Buying Goods and Purchased Services for International Activities
Those purchasing goods and services abroad should comply with institutional purchasing policies and procedures, U.S. government restrictions (such as economic embargoes and export controls), and any fund restrictions (e.g., donor imposed). The program director or designee should ensure that only authorized individuals enter into contracts and approve purchases on behalf of the institution. The authority to enter into such transactions should be established in the institution's transaction authority policy or similar policy, which should indicate specific individuals and/or roles with the authority to enter into transactions based on dollar thresholds and other considerations such as contract length. In some cases, the authority to purchase and enter into contracts will reside with administrators in the host country. In other cases-such as those involving high-dollar transactions-authority will reside with home-country authorities.
When making purchases abroad, consider:
- How the goods or materials will be transported either to the U.S. or between foreign sites
- Methods of payment
- Currency conversion
- Transacting in a foreign language
- Export controls
Resources
Kassy Ellefson, Purchasing Services, 206-543-5827
Tax Office, 206-616-9021
Paying vendors
Work with program director or designee and legal counsel, finance offices and risk management to comply with home- and host-country regulations regarding vendor payment:
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Minimize losses from currency conversion.
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Know that cash amounts coming into the host-country from the United States may be limited.
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Comply with home- and host-country bank regulations when wiring money.
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Pay from home-country bank accounts whenever possible to minimize the number of transactions and reduce the need to replenish host-country bank accounts.
Resources
Tax Office, 206-616-9021
Transactions on behalf of the institution
Work with program director or designee, legal counsel and risk management to ensure that only authorized individuals enter into transactions on behalf of the institution:
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Comply with existing institutional policies regarding dollar thresholds and similar considerations such as contract length.
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Be aware that high-dollar purchases and/or long-term contracts may have to be signed by home-country authorities as well as host-country authorities.
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Ensure that host-country program director or designee and others involved in the procurement process are properly trained to enter into contracts and subcontracts.
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Define in writing what constitutes a vendor and what constitutes a subcontractor, including the differences between the two.
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Ensure that high-dollar and long-term contracts are approved by home- and host-country legal counsel and home-country procurement office.
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Comply with fund terms when entering into contracts if paying with sponsored funds.
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Draft a code of ethics regarding purchasing, require that those involved in purchasing and approving sign the document, and retain copies in home and host country.
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Maintain an up-to-date list of individuals authorized to enter into transactions, including thresholds.
Resources
Becky Bullock, Risk Services, 206-543-2033
Allowable costs and vendors
Work with program director or designee, legal counsel and research compliance to comply with institutional policies, U.S. government regulations, and fund terms related to allowable costs and vendors including:
- Capital equipment:
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May require approval of home-country institutional authority.
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May require approval from funding agency.
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Don't pay for a single piece of equipment with funds from multiple donors as conflicts may arise.
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Work with reporting and compliance to properly document capital equipment in host country in accordance with U.S. GAAP and host-country GAAP.
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Request and retain bids as described below in this subsection.
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- Vehicles:
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If U.S. government funding is used, you may be required to purchase U.S.-made vehicles, unless documented and approved extenuating circumstances
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Follow procedures as you would for capital equipment.
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- Drugs/pharmaceuticals
- "Buy America Act." (law requiring U.S. government to prefer U.S.-made products in its purchases).
- Know that travel purchases must comply with the "Fly America Act." (requires use of U.S. flag airlines when using federal funds)
Comply with any vendor debarment restrictions on the GSA's EPLS including:
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"A list of individuals and firms excluded by federal government agencies from receiving federal contracts or federally approved subcontracts and from certain types of federal financial and nonfinancial assistance and benefits."
Resources
Kassy Ellefson, Purchasing Services, 206-543-5827
Necessary permits or licenses
Work with program director or designee and legal counsel to obtain any necessary permits or licenses when purchasing or shipping certain goods, including any export licenses required by the State Department for the following materials (the following is not an exhaustive list):
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Radioactive materials and hazardous materials.
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Drugs/pharmaceuticals.
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Technical data on laptops and PDAs may be subject to export controls.
Consider hiring a vendor to help with brokering customs in certain host countries.
- Work with program director or designee and finance offices to comply with any OFAC economic sanctions, including sanctions on countries and SDNs:
- OFAC notes that it has "the authority by means of a specific license to permit a person or entity to engage in a transaction which otherwise would be prohibited."
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U.S. Department of Treasury Resource Center.
- Work with program director or designee, finance offices, and host-country legal counsel to comply with the FCPA, particularly its antibribery provisions:
- Consult host-country legal counsel prior to making a payment if in doubt about compliance with FCPA.
- FCPA was: "Enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business."
- Work with program director or designee and research compliance to ensure that all purchase orders are subject to a bidding process in accordance with institutional policies, U.S. government regulations, and fund terms:
- Bids from host-country contractors may require translation by an accredited translator.
- Keep all bids on file in accordance with institutional record-retention policies.
- Be aware that low-dollar purchases are typically not subject to a bidding process.
- Don't split purchases to avoid transaction or bidding thresholds.
- Comply with any home- or host-country or sponsored funding vendor-diversity requirements.
- Work with program director or designee to ensure that all purchases and contracts are properly documented and kept on file by home- and host-country finance offices in accordance with institutional record-retention policies.
- Work with program director or designee and legal counsel, risk management, and cash management to comply with home- and host-country regulations regarding vendor payment:
- Minimize losses from currency conversion.
- Know that cash amounts coming into the host-country from the United States may be limited.
- Comply with home- and host-country bank regulations when wiring money.
- Pay from home-country bank accounts whenever possible to minimize the number of transactions and reduce the need to replenish host-country bank accounts.
- Work with program director or designee, reporting and compliance, and research compliance to ensure that host-country offices maintain up-to-date inventories of leased and purchased equipment in accordance with U.S. and host-country GAAP:
- Comply with institutional policies regarding capital equipment.
- Know that you will need inventories in the event of insurance claims.
- Maintain inventories in accordance with sponsored funding terms.
Resources
Kassy Ellefson, Purchasing Services, 206-543-5827
Equipment Inventory
Equipment purchased and used at a foreign site must be tagged and inventoried consistent with UW policies and procedures. For more information, see the Equipment Inventory Office site. Consult the Risk Services website for information regarding equipment insurance and if there are there host country requirements that will apply.
Resources
Equipment Inventory Office, website, email, 206-543-4663
Insurance
Per UW policy, only the UW Risk Services Office may purchase or authorize the purchase of insurance.
Resources
Becky Bullock, Risk Services, 206-543-2033
Shipping
Determine where equipment needed for the project will be purchased and factor in additional shipping charges. Options include:
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Buying in the U.S. and shipping to the foreign project site
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Buying in a different foreign country and shipping to the foreign project site
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Buying in the country where the project will be done
Typically, purchasing equipment in the host country is the most cost effective approach. The following charges will likely be assessed against equipment brought into the foreign location: taxes, customs duty, clearing charges, storage at the port of entry and transportation charge from the port of entry to the final in-country destination.
Shipping items out of the U.S. from the UW requires additional review and consideration. The University does not have a centralized shipping center for international or domestic shipments. Each department must determine the best practice and method related to the logistics in moving items, freight and cargo to the desired end-use location.
Value Added Tax
Value Added Tax (VAT) is a consumption tax levied on goods and services in many countries. Each country has its own policy regarding whether VAT is charged, and if so, whether and how it can be reclaimed. For example, VAT rates in the European Union countries range from 3.5% to 25% depending on the country and the item purchased. Some countries charge VAT on rent and associated costs like cleaning, gardening and landscaping. VAT recovery can be a lengthy process and it may take up to 12 months to receive a refund. VAT cannot be included as a direct charge in a federal grant for an international project. Departments are advised to explore processes to either waive or recover VAT. If exemption or recovery is not feasible, unallowable VAT should be transferred to an appropriate non-federal funding source.
Resources
Tax Office, 206-616-9021