FOOD FOR PEACE

INFORMATION BULLETIN (FFPIB)

Date: 27 October 2003

MEMORANDUM FOR ALL FOOD FOR PEACE OFFICERS

TO: USAID/W and Overseas Distribution Lists

FROM: DCHA/FFP, Lauren R. Landis, Director

SUBJECT: Legitimate uses of 202(e) Funding

FFPIB 04-01

**I. Authority and Purpose:** P.L. 480 Title II Section 202(e), requires
the Office of Food for Peace (FFP) to make cash available to eligible
organizations in support of Title II programs in order to 1) assist them
in establishing new programs under Title II; and 2) help in meeting
specific administrative, management, personnel and internal
transportation and distribution costs for carrying out Title II programs
(including monetization programs) in foreign countries.

**II. Background:** While Section 202(e) has historically been limited
by a \$28 million cap, the 2002 Farm Bill increased the authorization to
an amount no less than 5% and no greater than 10%[^1] of the total Title
II appropriation in each fiscal year. Due to the previous \$28 million
cap on this funding, FFP placed restrictions on its use to ensure its
availability for critical, priority needs. However due to the
significant increase in the amount of 202(e) funding authorized in the
2002 Farm Bill, FFP has broadened the scope of the types of costs
eligible for funding consideration under this section.

**III. Definition of Eligible Recipients:** In order to be considered
"eligible" to receive funds under Section 202(e) an organization must
be:

1)  a Private Voluntary Organization (PVO) or cooperative that is, to
    the extent practicable, registered with USAID[^2] or

2)  an Intergovernmental Organization (IO), such as the World Food
    Program

**IV. Eligible Uses:**

Eligible uses for 202(e) funding differ between "new" programs and
"established" programs as detailed in sections A and B below.

***A. FFP may use 202(e) funds to assist cooperating sponsors in
establishing new programs under Title II. A new program can be defined
in the following ways:***

> 1\. Any new Title II program (emergency or non-emergency) that targets
> a distinct area or population not served by the same organization
> under an existing Title II program can be considered as "new" for up
> to two years. The term "new" does not apply to follow-ons or
> amendments that simply broaden the existing program area or target
> population.[^3]
>
> 2\. Ongoing emergency programs that are undergoing a re-design in
> order to introduce non-emergency interventions may be considered as
> new for up to one year on a one-time basis.
>
> 3\. A Development Assistance Program (DAP) that follows an emergency
> program in the same area or that targets some or all of the same
> population can be considered as new for up to two years.

Eligible uses for Section 202(e) funding **in "new" programs** include
reasonable, allowable and allocable line item costs for the following:

> 1\. Administrative, management, overhead, training, personnel,
> internal transportation and distribution costs directly associated
> with the Title II program as delineated under section "B" below.
>
> 2\. Program related costs for items to enhance the effectiveness of
> the use of Title II commodities including but not limited to:

a.  Food for work materials, tools and equipment;

b.  Food for training materials, tools and equipment;

c.  Agricultural materials, seeds, tools and equipment;

d.  Other training materials for beneficiaries;

e.  Building materials used in program activities;

f.  Health and nutrition interventions for beneficiaries;

g.  Public health education/training materials for beneficiary
    populations;

h.  Materials to promote community development or capacity building;

i.  Costs of accessing or providing clean water or a clean water source;

j.  Income generating or micro-financing activities;

k.  Communications costs for food security related messages and
    training;

l.  Publications (technical journals, reference guides, industry
    newsletters);

m.  Locally purchased food supplements for therapeutic feeding; (i.e.:
    sugar, salt, etc.)

n.  Milling

> 3\. Storage related costs such as warehouse leases and security.

**B. *For both new and established programs, 202(e) can be used for
meeting specific administrative, management, personnel and internal
transportation and distribution costs for carrying out Title II programs
(including monetization programs) in foreign countries. ***

Eligible costs for Section 202(e) funding **in both "new" and
"established" programs** include reasonable, allowable and allocable
line item costs for the following:

> 1\. Administrative/Overhead Costs such as:

a.  Office rent, utilities, communications, supplies and equipment for
    Title II offices and distribution programs in field locations;

b.  International and local travel costs for staff and consultants in
    relation to program administration, management or monitoring of
    Title II activities;

c.  Facilities, supplies and equipment for preparation of foods for
    distribution (ie: kitchens or canteens for supplementary or
    therapeutic feeding activities);

d.  Scales and medical equipment for nutritional assessments and
    monitoring of beneficiaries;

e.  Vehicle maintenance and fuel; The FFP preferred policy regarding
    vehicle procurements is that CSs purchase vehicles for project use
    with a source of funding other than the U.S. Government (USG).
    However, if the cooperating sponsor is unable to identify alternate
    funding (at the discretion of the CS), 202(e) funds may be used to
    procure vehicles for use in Title II project(s). Vehicles purchased
    with USG funding must follow the FFP procurement policy on source
    and origin requirements.

f.  Vehicle lease costs in short-term programs or when leasing a vehicle
    is considered to be more cost effective than purchasing a vehicle;

g.  Miscellaneous fees associated with administration of the Title II
    programs, i.e.: bank fees, etc.

> 2\. Management Costs such as:

a.  Supervision of Title II commodity distribution and program
    implementation. (see personnel costs);

b.  Surveys and assessments to identify community risks and
    vulnerabilities;

c.  Assessments to determine nutritional and other needs of beneficiary
    groups;

d.  Program evaluations;

e.  Provision of technical assistance to a Title II program or activity.

> 3\. Personnel Costs such as:

a.  Salaries, benefits, travel and relocation expenses of field-based
    expatriate and local staff/consultants dedicated to the management,
    support or administration of a Title II program(s); Types of
    staff/consultants may include (but are not limited to) managers,
    supervisors, program officers, food monitors, monetization officers,
    commodity supervisors, logistics officers, technical staff, food for
    work staff, security and support staff;

b.  Direct charges of salaries and benefits of headquarter backstop or
    management staff/consultants in proportion to their time spent
    managing or backstopping an approved Title II program or programs;

c.  Title II related headquarters or field staff training and
    development costs, consultants/trainers, facilities, materials,
    transportation, lodging and per diem.

> 4\. Internal Transportation and Distribution Costs[^4] such as:

a.  Internal transportation of commodities by rail, truck or barge
    associated with the delivery of Title II commodities to
    beneficiaries from discharge port (non-landlocked country) or
    designated point of entry (landlocked country) to distribution
    sites.

    1.  Trucking includes the lease or rental of trucks, maintenance,
        fuel, drivers and loading/unloading charges.

    2.  Rail and barge transportation include costs to transport, load
        and unload commodities. Barging costs may also include
        stevedoring.

> Distribution includes registration materials, commodity distribution
> materials, commodity bagging, handling, superintendence, appropriate
> marking and labeling if done locally, commodity fumigation,
> rehabilitation, reconditioning and re-bagging and costs of monitoring
> the utilization of Title II commodities and their impact on the
> nutrition and food security levels of the beneficiaries.

**V. Ineligible uses:**

The following costs are not eligible for 202(e) funding:

1.  Costs of activities not associated with programming of Title II
    resources;

2.  Case studies not associated with assessments or evaluations;

3.  Medicines or vaccines;[^5]

4.  Proposal writing;

5.  Advocacy; and

6.  Hospitality.

**VI. Expectations:**

A. FFP strongly encourages Cooperating Sponsors to identify other
sources of public and private funding in order to leverage Title II
resources and diversify support for the program prior to making requests
for 202(e).

B. FFP expects that the 202(e) portion of most Title II programs will be
between 5% and 7% of the approved program value (including the commodity
cost, shipping cost, ITSH and 202(e) budgets), and will not exceed 10%
of the approved program value. Exceptions will be considered on a case
by case basis.

C. No expense is eligible for 202(e) funding until it is made available
under a Transfer Authorization or Cooperative Agreement budget (or
amendment).

D. If the Title II program shares staff, services or space with another
program(s), the amount charged to 202(e) should be in proportion to the
expenses incurred by the Title II program.

E. FFP will receive and consider 202(e) funding requests from PVO
Cooperating Sponsors on a per project basis. PVOs may charge indirect
costs on their 202(e) direct costs in accordance with their previously
established Negotiated Indirect Cost Rate Agreements (NICRAs). To
promote efficiency, WFP will continue to receive a block grant of 202(e)
funding applicable to all WFP programs. In order to meet WFP's full cost
recovery requirement, this block grant will include both direct and
indirect 202(e) costs as well as some indirect cost recovery on WFP ITSH
expenditures. All cooperating sponsors, including WFP and PVOs will be
subject to the same 202(e) policy guidelines defining what types of
direct costs may be covered by 202(e) funding.

**VII. Office Procedure for Setting Section 202(e) spending levels:**

Once the overall annual budget level for Title II is finalized in the
Agriculture Appropriations Bill, the FFP Budget Team will meet to
discuss the amount of 202(e) allocated to each FFP Division. As a rule,
the amount designated to each operating unit will be approximately 5 -
10 percent of each division's OYB. Each operating unit will be
responsible for creating a plan to manage their portion of the 202(e)
budget. Operating units within FFP will work together in determining a
plan for addressing 202(e) allocations for WFP. After the second and
third quarters of each year (and as needed), the Budget Team will meet
to discuss needs related to 202(e) allocations, providing an opportunity
to revise allocations and OYBs.

Food for Peace Information Bulletin (FFPIB) 04-01

Lwitte/docs/FFPIB 04-01.doc

CLEARANCES: Legitimate Uses of 202(e) Funding

FFP/D: L.
Landis\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Date:\_\_\_\_\_\_\_\_\_

FFP/EP: D.
Weller\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Date:\_\_\_\_\_\_\_\_\_

FFP/POD: J.
Drummond\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Date:\_\_\_\_\_\_\_\_\_

FFP/DP: P.E.
Balakrishnan\_\_\_\_\_\_\_\_\_\_\_\_\_\_Date:\_\_\_\_\_\_\_\_\_

FFP/TP: A.
Crumbly\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Date:\_\_\_\_\_\_\_\_\_

GC/DCHA D. Gressett
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Date:\_\_\_\_\_\_\_\_\_

[^1]: In FY 2003, the range between 5% and 10% of the Title II
    appropriation of \$1.75 billion equated to between \$87.5 million
    and \$175 million. For FY 2004 the projected range is from \$59.6
    million to \$119.2 million.

[^2]: Registration for U.S. based PVOs is done through the USAID/DCHA
    Office of Private and Voluntary Cooperation. Indigenous
    organizations in host countries work through the local USAID mission
    in most cases to establish themselves as eligible organizations. In
    addition, FFP requires all cooperating sponsors to sign a Food for
    Peace Agreement to use Title II commodities in compliance with P.L.
    480 and USAID Regulation 11 (22 C.F.R. 211).

[^3]: For example: If an organization has a new TA in Sudan which
    follows a previous TA in the same area, their new TA is not
    considered a "new" program in this category. However, if an
    organization has a new TA in a different part of Sudan where the
    organization has not been operating, this could be considered a
    "new" program.

[^4]: ITSH related costs should be covered under ITSH where possible in
    order to maximize the use of 202(e) funds for costs not eligible for
    ITSH funding.

[^5]: This includes items such as Vitamin A supplements and Oral
    Rehydration Salts (ORS).