mum extent practicable and an offeror who submits an unsolicited proposal is not necessarily entitled to preferential treatment. However, a contract may be awarded to a qualified offeror without consideration of other competitive sources if the unsolicited proposal is the product of original thinking, has significant scientific or technical merit, and contributes to AID's research program objectives. Such an award shall be made upon a determination by the Assistant Administrator having primary responsibility for the research activity.

[34 F.R. 256, Jan. 8, 1969, as amended at 35 F.R. 3808, Feb. 27, 1970; 35 F.R. 11393, July 16, 1970; 38 FR 28671, Oct. 16, 1973] Subpart 7-4.54-Procurement by Barter-Commodity Credit Corpora

*

Section 303 of the Agricultural Trade and Development Act of 1954 (Public Law 480) requires "to the maximum extent practicable, barter or exchange (of) agricultural commodities owned by the Commodity Credit Corporation for * materials, goods, or equipment required in connection with foreign economic and military aid and assistance programs”. AID favors the use of such barter arrangements in the procurement of AIDfinanced supplies from non-U.S. sources when dollars would otherwise be used to procure such supplies from non-U.S. sources. Applicable policies and procedures are stated in Manual Order 1144.1.

Subpart 7-4.55-Pharmaceutical
Products
General.

§ 7-4.5500

Section 606(c) of the Foreign Assistance Act bars procurement by the Government of drug and pharmaceutical products manufactured outside the United States if their manufacture involves the use of or is covered by an unexpired U.S. patent which has not been held invalid by an unappealed or unappealable court decision unless the manufacture is expressly authorized by the patent owner. Applicable policies and procedures are stated in Manual Order 1415.2.

The Foreign Assistance Act authorizes procurement by, through, or from other Government agencies, subject to a requirement for use, to the fullest practicable extent, of goods and engineering, and other services from private enterprise on a contract basis. The Foreign Assistance Act directs that in such fields as education, health, housing, and agriculture, the facilities and resources of other agencies are to be used when they are particularly or uniquely suitable for technical assistance, are not competitive with private enterprise, and can be made available without interfering unduly with domestic programs. With regard to the purchase of goods, or commodities, AID policy favors assumption of procurement responsibility by borrowers and grantees to the maximum practical extent, but when this is not practical, the preference is for procurement carried out through other Government agencies rather than AID itself.

side the United States, there is an exception for economic assistance functions performed under authority of the Foreign Assistance Act. This exception is stated in Executive Order 11223, dated May 12, 1965 (30 F.R. 6635). U.S. procurement restrictions are applied by AID, however, as shown elsewhere in this part. These restrictions are generally tighter than the Buy American Act. As a general rule, the tighter AID restrictions will be used. In the case of certain procurements for use within the United States, the Buy American provision may be used instead in the interest of uniformity among Federal Agencies procuring for domestic use. [30 F.R. 12975, Oct. 12, 1965]

Subpart 7-6.2-Buy American ActConstruction Contracts

AID has issued a uniform set of policies and procedures that govern the geographic source of services procured by borrowers and grantees as well as by AID for overseas activities that are financed with United States dollars rather than foreign currencies. These are stated in Manual Order 1412.1, which is set out below. With regard to policies and procedures on commodities which may be acquired or financed under service contracts, see AIDPR 7-6.52.

§ 7-6.5101 Policies and procedures.

M.O. 1412.1, which applies to borrower and grantee procurement, as well as to A.I.D. procurement, is set forth below: AGENCY FOR INTERNATIONAL DEVELOPMENT MANUAL

Subject: Service Contracting: Geographic Source Requirements.

Order No.: 1412.1.

Transmittal Letter No.: 13:228.

Supersedes: M.O. 1412.1 (TL 13:64).
Effective Date: April 26, 1968.
I. Scope:

A. The basic policy of A.I.D. as set forth in this manual order is to reduce the balance of payments dollar outflow, consistent with the efficient use of A.I.D. program funds and enhancement of the U.S. image abroad.

B. This manual order establishes A.ID. policy with regard to the order of preference to be accorded firms in the procurement of services (other than ocean and air transportation which are governed by the flag of the carrier) when such services are funded, wholly or partially, in dollars by direct-A.I.D. contract or through A.ID.-financed borrower/grantee procurement.

C. The order of preference as stated in paragraph III. of this manual order shall be followed for both direct and borrower/ grantee contracts and no firm may be accorded a higher degree of preference than provided herein without appropriate determination and waiver. However, action offices may provide in loan or grant agreements that less than the full range of firms listed in paragraph III. may be considered when procuring services hereunder, or that the order of preference shall be followed with respect to firms accorded equal preference hereunder. The order of preference of such firms shall be the order in which they are listed in paragraph III. In addition, if a blanket waiver has been authorized pursuant to paragraph IV.B.2. or IV.B.3. below, to give, for example, local firms equal preference with U.S. and U.S.-controlled local firms, the agreement may limit contracting to only those three types of firms in equal preference.

D. It does not establish (1) policy and procedures in regard to the procurement of services when funded wholly by other than A.I.D. dollars (e.g., Cooley loans), (2) criteria for the determination of what services should be A.I.D.-financed, or (3) policy or procedures for procurement of equipment or commodities.

II. Definitions: A. General:

The definitions contained in this section are controlling for A.I.D.-direct contracts and are recommended for A.ID.-financed borrower/grantee procurements for capital projects. In the event of any inconsistency between the definitions contained herein and those for borrower/grantee contracts, the definitions in the latter documents shall govern.

B. Beneficial Ownership:

1. "Beneficial ownership" of a firm is presumptively established by the bona fide certification of a duly authorized officer of the firm as to the citizenship of the firm's

owners.

2. In the case of corporations, the corporate secretary shall certify as to beneficial ownership. He may presume citizenship on the basis of a stockholder's record address, provided he certifies, regarding any

stockholder whose holdings are material to the corporation's eligibility hereunder, that he knows of no facts which might rebut that presumption.

C. Cooperating Country:

The term "cooperating country" shall mean the country which is the prime beneficiary of the services to be performed as set forth in the authorizing document.

D. Firms (See Guide, Attachment A.):
1. United States Firm:

An entity is a "U.S. firm" if it meets all of the conditions listed in subparagraphs a., b., and c. below as follows:

a. It is incorporated or legally organized in the U.S.

b. It has its principal place of business in the U.S.

c. It is more than 50% beneficially owned by a U.S. firm or firms and/or by U.S. citizens.

2. U.S.-Controlled Local Firm: 1

An entity is a "U.S.-controlled Local Firm" if it meets all of the conditions listed in subparagraphs a., b., c. below as follows:

a. It is incorporated or otherwise legally organized in the cooperating country.

b. It has its principal place of business in the U.S. or in the cooperating country.

c. It is at least 95% beneficially owned by a U.S. firm or U.S. firms and/or U.S. citizens. 3. Preferred Local Firm: 1

An entity is a "preferred local firm" if it meets all of the conditions listed in subparagraphs a., b., c., and d. below as follows:

a. It is incorporated or legally organized in the cooperating country.

b. It has its principal place of business in the cooperating country.

c. It has substantial participation in management by U.S. citizens.

d. It is (1) at least 30 percent beneficially owned by a U.S. firm or firms and/or U.S. citizens and (2) the remaining interest is beneficially owned by a local firm or firms and/or citizens of the cooperating country. 4. Local Firm:1

An entity is a "local firm" if it meets the conditions listed in subparagraphs a. and b. below and either c. or d. below as follows:

a. It is incorporated or legally organized in the cooperating country.

b. It has its principal place of business in the cooperating country.

c. It is more than 50 percent beneficially owned by a firm or firms of such country

1 Where, under A.I.D. policy, one or more countries in addition to the U.S. and the cooperating country are eligible sources for procurement of services, the term "cooperating country" in the definitions of "local firm," "U.S.-controlled local firm,” and “preferred local firm" shall include such additional countries for the purposes of para graph III. of this manual order.

and/or by a U.S. firm or firms and/or by citizens of such country and/or U.S. citizens.

d. It is determined by the Mission Director to be an integral part of the local economy. 5. Limited Free World Firm:

An entity is a "limited free world firm" if it meets all of the conditions listed in subparagraphs a. and b. below as follows:

a. It is incorporated or legally organized in one of the limited free world countries listed in A.I.D. Geographic Code 901.

b. It has its principal place of business in the cooperating country or in a limited free world country.

6. Free World Firm:

A collaborative effort by two or more individual firms for the purpose of performing work under an A.I.D.-financed contract.

III. Order of Preference:

A. The Agency policy for single procurements of services financed by A.I.D. shall be: 1. To procure or authorize the procurement of A.I.D.-financed services from any of the following firms, in equal preference (except as noted in paragraph I.C. above): a. U.S. firm.

b. U.S.-controlled local firm.

c. Joint venture of the above firms.

2. Selection of other than the above firms shall only be made pursuant to a waiver based upon a written determination by the duly authorized A.I.D. official (See paragraph IV.B. below) that the proposed procurement will best serve the interests of the U.S. The order of preference for selecting a firm pursuant to such a waiver shall be as follows:

a. Preferred local firm.

b. Joint venture of a U.S. firm, U.S.controlled local firm, a preferred local firm, or more than one of these firms, joined with a local firm, provided that management control and responsibility for the joint venture rests with one or more of the above firms having principal management by U.S. citizens.

c. Local firms.

d. Joint venture of local firms with limited free world firms or free world firms.

e. Limited free world firm.

1. Free world firm.

IV. Waivers-Determinations (See Guide, Attachment B.):

A. Criteria:

In deciding upon a written determination, the duly authorized A.I.D. official shall consider any factors, such as the following, which may bear on the justification of a waiver from the policy contained in paragraph III. above.

1. The effect on the U.S. balance of payments.

2. Availability and/or quality of firms to perform the required services.

3. Comparative prices.

4. Nationality of contractor employees.
5. Desired U.S. identification at job sites.
6. Foreign policy objectives.

7. Willingness of contractors to accept a higher proportion of contract payments in the currency of the cooperating country. B. Authority:

1. Written determinations authorizing the procurement of services from those firms listed in paragraph III.A.2. above shall be approved by the Assistant Administrator having responsibility for the project office, without power of redelegation, with respect to each single procurement, regardless of size, except as stated in paragraphs IV.B.2. and IV.B.3. below.

2. Assistant Administrators are also authorized, without power of redelegation, to make continuing written determinations ("blanket" waivers) that the interests of the U.S. are best served by permitting the procurement of services for all or specified categories of procurement from (a) preferred local firms, (b) joint ventures described in paragraph III.A.2.b., or (c) local firms in equal preference with, (d) U.S. firms, (e) U.S.-controlled local firms, or (f) joint ventures of U.S. firms and U.S.-controlled local firms.

a. This authority to issue blanket waivers is limited to procurement contracts of $250,000 or less. It may apply to any program or programs in any countries within the responsibility of the issuing Assistant Administrator.

3. If the Assistant Administrator determines with respect to a particular country that the rules cited in paragraph 2. above would require waivers in all or substantially all cases of procurements in excess of $250,000, the circumstances may be documented and a request for a blanket waiver submitted to the Administrator or his Deputy.

4. Written determinations may be included either in the loan authorization or in a separate document.

C. Coordination:

1. In exercise of the authority herein provided, the Assistant Administrators or their designees shall furnish copies of the documents supporting the proposed determination to the following office (s), as appropriate, for comment:

a. Office of Procurement (A/PROC):

In those cases where the availability, quality, or relative costs of U.S. services is at issue.

b. Office of Engineering (ENGR):

In those cases where engineering or construction services are involved.

c. Office of the War on Hunger (WOH): In those cases in which WOH has an interest (e.g., agriculture, health, population, nutrition, irrigation).

2. The above office(s) shall be allowed at least four working days to submit comments prior to the date the written determination is approved.

V. Subcontracts:

A. The policy contained in paragraph III. is applicable to all A.I.D.-financed subcontracts requiring A.I.D. approval, including any lower-tier subcontracts, and shall be given effect through the prime contract provisions, as appropriate.

B. Waiver of this policy shall be obtained in accordance with the procedures contained in paragraph IV. herein and may be granted to the prime contractor for proposed subcontract(s) either (1) in the terms of his contract or (2) on a case-by-case basis.

VI. Reporting and Control:

A. Every waiver issued, including blanket waivers, is reported and controlled in accordance with the following procedure:

1. All approved waivers shall be consecutively numbered by the office granting the waiver.

2. Waivers shall be returned to the drafting office for distribution of copies to each clearing office, the cognizant Regional Bureau or Office, PC/SRD, EXSEC, A/PROC, C/FRD, ENGR, and other offices, as appropriate.

3. Waivers shall be reported as follows: a. Quarterly Waiver Report:

(1) PC/SRD shall report quarterly all source waivers granted for contract services.

(2) The information reported shall be included in the Quarterly Waiver Report, W140. (See M.O. 1414.1.1-Source Requirements for Commodities: Waiver Authority and Procedures, for the commodity source waiver portion of the report.)

b. Semiannual Report of Blanket Waivers: (1) A.I.D. officers who approve or sign contracts shall submit a semiannual report to PROC/CSD of all contract actions effected under blanket waivers.

(2) The report shall contain the (a) blanket waiver number, (b) contractor's name, (c) type of firm (See paragraph II.D. above.), (d) contract amount, and (e) contract number and task order number (if appropriate).

(3) The report shall cover the six months periods ending June 30 and December 31, respectively, and shall be submitted within 20 working days after the end of the reporting period.

VII. Contractor Employees:

It shall be the policy of A.I.D. to employ citizens or residents of the U.S. or of the cooperating country in preference to the employment of third-country nationals.

A. Unless the A.I.D. officer who approves or signs the contract determines that the circumstances necessitate recruitment of personnel from a third country, all supervisory personnel and all professional personnel (See paragraphs B. and C. below.) to be employed under the contract, excluding construction contracts (See M.O. 1412.1.2-Service Contracting: Use of Third Country Nationals on A.I.D.-Financed Construction (A.I.D. Regulation 7).), and major subcontracts thereunder, shall be citizens or residents (prior to the time of employment) of the U.S. and/or of the cooperating country. Where it is considered that the services of third-country nationals will be needed and it is determined to be in the best interests of the objectives of the program, a provision authorizing their employment shall be contained in the contract. Where exceptions are not contained in the contract, waivers to permit employment of third-country nationals shall be granted by the A.I.D. officer who approved or signed the contract, on the basis of a written determination that the circumstances necessitates such employment. This requirement shall apply to all firms or joint ventures mentioned in this manual order except when a waiver is granted to procure from a free world or a limited free world firm. Whenever it is necessary to assure U.S. jobsite identification on a particular project, the work statement or other applicable contractual provisions shall require an appropriate degree of management participation by U.S. citizens.

B. For the purposes of this section, an individual shall be considered a professional if he is engaged in providing services requiring specialized training in some liberal art or science, usually involving mental rather than manual work and who is qualified in his field by the standards of the profession, e.g., lawyers, doctors, professors, teachers, engineers, economists, scientists, and research associates.

C. Supervisory personnel are defined as those contractor employees who are assigned the responsibility for an area of work under the contract and the direction of the work of other contractor employees. Generally, with respect to said employees, they are responsible for the employee's selection, orientation, workload organization and scheduling; training, evaluation of performance, and necessary disciplinary action.

VIII. Place of Performance:

Prospective contractors shall be required to indicate in advance, and the contract shall specify, the extent to which work under the contract is to be performed outside the United States and the cooperating country.