USAID Procurement Procedures

USAID Procurement Procedures Hawassa, Ethiopia 7-10 March 2011

Objectives • Understand how USAID defines procurement. • Understand how to implement USAID’s procurement policy when managing your Cooperative Agreement. • Understand what you cannot buy with USG funds. • Understand USAID geographic codes and how they affect procurement. • Discuss when and how a waiver or approval should be requested.

Exercises 7.1 & 7.2—Procurement scenarios 1

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Procurement Procurement is the p process of acquiring q gg goods,, supplies and services. It includes: • Equipment, spare parts and supplies for program activities; • Equipment, office furniture and supplies for project p j offices;; • Technical assistance by individuals or organizations; and • Subawards and subcontracts. 2

Understanding your USAID Agreement Standard Provisions Award Administration

ADS Chapter 303

(22 CFR 226) USAID Cooperative Agreement Administrative Requirements A-110

Audit Guidelines A-133 Cost Principles for NGOs (2 CFR 230)

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22 CFR 226: Award Administration This establishes uniform administrative requirements for grants and cooperative agreements awarded by USAID to non-profit organizations, and to subawards there under.

Procurement Rules and Regulations • 22 CFR 226 contains: o Inventory requirements o Property management requirements o Other procurement requirements, including definitions and regulations on equipment, codes of g avoidance of conflict of interest, conduct including competition, written procurement procedures, required flow-down clauses and record keeping

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Procurement Policy Requirements You may use your own procurement policies and practices as long l as they th conform f with ith the th ffollowing ll i USAID eligibility li ibilit requirements that include: 1. A written code of conduct preventing and addressing conflict of interest 2. Procurement transactions providing, to the maximum extent practical, open and free competition 3. Procedures to document price or cost analysis in your procurement files 4. Sound and complete policies for procurements in excess of $10,000. Any agreement should include provisions that allow administrative, contractual, or legal remedies for contractor violation of terms; and suitable provisions for termination by the recipient. 6

Recipient Procurement Best Practices At minimum: • Avoid purchasing unnecessary items. • All solicitations should provide for: clear and accurate description, requirements that a bidder/offeror must fulfill, and description of technical requirements. – Remember to compare “apples with apples.”

• Procurement made with responsible contractors. contractors – Based on best value to organization (if not the lowest price, the reason must be documented).

• Make procurement documents available to USAID.

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USAID Thresholds Note the following USAID procurement thresholds: • $3,000 (micro-purchase threshold): over this transactional amount you must obtain at least 3 quotations and conduct analysis to justify vendor selection. • $100 $100,000 000 (simplified acquisition threshold): over this amount requires “full and open competition;” you must issue a solicitation publicly and establish criteria for evaluating submissions.

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Organizational Thresholds • Taking into account USAID thresholds, DGP partners must establish t bli h and d follow f ll th i own organizational their i ti l purchasing thresholds in coordination with signatory policies and levels of authority. • Note: Purchases of similar types of items that can be obtained from the same vendor cannot be separated to avoid meeting thresholds (i.e., separate computer and printer i t equipment i t tto avoid id reaching hi th the $100 $100,000 000 threshold, which triggers the public solicitation requirement).

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Restrictions on Goods Standard Provision entitled “USAID USAID Eligibility Rules for Goods and Services” • Ineligible Goods & Services: May not be procured under any circumstances. • Restricted Goods: Need prior approval from the Agreement Officer (AO). • Ineligible Suppliers: Cannot procure from firms or individuals whose name appears on the “Lists of Parties Excluded from Federal Procurement and Nonprocurement Programs” (www.epls.gov) and terrorism databases. 10

Ineligible Goods and Services – What You Cannot Buy • • • • • •

Abortion equipment and 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 11

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Restricted Goods – What You Need Prior Approval For • • • • • • • •

Motor vehicles Pharmaceuticals Used Equipment U.S. Government-owned excess property Agricultural commodities Pesticides Fertilizers Contraceptives 12

Ineligible Suppliers Before purchasing goods and services or hiring staff and consultants with USG funds, you are required to check the following three sources and document the search results: 1. Excluded Parties List (EPLS)—required under the Terrorism Financing clause in the Special Provisions section (listed under Attachment A – Schedule) of your Cooperative Agreement—http://www.epls.gov; 2 U.S. 2. U S Department of Treasury List of Specially Designated Nationals and Blocked Persons— http://www.ustreas.gov/offices/enforcement/ofac/sdn/; and 3. United Nations Al-Qaida and Taliban Consolidated List— http://www.un.org/sc/committees/1267/consolist.shtml. 13

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22 CFR 228: Rules & Regulations

Rules on Source, Origin and Nationality for Commodities and Services Financed b USAID by

Rules and Regulations 22 CFR 228 contains: • List of geographic codes • Waiver definition and criteria • Source, origin, and nationality definitions and requirements

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Procurement—USAID Geographic Codes When undertaking procurement activities first look at: • The USAID-specified project Geographic Code: a three digit code which designates a country or a group of countries • Schedule A of your Cooperative Agreement

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Procurement—USAID Geographic Code The source and origin g of the g goods p procured must comply with the authorized Geographic Code. • Source means the country from which a commodity is shipped to the Cooperating Country, or the Cooperating Country if the commodity is located in-country at time of purchase. purchase • Origin means the country where a commodity is mined, grown or produced.

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Procurement—USAID Geographic Code 935 899 941 000

Code 935 Any area or country including the cooperating country, but excluding the foreign policy restricted countries. Cuba, Laos, Libya, Iran Iraq, Iran, Iraq North Korea, Syria. “SPECIAL FREE WORLD” Code 000 The United States 18

Procurement— USAID Geographic Code 935 Code 935: Special Free World; includes any area or country in the Free World, including the Cooperating Country (least restrictive). Preferences: 1. U.S. 2 . Host Country 3. Code 941 4. Code 935 19

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Local Procurement (if USAID Geo Code = 000) All locally financed procurement must have source and nationality waivers except: ; Commodities and services only available in the local economy (fuel, rent, etc.) ; Commodities of 935 origin if transaction is