Source, Origin and Nationality rules covering Transportation (Ocean Freight and Air Travel). See 22 CFR 228, Subpart C for these rules.
This guide is intended as a summary only. The full regulations should be consulted for the exact language when necessary. Questions? Contact asparks@mercycorps.org Page 2 of 6 Version: 7/06
Local Procurement rules provide important exceptions to the geographic code requirements outlined in the Procurement Rules. To be eligible for the exceptions under Local Procurement, the SOURCE and NATIONALITY of the supplier must be the country in which the agreement is being implemented (cooperating country).
Local procurement overrides the geographic code stated in the agreement for the following circumstances:
Goods
Local Procurement is allowed when: Transaction does not exceed $100,000 Transaction does not exceed $5,000 Items which can only be practically purchased locally such as fuel, newspapers, etc. Cooperating Country Cooperating Country Cooperating Country Cooperating Country For Source/Natl.: Type of Service:
Services
Local Procurement is allowed when: Contract is estimated not to exceed $250,000
For Source/Natl.:
And Origin:
Cooperating Country
United States
Cooperating Country
935
Cooperating Country
n/a
Contract (including materials) is estimated not to exceed $5 million Prime contractor may procure locally Fixed-Price produced goods and services under Construction subcontracts (up to any value) Services which are only practically purchased locally such as utilities, rentals, communications, maintenance services, etc.
4. Rules on Ineligible and Restricted Goods (Standard Provision,USAID Eligibility Rules for Goods and Services)
Restricted Goods
Restricted goods require prior approval before purchase.
Ineligible Goods
Ineligible goods may never be purchased with USAID funds under any geographic code.
Military equipment Surveillance equipment Commodities or services for the support of police or law enforcement Abortion equipment or services Luxury goods and gambling equipment Weather modification equipment
Agricultural commodities (e.g. food and seeds) Motor vehicles (including passenger vehicles, trucks, motorcycles, buses, etc.; excludes industrial vehicles, e.g. tractors, lift trucks, dump trucks, etc.) Pharmaceuticals (for human consumption or veterinary use) Pesticides and Fertilizers Used items and equipment; and USG owned excess property
Prior approval is considered to be met when: 1. the item is of U.S. source and origin 2. the item has been identified in the approved program description or the schedule of the award (or modifications) 3. the cost of the item is included in the approved budget If any one of these conditions is not met, the item must be pre-approved in writing by the USAID Agreement Officer. NOTE: CTOs do not have authority to grant these approvals.
This guide is intended as a summary only. The full regulations should be consulted for the exact language when necessary. Questions? Contact asparks@mercycorps.org Page 3 of 6 Version: 7/06
A waiver to authorize a purchase (or purchases) outside the geographic code may be requested. All waivers must be in writing and directed to the USAID Agreement Officer or may be included directly in the schedule of the award. CTOs do not have the authority to approve waivers unless this authority has been delegated to them in the agreement.
The following criteria are provided in the regulations as justification for a waiver. It is best practice to cite the criteria in your waiver request.
1.
2. 3. 4.
Services required for assistance are of a type that is not available for purchase in the United States, and for waivers to Code 899 or Code 935, also not in the cooperating country, or any country in Code 941. It is necessary to permit procurement in a country not otherwise eligible in order to meet unforeseen circumstances, such as emergency situations. It is necessary to promote efficiency in the use of United States foreign assistance resources, including to avoid impairment of foreign assistance objectives. For waivers to authorize procurement from Geographic Code 941 or the cooperating country: a. There is an emergency requirement for which non-USAID funds are not available and the requirement can be met in time only from suppliers in a country or area not included in the authorized geographic code. b. No suppliers from countries or areas included in the authorized geographic code are able to provide the required services. c. Persuasive political considerations. d. Procurement of locally available services would best promote the objectives of the foreign assistance program. e. Such other circumstances as are determined to be critical to the achievement of project objectives Notes: See 22 CFR 228.54 for criteria related to waivers for foreign government owned organizations. See 22 CFR 228.55 for criteria related to waivers for ocean transportation. Waivers are not available for air transportation. See 41 CFR 301 for rules on unavailability of US flag carriers under the Fly America rules.
Commodities are of a type that are not produced in and available for purchase in the United States, and for waivers to Code 899 or Code 935, also not in the cooperating country, or any country in Code 941. 2. It is necessary to permit procurement in a country not otherwise eligible in order to meet unforeseen circumstances, such as emergency situations. 3. It is necessary to promote efficiency in the use of United States foreign assistance resources, including to avoid the impairment of foreign assistance objectives. 4. For waivers to authorize procurement from Geo Code 941 or the coop. country: a. For assistance other than commodity import programs, when the lowest available delivered price from the United States is reasonably estimated to be 50 percent or more higher than the delivered price from a country or area included in Geographic Code 941 or the cooperating country. b. For assistance other than commodity import programs, when the estimated cost of U.S. construction materials (including transportation and handling charges) is at least 50 percent higher than the cost of locally produced materials. c. For commodity import programs or similar sector assistance, an acute shortage exists in the U. S. for a commodity generally available elsewhere. d. Persuasive political considerations. e. Procurement in the cooperating country would best promote the objectives of the foreign assistance program. f. Such other circumstances as are determined to be critical to the success of project objectives. Notes: Waivers for goods automatically also apply to the nationality of the supplier. Any individual transaction under $5,000 does not require a waiver. (22 CFR 228.51 (c ). For restricted goods, waivers of source and origin are necessary in addition to prior approval of the restricted item if the item is purchased outside the U.S.
IMPORTANT: Referencing a non-U.S. make or model in a budget DOES NOT constitute a waiver.
This guide is intended as a summary only. The full regulations should be consulted for the exact language when necessary. Questions? Contact asparks@mercycorps.org Page 4 of 6 Version: 7/06
Checklist Questions
1.
2.
3.
What is the geographic code included in the agreement? Item can be manufactured in any country, except a Foreign Policy Restricted Country (see Important Definitions, Section 1, Page 1)
a.
Item must be manufactured in the United States only; If NO, go to Question 4. Item must also be purchased in the United States only; If NO, go to Question 4. The nationality of the supplier must also be American; If NO, go to Question 4.
Item must be manufactured in the Cooperating Country; If NO, go to Question 4. Item must also be purchased in the Cooperating Country; If NO, go to Question 5 (Local Procurement will not apply in this case.)
b.
Can the item or service be purchased in the geographic code listed in the agreement? (SOURCE)
Item can also be purchased from any country, except a Foreign Policy Restricted Country (see Important Definitions, Section 1, Page 1) The nationality of the supplier can be any country, except a Foreign Policy Restricted Country (see Important Definitions, Section 1, Page 1)
c.
What is the nationality of the supplier and does the supplier qualify under the geographic code? (NATIONALITY)
The nationality of the supplier must also be that of the Cooperating Country; If NO, go to Question 5 (Local Procurement will not apply in this case.)
This guide is intended as a summary only. The full regulations should be consulted for the exact language when necessary. Questions? Contact asparks@mercycorps.org Page 5 of 6 Version: 7/06
Checklist Questions
4.
If the geographic code is 000 and you wish to purchase outside the U. S., then can the purchase qualify as local procurement?
a.
If you cannot buy in country, then go to Question 5. You must get a waiver to purchase outside the geographic code. When Goods And Goods were Local Procurement is allowed when: can be bought in: manufactured in: Coop. Country United States Transaction does not exceed $100,000 Coop. Country 935 Transaction does not exceed $5,000 Coop. Country Items which can only be practically purchased locally such as fuel, newspapers, etc.
b.
If criteria cannot be met, then go on to Question 5. You must get a waiver to purchase outside the geographic code. When Services And Type of Local Procurement is allowed when: can be bought in: Service is: Coop. Country Professional Services Contract is estimated not to exceed $250,000 Coop. Country Construction Contract (including materials) is estimated not to exceed $5 million Contracts Coop. Country Fixed-Price Prime contractor may procure locally produced goods and services under Construction subcontracts (up to any value) Coop. Country Services which are only practically purchased locally such as utilities, rentals, communications, maintenance services, etc. If criteria cannot be met, then go on to Question 5. You must get a waiver to purchase outside the geographic code. When the purchase must be made outside of the required geographic code or outside the U.S. for a restricted item and no exceptions are available, a waiver request may be submitted to authorize the purchase. Waivers requests must be approved by the Agreement Officer. (CTOs do not have the authority to approve waivers.) ALL WAIVERS MUST BE IN WRITING OR WRITTEN INTO THE GRANT AGREEMENT. (Mentioning the non-U.S. make and model in the budget does not constitute a waiver.) See the Digital Library for sample waiver requests. See Section 5 of this guide for justification criteria.
5.
IMPORTANT: Please note that the A-122 Cost Principles (a separate set of regulations which apply to all USG funds except USDA) may also require some items to receive prior approval. This requirement is separate from the source, origin and nationality rules or the restricted goods rules (which are USAID only). For more information, see the Mercy Corps Quick Reference Guide to the A-122 Cost Principles available on the Digital Library.
One class of items which would also require prior approval according to A-122 is: Equipment and Capital Expenditures (an item >$5k and 1 year useful life), including vehicles.
Requests for prior approval required by A-122 are also directed to the Agreement Officer and may be combined with waiver requests or approvals of restricted items.
This guide is intended as a summary only. The full regulations should be consulted for the exact language when necessary. Questions? Contact asparks@mercycorps.org Page 6 of 6 Version: 7/06