As used in this part, the following terms shall have the meanings indicated below:

(a) The Act. "The Act" means the Foreign Assistance Act of 1961, as amended from time to time.

(b) A.I.D. "A.I.D." means the Agency for International Development or any successor agency, including, when applicable, each US AID.

(c) A.I.D. geographic code. "A.I.D. geographic code" means a code in the A.I.D. Geographic Code Book which designates a country, a group of countries, or an otherwise defined area. Principal A.I.D. geographic codes are described in § 201.11(b) (4) of this part. (d) AID/W. "AID/W" means A.I.D. in Washington, D.C. 20523, including any office thereof.

the

(e) Approved applicant. "Approved applicant" means the person or organization designated by the borrower/ grantee to establish credits with banks in favor of suppliers or to instruct banks to make payments to suppliers, and includes any agent acting on behalf of such approved applicant.

(f) Bank "Bank” means a banking institution organized under the laws of the United States, or any State, territory, or possession thereof, or Puerto Rico or the District of Columbia.

(g) Borrower/grantee. "Borrower/ grantee" means the government of any cooperating country, or any agency, instrumentality or political subdivision thereof, or any private entity to which A.I.D. directly makes funds available by loan or grant.

(h) Commodity. “Commodity” means any material, article, supply, goods, or equipment.

(i) Commodity-related

services.

"Commodity-related services" means delivery services and/or incidental services.

(j) Cooperating country. “Cooperating country" means the country receiving the A.I.D. assistance subject to provisions of this Part 201.

(k) Delivery. "Delivery" means the transfer to, or for the account of, an

importer of the right to possession of a commodity, or the rendering to, or for the account of, an importer of any commodity-related service.

(1) Delivery services. "Delivery services" means any service customarily performed in a commercial export transaction which is necessary to effect a physical transfer of commodities to the cooperating country. Examples of such services are the following: Export packing, local drayage in the source country (including waiting time at the dock), ocean and other freight, loading, heavy lift, wharfage, tollage, switching, dumping and trimming, lighterage, insurance, commodity inspection services, and services of a freight forwarder. “Delivery services" may also include work and materials necessary to meet A.I.D. marking requirements.

(m) Implementing document. "Implementing document" means any document issued by A.I.D. which authorizes the use of A.I.D. funds for the procurement of commodities and/or commodityrelated services and which specifies conditions which will apply to such procurement.

(n) Importer. "Importer" means any person or organization, governmental or otherwise, in the cooperating country who is authorized by the borrower/ grantee to use A.I.D. funds under this Regulation for the procurement of commodities, and includes any borrower/ grantee who undertakes such procurement.

(0) Incidental services. "Incidental services" means the installation or erection of A.I.D.-financed equipment, or the training of personnel in the maintenance, operation and use of such equipment.

(p) Purchase contract. "Purchase contract" means any contract or similar arrangement under which a supplier furnishes commodities and/or commodityrelated services financed under this part.

(q) Source. "Source" means the country from which a commodity is shipped to the cooperating country, or the cooperating country if the commodity is located therein at the time of the purchase. Where, however, a commodity is shipped from a free port or bonded warehouse in the form in which received therein, "source" means the country from which the commodity was shipped to the free port or bonded warehouse.

(r) Supplier. "Supplier" means any person or organization, governmental or

otherwise, who furnishes commodities and/or commodity-related services financed under this Part 201.

(s) Supplier's Certificate. "Supplier's Certificate" means AID Form 282, "Supplier's Certificate and Agreement with the Agency for International Development", including the "Invoice-and-Contract Abstract" on the reverse of such form (Appendix A to this Part 201), or any substitute form which may be prescribed in the letter of commitment, request for the opening of a special letter of credit, or other pertinent implementing document.

(t) United States. "United States" means the United States of America, any State, territory or possession thereof, Puerto Rico and the District of Columbia. (u) US AID. "US AID" means the A.I.D. mission or representative to any cooperating country.

(v) Certificate Concerning Commissions. "Certificate Concerning Commissions" means the Certificate and Agreement with the Agency for International Development Concerning Commissions and Service Payments Associated with Commodity Sales Financed with Foreign Assistance Funds" (A.I.D. Form 283) which appears as Appendix C to this part.

(w) Commodity Approval Application. "Commodity Approval Application" means the Application for Approval by the Agency for International Development of Commodity Eligibility (A.I.D. Form 11) which appears as Appendix E to this Part 201.

(x) Schedule B. "Schedule B" means "Schedule B, Statistical Classification of Domestic and Foreign Commodities Exported from the United States" issued and amended from time to time by the U.S. Bureau of the Census, Department of Commerce, and published in 15 CFR 30.92.

§ 201.02 Scope and application.

or

The appropriate implementing document will indicate whether and the extent to which this Part 201 shall apply to the procurement of commodities or commodity-related services both. Whenever this Part 201 is applicable, those terms and conditions of this part will govern which are in effect on the date of issuance of an irrevocable letter of credit under which payment is made or is to be made from funds made available under the Act, or, if no such letter of credit has been issued, on the date payment instructions for payment from

funds made available under the Act are received by the paying bank.

(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 the 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 201.

(j) Unless otherwise indicated, references in this Part 201 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 beeen 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 described in A.I.D. Geographic Code 935; 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 50 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.).

(c) For the purpose of calculating eligible components under this subdivision, "authorized source countries" shall include the cooperating country itself whenever A.I.D. has authorized procurement from a geographic code other than A.I.D. Geographic Code 000, 001, or 002, and shall include all A.I.D. Geographic Code 941 countries whenever A.I.D. has authorized procurement from A.I.D. Geographic Code 910.

(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.

(4) Identification of principal geographic code numbers. The A.I.D. Geo

graphic Code Book sets forth the official description of all geographic codes used by A.I.D. in authorizing or implementing documents to designate authorized source countries or areas. The following are summaries of the principal codes: Code 000-The States of the United States, the District of Columbia, areas of U.S.associated sovereignty (including trust territories), and the Ryukyu Islands under U.S. control.

Code 940-"The Americas": The United States and areas of U.S.-sovereignty (excluding the Ryukyu Islands) and all independent countries in the Americas south of the United States, except the cooperating country itself and Cuba.

Code 901-"Limited Free World": Any area or country in the Free World, excluding the cooperating country itself and the following developed countries: Australia, Austria, Belgium, Canada, Denmark, France, Germany (Fed. Rep.), Italy, Japan, Luxembourg, Monaco, Netherlands, New Zealand, Norway, South Africa, Spain, Sweden, Switzerland, the United Kingdom.

and

Code 899-"Free World": Any area or country excluding the cooperating country itself and the following countries: Albania, Bulgaria, China (Mainland) and other Chinese Communist-controlled Areas, Cuba, Czechoslovakia, Estonia, East Germany, Hungary, North Korea, Latvia, Lithuania, Outer Mongolia, Poland, Romania, North Vietnam, and the Union of Soviet Socialist Republics (USSR).

Code 935-"Special Free World": Any area or country in the Free World, including the cooperating country itself.

Code 941-"Selected Free World": Any independent country in the Free World, except Algeria, Andorra, Australia, Austria, Belgium, West Berlin, Canada, Cyprus, Denmark, Finland, France, West Germany, Greece, Hong Kong, Iceland, Iraq, Ireland, Israel, Italy, Japan, Kuwait, Liechtenstein, Luxembourg, Malta, Monaco, Netherlands, New Zealand, Norway, Portugal, Southern Rhodesia, San Marino, Somali Republic, South Africa, Spain, Sudan, Syria, Sweden, Switzerland, United Arab Republic, United Kingdom, Vatican City, Yemen, Yugoslavia, and the cooperating country itself.

Code 910-"Selected Less Developed Countries": India, Morocco, Pakistan, the Philippines, Taiwan, South Korea, Singapore, and Tunisia. Code 000 shall also be included within this Code.

(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 935; or

(2) 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 commodity 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 paragraphs (d) (1) and (2) of this section or if it was shipped from the free port or bonded warehouse without compliance with the requirements set

forth in paragraphs (d) (1), (2) and (3) 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 A.I.D. pursuant to A.I.D. Regulation 8, Part 208 of this chapter;

or

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

(3) The Supplier is not an individual, resident in a country included in the authorized source code; a nonresident citizen of a country included in the authorized source code; a corporation or partnership organized under the laws of a country included in the authorized source code; 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 Rvenue 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 Approval Application submitted to A.I.D. by the supplier.

§ 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) Transportation costs. Unless otherwise authorized, A.I.D. will not finance transportation costs

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

(ii) On any aircraft or ocean vessel under flag registry of the cooperating country or of any country not included within the geographic code authorized by A.I.D. for the transaction, except when such cost is part of the total cost on a through bill of lading paid to a carrier under flag registry of a country included within the geographic code authorized by A.I.D. for the transaction; 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 (a) with the Federal Maritime Commission for any voyages originating in the United States (whether or not such filing is required by the Federal Maritime Commission), or (b) with AID/W (Resources Transportation Division) for voyages originating outside the United States; 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 are 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) Unless otherwise authorized, A.I.D. will finance premiums for marine insurance including war risk on A.I.D.-financed commodities only if

(a) The insurance is placed within a country included in the authorized geographic code: Provided, That if the authorized geographic source code is any other than A.I.D. Geographic Code, 000, 001, or 002, the cooperating country itself shall be recognized as an eligible source; 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; and

(e) The insurance provides that loss payment proceeds shall be paid in U.S. dollars.

(ii) Within 15 days after payment of an amount exceeding $6,000 in value by a supplier of marine insurance 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.

(iii) 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.

§ 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 docunent 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