§ 201.02 Scope.

The appropriate implementing document will indicate whether and the extent to which this part shall apply to the procurement of commodities or commodity-related services or both.

(a) The borrower/grantee is responsible for compliance with the applicable provisions of this part by importers and suppliers and for assuring that importers and suppliers are informed of the extent to which this part applies.

(b) Subpart B sets forth conditions governing the eligibility for A.I.D.-financing of transactions covering commodities and commodity-related services.

(c) Subpart C prescribes procedures which importers shall follow in purchasing commodities.

(d) Subpart D sets forth the responsibilities of suppliers.

(e) Subpart E contains provisions relating to

(1) The diversion of shipments and the vesting in A.I.D. of title to commodities.

(2) The effect of termination or modification of any loan, grant or implementing document; and

(3) A.I.D. audit and inspection rights. (f) Subpart F describes the financing process and prescribes the documents which shall be submitted to banks and to A.I.D.

(g) Subpart G contains the price tests which shall be met and limitations on amounts and types of payments which A.I.D. will finance.

(h) Subpart H defines the rights and responsibilities of banks.

(i) Subpart I sets out the rights and remedies which are reserved to A.I.D. and provides for the waiver under special circumstances of the provisions of this part. The subpart also contains necessary transitory provisions.

(j) Unless otherwise indicated, references in this part to subparts or to sections relate to subparts or sections of this Part 201.

Subpart B-Conditions Governing the Eligibility of Procurement Transactions for A.I.D. Financing

§ 201.10 Purpose.

This subpart sets forth requirements for A.I.D. financing applicable to transactions for the procurement of commodities and/or commodity-related services.

§ 201.11

Eligibility of commodities.

To qualify for A.I.D. financing, a commodity procurement transaction shall satisfy the following requirements:

(a) Description and condition of the commodity. The commodity shall conform to the description in the implementing document. Unless otherwise authorized by AID/W in writing, the commodity shall be unused, and may not have been disposed of as surplus by any governmental agency.

(b) Source-(1) General rule. The source of the commodity shall be a country authorized in the implementing document by name or by reference to an A.I.D. geographic code. In addition, the commodity shall have been mined, grown, or through manufacturing, processing, or assembly produced in a source country authorized in the implementing document.

(2) Exceptions. A produced commodity will not be eligible for A.I.D. financing if

(i) It contains any component from countries other than free world countries as listed in A.I.D. geographic code 899; or

(ii) It contains components which were imported into the country of production from such free world countries other than authorized source countries; and

(a) Such components were acquired by the producer in the form in which they were imported; and

(b) The total cost of such components (delivered at the point of production) amounts to more than 10 percent, or such other percentage as A.I.D. may prescribe, of the lowest price (excluding the cost of ocean transportation and marine insurance) at which the supplier makes the commodity available for export sale (whether or not financed by A.I.D.).

(3) Waiver provision. AID/W may from time to time waive or modify the requirements of subparagraph (2) (ii) of this paragraph if in its view such action is necessary to achieve A.I.D.'s objective of conformity with normal industry practices.

(c) Date of shipping documents. The documents required as evidence of shipment under § 201.52 (a) (4) shall show that the date of shipment was within the shipping period, if any, specified in the implementing document.

(d) Medium of transportation. Shipment shall not be effected

(1) By a transportation medium owned, operated or under the control of any country not included within A.I.D. geographic code 899; or

(2) From the United States on a vessel which A.I.D. has designated ineligible;

or

(3) Under any ocean or air charter which has not received prior approval by AID/W.

(e) Marine insurance. If A.I.D. determines that the government of a cooperating country, by statute, decree, rule, or regulation, discriminates with respect to A.I.D.-financed procurement against any marine insurance company authorized to do business in any State of the United States, then any A.I.D.-financed commodity shipped to the cooperating country shall be insured against marine risks and such insurance shall be placed in the United States with a company or companies authorized to do a marine insurance business in a State of the United States. "Discrimination" within the meaning of this paragraph may be found to exist whenever the effect of governmental action by a cooperating country is to hinder an importer in entering into a c.i.f. contract with a U.S. supplier or in instructing a U.S. supplier to place marine insurance in the United States.

(f) Timely submission of documents. All documents required under § 201.52 to be submitted by a supplier in order to receive payment or reimbursement shall be submitted to A.I.D. or to a designated bank, whichever is appropriate, on or before the terminal date specified in the letter of commitment, the request for the opening of a special letter of credit, or other implementing document.

(g) U.S. Treasury Department regulations. Procurement transactions shall comply with the requirements of the Foreign Assets Control Regulation and Cuban Assets Control Regulation of the U.S. Treasury Department.

(h) Commodities shipped out of free port or bonded warehouse. No com

modity shipped out of a free port or bonded warehouse is eligible for A.I.D. financing if it was shipped to the free port or bonded warehouse without compliance with the requirements set forth in paragraph (d) (1) and (2) of this section.

(i) Purchase price. The purchase price for the commodity shall satisfy the requirements of Subpart G.

(j) Purchases from eligible suppliers. Commodities procured with funds made available under this Part 201 shall be purchased from eligible suppliers. A supplier shall not be eligible to receive A.I.D. funds if:

(1) The supplier has been suspended or debarred by AID pursuant to AID Regulation 8, Part 208 of this chapter;

(2) The supplier has been placed by AID on prior review and approval pursuant to § 201.33 of this part and AID has not, in fact, given its prior approval to the supplier for the furnishing of specific goods.

(3) With respect to procurement of U.S.-source commodities, the supplier is not an individual, resident in the United States; a nonresident citizen of the United States; a corporation or partnership organized under the laws of the United States; or a controlled foreign corporation (within the meaning of section 957 et seq. of the Internal Revenue Code) as attested by current information on file with the Internal Revenue Service of the United States (on IRS Form 959, 2952, 3646, or on substitute or successor forms) submitted by shareholders of the corporation.

(k) Determination of commodity eligibility. The commodity shall be approved in writing by A.I.D. for each sale transaction as eligible for A.I.D. financing. Such approval shall be indicated on the Commodity Eligibility Application submitted to A.I.D. by the supplier.

[A.I.D. Reg. 1, 32 F.R. 7672, May 25, 1967, as amended at 32 F.R. 11264, Aug. 3, 1967; 32 F.R. 15013, Oct. 31, 1967; 33 F.R. 6769, May 3, 1968]

§ 201.12 Eligibility of incidental services.

Incidental services may be financed under the same implementing document which makes funds available for the procurement of equipment if

(a) The supplier does not procure such services with local currency in the cooperating country; and

(b) Such services are specified in the purchase contract relating to the equipment.

§ 201.13

Eligibility of delivery services. Delivery services will be financed by A.I.D. in the manner provided in this section.

(a) General. Delivery services which relate to A.I.D.-financed commodities may be financed under the implementing document which authorizes the purchase of the commodities or under a separate implementing document.

(b) Conditions and limitations—(1) Freight. Unless otherwise authorized, A.I.D. will not finance freight

(i) For shipment beyond the point of entry in the cooperating country; or

(ii) On any non-U.S.-flag transportation medium or any U.S.-flag vessel transferred from foreign-flag to provisional U.S.-flag registry under 46 U.S.C. section 12 for carriage of commodities to the cooperating country, or to or from a free port or bonded warehouse; or

(iii) On any vessel designated by A.I.D. as ineligible to carry A.I.D.financed cargo; or

(iv) On any liner vessel for which the rate applicable to the commodity shipped and applying to both A.I.D.-financed and non-A.I.D.-financed cargo has not been filed with the Federal Maritime Commission (whether or not such filing is required by the Federal Maritime Commission); or

(v) Under any ocean or air charter covering full or part cargo (whether for a single voyage, consecutive voyages, or a time period) which has not received prior approval by AID/W (Resources Transportation Division); or

(vi) Which is attributable to brokerage commissions which exceed the limitations specified in § 201.65 (1) or to address commissions, dead freight, or demurrage.

(2) Inspection services. A.I.D. will finance inspection of A.I.D.-financed commodities if such inspection is performed by independent inspectors at the request of the importer and is either customary in export transactions for the commodity involved or is necessary to determine conformity of the commodities to the contract.

(3) Insurance. (i) A.I.D. will finance U.S. dollar premiums for marine insurance including war risk on A.I.D.financed commodities, if

(a) The insurance is placed on a competitive basis, in an authorized source country, with a company or companies authorized to do a marine insurance business in any State of the United States; and

(b) Such insurance is placed either in accordance with the terms of the commodity purchase contract or by, or on the written instructions of, the importer; and

(c) Insurance coverage relates only to the period during which the commodities are in transit to the cooperating country, except that it may include coverage under a so-called "warehouse-to-warehouse" clause; and

(d) The premiums do not exceed the limitations contained in § 201.68.

(e) Within 15 days after payment by a supplier of marine insurance of any loss claim in excess of $6,000 to the assured or to his assignee under any marine insurance policy financed by A.I.D. pursuant to this part, the supplier of marine insurance notifies A.I.D., Office of the Controller, of the amount and date of the payment, a description of the commodity, the A.I.D. number, name of carrier, vessel, and voyage number (alternatively, flight or inland carrier run number), date of the bill of lading, the identity and address of the assured, and the identity and address of any assignee of the assured to whom payment has actually been made.

(ii) Within the meaning of § 201.11(e) as well as of this subparagraph, insurance is "placed" in a country only if payment of the insurance premium is made to, and the insurance policy is issued by, an insurance company office located in said country. "On a competitive basis" means under conditions of effective competition, but not necessarily under formal competitive bid procedures.

§ 201.14 Eligibility of bid bonds and performance guaranties.

The cost of any bid bond posted by a successful bidder or of any guaranty of performance posted by a supplier is eligible for financing under the implementing document to the extent that the principal amount of the bond or guaranty does not exceed the amount customary in international trade for the type of transaction and commodity involved: Provided, That the bid bond and guarantee of performance must be payable in U.S. dollars and must conform to the requirements of the invitation for bids or the contract, as applicable. §201.15 U.S.-flag vessel shipping re

quirement.

(a) General requirement. At least 50 percent of the gross tonnage of all commodities financed with A.I.D. dollar funds and transported to the cooperating country on ocean vessels shall be transported on privately owned U.S.-flag commercial vessels. The foregoing requirement shall apply separately for any dry bulk carrier shipments, dry cargo liner shipments, and tanker shipments from each of the following geographical areas: (1) United States;

(2) Europe and Africa;

(3) Near East and South Asia;

(4) Latin America and Canada; and (5) Far East.

(b) Responsibility of borrower/grantee. The borrower/grantee shall be responsible for assuring compliance with the requirements of paragraph (a) of this section and for imposing upon subborrowers, contractors and importers such requirements regarding shipping arrangements with suppliers as will assure discharge of this responsibility. Such compliance shall be achieved during each U.S. fiscal year (July 1-June 30) as well as each quarterly period thereof, or during such other period or periods as may be specified by A.I.D. in agreements or implementing documents.

(c) Nonavailability of U.S.-flag vessels. Upon application of the borrower/ grantee, AID/W (Resources Transportation Division) will determine and advise the borrower/grantee whether or not a privately owned U.S.-flag commercial

vessel is available for a specific shipment of commodities at fair and reasonable rates. Such determination and advice of nonavailability does not relieve the borrower/grantee of the obligation to comply with the requirements of paragraphs (a) and (b) of this section except to the extent that A.I.D. after reviewing shipments by the borrower/grantee during the fiscal year, quarterly period thereof, or other relevant time period, determines that such compliance has not been possible. Any such determination and advice will not render transportation costs on foreign flag vessels eligible for A.I.D. financing.

(d) Privately owned U.S.-flag commercial vessels. For purposes of this section the term "privately owned U.S.flag commercial vessels" shall not include any vessel which, subsequent to September 21, 1961, shall have been either built outside the United States, rebuilt outside the United States, or documented under any foreign registry until such vessel shall have been documented under the laws of the United States for a period of 3 years.

The importer is responsible for providing the supplier with the following information (either through the invitation for bids or otherwise):

(a) Notice that the transaction is to be financed by A.I.D. under this part;

(b) The identification number of the implementing document; and

(c) All additional information prerequisite to A.I.D. financing and contained in the instructions from the borrower/grantee to the importer (for example, eligible source of commodity, periods during which deliveries must be made, shipping provisions, and documentation requirements).

§ 201.22 Formal competitive bid procedures.

If the implementing document requires, or if the importer elects procurement through formal competitive bid procedures, the following minimum requirements shall apply:

(a) Contents of the invitation for bids. Every invitation for bids and every attachment or amendment to an invitation shall be in the English language. The invitation shall contain the following:

(1) Statement of requirements. The invitation shall state specifically that formal competitive bid procedures apply. The terms and conditions which apply to the procurement shall be clearly indicated, including any factors other than price to be used in evaluation. Commodity specifications shall be stated in terms of U.S. standards, in a nonrestrictive manner, and in sufficient detail to permit maximum response from prospective suppliers.

(2) Statement regarding submission of bids. Invitations for bids shall state the applicable invitation number, the address to which bids are to be sent, the closing hour and date for submission and the date, hour, and place for public opening of bids. If additional drawings, details, or regulations or forms are necessary for bidding, the invitation shall state where such material may be obtained.

(3) Statement regarding this Part 201. Invitations for bids shall expressly indicate the extent to which any resulting contract is subject to the requirements of this part.

(b) Advertising the invitation for bids. The invitation for bids shall be advertised in the manner described in § 201.24(a) (1).

(c) Handling bids. Bids received shall be held intact and sealed and shall be safeguarded against disclosure of contents prior to bid opening. The bids shall be opened publicly as specified in the bid invitation, and all properly submitted bids shall be considered. Direct submission of a bid by a prospective supplier, rather than through an agent or other representative of the supplier in the cooperating country, shall not be cause for rejection.

(d) Awards. Every award shall be made to that responsible bidder whose bid, conforming to the invitation for bids, is lowest in price, unless another bid is

demonstrably more advantageous to the importer because of any factor (other than price) set forth in the invitation for bids as a factor to be considered in the evaluation of bids.

(e) Submission of award information to A.I.D. The importer shall complete Form A.I.D. 11-83 "Abstract of Bids", identifying thereon the successful bidder, and noting any two or more identical bids or any evidence of suspected collusion. If the lowest bid has not been accepted, the importer shall justify the award and shall append to the Abstract a statement of reasons for rejecting all lower bids. The Abstract and any justification statement shall be sent in triplicate to the Office of the Controller, A.I.D., Washington, D.C. 20523, to arrive within 20 days after the award of the contract. § 201.23 Other procurement proce

dures.

(a) General requirements. Procurement not subject to § 201.22 shall be made in accordance with good commercial practice. Specifications shall be expressed in terms of U.S. standards and shall be in the English language. All solicitations of quotations and offers shall be made uniformly to a reasonable number of prospective suppliers.

(b) Notification as adequate solicitation. If the notification requirements of § 201.24 (a) (2) apply, such notification shall be deemed an adequate solicitation of quotations and offers, and all supplementary solicitations shall be consistent with such notification.

(c) Notice of quotations and offers received. A.I.D. may require that an importer furnish an abstract in the English language and identify thereon all offers or quotations received, the offer accepted or order placed, the price, the quantity, the name and address of all persons submitting offers or quotations and of their principals, if any (including manufacturers or processors of the commodity). § 201.24 Solicitation of bids and quota

tions.

(a) Notification requirements. Except as paragraph (b) or (c) of this section may apply, the importer shall comply with the minimum notification requirements set forth in this paragraph (a). He may take such additional steps to notify prospective suppliers as are consistent with prudent procurement.