Slide 1
Fast Facts: USAID Prior Approvals & Waivers
Kellie Klein
International Finance & Operations Manager
Johns Hopkins Bloomberg School of Public Health
Slide 2
Summary
I.
USAID Prior Approval Process
II. USAID Waiver Process
III. USAID Prior Approval vs. Waiver
Slide 3
Today’s Agenda
I. USAID Prior Approval
1. What is prior approval?
2. What happens when a required prior approval is not obtained?
3. When is prior approval required?
a) Programmatic requests
b) Financial requests
c) Restricted goods and equipment
4. When should prior approval requests be submitted?
5. Which USAID officer can approve requests?
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Section I.
USAID: Prior Approval
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Prior Approval
1. What is prior approval?
USAID recipients request prior approval from USAID for program or budget related reasons, or with the intent of
purchasing restricted commodities.
2. What happens when a required prior approval is not obtained?
Recipients must comply with prior approval requirements that are established in the grant agreement. Failure to
comply with prior approval requirements generally causes USAID to deem the costs unallowable.
**Prior Approval means written approval by an authorized official evidencing prior consent.
3. When is prior approval required?
a.
Required Programmatic Prior Approvals
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Change in the scope or the objective of the project or program (even if there is no associated
budget revision)
Change in a key person specified in the application or award document
A 25 percent reduction in effort devoted to the project, by the approved project director, chief of
party or principal investigator
Slide 6
Prior Approval (continued)
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The sub award, transfer or contracting out of any work not included in the award document.
(Does not apply to supplies, material, equipment or general support services).
Initiate a one-time extension of the expiration date of the award of up to 12 months.
Pre-award costs up to 90 days before start of project.
Approval of subawards or subcontracts under the award.
b) Required Financial Prior Approvals
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Any change in budget for indirect costs
Additional federal funding needed
Carry forward funding to subsequent funding periods
The transfer of funds allotted for training allowances (direct payment to trainees) to other
categories of expense
Revision of award budget
The inclusion, unless waived in the agreement by USAID, of costs that require prior approval in
accordance with OMB Circular A–21 “Cost Principles for Institutions of Higher Education”
 Salary rates for faculty members
 Capital expenditures for general purpose equipment, buildings and land and expenditures for
special purpose equipment
 Capital expenditures for improvements to land, buildings or equipment which materially
increase their value or useful life
 Costs of insurance or of any contributions to any reserve covering the risk of loss of or damage
to federally-owned property
 Special arrangement and alteration costs incurred specifically for the project
Slide 7
Prior Approval (continued)
c) Required Restricted Goods Prior Approvals
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The purchase of any item that meets the definition of equipment.
 Equipment is defined as any item of property with a per-unit price of $5,000 or more with a
useful life of one year or more.
Leasing any item (example: vehicles) for more than 180 days in a calendar year (does not refer to
facilities) .
The intent to purchase any item listed on the restricted goods list. Items on the restricted goods list
include:
 Motor vehicles
 Pharmaceuticals
 Used equipment
 US government owned excess property
 Agricultural commodities
 Pesticides
 Fertilizers
 Contraceptives
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Prior Approval (continued)
4. When should prior approval requests be submitted?
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
If there are known programmatic or budgetary items in the award that will require prior approval, these
items can be negotiated and included in the award document. Items included and detailed in the
award document are deemed to have Prior Approval.
If the necessary prior approval was not contained in the award document, the prior approval request should
be submitted as soon as it is it is deemed necessary.
Note: Requests can take much longer than anticipated so advance planning is advised!
Slide 9
Prior Approval
5. Which USAID officer can approve requests?
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The agreement officer (AO) has legal responsibility for the award. Therefore, only the agreement officer
can take action on behalf of USAID to enter into, change, or terminate an award.
The agreement officer can delegate authority for prior approval to the agreement officer’s technical
representative (AOTR) - formerly called the cognizant technical officer (CTO).
 Delegation can be given to the AOTR for all prior approvals except changes to the program
description or budget.
If prior approval has been granted in writing from the AOTR, a formal copy of the delegation of
approval from the agreement officer must be kept on file as backup.
Prior approval requests should be submitted to the AOTR (but addressed to the agreement officer)
who will then forward the request to the agreement officer (usually with the recommendation to grant or
deny the request).
Prior approval cannot be deemed valid unless received in writing from the agreement officer (verbal
approvals are not valid).
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Section II.
USAID: Waivers
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Agenda
II. USAID Waivers
1.
2.
3.
4.
5.
6.
7.
What is a waiver?
When is a waiver required?
a) Geographic code
b) Source and origin
Waiver criteria
What happens when a waiver is not obtained?
Which USAID officer can approve waivers?
Restrictions
a) Restricted goods
b) Ineligible goods & services
c) Ineligible suppliers
Local procurement
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Waivers
1. What is a waiver?

A waiver is a request to USAID to waive certain restrictions on the purchase of goods and services
under a USAID award.
2. When is a waiver required?

Waivers are required whenever the project needs to buy outside the authorized geographic code and
has met one of the criteria for a waiver.
a. Geographic Codes

USAID has preference requirements governing from where purchases can be made. Within USAID
awards, geographic codes are provided which outline the acceptable countries/regions from which
commodities and services can be procured.
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
The USAID specified Project Geographic Code is a three digit code which designates a country
or a group of countries from which purchases can be made.
The geographic code for your USAID award can be found in Section A of your award.
Slide 13
Waivers (continued)
“SPECIAL FREE WORLD”
Code 935
Any area or country
including the cooperating country,
but excluding the foreign policy
restricted countries.
Cuba, Laos, Iran, North Korea, Libya,
Syria.
Procurement – USAID Geographic Codes
935
Any area or country, except the
cooperating country itself and
the foreign policy restricted
countries
935
899
941
000
Code 000
The United States
The United States and any independent country
(except foreign policy restricted countries)
except the cooperating country itself and the
following: Albania, Andorra, Angola, Armenia,
Austria, Australia, Azerbaijan, Bahamas, Bahrain,
Belgium, Bosnia and Herzegovina, Bulgaria,
Belarus, Canada, Croatia, Cyprus, Czech
Republic, Denmark, Estonia, Finland, France,
Gabon, Georgia, Germany, Greece, Hong Kong,
Hungary, Iceland, Ireland, Italy, Japan,
Kazakhstan, Kuwait, Kyrgyzstan, Latvia,
Liechtenstein, Lithuania, Luxembourg,
Macedonia,* Malta, Moldova, Monaco, Mongolia,
Montenegro*, Netherlands, New Zealand,
Norway, People's Republic of China, Poland,
Portugal, Qatar, Romania, Russia, San Marino,
Saudi Arabia, Serbia*, Singapore, Slovak
Republic, Slovenia, South Africa, Spain, Sweden,
Switzerland, Taiwan*, Tajikistan, Turkmenistan,
Ukraine, United Arab Emirates, United Kingdom,
Uzbekistan, and Vatican City.
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Waivers (continued)
b. Source and Origin

The Geographic Code for your award determines the source and origin for which purchases must
comply.
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Source means the country which a commodity is shipped from to the cooperating country, or the
cooperating country if the commodity is located in-country at time of purchase.
Origin means the country where a commodity is mined, grown or produced.
**To the extent possible, programs under USG funded awards must purchase US manufactured goods from US
vendors.
3. Waiver Criteria

A waiver must be based on one of the criteria below:
 A commodity required for assistance is of a type that is not produced in or available for
purchase in the United States or the cooperating country.
 It is necessary to permit procurement in a country not otherwise eligible in order to meet unforeseen
circumstances, such as emergency situations.
 It is necessary to promote efficiency in the use of United States foreign assistance resources,
including to avoid impairment of foreign assistance objectives.
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Waivers (continued)
4. What happens when a waiver is not obtained?
Recipients must comply with waiver requirements. Failure to comply with waiver requirements generally causes
USAID to deem the costs unallowable.
5. Who can grant waivers?
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The agreement officer (AO) has legal responsibility for the award. Therefore, only the agreement officer
can take action on behalf of USAID to enter into, change, or terminate an award.
The agreement officer CANNOT delegate authority for waivers to the agreement officer’s technical
representative (AOTR) - formerly called the cognizant technical officer (CTO).
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Waivers (continued)
6. Restrictions
a. Restricted Goods
USAID has classified certain items of cost as ‘restricted’ . Restricted goods require prior approval and
may require a waiver. Restricted items include:
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Motor vehicles
Pharmaceuticals
Used equipment
US government owned excess property
Agricultural commodities
Pesticides
Fertilizers
Contraceptives
Slide 17
Waivers (continued)
b. Ineligible Goods and Services
Ineligible goods and services cannot be procured under any circumstance. Waivers will not be
accepted or granted for these items. Ineligible items include:
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c.
Abortion equipment & 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
Ineligible Suppliers
USAID recipients cannot procure from firms or individuals whose name appears on the “Lists of Parties
Excluded from Federal Procurement and Non-procurement Programs.” Suppliers appearing on this list
have been linked to terrorist activities and are not eligible suppliers of goods or services under your award.
Eligibility can be determined by searching the source name at www.epls.gov
Slide 18
Waivers (continued)
7. Local Procurement
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Local procurement in the cooperating country involves the use of program funds to finance the
procurement of goods and services supplied by local businesses, dealers or producers, with payment
normally being in the currency of the cooperating country.
Currently, it is quite common for USAID to use the geographic code 935 (Special Free World) in its
grant agreements. However, even with this geographic code, it is sometimes necessary to obtain waivers
for purchases of local goods or services.
Local procurement is eligible for USAID financing only in the following situations:
 Locally available commodities of U.S. origin, which aren’t otherwise eligible for financing, if the value
of the transaction is estimated not to exceed the local currency equivalent of $100,000.
 Commodities of geographic code 935 origin if the value of the transaction does not exceed
$5,000.
 Professional services contracts estimated not to exceed the local currency equivalent of
$250,000.
 Construction services contracts, including construction materials required under the contract,
estimated not to exceed the local currency equivalent of $5,000,000.
** Under a fixed-price construction contract of any value, the prime contractor may procure locally produced
goods and services under subcontracts.
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Procurement
The regulations are SO confusing! How do I know if I need prior approval, a
waiver or both?
USAID regulations can be very confusing. When implementing programs with USAID funds, it is
imperative that prior approval and waivers are obtained in accordance with the regulations.
Otherwise, JHU runs the risk of having the costs declared unallowable and will need to pay the
costs out of its own funds.
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Procurement of Commodities under
USAID Source and Origin Rules
Is the commodity a restricted good?
Motor vehicle, agricultural or
pharmaceutical product
No
Is the unit cost of the
commodity over $5000?
Yes
No
Where will the procurement
take place?
THIS
PROCUREMENT
REQUIRES Prior
Approval
THIS
PROCUREMENT
REQUIRES Prior
Approval
Contact Baltimore
to initiate request
Contact Baltimore
to initiate request
Yes
What is the origin of the
commodity?
US
Outside US
(Ex. Geo. Code 935)
Where will the
procurement take place?
Outside US
(Ex. Geo Code 935)
US
Outside US
(Ex. Geo. Code 935)
US
What is the origin of the
commodity?
Outside US
US
(Ex. Geo Code 935)
Is the total transaction value
less than $100,000?
Yes
PROCURE
No
THIS
PROCUREMENT
REQUIRES A
SOURCE WAIVER
Contact Baltimore
to initiate request
Is the total transaction value
less than $5000?
Yes
PROCURE
No
THIS
PROCUREMENT
LIKELY
REQUIRES A
SOURCE AND
ORIGIN WAIVER
Is the total transaction value
less than $100,000?
Yes
PROCURE
No
THIS
PROCUREMENT
LIKELY
REQUIRES A
SOURCE AND
ORIGIN WAIVER
Slide 21
Contents of Requests
In order to produce a successful prior approval or waiver request, it is crucial that you provide
adequate information to the agreement officer in order to make a decision. If the AO must come
back to you for clarification it will delay the approval and you may have to prepare a completely new
request if the first is not satisfactory.
In order to produce a successful request, it must contain the following information:
Addressed to agreement officer
Recipient organization name, name or project and award number
Reason for request and regulation necessitating request
Justification for request and purpose for which the item of service
Backup documentation (bids, lease vs. purchase analysis, vendor selection forms, etc)
Specifics of selected item(s)/service
Evidence of sufficient funds to procure
Slide 22
References