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Fast Facts: USAID Prior Approvals & Waivers

Kellie KleinInternational Finance & Operations Manager

Johns Hopkins Bloomberg School of Public Health

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Summary

I. USAID Prior Approval Process

II. USAID Waiver Process III. USAID Prior Approval vs. Waiver

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Today’s Agenda

I. USAID Prior Approval

1. What is prior approval?2. What happens when a required prior approval is not obtained?3. When is prior approval required?

a) Programmatic requests

b) Financial requests

c) Restricted goods and equipment

4. When should prior approval requests be submitted?5. Which USAID officer can approve requests?

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Section I.

USAID: Prior Approval

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Prior Approval1. What is prior approval?

USAID recipients request prior approval from USAID for program or budget related reasons, or with the intent of purchasing restricted commodities.

2. What happens when a required prior approval is not obtained?

Recipients must comply with prior approval requirements that are established in the grant agreement. Failure to comply with prior approval requirements generally causes USAID to deem the costs unallowable.

**Prior Approval means written approval by an authorized official evidencing prior consent.

3. When is prior approval required?

a. Required Programmatic Prior Approvals

Change in the scope or the objective of the project or program (even if there is no associated budget revision)

Change in a key person specified in the application or award document A 25 percent reduction in effort devoted to the project, by the approved project

director, chief of party or principal investigator

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Prior Approval (continued) The sub award, transfer or contracting out of any work not included in the award

document. (Does not apply to supplies, material, equipment or general support services). Initiate a one-time extension of the expiration date of the award of up to 12 months. Pre-award costs up to 90 days before start of project. Approval of subawards or subcontracts under the award.

b) Required Financial Prior Approvals

Any change in budget for indirect costs Additional federal funding needed Carry forward funding to subsequent funding periods The transfer of funds allotted for training allowances (direct payment to trainees) to

other categories of expense Revision of award budget The inclusion, unless waived in the agreement by USAID, of costs that require prior

approval in accordance with OMB Circular A–21 “Cost Principles for Institutions of Higher Education”

Salary rates for faculty members Capital expenditures for general purpose equipment, buildings and land and expenditures for

special purpose equipment Capital expenditures for improvements to land, buildings or equipment which materially increase

their value or useful life Costs of insurance or of any contributions to any reserve covering the risk of loss of or damage to

federally-owned property Special arrangement and alteration costs incurred specifically for the project

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Prior Approval (continued)c) Required Restricted Goods Prior Approvals

The purchase of any item that meets the definition of equipment. Equipment is defined as any item of property with a per-unit price of $5,000 or more with a

useful life of one year or more. Leasing any item (example: vehicles) for more than 180 days in a calendar year (does not

refer to facilities) . The intent to purchase any item listed on the restricted goods list. Items on the restricted

goods list include: Motor vehicles Pharmaceuticals Used equipment US government owned excess property Agricultural commodities Pesticides Fertilizers Contraceptives

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Prior Approval (continued)

4. When should prior approval requests be submitted?

If there are known programmatic or budgetary items in the award that will require prior approval, these items can be negotiated and included in the award document. Items included and detailed in the award document are deemed to have Prior Approval.

If the necessary prior approval was not contained in the award document, the prior approval request should be submitted as soon as it is it is deemed necessary.

Note: Requests can take much longer than anticipated so advance planning is advised!

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Prior Approval

5. Which USAID officer can approve requests?

The agreement officer (AO) has legal responsibility for the award. Therefore, only the agreement officer can take action on behalf of USAID to enter into, change, or terminate an award.

The agreement officer can delegate authority for prior approval to the agreement officer’s technical representative (AOTR) - formerly called the cognizant technical officer (CTO).

Delegation can be given to the AOTR for all prior approvals except changes to the program description or budget.

If prior approval has been granted in writing from the AOTR, a formal copy of the delegation of approval from the agreement officer must be kept on file as backup.

Prior approval requests should be submitted to the AOTR (but addressed to the agreement officer) who will then forward the request to the agreement officer (usually with the recommendation to grant or deny the request).

Prior approval cannot be deemed valid unless received in writing from the agreement officer (verbal approvals are not valid).

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Section II.

USAID: Waivers

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Agenda

II. USAID Waivers

1. What is a waiver?2. When is a waiver required?

a) Geographic code

b) Source and origin

3. Waiver criteria4. What happens when a waiver is not obtained?5. Which USAID officer can approve waivers?6. Restrictions

a) Restricted goods

b) Ineligible goods & services

c) Ineligible suppliers

7. Local procurement

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Waivers1. What is a waiver?

A waiver is a request to USAID to waive certain restrictions on the purchase of goods and services under a USAID award.

2. When is a waiver required?

Waivers are required whenever the project needs to buy outside the authorized geographic code and has met one of the criteria for a waiver.

a. Geographic Codes

USAID has preference requirements governing from where purchases can be made. Within USAID awards, geographic codes are provided which outline the acceptable countries/regions from which commodities and services can be procured.

The USAID specified Project Geographic Code is a three digit code which designates a country or a group of countries from which purchases can be made.

The geographic code for your USAID award can be found in Section A of your award.

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Waivers (continued)

Procurement – USAID Geographic Codes

935935

935935

899899

941941

000000

“SPECIAL FREE WORLD”Code 935

Any area or country including the cooperating country, but excluding the foreign policy restricted countries. Cuba, Laos, Iran, North Korea, Libya, Syria.

“SPECIAL FREE WORLD”Code 935

Any area or country including the cooperating country, but excluding the foreign policy restricted countries. Cuba, Laos, Iran, North Korea, Libya, Syria.

Code 000The United States

Code 000The United States

Any area or country, except the cooperating country itself and the foreign policy restricted countries

Any area or country, except the cooperating country itself and the foreign policy restricted countries

The United States and any independent country (except foreign policy restricted

countries) except the cooperating country itself and the following: Albania, Andorra,

Angola, Armenia, Austria, Australia, Azerbaijan, Bahamas, Bahrain, Belgium,

Bosnia and Herzegovina, Bulgaria, Belarus, Canada, Croatia, Cyprus, Czech Republic,

Denmark, Estonia, Finland, France, Gabon, Georgia, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Italy, Japan,

Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia,* Malta, Moldova, Monaco,

Mongolia, Montenegro*, Netherlands, New Zealand, Norway, People's Republic of

China, Poland, Portugal, Qatar, Romania, Russia, San Marino, Saudi Arabia, Serbia*,

Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland,

Taiwan*, Tajikistan, Turkmenistan, Ukraine, United Arab Emirates, United

Kingdom, Uzbekistan, and Vatican City.

The United States and any independent country (except foreign policy restricted

countries) except the cooperating country itself and the following: Albania, Andorra,

Angola, Armenia, Austria, Australia, Azerbaijan, Bahamas, Bahrain, Belgium,

Bosnia and Herzegovina, Bulgaria, Belarus, Canada, Croatia, Cyprus, Czech Republic,

Denmark, Estonia, Finland, France, Gabon, Georgia, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Italy, Japan,

Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia,* Malta, Moldova, Monaco,

Mongolia, Montenegro*, Netherlands, New Zealand, Norway, People's Republic of

China, Poland, Portugal, Qatar, Romania, Russia, San Marino, Saudi Arabia, Serbia*,

Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland,

Taiwan*, Tajikistan, Turkmenistan, Ukraine, United Arab Emirates, United

Kingdom, Uzbekistan, and Vatican City.

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b. Source and Origin

The Geographic Code for your award determines the source and origin for which purchases must comply.

Source means the country which a commodity is shipped from to the cooperating country, or the cooperating country if the commodity is located in-country at time of purchase.

Origin means the country where a commodity is mined, grown or produced.

**To the extent possible, programs under USG funded awards must purchase US manufactured goods from US vendors.

3. Waiver Criteria

A waiver must be based on one of the criteria below: A commodity required for assistance is of a type that is not produced in or available

for purchase in the United States or the cooperating country. 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.

Waivers (continued)

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4. What happens when a waiver is not obtained?

Recipients must comply with waiver requirements. Failure to comply with waiver requirements generally causes USAID to deem the costs unallowable.

5. Who can grant waivers?

The agreement officer (AO) has legal responsibility for the award. Therefore, only the agreement officer can take action on behalf of USAID to enter into, change, or terminate an award.

The agreement officer CANNOT delegate authority for waivers to the agreement officer’s technical representative (AOTR) - formerly called the cognizant technical officer (CTO).

Waivers (continued)

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6. Restrictions

a. Restricted Goods

USAID has classified certain items of cost as ‘restricted’ . Restricted goods require prior approval and may require a waiver. Restricted items include:

Motor vehicles Pharmaceuticals Used equipment US government owned excess property Agricultural commodities Pesticides Fertilizers Contraceptives

Waivers (continued)

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b. Ineligible Goods and Services

Ineligible goods and services cannot be procured under any circumstance. Waivers will not be accepted or granted for these items. Ineligible items include:

Abortion equipment & services Luxury goods and gambling equipment Weather modification equipment Military equipment Surveillance equipment Commodities and services for support of police or other law enforcement activities

c. Ineligible Suppliers

USAID recipients cannot procure from firms or individuals whose name appears on the “Lists of Parties Excluded from Federal Procurement and Non-procurement Programs.” Suppliers appearing on this list have been linked to terrorist activities and are not eligible suppliers of goods or services under your award. Eligibility can be determined by searching the source name at www.epls.gov

Waivers (continued)

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7. Local Procurement

Local procurement in the cooperating country involves the use of program funds to finance the procurement of goods and services supplied by local businesses, dealers or producers, with payment normally being in the currency of the cooperating country.

Currently, it is quite common for USAID to use the geographic code 935 (Special Free World) in its grant agreements. However, even with this geographic code, it is sometimes necessary to obtain waivers for purchases of local goods or services.

Local procurement is eligible for USAID financing only in the following situations:

Locally available commodities of U.S. origin, which aren’t otherwise eligible for financing, if the value of the transaction is estimated not to exceed the local currency equivalent of $100,000.

Commodities of geographic code 935 origin if the value of the transaction does not exceed $5,000.

Professional services contracts estimated not to exceed the local currency equivalent of $250,000.

Construction services contracts, including construction materials required under the contract, estimated not to exceed the local currency equivalent of $5,000,000.

** Under a fixed-price construction contract of any value, the prime contractor may procure locally produced goods and services under subcontracts.

Waivers (continued)

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Procurement

The regulations are SO confusing! How do I know if I need prior approval, a waiver or both?

USAID regulations can be very confusing. When implementing programs with USAID funds, it is imperative that prior approval and waivers are obtained in accordance with the regulations. Otherwise, JHU runs the risk of having the costs declared unallowable and will need to pay the costs out of its own funds.

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Is the unit cost of the commodity over $5000? THIS

PROCUREMENT REQUIRES Prior

Approval Contact Baltimore to initiate request

THIS PROCUREMENT

REQUIRES A SOURCE WAIVER Contact Baltimore to initiate request

PROCURE

Is the total transaction value less than $5000?

What is the origin of the commodity?

Where will the procurement take place?

Is the total transaction value less than $100,000?

PROCURE

Where will the procurement take place?

What is the origin of the commodity?

Is the total transaction value less than $100,000?

THIS PROCUREMENT

LIKELY REQUIRES A SOURCE AND

ORIGIN WAIVER

PROCURE

Is the commodity a restricted good?Motor vehicle, agricultural or

pharmaceutical product

Yes No NoNoYes

No

Yes

No

US

US

US

Yes

US

Outside US (Ex. Geo Code 935)

Yes

Outside US(Ex. Geo. Code 935)

Outside US(Ex. Geo. Code 935)

Outside US(Ex. Geo Code 935)

THIS PROCUREMENT

LIKELY REQUIRES A SOURCE AND

ORIGIN WAIVER

THIS PROCUREMENT REQUIRES Prior

Approval Contact Baltimore to initiate request

Procurement of Commodities under USAID Source and Origin

Rules

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Contents of RequestsIn order to produce a successful prior approval or waiver request, it is crucial that you

provide adequate information to the agreement officer in order to make a decision. If the AO must come back to you for clarification it will delay the approval and you may have to prepare a completely new request if the first is not satisfactory.

In order to produce a successful request, it must contain the following information:

Addressed to agreement officer

Recipient organization name, name or project and award number

Reason for request and regulation necessitating request

Justification for request and purpose for which the item of service

Backup documentation (bids, lease vs. purchase analysis, vendor selection forms, etc)

Specifics of selected item(s)/service

Evidence of sufficient funds to procure

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References