[Federal Register Volume 62, Number 153 (Friday, August 8, 1997)]
[Proposed Rules]
[Pages 42712-42713]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20718]
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INTERNATIONAL DEVELOPMENT COOPERATION AGENCY
Agency for International Development
22 CFR Part 201
[AID Reg. 1]
RIN 0412-AA-34
Rules and Procedures Applicable to Commodity Transactions
Financed by USAID: Inspection and Price Provisions
AGENCY: Agency for International Development, IDCA.
ACTION: Proposed rule.
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SUMMARY: The U.S. Agency for International Development (USAID) proposes
to amend the regulation to implement the requirement for preshipment
inspection of commodities and to simplify the current rules on maximum
prices for commodities. USAID previously employed post-audit procedures
to assure that commodities and related services financed under its
programs were not over priced by suppliers. The purpose of preshipment
inspection is to complete the price review prior to shipment, rather
than after the fact, and when determined necessary, to complete a
physical inspection of the commodities being financed. The purpose of
the proposed amendment to the price rules for commodities is to make it
easier for suppliers to understand and bring it into line with
commercial practices used by preshipment inspection firms that will be
contracted to carry out the preshipment inspection program.
DATES: Comment Deadline: October 7, 1997.
ADDRESSES: Send comments to Kathleen J. O'Hara, Office of Procurement
Policy Division (M/OP/PP), USAID, Room 1600 A, Washington, DC 20523-
1435.
FOR FURTHER INFORMATION CONTACT: Kathleen J. O'Hara, Office of
Procurement, Procurement Policy Division (M/OP/PP), USAID, Room 1600 A,
Washington, DC 20523-1435. Telephone (703) 875-1534, facsimile (703)
875-1243.
SUPPLEMENTARY INFORMATION: As part of USAID's re-engineering process, a
decision has been taken to revise the procedure it uses to assure that
the prices paid to suppliers under transactions financed by Commodity
Import Programs are fair and reasonable. Currently, this is being done
through a post-audit function within USAID. The purpose of this
proposed amendment is to implement a preshipment inspection program
which would essentially replace the post-audit function. The
preshipment inspection services will be carried out by a private
contractor, under a contract with USAID.
The specific changes being proposed would add a definition for
``preshipment inspection,'' amend the coverage on responsibilities of
importers and suppliers to add requirements concerning preshipment
inspection, add a new Sec. 201.48 establishing the requirement for
preshipment inspection, and add the requirement for a ``clean''
inspection report to the list of documents that the supplier must
furnish in order to receive payment from USAID in Sec. 201.52(a).
Preshipment inspection will include a price review, and USAID
proposes to revise its rules on maximum prices for commodities to be
more in line with the commercial practices used by the preshipment
inspection firms. The basic prevailing market price test would be
reformulated; the method for constructing an allowable price in the
absence of comparable sales in Sec. 201.63(e) would be removed since it
does not agree with commercial practices established between
preshipment inspection firms and the World Trade Organization; and the
supplier's comparable export price test in Sec. 201.63 (c) would also
be removed. Various changes in subpart G, Price Provisions, implement
the new rules.
USAID has determined that this proposed rule is not a significant
regulatory action under Executive Order 12866. The rule has been
reviewed in accordance with the requirement of the Regulatory
Flexibility Act. USAID has determined that the proposed rule will not
have a significant economic impact on a substantial number of small
entities, and, therefore, a Regulatory Flexibility Analysis is not
required. The additional documentation requirement will be submitted to
OMB for approval as required by the Paperwork Reduction Act.
List of Subjects in 22 CFR Part 201
Administrative practice and procedure, Commodity procurement--
foreign relations.
For the reasons set out in the preamble, 22 CFR part 201 is
proposed to be amended as follows:
1. The authority citation continues to read as follows:
Authority: 22 U.S.C. 2381.
2. Section 201.01 is amended to add a new paragraph (dd) as
follows:
Sec. 201.01 Definition.
* * * * *
(dd) Preshipment inspection means a review by the designated USAID
contractor of all costs associated with a transaction and, where
applicable, a physical inspection of the commodity, including packaging
and packing.
3. Section 201.21 is amended by removing ``and, where
appropriate,'' from the end of paragraph (c); by removing the period
from the end of paragraph (d) and adding ``; and'' in its place; and by
adding a new paragraph (e) as follows:
Sec. 201.21 Notice to supplier.
* * * * *
(e) The USAID requirement in Sec. 201.31(j) for preshipment
inspection, when applicable.
4. Section 201.31 is amended to add a new paragraph (j) as follows:
Sec. 201.31 Suppliers of commodities.
* * * * *
(j) Preshipment inspection. As applicable, the supplier shall be
responsible for coordinating the preshipment inspection of the
[[Page 42713]]
commodity with the contractor designated by USAID. In the case of a
physical inspection of the commodity, the supplier shall make the
commodity available to the contractor's inspector and, when applicable,
in a condition for operational testing. The supplier shall provide
reasonable assistance to the inspector in completing the inspection, to
include, but not limited to, unpacking, packing, weighing, etc. Any
costs associated with making the commodity available for inspection
will be for the account of the supplier.
5. Section 201.48 is added to read as follows:
Sec. 201.48 Preshipment inspection of commodities.
For each shipment under a purchase contract with an f.o.b. value in
excess of $100,000, a preshipment documentary inspection is required.
For each shipment under a purchase contract with an f.o.b. value in
excess of $1,000,000, a full preshipment inspection, to include a
physical inspection, is required unless USAID determines in writing to
limit the inspection to a review of the documentation for the
transaction. USAID may also require documentary and/or physical
inspections in other situations.
6. Section 201.52 is amended to remove ``(8)'' in paragraph (a),
introductory text, and add ``(9)'' in its place and to add a new
paragraph (a)(9) to read as follows:
Sec. 201.52 Required documents.
(a) * * *
(9) Pre-shipment inspection report. When required in the letter of
credit, direct letter of commitment, or other payment document, one
signed original of the ``clean'' inspection report, issued by the
inspection firm designated by USAID to undertake preshipment
inspections.
* * * * *
7. Section 201.60 is amended by revising paragraph (c) as follows:
Sec. 201.60 Purpose and applicability of this subpart.
* * * * *
(c) Compliance. Compliance with this subpart G and with any
additional price requirement contained in the implementing document
shall be a condition to the financing by USAID of procurement
transactions under this part. Preshipment inspection of the commodities
will include a price review for compliance. Additionally, USAID may
post-audit transactions to determine that there has been compliance.
8. Section 201.63 is amended by removing paragraphs (c), (d) and
(e); by redesignating paragraphs (f) and (g) as paragraphs (c) and (d),
respectively; by removing ``(f)(1)'' from the newly redesignated
paragraph (c)(2) and adding ``(c)(1)'' in its place, and by revising
paragraphs (a) and (b) as follows:
Sec. 201.63 Maximum prices for commodities.
(a) Prevailing export market price. (1) The purchase price of a
commodity shall not exceed the prevailing export price range in the
country of supply for comparable goods sold under comparable terms of
sale. If there are no export sales of comparable goods, then the
purchase price shall not exceed the prevailing domestic price range in
the country of supply for comparable goods, adjusted upward or downward
by the appropriate export differential. The prevailing price range,
whether export or domestic, shall be determined through analysis of
prices during a reference period prior to the date the purchase price
for the USAID-financed transaction was fixed. The analysis identifies
the applicable range of prices which the ex-factory or f.o.b. price of
the commodity shall not exceed.
(2) The purchase price of a commodity from a source outside the
United States shall also not exceed the prevailing export price range
in the United States for comparable goods sold under comparable terms
of sale, as determined in paragraph (a)(1) of this section, adjusted
for differences in the cost of transportation to destination when
applicable.
(b) Paragraph (a) of this section shall not apply to the purchase
price:
(1) In any sale under formal competitive bid procedures; or
(2) In any sale of a commodity generally traded on an organized
commodity exchange.
* * * * *
9. In Sec. 201.64, paragraph (a) is revised to read as follows:
Sec. 201.64 Application of the price rules to commodities.
(a) Calculation of commodity prices on a common basis. In testing
whether the purchase price of a commodity complies with the
requirements of Sec. 201.63(a) it is necessary to insure that the price
being tested as well as the prices being used as a test or measurement
are calculated on the basis of delivery alongside or on board the
vessel or other export conveyance. Therefore, in addition to the price
of the commodity at an internal point in the source country, prices
will include transportation from that point to the port of export in
the source country and, to the extent not already included in the price
at the internal point, inspection, export packing, forwarder's fees at
customary rates, the cost of placing the commodities on board the
vessel or export conveyance (unless this cost is covered in the export
freight), and other necessary costs customary in the trade.
Sec. 201.64 [Added]
9. In Sec. 201.64, paragraph (b)(1) is amended by removing ``(c),
(d) and (e),'' and paragraph (c) is amended by removing ``(f)(1)'',
``(f)(1)(i)'' and ``(f)(2)'' from wherever they appear in and adding
``(c)(1)'', ``(c)(1)(i)'' and ``(c)(2)'', respectively, in their
places.
Dated: June 26, 1997.
Marcus L. Stevenson,
Procurement Executive.
[FR Doc. 97-20718 Filed 8-7-97; 8:45 am]
BILLING CODE 6116-71-M