may not be made on the lowest landed cost basis unless IFB's are issued for commodity and ocean freight so that all commodity and ocean freight offers are reviewed simultaneously.

(iv) Participants are encouraged to purchase commodities on the basis of lowest landed cost when U.S. flag vessels are to be used. If such commodity purchases are not made on the basis of lowest landed cost (U.S. flag), ocean freight differential payments will nonetheless be calculated on the rates of U.S. flag vessels which would represent the lowest landed cost. Participants are therefore cautioned to review the provisions in the purchase authorization relating to the method of computing ocean freight differential.

(v) Announcement of awards shall be made in the United States. The importer shall promptly submit to the Pub. L. 480 Operations Division, FAS, USDA, copies of all offers received with a copy of the IFB which was issued. No sale can be approved for financing until this information has been received by FAS. The decision of the GSM shall be final regarding the responsiveness of offers to IFB terms in the awarding of contracts.

(c) Contract quantity eligible for financing. The quantity eligible for financing in the contract between the supplier and the importer may not exceed that quantity approved by the Pub. L. 480 Operations Division, FAS, including any approved contract tolerance.

(d) Contract disputes. Contracts between suppliers and importers should stipulate the responsibility of each party for payment of any costs not eligible for financing by CCC. Ouestions as to payment of ineligible costs should be resolved between the contracting parties.

(e) Special contracting provisions. The general provisions for contracting set forth in this section are supplemented by special contracting provisions in Appendix A applicable to individual commodities. Each purchase authorization, unless otherwise provided, is subject to the special provisions of Appendix A for the specific commodity named in the purchase authorization as though such special provisions

were fully set forth in the purchase authorization. Each contract entered into for financing under these regulations is deemed to include all terms and conditions required by the regulations in this subpart.

(f) Export Trade Act (Webb-Pomerene Law). A supplier who is a member of a Webb-Pomerene association and who enters into contracts with importers as a member of such an association shall so indicate in a statement on, or attached to, the copy of the supplier's detailed invoice referred to in § 17.18(c)(2).

(g) Shipment before letter of credit. If the supplier of the commodity permits shipment, or the supplier of ocean transportation accepts the commodity, before receipt of an acceptable letter of credit from a bank, the supplier takes such action at its own risk. This action in itself does not affect eligibility for CCC financing provided acceptable documentation is presented within the time limitations prescribed in the regulations in this subpart.

§ 17.7 Eligibility of suppliers and selling agents.

(a) Suppliers of ocean transportation (requirements). The supplier must be engaged in the business of furnishing ocean transportation from the United States and must have a person, principal or agent, on whom service of judicial process may be had in the United States.

(b) Commodity suppliers (requirements). (1) The commodity supplier must be engaged in the business of selling agricultural commodities for export from the United States.

(2) The commodity supplier must maintain a bona fide business office in the United States, and shall have a person, principal or agent, on whom service of judicial process may be had in the United States.

(3) A legal entity which is more than 50 percent owned by a foreign government, or which is controlled by a foreign government, may not act as a commodity supplier.

(c) Commodity suppliers (approval). (1) Commodity suppliers must be approved by USDA as eligible under the Pub. L. 480, Title I program in order

for their contracts to be eligible for CCC financing.

(2) Persons who wish to participate as commodity suppliers may be required to submit the following information to USDA, which will determine their eligibility:

(i) A current financial statement of the person as evidence of financial responsibility.

(ii) A statement containing general background information about the person, with particular reference to experience as an exporter of U.S. agricultural commodities, and any other information requested relating to whether the person is a responsible person and able to perform its obligations under this subpart and the purchase authorization.

(3) A commodity supplier's sales will not be approved unless the supplier has submitted a statement listing name, address and chief executive officers of all legal entities, foreign and domestic, which the supplier owns or controls and similar information for all legal entities which own or control the supplier and for all legal entities which are owned or controlled by any legal entity which owns or controls the supplier.

(i) The term "chief executive officers" includes:

(A) The president, or if no president, the chairman of the board of directors, and

(B) The vice president, but in cases of multiple vice presidents only the principal vice president, and then only if one is so designated, and

(C) Any other person who is designated as, or who acts in the capacity of, a chief executive officer.

(ii) If a person has been approved as an eligible supplier, the statement required in (c)(3) of this section must be kept current; that is, all changes must be reported within three months after they have occurred. If an approved supplier does not keep this statement current, USDA may disapprove the supplier's sales.

(iii) A statement filed by a subsidiary is considered complete as to the legal entities which it owns or controls and any other legal entities owned or controlled by the parent (including the chief executive officers for all

such companies) if the subsidiary certifies thereon that such information has been furnished to USDA in a separate statement filed by the parent.

(4) The supplier shall submit the information required in this section to the appropriate office listed below:

(i) For all commodities except tobacco and cotton, to the Director, Pub. L. 480 Operations Division, FAS, USDA, Washington, D.C. 20250-1000.

(ii) For tobacco, to the Director, Tobacco and Peanuts Division, ASCS, USDA, P.O. Box 2415, Washington, D.C. 20013.

(iii) For cotton, to the Director, Kansas City ASCS Commodity Office, USDA, P.O. Box 205, Kansas City, Missouri 64141-0205.

(5) The General Sales Manager, FAS, is responsible for approval of suppliers of all commodities except tobacco and cotton. The Administrator, ASCS, is responsible for approval of suppliers of tobacco and cotton.

(6) USDA may permit a person to act as a commodity supplier only on submission of acceptable performance security in the form of a letter of credit which will assure that the person and the person's selling agents will perform the obligations required under this subpart and the purchase authorization.

(d) Selling agents (requirements). If, at the time the commodity supplier reports the sale for price approval, it is determined that an agent employed or engaged by a commodity supplier to obtain a contract is not a selling agent as defined in § 17.2(c), the sale will not be eligible for financing. (See § 17.8(c) regarding commissions to selling agents for food commodities.)

(e) Disapproval; approval under certain conditions. USDA shall notify promptly a prospective supplier or a selling agent who is not approved, or who is approved under certain conditions established under these regulations. The notification will state the reasons for the action taken or conditions established. The prospective supplier or selling agent may appeal the action to a designated USDA official and submit further information, orally or in writing, bearing on the determination.

(Approved by the Office of Management and Budget under control number 05510005)

[51 FR 47409, Dec 31, 1986; 52 FR 1623, Jan. 15, 1987, as amended at 54 FR 21931, May 22, 1989]

§ 17.8 Fees, discounts, commissions, brand

names.

(a) Consular fees. CCC will not finance consular fees imposed for the issuance or legalization of consular invoices or certificates in connection with the importation of commodities into a foreign country.

(b) Discounts. If a contract provides for one or more discounts (including but not limited to trade or quantity discounts and discounts for prompt payment) whether expressed as such or as "commissions" to the importer, only the invoice amount after discount (supplier's contracted price less all discounts) is eligible for financing.

(c) Commissions. (1)(i) For non-food commodities, a commission to a selling agent as defined in § 17.2(c), employed or engaged by the supplier to obtain a contract, is eligible for financing to the extent that such commission is included in the contract price, except as stated in this paragraph.

(ii) For food commodities, a commission, fee or other payment to a selling agent as defined in § 17.2(c), employed or engaged by the supplier to obtain a contract, is prohibited.

(A) Any act by a person on behalf of a commodity supplier, which would influence or tend to influence a buyer to award a contract to the supplier, or which may result in the supplier's having a competitive advantage in relation to other potential suppliers, constitutes an act "to obtain a contract." Furthermore, any act by a person on behalf of a commodity supplier to influence USDA to approve a contract for financing constitutes an act "to obtain a contract."

(B) Services on behalf of a supplier which are purely ministerial in nature and do not require the exercise of personal influence, judgment, or discretion, such as attending bid openings or presenting offers at bid openings, would not in themselves be considered acts "to obtain a contract."

(C) Services to implement a contract after it has been entered into by the parties thereto, such as handling documentation problems or contract disputes, would not constitute acts "to obtain a contract."

(D) Payments of any kind to a person who has acted as a selling agent to obtain a contract, including payments for services that may be performed in connection with such contract which in themselves are not services to obtain a contract, are prohibited.

(2) A commission paid or to be paid to any agency, including a corporation, owned or controlled by the participant or the government of the destination country is not eligible for financing.

(3) A commission paid or to be paid to any agent, broker or other representative of the participant or the importer is not eligible for financing. This limitation applies to ocean transportation brokerage commissions which exceed 22 percent of the freight financed.

(4) For ocean transportation, in addition to this paragraph, see also § 17.14(j)(8).

(5) If a commission is paid in violation of paragraph (c) (2) or (3) of this section, CCC may demand dollar refund of the entire amount financed by CCC under the contract.

(6) The supplier should be aware of § 17.12 regarding reports required on certain commissions paid.

(d) Brand names. Brand names are not required to be shown on packaged commodities. If, however, a brand name is used, it must be a bona fide U.S. brand. The container or attached label must show the name and U.S. business address of the supplier or the manufacturer. Any reference on the container or attached label to foreign addresses of suppliers or foreign brand names is prohibited and will make the sale ineligible for financing. If the markings on the shipping container include a brand name, such brand name must be identical with the brand name on the unit container.

[51 FR 47409, Dec. 31, 1989, as amended at 54 FR 21931, May 22, 1989]

§ 17.9 Notice of sale procedures (tobacco and cotton).

The notice of sale procedures for tobacco and cotton are contained in Appendix A of the regulations and the purchase authorization.

§ 17.10 Notice of sale procedures (commodities other than tobacco and cotton).

(a) Submission of notice of sale. The supplier shall, immediately upon making a firm sale, telephone a notice of sale to Pub. L. 480 Operations Division, FAS, (202) 447-5780.

(1) A sale is considered firm under the regulations when the supplier has been notified by the importer of an award, even though the contract is conditioned on approval by FAS of the price; the supplier; the selling agent, if any; conformance of the sale to the provisions of the purchase authorization; and responsiveness of the offer to the IFB terms.

(2) The supplier shall not withhold the notice of sale because of the existence of contract provisions which make a contract conditional on the occurrence of certain events, i.e., on approval of the price by FAS, on the receipt of acceptable letter(s) of credit, or receipt of delivery instructions.

(3) Each notice of sale shall cover only a single sale contract. If a sale is made under two or more purchase authorizations, separate notices of sale shall be submitted for each purchase authorization.

(4) If the supplier fails to furnish a notice of sale within 5 calendar days after the date of sale, CCC has the right to refuse to finance the sale.

(5) The following information must be included in the notice of sale. (Contracts containing options for the items listed in this paragraph (a)(5) are acceptable only as provided in paragraph (a)(5)(vii) or the purchase authorization.)

(i) Purchase authorization number. (ii) Name and address of supplier. (iii) Date and time of sale. (See § 17.11(b)(2).)

(iv) Country to which export is to be made (destination).

(v) Name of importer.

(vi) Contract quantity expressed in the contract unit and in the quantity

unit in which the commodity normally trades.

(vii) Contract tolerance, if any, expressed in percentage, but not in excess of 5 percent more or less. This tolerance must be at buyer's option and must include any loading tolerance. If the contract does not provide a tolerance, show "No tolerance."

(viii) Price per contract unit and per quantity unit in which the commodity normally trades.

(ix) Coast or port of export (e.g., East coast, West coast, Gulf coast, Great Lakes port) or Canadian transshipment point in the case of bulk grain.

(x) Delivery period specified in the contract.

(xi) Delivery terms (f.o.b., f.a.s., etc.).

(xii) Complete commodity description.

(xiii) Complete packaging description and packaging material specifications if export is other than in bulk.

(xiv) Supplier's contract number, sale number, or order number, if any. (xv) Name and address of selling agent (supplier's agent) if any. If none, show "None."

(xvi) Import license number when required by the purchase authorization.

(xvii) Any other terms of the contract between the supplier and importer not specifically provided for in this paragraph (a)(5) which would affect the delivery of the commodity to be exported.

(xviii) Any additional information requested by the purchase authorization.

(b) Sale approval. (1) Public Law 480 Operations Division, FAS, will notify the supplier by telephone as to whether it has been determined on the basis of the information submitted in the notice of sale:

(i) That the price is approved for financing;

(ii) That the supplier and the selling agent, if any, are approved under the program;

(iii) That the sale conforms to the provisions of the purchase authorization; and

(iv) That the offer is responsive to the terms of the IFB.

(2) The supplier shall prepare Form FAS-359 (or CCC-359), "Declaration of Sale," and shall mail or otherwise deliver it to Pub. L. 480 Operations Division, FAS, promptly as soon as FAS has provided the CCC Registration Number to the supplier.

(3) The supplier shall enter on the Declaration of Sale form the same information as provided in paragraph (a)(5) of this section. Each Declaration of Sale form covers only a single sale contract. The supplier shall submit the Declaration of Sale form in an original and 4 copies, and it must be signed by the supplier or the supplier's authorized representative.

(4) USDA will return two copies of the Declaration of Sale form to the supplier, signed for the General Sales Manager by an authorized official, confirming the telephonic approval given as provided in paragraph (b)(1) of this section.

(5) Declaration of Sale forms are available from Public Law 480 Operations Division, FAS, USDA, Washington, D.C. 20250-1000. Telephone (202) 447-5780.

(c) Sale disapproval. (1) Public Law 480 Operations Division, FAS, will notify the supplier by telephone and telegraph when a sale is disapproved for financing. The related contract between the supplier and importer shall, for purposes of financing, be considered null and void.

(2) On receipt of a notice of disapproval, the supplier shall promptly notify the importer.

(d) Contract delivery period. Price approval is limited to exports made during the delivery period stated in the notice of sale or any amendment thereto submitted to Pub. L. 480 Operations Division, FAS, even though the purchase authorization may authorize a final delivery date later than that stated in the sale. If the supplier cannot complete delivery on or before the terminal delivery date of the contract delivery period, the supplier shall submit a notice of contract amendment as provided in paragraph (e) of this section. If the supplier fails to comply, § 17.17(d) of the regulations shall apply.

(e) Contract amendments. (1) The supplier shall submit a notice of each

contract amendment to the Director, Pub. L. 480 Operations Division, FAS/ EC, by telephone or telegraph immediately after the amendment to the contract is made. This includes not only any change in the contract delivery period or any other terms and conditions of the contract as provided in the information given in the original notice of sale or any amendment thereto, but also any change in any other terms and conditions of the contract.

(2) If a notice of an amendment is made by telephone, the supplier shall confirm immediately in writing (by telegraph).

(3) The supplier shall include only amended items pertaining to a single sale in one amendment notice.

(4) The notice of contract amendment must contain the following:

(i) A request that USDA approve an amendment to the specifically identified sale contract between the Government of (country) and (commodity supplier).

(ii) A statement of what the amendment consists of (as, extension of delivery period through (date)) and a detailed explanation of the reasons for the amendment.

(iii) A statement that the contract amendment has been agreed to by both buyer and seller.

(5) Any amendment to a contract for which FAS has given price approval subjects the terms of the contract, as amended, to reexamination by FAS for the purpose of financing under Pub. L. 480.

(6) Public Law 480 Operations Division, FAS, will notify the supplier by telegraph and telephone as to whether the amendment is approved or disapproved.

(7) Any amendment must be consistent with the provisions of the purchase authorization and the regulations and must otherwise be acceptable to Pub. L. 480 Operations Division, FAS.

(8) The supplier shall furnish a copy of the USDA telegraphic approval of the amendment with other documentation submitted to obtain payment.

(9) If the supplier fails to furnish notice of a contract amendment to Pub. L. 480 Operations Division, FAS,