EXIM Bank's mission is to support U.S. jobs through exports. To fulfill its jobs mandate, EXIM Bank relies on U.S. content as a proxy to evidence support for U.S. jobs.
Services may be supported through a stand-alone contract, or associated with capital goods exports, and may be performed either inside or outside of the U.S. To be eligible for EXIM Bank support, the service must meet the following criteria:
- Eligible U.S. services export contracts are those that are signed with U.S. operations of a firm or where the connection between the U.S. exporter and the foreign buyer can be otherwise documented.
- To qualify as eligible U.S. content, the person(s) performing the service must be a legal U.S. worker(s), as evidenced by the employer having an I-9 form on file for the employee.
Additional Eligibility Issues:
- Foreign-developed technology owned by a U.S. company for one year or more at the time of application is considered U.S. content. Foreign-developed technology owned for less than one year is considered eligible foreign content.
- Tools used either in the U.S. or overseas to execute a U.S. services contract are not required to meet EXIM Bank's content requirements. Tools are equipment used to execute the U.S. services contract, are owned by the U.S. exporter, and are not sold/transferred to the project/end-user for the execution of the contract.
Level of Support
Medium- and Long-Term Transactions
For medium and long-term transactions, the level of support for the Net Contract Price will be the lesser of (i) 85% of the value of all eligible exports in the U.S. Export Contract, or (ii) 100% of the U.S. content in all eligible exports in the U.S. Export Contract. The U.S. exporter must certify to eligibility.
Examples of Services Content Policy
Customized Computer Software Package
The U.S. exporter is exporting a customized software package with the following characteristics:
- The main module of the software package was developed in Japan, and was purchased by the U.S. software company 6 months before applying to EXIM for support.
- The module was customized to the foreign buyer's specifications in the United States, by individuals with I-9 documentation.
- The tools used to customize the computer software are foreign-manufactured computer systems.
- The Net Contract Price is $6 million, which includes $1.5 million in licensing fees for the foreign-developed main module, and $4.5 million in customization costs, profit and overhead incurred by the U.S. exporter.
Since the foreign-developed main module was purchased less than a year prior to submitting an EXIM Bank application, the main module is considered eligible foreign content. The U.S. content is 75%, and the eligible foreign content is 25%. Therefore, EXIM Bank can guarantee, insure or provide a loan for up to 75% or $4.5 million.The computers used to execute the services contract do not need to be taken into consideration in the calculation since they are considered "tools."
However, if characteristic one were changed, and the U.S. firm had owned the main module for more than 1 year at the time of application, the entire Net Contract Price would be considered U.S. content. Therefore, EXIM Bank could guarantee, insure, or provide a loan for up to 85% ($5.1 million) of the Net Contract Price.
Oil Well Drilling Services
The U.S. exporter will provide oil well drilling services to a foreign buyer. The transaction possesses the following characteristics:
A contract is signed between the U.S. drilling services firm and a foreign buyer to provide oil well drilling services. The contract provides for a five well on-land drilling program. The Net Contract Price is $50 million based on agreed upon fixed day rates. The contract includes the costs of renting a fully outfitted rig, crew (labor costs), and consumables. The contract also accounts for mark-up and overhead.
The major contract components are broken out in the following manner:
- Equipment Rental Costs - 30%, or $15 million
- Labor Costs - 30%, or $15 million
- Consumables - 25%, or $12.5 million
- Mark-up and Overhead - 15%, or $7.5 million
- The services will be provided in the foreign buyer's country.
- Legal, U.S. workers with I-9 documents account for $6 million in labor costs while foreign workers who are not residents of the buyer's country account for $9 million in labor costs.
- All consumables will be procured from the U.S.
- The drilling rig was manufactured in Korea, but is part of the U.S. drilling rig services firm's regular U.S. land rig inventory, and ownership of the rig will be retained by the U.S. firm upon completion of this contract.
Since the foreign buyer is not purchasing the drilling rig, but instead the U.S. exporter is deploying the rig from its U.S. inventory and employing the rig in the execution of a contract, the rig is considered a tool that is used to execute the U.S. services contract. Therefore, the fact that the rig was manufactured in Korea is not a factor in calculating the U.S. or eligible foreign content.
The U.S. exporter then calculates the non-U.S. content of the major contract components. In this scenario, it is $9 million in third country labor costs.
The total amount of U.S. content is $41 million (=$50 million-$9 million), or 82% of the Net Contract price. Therefore, EXIM Bank can guarantee, insure or provide a loan for up to 82% or $41 million.
For additional questions related to EXIM's support for services, contact the Policy Group at 202.565.3570, or the Engineering and Environment Division at 202.565.3556.