None of the funds appropriated or made available by this or any predecessor Act for the year subsequent to fiscal year 1962 for carrying out the Foreign Assistance Act of 1961, as amended, may be used on or after 60 days from the date of enactment of this Act to make payments with respect to any contract for the performance of services outside the United States by U.S. citizens unless the President shall have promulgated regulations that provide for the investigation of such citizens for loyalty and security to the extent necessary to protect the security and other interests of the United States: Provided, That such regulations shall require that any such U.S. citizen who will have access, in connection with the performance of such services, to information or material classified for security reasons shall be subject to such investigation as may otherwise be provided by law and executive order. [31 F.R. 11030, Aug. 19, 1966]

§ 7-12.5101 Contract provision.

AID contracts provide for necessary approvals of contract personnel. § 7-12.5102 AID Directives.

(a) Regulations have been issued under the statutory provision cited in AIDPR S7-12.5100 and are set out in AID Regulation 10, published in part 210, Title 22 of the Code of Federal Regulations.

(b) See also Manual Order 610.2, entitled "Security Clearance for Contractors and Contractor Personnel under AID Financed Contracts". [31 F.R. 11030, Aug. 19, 1966]

Subpart 7-12.52-Foreign Nationals § 7-12.5201 Construction work. § 7-12.5201-1 Legislation.

Beginning with the Foreign Assistance and Related Agencies Appropriation Act, 1964, the appropriation Acts governing AID have imposed the following requirement:

None of the funds made available by this Act for carrying out the Foreign Assistance

Act of 1961, as amended, may be obligated on or after April 30, 1964, for financing, in whole or in part, the direct costs of any contract for the construction of facilities and installations in any underdeveloped country, unless the President shall, on or before such date, have promulgated regulations designed to assure, to the maximum extent consistent with the national interest and the avoidance of excessive costs to the United States, that none of the funds made available by this Act and thereafter obligated shall be used to finance the direct costs under such contracts for construction work performed by persons other than qualified nationals of the recipient country or qualified citizens of the United States: Provided, however, That the President may waive the application of this amendment if it is important to the national interest.

See, for example, section 117 of the Foreign Assistance and Related Agencies Appropriation Act, 1965.

§ 7-12.5201-2 Regulations.

Regulations have been issued under the statutory provision cited in AIDPR 7-12.5201-1. They are set out in AID Regulation 7, published in Part 207, Title 22 of the Code of Federal Regulations, and reproduced in AID Manual Order 1412.1.2.

Subpart 7-12.53-Workmen's Compensation (Defense Base Act) and War Hazards Compensation for Overseas Employees

AUTHORITY: The provisions of this Part 7-15 issued under sec. 621, 75 Stat. 445, as amended; 22 U.S.C. 2381.

SOURCE: The provisions of this Part 7-15 appear at 30 F.R. 12981, Oct. 12, 1965, unless otherwise noted.

Subpart 7-15.1—Applicability

§ 7-15.103 Cost-reimbursement research contracts with educational institutions.

This category is applied to contracts with educational institutions for technical assistance services provided to or for another country. See AIDPR 7-15.151. § 7-15.107 Advance understandings on particular cost items.

AID contracts generally spell out rules and principles governing the reimbursement of compensation, travel, transportation, and a number of "fringe benefit" costs associated with overseas operations.

As provided in FPR 1-15.102, this subpart applies to contracts for services, as well as to contracts for supplies and to contracts with noncommercial organizations other than educational institutions.

§ 7-15.205 Selected costs.

§ 7-15.205-6 Compensation for personal services.

(a) Specific limitations on compensation for personal services, including fringe benefits, may be spelled out or incorporated by reference in AID contracts. Where the provisions of the contract are inconsistent with this section, such provisions will govern. Where approvals are required by this section for salaries, allowances, or other matters specifically spelled out and agreed to in the contract, the Contracting Officer's signature on the contract will be sufficient evidence of approval.

(b) Salaries and wages: Within the meaning of this paragraph (AIDPR 715.205-6(b)) and the subparagraphs under it, salaries and wages exclude overseas differential and other allowances associated with overseas service, except as otherwise stated, but include payments for personal services (including fees and honoraria) computed on a daily or other time basis different from an annual rate. Daily rates of compensation are computed on the basis of a 260-daywork year made up of 5-day (8-hour) work weeks.

(1) Salary ceiling. Reimbursement will not be allowed with respect to any salary or wage charged as a direct cost which exceeds $24,500 per year (or a

daily rate of $94 if compensation is not on an annual basis), or a daily rate of $100 for consultants engaged for no more than 90 days in any twelve month period, without written approval of the Contracting Officer. Justifications for such approvals should show the present scale attached to the position and the earnings of the person chosen to fill it, if someone has been selected; the reasons which make it necessary to pay the amount proposed, including reasonable efforts to recruit personnel of adequate qualifications and experience at a lower rate of compensation; and the reasons why payment at the proposed level is needed to accomplish AID objectives.

(2) Salary scale approval. Contractor salary and wage scales for positions which will be charged as direct costs are subject to written approval of the Contracting Officer.

(3) Individual salary approval. Unless approved by the Contracting Officer, reimbursement will not be allowed with respect to any salary or wage charged as a direct cost which exceeds the employee's current salary or wage or highest rate of annual salary or wage during any full year of the immediately preceding 3 years, plus a reasonable incentive for overseas service not to exceed 10 percent. Provision may be made for merit increases in accord with the Contractor's established practice as approved by the Contracting Officer or for a merit increase after one year of service overseas, provided that, as a general rule, merit increases do not exceed 5 percent of the salary at the time of the increase.

(4) Approval procedures. Before giving approvals, Contracting Officers will follow such procedures as may be prescribed by the Assistant Administrator with cognizance over the procuring activity.

(c)-(f) [Reserved]

(g) Fringe benefits: AID contracts generally spell out rules and principles governing reimbursement of specific "fringe benefits" costs associated with overseas operations. These may include vacations, holidays, sick leave, military leave, employee insurance, medical examinations, overseas differential, quarters allowance, temporary lodging allowance, post allowance, supplemental post allowance, education allowance, educa

§ 7-15.205-46

§ 7-15.205-46.50

Travel costs.

Special restrictions. § 7-15.205-46.51 Air travel.

(a) Class of travel. The difference in cost between first-class air accommodations and less than first-class air accommodations is unallowable except when less than first-class accommodations are not reasonably available to meet necessary requirements. A responsible officer of the Contractor must certify to the facts justifying an exception in the voucher or other document retained as part of its contract records to support the claim or for post-audit. One stopover enroute for a period not to exceed 24 hours is allowable when the traveller uses less than first-class accommodations for an international trip of 14 hours or more of scheduled duration. For international travel, the cost incurred for transporting not to exceed 22 pounds of accompanied personal baggage per traveller will be allowed if reasonable, in addition to that regularly allowed with a ticket for less than firstclass accommodations.

(b) Flag of carrier. International air travel must be carried out on U.S. flag carriers. Exceptions to this requirement will be allowed in the following situations provided that a responsible officer of the Contractor certifies to the facts in the voucher or other documents retained as a part of its contract records to support its claim for reimbursement and for post audit:

(1) Where a flight by a U.S. carrier is not scheduled to arrive in time for the conduct of official business.

(2) Where a flight by U.S. carrier is scheduled but does not have accommodations available when reservations are sought.

(3) Where the departure time, routing, or other features of a U.S. carrier flight would interfere with or prevent the satisfactory performance of official business.

(4) Where a scheduled flight by a U.S. carrier is delayed because of weather, mechanical, or other conditions to such an extent that use of a non-U.S. carrier is in the Government's interest.

(5) Where the appropriate class of accommodations is available on both U.S. and non-U.S. carriers, but the use of the U.S. carriers will result in higher total U.S. dollar cost to the contract due to additional per diem or other expenses.

(6) Where the appropriate class of accommodations is available only on a non-U.S. carrier and the cost of transportation and related per diem is less than the cost of available accommodations of another class on a U.S. carrier and related per diem.

§ 7-15.307-4 Predetermined fixed rates for indirect costs.

In accordance with the authority contained in section 635 (k) of the Foreign Assistance Act of 1961, as amended, and Subpart 1-15.307-4 of the Federal Procurement Regulations, the following clause entitled "Indirect Costs (Overhead)-Predetermined (June 1966)" is authorized for use in cost-reimbursement contracts with educational institutions for payment of reimbursable indirect costs: Provided, That predetermined overhead rates are used as the basis for reimbursing indirect costs under all of the applicable AID contracts with an institution.

INDIRECT COSTS (OVERHEAD) —PREDETERMINED (JUNE 1966)

(A) Notwithstanding the provisions of any other clause of this contract, the allowable indirect costs under this contract shall be obtained by applying predetermined overhead rates to bases agreed upon by the parties, as specified below.

(B) The contractor, as soon as possible but not later than three (3) months after the expiration of his fiscal year, shall submit to the Contracting Officer, with a copy to the cognizant audit activity, a proposed predeter

mined overhead rate or rates based on the contractor's actual cost experience during that fiscal year, together with supporting cost data. Negotiation of predetermined overhead rates shall be undertaken as promptly as practicable after receipt of the contractor's proposal.

(C) Allowability of costs and acceptability of cost allocation methods shall be determined in accordance with the provisions of Subpart 1-15.3 (Principles for Determining Costs Applicable to Research and Development Under Grants and Contracts With Educational Institutions), of the Federal Procurement Regulations as in effect on the date of this contract.

(D) The results of each negotiation shall be set forth in a modification to this contract, which shall specify (i) the agreed predetermined overhead rates, (ii) the bases to which the rates apply, (iii) the fiscal year unless the parties agree to a different period for which the rates apply, and (iv) the specific items treated as direct costs or any changes in the items previously agreed to be direct costs.

(E) Pending establishment of predetermined overhead rates for any fiscal year on different period agreed to by the parties, the contractor shall be reimbursed either at the rates fixed for the previous fiscal year or other period or at billing rates acceptable to the Contracting Officer subject to appropriate adjustment when the final rates for that fiscal year or other period are established.

(F) Any failure by the parties to agree on any predetermined overhead rate or rates under this clause shall not be considered a

dispute concerning a question of fact for decision by the Contracting Officer within the meaning of the "Disputes" clause of this contract. If for any fiscal year or other period specified in Appendix D of this contract the parties fail to agree to a predetermined overhead rate or rates, it is agreed that the allowable indirect costs under this contract shall be obtained by applying negotiated final overhead rates in accordance with the terms of the "Indirect Costs (Overhead)" clause set forth in § 7-16.951-2 of the Agency for International Development Procurement Regulations as in effect on the date of this contract.

(G) Allowable indirect costs for the period until the end of the contractor's fiscal year during which performance begins shall be obtained by applying the predetermined overhead rates set forth in Appendix D to the bases set forth therein.

[31 F.R. 11301, Aug. 19, 1966]