Fast Facts: USAID Prior Approvals & Waivers

1. Fast Facts: USAID Prior Approvals & Waivers Kellie Klein International Finance & Operations Manager Johns Hopkins Bloomberg School of Public Health

2. Summary • USAID Prior Approval Process • USAID Waiver Process • USAID Prior Approval vs. Waiver

3. Today’s Agenda • USAID Prior Approval • What is prior approval? • What happens when a required prior approval is not obtained? • When is prior approval required? • Programmatic requests • Financial requests • Restricted goods and equipment • When should prior approval requests be submitted? • Which USAID officer can approve requests?

4. Section I. USAID: Prior Approval

5. Prior Approval • What is prior approval? USAID recipients request prior approval from USAID forprogram or budget related reasons, or with the intent of purchasing restricted commodities. • 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. • When is prior approval required? • 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

6. 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 ofthe expiration date of the award of up to 12 months. • Pre-award costsup to 90 days before start of project. • Approval of subawards or subcontractsunder the award. • 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

7. Prior Approval (continued) • 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. • Leasingany 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

8. Prior Approval (continued) • 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!

9. Prior Approval • 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 descriptionor 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 validunless received in writing from the agreement officer (verbal approvals are not valid).

10. Section II. USAID: Waivers

11. Agenda • USAID Waivers • What is a waiver? • When is a waiver required? • Geographic code • Source and origin • Waiver criteria • What happens when a waiver is not obtained? • Which USAID officer can approve waivers? • Restrictions • Restricted goods • Ineligible goods & services • Ineligible suppliers • Local procurement

12. Waivers • 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. • 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. • Geographic Codes • USAID has preference requirements governing fromwhere 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.

13. Waivers (continued) “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. Procurement – USAID Geographic Codes • 935 935 Any area or country, except the cooperating country itself and the foreign policy restricted countries 899 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. 941 000 Code 000 The United States

14. Waivers (continued) • Source and Origin • The Geographic Code for your award determines the source and origin for which purchases must comply. • Sourcemeans the country which a commodity is shippedfrom 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. • 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.

15. Waivers (continued) • 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. • 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).

16. Waivers (continued) • Restrictions • 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

17. Waivers (continued) • 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 • 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

18. Waivers (continued) • 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.

19. 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.

20. Is the commodity a restricted good? Motor vehicle, agricultural or pharmaceutical product No Yes Is the unit cost of the commodity over $5000? What is the origin of the commodity? Yes THIS PROCUREMENT REQUIRES Prior Approval Contact Baltimore to initiate request THIS PROCUREMENT REQUIRES Prior Approval Contact Baltimore to initiate request No US Outside US (Ex. Geo. Code 935) Where will the procurement take place? Where will the procurement take place? Outside US (Ex. Geo Code 935) US Outside US (Ex. Geo. Code 935) US What is the origin of the commodity? Outside US (Ex. Geo Code 935) US Is the total transaction value less than $100,000? Is the total transaction value less than $100,000? Is the total transaction value less than $5000? Yes No Yes No Yes No PROCURE THIS PROCUREMENT REQUIRES A SOURCE WAIVER Contact Baltimore to initiate request PROCURE THIS PROCUREMENT LIKELY REQUIRES A SOURCE AND ORIGIN WAIVER PROCURE THIS PROCUREMENT LIKELY REQUIRES A SOURCE AND ORIGIN WAIVER Procurement of Commodities under USAID Source and Origin Rules

21. Contents of Requests In 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

22. References